EXHIBIT 10.1

SECURITIES PURCHASE AGREEMENT

This SECURITIES PURCHASE AGREEMENT (the “Agreement”), dated as of March 31,
2016, is by and among Duos Technologies Group, Inc., a Florida corporation with
offices located at 6622 Southpoint Drive South, Suite 310, Jacksonville, Florida
32216 (the “Company”), and each of the investors listed on the Schedule of
Buyers attached hereto (individually, a “Buyer” and collectively, the “Buyers”).

RECITALS

A.

The Company and each Buyer are each executing and delivering this Agreement in
reliance upon the exemption from securities registration afforded by Section
4(a)(2) of the Securities Act of 1933, as amended (the “1933 Act”), and Rule
506(b) of Regulation D (“Regulation D”) as promulgated by the United States
Securities and Exchange Commission (the “SEC”) under the 1933 Act.

B.

The Company has authorized a new series of senior secured notes of the Company,
in the aggregate original principal amount of up to $1,800,000, substantially in
the form attached hereto as Exhibit A (the “Notes”).

C.

Each Buyer wishes to purchase, and the Company wishes to sell, upon the terms
and conditions stated in this Agreement, (i) a Note in the aggregate original
principal amount set forth opposite such Buyer’s name in column (3) on the
Schedule of Buyers and (ii) such aggregate number of Warrants to purchase shares
of Common Stock as set forth opposite such Buyer’s name in column (4) on the
Schedule of Buyers (the “Warrants”) in form attached hereto as Exhibit B.

D.

The Notes and the Warrants are collectively referred to herein as the
“Securities.”

E.

The Notes will rank senior to all outstanding and future indebtedness of the
Company, and its Subsidiaries (as defined below) and will be secured by a first
priority perfected security interest in all of the existing and future assets of
the Company and its direct and indirect Subsidiaries, including a pledge of all
of the capital stock of each of the Subsidiaries, as evidenced by (i) a security
agreement in the form attached hereto as Exhibit C (the “Security Agreement”),
(ii) account control agreements with respect to certain accounts described in
the Note and the Security Agreement, in form and substance acceptable to each
Buyer, duly executed by the Company and each depositary bank (each, an
“Controlled Account Bank”) in which each such account is maintained (the
“Controlled Account Agreements”, and together with the Security Agreement, the
Perfection Certificate (as defined below) and the other security documents and
agreements entered into in connection with this Agreement and each of such other
documents and agreements, as each may be amended or modified from time to time,
collectively, the “Security Documents”), and (iii) a guaranty executed by each
Subsidiary of the Company, in the form attached hereto as Exhibit D
(collectively, the “Guaranties”) pursuant to which each of them guarantees the
obligations of the Company under the Transaction Documents (as defined below).

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AGREEMENT

NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and each Buyer hereby
agrees as follows:

1.

PURCHASE AND SALE OF NOTES AND WARRANTS.

(a)

Purchase of Notes and Warrants. Subject to the satisfaction (or waiver) of the
conditions set forth in Sections 6 and 7 below, the Company shall issue and sell
to each Buyer, and each Buyer severally, but not jointly, agrees to purchase
from the Company on the Closing Date (as defined below) a Note in the original
principal amount as is set forth opposite such Buyer’s name in column (3) on the
Schedule of Buyers along with such aggregate number of Warrants as is set forth
opposite such Buyer’s name in column (4) on the Schedule of Buyers.

(b)

Closing.  The closing (the “Closing”) of the purchase of the Notes and the
Warrants by the Buyers shall occur at the offices of Akerman LLP, 666 Fifth
Avenue, New York, NY 10103. The date and time of the Closing (the “Closing
Date”) shall be 10:00 a.m., New York time, on the first (1st) Business Day on
which the conditions to the Closing set forth in Sections 6 and 7 below are
satisfied or waived (or such other date as is mutually agreed to by the Company
and each Buyer).  As used herein “Business Day” means any day other than a
Saturday, Sunday or other day on which commercial banks in New York, New York
are authorized or required by law to remain closed.

(c)

Purchase Price.  The aggregate purchase price for the Notes and the Warrants to
be purchased by each Buyer (the “Purchase Price”) shall be the amount set forth
opposite such Buyer’s name in column (5) on the Schedule of Buyers.  Each Buyer
shall pay approximately $950.00 for each $1,000 of principal amount of Notes and
related Warrants to be purchased by such Buyer at the Closing.  Each Buyer and
the Company agree that the Notes and the Warrants constitute an “investment
unit” for purposes of Section 1273(c)(2) of the Internal Revenue Code of 1986,
as amended (the “Code”). The Buyers and the Company mutually agree that the
allocation of the issue price of such investment unit between the Notes and the
Warrants in accordance with Section 1273(c)(2) of the Code and Treasury
Regulation Section 1.1273-2(h) shall be an aggregate amount of $500 allocated to
the Warrants and the balance of the Purchase Price allocated to the Notes, and
neither the Buyers nor the Company shall take any position inconsistent with
such allocation in any tax return or in any judicial or administrative
proceeding in respect of taxes.

(d)

Form of Payment.  On the Closing Date, (i) each Buyer shall pay its respective
Purchase Price (less, in the case of any Buyer, the amounts withheld pursuant to
Section 4(g)) to the Company for the Notes and the Warrants to be issued and
sold to such Buyer at the Closing, by wire transfer of immediately available
funds in accordance with the Flow of Funds Letter (as defined below) and
(ii) the Company shall deliver to each Buyer (A) a Note in the aggregate
original principal amount as is set forth opposite such Buyer’s name in column
(3) of the Schedule of Buyers and (B) Warrants to purchase such aggregate number
of shares of Common Stock as is set forth opposite such Buyer’s name in column
(4) of the Schedule of Buyers duly executed on behalf of the Company and
registered in the name of such Buyer or its designee.

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(e)

Residency.  Such Buyer is a resident of that jurisdiction specified below its
address of the Schedule of Buyers.

(f)

Placement Agent Fees. On the Closing Date, the Company shall pay to Aegis
Capital Corp., as placement agent (the “Placement Agent”), all fees (other than
legal fees), reasonable and documented expenses, and reasonable and documented
legal fees and expenses (collectively, the “Placement Agent Fees”) due to the
Placement Agent as of such Closing Date, pursuant to the terms of the engagement
letter, dated as of June 29, 2015, as amended as of February 4, 2016, between
the Company and the Placement Agent (the “Engagement Letter:), (i) with respect
to any cash Placement Agent Fees, by wire transfer of immediately available
funds in accordance with the Placement Agent's written wire instructions or (ii)
with respect to any Placement Agent Fees to be paid in securities of the Company
(as described in the Engagement Letter), by delivery to the Placement Agent of
the certificate with respect to such securities duly executed on behalf of the
Company and registered in the name of the Placement Agent or its designee(s).

2.

BUYER’S REPRESENTATIONS AND WARRANTIES.

Each Buyer, severally and not jointly, represents and warrants to the Company
and the Placement Agent with respect to only itself that, as of the date hereof
and as of the Closing Date:

(a)

Organization; Authority. Such Buyer is an entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization with the requisite power and authority to enter into and to
consummate the transactions contemplated by the Transaction Documents (as
defined below) to which it is a party and otherwise to carry out its obligations
hereunder and thereunder.

(b)

No Public Sale or Distribution.  Such Buyer is acquiring the Securities for its
own account and not with a view towards, or for resale in connection with, the
public sale or distribution thereof in violation of applicable securities laws,
except pursuant to sales registered or exempted under the 1933 Act; provided,
however, by making the representations herein, such Buyer does not agree, or
make any representation or warranty, to hold any of the Securities for any
minimum or other specific term and reserves the right to dispose of the
Securities at any time in accordance with or pursuant to a registration
statement or an exemption from registration under the 1933 Act.  Such Buyer does
not presently have any agreement or understanding, directly or indirectly, with
any Person to distribute any of the Securities in violation of applicable
securities laws.  For purposes of this Agreement, “Person” means an individual,
a limited liability company, a partnership, a joint venture, a corporation, a
trust, an unincorporated organization, any other entity and any Governmental
Entity or any department or agency thereof

(c)

Accredited Investor Status.  Such Buyer is an “accredited investor” as that term
is defined in Rule 501(a) of Regulation D.

(d)

Reliance on Exemptions.  Such Buyer understands that the Securities are being
offered and sold to it in reliance on specific exemptions from the registration
requirements of United States federal and state securities laws and that the
Company is relying in part upon the truth and accuracy of, and such Buyer’s
compliance with, the representations, warranties,

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agreements, acknowledgments and understandings of such Buyer set forth herein in
order to determine the availability of such exemptions and the eligibility of
such Buyer to acquire the Securities.

(e)

Information.  Such Buyer and its advisors, if any, have been furnished with all
materials relating to the business, finances and operations of the Company and
materials relating to the offer and sale of the Securities that have been
requested by such Buyer.  Such Buyer and its advisors, if any, have been
afforded the opportunity to ask questions of the Company.  Neither such
inquiries nor any other due diligence investigations conducted by such Buyer or
its advisors, if any, or its representatives shall modify, amend or affect such
Buyer’s right to rely on the Company’s representations and warranties contained
herein.  Such Buyer understands that its investment in the Securities involves a
high degree of risk.  Such Buyer has sought such accounting, legal and tax
advice as it has considered necessary to make an informed investment decision
with respect to its acquisition of the Securities.

(f)

No Governmental Review.  Such Buyer understands that no United States federal or
state agency or any other government or governmental agency has passed on or
made any recommendation or endorsement of the Securities and the shares of
common stock issuable upon the exercise of the Warrants (the "Warrant Shares")
or the fairness or suitability of the investment in the Securities and the
Warrant Shares nor have such authorities passed upon or endorsed the merits of
the offering of the Securities. Such Buyer acknowledges and agrees that neither
the Placement Agent nor any affiliate of the Placement Agent has provided such
Buyer with any information or advice with respect to the Securities and the
Warrant Shares nor is such information or advice necessary or desired. Neither
the Placement Agent nor any affiliate has made or makes any representation as to
the Company or the quality of the Securities and the Warrant Shares and the
Placement Agent and any affiliate may have acquired non-public information with
respect to the Company which such Buyer agrees need not be provided to it. In
connection with the issuance of the Securities to such Buyer, neither the
Placement Agent, the Company, nor any of their respective affiliates has acted
as a financial advisor or fiduciary to such Buyer.

(g)

Transfer or Resale.  Such Buyer understands that:  (i) the Securities and the
Warrant Shares have not been and are not being registered under the 1933 Act or
any state securities laws, and may not be offered for sale, sold, assigned or
transferred unless (A) subsequently registered thereunder, (B) such Buyer shall
have delivered to the Company (if requested by the Company) an opinion of
counsel, in a form reasonably acceptable to the Company, to the effect that such
Securities to be sold, assigned or transferred may be sold, assigned or
transferred pursuant to an exemption from such registration, or (C) such Buyer
provides the Company with reasonable assurance that such Securities can be sold,
assigned or transferred pursuant to Rule 144 or Rule 144A promulgated under the
1933 Act (or a successor rule thereto) (collectively, “Rule 144”); (ii) any sale
of the Securities made in reliance on Rule 144 may be made only in accordance
with the terms of Rule 144, and further, if Rule 144 is not applicable, any
resale of the Securities under circumstances in which the seller (or the Person
through whom the sale is made) may be deemed to be an underwriter (as that term
is defined in the 1933 Act) may require compliance with some other exemption
under the 1933 Act or the rules and regulations of the SEC promulgated
thereunder; and (iii) neither the Company nor any other Person is under any
obligation to register the Securities under the 1933 Act or any state

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securities laws or to comply with the terms and conditions of any exemption
thereunder.  Notwithstanding the foregoing, the Securities may be pledged in
connection with a bona fide margin account or other loan or financing
arrangement secured by the Securities and such pledge of Securities shall not be
deemed to be a transfer, sale or assignment of the Securities hereunder, and no
Buyer effecting a pledge of Securities shall be required to provide the Company
with any notice thereof or otherwise make any delivery to the Company pursuant
to this Agreement or any other Transaction Document (as defined in Section
3(b)), including, without limitation, this Section 2(g).

(h)

Validity; Enforcement.  This Agreement has been duly and validly authorized,
executed and delivered on behalf of such Buyer and shall constitute the legal,
valid and binding obligations of such Buyer enforceable against such Buyer in
accordance with their respective terms, except as such enforceability may be
limited by general principles of equity or to applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation and other similar laws relating to, or
affecting generally, the enforcement of applicable creditors’ rights and
remedies.

(i)

No Conflicts.  The execution, delivery and performance by such Buyer of this
Agreement and the consummation by such Buyer of the transactions contemplated
hereby and thereby will not (i) result in a violation of the organizational
documents of such Buyer, or (ii) conflict with, or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which such Buyer is a
party, or (iii) result in a violation of any law, rule, regulation, order,
judgment or decree (including federal and state securities laws) applicable to
such Buyer, except in the case of clauses (ii) and (iii) above, for such
conflicts, defaults, rights or violations which could not, individually or in
the aggregate, reasonably be expected to have a material adverse effect on the
ability of such Buyer to perform its obligations hereunder.

(j)

Independent Evaluation. Such Buyer confirms and agrees that (i) it has
independently evaluated the merits of its decision to purchase the Securities
and the Warrant Shares, (ii) it has not relied on the advice of, or any
representations by the Placement Agent or any affiliate thereof or any
representative of the Placement Agent or its affiliates in making such decision
and (iii) neither the Placement Agent nor any of its representatives has any
responsibility with respect to the completeness or accuracy of any information
or materials furnished to such Buyer in connection with the transactions
contemplated hereby.

(k)

Acknowledgements Regarding Placement Agent. Such Buyer acknowledges that the
Placement Agent is acting as the exclusive placement agents on a “best efforts”
basis for the Securities being offered hereby and will be compensated by the
Company for acting in such capacity. Such Buyer represents that (i) such Buyer
was contacted regarding the sale of the Securities by the Placement Agent (or an
authorized agent or representative thereof) with whom such Buyer had a
substantial pre-existing relationship and who entered into a confidentiality
agreement or otherwise agreed, orally or in writing, to keep information with
respect to the transactions contemplated hereby confidential and (ii) to such
Buyer's knowledge, no Securities were offered or sold to such Buyer by means of
any form of general solicitation or general advertising.

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3.

REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

The Company represents and warrants to each of the Buyers and the Placement
Agent that, as of the date hereof and as of the Closing Date:

(a)

Organization and Qualification.  Each of the Company and each of its
Subsidiaries are entities duly organized and validly existing and in good
standing under the laws of the jurisdiction in which they are formed, and have
the requisite power and authority to own their properties and to carry on their
business as now being conducted and as presently proposed to be conducted.  Each
of the Company and each of its Subsidiaries is duly qualified as a foreign
entity to do business and is in good standing in every jurisdiction in which its
ownership of property or the nature of the business conducted by it makes such
qualification necessary, except to the extent that the failure to be so
qualified or be in good standing would not reasonably be expected to have a
Material Adverse Effect (as defined below).  As used in this Agreement,
“Material Adverse Effect” means any material adverse effect on (i) the business,
properties, assets, liabilities, operations (including results thereof),
condition (financial or otherwise) or prospects of the Company or any
Subsidiary, individually or taken as a whole, (ii) the transactions contemplated
hereby or in any of the other Transaction Documents or any other agreements or
instruments to be entered into in connection herewith or therewith or (iii) the
authority or ability of the Company or any of its Subsidiaries to perform any of
their respective obligations under any of the Transaction Documents (as defined
below).  Other than the Persons (as defined below) set forth on Schedule 3(a),
the Company has no Subsidiaries.  “Subsidiaries” means any Person in which the
Company, directly or indirectly, (I) owns any of the outstanding capital stock
or holds any equity or similar interest of such Person or (II) controls or
operates all or any part of the business, operations or administration of such
Person, and each of the foregoing, is individually referred to herein as a
“Subsidiary.”

(b)

Authorization; Enforcement; Validity.  The Company has the requisite power and
authority to enter into and perform its obligations under this Agreement and the
other Transaction Documents and to issue the Securities in accordance with the
terms hereof and thereof.  Each Subsidiary has the requisite power and authority
to enter into and perform its obligations under the Transaction Documents to
which it is a party.  The execution and delivery of this Agreement and the other
Transaction Documents by the Company and its Subsidiaries, and the consummation
by the Company and its Subsidiaries of the transactions contemplated hereby and
thereby (including, without limitation, the issuance of the Notes, the issuance
of the Warrants and the issuance of the Warrant Shares) have been duly
authorized by the Company’s board of directors and each of its Subsidiaries’
board of directors or other governing body, as applicable, and (other than the
filing of a Form D with the SEC and the filing(s) required by applicable state
“blue sky” securities laws, rules and regulations (together the “Securities
Filings”)) no further filing, consent or authorization is required by the
Company, its Subsidiaries, their respective boards of directors or their
stockholders or other governing body.  This Agreement has been, and the other
Transaction Documents to which it is a party will be prior to the Closing, duly
executed and delivered by the Company, and each constitutes the legal, valid and
binding obligations of the Company, enforceable against the Company in
accordance with its respective terms, except as such enforceability may be
limited by general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally, the enforcement of applicable creditors’ rights and
remedies

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and except as rights to indemnification and to contribution may be limited by
federal or state securities law.  Prior to the Closing, the Transaction
Documents to which each Subsidiary is a party will be duly executed and
delivered by each such Subsidiary, and shall constitute the legal, valid and
binding obligations of each such Subsidiary, enforceable against each such
Subsidiary in accordance with their respective terms, except as such
enforceability may be limited by general principles of equity or applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally, the enforcement of applicable creditors’
rights and remedies and except as rights to indemnification and to contribution
may be limited by federal or state securities law.  “Transaction Documents”
means, collectively, this Agreement, the Notes, the Warrants, the Warrant
Shares, the Confession of Judgment, the Guaranties, the Security Documents and
each of the other agreements and instruments entered into or delivered by any of
the parties hereto in connection with the transactions contemplated hereby and
thereby, as may be amended from time to time.

(c)

Issuance of Securities and Warrant Shares.  The issuance of the Securities and
the Warrant Shares are duly authorized and upon issuance in accordance with the
terms of the Transaction Documents shall be validly issued, fully paid and
non-assessable and free from all preemptive or similar rights, mortgages,
defects, claims, liens, pledges, charges, taxes, rights of first refusal,
encumbrances, security interests and other encumbrances (collectively “Liens”)
with respect to the issuance thereof and, with respect to the Warrant Shares,
with the holders being entitled to all rights accorded to a holder of Common
Stock.  Subject to the accuracy of the representations and warranties of the
Buyers in this Agreement, the offer and issuance by the Company of the
Securities and the Warrant Shares is exempt from registration under the 1933
Act.  

(d)

No Conflicts.  The execution, delivery and performance of the Transaction
Documents by the Company and its Subsidiaries and the consummation by the
Company and its Subsidiaries of the transactions contemplated hereby and thereby
(including, without limitation, the issuance of the Notes, the Warrants and the
Warrant Shares) will not (i) result in a violation of the Certificate of
Incorporation (as defined below) (including, without limitation, any certificate
of designation contained therein), By-Laws (as defined below), certificate of
formation, memorandum of association, articles of association, bylaws or other
organizational documents of the Company or any of its Subsidiaries, or any
capital stock or other securities of the Company or any of its Subsidiaries,
(ii) conflict with, or constitute a default (or an event which with notice or
lapse of time or both would become a default) in any respect under, or give to
others any rights of termination, amendment, acceleration or cancellation of,
any agreement, indenture or instrument to which the Company or any of its
Subsidiaries is a party, or (iii) result in a violation of any law, rule,
regulation, order, judgment or decree (including, without limitation, foreign,
federal and state securities laws and regulations) applicable to the Company or
any of its Subsidiaries or by which any property or asset of the Company or any
of its Subsidiaries is bound or affected, except, in the case of clause (ii),
where such conflict, default or giving of any rights of termination, amendment,
acceleration or cancellation would not result, either individually or in the
aggregate, in a Material Adverse Effect.

