ex1005.htm


    Exhibit
10.05

    


    PURCHASE
AGREEMENT

    


    THIS PURCHASE AGREEMENT (“Agreement”)
is made as of the 30th day of December, 2008, by and among Amber Alert Safety
Centers, Inc., a Nevada corporation (“Company”), and the John Thomas Bridge
& Opportunity Fund, L.P., a Delaware limited partnership
(“Investor”).

    


    Recitals

    


    A.           The
Company and the Investor are executing and delivering this Agreement in reliance
upon the exemption from securities registration afforded by the provisions of
Regulation D (“Regulation D”), as promulgated by the U.S. Securities and
Exchange Commission (the “SEC”) under the Securities Act of 1933, as amended;
and

    


    B.           The
Investor wishes to purchase from the Company, and the Company wishes to sell and
issue to the Investor, upon the terms and conditions stated in this Agreement,
(i) a debenture in the principal amount of $740,000, bearing interest at the
rate of 14% per annum, in the form attached hereto as Exhibit A (the
“Debenture”), which shall be secured by the certain collateral pursuant to the
security agreement in the form attached hereto as Exhibit B (the
“Security Agreement”) and (ii) 7,500,000 shares of Company common stock
(“Shares”) issued for $10,000 of consideration, pursuant to a stock purchase
agreement attached hereto as Exhibit C (“Stock
Purchase Agreement”), which shares shall have certain registration rights as
described in the agreement attached hereto as Exhibit D
(“Registration Rights Agreement”).

    


    In consideration of the mutual promises
made herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

    


    1.           Definitions.  In
addition to those terms defined above and elsewhere in this Agreement, for the
purposes of this Agreement, the following terms shall have the meanings set
forth below:

    


    “Account Control
Agreement” has the meaning set forth in Section 7.10.

    


    “Affiliate” means,
with respect to any Person, any other Person which directly or indirectly
through one or more intermediaries Controls, is controlled by, or is under
common control with, such Person.

    


    “Business Day” means a
day, other than a Saturday or Sunday, on which banks in New York City are open
for the general transaction of business.

    


    “Closing” has the
meaning set forth in Section 3.

    


    “Closing Date” has the
meaning set forth in Section 3.

     

    
      
        
        

      

      
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    “Common Stock” means
common stock, par value of $.0001 per share of the Company.

    


    “Conversion Shares”
means Common Stock issued upon conversion of all or a portion of the principal
amount of the Debenture, at the option of the Investor, upon an event of default
of the Debenture.

    


    “Company’s Knowledge”
means the actual knowledge of the executive officers (as defined in Rule 405
under the 1933 Act) of the Company, after due inquiry.

    


    “Confidential
Information” means trade secrets, confidential information and know-how
(including but not limited to ideas, formulae, compositions, processes,
procedures and techniques, research and development information, computer
program code, performance specifications, support documentation, drawings,
specifications, designs, business and marketing plans, and customer and supplier
lists and related information).

    


    “Control” (including
the terms “controlling”, “controlled by” or “under common control with”) means
the possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.

    


    “Debenture” has the
meaning set forth in recitals.

    


    “Environmental Laws”
has the meaning set forth in Section 4.15.

    


    “GAAP” has the meaning
set forth in Section 4.18.

    


    “Infringe” has the
meaning set forth in Section 4.15(d).

    


    “Intellectual
Property” means all of the following: (i) patents, patent applications,
patent disclosures and inventions (whether or not patentable and whether or not
reduced to practice); (ii) trademarks, service marks, trade dress, trade names,
corporate names, logos, slogans and Internet domain names, together with all
goodwill associated with each of the foregoing; (iii) copyrights and
copyrightable works; (iv) registrations, applications and renewals for any of
the foregoing; and (v) proprietary computer software (including but not limited
to data, data bases and documentation).

    


    “Investment Banking
Agreement” means that certain investment banking agreement dated December
29, 2008 by and between the Company and John Thomas Financial, Inc.

    


    “License Agreements”
has the meaning set forth in Section 4.15(b).

    


    “Liquidated Damage
Shares” means the shares of Common Stock to be issued pursuant to Section
2.1(c) of the Registration Rights Agreement.

     

    
      
        
        

      

      
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    “Material Adverse
Effect” means a material adverse effect on (i) the assets, liabilities,
results of operations, condition (financial or otherwise), business, or
prospects of the Company and its Subsidiaries taken as a whole, or (ii) the
ability of the Company to perform its obligations under the Transaction
Documents.

    


    “Person” means an
individual, corporation, partnership, limited liability company, trust, business
trust, association, joint stock company, joint venture, sole proprietorship,
unincorporated organization, governmental authority or any other form of entity
not specifically listed herein.

    


    “Purchase Price” means
$750,000.

    


    “Registration Rights
Agreement” has the meaning set forth in the recitals.

    


    “Securities” means the
Debenture, the Shares, the Conversion Shares, and the Liquidated Damage
Shares.

    


    “Security Agreement”
has the meaning set forth in recitals.

    


    “Shares” means the
7,500,000 shares of Common Stock issued at Closing pursuant to the Stock
Purchase Agreement.

    


    “Stock Purchase
Agreement” has the meaning set forth in the recitals.

    


    “Subsidiary” of any
Person means another Person, an amount of the voting securities, other voting
ownership or voting partnership interests of which is sufficient to elect at
least a majority of its Board of Directors or other governing body (or, if there
are no such voting interests, 50% or more of the equity interests of which) is
owned directly or indirectly by such first Person.

    


    “Transaction
Documents” means this Agreement, the Debenture, the Security Agreement,
the Stock Purchase Agreement and the Registration Rights Agreement.

    


    “1933 Act” means the
Securities Act of 1933, as amended, or any successor statute, and the rules and
regulations promulgated thereunder.

    


    2.           Purchase and Issuance of the
Securities

    


    2.1           Debenture and
Shares.  Subject to the terms and conditions of this Agreement,
on the Closing Date the Investor shall purchase, and the Company shall sell and
issue to the Investor, the Debenture and the Shares in the amount set forth
opposite the Investor’s name on the signature page attached hereto in exchange
for the Purchase Price.

