f8k110507ex10i_signet.htm


    INVESTMENT
      AGREEMENT

     

    INVESTMENT
      AGREEMENT (this "AGREEMENT"), dated as of November 5, 2007 by and between Signet
      International Holdings, Inc., a Delaware corporation (the "Company"), and
      Dutchess Private Equities Fund, Ltd., a Cayman Islands exempted company (the
      "Investor").

     

    WHEREAS,
      the parties desire that, upon the terms and subject to the conditions contained
      herein, the Investor shall invest up to Ten Million dollars ($10,000,000) to
      purchase the Company's Common Stock, $.001 par value per share (the "Common
      Stock");

     

    WHEREAS,
      such investments will be made in reliance upon the provisions of Section 4(2)
      under the Securities Act of 1933, as amended (the "1933 Act"), Rule 506 of
      Regulation D, and the rules and regulations promulgated thereunder, and/or
      upon
      such other exemption from the registration requirements of the 1933 Act as
      may
      be available with respect to any or all of the investments in Common Stock
      to be
      made hereunder; and

     

    WHEREAS,
      contemporaneously with the execution and delivery of this Agreement, the parties
      hereto are executing and delivering a Registration Rights Agreement
      substantially in the form attached hereto (the "Registration Rights Agreement")
      pursuant to which the Company has agreed to provide certain registration rights
      under the 1933 Act, and the rules and regulations promulgated thereunder, and
      applicable state securities laws.

     

    NOW
      THEREFORE, in consideration of the foregoing recitals, which shall be considered
      an integral part of this Agreement, the covenants and agreements set forth
      hereafter, and other good and valuable consideration, the receipt and
      sufficiency of which is hereby acknowledged, the Company and the Investor hereby
      agree as follows:

     

    SECTION
      1.  DEFINITIONS.

     

    As
      used
      in this Agreement, the following terms shall have the following meanings
      specified or indicated below, and such meanings shall be equally applicable
      to
      the singular and plural forms of such defined terms.

     

    “1933
      Act” shall have the meaning set forth in the preamble of this
      agreement.

     

    “1934
      Act” shall mean the Securities Exchange Act of 1934, as it may be
      amended.

     

    “Affiliate”
      shall have the meaning specified in Section 5(H), below. 

     

    “Agreement”
      shall mean this Investment Agreement.

     

     

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

     

     

    “Best
      Bid” shall mean the highest posted bid price of the Common Stock during a
      given period of time.

     

    “By-laws”
      shall have the meaning specified in Section 4(C).

     

          
      “Certificate of Incorporation” shall have the meaning specified in
      Section 4(C).

     

    “Closing”
      shall have the meaning specified in Section 2(G).

     

    “Closing
      Date” shall mean no more than seven (7) Trading Days following the Put
      Notice Date.

     

    “Common
      Stock” shall have the meaning set forth in the preamble of this
      Agreement.

     

          
      “Control” or “Controls” shall have the meaning specified in
      Section 5(H).

     

    “Effective
      Date” shall mean the date the SEC declares effective under the 1933 Act the
      Registration Statement covering the Securities.

     

          
      “Environmental Laws” shall have the meaning specified in Section
      4(M).

     

    “Equity
      Line Transaction Documents” shall mean this Agreement, the Registration
      Rights Agreement.

     

    “Execution
      Date” shall mean the date indicated in the preamble to this
      Agreement.

     

          
       “Indemnities” shall have the meaning specified in Section 11.


     

                  
      “Indemnified Liabilities” shall have the meaning specified in Section
      11.

     

    “Ineffective
      Period” shall mean any period of time that the Registration Statement or any
      Supplemental Registration Statement (as defined in the Registration Rights
      Agreement between the parties) becomes ineffective or unavailable for use for
      the sale or resale, as applicable, of any or all of the Registrable Securities
      (as defined in the Registration Rights Agreement) for any reason (or in the
      event the prospectus under either of the above is not current and deliverable)
      during any time period required under the Registration Rights
      Agreement.

     

    “Investor”
      shall have the meaning indicated in the preamble of this
      Agreement.

     

          
      “Material Adverse Effect” shall have the meaning specified in Section
      4(A).

    


     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

     

     

    “Maximum
      Common Stock Issuance” shall have the meaning specified in Section
      2(H).

     

    “Open
      Market Adjustment Amount” shall have the meaning specified in Section
      2(I).

     

           "Open
      Market Purchase" shall have the meaning specified in Section
      2(I)

     

    “Open
      Market Share Purchase” shall have the meaning specified in Section
      2(I).

     

    “Open
      Period” shall mean the period beginning on and including the Trading Day
      immediately following the Effective Date and ending on the earlier to occur
      of
(i) the date which is thirty-six (36) months from the Effective
      Date; or (ii) termination of the Agreement in accordance with
      Section 9, below.

     

    “Pricing
      Period” shall mean the period beginning on the Put Notice Date and ending on
      and including the date that is five (5) Trading Days after such Put Notice
      Date.

     

    “Principal
      Market” shall mean the American Stock Exchange, Inc., the National
      Association of Securities Dealers, Inc. Over-the-Counter Bulletin Board, the
      NASDAQ National Market System or the NASDAQ SmallCap Market, whichever is the
      principal market on which the Common Stock is listed.

     

    “Prospectus”
      shall mean the prospectus, preliminary prospectus and supplemental
      prospectus used in connection with the Registration Statement.

     

    “Purchase
      Amount” shall mean the total amount being paid by the Investor on a
      particular Closing Date to purchase the Securities.

     

    “Purchase
      Price” shall mean ninety-three percent (93%) of the lowest closing Best Bid
      price of the Common Stock during the Pricing Period.

     

    “Put”
      shall have the meaning set forth in Section 2(B)(1) hereof.

     

    “Put
      Amount” shall have the meaning set forth in Section 2(B)(1)
      hereof.

     

    “Put
      Notice” shall mean a written notice sent to the Investor by the Company
      stating the Put Amount in U.S. dollars the Company intends to sell to the
      Investor pursuant to the terms of the Agreement and stating the current number
      of Shares issued and outstanding on such date.

     

     

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

     

    “Put
      Notice Date” shall mean the Trading Day, as set forth below, immediately
      following the day on which the Investor receives a Put Notice, however a Put
      Notice shall be deemed delivered on (a) the Trading Day it is
      received by facsimile or otherwise by the Investor if such notice is received
      prior to 9:00 am Eastern Time, or (b) the immediately
      succeeding Trading Day if it is received by facsimile or otherwise after 9:00
      am
      Eastern Time on a Trading Day. No Put Notice may be deemed delivered on a day
      that is not a Trading Day.

     

    “Put
      Restriction” shall mean the days between the beginning of the Pricing Period
      and Closing Date. During this time, the Company shall not be entitled to deliver
      another Put Notice.

     

    “Put
      Shares Due” shall have the meaning specified in Section 2(I).

     

    “Registration
      Period” shall have the meaning specified in Section 5(C),
      below.

     

    “Registration
      Rights Agreement” shall have the meaning set forth in the recitals,
      above.

     

    “Registration
      Statement” means the registration statement of the Company filed under the
      1933 Act covering the Common Stock issuable hereunder.

     

    “Related
      Party” shall have the meaning specified in Section 5(H).

     

     “Resolution”
      shall have the meaning specified in Section 8(E). 

     

    “SEC”
      shall mean the U.S. Securities & Exchange Commission. 

     

    “SEC
      Documents” shall have the meaning specified in Section 4(F).

     

    “Securities”
      shall mean the shares of Common Stock issued pursuant to the terms of the
      Agreement.

     

    “Shares”
      shall mean the shares of the Company’s Common Stock. 

     

    “Subsidiaries”
      shall have the meaning specified in Section 4(A).

     

    “Trading
      Day” shall mean any day on which the Principal Market for the Common Stock
      is open for trading, from the hours of 9:30 am until 4:00 pm.

     

    SECTION
      2.  PURCHASE AND SALE
      OF COMMON STOCK.

     

    (A)  PURCHASE
      AND SALE OF
      COMMON STOCK. Subject to the terms and conditions set forth herein, the Company
      shall issue and sell to the Investor, and the
      Investor shall purchase from the Company, up to that number of Shares having
      an
      aggregate Purchase Price of Ten Million dollars ($10,000,000).

     

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

     

    (B)  DELIVERY
      OF PUT NOTICES.

     

    (I)
      Subject to the terms and conditions of the Equity Line Transaction Documents,
      and from time to time during the Open Period, the Company may, in its sole
      discretion, deliver a Put Notice to the Investor which states the dollar amount
      (designated in U.S. Dollars) (the "Put Amount"), which the Company intends
      to
      sell to the Investor on a Closing Date (the "Put"). The Put Notice shall be
      in
      the form attached hereto as Exhibit C and incorporated herein by reference.
      The
      amount that the Company shall be entitled to Put to the Investor (the "Put
      Amount") shall be equal to, at the Company's election, either: (A) up to Two
      Hundred percent (200%) of the average daily volume (U.S. market only) of the
      Common Stock for the Ten (10) Trading Days prior to the applicable Put Notice
      Date, multiplied by the average of the three (3) daily closing bid prices
      immediately preceding the Put Date, or (B) up to two hundred fifty thousand
      dollars ($250,000). During the Open Period, the Company shall not be entitled
      to
      submit a Put Notice until after the previous Closing has been completed. The
      Purchase Price for the Common Stock identified in the Put Notice shall be equal
      to ninety-three percent (93%) of the lowest closing Best Bid price of the Common
      Stock during the Pricing Period.