(e)

Consents.  Neither the Company nor any Subsidiary is required to obtain any
consent from, authorization or order of, or make any filing or registration with
(other than the Securities Filings), any Governmental Entity (as defined below)
or any regulatory or self-

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regulatory agency or any other Person in order for it to execute, deliver or
perform any of its respective obligations under or contemplated by the
Transaction Documents, in each case, in accordance with the terms hereof or
thereof.  All consents, authorizations, orders, filings and registrations which
the Company or any Subsidiary is required to obtain pursuant to the preceding
sentence have been or will be obtained or effected on or prior to the Closing
Date, and neither the Company nor any of its Subsidiaries are aware of any facts
or circumstances which might prevent the Company or any of its Subsidiaries from
obtaining or effecting any of the registration, application or filings
contemplated by the Transaction Documents.  “Governmental Entity” means any
nation, state, county, city, town, village, district, or other political
jurisdiction of any nature, federal, state, local, municipal, foreign, or other
government, governmental or quasi-governmental authority of any nature
(including any governmental agency, branch, department, official, or entity and
any court or other tribunal), multi-national organization or body; or body
exercising, or entitled to exercise, any administrative, executive, judicial,
legislative, police, regulatory, or taxing authority or power of any nature or
instrumentality of any of the foregoing, including any entity or enterprise
owned or controlled by a government or a public international organization or
any of the foregoing.

(f)

Acknowledgment Regarding Buyer’s Purchase of Securities.  The Company
acknowledges and agrees that each Buyer is acting solely in the capacity of an
arm’s length purchaser with respect to the Transaction Documents and the
transactions contemplated hereby and thereby and that no Buyer is (i) an officer
or director of the Company or any of its Subsidiaries, (ii) an “affiliate” (as
defined in Rule 144) of the Company or any of its Subsidiaries or (iii) to its
knowledge, a “beneficial owner” of more than 10% of the shares of Common Stock
(as defined for purposes of Rule 13d-3 of the Securities Exchange Act of 1934,
as amended (the “1934 Act”)).  The Company further acknowledges that no Buyer is
acting as a financial advisor or fiduciary of the Company or any of its
Subsidiaries (or in any similar capacity) with respect to the Transaction
Documents and the transactions contemplated hereby and thereby, and any advice
given by a Buyer or any of its representatives or agents in connection with the
Transaction Documents and the transactions contemplated hereby and thereby is
merely incidental to such Buyer’s purchase of the Securities.  The Company
further represents to each Buyer that the Company’s and each Subsidiary’s
decision to enter into the Transaction Documents to which it is a party has been
based solely on the independent evaluation by the Company, each Subsidiary and
their respective representatives.

(g)

No General Solicitation; Placement Agent’s Fees.  Neither the Company, nor any
of its Subsidiaries or affiliates, nor any Person acting on its or their behalf,
has engaged in any form of general solicitation or general advertising (within
the meaning of Regulation D) in connection with the offer or sale of the
Securities.  The Company shall be responsible for the payment of any placement
agent’s fees, financial advisory fees, or brokers’ commissions (other than for
Persons engaged by any Buyer or its investment advisor) relating to or arising
out of the transactions contemplated hereby, including, without limitation,
placement agent fees payable to the Placement Agent in connection with the sale
of the Securities.  The fees and expenses of the Placement Agent to be paid by
the Company or any of its Subsidiaries are as set forth on Schedule 3(g)
attached hereto.  The Company shall pay, and hold each Buyer harmless against,
any liability, loss or expense (including, without limitation, attorney’s fees
and out-of-pocket expenses) arising in connection with any such claim.  The
Company acknowledges that it has engaged the Placement Agent in connection with
the sale of the Securities.  Other than the

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Placement Agent, neither the Company nor any of its Subsidiaries has engaged any
placement agent or other agent in connection with the offer or sale of the
Securities.

(h)

No Integrated Offering.  None of the Company, its Subsidiaries nor any of their
affiliates, nor any Person acting on their behalf has, directly or indirectly,
made any offers or sales of any security or solicited any offers to buy any
security, under circumstances that would require registration of any of the
Securities under the 1933 Act, whether through integration with prior offerings
or otherwise, or cause this offering of the Securities to require approval of
stockholders of the Company for purposes of the 1933 Act or under any applicable
stockholder approval provisions, including, without limitation, under the rules
and regulations of any exchange or automated quotation system on which any of
the securities of the Company are listed or designated for quotation.  None of
the Company, its Subsidiaries, their affiliates nor any Person acting on their
behalf will take any action or steps that would require registration of any of
the Securities under the 1933 Act or cause the offering of any of the Securities
to be integrated with other offerings of securities of the Company.

(i)

Application of Takeover Protections; Rights Agreement.  The Company and its
board of directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, interested stockholder, business
combination, poison pill (including, without limitation, any distribution under
a rights agreement), stockholder rights plan or other similar anti-takeover
provision under the Certificate of Incorporation, Bylaws or other organizational
documents or the laws of the jurisdiction of its incorporation or otherwise
which is or could become applicable to any Buyer as a result of the transactions
contemplated by this Agreement, including, without limitation, the Company’s
issuance of the Securities and the Warrant Shares and any Buyer’s ownership of
the Securities and the Warrant Shares.  The Company and its board of directors
have taken all necessary action, if any, in order to render inapplicable any
stockholder rights plan or similar arrangement relating to accumulations of
beneficial ownership of shares of Common Stock or a change in control of the
Company or any of its Subsidiaries.

(j)

Material Liabilities; Financial Information; SEC Information; Forecasts.  Except
as set forth on Schedule 3(j)(i), the Company has no liabilities or obligations,
absolute or contingent (individually or in the aggregate), except obligations
under contracts made in the ordinary course of business that as of the date of
this Agreement would not be required to be reflected in financial statements
prepared in accordance with generally accepted accounting principles as applied
in the United States, consistently applied for the periods covered thereby
(“GAAP”).  Since January 1, 2012, the Company has filed with or furnished to the
SEC all reports, schedules, forms, statements and other documents required to be
filed or furnished by it with the SEC pursuant to the reporting requirements of
the 1934 Act (all of the foregoing and all other documents filed with the SEC
since such date and all exhibits included therein, schedules thereto and
documents incorporated by reference therein, being hereinafter referred to
herein as the “SEC Documents”). The SEC Documents have been made available to
each Buyer via the SEC’s EDGAR system. As of their respective dates, the SEC
Documents complied as to form in all material respects with the requirements of
the 1934 Act and the rules and regulations of the SEC promulgated thereunder
applicable to the SEC Documents, and none of the SEC Documents, at the time they
were filed with the SEC, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order

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to make the statements therein, in light of the circumstances under which they
were made, not misleading.  As of their respective dates, the financial
statements of the Company included in the SEC Documents, including any related
notes thereto (the “Financial Statements”), complied as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto. The Financial Statements have been
prepared in accordance with GAAP, consistently applied, during the periods
involved (except as may be otherwise indicated in such financial statements or
the notes thereto) and fairly present in all material respects the consolidated
financial position of Company and its consolidated Subsidiaries as of the dates
thereof and the consolidated results of their operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments none of which shall, in the aggregate, be material).
 The forecasts and projections previously delivered to the Buyers by the Company
and attached hereto as Schedule 3(j)(iii) have been prepared in good faith and
on the basis of assumptions that are fair and reasonable in light of current and
reasonably foreseeable circumstances.  No other information provided by or on
behalf of the Company to any of the Buyers contains any untrue statement of a
material fact or omits to state any material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstance under which they are or were made, not misleading.  The Company is
not currently contemplating to amend or restate any of the Financial Statements,
nor is the Company currently aware of facts or circumstances which would require
the Company to amend or restate any of the Financial Statements, in each case,
in order for any of the Financials Statements to be in compliance with GAAP.
 The Company has not been informed by its independent accountants that they
recommend that the Company amend or restate any of the Financial Statements or
that there is any need for the Company to amend or restate any of the Financial
Statements.

(k)

Absence of Certain Changes.  Since December 31, 2014, there has been no Material
Adverse Effect on the Company and its Subsidiaries, taken as a whole.
 Specifically,  except as set forth on Schedule 3(k), since December 31, 2014,
neither the Company nor its Subsidiaries have:

(i)

declared, set aside or paid any dividend or other distribution with respect to
any shares of capital stock of the Company or any of its Subsidiaries or any
direct or indirect redemption, purchase or other acquisition of any such shares;

(ii)

sold, assigned, pledged, encumbered, transferred or other disposed of any
tangible asset of the Company or any of its Subsidiaries (other than sales or
the licensing of its products to customers in the ordinary course of business
consistent with past practice), or sold, assigned, pledged, encumbered,
transferred or other disposed of any Intellectual Property (as defined in
Section 3(v)) (other than licensing of products of the Company or its
Subsidiaries in the ordinary course of business and on a non-exclusive basis);

(iii)

entered into any licensing or other agreement with regard to the acquisition or
disposition of any Intellectual Property other than licenses in the ordinary
course of business consistent with past practice or any amendment or consent
with respect to any licensing agreement filed or required to be filed with
respect to any Governmental Entity;

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(iv)

capital expenditures, individually or in the aggregate, in excess of $50,000;

(v)

any obligation or liability (whether absolute, accrued, contingent or otherwise,
and whether due or to become due) incurred by the Company or any of its
Subsidiaries, in excess of $50,000 individually, other than obligations under
customer contracts, current obligations and liabilities, in each case incurred
in the ordinary course of business and consistent with past practice;

(vi)

any Lien on any property of the Company or any of its Subsidiaries except for
Liens in existence on the date of this Agreement that are described on Schedule
3(k)(vi).

(vii)

 Any material change to any agreement or relationship with any Material Customer
(as defined below), partner or supplier;

(viii)

any payment, discharge, satisfaction or settlement of any suit, action, claim,
arbitration, proceeding or obligation of the Company or any of its Subsidiaries,
except in the ordinary course of business and consistent with past practice;

(ix)

any split, combination or reclassification of any equity securities;

(x)

any material loss, destruction or damage to any property of the Company or any
Subsidiary, whether or not insured;

(xi)

any acceleration or prepayment of any Indebtedness (as defined below) for
borrowed money or the refunding of any such Indebtedness;

(xii)

any labor trouble involving the Company or any Subsidiary or any material change
in their personnel or the terms and conditions of employment;

(xiii)

any waiver of any valuable right, whether by contract or otherwise;

(xiv)

except as disclosed in Schedule 3(k)(xiv), any loan or extension of credit to
any officer or employee of the Company;

(xv)

any change in the independent public accountants of the Company or its
Subsidiaries or any material change in the accounting methods or accounting
practices followed by the Company or its Subsidiaries, as applicable, or any
material change in depreciation or amortization policies or rates;

(xvi)

any resignation or termination of any officer, key employee or group of
employees of the Company or any of its Subsidiaries;

(xvii)

any change in any compensation arrangement or agreement with any employee,
officer, director or stockholder that would result in the aggregate compensation
to such Person in such year to exceed $50,000;

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(xviii)

any material increase in the compensation of employees of the Company or its
Subsidiaries (including any increase pursuant to any written bonus, pension,
profit sharing or other benefit or compensation plan, policy or arrangement or
commitment), or any increase in any such compensation or bonus payable to any
officer, stockholder, director, consultant or agent of the Company or any of its
Subsidiaries having an annual salary or remuneration in excess of $50,000,
except as may be provided in projections contained in Schedule 3(k)(xviii);

(xix)

any revaluation of any of their respective assets, including, without
limitation, writing down the value of capitalized inventory or writing off notes
or accounts receivable or any sale of assets other than in the ordinary course
of business; or

(xx)

any acquisition or disposition of any material assets (or any contract or
arrangement therefor), or any other material transaction by the Company or any
Subsidiary otherwise than for fair value in the ordinary course of business,
except as provided on Schedule 3(k)(xx);  

(xxi)

written-down the value of any asset of the Company or its Subsidiaries or
written-off as uncollectible of any accounts or notes receivable or any portion
thereof except in the ordinary course of business and in a magnitude consistent
with historical practice;

(xxii)

cancelled any debts or claims or any material amendment, termination or waiver
of any rights of the Company or its Subsidiaries; or

(xxiii)

any agreement, whether in writing or otherwise, to take any of the actions
specified in the foregoing items (i) through (xxii).

Neither the Company nor any of its Subsidiaries has taken any steps to seek
protection pursuant to any bankruptcy law nor does the Company have any
knowledge or reason to believe that its creditors intend to initiate involuntary
bankruptcy proceedings or any actual knowledge of any fact that would reasonably
lead a creditor to do so.  The Company and its Subsidiaries, individually and on
a consolidated basis, will not be, after giving effect to the transactions
contemplated hereby to occur at each Closing, Insolvent (as defined below).  For
purposes of this Section 3(k), “Insolvent” means, (i) with respect to the
Company and its Subsidiaries, on a consolidated basis, (A) the present fair
saleable value of the Company’s and its Subsidiaries’ assets is less than the
amount required to pay the Company’s and its Subsidiaries’ total Indebtedness
(as defined below), (B) the Company and its Subsidiaries are unable to pay their
debts and liabilities, subordinated, contingent or otherwise, as such debts and
liabilities become absolute and matured or (C) the Company and its Subsidiaries
intend to incur or believe that they will incur debts that would be beyond their
ability to pay as such debts mature; and (ii) with respect to the Company and
each Subsidiary, individually, (A) the present fair saleable value of the
Company’s or such Subsidiary’s (as the case may be) assets is less than the
amount required to pay its respective total Indebtedness, (B) the Company or
such Subsidiary (as the case may be) is unable to pay its respective debts and
liabilities, subordinated, contingent or otherwise, as such debts and
liabilities become absolute and matured or (C) the Company or such Subsidiary
(as the case may be) intends to incur or believes that it will incur debts that
would be beyond its

12

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respective ability to pay as such debts mature.  Neither the Company nor any of
its Subsidiaries has engaged in any business or in any transaction, and is not
about to engage in any business or in any transaction, for which the Company’s
or such Subsidiary’s remaining assets constitute unreasonably small capital with
which to conduct the business in which it is engaged as such business is now
conducted and is proposed to be conducted.

(l)

No Undisclosed Events, Liabilities, Developments or Circumstances.  To the
Company’s knowledge, no event, liability, development or circumstance has
occurred or exists, or is reasonably expected to exist or occur with respect to
the Company, any of its Subsidiaries or any of their respective businesses,
properties, liabilities, prospects, operations (including results thereof) or
condition (financial or otherwise), that (i) could have a material adverse
effect on any Buyer’s investment hereunder or (ii) could have a Material Adverse
Effect.  The reserves, if any, established by the Company or the lack of
reserves, if applicable, are reasonable based upon facts and circumstances known
by the Company on the date hereof and there are no loss contingencies that are
required to be accrued by the Statement of Financial Accounting Standard No. 5
of the Financial Accounting Standards Board which are not provided for by the
Company in its financial statements or otherwise.  

(m)

Conduct of Business; Regulatory Permits.  Neither the Company nor any of its
Subsidiaries is in violation of any term of or in default under its Certificate
of Incorporation, any certificate of designation, preferences or rights of any
other outstanding series of preferred stock of the Company or any of its
Subsidiaries or Bylaws or their organizational charter, certificate of
formation, memorandum of association, articles of association, Certificate of
Incorporation or certificate of incorporation or bylaws, respectively.  Neither
the Company nor any of its Subsidiaries is in violation of any judgment, decree
or order or any statute, ordinance, rule or regulation (each a “Legal
Requirement”) applicable to the Company or any of its Subsidiaries, and neither
the Company nor any of its Subsidiaries will conduct its business in violation
of any of the foregoing, except in all cases for possible violations which could
not, individually or in the aggregate, have a Material Adverse Effect.  The
Company and each of its Subsidiaries possess all certificates, authorizations
and permits issued by the appropriate regulatory authorities necessary to
conduct their respective businesses, except where the failure to possess such
certificates, authorizations or permits would not have, individually or in the
aggregate, a Material Adverse Effect, and neither the Company nor any such
Subsidiary has received any notice of proceedings relating to the revocation or
modification of any such certificate, authorization or permit.  There is no
agreement, commitment, judgment, injunction, order or decree binding upon the
Company or any of its Subsidiaries or to which the Company or any of its
Subsidiaries is a party which has or would reasonably be expected to have the
effect of prohibiting or materially impairing any business practice of the
Company or any of its Subsidiaries, any acquisition of property by the Company
or any of its Subsidiaries or the conduct of business by the Company or any of
its Subsidiaries as currently conducted other than such effects, individually or
in the aggregate, which have not had and would not reasonably be expected to
have a Material Adverse Effect on the Company or any of its Subsidiaries.

(n)

Foreign Corrupt Practices.  Neither the Company, the Company’s subsidiary or any
director, officer, agent, employee, nor any other person acting for or on behalf
of the foregoing (individually and collectively, a “Company Affiliate”) have
violated the U.S. Foreign Corrupt Practices Act (the “FCPA”) or any other
applicable anti-bribery or anti-corruption laws,

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nor has any Company Affiliate offered, paid, promised to pay, or authorized the
payment of any money, or offered, given, promised to give, or authorized the
giving of anything of value, to any officer, employee or any other person acting
in an official capacity for any Governmental Entity to any political party or
official thereof or to any candidate for political office (individually and
collectively, a “Government Official”) or to any person under circumstances
where such Company Affiliate knew or was aware of a high probability that all or
a portion of such money or thing of value would be offered, given or promised,
directly or indirectly, to any Government Official, for the purpose of:

(i)

(A) influencing any act or decision of such Government Official in his/her
official capacity, (B) inducing such Government Official to do or omit to do any
act in violation of his/her lawful duty, (C) securing any improper advantage, or
(D) inducing such Government Official to influence or affect any act or decision
of any Governmental Entity, or

(ii)

assisting the Company or its Subsidiaries in obtaining or retaining business for
or with, or directing business to, the Company or its Subsidiaries.

(o)

Transactions With Affiliates.  No current employee, partner, director officer or
stockholder of the Company or its Subsidiaries or, to the knowledge of the
Company, any affiliate of any thereof, or any relative with a relationship no
more remote than first cousin of any of the foregoing, is presently, or has ever
been, (i) a party to any transaction with the Company or its Subsidiaries
(including any contract, agreement or other arrangement providing for the
furnishing of services by, or rental of real or personal property from, or
otherwise requiring payments to, any such director, officer or stockholder or
such associate or affiliate or relative Subsidiaries (other than for ordinary
course services as employees, officers or directors of the Company or any of its
Subsidiaries)) or (ii) the direct or indirect owner of an interest in any
corporation, firm, association or business organization which is a competitor,
supplier or customer of the Company or its Subsidiaries (except for a passive
investment (direct or indirect) in less than 5% of the common stock of a company
whose securities are traded on or quoted through an Eligible Market (as defined
in the Notes)), nor does any such Person receive income from any source other
than the Company or its Subsidiaries which relates to the business of the
Company or its Subsidiaries or should properly accrue to the Company or its
Subsidiaries.  Except as set forth on Schedule 3(o), no employee, officer,
stockholder or director of the Company or any of its Subsidiaries or member of
his or her immediate family is indebted to the Company or its Subsidiaries, as
the case may be, nor is the Company or any of its Subsidiaries indebted (or
committed to make loans or extend or guarantee credit) to any of them, other
than (i) for payment of salary for services rendered, (ii) reimbursement for
reasonable expenses incurred on behalf of the Company, and (iii) for other
standard employee benefits made generally available to all employees or
executives (including stock option agreements or restricted stock agreements
outstanding under any stock option plan or other stock incentive plan approved
by the Board of Directors of the Company).

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(p)

Equity Capitalization.

(i)

Definitions:  

(A)

“Common Stock” means (x) the Company’s shares of common stock, $0.001 par value
per share, and (y) any capital stock into which such common stock shall have
been changed or any share capital resulting from a reclassification of such
common stock.  

(B)

“Preferred Stock” means (x) the Company’s blank check preferred stock, $0.001
par value per share, the terms of which may be designated by the board of
directors of the Company in a certificate of designations and (y) any capital
stock into which such preferred stock shall have been changed or any share
capital resulting from a reclassification of such preferred stock (other than a
conversion of such preferred stock into Common Stock in accordance with the
terms of such certificate of designations).  

(ii)

Authorized and Outstanding Capital Stock.  As of the date hereof, the authorized
capital stock of the Company consists of (A) 500,000,000 shares of Common Stock,
of which, 65,008,605 are issued and outstanding and 1,703,177 shares are
reserved for issuance pursuant to Convertible Securities (as defined below)
(other than the Warrant Shares) exercisable or exchangeable for, or convertible
into, shares of Common Stock and (B) 10,000,000 shares of Preferred Stock, none
of which are issued and outstanding. No shares of Common Stock are held in the
treasury of the Company.  