    


    3.           Closing.  Within
one Business Day of the date of executing this Agreement, the Company shall
cause the delivery of the certificates representing the Debenture and the
Shares, registered in the names and amounts of the Investor as set forth on the
signature pages attached hereto to the Investor and the Investor shall wire to
the Company in same day funds an amount representing such Investor’s Purchase
Price, as set forth on the signature page hereto (“Closing” or “Closing
Date”).  The Closing shall occur upon confirmation that the conditions
to Closing in Section 6 hereof have been satisfied.  The Closing of
the purchase and sale of the Debenture and Shares shall take place at the
offices of Brewer & Pritchard, P.C., 3 Riverway, Suite 1800, Houston, Texas
77056.

     

    
      
        
        

      

      
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    4.           Representations and
Warranties of the Company.  The Company hereby represents and
warrants to the Investor that, except as set forth in the schedules delivered
herewith (collectively, the “Disclosure Schedules”):

    


    4.1           Organization, Good Standing
and Qualification.  Each of the Company and its Subsidiaries is
a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has all requisite corporate
power and authority to carry on its business as now conducted and to own its
properties.  Each of the Company and its Subsidiaries is duly
qualified to do business as a foreign corporation and is in good standing in
each jurisdiction in which the conduct of its business or its ownership or
leasing of property makes such qualification or leasing necessary unless the
failure to so qualify has not had and could not reasonably be expected to have a
Material Adverse Effect.  Schedule 4.1 sets forth the full corporation
name and all assumed names of the Company and each Subsidiary, its respective
place of incorporation, and jurisdictions where each conducts
business.

    


    4.2           Authorization.  The
Company has full power and authority and has taken all requisite
action on the part of the Company, its officers, directors and stockholders
necessary for (i) the authorization, execution and delivery of the Transaction
Documents, (ii) the authorization of the performance of all obligations of the
Company hereunder or thereunder, and (iii) the authorization, issuance (or
reservation for issuance) and delivery of the Securities.  The
Transaction Documents constitute the legal, valid and binding obligations of the
Company, enforceable against the Company in accordance with their terms, subject
to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability, relating to or affecting creditors’
rights generally.

    


    4.3           Capitalization.  Schedule 4.3 sets
forth (a) the authorized capital stock of the Company on the date hereof; (b)
the number of shares of capital stock issued and outstanding; (c) the number of
shares of capital stock issuable pursuant to the Company’s stock plans; and (d)
the number of shares of capital stock issuable and reserved for issuance
pursuant to securities exercisable for, or convertible into or exchangeable for
any shares of capital stock of the Company.  All of the issued and
outstanding shares of the Company’s capital stock have been duly authorized and
validly issued and are fully paid, nonassessable and free of pre-emptive rights
and were issued in full compliance with applicable state and federal securities
law and any rights of third parties.  Except as described on Schedule 4.3, all of
the issued and outstanding shares of capital stock of each Subsidiary have been
duly authorized and validly issued and are fully paid, nonassessable and free of
pre-emptive rights, were issued in full compliance with applicable state and
federal securities law and any rights of third parties and are owned by the
Company, beneficially and of record, subject to no lien, encumbrance or other
adverse claim.  Except as described on Schedule 4.3, no
Person is entitled to pre-emptive or similar statutory or contractual rights
with respect to any securities of the Company.  Except as described on
Schedule 4.3,
there are no outstanding warrants, options, convertible securities or other
rights, agreements or arrangements of any character under which the Company or
any of its Subsidiaries is or may be obligated to issue any equity securities of
any kind and except as contemplated by this Agreement, neither the Company nor
any of its Subsidiaries is currently in negotiations for the issuance of any
equity securities of any kind.  Except as described on Schedule 4.3, there
are no voting agreements, buy-sell agreements, option or right of first purchase
agreements or other agreements of any kind among the Company and any of the
securityholders of the Company relating to the securities of the Company held by
them.  Except as described on Schedule 4.3, no
Person has the right to require the Company to register any securities of the
Company under the 1933 Act, whether on a demand basis or in connection with the
registration of securities of the Company for its own account or for the account
of any other Person.

    


    Except as described on Schedule 4.3, the
issuance and sale of the Securities hereunder will not obligate the Company to
issue shares of Common Stock or other securities to any other Person (other than
the Investor) and will not result in the adjustment of the exercise, conversion,
exchange or reset price of any outstanding security.

    


    Except as described on Schedule 4.3, the
Company does not have outstanding stockholder purchase rights or “poison pill”
or any similar arrangement in effect giving any Person the right to purchase any
equity interest in the Company upon the occurrence of certain
events.

     

    
      
        
        

      

      
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    4.4           Valid
Issuance.  The Debenture, the Shares, the Conversion Shares,
and Liquidated Damage Shares have been duly and validly authorized and, when
issued and paid for pursuant to this Agreement, will be validly issued, fully
paid and nonassessable, and shall be free and clear of all encumbrances and
restrictions (other than those created by the Investor), except for restrictions
on transfer set forth in the Transaction Documents or imposed by applicable
securities laws.  The Company has reserved a sufficient number of
shares of Common Stock for issuance as Conversion Shares and Liquidated Damage
Shares, free and clear of all encumbrances and restrictions, except for
restrictions on transfer set forth in the Transaction Documents or imposed by
applicable securities laws.

    


    4.5           Consents.  The
execution, delivery and performance by the Company of the Transaction Documents
and the offer, issuance and sale of the Securities require no consent of, action
by or in respect of, or filing with, any Person, governmental body, agency, or
official other than filings that have been made pursuant to applicable state
securities laws and post-sale filings pursuant to applicable state and federal
securities laws which the Company undertakes to file within the applicable time
periods.  Subject to the accuracy of the representations and
warranties of the Investor set forth in Section 5 hereof, the Company has taken
all action necessary to exempt (i) the issuance and sale of the Securities and
(ii) the other transactions contemplated by the Transaction Documents from the
provisions of any stockholder rights plan or other “poison pill” arrangement,
any anti-takeover, business combination or control share law or statute binding
on the Company or to which the Company or any of its assets and properties may
be subject and any provision of the Company’s Articles of Incorporation or
Bylaws that is or could reasonably be expected to become applicable to the
Investor as a result of the transactions contemplated hereby, including without
limitation, the issuance of the Securities and the ownership, disposition or
voting of the Securities by the Investor or the exercise of any right granted to
the Investor pursuant to this Agreement or the other Transaction
Documents.