     

    (C)  INTENTIONALLY
      OMITTED

     

    (D)  CONDITIONS
      TO INVESTOR'S OBLIGATION TO PURCHASE SHARES. Notwithstanding anything to the
      contrary in this Agreement, the Company shall not be entitled to deliver a
      Put
      Notice and the Investor shall not be obligated to purchase any Shares at a
      Closing (as defined in Section 2(G)) unless each of the following conditions
      are
      satisfied:

     

    (I)  a
      Registration Statement shall have been declared effective and shall remain
      effective and available for the resale of all the Registrable Securities (as
      defined in the Registration Rights Agreement) at all times until the Closing
      with respect to the subject Put Notice;

     

    (II)  at
      all
      times during the period beginning on the related Put Notice Date and ending
      on
      and including the related Closing Date, the Common Stock shall have been listed
      on the Principal Market and shall not have been suspended from trading thereon
      for a period of two (2) consecutive Trading Days during the Open
      Period and the Company shall not have been notified of any pending or threatened
      proceeding or other action to suspend the trading of the Common
      Stock;

     

     

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

     

    (III)  the
      Company has complied with its obligations and is otherwise not in breach of
      or
      in default under, this Agreement, the Registration Rights Agreement or any
      other
      agreement executed in connection herewith which has not been cured prior to
      delivery of the Investor’s Put Notice Date;

     

    (IV)  no
      injunction shall have been issued and remain in force, or action commenced
      by a
      governmental authority which has not been stayed or abandoned, prohibiting
      the
      purchase or the issuance of the Securities; and

     

    (V)       
      the issuance of the Securities will not violate any shareholder approval
      requirements of the Principal Market.

     

    If
      any of
      the events described in clauses (I) through (V) above occurs during a Pricing
      Period, then the Investor shall have no obligation to purchase the Put Amount
      of
      Common Stock set forth in the applicable Put Notice.

     

    (E)  RESERVED

     

    (F)  MECHANICS
      OF PURCHASE OF SHARES BY INVESTOR. Subject to the satisfaction of the conditions
      set forth in Sections 2(E), 7 and 8, the closing of the purchase by the Investor
      of Shares (a "Closing") shall occur on the date which is no later than seven
      (7)
      Trading Days following the applicable Put Notice Date (each a "Closing Date").
      Prior to each Closing Date, (I) the Company shall deliver to the Investor
      pursuant to this Agreement, certificates representing the Shares to be issued
      to
      the Investor on such date and registered in the name of the Investor; and (II)
      the Investor shall deliver to the Company the Purchase Price to be paid for
      such
      Shares, determined as set forth in Section 2(B). In lieu of delivering physical
      certificates representing the Securities and provided that the Company's
      transfer agent then is participating in The Depository Trust Company ("DTC")
      Fast Automated Securities Transfer ("FAST") program, upon request of the
      Investor, the Company shall use all commercially reasonable efforts to cause
      its
      transfer agent to electronically transmit the Securities by crediting the
      account of the Investor's prime broker (as specified by the Investor within
      a
      reasonably in advance of the Investor's notice) with DTC through its Deposit
      Withdrawal Agent Commission ("DWAC") system.

     

    The
      Company understands that a delay in the issuance of Securities beyond the
      Closing Date could result in economic damage to the Investor. After the
      Effective Date, as compensation to the Investor for such loss, the Company
      agrees to make late payments to the Investor for late issuance of Securities
      (delivery of Securities after the applicable Closing Date) in accordance with
      the following schedule (where "No. of Days Late" is defined as the number of
      trading days beyond the Closing Date, with the Amounts being
      cumulative.):

    


     

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

     

     

    
      	
              LATE
                PAYMENT FOR EACH

              NO. 
                OF
                DAYS LATE

            	
              $10,000
                WORTH OF COMMON STOCK 

            
	
              1

            	
              $100

            
	
              2

            	
              $200

            
	
              3

            	
              $300

            
	
              4

            	
              $400

            
	
              5

            	
              $500

            
	
              6

            	
              $600

            
	
              7

            	
              $700

            
	
              8

            	
              $800

            
	
              9

            	
              $900

            
	
              10

            	
              $1,000

            
	
              Over
                10

            	
              $1,000
                + $200 for each Business
                Day late beyond 10 days

            


    

     

     

    The
      Company shall make any payments incurred under this Section in immediately
      available funds upon demand by the Investor. Nothing herein shall limit the
      Investor's right to pursue actual damages for the Company's failure to issue
      and
      deliver the Securities to the Investor, except that such late payments shall
      offset any such actual damages incurred by the Investor, and any Open Market
      Adjustment Amount, as set forth below.

     

    (G)  OVERALL
      LIMIT ON COMMON STOCK ISSUABLE. Notwithstanding anything contained herein to
      the
      contrary, if during the Open Period the Company becomes listed on an exchange
      that limits the number of shares of Common Stock that may be issued without
      shareholder approval, then the number of Shares issuable by the Company and
      purchasable by the Investor, shall not exceed that number of the shares of
      Common Stock that may be issuable without shareholder approval (the "Maximum
      Common Stock Issuance"). If such issuance of shares of Common Stock could cause
      a delisting on the Principal Market, then the Maximum Common Stock Issuance
      shall first be approved by the Company's shareholders in accordance with
      applicable law and the By-laws and Amended and Restated Certificate of
      Incorporation of the Company, if such issuance of shares of Common Stock could
      cause a delisting on the Principal Market. The parties understand and agree
      that
      the Company's failure to seek or obtain such shareholder approval shall in
      no
      way adversely affect the validity and due authorization of the issuance and
      sale
      of Securities or the Investor's obligation in accordance with the terms and
      conditions hereof to purchase a number of Shares in the aggregate up to the
      Maximum Common Stock Issuance limitation, and that such approval pertains only
      to the applicability of the Maximum Common Stock Issuance limitation provided
      in
      this Section 2(H).

     

    (H)  If,
      by
      the third (3rd) business day after the Closing Date, the Company fails to
      deliver any portion of the shares of the Put to the Investor (the "Put Shares
      Due") and the Investor purchases, in an open market transaction or otherwise,
      shares of Common Stock necessary to make delivery of shares which would have
      been delivered if the full amount of the shares to be delivered to the Investor
      by the Company (the "Open Market Share Purchase") , then the Company shall
      pay
      to the
      Investor, in addition to any other amounts due to Investor pursuant to the
      Put,
      and not in lieu thereof, the Open Market Adjustment Amount (as defined below).
      

     

     

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    The
      "Open
      Market Adjustment Amount" is the amount equal to the excess, if any, of (x)
      the
      Investor's total purchase price (including brokerage commissions, if any) for
      the Open Market Share Purchase minus (y) the net proceeds (after brokerage
      commissions, if any) received by the Investor from the sale of the Put Shares
      Due. The Company shall pay the Open Market Adjustment Amount to the Investor
      in
      immediately available funds within five (5) business days of written demand
      by
      the Investor. By way of illustration and not in limitation of the foregoing,
      if
      the Investor purchases shares of Common Stock having a total purchase price
      (including brokerage commissions) of $11,000 to cover an Open Market Purchase
      with respect to shares of Common Stock it sold for net proceeds of $10,000,
      the
      Open Market Purchase Adjustment Amount which the Company will be required to
      pay
      to the Investor will be $1,000.

     

    (I)  LIMITATION
      ON AMOUNT OF
      OWNERSHIP. Notwithstanding anything to the contrary in this Agreement, in no
      event shall the Investor be entitled to purchase that number of Shares, which
      when added to the sum of the number of shares of Common Stock beneficially
      owned
      (as such term is defined under Section 13(d) and Rule 1 3d-3 of the 1934 Act),
      by the Investor, would exceed 4.99% of the number of shares of Common Stock
      outstanding on the Closing Date, as determined in accordance with Rule 1 3d-1
      (j) of the 1934 Act.

     

    SECTION
      3.  INVESTOR'S
      REPRESENTATIONS, WARRANTIES AND COVENANTS.

     

    The
      Investor represents and warrants to the Company, and covenants,
      that:

     

    (A)  SOPHISTICATED
      INVESTOR. The Investor has, by reason of its business and financial experience,
      such knowledge, sophistication and experience in financial and business matters
      and in making investment decisions of this type that it is capable of (I)
      evaluating the merits and risks of an investment in the Securities and making
      an
      informed investment decision; (II) protecting its own interest; and (III)
      bearing the economic risk of such investment for an indefinite period of
      time.

     

    (B)  AUTHORIZATION;
      ENFORCEMENT. This Agreement has been duly and validly authorized, executed
      and
      delivered on behalf of the Investor and is a valid and binding agreement of
      the
      Investor enforceable against the Investor in accordance with its terms, subject
      as to enforceability to general principles of equity and to applicable
      bankruptcy, insolvency, reorganization, moratorium, liquidation and other
      similar laws relating to, or affecting generally, the enforcement of applicable
      creditors' rights and remedies.

     

    (C)  SECTION
      9 OF THE 1934
      ACT. During the term of this Agreement, the Investor will comply with the
      provisions of Section 9 of the 1934 Act, and the rules promulgated thereunder,
      with respect to transactions involving the Common Stock.
      The Investor agrees not to sell the Company's stock short, either directly
      or
      indirectly through its affiliates, principals or advisors, the Company's common
      stock during the term of this Agreement.

     

     

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

     

    (D)  ACCREDITED
      INVESTOR. Investor is an "Accredited Investor" as that term is defined in Rule
      501(a) of Regulation D of the 1933 Act.

     

    (E)  NO
      CONFLICTS. The execution, delivery and performance of the Transaction Documents
      by the Investor and the consummation by the Investor of the transactions
      contemplated hereby and thereby will not result in a violation of Partnership
      Agreement or other organizational documents of the Investor.

     

    (F)  OPPORTUNITY
      TO DISCUSS. The Investor has received all materials relating to the Company's
      business, finance and operations which it has requested. The Investor has had
      an
      opportunity to discuss the business, management and financial affairs of the
      Company with the Company's management.

     

    (G)  INVESTMENT
      PURPOSES. The Investor is purchasing the Securities for its own account for
      investment purposes and not with a view towards distribution and agrees to
      resell or otherwise dispose of the Securities solely in accordance with the
      registration provisions of the 1933 Act (or pursuant to an exemption from such
      registration provisions).