(iii)

Valid Issuance; Available Shares; Listing; Affiliates.  All of such outstanding
shares are duly authorized and have been, or upon issuance will be, validly
issued and are fully paid and nonassessable.  Schedule 3(p)(iii) sets forth the
number of shares of Common Stock that are (A) reserved for issuance pursuant to
Convertible Securities (as defined below) (other than the Notes and the Warrant
Shares) and (B) that are, as of the date hereof, owned by Persons who are
“affiliates” (as defined in Rule 405 of the 1933 Act and calculated based on the
assumption that only officers, directors and holders of at least 10% of the
Company’s issued and outstanding Common Stock are “affiliates” without conceding
that any such Persons are “affiliates” for purposes of federal securities laws)
of the Company or any of its Subsidiaries.  The Common Stock is currently
registered under Section 12(g) of the 1934 Act, the Company has not taken any
action designed to, or which to its knowledge is likely to have the effect of,
terminating the registration of the Common Stock under the 1934 Act, and the
Company has not received any notification that the SEC is contemplating
terminating such registration. The Common Stock is currently listed for trading
on the OTCQB ("OTCQB"). Since January 1, 2015, Parent has not received notice
(written or oral) from the OTC Markets Group, Inc. ("OTC") or OTCQB to the
effect that the Company is not in compliance in all material respects with the
continued listing and corporate governance requirements of OTC and OTCQB.  The
Company is in compliance in all material respects with all listing and corporate
governance requirements of the OTC and OTCQB. The consummation of the
transactions contemplated by this Agreement do not violate the rules of the OTC
and OTCQB.  

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(iv)

Existing Securities; Obligations.  Except as disclosed on Schedule 3(p)(iv): (A)
none of the Company’s or any Subsidiary’s shares, interests or capital stock is
subject to preemptive rights or any other similar rights or Liens suffered or
permitted by the Company or any Subsidiary; (B) there are no outstanding
options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into, or
exercisable or exchangeable for, any shares, interests or capital stock of the
Company or any of its Subsidiaries, or contracts, commitments, understandings or
arrangements by which the Company or any of its Subsidiaries is or may become
bound to issue additional shares, interests or capital stock of the Company or
any of its Subsidiaries or options, warrants, scrip, rights to subscribe to,
calls or commitments of any character whatsoever relating to, or securities or
rights convertible into, or exercisable or exchangeable for, any shares,
interests or capital stock of the Company or any of its Subsidiaries; (C) there
are no agreements or arrangements under which the Company or any of its
Subsidiaries is obligated to register the sale of any of their securities under
the 1933 Act; (D) there are no outstanding securities or instruments of the
Company or any of its Subsidiaries which contain any redemption or similar
provisions, and there are no contracts, commitments, understandings or
arrangements by which the Company or any of its Subsidiaries is or may become
bound to redeem a security of the Company or any of its Subsidiaries; (E) there
are no securities or instruments containing anti-dilution or similar provisions
that will be triggered by the issuance of the Securities; and (F) neither the
Company nor any Subsidiary has any stock appreciation rights or “phantom stock”
plans or agreements or any similar plan or agreement.

(v)

Organizational Documents.  The Company has furnished to the Buyers true, correct
and complete copies of the Company’s Certificate of Incorporation, as amended
and as in effect on the date hereof (the “Certificate of Incorporation”), and
the Company’s bylaws, as amended and as in effect on the date hereof (the
“Bylaws”), and the terms of all Convertible Securities and the material rights
of the holders thereof in respect thereto.

(q)

Indebtedness and Other Contracts.  Neither the Company nor any of its
Subsidiaries, (i) except as disclosed on Schedule 3(p), has any outstanding debt
securities, notes, credit agreements, credit facilities or other agreements,
documents or instruments evidencing Indebtedness of the Company or any of its
Subsidiaries or by which the Company or any of its Subsidiaries is or may become
bound, (ii) is a party to any contract, agreement or instrument, the violation
of which, or default under which, by the other party(ies) to such contract,
agreement or instrument could reasonably be expected to result in a Material
Adverse Effect, (iii) has any financing statements securing obligations in any
amounts filed in connection with the Company or any of its Subsidiaries; (iv) is
in violation of any term of, or in default under, any contract, agreement or
instrument relating to any Indebtedness, except where such violations and
defaults would not result, individually or in the aggregate, in a Material
Adverse Effect, or (v) is a party to any contract, agreement or instrument
relating to any Indebtedness, the performance of which, in the judgment of the
Company’s officers, has or is expected to have a Material Adverse Effect. For
purposes of this Agreement:  (x) “Indebtedness” of any Person means, without
duplication and in all cases in excess of $50,000 in the aggregate, (A) all
indebtedness for borrowed money, (B) all obligations issued, undertaken or
assumed as the deferred purchase price of property or

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services (including, without limitation, “capital leases” in accordance with
GAAP) (other than trade payables entered into in the ordinary course of business
consistent with past practice), (C) all reimbursement or payment obligations
with respect to letters of credit, surety bonds and other similar instruments,
(D) all obligations evidenced by notes, bonds, debentures or similar
instruments, including obligations so evidenced incurred in connection with the
acquisition of property, assets or businesses, (E) all indebtedness created or
arising under any conditional sale or other title retention agreement, or
incurred as financing, in either case with respect to any property or assets
acquired with the proceeds of such indebtedness (even though the rights and
remedies of the seller or bank under such agreement in the event of default are
limited to repossession or sale of such property), (F) all monetary obligations
under any leasing or similar arrangement which, in connection with GAAP,
consistently applied for the periods covered thereby, is classified as a capital
lease, (G) all indebtedness referred to in clauses (A) through (F) above secured
by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien upon or in any property or
assets (including accounts and contract rights) owned by any Person, even though
the Person which owns such assets or property has not assumed or become liable
for the payment of such indebtedness, and (H) all Contingent Obligations in
respect of indebtedness or obligations of others of the kinds referred to in
clauses (A) through (G) above; and (y) “Contingent Obligation” means, as to any
Person, any direct or indirect liability, contingent or otherwise, of that
Person with respect to any Indebtedness, lease, dividend or other obligation of
another Person if the primary purpose or intent of the Person incurring such
liability, or the primary effect thereof, is to provide assurance to the obligee
of such liability that such liability will be paid or discharged, or that any
agreements relating thereto will be complied with, or that the holders of such
liability will be protected (in whole or in part) against loss with respect
thereto.

(r)

Litigation.  There is no action, suit, arbitration, proceeding, inquiry or
investigation before or by any court, public board, other Governmental Entity,
self-regulatory organization or body pending or, to the knowledge of the
Company, threatened against or affecting the Company or any of its Subsidiaries,
the Common Stock or any of the Company’s or its Subsidiaries’ officers or
directors , whether of a civil or criminal nature or otherwise, in their
capacities as such, except as set forth in Schedule 3(r).  No director, officer
or employee of the Company or any of its subsidiaries has willfully violated 18
U.S.C. §1519 or engaged in spoliation in reasonable anticipation of litigation.
 To the best of its knowledge, the Company is not aware of any fact which might
result in or form the basis for any such action, suit, arbitration,
investigation, inquiry or other proceeding.  Neither the Company nor any of its
Subsidiaries is subject to any order, writ, judgment, injunction, decree,
determination or award of any Governmental Entity.

(s)

Insurance.  The Company and each of its Subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as management of the Company believes to be prudent and customary in the
businesses in which the Company and its Subsidiaries are engaged.  Neither the
Company nor any such Subsidiary has been refused any insurance coverage sought
or applied for, and neither the Company nor any such Subsidiary has any reason
to believe that it will be unable to renew its existing insurance coverage as
and when such coverage expires or to obtain similar coverage from similar
insurers as may be necessary to continue its business at a cost that would not
have a Material Adverse Effect.

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(t)

Employee Matters; Benefit Plans.

(i)

Except as set forth on Schedule 3(t)(i), the employment of each officer and
employee of the Company is terminable at the will of the Company.  The Company
and its Subsidiaries have complied in all material respects with all applicable
laws relating to wages, hours, equal opportunity, collective bargaining,
workers’ compensation insurance and the payment of social security and other
taxes.  The Company is not aware that any officer, key employee or group of
employees intends to terminate his, her or their employment with the Company or
its Subsidiaries, as the case may be, nor does the Company have a present
intention, or know of a present intention of its Subsidiaries, to terminate the
employment of any officer, key employee or group of employees.  There are no
pending or, to the knowledge of the Company, threatened employment
discrimination charges or complaints against or involving the Company or its
Subsidiaries before any federal, state, or local board, department, commission
or agency, or unfair labor practice charges or complaints, disputes or
grievances affecting the Company or its Subsidiaries.

(ii)

Since the Company’s inception, neither the Company nor its Subsidiaries has
experienced any labor disputes, union organization attempts or work stoppage due
to labor disagreements.  There are no unfair labor practice charges or
complaints against the Company or its Subsidiaries pending, or to the knowledge
of the Company, threatened before the National Labor Relations Board or any
comparable state agency or authority.  There are no written or oral contracts,
commitments, agreements, understandings or other arrangements with any labor
organization, nor work rules or practices agreed to with any labor organization
or employee association, applicable to employees of the Company or any of its
Subsidiaries, nor is the Company or its Subsidiaries a party to, or bound by,
any collective bargaining or similar agreement; there is not, and since the
Company’s inception there has not been, any representation of the employees of
the Company or its Subsidiaries by any labor organization and, to the knowledge
of the Company, there are no union organizing activities among the employees of
the Company or its Subsidiaries, and to the knowledge of the Company, no
question concerning representation has been raised or is threatened respecting
the employees of the Company or its Subsidiaries.

(iii)

Schedule 3(t)(iii) contains a true, correct and complete list of each pension,
retirement, savings, deferred compensation and profit-sharing plan and each
stock option, stock appreciation, stock purchase, performance share, bonus or
other incentive plan, severance plan, health, group insurance or other welfare
plan, or other similar plan (whether written or otherwise) and any “employee
benefit plan” within the meaning of Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended (“ERISA”), under which the Company has
any current or future obligation or liability (including any potential,
contingent or secondary liability under Title IV of ERISA) or under which any
employee or former employee (or beneficiary of any employee or former employee)
of the Company has or may have any current or future right to benefits (the term
“plan” shall include any contract, agreement (including an employment or
independent contractor agreement), policy or understanding, each such plan being
hereinafter referred to in this Agreement individually as a “Benefit Plan”).  

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The Company has delivered to each Buyer true, correct and complete copies of (i)
each material Benefit Plan, including any amendments thereto, (ii) the summary
plan description, if any, for each Benefit Plan, including any summaries of
material modifications made since the most recent summary plan description,
(iii) the latest annual report which has been filed with the Internal Revenue
Service (the “IRS”) for each Benefit Plan required to file an annual report, and
(iv) the most recent IRS determination letter for each Benefit Plan that is a
pension plan (as defined in ERISA) intended to be qualified under Section 401(a)
of the Code.  Each Benefit Plan intended to be tax qualified under Sections
401(a) and 501(a) of the Code is and has been determined by the IRS to be tax
qualified under Sections 401(a) and 501(a) of the Code and, since such
determination, no amendment to or failure to amend any such Benefit Plan and no
other event or circumstance has occurred that could reasonably be expected to
adversely affect its tax qualified status.

(iv)

There are no actions, claims, audits, lawsuits or arbitrations pending, or, to
the knowledge of the Company, threatened, with respect to any Benefit Plan or
the assets of any Benefit Plan.  Except as set forth in Schedule 3(t)(iv), each
Benefit Plan has been administered in all material respects in accordance with
its terms and with all applicable Legal Requirements (including, without
limitation, the Code and ERISA).  

(v)

The consummation of the transactions contemplated by this Agreement will not (1)
entitle any employee or independent contractor of the Company or its
Subsidiaries to severance pay or termination benefits, (2) accelerate the time
of payment or vesting, or increase the amount of compensation due to any current
or former employee or independent contractor of the Company or its Subsidiaries,
(3) obligate the Company or any of its affiliates to pay or otherwise be liable
for any compensation, vacation days, pension contribution or other benefits to
any current or former employee, consultant, agent or independent contractor of
the Company or its Subsidiaries for periods before the applicable Closing Date,
(4) require assets to be set aside or other forms of security to be provided
with respect to any liability under a Benefit Plan, or (5) result in any
“parachute payment” (within the meaning of Section 280G of the Code) under any
Benefit Plan.

(vi)

No Benefit Plan is subject to the provisions of Section 412 of the Code or Part
3 of Subtitle B of Title I of ERISA.  No Benefit Plan is subject to Title IV of
ERISA and no Benefit Plan is a “multiemployer plan” (within the meaning of
Section 3(37) of ERISA).  Since inception, neither the Company, its
Subsidiaries, nor any business or entity treated as a single employer with the
Company or its Subsidiaries for purposes of Title IV of ERISA contributed to or
was obliged to contribute to a pension plan that was at any time subject to
Title IV of ERISA.

(vii)

No Benefit Plan has provided, been required to provide, provides or is required
to provide, at any time in the past, present, or future, health, medical,
dental, accident, disability, death or survivor benefits to or in respect of any
Person beyond one year following termination of employment, except to the extent
required under any state insurance law or under Part 6 of Subtitle B of Title I
of ERISA and under

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Section 4980B of the Code.  No Benefit Plan covers any individual that is not an
employee or advisor of the Company or its Subsidiaries, other than spouses and
dependents of employees under health and child care policies listed in
Schedule 3(t)(vii), true and complete copies of which have been made available
to each Buyer.

Except as otherwise permitted pursuant to employment agreements with the Company
disclosed to the Buyers, each officer of the Company is currently devoting all
of such officer’s business time to the conduct of the business of the Company.
 Except as otherwise permitted pursuant to employment agreements with the
Company disclosed to the Buyers, the Company is not aware of any officer or key
employee of the Company or any of its Subsidiaries planning to work less than
full time at the Company or its Subsidiaries in the future.

(u)

Assets; Title.

(i)

Each of the Company and its Subsidiaries has good and valid title to, or a valid
leasehold interest in, as applicable, all of its properties and assets, free and
clear of all Liens except (i) any Lien for taxes not yet due or delinquent or
being contested in good faith by appropriate proceedings for which adequate
reserves have been established in accordance with GAAP, (ii) any statutory Lien
arising in the ordinary course of business by operation of law with respect to a
liability that is not yet due or delinquent, (iii) any Lien created by operation
of law, such as materialmen’s liens, mechanics’ liens and other similar liens,
arising in the ordinary course of business with respect to a liability that is
not yet due or delinquent or that are being contested in good faith by
appropriate proceedings, and (iv) such as have been disposed of in the ordinary
course of business.  All tangible personal property owned by the Company and its
Subsidiaries has been maintained in good operating condition and repair, except
(x) for ordinary wear and tear, and (y) where such failure would not have a
Material Adverse Effect.  All assets leased by the Company or any of its
Subsidiaries are in the condition required by the terms of the lease applicable
thereto during the term of such lease and upon the expiration thereof.  The
Company and its Subsidiaries have good and marketable title in fee simple to all
real property, if any, and good and marketable title to all personal property
owned by them which is material to the business of the Company and its
Subsidiaries, in each case free and clear of all liens, encumbrances and defects
except such Liens set forth in Schedule 3(u)(i).

(ii)

Schedule 3(u)(ii) sets forth a complete list of all real property and interests
in real property leased by the Company as of the date hereof (collectively, the
“Interests”).  The Company has good and valid leasehold interest in all the
Interests shown on Schedule 3(u)(ii) to be leased by it free and clear of all
Liens except where such Liens would not have a Material Adverse Effect.  Except
as set forth on Schedule 3(u)(ii), there exists no default, or any event which
upon notice or the passage of time, or both, would give rise to any default, in
the performance of the Company or by any lessor under any such lease, nor, to
the knowledge of the Company, is the landlord of any such lease in default
except where any such default would not have a Material Adverse Effect.

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(v)

Intellectual Property.

(i)

Except as set forth on Schedule 3(v)(i), the Company and its Subsidiaries own
all right, title and interest in and to, or have a valid and enforceable license
to use all the Intellectual Property used by them in connection with the their
respective businesses, which represents all intellectual property rights
necessary to the conduct of the their business as now conducted.  The Company
and its Subsidiaries are in compliance with all contractual obligations relating
to the protection of such of the Intellectual Property as they use pursuant to
license or other agreement.  The conduct of the business of the Company and its
Subsidiaries, to the knowledge of the Company, as currently conducted, or as
reasonably be expected to be conducted, does not, and is not reasonably expected
to, conflict with or infringe any proprietary right or Intellectual Property of
any third party, including, without limitation, the transmission, reproduction,
use, display or modification of any content or material (including framing, and
linking web site content) on a web site, bulletin board or other like medium
hosted by or on behalf of the Company or any of its Subsidiaries, except for
such infringements and conflicts which would not reasonably be expected to have
a Material Adverse Effect.  There is no claim, suit, action or proceeding
pending or, to the knowledge of the Company, threatened against the Company or
any Subsidiary:  (i) alleging any such conflict or infringement with any third
party’s proprietary rights; or (ii) challenging the Company’s or any
Subsidiary’s ownership or use of, or the validity or enforceability of any
Intellectual Property.  

(ii)

Schedule 3(v)(ii) sets forth a complete and current list of registered
trademarks or copyrights, issued patents, applications therefor, or other forms
of Intellectual Property registration anywhere in the world that is owned by the
Company or a Subsidiary (“Listed Intellectual Property”) and the owner of
record, date of application or issuance and relevant jurisdiction as to each.
 All Listed Intellectual Property is owned by the Company or a Subsidiary, free
and clear of security interests, liens, encumbrances or claims of any nature.
 All Listed Intellectual Property is valid, subsisting, unexpired, in proper
form and enforceable and all renewal fees and other maintenance fees that have
fallen due on or prior to the effective date of this Agreement have been paid.
 No Listed Intellectual Property is the subject of any proceeding before any
governmental, registration or other authority in any jurisdiction, including any
office action or other form of preliminary or final refusal of registration,
except as noted on Schedule 3(v)(ii).  The consummation of the transactions
contemplated hereby will not alter or impair any Intellectual Property that is
owned or licensed by the Company or a Subsidiary.

(iii)

Schedule 3(v)(iii) sets forth a complete list of all agreements relating to
Intellectual Property to which the Company or a Subsidiary is a party, subject
or bound (the “Intellectual Property Contracts”) (other than agreements
involving (A) the license of the Company of standard, generally commercially
available “off-the-shelf” third party products that are not and will not to any
extent be part of any product, service or intellectual property offering of the
Company or (B) non-disclosure or non-use of information).  Each Intellectual
Property Contract:  (i) is valid and binding on the Company or a Subsidiary, as
the case may be, and, to the Company’s knowledge, the counterparties thereto,
and is in full force and effect and (ii) upon consummation of the

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transactions contemplated hereby shall continue in full force and effect without
penalty or other adverse consequence.  

(iv)

The Company and its Subsidiaries are not under any obligation to pay royalties
or other payments in connection with any agreement, nor restricted from
assigning their rights respecting Intellectual Property nor will the Company or
any Subsidiary otherwise be, as a result of the execution and delivery of this
Agreement or the performance of the Company’s obligations under this Agreement,
in breach of any agreement relating to the Intellectual Property.  

(v)

Except as set forth on Schedule 3(v)(v), no present or former employee, officer
or director of the Company or any Subsidiary, or agent or outside contractor of
the Company or any Subsidiary, holds any right, title or interest, directly or
indirectly, in whole or in part, in or to any Intellectual Property that is
owned or licensed by the Company or any Subsidiary.  

(vi)

To the Company’s knowledge: (i) none of the Listed Intellectual Property has
been used, disclosed or appropriated to the detriment of the Company or any
Subsidiary for the benefit of any Person other than the Company; and (ii) no
employee, independent contractor or agent of the Company or any Subsidiary has
misappropriated any trade secrets or other confidential information of any other
Person in the course of the performance of his or her duties as an employee,
independent contractor or agent of the Company or any Subsidiary.  

(vii)

Any programs, modifications, enhancements or other inventions, improvements,
discoveries, methods or works of authorship (“Works”) that were created by
employees of the Company or any Subsidiary were made in the regular course of
such employees’ employment or service relationships with the Company or its
Subsidiary using the Company’s or the Subsidiary’s facilities and resources and,
as such, constitute either works made for hire or all rights and title to and in
such Works have been fully assigned to the Company or a Subsidiary.  Each such
employee who has created Works or any employee who in the regular course of his
employment may create Works and all consultants have signed an assignment or
similar agreement with the Company or the Subsidiary confirming the Company’s or
the Subsidiary’s ownership or, in the alternate, transferring and assigning to
the Company or the Subsidiary all right, title and interest in and to such
programs, modifications, enhancements or other inventions including copyright
and other intellectual property rights therein.