    


    4.6           Use of
Proceeds.  The net proceeds of the sale of the Debenture and
the Shares hereunder shall be used by the Company as set forth in Schedule
4.6.

    


    4.7           No Material Adverse
Change.  Since November, 2008, except as identified and
described on Schedule 4.7, there has not been:

    


    (i)           any
change in the consolidated assets, liabilities, financial condition or operating
results of the Company from that are reflected its most recent financial
statements, except for changes in the ordinary course of business which have not
had and could not reasonably be expected to have a Material Adverse Effect,
individually or in the aggregate;

    


    (ii)           any
declaration or payment of any dividend, or any authorization or payment of any
distribution, on any of the capital stock of the Company, or any redemption or
repurchase of any securities of the Company;

    


    (iii)           any
material damage, destruction or loss, whether or not covered by insurance to any
assets or properties of the Company or its Subsidiaries;

    


    (iv)           any
waiver, not in the ordinary course of business, by the Company or any Subsidiary
of a material right or of a material debt owed to it;

    


    (v)           any
satisfaction or discharge of any lien, claim or encumbrance or payment of any
obligation by the Company or a Subsidiary, except in the ordinary course of
business and which is not material to the assets, properties, financial
condition, operating results or business of the Company and its Subsidiaries
taken as a whole (as such business is presently conducted and as it is proposed
to be conducted);

    


    (vi)           any
change or amendment to the Company's Articles of Incorporation or Bylaws, or
material change to any material contract or arrangement by which the Company or
any Subsidiary is bound or to which any of their respective assets or properties
is subject;

    


    (vii)           any
material labor difficulties or labor union organizing activities with respect to
employees of the Company or any Subsidiary;

    


    (viii)           any
material transaction entered into by the Company or a Subsidiary other than in
the ordinary course of business;

    


    (ix)           the
loss of the services of any key employee, or material change in the composition
or duties of the senior management of the Company or any
Subsidiary;

    


    (x)           the
loss or threatened loss of any customer which has had or could reasonably be
expected to have a Material Adverse Effect; or

    


    (xi)           any
other event or condition of any character that has had or could reasonably be
expected to have a Material Adverse Effect.

     

    
      
        
        

      

      
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    4.8           Reserved.

    


    4.9           No Conflict, Breach,
Violation or Default.  The execution, delivery and performance
of the Transaction Documents by the Company and the issuance and sale of the
Securities will not conflict with or result in a breach or violation of any of
the terms and provisions of, or constitute a default under (i) the Company’s
Articles of Incorporation or the Company’s Bylaws, both as in effect on the date
hereof, or (ii)(a) any statute, rule, regulation or order of any governmental
agency or body or any court, domestic or foreign, having jurisdiction over the
Company, any Subsidiary or any of their respective assets or properties, or (b)
any agreement or instrument to which the Company or any Subsidiary is a party or
by which the Company or a Subsidiary is bound or to which any of their
respective assets or properties is subject.

    


    4.10           Tax
Matters.  Except as described on Schedule 4.10, the
Company and each Subsidiary has prepared and filed all tax returns required to
have been filed by the Company or such Subsidiary with all appropriate
governmental agencies and paid all taxes and penalties shown thereon or
otherwise owed by it, except to the extent the Company and Subsidiaries have set
aside on its books provisions reasonably adequate for the payment of all unpaid
and unreported taxes.  The charges, accruals and reserves on the books
of the Company in respect of taxes for all fiscal periods are adequate in all
material respects, and there are no material unpaid assessments against the
Company or any Subsidiary nor, to the Company’s Knowledge, any basis for the
assessment of any additional taxes, penalties or interest for any fiscal period
or audits by any federal, state or local taxing authority except for any
assessment which is not material to the Company and its Subsidiaries, taken as a
whole.  All taxes and other assessments and levies that the Company or
any Subsidiary is required to withhold or to collect for payment have been duly
withheld and collected and paid to the proper governmental entity or third party
when due, except to the extent the Company and Subsidiaries have set aside on
its books provisions reasonably adequate for the payment of all unpaid and
unreported taxes.  There are no tax liens or claims pending or, to the
Company’s Knowledge, threatened against the Company or any Subsidiary or any of
their respective assets or property.  There are no outstanding tax
sharing agreements or other such arrangements between the Company and any
Subsidiary or other corporation or entity.

    


    4.11           Title to
Properties.  The Company and each Subsidiary has good and
marketable title to all real properties and all other properties and assets
owned by it, in each case free from liens, encumbrances and defects that would
materially affect the value thereof or materially interfere with the use made or
currently planned to be made thereof by them; and the Company and each
Subsidiary holds any leased real or personal property under valid and
enforceable leases with no exceptions that would materially interfere with the
use made or currently planned to be made thereof by them.

    


    4.12           Certificates, Authorities
and Permits.  The Company and each Subsidiary possess all
material certificates, authorities or permits issued by appropriate governmental
agencies or bodies necessary to conduct the business now operated by it, and
neither the Company nor any Subsidiary has received any notice of proceedings
relating to the revocation or modification of any such certificate, authority or
permit that, if determined adversely to the Company or such Subsidiary, could
reasonably be expected to have a Material Adverse Effect, individually or in the
aggregate.

    


                          4.13           Labor
Matters.

    


                          (a)           The
Company is not a party to or bound by any collective bargaining agreements or
other agreements with labor organizations.  The Company has not
violated in any material respect any laws, regulations, orders or contract
terms, affecting the collective bargaining rights of employees, labor
organizations or any laws, regulations or orders affecting employment
discrimination, equal opportunity employment, or employees’ health, safety,
welfare, wages and hours.