     

    (H)  NO
      REGISTRATION AS A DEALER. The Investor is not and will not be required to be
      registered as a "dealer" under the 1934 Act, either as a result of its execution
      and performance of its obligations under this Agreement or
      otherwise.

     

    (I)  GOOD
      STANDING. The Investor is a Limited Partnership, duly organized, validly
      existing and in good standing in the Cayman Islands.

     

    (J)  TAX
      LIABILITIES. The Investor understands that it is liable for its own tax
      liabilities.

     

    (K)  REGULATION
      M. The Investor will comply with Regulation M under the 1934 Act, if
      applicable.

     

    SECTION
      4.  REPRESENTATIONS
      AND WARRANTIES OF THE COMPANY.

     

    Except
      as
      set forth in the Schedules attached hereto, or as disclosed on the Company's
      SEC
      Documents, the Company represents and warrants to the Investor
      that:

     

    (A)  ORGANIZATION
      AND
      QUALIFICATION. The Company is a corporation duly organized and validly existing
      in good standing under the laws of the State of Delaware, and has the requisite
      corporate power and authorization to own its properties and to carry on its
      business as now being conducted. 

     

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

     

    Both
      the
Company
      and the companies it owns or controls (“Subsidiaries”) are duly qualified to do
      business and are 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 have a Material Adverse Effect.
      As
      used in this Agreement, "Material Adverse Effect" means any material adverse
      effect on the business, properties, assets, operations, results of operations,
      financial condition or prospects of the Company and its Subsidiaries, if any,
      taken as a whole, or on the transactions contemplated hereby or by the
      agreements and instruments to be entered into in connection herewith, or on
      the
      authority or ability of the Company to perform its obligations under the Equity
      Line Transaction Documents (as defined in Section 1 and 4(B),
      below).

     

    (B)  AUTHORIZATION;
      ENFORCEMENT; COMPLIANCE WITH OTHER INSTRUMENTS.

     

    (I)  The
      Company has the requisite corporate power and authority to enter into and
      perform this Investment Agreement and the Registration Rights Agreement
      (collectively, the "Equity Line Transaction Documents"), and to issue the
      Securities in accordance with the terms hereof and thereof.

     

    (II)  The
      execution and delivery of the Equity Line Transaction Documents by the Company
      and the consummation by it of the transactions contemplated hereby and thereby,
      including without limitation the reservation for issuance and the issuance
      of
      the Securities pursuant to this Agreement, have been duly and validly authorized
      by the Company's Board of Directors and no further consent or authorization
      is
      required by the Company, its Board of Directors, or its
      shareholders.

     

    (III)  The
      Equity Line Transaction Documents have been duly and validly executed and
      delivered by the Company.

     

    (IV)  The
      Equity Line Transaction Documents constitute the valid and binding obligations
      of the Company enforceable against the Company in accordance with their 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 creditors'
      rights and remedies.

     

    (C)  CAPITALIZATION.
      As of the
      date hereof, the authorized capital stock of the Company consists of 100,000,000
      shares of Common Stock, $.001 par value per share, of which as of the date
      hereof, 4,504,962 and 4,102,000 shares are issued and outstanding respectively;
      50,000,000 shares of Preferred Stock authorized with 5,000,000 shares issued
      or
      outstanding; as of April 30, 2007, and no shares reserved for issuance pursuant
      to options, warrants and other convertible securities. All of such outstanding
      shares have been, or upon issuance will be, validly issued and are fully paid
      and nonassessable.

     

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    Except
      as
      disclosed in the Company's publicly available filings with the SEC:

     

    (I)
      no
      shares of the Company's capital stock are subject to preemptive rights or any
      other similar rights or any liens or encumbrances suffered or permitted by
      the
      Company; (II) there are no outstanding debt securities; (III) there are no
      outstanding shares of capital stock, options, warrants, scrip, rights to
      subscribe to, calls or commitments of any character whatsoever relating to,
      or
      securities or rights convertible into, any shares of 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 of 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, any shares of capital stock of the Company or any of its
      Subsidiaries; (IV) 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 (except the Registration Rights Agreement);
      (V) there are no outstanding securities 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; (VI) there are no securities or instruments
      containing anti-dilution or similar provisions that will be triggered by the
      issuance of the Securities as described in this Agreement; (VII) the Company
      does not have any stock appreciation rights or "phantom stock" plans or
      agreements or any similar plan or agreement; and (VIII) there is no dispute
      as
      to the classification of any shares of the Company's capital stock.

     

    The
      Company has furnished to the Investor, or the Investor has had access through
      EDGAR to, true and correct copies of the Company's Amended and Restated
      Certificate of Incorporation, as in effect on the date hereof (the "Certificate
      of Incorporation"), and the Company's By-laws, as in effect on the date hereof
      (the "By-laws"), and the terms of all securities convertible into or exercisable
      for Common Stock and the material rights of the holders thereof in respect
      thereto.

     

    (D)  ISSUANCE
      OF SHARES. The
      Company has reserved 479,900 Shares for issuance pursuant to this Agreement,
      which have been duly authorized and reserved those Shares for issuance (subject
      to adjustment pursuant to the Company's covenant set forth in Section 5(F)
      below) pursuant to this Agreement. Upon issuance in accordance with this
      Agreement, the Securities will be validly issued, fully paid for and
      non-assessable and free from all taxes, liens and charges with respect to the
      issue thereof. In the event the Company cannot register a sufficient number
      of
      Shares for issuance pursuant to this Agreement, the Company will use its best
      efforts to authorize and reserve for issuance the number of Shares required
      for
      the Company to perform its obligations hereunder as soon as reasonably
      practicable.

     

     

    
 

    
      
        
        

      

      
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    (E)  NO
      CONFLICTS. The
      execution, delivery and performance of the Equity Line Transaction Documents by
      the Company and the consummation by the Company of the transactions contemplated
      hereby and thereby will not (I) result in a violation of the Certificate of
      Incorporation, any Certificate of Designations, Preferences and Rights of any
      outstanding series of preferred stock of the Company or the By-laws; or (II)
      conflict with, or constitute a material default (or an event which with notice
      or lapse of time or both would become a material default) under, or give to
      others any rights of termination, amendment, acceleration or cancellation of,
      any material agreement, contract, indenture mortgage, indebtedness or instrument
      to which the Company or any of its Subsidiaries is a party, or to the Company's
      knowledge result in a violation of any law, rule, regulation, order, judgment
      or
      decree (including United States federal and state securities laws and
      regulations and the rules and regulations of the Principal Market or principal
      securities exchange or trading market on which the Common Stock is traded or
      listed) 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 as disclosed in Schedule 4(e), neither the Company nor its
      Subsidiaries is in violation of any term of, or in default under, the
      Certificate of Incorporation, any Certificate of Designations, Preferences
      and
      Rights of any outstanding series of preferred stock of the Company or the
      By­laws or their organizational charter or by-laws, respectively, or any
      contract, agreement, mortgage, indebtedness, indenture, instrument, judgment,
      decree or order or any statute, rule or regulation applicable to the Company
      or
      its Subsidiaries, except for possible conflicts, defaults, terminations,
      amendments, accelerations, cancellations and violations that would not
      individually or in the aggregate have or constitute a Material Adverse Effect.
      The business of the Company and its Subsidiaries is not being conducted, and
      shall not be conducted, in violation of any law, statute, ordinance, rule,
      order
      or regulation of any governmental authority or agency, regulatory or
      self-regulatory agency, or court, except for possible violations the sanctions
      for which either individually or in the aggregate would not have a Material
      Adverse Effect. Except as specifically contemplated by this Agreement and as
      required under the 1933 Act or any securities laws of any states, to the
      Company's knowledge, the Company is not required to obtain any consent,
      authorization, permit or order of, or make any filing or registration (except
      the filing of a registration statement as outlined in the Registration Rights
      Agreement between the Parties) with, any court, governmental authority or
      agency, regulatory or self-regulatory agency or other third party in order
      for
      it to execute, deliver or perform any of its obligations under, or contemplated
      by, the Equity Line Transaction Documents in accordance with the terms hereof
      or
      thereof. All consents, authorizations, permits, orders, filings and
      registrations which the Company is required to obtain pursuant to the preceding
      sentence have been obtained or effected on or prior to the date hereof and
      are
      in full force and effect as of the date hereof. Except as disclosed in Schedule
      4(e), the Company and its Subsidiaries are unaware of any facts or circumstances
      which might give rise to any of the foregoing. The Company is not, and will
      not
      be, in violation of the listing requirements of the Principal Market as in
      effect on the date hereof and on each of the Closing Dates and
      is
      not aware of any facts which would reasonably lead to delisting of the Common
      Stock by the Principal Market in the foreseeable future.

     

     

    
      
        
        

      

      
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    (F)  SEC
      DOCUMENTS; FINANCIAL STATEMENTS. As of the date hereof, the Company has filed
      all reports, schedules, forms, statements and other documents required to be
      filed by it with the SEC pursuant to the reporting requirements of the 1934
      Act
      (all of the foregoing filed prior to the date hereof and all exhibits included
      therein and financial statements and schedules thereto and documents
      incorporated by reference therein being hereinafter referred to as the "SEC
      Documents"). The Company has delivered to the Investor or its representatives,
      or they have had access through EDGAR to, true and complete copies of the SEC
      Documents. As of their respective filing dates, the SEC Documents complied
      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 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 complied as to form in all material respects with applicable
      accounting requirements and the published rules and regulations of the SEC
      with
      respect thereto. Such financial statements have been prepared in accordance
      with
      generally accepted accounting principles, by a firm that is a member of the
      Public Companies Accounting Oversight Board ("PCAOB") consistently applied,
      during the periods involved (except (I) as may be otherwise indicated in such
      financial statements or the notes thereto, or (II) in the case of unaudited
      interim statements, to the extent they may exclude footnotes or may be condensed
      or summary statements) and fairly present in all material respects the financial
      position of the Company as of the dates thereof and the results of its
      operations and cash flows for the periods then ended (subject, in the case
      of
      unaudited statements, to normal year-end audit adjustments). No other written
      information provided by or on behalf of the Company to the Investor which is
      not
      included in the SEC Documents, including, without limitation, information
      referred to in Section 4(D) of this Agreement, contains any untrue statement
      of
      a material fact or omits to state any material fact necessary to make the
      statements therein, in the light of the circumstance under which they are or
      were made, not misleading. Neither the Company nor any of its Subsidiaries
      or
      any of their officers, directors, employees or agents have provided the Investor
      with any material, nonpublic information which was not publicly disclosed prior
      to the date hereof and any material, nonpublic information provided to the
      Investor by the Company or its Subsidiaries or any of their officers, directors,
      employees or agents prior to any Closing Date shall be publicly disclosed by
      the
      Company prior to such Closing Date.