(viii)

For the purpose of this Agreement, “Intellectual Property” shall mean all of the
following:  (A) trademarks and service marks, trade dress, product
configurations, trade names and other indications of origin, applications or
registrations in any jurisdiction pertaining to the foregoing and all goodwill
associated therewith; (B) inventions, discoveries, improvements, ideas,
know-how, formula methodology, processes, technology, software (including
password unprotected interpretive code or source code, object code, development
documentation, programming tools, drawings, specifications and data) and
applications and patents in any jurisdiction pertaining to the foregoing,
including re-issues, continuations, divisions, continuations-in-part, renewals
or

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extensions; (C) trade secrets, including confidential information and the right
in any jurisdiction to limit the use or disclosure thereof; (D) copyrights in
writings, designs software, mask works or other works, applications or
registrations in any jurisdiction for the foregoing and all moral rights related
thereto; (E) database rights; (F) Internet Web sites, domain names and
applications and registrations pertaining thereto and all intellectual property
used in connection with or contained in all versions of the Company’s Web sites;
(G) rights under all agreements relating to the foregoing; (H) books and records
pertaining to the foregoing; and (I) claims or causes of action arising out of
or related to past, present or future infringement or misappropriation of the
foregoing.

(w)

Environmental Laws. (i)  The Company and its Subsidiaries (A) are in compliance
with any and all Environmental Laws (as defined below), (B) have received all
permits, licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (C) are in
compliance with all terms and conditions of any such permit, license or approval
where, in each of the foregoing clauses (A), (B) and (C), the failure to so
comply could be reasonably expected to have, individually or in the aggregate, a
Material Adverse Effect.  The term “Environmental Laws” means all federal,
state, local or foreign laws relating to pollution or protection of human health
or the environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata), including, without limitation,
laws relating to emissions, discharges, releases or threatened releases of
chemicals, pollutants, contaminants, or toxic or hazardous substances or wastes
(collectively, “Hazardous Materials”) into the environment, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials, as well as all
authorizations, codes, decrees, demands or demand letters, injunctions,
judgments, licenses, notices or notice letters, orders, permits, plans or
regulations issued, entered, promulgated or approved thereunder.

(ii)

No Hazardous Materials:

(A)

have been disposed of or otherwise released from any Interest of the Company or
any of its Subsidiaries in violation of any Environmental Laws; or

(B)

are present on, over, beneath, in or upon an Interest or any portion thereof in
quantities that would constitute a violation of any Environmental Laws.  No
prior use by the Company or any of its Subsidiaries of any Interest has occurred
that violates any Environmental Laws, which violation would have a material
adverse effect on the business of the Company or any of its Subsidiaries.

(iii)

Neither the Company nor any of its Subsidiaries knows of any other person who or
entity which has stored, treated, recycled, disposed of or otherwise located on
any Interest any Hazardous Materials, including, without limitation, such
substances as asbestos and polychlorinated biphenyls.

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(iv)

None of the Interests are on any federal or state “Superfund” list or Liability
Information System (“CERCLIS”) list or any state environmental agency list of
sites under consideration for CERCLIS, nor subject to any environmental related
Liens.

(x)

Subsidiary Rights.  The Company or one of its Subsidiaries has the unrestricted
right to vote, and (subject to limitations imposed by applicable law) to receive
dividends and distributions on, all capital securities of its Subsidiaries as
owned by the Company or such Subsidiary.

(y)

Tax Status.

(i)

Each of the Company and the Guarantors has filed or caused to be filed in a
timely manner (within any applicable extension periods) and in the appropriate
jurisdictions all material returns, reports, information statements and other
documentation (including any additional or supporting materials) filed or
maintained, or required to be filed or maintained, in connection with the
calculation, determination, assessment or collection of any and all federal,
state, local, foreign and other taxes, levies, fees, imposts, duties,
governmental fees and charges of whatever kind (including any interest,
penalties or additions to the tax imposed in connection therewith or with
respect thereto), including, without limitation, taxes imposed on, or measured
by, income, franchise, profits, gross income or gross receipts, and also ad
valorem, value added, sales, use, service, real or personal property, capital
stock, stock transfer, license, payroll, withholding, employment, social
security, workers’ compensation, unemployment compensation, utility, severance,
production, excise, stamp, occupation, premium, windfall profits, environmental,
transfer and gains taxes and customs duties (each a “Tax”) and shall include
amended returns required as a result of examination adjustments made by the IRS
or other Governmental Entity responsible for the imposition of any Tax
(collectively, the “Returns”) and such Returns are true, correct and complete in
all material respects.  

(ii)

Each of the Company and the Guarantors has paid all material Taxes and other
assessments due from and payable by the Company and the Guarantors on or prior
to the date hereof on a timely basis except as to those set forth in Schedule
3(y)(ii).  The charges, accruals, and reserves for Taxes with respect to the
Company and the Guarantors are adequate to cover Tax liabilities of the Company
and the Guarantors accruing throughout the date thereof.  Except as set forth in
Schedule 3(y)(ii), each of the Company and the Guarantors has complied in all
material respects with all applicable Legal Requirements relating to the payment
and withholding of Taxes (including withholding and reporting requirements under
Sections 1441 through 1464, 3401 through 3406, and 6041 and 6049 of the Code and
similar provisions under any other applicable Legal Requirements) and, within
the time and in the manner prescribed by law, has withheld from wages, fees and
other payments and paid over to the proper governmental or regulatory
authorities all amounts required.  Except as set forth in Schedule 3(y)(ii),
neither the Company nor any of the Guarantors has received notice of assessment
or proposed assessment of any Taxes claimed to be owed by it or any other Person
on its behalf.  Except as set forth in Schedule 3(y)(ii), no Returns filed by or
on behalf of the Company or any of the Guarantors with respect to Taxes are
currently being audited or

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examined.  Except as set forth in Schedule 3(y)(ii), neither the Company nor any
of the Guarantors has received notice of any such audit or examination.  Except
as set forth in Schedule 3(y)(ii), no issue has been raised by any taxing
authority with respect to the Company or any of the Guarantors in any audit or
examination which, by application of similar principles, could reasonably be
expected to result in a proposed material adjustment to the liability for Taxes
for any period not so examined.  

(iii)

Except as set forth in Schedule 3(y)(iii), no known Liens have been filed and no
claims are being asserted by or against the Company or any of the Guarantors
with respect to any Taxes (other than Liens for Taxes not yet due and payable).
 Neither the Company nor any of the Guarantors has currently elected pursuant to
the Code to be treated as an S corporation or any comparable provision of local,
state or foreign law, or has made any other elections pursuant to the Code
(other than elections that relate solely to entity classification, methods of
accounting, depreciation, or amortization) that would have a material effect on
the business, properties, prospects, or financial condition of the Company and
the Guarantors, individually or in the aggregate.  

(iv)

No claim has ever been made, or, to the knowledge of the Company, is threatened
or pending, by any authority in a jurisdiction where the Company or any of the
Guarantors, respectively, does not file Returns that the Company or any of the
Guarantors is or may be subject to taxation by that jurisdiction, and neither
the Company nor any of the Guarantors has received any notice or request for
information from any such authority.  Neither the Company nor any of the
Guarantors has been a member of an affiliated group (as defined in Section
1504(a) of the Code) or filed or been included in a combined, consolidated or
unitary income tax return other than the affiliated group of which the Company
is currently the common parent.  Neither the Company nor any of the Guarantors
is required to include in income any adjustment pursuant to Section 481(a) of
the Code by reason of a voluntary change in accounting methods initiated by the
Company or any of the Guarantors, and no Governmental Entity has proposed an
adjustment or change in accounting method.  All transactions or methods of
accounting that could give rise to a substantial understatement of federal
income tax as described in Section 6662(d)(2)(B)(i) of the Code have been
adequately disclosed on the Company’s and the Guarantors’ federal income tax
returns in accordance with Section 6662(d)(2)(B) of the Code.  Neither the
Company nor any of the Guarantors is a party to any Tax sharing or Tax indemnity
agreement or any other agreement of a similar nature that remains in effect.
 Neither the Company nor any of the Guarantors has consented to any waiver of
the statute of limitations for the assessment of any Taxes or has requested any
extension of time for the payment of any Taxes.  Neither the Company nor any of
the Guarantors has ever held a material beneficial interest in any other Person,
other than those listed in Schedule 3(y)(iv).  Neither the Company nor any of
the Guarantors is obligated to make, nor as a result of any event connected with
the transactions contemplated by this Agreement will become obligated to make,
any payment that would not be deductible under Section 280G of the Code.
 Neither the Company nor any Guarantor is a “passive foreign investment company”
within the meaning of Section 1296 of the Code (a “PFIC”), and the Company does
not anticipate that the Company or any additional foreign Guarantor will become
a PFIC in the foreseeable future.

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(v)

The net operating loss carryforwards (“NOLs”) for United States federal income
tax purposes of the consolidated group of which the Company is the common
parent, if any, shall not be adversely effected by the transactions contemplated
hereby.  The transactions contemplated hereby do not constitute an “ownership
change” within the meaning of Section 382 of the Code, thereby preserving the
Company’s ability to utilize such NOLs.

(z)

Internal Accounting and Disclosure Controls.  The Company has designed and
maintains a system of “internal controls over financial reporting” (as defined
in Rules 13a-15(f) and 15d-15(f) of the 1934 Act) sufficient to provide
reasonable assurances regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
GAAP.  The management of the Company has (i) designed and maintains disclosure
controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) of the 1934
Act) to ensure that material information relating to the Company, including its
consolidated subsidiaries, is made known to the Chief Executive Officer and
Chief Financial Officer of the Company by others within those entities, and
(ii) has disclosed, based on its most recent evaluation of internal control over
financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) of the 1934
Act), to the Company’s outside auditors and the audit committee of the board of
directors of the Company (A) all significant deficiencies and material weakness
in the design or operation of internal control over financial reporting which
are reasonably likely to adversely affect the Company’s ability to record,
process, summarize and report financial information and (B) any fraud, whether
or not material, that involves management or other employees who have a
significant role in the Company’s internal control over financial reporting.
Neither the Company nor any of its Subsidiaries has received any notice or
correspondence from any accountant, Governmental Entity or other Person relating
to any potential material weakness or significant deficiency in any part of the
internal controls over financial reporting of the Company or any of its
Subsidiaries.

(aa)

Off Balance Sheet Arrangements.  There is no transaction, arrangement, or other
relationship between the Company or any of its Subsidiaries and an
unconsolidated or other off balance sheet entity that is required to be
disclosed by the Company in its 1934 Act filings and is not so disclosed or that
otherwise could be reasonably likely to have a Material Adverse Effect.

(bb)

Investment Company Status.  The Company is not, and upon consummation of the
sale of the Securities will not be, an “investment company,” an affiliate of an
“investment company,” a company controlled by an “investment company” or an
“affiliated person” of, or “promoter” or “principal underwriter” for, an
“investment company” as such terms are defined in the Investment Company Act of
1940, as amended.

(cc)

U.S. Real Property Holding Corporation.  Neither the Company nor any of its
Subsidiaries is, or has ever been, and so long as any of the Securities are held
by any of the Buyers, shall become, a U.S. real property holding corporation
within the meaning of Section 897 of the Code, and the Company and each
Subsidiary shall so certify upon any Buyer’s request.

(dd)

Transfer Taxes.  On the Closing Date, all stock transfer or other taxes (other
than income or similar taxes) which are required to be paid in connection with
the issuance, sale and

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transfer of the Securities and the Warrant Shares to be sold to each Buyer
hereunder will be, or will have been, fully paid or provided for by the Company,
and all laws imposing such taxes will be or will have been complied with.

(ee)

Reserved.

(ff)

Illegal or Unauthorized Payments; Political Contributions.  Neither the Company
nor any of its Subsidiaries nor, to the best of the Company’s knowledge (after
reasonable inquiry of its officers and directors), any of the officers,
directors, employees, agents or other representatives of the Company or any of
its Subsidiaries or any other business entity or enterprise with which the
Company or any Subsidiary is or has been affiliated or associated, has, directly
or indirectly, made or authorized any payment, contribution or gift of money,
property, or services, whether or not in contravention of applicable law, (i) as
a kickback or bribe to any Person or (ii) to any political organization, or the
holder of or any aspirant to any elective or appointive public office except for
personal political contributions not involving the direct or indirect use of
funds of the Company or any of its Subsidiaries.

(gg)

Money Laundering.  The Company and its Subsidiaries are in compliance with, and
have not previously violated, the USA Patriot Act of 2001 and all other
applicable U.S. and non-U.S. anti-money laundering laws and regulations,
including, without limitation, the laws, regulations and Executive Orders and
sanctions programs administered by the U.S. Office of Foreign Assets Control,
including, but not limited, to (i) Executive Order 13224 of September 23, 2001
entitled, “Blocking Property and Prohibiting Transactions With Persons Who
Commit, Threaten to Commit, or Support Terrorism” (66 Fed. Reg. 49079 (2001));
and (ii) any regulations contained in 31 CFR, Subtitle B, Chapter V.

(hh)

Books and Records.  The books of account, ledgers, order books, records and
documents of the Company and its Subsidiaries accurately and completely reflect
all information relating to the respective businesses of the Company and its
Subsidiaries, the nature, acquisition, maintenance, location and collection of
each of their respective assets, and the nature of all transactions giving rise
to material obligations or accounts receivable of the Company or its
Subsidiaries, as the case may be, except where the failure to so reflect such
information would not have a Material Adverse Effect.  The minute books of the
Company and its Subsidiaries contain accurate records of all material meetings
and accurately reflect all other material actions taken by the stockholders,
boards of directors and all committees of the boards of directors, and other
governing Persons of the Company and its Subsidiaries, respectively.

(ii)

Management.  Except as set forth in Schedule 3(ii) hereto, during the past five
year period, no current or former officer or director or, to the knowledge of
the Company, no current ten percent (10%) or greater stockholder of the Company
or any of its Subsidiaries has been the subject of:

(i)

a petition under bankruptcy laws or any other insolvency or moratorium law or
the appointment by a court of a receiver, fiscal agent or similar officer for
such Person, or any partnership in which such person was a general partner at or
within two years before the filing of such petition or such appointment, or any
corporation or

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business association of which such person was an executive officer at or within
two years before the time of the filing of such petition or such appointment;

(ii)

a conviction in a criminal proceeding or a named subject of a pending criminal
proceeding (excluding traffic violations that do not relate to driving while
intoxicated or driving under the influence);

(iii)

any order, judgment or decree, not subsequently reversed, suspended or vacated,
of any court of competent jurisdiction, permanently or temporarily enjoining any
such person from, or otherwise limiting, the following activities:

(1)

Acting as a futures commission merchant, introducing broker, commodity trading
advisor, commodity pool operator, floor broker, leverage transaction merchant,
any other person regulated by the United States Commodity Futures Trading
Commission or an associated person of any of the foregoing, or as an investment
adviser, underwriter, broker or dealer in securities, or as an affiliated
person, director or employee of any investment company, bank, savings and loan
association or insurance company, or engaging in or continuing any conduct or
practice in connection with such activity;

(2)

Engaging in any particular type of business practice; or

(3)

Engaging in any activity in connection with the purchase or sale of any security
or commodity or in connection with any violation of securities laws or
commodities laws;

(iv)

any order, judgment or decree, not subsequently reversed, suspended or vacated,
of any authority barring, suspending or otherwise limiting for more than sixty
(60) days the right of any such person to engage in any activity described in
the preceding sub paragraph, or to be associated with persons engaged in any
such activity;

(v)

a finding by a court of competent jurisdiction in a civil action or by the SEC
or other authority to have violated any securities law, regulation or decree and
the judgment in such civil action or finding by the SEC or any other authority
has not been subsequently reversed, suspended or vacated; or

(vi)

a finding by a court of competent jurisdiction in a civil action or by the
Commodity Futures Trading Commission to have violated any federal commodities
law, and the judgment in such civil action or finding has not been subsequently
reversed, suspended or vacated.

(jj)

Stock Option Plans.  Each stock option granted by the Company was granted (i) in
accordance with the terms of the applicable stock option plan of the Company and
(ii) with an exercise price at least equal to the fair market value of the
Common Stock on the date such stock option would be considered granted under
GAAP and applicable law.  No stock option granted under the Company’s stock
option plan has been backdated.  The Company has not knowingly granted, and
there is no and has been no policy or practice of the Company to knowingly
grant, stock options prior to, or otherwise knowingly coordinate the grant of
stock options with, the

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release or other public announcement of material information regarding the
Company or its Subsidiaries or their financial results or prospects.

(kk)

No Disagreements with Accountants and Lawyers.  There are no material
disagreements of any kind presently existing, or reasonably anticipated by the
Company to arise, between the Company and the accountants and lawyers formerly
or presently employed by the Company and the Company is current with respect to
any fees owed to its accountants and lawyers which could affect the Company’s
ability to perform any of its obligations under any of the Transaction
Documents.  In addition, on or prior to the date hereof, the Company had
discussions with its accountants about its financial statements.  Based on those
discussions, the Company has no reason to believe that it will need to restate
any such financial statements or any part thereof.

(ll)

No Disqualification Events.  With respect to Securities to be offered and sold
hereunder in reliance on Rule 506(b) under the 1933 Act (“Regulation D
Securities”), none of the Company, any of its predecessors, any affiliated
issuer, any director, executive officer, other officer of the Company
participating in the offering contemplated hereby, any beneficial owner of 20%
or more of the Company’s outstanding voting equity securities, calculated on the
basis of voting power, nor any promoter (as that term is defined in Rule 405
under the 1933 Act) connected with the Company in any capacity at the time of
sale (each, an “Issuer Covered Person” and, together, “Issuer Covered Persons”)
is subject to any of the “Bad Actor” disqualifications described in Rule
506(d)(1)(i) to (viii) under the 1933 Act (a “Disqualification Event”), except
for a Disqualification Event covered by Rule 506(d)(2) or (d)(3). The Company
has exercised reasonable care to determine whether any Issuer Covered Person is
subject to a Disqualification Event.  The Company has complied, to the extent
applicable, with its disclosure obligations under Rule 506(e), and has furnished
to the Buyers a copy of any disclosures provided thereunder.

(mm)

Other Covered Persons.  The Company is not aware of any Person (other than the
Placement Agent) that has been or will be paid (directly or indirectly)
remuneration for solicitation of Buyers or potential purchasers in connection
with the sale of any Regulation D Securities.

(nn)

No Additional Agreements.  The Company does not have any agreement or
understanding with any Buyer with respect to the transactions contemplated by
the Transaction Documents other than as specified in the Transaction Documents.

(oo)

Public Utility Holding Act.  None of the Company nor any of its Subsidiaries is
a “holding company,” or an “affiliate” of a “holding company,” as such terms are
defined in the Public Utility Holding Act of 2005.

(pp)

Federal Power Act.  None of the Company nor any of its Subsidiaries is subject
to regulation as a “public utility” under the Federal Power Act, as amended.

(qq)

Ranking of Notes.  No Indebtedness of the Company, at the Closing, will be
senior to, or pari passu with, the Notes in right of payment, whether with
respect to payment or redemptions, interest, damages, upon liquidation or
dissolution or otherwise.

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(rr)

Placement Agent Affiliates; No Conflict.  The Company acknowledges that certain
of Buyers who are purchasing Notes hereunder may be deemed affiliates of and/or
otherwise associated with the Placement Agent (the “Placement Agent Buyers”).
 The Company represents and warrants that neither the Placement Agent nor such
Placement Agent Buyers are affiliates of, control persons of, controlled by, or
under common control with, the Company. The Company further acknowledges and
agrees that the execution of the Engagement Letter and the performance by
Placement Agent of all actions contemplated in the Engagement Letter does not
directly and/or indirectly affect the rights or remedies of any of the Placement
Agent Buyers or the obligations of the Company under any Transaction Document,
including the Company’s obligations under the Notes and such Placement Agent
Buyer’s rights to transfer any of the Securities. The Company is aware that
there may be deemed a conflict of interest of the Placement Agent resulting from
the engagement contemplated by the Engagement Letter and the Transaction
Documents and the Company hereby knowingly and expressly waives any such
conflict and/or claim with respect to any such conflict which may exist after
consultation with its independent legal counsel.

(ss)

Customers; Suppliers.  