    


                          (b)           (i)
There are no labor disputes existing, or to the Company's Knowledge, threatened,
involving strikes, slow-downs, work stoppages, job actions, disputes, lockouts
or any other disruptions of or by the Company's employees, (ii) there are no
unfair labor practices or petitions for election pending or, to the Company's
Knowledge, threatened before the National Labor Relations Board or any other
federal, state or local labor commission relating to the Company's employees,
(iii) no demand for recognition or certification heretofore made by any labor
organization or group of employees is pending with respect to the Company and
(iv) to the Company's Knowledge, the Company enjoys good labor and employee
relations with its employees and labor organizations.

    


                          (c)           The
Company is, and at all times has been, in compliance in all material respects
with all applicable laws respecting employment (including laws relating to
classification of employees and independent contractors) and employment
practices, terms and conditions of employment, wages and hours, and immigration
and naturalization.  There are no claims pending against the Company
before the Equal Employment Opportunity Commission or any other administrative
body or in any court asserting any violation of Title VII of the Civil Rights
Act of 1964, the Age Discrimination Act of 1967, 42 U.S.C. §§ 1981 or 1983 or
any other federal, state or local Law, statute or ordinance barring
discrimination in employment.

    


                          (d)           Except
as described on Schedule 4.13, the Company is not a party to, or bound by, any
employment or other contract or agreement that contains any severance,
termination pay or change of control liability or obligation, including, without
limitation, any “excess parachute payment,” as defined in Section 2806(b) of the
Internal Revenue Code.

    


                          (e)           Each
of the Company's employees is a Person who is either a United States citizen or
a permanent resident entitled to work in the United States.  To the
Company's Knowledge, the Company has no liability for the improper
classification by the Company of such employees as independent contractors or
leased employees prior to the Closing.

    


    


    
      
        
        

      

      
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    4.14           Intellectual
Property.

    


    (a)           All
Intellectual Property of the Company and its Subsidiaries is currently in
compliance with all legal requirements (including timely filings, proofs and
payments of fees) and is valid and enforceable.  No Intellectual
Property of the Company or its Subsidiaries which is necessary for the conduct
of Company’s and each of its Subsidiaries’ respective businesses as currently
conducted or as currently proposed to be conducted has been or is now involved
in any cancellation, dispute or litigation, and, to the Company’s Knowledge, no
such action is threatened.  No patent of the Company or its
Subsidiaries has been or is now involved in any interference, reissue,
re-examination or opposition proceeding.

    


    (b)           All
of the licenses and sublicenses and consent, royalty or other agreements
concerning Intellectual Property which are necessary for the conduct of the
Company’s and each of its Subsidiaries’ respective businesses as currently
conducted or as currently proposed to be conducted to which the Company or any
Subsidiary is a party or by which any of their assets are bound (other than
 generally commercially available, non-custom, off-the-shelf software
application programs having a retail acquisition price of less than $10,000 per
license) (collectively, “License Agreements”) are valid and binding obligations
of the Company or its Subsidiaries that are parties thereto and, to the
Company’s Knowledge, the other parties thereto, enforceable in accordance with
their terms, except to the extent that enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
other similar laws affecting the enforcement of creditors’ rights generally, and
there exists no event or condition which will result in a material violation or
breach of or constitute (with or without due notice or lapse of time or both) a
default by the Company or any of its Subsidiaries under any such License
Agreement.

    


    (c)           The
Company and its Subsidiaries own or have the valid right to use all of the
Intellectual Property that is necessary for the conduct of the Company’s and
each of its Subsidiaries’ respective businesses as currently conducted or as
currently proposed to be conducted and for the ownership, maintenance and
operation of the Company’s and its Subsidiaries’ properties and assets, free and
clear of all liens, encumbrances, adverse claims or obligations to license all
such owned Intellectual Property and Confidential Information, other than
licenses entered into in the ordinary course of the Company’s and its
Subsidiaries’ businesses.  The Company and its Subsidiaries have a
valid and enforceable right to use all third party Intellectual Property and
Confidential Information used or held for use in the respective businesses of
the Company and its Subsidiaries.

    


    (d)           The
conduct of the Company’s and its Subsidiaries’ businesses as currently conducted
does not infringe or otherwise impair or conflict with (collectively,
“Infringe”) any Intellectual Property rights of any third party or any
confidentiality obligation owed to a third party, and, to the Company’s
Knowledge, the Intellectual Property and Confidential Information of the Company
and its Subsidiaries which are necessary for the conduct of Company’s and each
of its Subsidiaries’ respective businesses as currently conducted or as
currently proposed to be conducted are not being Infringed by any third
party.  There is no litigation or order pending or outstanding or, to
the Company’s Knowledge, threatened or imminent, that seeks to limit or
challenge or that concerns the ownership, use, validity or enforceability of any
Intellectual Property or Confidential Information of the Company and its
Subsidiaries and the Company’s and its Subsidiaries’ use of any Intellectual
Property or Confidential Information owned by a third party, and, to the
Company’s Knowledge, there is no valid basis for the same.

    


    (e)           The
consummation of the transactions contemplated hereby and by the other
Transaction Documents will not result in the alteration, loss, impairment of or
restriction on the Company’s or any of its Subsidiaries’ ownership or right to
use any of the Intellectual Property or Confidential Information which is
necessary for the conduct of Company’s and each of its Subsidiaries’ respective
businesses as currently conducted or as currently proposed to be
conducted.

    


    (f)           The
Company and its Subsidiaries have taken reasonable steps to protect the
Company’s and its Subsidiaries’ rights in their Intellectual Property and
Confidential Information.  Each employee, consultant and contractor
who has had access to Confidential Information which is necessary for the
conduct of Company’s and each of its Subsidiaries’ respective businesses as
currently conducted or as currently proposed to be conducted has executed an
agreement to maintain the confidentiality of such Confidential Information and
has executed appropriate agreements that are substantially consistent with the
Company’s standard forms thereof.  Except under confidentiality
obligations, there has been no material disclosure of any of the Company’s or
its Subsidiaries’ Confidential Information to any third party.