     

    (G)  ABSENCE
      OF CERTAIN CHANGES. Except as otherwise set forth in the SEC Documents, the
      Company does not intend to change the business operations of the Company in
      any
      material way. The Company has not taken any steps,
      and does not currently expect to take any steps, to seek protection pursuant
      to
      any bankruptcy law nor does the Company or its Subsidiaries have any knowledge
      or reason to believe that its creditors intend to initiate involuntary
      bankruptcy proceedings.

     

     

    
      
        
        

      

      
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    (H)  ABSENCE
      OF LITIGATION AND/OR REGULATORY PROCEEDINGS. Except as set forth in the SEC
      Documents, there is no action, suit, proceeding, inquiry or investigation before
      or by any court, public board, government agency, self-regulatory organization
      or body pending or, to the knowledge of the executive officers of Company or
      any
      of its Subsidiaries, threatened against or affecting the Company, the Common
      Stock or any of the Company's Subsidiaries or any of the Company's or the
      Company's Subsidiaries' officers or directors in their capacities as such,
      in
      which an adverse decision could have a Material Adverse Effect.

     

    (I)  ACKNOWLEDGMENT
      REGARDING INVESTOR'S PURCHASE OF SHARES. The Company acknowledges and agrees
      that the Investor 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. The Company further acknowledges that the Investor is not
      acting as a financial advisor or fiduciary of the Company (or in any similar
      capacity) with respect to the Equity Line Transaction Documents and the
      transactions contemplated hereby and thereby and any advice given by the
      Investor or any of its respective representatives or agents in connection with
      the Equity Line Transaction Documents and the transactions contemplated hereby
      and thereby is merely incidental to the Investor's purchase of the Securities,
      and is not being relied on by the Company. The Company further represents to
      the
      Investor that the Company's decision to enter into the Equity Line Transaction
      Documents has been based solely on the independent evaluation by the Company
      and
      its representatives.

     

    (J)  NO
      UNDISCLOSED EVENTS, LIABILITIES, DEVELOPMENTS OR CIRCUMSTANCES. Except as set
      forth in the SEC Documents, as of the date hereof, no event, liability,
      development or circumstance has occurred or exists, or to the Company's
      knowledge is contemplated to occur, with respect to the Company or its
      Subsidiaries or their respective business, properties, assets, prospects,
      operations or financial condition, that would be required to be disclosed by
      the
      Company under applicable securities laws on a registration statement filed
      with
      the SEC relating to an issuance and sale by the Company of its Common Stock
      and
      which has not been publicly announced.

     

    (K)  EMPLOYEE
      RELATIONS. Neither the Company nor any of its Subsidiaries is involved in any
      union labor dispute nor, to the knowledge of the Company or any of its
      Subsidiaries, is any such dispute threatened. Neither the Company nor any of
      its
      Subsidiaries is a party to a collective bargaining agreement, and the Company
      and its Subsidiaries believe that relations with their employees are good.
      No
      executive officer (as defined in Rule 501(f) of the 1933 Act) has notified
      the
      Company that such officer intends to leave the Company's employ or otherwise
      terminate such officer's employment with the Company.

     

     

    
      
        
        

      

      
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    (L)  INTELLECTUAL
      PROPERTY RIGHTS. The Company and its Subsidiaries own or possess adequate rights
      or licenses to use all trademarks, trade names, service marks, service mark
      registrations, service names, patents, patent rights, copyrights, inventions,
      licenses, approvals, governmental authorizations, trade secrets and rights
      necessary to conduct their respective businesses as now conducted. Except as
      set
      forth in the SEC Documents, none of the Company's trademarks, trade names,
      service marks, service mark registrations, service names, patents, patent
      rights, copyrights, inventions, licenses, approvals, government authorizations,
      trade secrets or other intellectual property rights necessary to conduct its
      business as now or as proposed to be conducted have expired or terminated,
      or
      are expected to expire or terminate within two (2) years from the date of this
      Agreement. The Company and its Subsidiaries do not have any knowledge of any
      infringement by the Company or its Subsidiaries of trademark, trade name rights,
      patents, patent rights, copyrights, inventions, licenses, service names, service
      marks, service mark registrations, trade secret or other similar rights of
      others, or of any such development of similar or identical trade secrets or
      technical information by others and, except as set forth in the SEC Documents,
      there is no claim, action or proceeding being made or brought against, or to
      the
      Company's knowledge, being threatened against, the Company or its Subsidiaries
      regarding trademark, trade name, patents, patent rights, invention, copyright,
      license, service names, service marks, service mark registrations, trade secret
      or other infringement; and the Company and its Subsidiaries are unaware of
      any
      facts or circumstances which might give rise to any of the foregoing. The
      Company and its Subsidiaries have taken commercially reasonable security
      measures to protect the secrecy, confidentiality and value of all of their
      intellectual properties.

     

    (M)  ENVIRONMENTAL
      LAWS. The Company and its Subsidiaries (I) are, to the knowledge of the
      management and directors of the Company and its Subsidiaries, in compliance
      with
      any and all applicable foreign, federal, state and local laws and regulations
      relating to the protection of human health and safety, the environment or
      hazardous or toxic substances or wastes, pollutants or contaminants
      ("Environmental Laws"); (II) have, to the knowledge of the management and
      directors of the Company, received all permits, licenses or other approvals
      required of them under applicable Environmental Laws to conduct their respective
      businesses; and (III) are in compliance, to the knowledge of the management
      and
      directors of the Company, with all terms and conditions of any such permit,
      license or approval where, in each of the three (3) foregoing cases, the failure
      to so comply would have, individually or in the aggregate, a Material Adverse
      Effect.

     

    (N)  TITLE.
      The Company and
      its Subsidiaries have 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 as are described in the SEC Documents or such as do
      not
      materially affect the value of such property and do not interfere with the
      use
      made and proposed to be made of such property by the Company or any of its
      Subsidiaries. 

     

     

    
      
        
        

      

      
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    Any
      real
      property and facilities held under lease by the Company or any of its
      Subsidiaries are held by them under valid, subsisting and enforceable leases
      with such exceptions as are not material and do not interfere with the use
      made
      and proposed to be made of such property and buildings by the Company and its
      Subsidiaries.

     

    (O)  INSURANCE.
      Each of the Company's Subsidiaries are insured by insurers of recognized
      financial responsibility against such losses and risks and in such amounts
      as
      management of the Company reasonably believes to be prudent and customary in
      the
      businesses in which the Company and its Subsidiaries are engaged. Neither the
      Company nor any of its Subsidiaries has been refused any insurance coverage
      sought or applied for and neither the Company nor its Subsidiaries has any
      reason to believe that it will not be able 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.

     

    (P)  REGULATORY
      PERMITS. The Company and its Subsidiaries have in full force and effect all
      certificates, approvals, authorizations and permits from the appropriate
      federal, state, local or foreign regulatory authorities and comparable foreign
      regulatory agencies, necessary to own, lease or operate their respective
      properties and assets and conduct their respective businesses, and neither
      the
      Company nor any such Subsidiary has received any notice of proceedings relating
      to the revocation or modification of any such certificate, approval,
      authorization or permit, except for such certificates, approvals, authorizations
      or permits which if not obtained, or such revocations or modifications which,
      would not have a Material Adverse Effect.

     

    (Q)  INTERNAL
      ACCOUNTING CONTROLS. The Company and each of its Subsidiaries maintain a system
      of internal accounting controls sufficient to provide reasonable assurance
      that
      (I) transactions are executed in accordance with management's general or
      specific authorizations; (II) transactions are recorded as necessary to permit
      preparation of financial statements in conformity with generally accepted
      accounting principles by a firm with membership to the PCAOB and to maintain
      asset accountability; (III) access to assets is permitted only in accordance
      with management's general or specific authorization; and (IV) the recorded
      accountability for assets is compared with the existing assets at reasonable
      intervals and appropriate action is taken with respect to any
      differences.

     

    (R)  NO
      MATERIALLY ADVERSE CONTRACTS, ETC. Neither the Company nor any of its
      Subsidiaries is subject to any charter, corporate or other legal restriction,
      or
      any judgment, decree, order, rule or regulation which in the judgment of the
      Company's officers has or is expected in the future to have a Material
      Adverse Effect. 

     

     

     

    
      
        
        

      

      
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    Neither
      the Company nor any of its Subsidiaries is a party to any contract or agreement
      which in the judgment of the Company's officers has or is expected to have
      a
      Material Adverse Effect.

     

    (S)  TAX
      STATUS. The Company and each of its Subsidiaries has made or filed all United
      States federal and state income and all other tax returns, reports and
      declarations required by any jurisdiction to which it is subject (unless and
      only to the extent that the Company and each of its Subsidiaries has set aside
      on its books provisions reasonably adequate for the payment of all unpaid and
      unreported taxes) and has paid all taxes and other governmental assessments
      and
      charges that are material in amount, shown or determined to be due on such
      returns, reports and declarations, except those being contested in good faith
      and has set aside on its books provision reasonably adequate for the payment
      of
      all taxes for periods subsequent to the periods to which such returns, reports
      or declarations apply. There are no unpaid taxes in any material amount claimed
      to be due by the taxing authority of any jurisdiction, and the officers of
      the
      Company know of no basis for any such claim.