(i)

Schedule 3(ss)(i) attached hereto sets forth a true and correct list of (a) all
customers of the Company and its Subsidiaries with annual gross sales (as
calculated pursuant to GAAP, consistently applied in accordance with past
practices) in excess of $250,000 in terms of gross sales during the fiscal year
ended December 31, 2015 and for the twelve month period ended as of the date
hereof.  (collectively, the “Major Customers”).

(ii)

Schedule 3(ss)(ii) attached hereto lists, and the Company has previously
provided to each Buyer a copy of, all written contracts, commitments, agreements
and other arrangements with Major Customers, including all amendments,
modifications and supplements thereto.  Except as set forth on Schedule
3(ss)(ii), there are no material oral contracts, commitments, agreements and
other arrangements between the Company or a Subsidiary, on the one hand, and any
Major Customer, on the other hand.

(iii)

Except as disclosed Schedule 3(ss)(iii), in Neither the Company nor any of its
Subsidiaries has received any written or oral notice, and neither the Company
nor any of its Subsidiaries has any reason to believe, that any Major Customer
(i) has ceased, or in the reasonably foreseeable future may cease, to use the
services of the Company and its Subsidiaries, (ii) has substantially reduced, or
in the reasonably foreseeable future may substantially reduce, the use of the
services of the Company and its Subsidiaries or (iii) has terminated or
materially altered, or in the reasonably foreseeable future would reasonably be
expected to terminate or materially alter its business relations with the
Company and its Subsidiaries, in each case as a result of the consummation of
the transactions contemplated hereby or otherwise.

(iv)

Neither the Company nor its Subsidiaries has received any written or oral
notice, and neither the Company nor any of its Subsidiaries has any reason to
believe, that any material partner, supplier or vendor to the Company and its
Subsidiaries has terminated or materially altered, or in the reasonably
foreseeable future would reasonably

30

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be likely to terminate or materially alter, its business relations with the
Company and its Subsidiaries, in each case as a result of the transactions
contemplated hereby or otherwise.

(tt)

Disclosure.  No statement made by the Company in this Agreement, any other
Transaction Document or the exhibits and schedules attached hereto or in any
certificate or schedule furnished or to be furnished by or on behalf of the
Company to the Investors or any of their representatives in connection with the
transactions contemplated hereby contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make the statements
contained herein or therein not misleading.  The due diligence materials
previously provided by or on behalf of the Company to each Buyer (the “Due
Diligence Materials”), have been prepared in a good faith effort by the Company
to describe the Company’s present and proposed products, and projected growth of
the Company and do not contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements therein not
misleading, except that with respect to assumptions, projections and expressions
of opinion or predictions contained in the Due Diligence Materials, the Company
represents only that such assumptions, projections, expressions of opinion and
predictions were made in good faith and that the Company believes there is a
reasonable basis therefor.  The Company acknowledges and agrees that no Buyer
makes or has made any representations or warranties with respect to the
transactions contemplated hereby other than those specifically set forth in
Section 2.

4.

COVENANTS.

(a)

Best Efforts.  Each Buyer shall use its best efforts to timely satisfy each of
the covenants hereunder and conditions to be satisfied by it as provided in
Section 6 of this Agreement. The Company shall use its best efforts to timely
satisfy each of the covenants hereunder and conditions to be satisfied by it as
provided in Section 7 of this Agreement.

(b)

Form D and Blue Sky.  The Company shall file a Form D with respect to the
Securities as required under Regulation D and to provide a copy thereof to each
Buyer promptly after such filing.  The Company shall, on or before the Closing
Date, take such action as the Company shall reasonably determine is necessary in
order to obtain an exemption for, or to, qualify the Securities for sale to the
Buyers at the Closing pursuant to this Agreement under applicable securities or
“Blue Sky” laws of the states of the United States (or to obtain an exemption
from such qualification), and shall provide evidence of any such action so taken
to the Buyers on or prior to the Closing Date.  Without limiting any other
obligation of the Company under this Agreement, the Company shall timely make
all filings and reports relating to the offer and sale of the Securities
required under all applicable securities laws (including, without limitation,
all applicable federal securities laws and all applicable “Blue Sky” laws), and
the Company shall comply with all applicable foreign, federal, state and local
laws, statutes, rules, regulations and the like relating to the offering and
sale of the Securities to the Buyers.

(c)

Reporting Status.  Until the date on which a Buyer or any transferee or assignee
thereof to which a Buyer assigns its rights as a holder of Securities under this
Agreement (each an “Investor”, and collectively, the “Investors”) shall have
sold all of the Warrant Shares (the “Reporting Period”), the Company shall
timely file all reports required to be filed with the SEC pursuant to the 1934
Act, and the Company shall not terminate its status as an issuer required to

31

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file reports under the 1934 Act even if the 1934 Act or the rules and
regulations thereunder would no longer require or otherwise permit such
termination, and the Company shall use its reasonable best efforts to maintain
its eligibility to register the Warrant Shares for resale by the Investors on
Form S-3 once Form S-3 is available to the Company for such use.

(d)

Use of Proceeds.  The Company will use the proceeds from the sale of the
Securities for general corporate purposes, but not, directly or indirectly, for
(i) except as set forth on Schedule 4(d), the satisfaction of any indebtedness
of the Company or any of its Subsidiaries, (ii) the redemption or repurchase of
any securities of the Company or any of its Subsidiaries, or (iii) the
settlement of any outstanding litigation.

(e)

Financial Information.  The Company agrees to send the following to each
Investor during the Reporting Period (i) unless the following are filed with the
SEC through EDGAR and are available to the public through the EDGAR system,
within one (1) Business Day after the filing thereof with the SEC, a copy of its
Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q, any interim
reports or any consolidated balance sheets, income statements, stockholders’
equity statements and/or cash flow statements for any period other than annual,
any Current Reports on Form 8-K and any registration statements (other than on
Form S-8) or amendments filed pursuant to the 1933 Act, (ii) unless the
following are either filed with the SEC through EDGAR or are otherwise widely
disseminated via a recognized news release service (such as PR Newswire), on the
same day as the release thereof, facsimile copies of all press releases issued
by the Company or any of its Subsidiaries and (iii) unless the following are
filed with the SEC through EDGAR, copies of any notices and other information
made available or given to the stockholders of the Company generally,
contemporaneously with the making available or giving thereof to the
stockholders.

(f)

Listing.  The Company shall maintain the listing or designation for quotation
(as the case may be) of all Warrant Shares from time to time issuable under the
terms of the Transaction Documents on the OTCQB or such other national
securities exchange or automated quotation system upon which the Common Stock is
then listed or designated for quotation (as the case may be).  Neither the
Company nor any of its Subsidiaries shall take any action which could be
reasonably expected to result in the delisting or suspension of the Common Stock
on the OTCQB or each other national securities exchange and automated quotation
system, if any, upon which the Common Stock is then listed or designated for
quotation (as the case may be).  The Company shall pay all fees and expenses in
connection with satisfying its obligations under this Section 4(f).

(g)

Fees.  The Company shall reimburse the lead Buyer for all costs and expenses
incurred by it or its affiliates in connection with the structuring,
documentation, negotiation and closing of the transactions contemplated by the
Transaction Documents (including, without limitation, as applicable, all
reasonable legal fees of outside counsel and disbursements of Akerman LLP,
counsel to the lead Buyer, any other reasonable fees and expenses in connection
with the structuring, documentation, negotiation and closing of the transactions
contemplated by the Transaction Documents and due diligence and regulatory
filings in connection therewith) (the “Transaction Expenses”) and shall be
withheld by the lead Buyer from its Purchase Price at the Closing, including
without limitation Transaction Expenses related to the due diligence of up to
$5,000 (the "Due Diligence Expenses"), less $10,000 previously paid by the
Company to the

32

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lead Buyer; provided, that the Company shall promptly reimburse Akerman LLP on
demand for all Transaction Expenses not so reimbursed through such withholding
at the Closing; provided further, that such Transaction Expenses (other than any
costs and expenses incurred by the Collateral Agent or Akerman LLP with respect
to the perfection of security interests and any enforcement costs or expenses
related hereto or to any of the Securities, the Warrant Shares or any other
Transaction Document and Due Diligence Expenses) shall not exceed $45,000
without the prior consent of the Company.  The Company shall be responsible for
the payment of any placement agent’s fees, financial advisory fees, Controlled
Account Bank fees, transfer agent fees, DTC (as defined below) fees or broker’s
commissions (other than for Persons engaged by any Buyer) relating to or arising
out of the transactions contemplated hereby (including, without limitation, any
fees or commissions payable to the Placement Agent, who is the Company’s sole
placement agent in connection with the transactions contemplated by this
Agreement).  The Company shall pay, and hold each Buyer harmless against, any
liability, loss or expense (including, without limitation, reasonable attorneys’
fees and out-of-pocket expenses) arising in connection with any claim relating
to any such payment.  Except as otherwise set forth in the Transaction
Documents, each party to this Agreement shall bear its own expenses in
connection with the sale of the Securities to the Buyers.

(h)

Pledge of Securities.  Notwithstanding anything to the contrary contained in
this Agreement, the Company acknowledges and agrees that the Securities may be
pledged by an Investor in connection with a bona fide margin agreement or other
loan or financing arrangement that is secured by the Securities.  The pledge of
Securities shall not be deemed to be a transfer, sale or assignment of the
Securities hereunder, and no Investor effecting a pledge of Securities shall be
required to provide the Company with any notice thereof or otherwise make any
delivery to the Company pursuant to this Agreement or any other Transaction
Document, including, without limitation, Section 2(g) hereof; provided that an
Investor and its pledgee shall be required to comply with the provisions of
Section 2(g) hereof in order to effect a sale, transfer or assignment of
Securities to such pledgee.  The Company hereby agrees to execute and deliver
such documentation as a pledgee of the Securities may reasonably request in
connection with a pledge of the Securities to such pledgee by a Buyer.

(i)

Disclosure of Transactions and Other Material Information.  Within four Business
Days after the Closing Date, the Company shall issue a press release (each, a
“Press Release”) reasonably acceptable to the Buyers describing the terms of the
transactions contemplated by the Transaction Documents if not already publicly
disclosed and disclosing any other material non-public information provided to
any Buyer on or prior to the public disclosure of the Press Release and attach
to the Press Release a hypertext link to the material Transaction Documents
(including, without limitation, this Agreement (and all schedules and exhibits
to this Agreement), the form of the Notes, the Warrants, the Security Documents
and the Guarantees (including all attachments), as well as any other material
documents related to any such other material nonpublic information), if not
already publicly available, which documents must be available to the public
either on the Company’s website (or the website of a successor, subsidiary or
parent company of the Company pursuant to such merger) or on the SEC’s EDGAR
website.  From and after the public disclosure of the applicable Press Release,
no Buyer shall be in possession of any material, nonpublic information received
from the Company, any of its Subsidiaries or any of their respective officers,
directors, employees or agents that is not disclosed in such Press Release,
unless otherwise requested by such Buyer or called for under the Transaction

33

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Documents.  Following the repayment of the Notes, the Company shall not, and
shall cause each of its Subsidiaries and its and each of their respective
officers, directors, affiliates, employees and agents, not to, provide any Buyer
with any material, nonpublic information regarding the Company or any of its
Subsidiaries from and after the date that any such Buyer shall instruct the
Company in writing of such Buyer’s intent not to receive such information
without the express prior written consent of such Buyer.  If a Buyer has, or
believes it has, received or is otherwise in possession of any material,
nonpublic information regarding the Company or any of its Subsidiaries without
the consent of such Buyer from the Company, any of its Subsidiaries or any of
their respective officers, directors, affiliates, employees or agents after the
earlier of (i) the date that the Company publicly discloses the first Press
Release and (ii) the date that the Company is required to publicly disclose the
first Press Release, at any time and from time to time, it may provide the
Company with written notice thereof.  The Company shall, upon the Company’s good
faith determination is material, nonpublic information, within one (1) Business
Day of receipt of such notice, make public disclosure of such material,
nonpublic information.  To the extent that the Company delivers any material,
non-public information to a Buyer without such Buyer’s consent or the Company
fails to publicly disclose any confidential information on or prior to the dates
and time periods specified in this Section 4(i), the Company hereby covenants
and agrees that such Buyer shall not have any duty of confidentiality to the
Company, any of its Subsidiaries or any of their respective officers, directors,
employees, affiliates or agents with respect to, or a duty to the Company, any
of its Subsidiaries or any of their respective officers, directors, employees,
affiliates or agents not to trade on the basis of, such material, non-public
information.  Subject to the foregoing, neither the Company, its Subsidiaries
nor any Buyer shall issue any press releases or any other public statements with
respect to the transactions contemplated hereby; provided, however, that the
Company shall be entitled, without the prior approval of any Buyer, to make any
press release or other public disclosure with respect to such transactions (i)
in substantial conformity with the Press Releases and contemporaneously
therewith and (ii) as is required by applicable law and regulations (provided
that in the case of clause (i) each Buyer shall be consulted by the Company in
connection with any such press release or other public disclosure prior to its
release).  Without the prior written consent of any applicable Buyer, neither
the Company nor any of its Subsidiaries or affiliates shall disclose the name of
such Buyer in any filing, announcement, release or otherwise.

(j)

Conduct of Business.  The business of the Company and its Subsidiaries shall not
be conducted in violation of any law, ordinance or regulation of any
Governmental Entity, except where such violations would not reasonably be
expected to result, either individually or in the aggregate, in a Material
Adverse Effect.

(k)

Other Notes; Variable Securities.  So long as any Notes remain outstanding, the
Company and each Subsidiary shall be prohibited from effecting or entering into
an agreement to effect any Subsequent Placement involving a Variable Rate
Transaction.  “Variable Rate Transaction” means a transaction in which the
Company or any Subsidiary (i) issues or sells any Convertible Securities either
(A) at a conversion, exercise or exchange rate or other price that is based upon
and/or varies with the trading prices of or quotations for the shares of Common
Stock at any time after the initial issuance of such Convertible Securities, or
(B) with a conversion, exercise or exchange price that is subject to being reset
at some future date after the initial issuance of such Convertible Securities or
upon the occurrence of specified or contingent events directly or indirectly
related to the business of the Company or the market for the

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Common Stock, other than pursuant to a customary “weighted average”
anti-dilution provision or (ii) enters into any agreement (including, without
limitation, an equity line of credit or an “at-the-market” offering) whereby the
Company or any Subsidiary may sell securities at a future determined price
(other than standard and customary “preemptive” or “participation” rights).
 Each Buyer shall be entitled to obtain injunctive relief against the Company
and its Subsidiaries to preclude any such issuance, which remedy shall be in
addition to any right to collect damages.

(l)

Participation Right.  Following the Closing Date and for a period of three (3)
years thereafter, neither the Company nor any of its Subsidiaries shall,
directly or indirectly, effect any Subsequent Placement in aggregate amount of
over $200,000 in a single transaction or a series of transactions within a three
month period unless the Company shall have first complied with this
Section 4(l).  The Company acknowledges and agrees that the right set forth in
this Section 4(l) is a right granted by the Company, separately, to each Buyer.

(i)

At least five (5) Business Days prior to any proposed or intended Subsequent
Placement, the Company shall deliver to each Buyer a written notice (each such
notice, a “Pre-Notice”), which Pre-Notice shall not contain any information
(including, without limitation, material, non-public information) other than:
 (A) if the proposed Offer Notice (as defined below) constitutes or contains
material, non-public information, a statement asking whether the Investor is
willing to accept material non-public information or (B) if the proposed Offer
Notice does not constitute or contain material, non-public information, (x) a
statement that the Company proposes or intends to effect a Subsequent Placement,
(y) a statement that the statement in clause (x) above does not constitute
material, non-public information and (z) a statement informing such Buyer that
it is entitled to receive an Offer Notice (as defined below) with respect to
such Subsequent Placement upon its written request.  Upon the written request of
a Buyer within three (3) Business Days after the Company’s delivery to such
Buyer of such Pre-Notice, and only upon a written request by such Buyer, the
Company shall promptly, but no later than three (3) Business Days after such
request, deliver to such Buyer an irrevocable written notice (the “Offer
Notice”) of any proposed or intended issuance or sale or exchange (the “Offer”)
of the securities being offered (the “Offered Securities”) in a Subsequent
Placement, which Offer Notice shall (A) identify and describe the Offered
Securities, (B) describe the price and other terms upon which they are to be
issued, sold or exchanged, and the number or amount of the Offered Securities to
be issued, sold or exchanged, (C) identify the Persons (if known) to which or
with which the Offered Securities are to be offered, issued, sold or exchanged
and (D) offer to issue and sell to or exchange with such Buyer in accordance
with the terms of the Offer such Buyer’s pro rata portion of 50% of the Offered
Securities, provided that the number of Offered Securities which such Buyer
shall have the right to subscribe for under this Section 4(l) shall be (x) based
on such Buyer’s pro rata portion of the aggregate original principal amount of
the Notes purchased hereunder on the Closing Date by all Buyers (the “Basic
Amount”), and (y) with respect to each Buyer that elects to purchase its Basic
Amount, any additional portion of the Offered Securities attributable to the
Basic Amounts of other Buyers as such Buyer shall indicate it will purchase or
acquire should the other Buyers subscribe for less than their Basic Amounts (the
“Undersubscription Amount”), which process shall be repeated until each Buyer
shall have an opportunity to subscribe for any remaining Undersubscription
Amount.

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(ii)

To accept an Offer, in whole or in part, such Buyer must deliver a written
notice to the Company prior to the end of the fifth (5th) Business Day after
such Buyer’s receipt of the Offer Notice (the “Offer Period”), setting forth the
portion of such Buyer’s Basic Amount that such Buyer elects to purchase and, if
such Buyer shall elect to purchase all of its Basic Amount, the
Undersubscription Amount, if any, that such Buyer elects to purchase (in either
case, the “Notice of Acceptance”).  If the Basic Amounts subscribed for by all
Buyers are less than the total of all of the Basic Amounts, then each Buyer who
has set forth an Undersubscription Amount in its Notice of Acceptance shall be
entitled to purchase, in addition to the Basic Amounts subscribed for, the
Undersubscription Amount it has subscribed for; provided, however, if the
Undersubscription Amounts subscribed for exceed the difference between the total
of all the Basic Amounts and the Basic Amounts subscribed for (the “Available
Undersubscription Amount”), each Buyer who has subscribed for any
Undersubscription Amount shall be entitled to purchase only that portion of the
Available Undersubscription Amount as the Basic Amount of such Buyer bears to
the total Basic Amounts of all Buyers that have subscribed for Undersubscription
Amounts, subject to rounding by the Company to the extent it deems reasonably
necessary.  Notwithstanding the foregoing, if the Company desires to modify or
amend the terms and conditions of the Offer prior to the expiration of the Offer
Period, the Company may deliver to each Buyer a new Offer Notice and the Offer
Period shall expire on the fifth (5th) Business Day after such Buyer’s receipt
of such new Offer Notice.

(iii)

The Company shall have seven (7) Business Days from the expiration of the Offer
Period above (A) to offer, issue, sell or exchange all or any part of such
Offered Securities as to which a Notice of Acceptance has not been given by a
Buyer (the “Refused Securities”) pursuant to a definitive agreement(s) (the
“Subsequent Placement Agreement”), but only to the offerees described in the
Offer Notice (if so described therein) and only upon terms and conditions
(including, without limitation, unit prices and interest rates) that are not
more favorable to the acquiring Person or Persons or less favorable to the
Company than those set forth in the Offer Notice and (B) to publicly announce
(x) the execution of such Subsequent Placement Agreement, and (y) either (I) the
consummation of the transactions contemplated by such Subsequent Placement
Agreement or (II) the termination of such Subsequent Placement Agreement, which
shall be filed with the SEC on a Current Report on Form 8-K with such Subsequent
Placement Agreement and any documents contemplated therein filed as exhibits
thereto.

(iv)

In the event the Company shall propose to sell less than all the Refused
Securities (any such sale to be in the manner and on the terms specified in
Section 4(l)(iii) above), then each Buyer may, at its sole option and in its
sole discretion, reduce the number or amount of the Offered Securities specified
in its Notice of Acceptance to an amount that shall be not less than the number
or amount of the Offered Securities that such Buyer elected to purchase pursuant
to Section 4(l)(ii) above multiplied by a fraction, (i) the numerator of which
shall be the number or amount of Offered Securities the Company actually
proposes to issue, sell or exchange (including Offered Securities to be issued
or sold to Buyers pursuant to this Section 4(l) prior to such reduction) and
(ii) the denominator of which shall be the original amount of the Offered
Securities.  In the event that any Buyer so elects to reduce the number or
amount

36

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of Offered Securities specified in its Notice of Acceptance, the Company may not
issue, sell or exchange more than the reduced number or amount of the Offered
Securities unless and until such securities have again been offered to the
Buyers in accordance with Section 4(l)(i) above.