    


    4.15           Environmental
Matters.  Neither the Company nor any Subsidiary is in
violation of any statute, rule, regulation, decision or order of any
governmental agency or body or any court, domestic or foreign, relating to the
use, disposal or release of hazardous or toxic substances or relating to the
protection or restoration of the environment or human exposure to hazardous or
toxic substances (collectively, “Environmental Laws”), owns or operates any real
property contaminated with any substance that is subject to any Environmental
Laws, is liable for any off-site disposal or contamination pursuant to any
Environmental Laws, or is subject to any claim relating to any Environmental
Laws, which violation, contamination, liability or claim has had or could
reasonably be expected to have a Material Adverse Effect, individually or in the
aggregate; and there is no pending or, to the Company’s Knowledge, threatened
investigation that might lead to such a claim.

    


    4.16           Litigation.  Except
as set forth in Schedule 4.16, there are no pending actions, suits or
proceedings against or affecting the Company, its Subsidiaries or any of its or
their properties, and to the Company’s Knowledge, no such actions, suits or
proceedings are threatened or contemplated.

     

    
      
        
        

      

      
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    4.17           Financial
Statements.  The Company’s financial statements set forth in
Schedule 4.17 present fairly, in all material respects, the consolidated
financial position of the Company as of the dates shown and its consolidated
results of operations and cash flows for the periods shown, and such financial
statements have been prepared in conformity with United States generally
accepted accounting principles applied on a consistent basis
(“GAAP”).  Except as set forth in the financial statements of the
Company as described on Schedule 4.17,
neither the Company nor any of its Subsidiaries has incurred any liabilities,
contingent or otherwise, except those incurred in the ordinary course of
business, consistent (as to amount and nature) with past practices since the
date of such financial statements, none of which, individually or in the
aggregate, have had or could reasonably be expected to have a Material Adverse
Effect.

    


    4.18           Insurance
Coverage.  The Company and each Subsidiary maintains in full
force and effect the insurance coverages described on Schedule
4.18..

    


    4.19           Brokers and
Finders.  No Person will have, as a result of the transactions
contemplated by the Transaction Documents, any valid right, interest or claim
against or upon the Company, any Subsidiary or an Investor for any commission,
fee or other compensation pursuant to any agreement, arrangement or
understanding entered into by or on behalf of the Company.

    


    4.20           No Directed Selling Efforts
or General Solicitation.  Neither the Company nor any Person
acting on its behalf has conducted any general solicitation or general
advertising (as those terms are used in Regulation D) in connection with the
offer or sale of any of the Securities.

    


    4.21           No Integrated
Offering.  Neither the Company nor any of its Affiliates, nor
any Person acting on its or their behalf has, directly or indirectly, made any
offers or sales of any Company security or solicited any offers to buy any
security, under circumstances that would adversely affect reliance by the
Company on Section 4(2) for the exemption from registration for the transactions
contemplated hereby or would require registration of the Securities under the
1933 Act.

    


    4.22           Private
Placement.  The offer and sale of the Securities to the
Investor as contemplated hereby is exempt from the registration requirements of
the 1933 Act.

    


    4.23           Questionable
Payments.  Neither
the Company nor any of its Subsidiaries, nor their respective directors,
officers or employees nor, to the Company’s Knowledge, any of their respective
current or former stockholders, agents or other Persons acting on behalf of the
Company or any Subsidiary, has on behalf of the Company or any Subsidiary or in
connection with their respective businesses: (a) used any corporate funds for
unlawful contributions, gifts, entertainment or other unlawful expenses relating
to political activity; (b) made any direct or indirect unlawful payments to any
governmental officials or employees from corporate funds; (c) established or
maintained any unlawful or unrecorded fund of corporate monies or other assets;
(d) made any false or fictitious entries on the books and records of the Company
or any Subsidiary; or (e) made any unlawful bribe, rebate, payoff, influence
payment, kickback or other unlawful payment of any nature.

    


    4.24           Transactions with
Affiliates.  Except as set forth in Schedule 4.24, none of the
officers or directors of the Company and, to the Company’s Knowledge, none of
the employees of the Company is presently a party to any transaction with the
Company or any Subsidiary (other than as holders of stock options and/or
warrants, and 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 Company’s Knowledge, any entity in which any officer,
director, or any such employee has a substantial interest or is an officer,
director, trustee or partner.

    


    4.25           Reserved.

    


    4.26           Solvency.  Based
on the financial condition of the Company as of the Closing Date and giving
effect to the net proceeds from the Closing, (i) the Company's fair saleable
value of its assets exceeds the amount that will be required to be paid on or in
respect of the Company's existing debts and other liabilities (including known
contingent liabilities) as they mature; (ii) the Company's assets do not
constitute unreasonably small capital to carry on its business for the 2009
calendar year as now conducted and as proposed to be conducted including its
capital needs taking into account the particular capital requirements of the
business conducted by the Company, and projected capital requirements and
capital availability thereof; and (iii) the proceeds the Company receives,
giving effect to the Closing, were it to liquidate all of its assets, after
taking into account all anticipated uses of the cash, would be sufficient to pay
all amounts on or in respect of its debt when such amounts are required to be
paid.  As of Closing, the Company does not intend to incur debts
beyond its ability to pay such debts as they mature (taking into account the
timing and amounts of cash to be payable on or in respect of its
debt).  The Company did not receive a qualified opinion from its
auditors with respect to its most recent fiscal year end.

     

    
      
        
        

      

      
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    4.27           Disclosures.  Neither
the Company nor any Person acting on its behalf has provided the Investor or its
agent or counsel with any information that constitutes or might constitute
material, non-public information.  The written materials delivered to
the Investor in connection with the transactions contemplated by the Transaction
Documents do not contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading.