     

    (T)  CERTAIN
      TRANSACTIONS. Except as set forth in the SEC Documents filed at least ten (10)
      days prior to the date hereof and except for arm's length transactions pursuant
      to which the Company makes payments in the ordinary course of business upon
      terms no less favorable than the Company could obtain from disinterested third
      parties and other than the grant of stock options disclosed in the SEC
      Documents, none of the officers, directors, or employees of the Company is
      presently a party to any transaction with the Company or any of its Subsidiaries
      (other than for services as employees, officers and directors), including any
      contract, agreement or other arrangement providing for the furnishing of
      services to or by, providing for rental of real or personal property to or
      from,
      or otherwise requiring payments to or from any officer, director or such
      employee or, to the knowledge of the Company, any corporation, partnership,
      trust or other entity in which any officer, director, or any such employee
      has a
      substantial interest or is an officer, director, trustee or
      partner.

     

    (U)  DILUTIVE
      EFFECT. The
      Company understands and acknowledges that the number of shares of Common Stock
      issuable upon purchases pursuant to this Agreement will increase in certain
      circumstances including, but not necessarily limited to, the circumstance
      wherein the trading price of the Common Stock declines during the period between
      the Effective Date and the end of the Open Period. The Company's executive
      officers and directors have studied and fully understand the nature of the
      transactions contemplated by this Agreement and recognize that they have a
      potential dilutive effect on the shareholders of the Company. The Board of
      Directors of the Company has concluded, in its good faith business judgment,
      and
      with full understanding of the implications, that such issuance is in the best
      interests of the Company. The Company specifically acknowledges that, subject
      to
      such limitations as are expressly set forth in the Equity Line Transaction
      Documents, its obligation to issue shares of Common Stock upon purchases
      pursuant to this Agreement is absolute and unconditional regardless
      of the dilutive effect that such issuance may have on the ownership interests
      of
      other shareholders of the Company.

     

     

    
      
        
        

      

      
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    (V)  LOCK-UP.
      The Company shall cause its officers, insiders, directors, and affiliates or
      other related parties under control of the Company, to refrain from selling
      Common Stock during each Pricing Period.

     

    (W)  NO
      GENERAL SOLICITATION. Neither the Company, nor any of its affiliates, nor any
      person acting on its 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 Common Stock to be offered as set forth in this
      Agreement.

     

    (X)  NO
      BROKERS, FINDERS OR
      FINANCIAL ADVISORY FEES OR COMMISSIONS. No brokers, finders or financial
      advisory fees or commissions will be payable by the Company, its agents or
      Subsidiaries, with respect to the transactions contemplated by this Agreement,
      except as otherwise disclosed in this Agreement.

     

    SECTION
      5. COVENANTS OF THE COMPANY

     

    (A)  BEST
      EFFORTS. The Company shall use all commercially reasonable efforts to timely
      satisfy each of the conditions set forth in Section 7 of this
      Agreement.

     

    (B)  BLUE
      SKY.
      The Company shall, at its sole cost and expense, on or before each of the
      Closing Dates, take such action as the Company shall reasonably determine is
      necessary to qualify the Securities for, or obtain exemption for the Securities
      for, sale to the Investor at each of the Closings pursuant to this Agreement
      under applicable securities or "Blue Sky" laws of such states of the United
      States, as reasonably specified by the Investor, and shall provide evidence
      of
      any such action so taken to the Investor on or prior to the Closing
      Date.

     

    (C)  REPORTING
      STATUS. Until one of the following occurs, the Company shall file all reports
      required to be filed with the SEC pursuant to the 1934 Act, and the Company
      shall not terminate its status, or take an action or fail to take any action,
      which would terminate its status as a reporting company under the 1934 Act:
      (i)
      this Agreement terminates pursuant to Section 9 and the Investor has the right
      to sell all of the Securities without restrictions pursuant to Rule 144(k)
      promulgated under the 1933 Act, or such other exemption (ii) the date on which
      the Investor has sold all the Securities and this Agreement has been terminated
      pursuant to Section 9.

     

    (D)  USE
      OF
      PROCEEDS. The Company will use the proceeds from the sale of the Shares
      (excluding amounts paid by the Company for fees as set forth in the Equity
      Line
      Transaction Documents) for general corporate and working capital purposes and
      acquisitions or assets, businesses or operations or for other purposes
      that the Board of Directors, in its good faith deem to be in the best interest
      of the Company.

     

     

    
      
        
        

      

      
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    (E)  FINANCIAL
      INFORMATION. During the Open Period, the Company agrees to make available to
      the
      Investor via EDGAR or other electronic means the following documents and
      information on the forms set forth: (I) within five (5) Trading Days after
      the
      filing thereof with the SEC, a copy of its Annual Reports on Form 10-KSB, its
      Quarterly Reports on Form 10-QSB, any Current Reports on Form 8-K and any
      Registration Statements or amendments filed pursuant to the 1933 Act; (II)
      copies of any notices and other information made available or given to the
      shareholders of the Company generally, contemporaneously with the making
      available or giving thereof to the shareholders; and (III) within two (2)
      calendar days of filing or delivery thereof, copies of all documents filed
      with,
      and all correspondence sent to, the Principal Market, any securities exchange
      or
      market, or the National Association of Securities Dealers, Inc., unless such
      information is material nonpublic information.

     

    (F)  RESERVATION
      OF SHARES. The Company shall take all action necessary to at all times have
      authorized, and reserved for the purpose of issuance, a sufficient number of
      shares of Common Stock to provide for the issuance of the Securities to the
      Investor as required hereunder. In the event that the Company determines that
      it
      does not have a sufficient number of authorized shares of Common Stock to
      reserve and keep available for issuance as described in this Section 5(F),
      the
      Company shall use all commercially reasonable efforts to increase the number
      of
      authorized shares of Common Stock by seeking shareholder approval for the
      authorization of such additional shares.

     

    (G)  LISTING.
      The Company shall promptly secure and maintain the listing of all of the
      Registrable Securities (as defined in the Registration Rights Agreement) on
      the
      Principal Market and each other national securities exchange and automated
      quotation system, if any, upon which shares of Common Stock are then listed
      (subject to official notice of issuance) and shall maintain, such listing of
      all
      Registrable Securities from time to time issuable under the terms of the Equity
      Line Transaction Documents. Neither the Company nor any of its Subsidiaries
      shall take any action which would be reasonably expected to result in the
      delisting or suspension of the Common Stock on the Principal Market (excluding
      suspensions of not more than one (1) trading day resulting from business
      announcements by the Company). The Company shall promptly provide to the
      Investor copies of any notices it receives from the Principal Market regarding
      the continued eligibility of the Common Stock for listing on such automated
      quotation system or securities exchange. The Company shall pay all fees and
      expenses in connection with satisfying its obligations under this Section
      5(G).

     

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

     

    (H)  TRANSACTIONS
      WITH AFFILIATES. The Company shall not, and shall cause each of its Subsidiaries
      not to, enter into, amend, modify or supplement, or permit any Subsidiary to
      enter into, amend, modify or supplement, any agreement,
      transaction, commitment or arrangement with any of its or any Subsidiary's
      officers, directors, persons who were officers or directors at any time during
      the previous two (2) years, shareholders who beneficially own 5% or more of
      the
      Common Stock, or Affiliates or with any individual related by blood, marriage
      or
      adoption to any such individual or with any entity in which any such entity
      or
      individual owns a 5% or more beneficial interest (each a "Related Party"),
      except for (I) customary employment arrangements and benefit programs on
      reasonable terms, (II) any agreement, transaction, commitment or arrangement
      on
      an arms-length basis on terms no less favorable than terms which would have
      been
      obtainable from a disinterested third party other than such Related Party,
      or
      (III) any agreement, transaction, commitment or arrangement which is approved
      by
      a majority of the disinterested directors of the Company. For purposes hereof,
      any director who is also an officer of the Company or any Subsidiary of the
      Company shall not be a disinterested director with respect to any such
      agreement, transaction, commitment or arrangement. "Affiliate" for purposes
      hereof means, with respect to any person or entity, another person or entity
      that, directly or indirectly, (I) has a 5% or more equity interest in that
      person or entity, (II) has 5% or more common ownership with that person or
      entity, (III) controls that person or entity, or (IV) is under common control
      with that person or entity. "Control" or "Controls" for purposes hereof means
      that a person or entity has the power, directly or indirectly, to conduct or
      govern the policies of another person or entity.

     

    (I)  FILING
      OF
      FORM 8-K. On or before the date which is four (4) Trading Days after the
      Execution Date, the Company shall file a Current Report on Form 8-K with the
      SEC
      describing the terms of the transaction contemplated by the Equity Line
      Transaction Documents in the form required by the 1934 Act, if such filing
      is
      required.

     

    (J)  CORPORATE
      EXISTENCE. The Company shall use all commercially reasonable efforts to preserve
      and continue the corporate existence of the Company.