(v)

Upon the closing of the issuance, sale or exchange of all or less than all of
the Refused Securities, such Buyer shall acquire from the Company, and the
Company shall issue to such Buyer, the number or amount of Offered Securities
specified in its Notice of Acceptance, as reduced pursuant to Section 4(l)(iv)
above if such Buyer has so elected, upon the terms and conditions specified in
the Offer.  The purchase by such Buyer of any Offered Securities is subject in
all cases to the preparation, execution and delivery by the Company and such
Buyer of a separate purchase agreement relating to such Offered Securities
reasonably satisfactory in form and substance to such Buyer and its counsel.

(vi)

Any Offered Securities not acquired by a Buyer or other Persons in accordance
with this Section 4(l) may not be issued, sold or exchanged until they are again
offered to such Buyer under the procedures specified in this Agreement.

(vii)

The Company and each Buyer agree that if any Buyer elects to participate in the
Offer, neither the Subsequent Placement Agreement with respect to such Offer nor
any other transaction documents related thereto (collectively, the “Subsequent
Placement Documents”) shall include any term or provision whereby such Buyer
shall be required to agree to any restrictions on trading as to any securities
of the Company or be required to consent to any amendment to or termination of,
or grant any waiver, release or the like under or in connection with, any
agreement previously entered into with the Company or any instrument received
from the Company.

(viii)

Notwithstanding anything to the contrary in this Section 4(l) and unless
otherwise agreed to by such Buyer, the Company shall either confirm in writing
to such Buyer that the transaction with respect to the Subsequent Placement has
been abandoned or shall publicly disclose its intention to issue the Offered
Securities, in either case, in such a manner such that such Buyer will not be in
possession of any material, non-public information, by the seventh (7th)
Business Day following delivery of the Offer Notice.  If by such seventh (7th)
Business Day, no public disclosure regarding a transaction with respect to the
Offered Securities has been made, and no notice regarding the abandonment of
such transaction has been received by such Buyer, such transaction shall be
deemed to have been abandoned and such Buyer shall not be in possession of any
material, non-public information with respect to the Company or any of its
Subsidiaries.  Should the Company decide to pursue such transaction with respect
to the Offered Securities, the Company shall provide such Buyer with another
Offer Notice and such Buyer will again have the right of participation set forth
in this Section 4(l).  The Company shall not be permitted to deliver more than
one such Offer Notice to such Buyer in any sixty (60) day period, except as
expressly contemplated by the last sentence of Section 4(l)(ii).

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(ix)

The restrictions contained in this Section 4(l) shall not apply in connection
with the issuance of any Excluded Securities.  The Company shall not circumvent
the provisions of this Section 4(l) by providing terms or conditions to one
Buyer that are not provided to all.

(x)

For the purpose of this Agreement, the following definitions shall apply:

(1)

“Approved Stock Plan” means any employee benefit plan which has been approved by
a majority of the disinterested directors of the Company, pursuant to which the
Company's securities may be issued to any employee, officer or director for
services provided to the Company.

(2)

“Convertible Securities” means any capital stock or other security of the
Company or any of its Subsidiaries that is at any time and under any
circumstances directly or indirectly convertible into, exercisable or
exchangeable for, or which otherwise entitles the holder thereof to acquire, any
capital stock or other equity security of the Company (including, without
limitation, Common Stock) or any of its Subsidiaries.

(3)

"Excluded Securities" means any shares of Common Stock issued or issuable: (i)
in connection with any Approved Stock Plan; (ii) as Warrant Shares; (iii) upon
conversion or exercise of any Convertible Securities which are outstanding on
the day immediately preceding the date hereof, provided that the terms of such
Convertible Securities are not amended, modified or changed on or after the date
hereof, (iv) to equipment lessors or real property lessors, pursuant to an
equipment leasing or real property leasing transaction approved by a majority of
the disinterested members of the Board of Directors of the Company, provided
that any such issuance shall not include a transaction in which the Company is
issuing securities primarily for the purpose of raising capital or to an entity
whose primary business is investing in securities; and (v) issued in connection
with sponsored research, collaboration, technology license, development, OEM,
marketing or other similar agreements or strategic partnerships approved by a
majority of the disinterested members of the Board of Directors of the Company,
provided that any such issuance shall only be to a Person (or to the
equityholders of a Person) which is, itself or through its subsidiaries, an
operating company or an owner of an asset in a business synergistic with the
business of the Company and shall provide to the Company additional benefits in
addition to the investment of funds, but shall not include a transaction in
which the Company is issuing securities primarily for the purpose of raising
capital or to an entity whose primary business is investing in securities.

(4)

“Subsequent Placement” means any issuance, offer, sale, grant of any option or
right to purchase, or other disposal by the Company or any of its Subsidiaries,
directly or indirectly, of any notes, debentures or other debt security of the
Company.

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(m)

Passive Foreign Investment Company.  The Company shall conduct its business, and
shall cause its Subsidiaries to conduct their respective businesses, in such a
manner as will ensure that the Company will not be deemed to constitute a
passive foreign investment company within the meaning of Section 1297 of the
Code.

(n)

Restriction on Redemption and Cash Dividends.  So long as any Notes are
outstanding, the Company shall not, directly or indirectly, redeem, or declare
or pay any cash dividend or distribution on, any securities of the Company
without the prior express written consent of the Buyers.

(o)

Corporate Existence.  So long as any Buyer beneficially owns any Notes, Warrants
or Warrant Shares, the Company shall not be party to any Fundamental Transaction
(as defined in the Notes) unless the Company is in compliance with the
applicable provisions governing Fundamental Transactions set forth in the Notes.

(p)

Collateral Agent.  Each Buyer hereby (i) appoints GPB Debt Holdings II, LLC, as
the collateral agent hereunder and under the other Security Documents (in such
capacity, the “Collateral Agent”), and (ii) authorizes the Collateral Agent (and
its officers, directors, employees and agents) to take such action on such
Buyer’s behalf in accordance with the terms hereof and thereof.  The Collateral
Agent shall not have, by reason hereof or any of the other Security Documents, a
fiduciary relationship in respect of any Buyer.  Neither the Collateral Agent
nor any of its officers, directors, employees or agents shall have any liability
to any Buyer for any action taken or omitted to be taken in connection hereof or
any other Security Document except to the extent caused by its own gross
negligence or willful misconduct, and each Buyer agrees to defend, protect,
indemnify and hold harmless the Collateral Agent and all of its officers,
directors, employees and agents (collectively, the “Collateral Agent
Indemnitees”) from and against any losses, damages, liabilities, obligations,
penalties, actions, judgments, suits, fees, costs and expenses (including,
without limitation, reasonable attorneys’ fees, costs and expenses) incurred by
such Collateral Agent Indemnitee, whether direct, indirect or consequential,
arising from or in connection with the performance by such Collateral Agent
Indemnitee of the duties and obligations of Collateral Agent pursuant hereto or
any of the Security Documents.  The Collateral Agent shall not be required to
exercise any discretion or take any action, but shall be required to act or to
refrain from acting (and shall be fully protected in so acting or refraining
from acting) upon the instructions of the Required Holders, and such
instructions shall be binding upon all holders of Notes; provided, however, that
the Collateral Agent shall not be required to take any action which, in the
reasonable opinion of the Collateral Agent, exposes the Collateral Agent to
liability or which is contrary to this Agreement or any other Transaction
Document or applicable law.  The Collateral Agent shall be entitled to rely upon
any written notices, statements, certificates, orders or other documents or any
telephone message believed by it in good faith to be genuine and correct and to
have been signed, sent or made by the proper Person, and with respect to all
matters pertaining to this Agreement or any of the other Transaction Documents
and its duties hereunder or thereunder, upon advice of counsel selected by it.

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(q)

Successor Collateral Agent.

(i)

The Collateral Agent may resign from the performance of all its functions and
duties hereunder and under the other Transaction Documents at any time by giving
at least ten (10) Business Days’ prior written notice to the Company and each
holder of Notes.  Such resignation shall take effect upon the acceptance by a
successor Collateral Agent of appointment pursuant to clauses (ii) and (iii)
below or as otherwise provided below.  If at any time the Collateral Agent
(together with its affiliates) beneficially owns less than $100,000 in aggregate
principal amount of Notes, the Required Holders may, by written consent, remove
the Collateral Agent from all its functions and duties hereunder and under the
other Transaction Documents.

(ii)

Upon any such notice of resignation or removal, the Required Holders shall
appoint a successor collateral agent.  Upon the acceptance of any appointment as
Collateral Agent hereunder by a successor agent, such successor collateral agent
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the collateral agent, and the Collateral Agent shall be
discharged from its duties and obligations under this Agreement and the other
Transaction Documents.  After the Collateral Agent’s resignation or removal
hereunder as the collateral agent, the provisions of this Section 4(q) shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was the Collateral Agent under this Agreement and the other Transaction
Documents.

(iii)

If a successor collateral agent shall not have been so appointed within ten (10)
Business Days of receipt of a written notice of resignation or removal, the
Collateral Agent shall then appoint a successor collateral agent who shall serve
as the Collateral Agent until such time, if any, as the Required Holders appoint
a successor collateral agent as provided above.

(iv)

In the event that a successor Collateral Agent is appointed pursuant to the
provisions of this Section 4(q) that is not a Buyer or an affiliate of any Buyer
(or the Required Holders or the Collateral Agent (or its successor), as
applicable, notify the Company that they or it wants to appoint such a successor
Collateral Agent pursuant to the terms of this Section 4(q)), the Company and
each Subsidiary thereof covenants and agrees to promptly take all actions
reasonably requested by the Required Holders or the Collateral Agent (or its
successor), as applicable, from time to time, to secure a successor Collateral
Agent satisfactory to the requesting part(y)(ies), in their sole discretion,
including, without limitation, by paying all reasonable and customary fees and
expenses of such successor Collateral Agent, by having the Company and each
Subsidiary thereof agree to indemnify any successor Collateral Agent pursuant to
reasonable and customary terms and by each of the Company and each Subsidiary
thereof executing a collateral agency agreement or similar agreement and/or any
amendment to the Security Documents reasonably requested or required by the
successor Collateral Agent.

(r)

Regulation M.  The Company will not take any action prohibited by Regulation M
under the 1934 Act, in connection with the distribution of the Securities
contemplated hereby.

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(s)

General Solicitation.  None of the Company, any of its affiliates (as defined in
Rule 501(b) under the 1933 Act) or any person acting on behalf of the Company or
such affiliate will solicit any offer to buy or offer or sell the Securities by
means of any form of general solicitation or general advertising within the
meaning of Regulation D, including:  () any advertisement, article, notice or
other communication published in any newspaper, magazine or similar medium or
broadcast over television or radio; and () any seminar or meeting whose
attendees have been invited by any general solicitation or general advertising.

(t)

Integration.  None of the Company, any of its affiliates (as defined in Rule
501(b) under the 1933 Act), or any person acting on behalf of the Company or
such affiliate will sell, offer for sale, or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in the 1933 Act) which will be
integrated with the sale of the Securities in a manner which would require the
registration of the Securities under the 1933 Act.

(u)

Notice of Disqualification Events.  The Company will notify the Buyers in
writing, prior to the Closing Date of (i) any Disqualification Event relating to
any Issuer Covered Person and (ii) any event that would, with the passage of
time, become a Disqualification Event relating to any Issuer Covered Person.

(v)

Subsidiary Guarantee.  For so long as any Notes remain outstanding, upon any
entity becoming a Subsidiary of the Company, the Company shall cause each such
Subsidiary to become party to the Guaranty by executing a joinder to the
Guaranty reasonably satisfactory in form and substance to the Required Holders.

(w)

Public Information.  At any time prior to such time that all of the Warrant
Shares, if a registration statement is not available for the resale of all of
the Warrant Shares, may be sold without restriction or limitation pursuant to
Rule 144 and without the requirement to be in compliance with Rule 144(c)(1), if
the Company shall (i) fail for any reason to satisfy the requirements of Rule
144(c)(1) or (ii) if the Company has ever been an issuer described in Rule
144(i)(1)(i) or becomes such an issuer in the future, and the Company shall fail
to satisfy any condition set forth in Rule 144(i)(2) (a “Public Information
Failure”) then, as partial relief for the damages to any holder of Warrant
Shares by reason of any such delay in or reduction of its ability to sell the
Warrant Shares (which remedy shall not be exclusive of any other remedies
available at law or in equity), the Company shall pay to each such holder an
amount in cash equal to two percent (2.0%) of the aggregate Purchase Price of
such holder’s Warrant Shares on the day of a Public Information Failure and on
every thirtieth day (pro-rated for periods totaling less than thirty days)
thereafter until the earlier of (i) the date such Public Information Failure is
cured and (ii) such time that such public information is no longer required
pursuant to Rule 144.  The payments to which a holder shall be entitled pursuant
to this Section 4(w) are referred to herein as “Public Information Failure
Payments.”  Public Information Failure Payments shall be paid on the earlier of
(I) the last day of the calendar month during which such Public Information
Failure Payments are incurred and (II) the third Business Day after the event or
failure giving rise to the Public Information Failure Payments is cured.  In the
event the Company fails to make Public Information Failure Payments in a timely
manner, such Public Information Failure Payments shall bear interest at the rate
of 1.5% per month (prorated for partial months) until paid in full.

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(x)

Books and Records.  The Company will keep proper books of record and account, in
which full and correct entries shall be made of all financial transactions and
the asset and business of the Company and its Subsidiaries in accordance with
GAAP.

(y)

Closing Documents.  On or prior to twenty (20) calendar days after the Closing
Date, the Company agrees to deliver, or cause to be delivered, to each Buyer and
Akerman LLP a complete closing set of the executed Transaction Documents,
Securities, Warrant Shares and any other document required to be delivered to
any party pursuant to Section 7 hereof or otherwise.

(z)

Exclusivity.  The Company agrees that for a period (the “Exclusivity Period”)
beginning on the date of this Agreement and continuing until (A) the Closing
Date or (B) if earlier, the date on which the Agreement is terminated in
accordance with Section 8 hereto, the Company will not, and will cause its
Subsidiaries or Affiliates not to, directly or indirect submit, solicit,
initiate, discuss, encourage, negotiate, authorize, recommend, propose or enter
into any proposal, agreement or offer from any person or entity relating to a
debt financing of the Company or any Subsidiary or the incurrence of
Indebtedness by the Company or any Subsidiary in excess of $1,000,000 in the
aggregate, including but not limited to, through the issuance notes, debentures
or any other debt security of the Company or a Subsidiary ("Alternate
Financing").  The Company agrees during the Exclusivity Period to promptly
notify the Buyers any expression of interest, inquiry, proposal or offer from
any person or entity relating to an Alternative Financing received by the
Company or any Subsidiary, including the material terms thereof.

5.

REGISTER; LEGEND.

(a)

Register.  The Company shall maintain at its principal executive offices (or
such other office or agency of the Company as it may designate by notice to each
holder of Securities), a register for the Notes, the Warrants and the Warrant
Shares in which the Company shall record the name and address of the Person in
whose name the Notes, the Warrants and the Warrant Shares have been issued
(including the name and address of each transferee) and the principal amount of
the Notes held by such Person.  The Company shall keep the register open and
available at all times during business hours for inspection of any Buyer or its
legal representatives.

(b)

Legends.  Each Buyer understands that the Securities and the Warrant Shares have
been and will be issued pursuant to an exemption from registration or
qualification under the 1933 Act and applicable state securities laws, and
except as set forth below, the Securities and the Warrant Shares shall bear any
legend as required by the “blue sky” laws of any state and a restrictive legend
in substantially the following form (and a stop-transfer order may be placed
against transfer of such stock certificates):

[THE ISSUANCE AND SALE OF THE SECURITY REPRESENTED BY THIS NOTE HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS.][THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN]
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS.  THE SECURITIES MAY NOT

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BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL TO THE HOLDER (IF REQUESTED BY
THE COMPANY), IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION
IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD
PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT.  NOTWITHSTANDING THE
FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

[NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THESE
SECURITIES HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR
THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY.  THESE SECURITIES AND THE SECURITIES ISSUABLE UPON EXERCISE OF THESE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT SECURED
BY SUCH SECURITIES.]

(c)

Removal of Legends.  Certificates evidencing Securities and the Warrant Shares
shall not be required to contain the legend set forth in Section 5(b) above or
any other legend (i) while a registration statement covering the resale of such
Securities is effective under the 1933 Act, (ii) following any sale of such
Securities pursuant to Rule 144 (assuming the transferor is not an affiliate of
the Company), (iii) if such Securities are eligible to be sold, assigned or
transferred under Rule 144 (provided that a Buyer provides the Company with
reasonable assurances that such Securities are eligible for sale, assignment or
transfer under Rule 144 which shall not include an opinion of Buyer’s counsel),
(iv) in connection with a sale, assignment or other transfer (other than under
Rule 144), provided that such Buyer provides the Company with an opinion of
counsel to such Buyer, in a generally acceptable form, to the effect that such
sale, assignment or transfer of the Securities may be made without registration
under the applicable requirements of the 1933 Act or (v) if such legend is not
required under applicable requirements of the 1933 Act (including, without
limitation, controlling judicial interpretations and pronouncements issued by
the SEC).  If a legend is not required pursuant to the foregoing, the Company
shall no later than five (5) Business Days (or such earlier date as required
pursuant to

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the 1934 Act or other applicable law, rule or regulation for the settlement of a
trade initiated on the date such Buyer delivers such legended certificate
representing such Securities to the Company) following the delivery by a Buyer
to the Company or the transfer agent (with notice to the Company) of a legended
certificate representing such Securities (endorsed or with stock powers
attached, signatures guaranteed, and otherwise in form necessary to affect the
reissuance and/or transfer, if applicable), together with any other deliveries
from such Buyer as may be required above in this Section 5(c), as directed by
such Buyer, either:  (A) provided that the Company’s transfer agent is
participating in the DTC Fast Automated Securities Transfer Program and such
Securities are Warrant Shares, credit the aggregate number of shares of Common
Stock to which such Buyer shall be entitled to such Buyer’s or its designee’s
balance account with DTC through its Deposit/Withdrawal at Custodian system or
(B) if the Company’s transfer agent is not participating in the DTC Fast
Automated Securities Transfer Program, issue and deliver (via reputable
overnight courier) to such Buyer, a certificate representing such Securities or
Warrant Shares that is free from all restrictive and other legends, registered
in the name of such Buyer or its designee (the date by which such credit is so
required to be made to the balance account of such Buyer’s or such Buyer’s
designee with DTC or such certificate is required to be delivered to such Buyer
pursuant to the foregoing is referred to herein as the “Required Delivery Date”,
and the date such shares of Common Stock are actually delivered without
restrictive legend to such Buyer or such Buyer’s designee with DTC, as
applicable, the “Share Delivery Date”).  The Company shall be responsible for
any transfer agent fees or DTC fees with respect to any issuance of Securities
or Warrant Shares or the removal of any legends with respect to any Securities
or Warrant Shares in accordance herewith.