    


    4.28.           No Shell
Company.  The Company is not, nor at any time during the 12
months preceding the date hereof has the Company been a “shell company,” as such
term is defined in paragraph (i)(1)(i) of Rule 144 of the 1933 Act or Rule 12b-2
of the Exchange Act of 1934, the effect of which would prevent the Investor from
selling the Shares, Conversion Shares or Liquidated Damage Shares without
restriction pursuant to Rule 144.

    


    4.29.           No Investment
Company.  The Company is not, and upon the issuance and sale of
the Securities as contemplated by this Agreement will not be an “investment
company” required to be registered under the Investment Company Act of 1940 (an
“Investment Company”).  The Company is not controlled by an Investment
Company.

    


    4.30.           Seniority.  As
of the Closing Date, no indebtedness or other equity of the Company is senior
to, or pari passu with, the Debenture in right of payment, whether with respect
to interest or upon liquidation or dissolution, or otherwise, except as set
forth in Schedule 4.30.  Except as set forth in Schedule 4.30, no
indebtedness is currently in default, whether arising from a financing
transaction or other contract.

    


    4.31.           No Disagreement with
Accountants and Lawyers.  During the two years preceding the
date hereof, there have been no disagreements of any kind presently existing, or
reasonably anticipated by the Company to arise, between the accountants and
lawyers formerly or presently employed by the Company and the Company is current
with respect to any fees owed to its accountants and lawyers.  By
making this representation the Company does not, in any manner, waive the
attorney/client privilege or the confidentiality of the communications between
the Company and its lawyers.

    


    5.           Representations and
Warranties of the Investor.  The Investor hereby represents and
warrants to the Company that:

    


    5.1           Organization and
Existence.  Investor is a validly existing corporation, limited
partnership or limited liability company and has all requisite corporate,
partnership or limited liability company power and authority to invest in the
Securities pursuant to this Agreement.

    


    5.2           Authorization.  The
execution, delivery and performance by Investor of the Transaction Documents to
which Investor is a party have been duly authorized and will each constitute the
valid and legally binding obligation of such Investor, enforceable against
Investor in accordance with their respective terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability, relating to or affecting creditors’ rights
generally.

    


    5.3           Purchase
Entirely for Own Account.  The Securities to be received by Investor
hereunder will be acquired for Investor’s own account, not as nominee or agent,
and not with a view to the resale or distribution of any part thereof in
violation of the 1933 Act, and such Investor has no present intention of
selling, granting any participation in, or otherwise distributing the same in
violation of the 1933 Act without prejudice, however, to such Investor’s
right at all times to sell or otherwise dispose of all or any part of such
Securities in compliance with applicable federal and state securities
laws.  Nothing contained herein shall be deemed a representation or
warranty by such Investor to hold the Securities for any period of
time.  Investor is not a broker-dealer registered with the SEC under
the 1934 Act or an entity engaged in a business that would require it to be so
registered.

    


    5.4           Investment
Experience.  Investor acknowledges that it can bear the
economic risk and complete loss of its investment in the Securities and has such
knowledge and experience in financial or business matters that it is capable of
evaluating the merits and risks of the investment contemplated
hereby.

    


    5.5           Disclosure of
Information.  Investor has had an opportunity to receive all
information related to the Company requested by it and to ask questions of and
receive answers from the Company regarding the Company, its business and the
terms and conditions of the offering of the Securities.  Neither such
inquiries nor any other due diligence investigation conducted by such Investor
shall modify, amend or affect Investor’s right to rely on the Company’s
representations and warranties contained in this Agreement.

    


    5.6           Restricted
Securities.  Investor understands that the Securities are
characterized as “restricted securities” under the U.S. federal securities laws
inasmuch as they are being acquired from the Company in a transaction not
involving a public offering and that under such laws and applicable regulations
such securities may be resold without registration under the 1933 Act only in
certain limited circumstances.  The Investor understands that the
Securities are being offered and sold to it in reliance on specific exemptions
from the registration requirements of United States federal and state securities
laws and that the Company is relying in part upon the truth and accuracy of, and
Investor’s compliance with, the representations, warranties, agreements,
acknowledgments and understanding of Investor set forth herein in order to
determine the availability of such exemptions and the eligibility of Investor to
acquire such securities.

     

    
      
        
        

      

      
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    5.7           Legends.  It
is understood that, except as provided below, certificates evidencing the
Securities may bear the following or any similar legend:

    


    (a)           “The
securities represented hereby may not be transferred unless (i) such securities
have been registered for sale pursuant to the Securities Act of 1933, as
amended, (ii) such securities may be sold pursuant to Rule 144, or (iii) the
Company has received an opinion of counsel reasonably satisfactory to it that
such transfer may lawfully be made without registration under the Securities Act
of 1933 or qualification under applicable state securities
laws.  Notwithstanding the foregoing, the securities may be pledged in
connection with a bona fide margin account secured by the
securities.”

    


    (b)           If
required by the authorities of any state in connection with the issuance of sale
of the Securities, the legend required by such state authority.

    


    5.8           Accredited
Investor.  Investor is an accredited investor as defined in
Rule 501(a) of Regulation D, as amended, under the 1933 Act.

    


    5.9           No General
Advertisement.  Investor did not learn of the investment in the
Securities as a result of any public advertisement, article, notice or other
communication regarding the Securities published in any newspaper, magazine or
similar media or broadcast over television, radio or internet or presented at
any seminar or other general advertisement.

    


    5.10           Brokers and
Finders.  No Person will have, as a result of the transactions
contemplated by the Transaction Documents, any valid right, interest or claim
against or upon the Company, any Subsidiary or an Investor for any commission,
fee or other compensation pursuant to any agreement, arrangement or
understanding entered into by or on behalf of such Investor, other than a
$97,500 payment owed to John Thomas Financial, Inc.

    


    5.11           Patriot
Act.  Neither Investor nor any of its Affiliates has been
designated, and is not owned or controlled, by a “suspected terrorist” as
defined in Executive Order 13224.  None of the cash used to fund such
Investor’s portion of the Purchase Price has been, and none of the cash used to
fund any cash exercise of such Investor’s Warrants will be, or derived from, any
activity that could cause the Company to be in violation of the United States
Bank Secrecy Act, the United States International Money Laundering Control Act
of 1986 or the United States International Money Laundering Abatement and
Anti-Terrorist Financing Act of 2001.