     

    (K)  NOTICE
      OF CERTAIN EVENTS
      AFFECTING REGISTRATION; SUSPENSION OF RIGHT TO MAKE A PUT. The Company shall
      promptly notify the Investor upon the occurrence of any of the following events
      in respect of a Registration Statement or related prospectus in respect of
      an
      offering of the Securities: (I) receipt of any request for additional
      information by the SEC or any other federal or state governmental authority
      during the period of effectiveness of the Registration Statement for amendments
      or supplements to the Registration Statement or related prospectus; (II) the
      issuance by the SEC or any other federal or state governmental authority of
      any
      stop order suspending the effectiveness of any Registration Statement or the
      initiation of any proceedings for that purpose; (III) receipt of any
      notification with respect to the suspension of the qualification or exemption
      from qualification of any of the Securities for sale in any jurisdiction or
      the
      initiation or notice of any proceeding for such purpose;

     

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    (IV)
      the
      happening of any event that makes any statement made in such Registration
Statement
      or related prospectus or any document incorporated or deemed to be incorporated
      therein by reference untrue in any material respect or that requires the making
      of any changes in the Registration Statement, related prospectus or documents
      so
      that, in the case of a Registration Statement, it will not contain any untrue
      statement of a material fact or omit to state any material fact required to
      be
      stated therein or necessary to make the statements therein not misleading,
      and
      that in the case of the related prospectus, it will not contain any untrue
      statement of a material fact or omit to state any material fact required to
      be
      stated therein or necessary to make the statements therein, in the light of
      the
      circumstances under which they were made, not misleading; and (V) the Company's
      reasonable determination that a post-effective amendment to the Registration
      Statement would be appropriate, and the Company shall promptly make available
      to
      Investor any such supplement or amendment to the related prospectus. The Company
      shall not deliver to Investor any Put Notice during the continuation of any
      of
      the foregoing events in this Section 5(K).

     

    (L)  REIMBURSEMENT.
      If (I) the
      Investor becomes involved in any capacity in any action, proceeding or
      investigation brought by any shareholder of the Company, in connection with
      or
      as a result of the consummation of the transactions contemplated by the Equity
      Line Transaction Documents, or if the Investor is impleaded in any such action,
      proceeding or investigation by any person (other than as a result of a breach
      of
      the Investor’s representations and warranties set forth in this Agreement); or
      (II) the Investor becomes involved in any capacity in any action, proceeding
      or
      investigation brought by the SEC against or involving the Company or in
      connection with or as a result of the consummation of the transactions
      contemplated by the Equity Line Transaction Documents (other than as a result
      of
      a breach of the Investor’s representations and warranties set forth in this
      Agreement), or if this Investor is impleaded in any such action, proceeding
      or
      investigation by any person, then in any such case, the Company will reimburse
      the Investor for its reasonable legal and other expenses (including the cost
      of
      any investigation and preparation) incurred in connection therewith, as such
      expenses are incurred. In addition, other than with respect to any matter in
      which the Investor is a named party, the Company will pay to the Investor the
      charges, as reasonably determined by the Investor, for the time of any officers
      or employees of the Investor devoted to appearing and preparing to appear as
      witnesses, assisting in preparation for hearings, trials or pretrial matters,
      or
      otherwise with respect to inquiries, hearing, trials, and other proceedings
      relating to the subject matter of this Agreement. The reimbursement obligations
      of the Company under this section shall be in addition to any liability which
      the Company may otherwise have, shall extend upon the same terms and conditions
      to any affiliates of the Investor that are actually named in such action,
      proceeding or investigation, and partners, directors, agents, employees,
      attorneys, accountants, auditors and controlling persons (if any), as the case
      may be, of Investor and any such affiliate, and shall be binding upon and inure
      to the benefit of any successors of the Company, the Investor and any such
      affiliate and any such person.

    


     

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    (M)  TRANSFER
      AGENT. Upon effectiveness of the Registration Statement, and for so long as
      the
      Registration Statement is effective, the Company shall deliver instructions
      to
      its transfer agent to issue Shares to the Investor that are covered for resale
      by the Registration Statement free of restrictive legends.

     

    (N)  ACKNOWLEDGEMENT
      OF TERMS. The Company hereby represents and warrants to the Investor that:
      (i)
      it is voluntarily entering into this Agreement of its own freewill, (ii) it
      is
      not entering this Agreement under economic duress, (iii) the terms of this
      Agreement are reasonable and fair to the Company, and (iv) the Company has
      had
      independent legal counsel of its own choosing review this Agreement, advise
      the
      Company with respect to this Agreement, and represent the Company in connection
      with this Agreement.

     

    SECTION
      6. INTENTIONALLY OMITTED

     

    SECTION
      7. CONDITIONS OF THE COMPANY'S OBLIGATION TO SELL

     

    The
      obligation hereunder of the Company to issue and sell the Securities to the
      Investor is further subject to the satisfaction, at or before each Closing
      Date,
      of each of the following conditions set forth below. These conditions are for
      the Company's sole benefit and may be waived by the Company at any time in
      its
      sole discretion.

     

    (A)  The
      Investor shall have executed this Agreement and the Registration Rights
      Agreement and delivered the same to the Company.

     

    (B)  The
      Investor shall have delivered to the Company the Purchase Price for the
      Securities being purchased by the Investor between the end of the Pricing Period
      and the Closing Date via a Put Settlement Sheet (hereto attached as Exhibit
      D).
      After receipt of confirmation of delivery of such Securities to the Investor,
      the Investor, by wire transfer of immediately available funds pursuant to the
      wire instructions provided by the Company will disburse the funds constituting
      the Purchase Amount.

     

    (C)  No
      statute, rule,
      regulation, executive order, decree, ruling or injunction shall have been
      enacted, entered, promulgated or endorsed by any court or governmental authority
      of competent jurisdiction which prohibits the consummation of any of the
      transactions contemplated by this Agreement.

     

    SECTION
      8. FURTHER CONDITIONS OF THE INVESTOR'S OBLIGATION TO
      PURCHASE

     

    The
      obligation of the Investor hereunder to purchase Shares is subject to the
      satisfaction, on or before each Closing Date, of each of the following
      conditions set forth below.

     

     

    
 

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

    (A)  The
      Company shall have executed the Equity Line Transaction Documents and delivered
      the same to the Investor.

     

    (B)  The
      Common Stock shall be authorized for quotation on the Principal Market and
      trading in the Common Stock shall not have been suspended by the Principal
      Market or the SEC, at any time beginning on the date hereof and through and
      including the respective Closing Date (excluding suspensions of not more than
      one (1) Trading Day resulting from business announcements by the Company,
      provided that such suspensions occur prior to the Company's delivery of the
      Put
      Notice related to such Closing).

     

    (C)  The
      representations and warranties of the Company shall be true and correct as
      of
      the date when made and as of the applicable Closing Date as though made at
      that
      time and the Company shall have performed, satisfied and complied with the
      covenants, agreements and conditions required by the Equity Line Transaction
      Documents to be performed, satisfied or complied with by the Company on or
      before such Closing Date. The Investor may request an update as of such Closing
      Date regarding the representation contained in Section 4(C) above.

     

    (D)  The
      Company shall have executed and delivered to the Investor the certificates
      representing, or have executed electronic book-entry transfer of, the Securities
      (in such denominations as the Investor shall request) being purchased by the
      Investor at such Closing.

     

    (E)  The
      Board
      of Directors of the Company shall have adopted resolutions consistent with
      Section 4(B)(II) above (the "Resolutions") and such Resolutions shall not have
      been amended or rescinded prior to such Closing Date.

     

    (F)  Reserved

     

    (G)  No
      statute, rule, regulation, executive order, decree, ruling or injunction shall
      have been enacted, entered, promulgated or endorsed by any court or governmental
      authority of competent jurisdiction which prohibits the consummation of any
      of
      the transactions contemplated by this Agreement.

     

    (H)  The
      Registration Statement shall be effective on each Closing Date and no stop
      order
      suspending the effectiveness of the Registration statement shall be in effect
      or
      to the Company's knowledge shall be pending or threatened. Furthermore, on
      each
      Closing Date (I) neither the Company nor the Investor shall have received notice
      that the SEC has issued or intends to issue a stop order with respect to such
      Registration Statement or that the SEC otherwise has suspended or withdrawn
      the
      effectiveness of such Registration Statement, either temporarily or permanently,
      or intends or has threatened to do so (unless the SEC's concerns have been
      addressed and Investor is reasonably satisfied that the SEC no longer is
      considering or intends to take such action), and (II) no other suspension
      of the use or withdrawal of the effectiveness of such Registration Statement
      or
      related prospectus shall exist.

     

     

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

     

    (I)  At
      the
      time of each Closing, the Registration Statement (including information or
      documents incorporated by reference therein) and any amendments or supplements
      thereto shall not contain any untrue statement of a material fact or omit to
      state any material fact required to be stated therein or necessary to make
      the
      statements therein not misleading or which would require public disclosure
      or an
      update supplement to the prospectus.

     

    (J)  If
      applicable, the shareholders of the Company shall have approved the issuance
      of
      any Shares in excess of the Maximum Common Stock Issuance in accordance with
      Section 2(H) or the Company shall have obtained appropriate approval pursuant
      to
      the requirements of Delaware law and the Company’s Articles of Incorporation and
      By-laws.

     

    (K)  The
      conditions to such Closing set forth in Section 2(E) shall have been satisfied
      on or before such Closing Date.

     

    (L)  The
      Company shall have certified to the Investor the number of Shares of Common
      Stock outstanding when a Put Notice is given to the Investor. The Company's
      delivery of a Put Notice to the Investor constitutes the Company's certification
      of the existence of the necessary number of shares of Common Stock reserved
      for
      issuance.

     

    SECTION
      9. TERMINATION

     

    This
      Agreement shall terminate upon any of the following events:

     

    (I)  when
      the
      Investor has purchased an aggregate of Ten Million dollars ($10,000,000) in
      the
      Common Stock of the Company pursuant to this Agreement; or,

     

    (II)  on
      the
      date which is thirty-six (36) months after the Effective Date; or,

     

    (III)  upon
      written notice of
      the Company to the Investor. Any and all shares, or penalties, if any, due
      under
      this Agreement shall be immediately payable and due upon termination of the
      Line.

     

    SECTION
      10. SUSPENSION

     

    This
      Agreement shall be suspended upon any of the following events, and shall remain
      suspended until such event is rectified:

     

    (I)  the
      trading of the Common
      Stock is suspended by the SEC, the Principal Market or the NASD for a period
      of
      two (2) consecutive Trading Days during the Open Period; or,

     

    
 

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

     

    (II)  The
      Common Stock ceases
      to be registered under the 1934 Act or listed or traded on the Principal Market.
      Immediately upon the occurrence of one of the above-described events, the
      Company shall send written notice of such event to the Investor.