(d)

Failure to Timely Deliver; Buy-In.  If the Company fails to fail, for any reason
or for no reason, to issue and deliver (or cause to be delivered) to a Buyer (or
its designee) by the Required Delivery Date, either (I) if the transfer agent of
the Company (the “Transfer Agent”) is not participating in the DTC Fast
Automated Securities Transfer Program, a certificate for the number of Warrant
Shares to which such Buyer is entitled and register such Warrant Shares on the
Company’s share register or, if the Transfer Agent is participating in the DTC
Fast Automated Securities Transfer Program, to credit the balance account of
such Buyer or such Buyer’s designee with DTC for such number of Warrant Shares
submitted for legend removal by such Buyer pursuant to Section 5(c) above or
(II) if a registration statement covering the resale of the Warrant Shares
submitted for legend removal by such Buyer pursuant to Section 5(c) above (the
“Unavailable Shares”) is not available for the resale of such Unavailable Shares
and the Company fails to promptly (x) so notify such Buyer and (y) deliver the
Warrant Shares electronically without any restrictive legend by crediting such
aggregate number of Warrant Shares submitted for legend removal by such Buyer
pursuant to Section 5(c) above to such Buyer’s or its designee’s balance account
with DTC through its Deposit/Withdrawal At Custodian system (the event described
in the immediately foregoing clause (II) is hereinafter referred as a “Notice
Failure” and together with the event described in clause (I) above, a “Delivery
Failure”), and if on or after such Business Day such Buyer purchases (in an open
market transaction or otherwise) shares of Common Stock to deliver in
satisfaction of a sale by such Buyer of shares of Common Stock submitted for
legend removal by such Buyer pursuant to Section 5(c) above that such Buyer
anticipated receiving from the Company (a “Buy-In”), then the Company shall,
within three (3) Business Days after such Buyer’s request and in such Buyer’s
discretion, either (i) pay cash to such Buyer in an amount equal to such Buyer’s
total purchase price (including brokerage commissions and other out-of-pocket
expenses, if any, for

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the shares of Common Stock so purchased) (the “Buy-In Price”), at which point
the Company’s obligation to so deliver such certificate or credit such Buyer’s
balance account shall terminate and such shares shall be cancelled, or (ii)
promptly honor its obligation to so deliver to such Buyer a certificate or
certificates or credit the balance account of such Buyer or such Buyer’s
designee with DTC representing such number of shares of Common Stock that would
have been so delivered if the Company timely complied with its obligations
hereunder and pay cash to such Buyer in an amount equal to the excess (if any)
of the Buy-In Price over the product of (A) such number of shares of Warrant
Shares that the Company was required to deliver to such Buyer by the Required
Delivery Date multiplied by (B) the lowest closing sale price of the Common
Stock on any Business Day during the period commencing on the date of the
delivery by such Buyer to the Company of the applicable Warrant Shares and
ending on the date of such delivery and payment under this clause (ii).  Nothing
shall limit such Buyer’s right to pursue any other remedies available to it
hereunder, at law or in equity, including, without limitation, a decree of
specific performance and/or injunctive relief with respect to the Company’s
failure to timely deliver certificates representing shares of Common Stock (or
to electronically deliver such shares of Common Stock) as required pursuant to
the terms hereof.  

(e)

FAST Compliance.  While any Warrant Shares are held by any Buyer, the Company
shall undertake best efforts to maintain a transfer agent that participates in
the DTC Fast Automated Securities Transfer Program.

6.

CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL.

(a)

The obligation of the Company hereunder to issue and sell the Notes and the
related Warrants to each Buyer at the Closing is subject to the satisfaction, at
or before the Closing Date, of each of the following conditions, provided that
these conditions are for the Company’s sole benefit and may be waived by the
Company at any time in its sole discretion by providing each Buyer with prior
written notice thereof:

(i)

Such Buyer shall have executed each of the other Transaction Documents to which
it is a party and delivered the same to the Company.

(ii)

Such Buyer and each other Buyer shall have delivered to the Company the Purchase
Price (less, in the case of any Buyer, the amounts withheld pursuant to
Section 4(g)) for the Note and the related Warrants being purchased by such
Buyer at the Closing by wire transfer of immediately available funds in
accordance with the Flow of Funds Letter.

(iii)

The representations and warranties of such Buyer shall be true and correct in
all material respects as of the date when made and as of the Closing Date as
though originally made at that time (except for representations and warranties
that speak as of a specific date, which shall be true and correct as of such
specific date), and such Buyer shall have performed, satisfied and complied in
all material respects with the covenants, agreements and conditions required by
this Agreement to be performed, satisfied or complied with by such Buyer at or
prior to the Closing Date.

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7.

CONDITIONS TO EACH BUYER’S OBLIGATION TO PURCHASE.

(a)

The obligation of each Buyer hereunder to purchase its Note and its related
Warrants at the Closing is subject to the satisfaction, at or before the Closing
Date, of each of the following conditions, provided that these conditions are
for each Buyer’s sole benefit and may be waived by such Buyer at any time in its
sole discretion by providing the Company with prior written notice thereof:

(i)

The Company and each Subsidiary (as the case may be) shall have duly executed
and delivered to such Buyer each of the Transaction Documents to which it is a
party and the Company shall have duly executed and delivered to such Buyer a
Note (in such original principal amount as is set forth across from such Buyer’s
name in column (3) of the Schedule of Buyers) together with such aggregate
number of Warrants as is set forth across from such Buyer’s name in column (4)
of the Schedule of Buyers being purchased by such Buyer at the Closing pursuant
to this Agreement.

(ii)

Such Buyer and the Placement Agent shall have received the opinion of Smith,
Gambrell & Russell, LLP, the Company’s counsel, dated as of the Closing Date, in
the form acceptable to such Buyer.

(iii)

The Company shall have delivered to such Buyer a certificate evidencing the
formation and good standing of the Company and each of its Subsidiaries in each
such entity’s jurisdiction of formation issued by the Secretary of State (or
comparable office) of such jurisdiction of formation as of a date within ten
(10) days of the Closing Date.

(iv)

The Company shall have delivered to such Buyer a certificate evidencing the
Company’s and each Subsidiary’s qualification as a foreign corporation and good
standing issued by the Secretary of State (or comparable office) of each
jurisdiction in which the Company and each Subsidiary conducts business and is
required to so qualify, as of a date within ten (10) days of the Closing Date.

(v)

The Company shall have delivered to such Buyer a certified copy of the
Certificate of Incorporation as certified by the Florida Secretary of State
within ten (10) days of the Closing Date.

(vi)

Each Subsidiary shall have delivered to such Buyer a certified copy of its
Certificate of Incorporation (or such equivalent organizational document) as
certified by the Secretary of State (or comparable office) of such Subsidiary’s
jurisdiction of incorporation within ten (10) days of the Closing Date.

(vii)

The Company and each Subsidiary shall have delivered to such Buyer a
certificate, in the form acceptable to such Buyer, executed by the Secretary of
the Company and each Subsidiary and dated as of the Closing Date, as to (i) the
resolutions consistent with Section 3(b) as adopted by the Company’s and each
Subsidiary’s board of directors in a form reasonably acceptable to such Buyer,
(ii) the Certificate of Incorporation of the Company and the organizational
documents of each Subsidiary and

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(iii) the Bylaws of the Company and the bylaws of each Subsidiary, each as in
effect at the Closing.

(viii)

Each and every representation and warranty of the Company shall be true and
correct as of the date when made and as of the Closing Date as though originally
made at that time (except for representations and warranties that speak as of a
specific date, which shall be true and correct as of such specific date) and the
Company shall have performed, satisfied and complied in all respects with the
covenants, agreements and conditions required to be performed, satisfied or
complied with by the Company at or prior to the Closing Date.  Such Buyer shall
have received a certificate, duly executed by the Chief Executive Officer of the
Company, dated as of the Closing Date, to the foregoing effect and as to such
other matters as may be reasonably requested by such Buyer in the form
acceptable to such Buyer.

(ix)

The Company shall have delivered to such Buyer a letter from the Company’s
transfer agent certifying the number of shares of Common Stock outstanding on
the Closing Date immediately prior to the Closing.

(x)

The Company shall have obtained all governmental, regulatory or third party
consents and approvals, if any, necessary for the sale of the Securities and the
Warrant Shares.

(xi)

No statute, rule, regulation, executive order, decree, ruling or injunction
shall have been enacted, entered, promulgated or endorsed by any court or
Governmental Entity of competent jurisdiction that prohibits the consummation of
any of the transactions contemplated by the Transaction Documents.

(xii)

Since the date of execution of this Agreement, no event or series of events
shall have occurred that reasonably would have or result in a Material Adverse
Effect.

(xiii)

In accordance with the terms of the Security Documents, the Company shall have
delivered to the Collateral Agent (A) original certificates (I) representing the
Subsidiaries’ shares of capital stock to the extent such subsidiary is a
corporation or otherwise has certificated equity and (II) representing all other
equity interests and all promissory notes required to be pledged thereunder, in
each case, accompanied by undated stock powers and allonges executed in blank
and other proper instruments of transfer and (B) appropriate financing
statements on Form UCC-1 to be duly filed in such office or offices as may be
necessary or, in the opinion of the Collateral Agent, desirable to perfect the
security interests purported to be created by each Security Document (the
“Perfection Certificate”).

(xiv)

Within two (2) Business Days prior to the Closing, the Company shall have
delivered or caused to be delivered to each Buyer and the Collateral Agent (A)
certified copies of requests for copies of information on Form UCC-11, listing
all effective financing statements which name as debtor the Company or any of
its Subsidiaries and which are filed in such office or offices as may be
necessary or, in the opinion of the Collateral Agent or the Buyers, desirable to
perfect the security interests

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purported to be created by the Security Agreement, together with copies of such
financing statements, none of which, except as otherwise agreed in writing by
the Collateral Agent, shall cover any of the Collateral (as defined in the
Security Agreement), and the results of searches for any tax Lien and judgment
Lien filed against such Person or its property, which results, except as
otherwise agreed to in writing by the Collateral Agent and the Buyers, shall not
show any such Liens; and (B) a perfection certificate, duly completed and
executed by the Company and each of its Subsidiaries, in form and substance
satisfactory to the Buyers.

(xv)

The Collateral Agent shall have received the Security Agreement, duly executed
by the Company and each of its Subsidiaries, together with the original stock
certificates representing all of the equity interests and all promissory notes
required to be pledged thereunder, accompanied by undated stock powers and
allonges executed in blank and other proper instruments of transfer.

(xvi)

With respect to the Intellectual Property, if any, of the Company or any of its
Subsidiaries, the Company and/or such Subsidiaries, as applicable, shall have
duly executed and delivered to such Buyer each Assignment For Security for the
Intellectual Property of the Company and its Subsidiaries, in the form attached
as Exhibit A to the Security Agreement.

(xvii)

Each Control Account Bank (as defined in the Notes) and the Collateral Agent
shall have duly executed and delivered to such Buyer a Controlled Account
Agreement (as defined in the Notes) with respect to each account of the Company
or any of its Subsidiaries held at such Control Account Bank.

(xviii)

Such Buyer shall have received a letter on the letterhead of the Company, duly
executed by the Chief Executive Officer of the Company, setting forth the wire
amounts of each Buyer and the wire transfer instructions of the (the “Flow of
Funds Letter”).

(xix)

The Company and each Subsidiary shall execute and deliver the Confession of
Judgment in the form attached hereto as Exhibit E (the “Confession of
Judgment”).

(xx)

Such Buyer shall have received a payoff letter, in a form reasonably
satisfactory to the Collateral Agent, with respect to the Indebtedness described
on Schedule 7(a)(xx), duly executed and delivered by the holder of each such
Indebtedness.

(xxi)

The Company and its Subsidiaries shall have delivered to such Buyer such other
documents, instruments or certificates relating to the transactions contemplated
by this Agreement as such Buyer or its counsel may reasonably request.

8.

TERMINATION.

In the event that the Closing shall not have occurred with respect to a Buyer
within seven (7) days of the date hereof, then such Buyer shall have the right
to terminate its obligations under this Agreement with respect to itself at any
time on or after the close of business on such date

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without liability of such Buyer to any other party; provided, however, (i) the
right to terminate this Agreement under this Section 8 shall not be available to
such Buyer if the failure of the transactions contemplated by this Agreement to
have been consummated by such date is the result of such Buyer’s breach of this
Agreement and (ii) the abandonment of the sale and purchase of the Notes and the
Warrants shall be applicable only to such Buyer providing such written notice,
provided further that no such termination shall affect any obligation of the
Company under this Agreement to reimburse such Buyer for the expenses described
in Section 4(g) above.  Nothing contained in this Section 8 shall be deemed to
release any party from any liability for any breach by such party of the terms
and provisions of this Agreement or the other Transaction Documents or to impair
the right of any party to compel specific performance by any other party of its
obligations under this Agreement or the other Transaction Documents.  

9.

MISCELLANEOUS.

(a)

Governing Law; Jurisdiction; Jury Trial.  All questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall
be governed by the internal laws of the State of New York, without giving effect
to any choice of law or conflict of law provision or rule (whether of the State
of New York or any other jurisdictions) that would cause the application of the
laws of any jurisdictions other than the State of New York.  The Company hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in The City of New York, Borough of Manhattan, for the
adjudication of any dispute hereunder or in connection herewith or under any of
the other Transaction Documents or with any transaction contemplated hereby or
thereby, and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is brought
in an inconvenient forum or that the venue of such suit, action or proceeding is
improper.  Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it under
this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof.  Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
 Nothing contained herein shall be deemed or operate to preclude any Buyer from
bringing suit or taking other legal action against the Company in any other
jurisdiction to collect on the Company’s obligations to such Buyer or to enforce
a judgment or other court ruling in favor of such Buyer. EACH PARTY HEREBY
IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY
TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR UNDER ANY OTHER
TRANSACTION DOCUMENT OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT, ANY
OTHER TRANSACTION DOCUMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY.

(b)

Counterparts.  This Agreement may be executed in two or more identical
counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party.  In the event that any signature is delivered by
facsimile transmission or by an e-mail which contains a portable document format
(.pdf) file of an executed signature page, such signature page shall

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create a valid and binding obligation of the party executing (or on whose behalf
such signature is executed) with the same force and effect as if such signature
page were an original thereof.

(c)

Headings; Gender.  The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.  Unless the context clearly indicates otherwise, each pronoun herein
shall be deemed to include the masculine, feminine, neuter, singular and plural
forms thereof.  The terms “including,” “includes,” “include” and words of like
import shall be construed broadly as if followed by the words “without
limitation.”  The terms “herein,” “hereunder,” “hereof” and words of like import
refer to this entire Agreement instead of just the provision in which they are
found.

(d)

Severability; Maximum Payment Amounts.  If any provision of this Agreement is
prohibited by law or otherwise determined to be invalid or unenforceable by a
court of competent jurisdiction, the provision that would otherwise be
prohibited, invalid or unenforceable shall be deemed amended to apply to the
broadest extent that it would be valid and enforceable, and the invalidity or
unenforceability of such provision shall not affect the validity of the
remaining provisions of this Agreement so long as this Agreement as so modified
continues to express, without material change, the original intentions of the
parties as to the subject matter hereof and the prohibited nature, invalidity or
unenforceability of the provision(s) in question does not substantially impair
the respective expectations or reciprocal obligations of the parties or the
practical realization of the benefits that would otherwise be conferred upon the
parties.  The parties will endeavor in good faith negotiations to replace the
prohibited, invalid or unenforceable provision(s) with a valid provision(s), the
effect of which comes as close as possible to that of the prohibited, invalid or
unenforceable provision(s).  Notwithstanding anything to the contrary contained
in this Agreement or any other Transaction Document (and without implication
that the following is required or applicable), it is the intention of the
parties that in no event shall amounts and value paid by the Company and/or any
of its Subsidiaries (as the case may be), or payable to or received by any of
the Buyers, under the Transaction Documents (including without limitation, any
amounts that would be characterized as “interest” under applicable law) exceed
amounts permitted under any applicable law.  Accordingly, if any obligation to
pay, payment made to any Buyer, or collection by any Buyer pursuant the
Transaction Documents is finally judicially determined to be contrary to any
such applicable law, such obligation to pay, payment or collection shall be
deemed to have been made by mutual mistake of such Buyer, the Company and its
Subsidiaries and such amount shall be deemed to have been adjusted with
retroactive effect to the maximum amount or rate of interest, as the case may
be, as would not be so prohibited by the applicable law.  Such adjustment shall
be effected, to the extent necessary, by reducing or refunding, at the option of
such Buyer, the amount of interest or any other amounts which would constitute
unlawful amounts required to be paid or actually paid to such Buyer under the
Transaction Documents.  For greater certainty, to the extent that any interest,
charges, fees, expenses or other amounts required to be paid to or received by
such Buyer under any of the Transaction Documents or related thereto are held to
be within the meaning of “interest” or another applicable term to otherwise be
violative of applicable law, such amounts shall be pro-rated over the period of
time to which they relate.  

(e)

Entire Agreement; Amendments.  This Agreement, the other Transaction Documents
and the schedules and exhibits attached hereto and thereto and the instruments
referenced herein and therein supersede all other prior oral or written
agreements between the

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Buyers, the Company, its Subsidiaries, their affiliates and Persons acting on
their behalf, including, without limitation, any transactions by any Buyer with
respect to Common Stock or the Securities, and the other matters contained
herein and therein, and this Agreement, the other Transaction Documents, the
schedules and exhibits attached hereto and thereto and the instruments
referenced herein and therein contain the entire understanding of the parties
solely with respect to the matters covered herein and therein; provided,
however, nothing contained in this Agreement or any other Transaction Document
shall (or shall be deemed to) (i) have any effect on any agreements any Buyer
has entered into with, or any instruments any Buyer has received from, the
Company or any of its Subsidiaries prior to the date hereof with respect to any
prior investment made by such Buyer in the Company or (ii) waive, alter, modify
or amend in any respect any obligations of the Company or any of its
Subsidiaries, or any rights of or benefits to any Buyer or any other Person, in
any agreement entered into prior to the date hereof between or among the Company
and/or any of its Subsidiaries and any Buyer, or any instruments any Buyer
received from the Company and/or any of its Subsidiaries prior to the date
hereof, and all such agreements and instruments shall continue in full force and
effect. Except as specifically set forth herein or therein, neither the Company
nor any Buyer makes any representation, warranty, covenant or undertaking with
respect to such matters.  For clarification purposes, the Recitals are part of
this Agreement.  No provision of this Agreement may be amended other than by an
instrument in writing signed by the Company and the Required Holders (as defined
below), and any amendment to any provision of this Agreement made in conformity
with the provisions of this Section 9(e) shall be binding on all Buyers and
holders of Securities, as applicable; provided that no such amendment shall be
effective to the extent that it (A) applies to less than all of the holders of
the Securities then outstanding or (B) imposes any obligation or liability on
any Buyer without such Buyer’s prior written consent (which may be granted or
withheld in such Buyer’s sole discretion); and provided further that (i) the
provisions of Sections 4(p) and 4(q) above cannot be amended or waived without
the additional prior written approval of the Collateral Agent or its successor
and (ii) any such amendment or waiver that materially and adversely affects the
rights of the Placement Agent shall require the prior written consent of the
Placement Agent.  No waiver shall be effective unless it is in writing and
signed by an authorized representative of the waiving party, provided that the
Required Holders may waive any provision of this Agreement, and any waiver of
any provision of this Agreement made in conformity with the provisions of this
Section 9(e) shall be binding on all Buyers and holders of Securities, as
applicable, provided that no such waiver shall be effective to the extent that
it (1) applies to less than all of the holders of the Securities then
outstanding (unless a party gives a waiver as to itself only) or (2) imposes any
obligation or liability on any Buyer without such Buyer’s prior written consent
(which may be granted or withheld in such Buyer’s sole discretion).  No
consideration (other than reimbursement of legal fees) shall be offered or paid
to any Person to amend or consent to a waiver or modification of any provision
of any of the Transaction Documents unless the same consideration also is
offered to all of the parties to the Transaction Documents, all holders of the
Notes or all holders of the Warrants (as the case may be).  From the date hereof
and while any Notes, Warrants or Warrant Shares are outstanding, the Company
shall not be permitted to receive any consideration from a Buyer or a holder of
Notes, Warrants or Warrant Shares that is not otherwise contemplated by the
Transaction Documents in order to, directly or indirectly, induce the Company or
any Subsidiary (i) to treat such Buyer or holder of Notes, Warrants or Warrant
Shares in a manner that is more favorable than to other similarly situated
Buyers or holders of Notes, Warrants or Warrant Shares, as applicable, or (ii)
to treat any

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Buyer(s) or holder(s) of Notes, Warrants or Warrant Shares in a manner that is
less favorable than the Buyer or holder of Notes, Warrants or Warrant Shares
that is paying such consideration; provided, however, that the determination of
whether a Buyer has been treated more or less favorably than another Buyer shall
disregard any securities of the Company purchased or sold by any Buyer.  The
Company has not, directly or indirectly, made any agreements with any Buyers
relating to the terms or conditions of the transactions contemplated by the
Transaction Documents except as set forth in the Transaction Documents.  Without
limiting the foregoing, the Company confirms that, except as set forth in this
Agreement, no Buyer has made any commitment or promise or has any other
obligation to provide any financing to the Company, any Subsidiary or otherwise.
 As a material inducement for each Buyer to enter into this Agreement, the
Company expressly acknowledges and agrees that (x) no due diligence or other
investigation or inquiry conducted by a Buyer, any of its advisors or any of its
representatives shall affect such Buyer’s right to rely on, or shall modify or
qualify in any manner or be an exception to any of, the Company’s
representations and warranties contained in this Agreement or any other
Transaction Document and (y) nothing contained in any of the Due Diligence
Materials shall affect such Buyer’s right to rely on, or shall modify or qualify
in any manner or be an exception to any of, the Company’s representations and
warranties contained in this Agreement or any other Transaction Document.
 “Required Holders” means (I) prior to the Closing Date, each Buyer entitled to
purchase Notes and Warrants at the Closing and (II) on or after the Closing
Date, holders of a majority of the Warrant Shares as of such time (excluding any
Warrant Shares held by the Company or any of its Subsidiaries as of such time)
issued or issuable hereunder or pursuant to the Notes and/or the Warrants (or
the Buyers, with respect to any waiver or amendment of Section 4(o)).