    


    6.  Conditions to
Closing.

    


    6.1           Conditions to the Investor’s
Obligations. The obligation of Investor to purchase the Debenture and the
Shares at the Closing is subject to the fulfillment to Investor’s satisfaction,
on or prior to the Closing Date, of the following conditions, any of which may
be waived by Investor:

    


    (a)           The
representations and warranties made by the Company in Section 4 hereof qualified
as to materiality shall be true and correct at all times prior to and on the
Closing Date, except to the extent any such representation or warranty expressly
speaks as of an earlier date, in which case such representation or warranty
shall be true and correct as of such earlier date, and, the representations and
warranties made by the Company in Section 4 hereof not qualified as to
materiality shall be true and correct in all material respects at all times
prior to and on the Closing Date, except to the extent any such representation
or warranty expressly speaks as of an earlier date, in which case such
representation or warranty shall be true and correct in all material respects as
of such earlier date.  The Company shall have performed in all
material respects all obligations and covenants herein required to be performed
by it on or prior to the Closing Date.

    


    (b)           The
Company shall have obtained any and all consents, permits, approvals,
registrations and waivers necessary or appropriate for consummation of the
purchase and sale of the Securities and the consummation of the other
transactions contemplated by the Transaction Documents, all of which shall be in
full force and effect.

    


    (c)           No
judgment, writ, order, injunction, award or decree of or by any court, or judge,
justice or magistrate, including any bankruptcy court or judge, or any order of
or by any governmental authority, shall have been issued, and no action or
proceeding shall have been instituted by any governmental authority, enjoining
or preventing the consummation of the transactions contemplated hereby or in the
other Transaction Documents.

    


    (d)           The
Company shall have delivered a Certificate, executed on behalf of the Company by
its Chief Executive Officer or its Chief Financial Officer, dated as of the
Closing Date, certifying to the fulfillment of the conditions specified in
subsections (a), (b), and (c) of this Section 6.1.

    


    (e)           The
Company shall have delivered a Certificate, executed on behalf of the Company by
its Secretary, dated as of the Closing Date, certifying the resolutions adopted
by the Board of Directors of the Company approving the transactions contemplated
by this Agreement and the other Transaction Documents, and the issuance of the
Securities, certifying the current versions of the Articles of Incorporation and
Bylaws of the Company and certifying as to the signatures and authority of
persons signing the Transaction Documents and related documents on behalf of the
Company.

    


    (f)           The
Investor shall have received an opinion from the Company's counsel, dated as of
the Closing Date, in form and substance reasonably acceptable to the Investor
and addressing such legal matters as the Investor may reasonably
request.

    


    (g)           The
Company shall have delivered the Securities to the Investor.

     

    
      
        
        

      

      
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    6.2           Conditions to Obligations of
the Company. The Company's obligation to sell and issue the Debenture and
the Shares at the Closing is subject to the fulfillment to the satisfaction of
the Company on or prior to the Closing Date of the following conditions, any of
which may be waived by the Company:

    


    (a)           The
representations and warranties made by the Investor in Sections 5.1 and 5.2
hereof (the “Investment Representations”), shall be true and correct in all
material respects when made, and shall be true and correct in all material
respects on the Closing Date with the same force and effect as if they had been
made on and as of said date.  The Investment Representations shall be
true and correct in all respects when made, and shall be true and correct in all
respects on the Closing Date with the same force and effect as if they had been
made on and as of said date.  The Investor shall have performed in all
material respects all obligations and covenants herein required to be performed
prior to the Closing Date.

    


    (b)           The
Investor shall have delivered the Purchase Price to the Company.

    


    6.3           Termination by Either
Company or Investor.  Either the Company or Investor shall have
the right to terminate this Agreement if the Closing hasn’t occurred prior to
January 10, 2009.

    


    7.           Covenants and Agreements of
the Company.

    


    7.1           Reservation of Common
Stock.  The Company shall at all times reserve and keep
available out of its authorized but unissued shares of Common Stock, such number
of shares of Common Stock as shall from time to time equal the number of shares
of Common Stock issuable as Conversion Shares and Liquidated Damage Shares
pursuant to this Agreement.

    


    7.2           Reports.  Until
the later of (i) payment in full of the Debenture and (ii) one year from the
effective date of the registration statement filed with the SEC pursuant to the
Registration Rights Agreement, the Company will furnish to the Investor and/or
assignee such information relating to the Company and its Subsidiaries as from
time to time may reasonably be requested by the Investor and/or assignee;
provided, however, that the Company shall not disclose material nonpublic
information to the Investor, or to advisors to or representatives of the
Investor, unless prior to disclosure of such information the Company identifies
such information as being material nonpublic information and provides the
Investor, such advisors and representatives with the opportunity to accept or
refuse to accept such material nonpublic information for review and Investor
enters into an appropriate confidentiality agreement with the Company with
respect thereto.

    


    7.3           No Conflicting
Agreements.  The Company will not take any action, enter into
any agreement or make any commitment that would conflict or interfere in any
material respect with the Company’s obligations to the Investor under the
Transaction Documents.

    


    7.4           Insurance.  Until
the later of (i) payment in full of the Debenture and (ii) one year from the
effective date of the registration statement filed with the SEC pursuant to the
Registration Rights Agreement, the Company shall maintain in full force and
effect insurance coverage that is customary for comparably situated companies
for the business being conducted and properties owned or leased by the Company
and each Subsidiary, in amounts the Company reasonably believes to be adequate
against all liabilities, claims and risks against which it is customary for
comparably situated companies to insure.

    


    7.5           Compliance with
Laws.  The Company will comply in all material respects with
all applicable laws, rules, regulations, orders and decrees of all governmental
authorities.