     

    SECTION
      11. INDEMNIFICATION.

     

    In
      consideration of the parties mutual obligations set forth in the Transaction
      Documents, each of the parties (in such capacity, an "Indemnitor") shall defend,
      protect, indemnify and hold harmless the other and all of the other party's
      shareholders, officers, directors, employees, counsel, and direct or indirect
      investors and any of the foregoing person's 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 reasonable 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
      Indemnitor or any other certificate, instrument or document contemplated hereby
      or thereby; (II) any breach of any covenant, agreement or obligation of the
      Indemnitor contained in the Equity Line Transaction Documents or any other
      certificate, instrument or document contemplated hereby or thereby; or (III)
      any
      cause of action, suit or claim brought or made against such Indemnitee by a
      third party and arising out of or resulting from the execution, delivery,
      performance or enforcement of the Equity Line Transaction Documents or any
      other
      certificate, instrument or document contemplated hereby or thereby, except
      insofar as any such misrepresentation, breach or any untrue statement, alleged
      untrue statement, omission or alleged omission is made in reliance upon and
      in
      conformity with information furnished to Indemnitor which is specifically
      intended for use in the preparation of any such Registration Statement,
      preliminary prospectus, prospectus or amendments to the prospectus. To the
      extent that the foregoing undertaking by the Indemnitor may be unenforceable
      for
      any reason, the Indemnitor shall make the maximum contribution to the payment
      and satisfaction of each of the Indemnified Liabilities which is permissible
      under applicable law. The indemnity provisions contained herein shall be in
      addition to any cause of action or similar rights Indemnitor may have, and
      any
      liabilities the Indemnitor or the Indemnitees may be subject to.

     

    SECTION
      12. GOVERNING LAW; DISPUTES SUBMITTED TO ARBITRATION.

     

    All
      disputes arising under this agreement shall be governed by and interpreted
      in
      accordance with the laws of the Commonwealth of Massachusetts, without regard
      to
      principles of conflict of laws. The parties to this agreement will submit all
      disputes arising under this agreement to arbitration in Boston, Massachusetts
      before a single arbitrator of the American Arbitration Association (“AAA”).


     

     

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

     

    The
      arbitrator shall be selected by application of the rules of the AAA, or by
      mutual agreement of the parties, except that such arbitrator shall be an
      attorney admitted to practice law in the Commonwealth of Massachusetts. No
      party
      to this agreement will challenge the jurisdiction or venue provisions as
      provided in this section. No party to this agreement will challenge the
      jurisdiction or venue provisions as provided in this section. Nothing contained
      herein shall prevent the party from obtaining an injunction.

     

    (B)  LEGAL
      FEES; AND MISCELLANEOUS FEES. Except as otherwise set forth in the Equity Line
      Transaction Documents, each party shall pay the fees and expenses of its
      advisers, counsel, the accountants and other experts, if any, and all other
      expenses incurred by such party incident to the negotiation, preparation,
      execution, delivery and performance of this Agreement. Any attorneys' fees
      and
      expenses incurred by either the Company or the Investor in connection with
      the
      preparation, negotiation, execution and delivery of any amendments to this
      Agreement or relating to the enforcement of the rights of any party, after
      the
      occurrence of any breach of the terms of this Agreement by another party or
      any
      default by another party in respect of the transactions contemplated hereunder,
      shall be paid on demand by the party which breached the Agreement and/or
      defaulted, as the case may be. The Company shall pay all stamp and other taxes
      and duties levied in connection with the issuance of any
      Securities.

     

    (C)  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; provided that a facsimile signature shall be considered due execution
      and
      shall be binding upon the signatory thereto with the same force and effect
      as if
      the signature were an original signature.

     

    (D)  HEADINGS;
      SINGULAR/PLURAL. The headings of this Agreement are for convenience of reference
      and shall not form part of, or affect the interpretation of, this Agreement.
      Whenever required by the context of this Agreement, the singular shall include
      the plural and masculine shall include the feminine.

     

    (E)  SEVERABILITY.
      If any provision of this Agreement shall be invalid or unenforceable in any
      jurisdiction, such invalidity or unenforceability shall not affect the validity
      or enforceability of the remainder of this Agreement in that jurisdiction or
      the
      validity or enforceability of any provision of this Agreement in any other
      jurisdiction.

     

    (F)  ENTIRE
      AGREEMENT;
      AMENDMENTS. This Agreement is the FINAL AGREEMENT between the Company and the
      Investor with respect to the terms and conditions set forth herein, and, the
      terms of this Agreement may not be contradicted by evidence of prior,
      contemporaneous, or subsequent oral agreements of the Parties. No provision
      of
      this Agreement may be amended other
      than by an instrument in writing signed by the Company and the Investor, and
      no
      provision hereof may be waived other than by an instrument in writing signed
      by
      the party against whom enforcement is sought. 

     

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

     

     

    The
      execution and delivery of the Equity Line Transaction Documents shall not alter
      the force and effect of any other agreements between the Parties, and the
      obligations under those agreements.

     

    (G)  NOTICES.
      Any notices 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 (III) one
      (1) day after deposit with a nationally recognized overnight delivery service,
      in each case properly addressed to the party to receive the same. The addresses
      and facsimile numbers for such communications shall be:

     

    If
      to the Company:

     

    Signet
      International Holdings, Inc. 

    205
      Worth
      Avenue, Suite 316 

    Palm
      Beach, Florida 33480

    Telephone:
      (561) 832-2000

    Facsimile:
      (561)832-1287

     

    If
      to the Investor:

     

    Dutchess
      Private Equities Fund, Ltd., 

    50
      Commonwealth Avenue, Suite 2 

    Boston,
      MA 02116

    Telephone:
      617-301-4700

    Facsimile:
      617-249-0947

     

    Each
      party shall provide five (5) days prior written notice to the other party of
      any
      change in address or facsimile number.

     

    (H)  NO
      ASSIGNMENT. This Agreement
      may not be assigned.

     

    (I)  NO
      THIRD
      PARTY BENEFICIARIES. This Agreement is intended for the benefit of the parties
      hereto and is not for the benefit of, nor may any provision hereof be enforced
      by, any other person, except that the Company acknowledges that the rights
      of
      the Investor may be enforced by its general partner.

     

    (J)  SURVIVAL.
      The representations and warranties of the Company and the Investor contained
      in
      Sections 2 and 3, the agreements and covenants set forth in
      Sections 4 and 5, and the indemnification provisions set forth in Section 11,
      shall survive each of the Closings and the termination of this
      Agreement.

     

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

     

     

     

    (K)  PUBLICITY.
      The Company and the Investor shall consult with each other in issuing any press
      releases or otherwise making public statements with respect to the transactions
      contemplated hereby and no party shall issue any such press release or otherwise
      make any such public statement without the prior consent of the other party,
      which consent shall not be unreasonably withheld or delayed, except that no
      prior consent shall be required if such disclosure is required by law, in which
      such case the disclosing party shall provide the other party with prior notice
      of such public statement. Notwithstanding the foregoing, the Company shall
      not
      publicly disclose the name of the Investor without the prior consent of the
      Investor, except to the extent required by law. The Investor acknowledges that
      this Agreement and all or part of the Equity Line Transaction Documents may
      be
      deemed to be "material contracts" as that term is defined by Item 601(b)(10)
      of
      Regulation S-B, and that the Company may therefore be required to file such
      documents as exhibits to reports or registration statements filed under the
      1933
      Act or the 1934 Act. The Investor further agrees that the status of such
      documents and materials as material contracts shall be determined solely by
      the
      Company, in consultation with its counsel.

     

    (L)  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 the 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.

     

    (M)  PLACEMENT
      AGENT. If so required, the Company agrees to pay a registered broker dealer,
      to
      act as placement agent, a percentage of the Put Amount on each draw toward
      the
      fee as outlined in the Placement Agent Agreement. The Investor shall have no
      obligation with respect to any fees or with respect to any claims made by or
      on
      behalf of other persons or entities for fees of a type contemplated in this
      Section that may be due in connection with the transactions contemplated by
      the
      Equity Line Transaction Documents. The Company shall indemnify and hold harmless
      the Investor, their employees, officers, directors, agents, and partners, and
      their respective affiliates, from and against all claims, losses, damages,
      costs
      (including the costs of preparation and attorney's fees) and expenses incurred
      in respect of any such claimed or existing fees, as such fees and expenses
      are
      incurred.

     

    (N)  NO
      STRICT
      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, as the parties mutually
      agree that each has had a full and fair opportunity to review this Agreement
      and
      seek the advice of counsel on it.

     

     

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

     

    (O)  REMEDIES.
      The Investor shall have all rights and remedies set forth in this Agreement
      and
      the Registration Rights Agreement 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 the Investor has by 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 default or breach of any provision of this Agreement, including
      the recovery of reasonable attorneys fees and costs, and to exercise all other
      rights granted by law.

     

    (P)  PAYMENT
      SET ASIDE. To the extent that the Company makes a payment or payments to the
      Investor hereunder or under the Registration Rights Agreement or the Investor
      enforces or exercises its 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, 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.

     

    (Q)  PRICING
      OF COMMON STOCK.
      For purposes of this Agreement, the bid price of the Common Stock shall be
      as
      reported on Bloomberg.

     

    SECTION
      13. NON-DISCLOSURE OF NON-PUBLIC INFORMATION.

     

    (a)  The
      Company shall not disclose non-public information to the Investor, its advisors,
      or its representatives.