(f)

Notices.  Any notices, consents, waivers or other communications required or
permitted to be given under the terms of this Agreement must be in writing and
will be deemed to have been delivered:  (i) upon receipt, when delivered
personally; (ii) upon receipt, when sent by facsimile (provided confirmation of
transmission is mechanically or electronically generated and kept on file by the
sending party) or electronic mail; or (iii) one (1) Business Day after deposit
with an overnight courier service with next day delivery specified, in each
case, properly addressed to the party to receive the same.  The addresses,
facsimile numbers and e-mail addresses for such communications shall be:

If to the Company:

Duos Technologies Group, Inc.
6622 Southpoint Drive South
Jacksonville, Florida 32216
Telephone:  (904) 652-1600
Attention:  Chief Executive Officer
E-Mail:  gba@duostech.com

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If to the Placement Agent:

Aegis Capital Corp.
810 7th Avenue- 18th Floor
New York, NY 10019
Telephone: (973) 650-7836
Attention:  Jeff Glasse
E-Mail: jglasse@aegiscap.com

If to a Buyer, to its address, e-mail address and facsimile number set forth on
the Schedule of Buyers, with copies to such Buyer’s representatives as set forth
on the Schedule of Buyers,

with a copy (for informational purposes only) to:

Akerman LLP
666 Fifth Avenue
New York, NY 10103
Telephone:  (212) 880-3800
Facsimile:  (212) 880-8965
Attention:  Kenneth G. Alberstadt, Esq.
E-mail:   kenneth.alberstadt@akerman.com

or to such other address, e-mail address and/or facsimile number and/or to the
attention of such other Person as the recipient party has specified by written
notice given to each other party five (5) days prior to the effectiveness of
such change, provided that Akerman LLP shall only be provided copies of notices
sent to the lead Buyer.  Written confirmation of receipt (A) given by the
recipient of such notice, consent, waiver or other communication, (B)
mechanically or electronically generated by the sender’s facsimile machine or
e-mail containing the time, date, recipient facsimile number and, with respect
to each facsimile transmission, an image of the first page of such transmission
or (C) provided by an overnight courier service shall be rebuttable evidence of
personal service, receipt by facsimile or receipt from an overnight courier
service in accordance with clause (i), (ii) or (iii) above, respectively.

(g)

Successors and Assigns.  This Agreement shall be binding upon and inure to the
benefit of the parties and their respective successors and assigns, including
any purchasers of any of the Notes, Warrants and Warrant Shares; provided,
however any purchaser of the Warrant Shares through an open market transaction
shall obtain no rights hereunder.  The Company shall not assign this Agreement
or any rights or obligations hereunder without the prior written consent of the
Required Holders, including, without limitation, by way of a Fundamental
Transaction (as defined in the Notes) (unless the Company is in compliance with
the applicable provisions governing Fundamental Transactions set forth in the
Notes).  A Buyer may assign some or all of its rights hereunder in connection
with any transfer of any of its Securities or Warrant Shares without the consent
of the Company, in which event such assignee shall be deemed to be a Buyer
hereunder with respect to such assigned rights.

(h)

No Third Party Beneficiaries.  This Agreement is intended for the benefit of the
parties hereto and their respective permitted successors and assigns, and is not
for the benefit of,

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nor may any provision hereof be enforced by, any other Person, other than the
Indemnitees referred to in Section 9(k) and the Placement Agent.

(i)

Survival.  The representations, warranties, agreements and covenants shall
survive the Closing.  Each Buyer shall be responsible only for its own
representations, warranties, agreements and covenants hereunder.

(j)

Further Assurances.  Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver all
such other agreements, certificates, instruments and documents, as any other
party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated
hereby.

(k)

Indemnification.

(i)

In consideration of each Buyer’s execution and delivery of the Transaction
Documents and acquiring the Securities and Warrant Shares thereunder and in
addition to all of the Company’s other obligations under the Transaction
Documents, the Company shall defend, protect, indemnify and hold harmless each
Buyer and each holder of any Securities and Warrant Shares and all of their
stockholders, partners, members, managers, officers, directors, employees and
direct or indirect investors and any of the foregoing Persons’ agents or other
representatives (including, without limitation, those retained in connection
with the transactions contemplated by this Agreement) (collectively, the
“Indemnitees”) from and against any and all actions, causes of action, suits,
claims, losses, costs, penalties, fees, liabilities and damages, and expenses in
connection therewith (irrespective of whether any such Indemnitee is a party to
the action for which indemnification hereunder is sought), and including
reasonable attorneys’ fees and disbursements (the “Indemnified Liabilities”),
incurred by any Indemnitee as a result of, or arising out of, or relating to (i)
any misrepresentation or breach of any representation or warranty made by the
Company or any Subsidiary in any of the Transaction Documents, (ii) any breach
of any covenant, agreement or obligation of the Company or any Subsidiary
contained in any of the Transaction Documents or (iii) any cause of action,
suit, proceeding or claim brought or made against such Indemnitee by a third
party (including for these purposes a derivative action brought on behalf of the
Company or any Subsidiary) or which otherwise involves such Indemnitee that
arises out of or results from (A) the execution, delivery, performance or
enforcement of any of the Transaction Documents, (B) any transaction financed or
to be financed in whole or in part, directly or indirectly, with the proceeds of
the issuance of the Securities, (C) any disclosure properly made by such Buyer
pursuant to Section 4(i), or (D) the status of such Buyer or holder of the
Securities and Warrant Shares either as an investor in the Company pursuant to
the transactions contemplated by the Transaction Documents or as a party to this
Agreement (including, without limitation, as a party  in interest or otherwise
in any action or proceeding for injunctive or other equitable relief) unless
such action is primarily based upon a breach of Buyer’s representations,
warranties or covenants under the Transaction Documents or violations by a Buyer
of state or federal securities laws or any conduct by a Buyer that a court of
competent jurisdiction issues a final non-appealable order that such conduct
constitutes fraud, gross negligence, willful

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misconduct or malfeasance.  To the extent that the foregoing undertaking by the
Company may be unenforceable for any reason, the Company shall make the maximum
contribution to the payment and satisfaction of each of the Indemnified
Liabilities which is permissible under applicable law.

(ii)

Promptly after receipt by an Indemnitee under this Section 9(k) of notice of the
commencement of any action or proceeding (including any governmental action or
proceeding) involving an Indemnified Liability, such Indemnitee shall, if a
claim in respect thereof is to be made against the Company under this Section
9(k), deliver to the Company a written notice of the commencement thereof, and
the Company shall have the right to participate in, and, to the extent the
Company so desires, to assume control of the defense thereof with counsel
mutually satisfactory to the Company and the Indemnitee; provided, however, that
an Indemnitee shall have the right to retain its own counsel with the fees and
expenses of such counsel to be paid by the Company if: (A) the Company has
agreed in writing to pay such fees and expenses; (B) the Company shall have
failed promptly to assume the defense of such Indemnified Liability and to
employ counsel reasonably satisfactory to such Indemnitee in any such
Indemnified Liability; or (C) the named parties to any such Indemnified
Liability (including any impleaded parties) include both such Indemnitee and the
Company, and such Indemnitee shall have been advised by counsel that a conflict
of interest is likely to exist if the same counsel were to represent such
Indemnitee and the Company (in which case, if such Indemnitee notifies the
Company in writing that it elects to employ separate counsel at the expense of
the Company, then the Company shall not have the right to assume the defense
thereof and such counsel shall be at the expense of the Company), provided
further, that in the case of clause (C) above the Company shall not be
responsible for the reasonable fees and expenses of more than one (1) separate
legal counsel for the Indemnitees. The Indemnitee shall reasonably cooperate
with the Company in connection with any negotiation or defense of any such
action or Indemnified Liability by the Company and shall furnish to the Company
all information reasonably available to the Indemnitee which relates to such
action or Indemnified Liability. The Company shall keep the Indemnitee
reasonably apprised at all times as to the status of the defense or any
settlement negotiations with respect thereto. The Company shall not be liable
for any settlement of any action, claim or proceeding effected without its prior
written consent, provided, however, that the Company shall not unreasonably
withhold, delay or condition its consent. The Company shall not, without the
prior written consent of the Indemnitee, consent to entry of any judgment or
enter into any settlement or other compromise which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnitee of a release from all liability in respect to such Indemnified
Liability or litigation, and such settlement shall not include any admission as
to fault on the part of the Indemnitee. Following indemnification as provided
for hereunder, the Company shall be subrogated to all rights of the Indemnitee
with respect to all third parties, firms or corporations relating to the matter
for which indemnification has been made. The failure to deliver written notice
to the Company within a reasonable time of the commencement of any such action
shall not relieve the Company of any liability to the Indemnitee under this
Section 9(k), except to the extent that the Company is materially and adversely
prejudiced in its ability to defend such action.

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(iii)

The indemnification required by this Section 9(k) shall be made by periodic
payments of the amount thereof during the course of the investigation or
defense, within ten (10) days after bills are received or Indemnified
Liabilities are incurred.

(iv)

The indemnity agreement contained herein shall be in addition to (A) any cause
of action or similar right of the Indemnitee against the Company or others, and
(B) any liabilities the Company may be subject to pursuant to the law.

(l)

Construction.  The language used in this Agreement will be deemed to be the
language chosen by the parties to express their mutual intent, and no rules of
strict construction will be applied against any party.  No specific
representation or warranty shall limit the generality or applicability of a more
general representation or warranty. Each and every reference to share prices,
shares of Common Stock and any other numbers in this Agreement that relate to
the Common Stock shall be automatically adjusted for any stock splits, stock
dividends, stock combinations, recapitalizations or other similar transactions
that occur with respect to the Common Stock after the date of this Agreement.
 It is expressly understood and agreed that for all purposes of this Agreement,
and without implication that the contrary would otherwise be true, neither
transactions nor purchases nor sales shall include the location and/or
reservation of borrowable shares of Common Stock.

(m)

Remedies.  Each Buyer and in the event of assignment by Buyer of its rights and
obligations hereunder, each holder of Securities, shall have all rights and
remedies set forth in the Transaction Documents and all rights and remedies
which such holders have been granted at any time under any other agreement or
contract and all of the rights which such holders have under any law.  Any
Person having any rights under any provision of this Agreement shall be entitled
to enforce such rights specifically (without posting a bond or other security),
to recover damages by reason of any breach of any provision of this Agreement
and to exercise all other rights granted by law.  Furthermore, the Company
recognizes that in the event that it or any Subsidiary fails to perform,
observe, or discharge any or all of its or such Subsidiary’s (as the case may
be) obligations under the Transaction Documents, any remedy at law may prove to
be inadequate relief to the Buyers.  The Company therefore agrees that the
Buyers shall be entitled to seek specific performance and/or temporary,
preliminary and permanent injunctive or other equitable relief from any court of
competent jurisdiction in any such case without the necessity of proving actual
damages and without posting a bond or other security.  The remedies provided in
this Agreement and the other Transaction Documents shall be cumulative and in
addition to all other remedies available under this Agreement and the other
Transaction Documents, at law or in equity (including a decree of specific
performance and/or other injunctive relief).

(n)

Withdrawal Right.  Notwithstanding anything to the contrary contained in (and
without limiting any similar provisions of) the Transaction Documents, whenever
any Buyer exercises a right, election, demand or option under a Transaction
Document and the Company or any Subsidiary does not timely perform its related
obligations within the periods therein provided, then such Buyer may rescind or
withdraw, in its sole discretion from time to time upon written notice to the
Company or such Subsidiary (as the case may be), any relevant notice, demand or
election in whole or in part without prejudice to its future actions and rights.

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(o)

Payment Set Aside; Currency.  To the extent that the Company makes a payment or
payments to any Buyer hereunder or pursuant to any of the other Transaction
Documents or any of the Buyers enforce or exercise their rights hereunder or
thereunder, and such payment or payments or the proceeds of such enforcement or
exercise or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside, recovered from, disgorged by or are
required to be refunded, repaid or otherwise restored to the Company, a trustee,
receiver or any other Person under any law (including, without limitation, any
bankruptcy law, foreign, state or federal law, common law or equitable cause of
action), then to the extent of any such restoration the obligation or part
thereof originally intended to be satisfied shall be revived and continued in
full force and effect as if such payment had not been made or such enforcement
or setoff had not occurred.  Unless otherwise expressly indicated, all dollar
amounts referred to in this Agreement and the other Transaction Documents are in
United States Dollars (“U.S. Dollars”), and all amounts owing under this
Agreement and all other Transaction Documents shall be paid in U.S. Dollars.
 All amounts denominated in other currencies (if any) shall be converted into
the U.S. Dollar equivalent amount in accordance with the Exchange Rate on the
date of calculation.  “Exchange Rate” means, in relation to any amount of
currency to be converted into U.S. Dollars pursuant to this Agreement, the U.S.
Dollar exchange rate as published in the Wall Street Journal on the relevant
date of calculation.

(p)

Judgment Currency.

(i)

If for the purpose of obtaining or enforcing judgment against the Company in
connection with this Agreement or any other Transaction Document in any court in
any jurisdiction it becomes necessary to convert into any other currency (such
other currency being hereinafter in this Section 9(p) referred to as the
“Judgment Currency”) an amount due in US Dollars under this Agreement, the
conversion shall be made at the Exchange Rate prevailing on the Business Day
immediately preceding:

(1)

the date actual payment of the amount due, in the case of any proceeding in the
courts of New York or in the courts of any other jurisdiction that will give
effect to such conversion being made on such date:  or

(2)

the date on which the foreign court determines, in the case of any proceeding in
the courts of any other jurisdiction (the date as of which such conversion is
made pursuant to this Section 9(p)(i)(2) being hereinafter referred to as the
“Judgment Conversion Date”).

(ii)

If in the case of any proceeding in the court of any jurisdiction referred to in
Section 9(p)(i)(2) above, there is a change in the Exchange Rate prevailing
between the Judgment Conversion Date and the date of actual payment of the
amount due, the applicable party shall pay such adjusted amount as may be
necessary to ensure that the amount paid in the Judgment Currency, when
converted at the Exchange Rate prevailing on the date of payment, will produce
the amount of US Dollars which could have been purchased with the amount of
Judgment Currency stipulated in the judgment or judicial order at the Exchange
Rate prevailing on the Judgment Conversion Date.

57

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(iii)

Any amount due from the Company under this provision shall be due as a separate
debt and shall not be affected by judgment being obtained for any other amounts
due under or in respect of this Agreement or any other Transaction Document.

(q)

Reliance by the Placement Agent. Each party agrees and acknowledges that the
Placement Agent may rely on the representations, warranties, agreements and
covenants of the Company contained in this Agreement and may rely on the
representations and warranties of the respective Buyers contained in this
Agreement as if such representations, warranties, agreements, and covenants, as
applicable, were made directly to the Placement Agent. The parties further agree
that the Placement Agent may rely on or, if the Placement Agent so requests, be
specifically named as an addressee of, the legal opinions to be delivered
pursuant to Section 7(a)(ii) of this Agreement.

(r)

Exculpation of Placement Agent. Each party hereto agrees for the express benefit
of each of the Placement Agent, their affiliates and representatives that:

(i)

Except with respect to the Placement Agent Buyers (solely in their capacity as a
holder of Securities or a Buyer hereunder with respect to such Buyer’s
representations, warranties, covenants and obligations of such Buyer hereunder
or pursuant to the Transaction Documents), neither the Placement Agent nor any
of its affiliates or any of its representatives (A) has any duties or
obligations other than those specifically set forth herein or in the Engagement
Letter; (B) shall be liable for any improper payment made in accordance with the
information provided by the Company; (C) makes any representation or warranty,
or has any responsibilities as to the validity, accuracy, value or genuineness
of any information, certificates or documentation delivered by or on behalf of
the Company pursuant to this Agreement or the Transaction Documents or in
connection with any of the transactions contemplated hereby; or (D) shall be
liable (x) for any action taken, suffered or omitted by any of them in good
faith and reasonably believed to be authorized or within the discretion or
rights or powers conferred upon it by this Agreement or any Transaction Document
or (y) for anything which any of them may do or refrain from doing in connection
with this Agreement or any Transaction Document, except for such party's own
gross negligence, willful misconduct or bad faith.

(ii)

The Placement Agent, and its affiliates and representatives shall be entitled to
(1) rely on, and shall be protected in acting upon, any certificate, instrument,
opinion, notice, letter or any other document or security delivered to any of
them by or on behalf of the Company, and (2) be indemnified by the Company for
acting as Placement Agent hereunder pursuant the indemnification provisions set
forth in the Engagement Letter.

(s)

Independent Nature of Buyers’ Obligations and Rights.  The obligations of each
Buyer under the Transaction Documents are several and not joint with the
obligations of any other Buyer, and no Buyer shall be responsible in any way for
the performance of the obligations of any other Buyer under any Transaction
Document.  Nothing contained herein or in any other Transaction Document, and no
action taken by any Buyer pursuant hereto or thereto, shall be deemed to
constitute the Buyers as, and the Company acknowledges that the Buyers do not so

58

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constitute, a partnership, an association, a joint venture or any other kind of
group or entity, or create a presumption that the Buyers are in any way acting
in concert or as a group or entity, and the Company shall not assert any such
claim with respect to such obligations or the transactions contemplated by the
Transaction Documents or any matters, and the Company acknowledges that the
Buyers are not acting in concert or as a group, and the Company shall not assert
any such claim, with respect to such obligations or the transactions
contemplated by the Transaction Documents.  The decision of each Buyer to
purchase Securities pursuant to the Transaction Documents has been made by such
Buyer independently of any other Buyer.  Each Buyer acknowledges that no other
Buyer has acted as agent for such Buyer in connection with such Buyer making its
investment hereunder and that no other Buyer will be acting as agent of such
Buyer in connection with monitoring such Buyer’s investment in the Securities or
enforcing its rights under the Transaction Documents.  The Company and each
Buyer confirms that each Buyer has independently participated with the Company
and its Subsidiaries in the negotiation of the transaction contemplated hereby
with the advice of its own counsel and advisors.  Each Buyer shall be entitled
to independently protect and enforce its rights, including, without limitation,
the rights arising out of this Agreement or out of any other Transaction
Documents, and it shall not be necessary for any other Buyer to be joined as an
additional party in any proceeding for such purpose.  The use of a single
agreement to effectuate the purchase and sale of the Securities contemplated
hereby was solely in the control of the Company, not the action or decision of
any Buyer, and was done solely for the convenience of the Company and its
Subsidiaries and not because it was required or requested to do so by any Buyer.
 It is expressly understood and agreed that each provision contained in this
Agreement and in each other Transaction Document is between the Company, each
Subsidiary and a Buyer, solely, and not between the Company, its Subsidiaries
and the Buyers collectively and not between and among the Buyers.

[signature pages follow]

59

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IN WITNESS WHEREOF, each Buyer and the Company have caused their respective
signature page to this Agreement to be duly executed as of the date first
written above.

COMPANY:

 

 

DUOS TECHNOLOGIES GROUP, INC.

 

 

 

 

 

 

By:

 

 

Name:

 

Title:

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, each Buyer and the Company have caused their respective
signature page to this Agreement to be duly executed as of the date first
written above.

BUYER:

 

 

GPB DEBT HOLDINGS II, LLC

 

 

 

 

 

 

By:

 

 

Name:

 

Title:

--------------------------------------------------------------------------------

SCHEDULE OF BUYERS

(1)

(2)

(3)

(4)

(5)

(6)

 

 

 

 

 

 

Buyer

Address and Facsimile Number

Original Principal Amount of Notes

Aggregate
Number of
Warrants

Purchase Price

Legal Representative’s
Address and Facsimile Number

 

 

 

 

 

 

GPB Debt Holdings II, LLC

535 West 24th Street,  4th Floor
New York, New York  10011
Telephone:  (212) 558-9199
Facsimile:  (212) 235-2651

Attention:  Tim Creutz

$1,800,000

2,500,000

1,710,000

Akerman LLP

666 Fifth Avenue

New York, NY 10103

Telephone:  (212) 880-3800

Facsimile:  (212) 880-8965

Attention:  Kenneth G. Alberstadt, Esq.

TOTAL

$1,800,000

2,500,000

1,710,000