     

    (b)  Nothing
      herein shall require the Company to disclose non-public information to the
      Investor or its advisors or representatives, and the Company represents that
      it
      does not disseminate non-public information to any investors who purchase stock
      in the Company in a public offering, to money managers or to securities
      analysts, provided, however, that notwithstanding anything herein to the
      contrary, the Company will, as hereinabove provided, immediately notify the
      advisors and representatives of the Investor and, if any, underwriters, of
      any
      event or the existence of any circumstance (without any obligation to disclose
      the specific event or circumstance) of which it becomes aware, constituting
      non­public information (whether or not requested of the Company specifically
      or generally during the course of due diligence by such persons or entities),
      which, if not disclosed in the prospectus included in the Registration Statement
      would cause such prospectus to include a material misstatement or to omit a
      material fact required to be stated therein in order to make the statements,
      therein, in light of the circumstances in which they were made, not misleading.
      

     

     

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

     

     

    Nothing
      contained in this Section 13 shall be construed to mean that such persons or
      entities
      other than the Investor (without the written consent of the Investor prior
      to
      disclosure of such information) may not obtain non-public information in the
      course of conducting due diligence in accordance with the terms of this
      Agreement and nothing herein shall prevent any such persons or entities from
      notifying the Company of their opinion that based on such due diligence by
      such
      persons or entities, that the Registration Statement contains an untrue
      statement of material fact or omits a material fact required to be stated in
      the
      Registration Statement or necessary to make the statements contained therein,
      in
      light of the circumstances in which they were made, not misleading.

     

    ARTICLE
      14 ACKNOWLEDGEMENTS OF THE PARTIES.

     

    Notwithstanding
      anything in this Agreement to the contrary, the parties hereto hereby
      acknowledge and agree to the following: (i) the Investor makes no
      representations or covenants that it will not engage in trading in the
      securities of the Company, other than the Investor will not sell short the
      Company's common stock at any time during this Agreement; (ii) the Company
      shall, by 8:30 a.m. Boston Time on the trading day following the date hereof,
      file a current report on Form 8-K disclosing the material terms of the
      transactions contemplated hereby and in the other Equity Line Transaction
      Documents; (iii) the Company has not and shall not provide material non-public
      information to the Investor unless prior thereto the Investor shall have
      executed a written agreement regarding the confidentiality and use of such
      information; and (iv) the Company understands and confirms that the Investor
      will be relying on the acknowledgements set forth in clauses (i) through (iii)
      above if the Investor effects any transactions in the securities of the
      Company.

     

     

     

    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

    

     

     

     

    SIGNATURE
      PAGE OF INVESTMENT AGREEMENT

     

    Your
      signature on this Signature Page evidences your agreement to be bound by the
      terms and conditions of the Investment Agreement and the Registration Rights
      Agreement as of the date first written above.

     

    The
      undersigned signatory hereby certifies that he has read and understands the
      Investment Agreement, and the representations made by the undersigned in this
      Investment Agreement are true and accurate, and agrees to be bound by its
      terms.

     

    DUTCHESS
      PRIVATE EQUITIES FUND, LTD.

     

     

    By:                                                          
      

    Douglas
      H. Leighton, Director

     

     

    SIGNET
      INTERNATIONAL HOLDINGS, INC.

    
       

       

      By:                                                     
        

    

    
            
        Ernest W. Letiziano, CEO

    

     

    
 

    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

    

     

    LIST
      OF EXHIBITS

     

    EXHIBIT
      A        Registration
      Rights Agreement

    EXHIBIT
      B        
Opinion
      of
      Company's Counsel

    EXHIBIT
      C                         Put
      Notice

    EXHIBIT
      D                        
Put Settlement Sheet

    


     

     

    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

    

     

     

    LIST
      OF SCHEDULES

     

    Schedule
      4(a) Subsidiaries

     

     

     

    
      
        
        

      

      
        33

        
          

        

      

      
        
        

      

    

    
 

     

    EXHIBIT
      A

    


     

     

    
      
        
        

      

      
        34

        
          

        

      

      
        
        

      

    

     

     

     

    EXHIBIT
      B

     

    FORM
      OF
      NOTICE OF EFFECTIVENESS OF REGISTRATION STATEMENT

     

                                                                                       Date:                    
      

    [TRANSFER
      AGENT]

     

    Re: Signet
      International Holdings, Inc.

     

        Ladies
      and
      Gentlemen:

     

    We
      are
      counsel to Signet International Holdings, Inc., a Delaware corporation
      (the "Company"), and have represented the Company in connection with that
      certain Investment Agreement (the "Investment Agreement") entered into by and
      among the Company
      and                                    (the
      "Investor") pursuant to which the Company
      has agreed to issue to the Investor shares of the Company's common stock, $.001
      par value per share (the "Common Stock") on the terms and conditions set forth
      in the Investment Agreement. Pursuant to the Investment Agreement, the Company
      also has entered into a Registration Rights Agreement with the Investor (the
      "Registration Rights Agreement") pursuant to which the Company agreed, among
      other things, to register the Registrable Securities (as defined in the
      Registration Rights Agreement), including the shares of Common Stock issued
      or
      issuable under the Investment Agreement under the Securities Act of 1933, as
      amended (the "1933 Act"). In connection with the Company's obligations
      under the Registration Rights Agreement, on___, 2006, the Company
      filed a Registration Statement on Form S- ___ (File No. 333- ____ ) (the
"Registration
      Statement") with the Securities and Exchange Commission (the "SEC") relating
      to
      the Registrable Securities which names the Investor as a selling shareholder
      thereunder.

     

    In
      connection with the foregoing, we advise you that [a member of the SEC's staff
      has advised us by telephone that the SEC has entered an order declaring the
      Registration Statement effective] [the Registration Statement has become
      effective] under the 1933 Act at [enter the time of effectiveness] on
[enter the date of effectiveness] and to the best of our knowledge, after
      telephonic inquiry of a member of the SEC’s staff, no stop order suspending its
      effectiveness has been issued and no proceedings for that purpose are pending
      before, or threatened by, the SEC and the Registrable Securities are available
      for resale under the 1933 Act pursuant to the Registration
      Statement.

     

    Very
      truly yours, 

     

    [Company
      Counsel]

     

     

    
 

    
      
        
        

      

      
        35

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      C

     

    Date:

     

    RE:
      Put
      Notice Number __

     

     Dear
      Mr. Leighton,

     

    This
      is
      to inform you that as of today, Signet International Holdings, Inc., a Delaware
      corporation (the "Company"), hereby elects to exercise its right pursuant to
      the
      Investment Agreement to require Dutchess Private Equities Fund, Ltd. to purchase
      shares of its common stock. The Company hereby certifies that:

     

    The
      amount of this put is $ _______
      .                                                               .

     

    The
      Pricing Period runs
      from ______ until  _______   .

     

    The
      current number of shares issued and outstanding as of the Company
      are:

     

    ______________________

     

    The
      number of shares currently available for issuance on the SB-2 for the Equity
      Line are:

     

    ______________________

     

    Regards,

     

    ___________________

    Ernest
      W.
      Letiziano, CEO

    Signet
      International Holdings, Inc.

    


     

    
      
        
        

      

      
        36

        
          

        

      

      
        
        

      

    

     

     

    EXHIBIT
      D

    PUT
      SETTLEMENT SHEET

     

    Date:

     

    Dear
      Mr.
      Letiziano,

     

    Pursuant
      to the Put given by Signet International Holdings, Inc., to Dutchess Private
      Equities Fund, Ltd. on ______ 200_, we are now submitting the
      amount of common shares for you to issue to Dutchess.

     

    Please
      have a certificate bearing no restrictive legend totaling_____________
shares
      issued to Dutchess Private Equities Fund, Ltd. immediately and send via DWAC
      to
      the following account:

     

    XXXXXX

     

    If
      not
      DWAC eligible, please send FedEx Priority Overnight to:

     

    XXXXXX

     

    Once
      these shares are received by us, we will have the funds wired to the
      Company.

     

    Regards,

     

    Douglas
      H. Leighton

     

     

     

    
      
        
        

      

      
        37

        
          

        

      

      
        
        

      

    

     

     

     

    DATE.
      . .
      . . . . . . . . . . . . . . . . . . PRICE

     

    Date
      of
      Day 1 . . . . . . . . . . . . . . . . Closing Bid of Day 1 

    Date
      of
      Day 2 . . . . . . . . . . . . . . . . Closing Bid of Day 2 

    Date
      of
      Day 3 . . . . . . . . . . . . . . . . Closing Bid of Day 3 

    Date
      of
      Day 4 . . . . . . . . . . . . . . . . Closing Bid of Day 4 

    Date
      of
      Day 5 . . . . . . . . . . . . . . . . Closing Bid of Day 5

     

     

                                            LOWEST
      1 (ONE) CLOSING BID IN PRICING PERIOD

     

                                          
      

                                           
      PUT
      AMOUNT

     

                                         
      

                                          
       AMOUNT WIRED TO COMPANY

     

                                        

                                           
      PURCHASE PRICE (93)% (NINETY-THREE PERCENT))

                 
      

                                          

                                           
      AMOUNT
      OF
      SHARES DUE

     

     

     

    The
      undersigned has completed this Put as of this ___th day of 200_.

     

    SIGNET
      INTERNATIONAL HOLDINGS, INC.

     

    __________________________

    Ernest
      W. Letiziano, CEO

     

    


     

    
      
        
        

      

      
        38

        
          

        

      

      
        
        

      

    

     

     

    SCHEDULE
      4(c) CAPITALIZATION

     

     

    
 

    
      
        
        

      

      
        39

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
      4(e) CONFLICTS

    


     

    
      
        
        

      

      
        40

        
          

        

      

      
        
        

      

    

     

     

    SCHEDULE
      4(g) MATERIAL CHANGES

     

     

    
      
        
        

      

      
        41

        
          

        

      

      
        
        

      

    

     

     

    SCHEDULE
      4(h) LITIGATION

     

     

    
 

    
      
        
        

      

      
        42

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
      4(l) INTELLECTUAL PROPERTY

    


     

    
      
        
        

      

      
        43

        
          

        

      

      
        
        

      

    

     

     

    SCHEDULE
      4(n) LIENS

     

     

    
 

    
      
        
        

      

      
        44

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
      4(t) CERTAIN TRANSACTIONS

     

     

     

    45