    


    7.6           Removal of
Legends.  Upon the earlier of (i) registration of the resale
pursuant to a registration statement of the Shares, Conversion Shares and
Liquidated Damage Shares, or (ii) Rule 144(b) becoming available, the Company
shall (A) deliver to the transfer agent for the Common Stock (the “Transfer
Agent”) irrevocable instructions that the Transfer Agent shall reissue a
certificate representing the Shares as well as the shares of Common Stock to be
issued as Conversion Shares and Liquidated Damage Shares without legends upon
receipt by such Transfer Agent of the legended certificates for such shares,
together with either (1) a customary representation by the Investor that Rule
144 applies to the shares of Common Stock represented thereby or (2) a statement
by the Investor that such Investor has sold the shares of Common Stock
represented thereby in accordance with the plan of distribution contained in the
registration statement and, if applicable, in accordance with any prospectus
delivery requirements, and (B) cause its counsel to deliver to the Transfer
Agent one or more blanket opinions to the effect that the removal of such
legends in such circumstances may be effected under the 1933
Act.  From and after the earlier of such dates, upon an Investor’s
written request, the Company shall promptly cause certificates evidencing the
Investor’s Securities to be replaced with certificates which do not bear such
restrictive legends.  When the Company is required to cause unlegended
certificates to replace previously issued legended certificates, if unlegended
certificates are not delivered to Investor within three (3) Business Days of
submission by Investor of legended certificate(s) to the Transfer Agent as
provided above (or to the Company, in the case of the Debenture), the Company
shall be liable to the Investor for liquidated damages in an amount equal to 3%
of the aggregate purchase price of the Securities evidenced by such
certificate(s) for each thirty (30) day period (or portion thereof) beyond such
three (3) Business Day that the unlegended certificates have not been so
delivered.

    


    7.7           Prohibited
Transactions.  From the date hereof until the date the
Debenture is repaid in full, the Company shall be prohibited from effecting or
entering into an agreement to effect any subsequent financing involving a
“Variable Rate Transaction”.  The term “Variable Rate Transaction”
shall mean a transaction in which the Company issues or sells (i) any debt or
equity securities that are convertible into, exchangeable or exercisable for, or
include the right to receive additional shares of Common Stock either (A) at a
conversion, exercise or exchange rate or other price that is based upon and/or
varies with the trading prices of or quotations for the shares of Common Stock
at any time after the initial issuance of such debt or equity securities, or (B)
with a conversion, exercise or exchange price that is subject to being reset at
some future date after the initial issuance of such debt or equity security or
upon the occurrence of specified or contingent events directly or indirectly
related to the business of the Company or the market for the Common Stock or
(ii) enters into any agreement, including, but not limited to, an equity line of
credit, whereby the Company may sell securities at a future determined
price.

    


    7.8.           Internal Controls. On
or before the date of the effectiveness of a registration statement filed
pursuant to the Registration Rights Agreement, the
Company and the Subsidiaries shall implement and 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 GAAP 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.

    


    7.9.           Anti-dilution
Protection.  Until the later of (i) payment in full of the
Debenture and (ii) one year from the effective date of the registration
statement filed with the SEC pursuant to the Registration Rights Agreement, the
Company shall reserve a sufficient number of shares of its Common Stock in order
to lawfully issue Investor additional shares of Common Stock for a purchase
price equal to the par value of the Common Stock so that the amount of Shares
purchased pursuant to the Stock Purchase Agreement shall not be less than three
percent (3%) of the fully diluted issued and outstanding capital stock of the
Company, after giving effect to all outstanding derivative securities regardless
of whether such derivative securities have vested, or exercisable or
convertible.  The Company shall increase the number of shares of its
authorized Common Stock pursuant to its Articles of Incorporation, if necessary,
in order to reserve a sufficient number of shares to fulfill its obligation to
this Section 7.9.

    


    7.10           Deposit Account Control
Agreement.  Within ten (10) Business Days of the date hereof,
the Company shall deliver to Investor a fully executed deposit account control
agreement, substantially in the form attached as Schedule X to the Security
Agreement (“Account Control Agreement”).   If the Account Control
Agreement is not delivered to Investor within 10 Business Days, the Company
shall make payments to the Investor, as liquidated damages and not as a penalty,
an amount equal to 750,000 Shares per day for a 20 Business Day period beyond
such ten Business Days that the executed Account Control Agreement has not been
so delivered.  Failure by the Company to deliver the executed Account
Control Agreement by the 21st
Business Day beyond such 10 Business Day period will constitute an event of
default pursuant to the terms of the Debenture.

     

    
      
        
        

      

      
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                       7.11           Other
Negative Covenants.  For the period ending six (6) months following
the repayment in full of the Debenture (except for subsection (viii)), the
Company shall not, unless such transaction is approved in writing by the
Investor:

    


    (i)           Sell,
lease, or otherwise dispose of all or substantially all of its
assets;

    


    (ii)           Dissolve,
liquidate, or wind up its business;

    


    (iii)           Conduct
its business other than in its ordinary and usual course;

    


    (iv)           Issue
any debt obligations other than those described in the Investment Banking
Agreement, unless all of the obligations of the Debenture are retired with such
proceeds;

    


    (v)           Pay
any dividend or make any other distributions of cash or property to any of the
holders of its capital stock;

    


    (vi)           Merge
or consolidate with another entity;

    


    (vii)           Enter
into any transaction with an affiliate other than in the ordinary
course;

    


    (viii)           For
a period of one (1) year following the date of this Agreement, the Company shall
not, without the prior written consent of the Investor, (x) issue or sell shares
of Common Stock or preferred stock or (y) issue any warrant, option, right,
contract, call, or other security or instrument granting the holder thereof the
right to acquire Common Stock or preferred stock, provided, however, the Company
may issue up to an aggregate of 50,000,000 shares of Common Stock at a price not
less than $0.08 per share during the one (1) year
period.  Notwithstanding the preceding, this Section 7.11 (viii) shall
not apply if the Company does not raise a minimum of $3,000,000 in debt
financing pursuant to the Investment Banking Agreement by March 31,
2009.

    


    8.           Survival and
Indemnification.

    


    8.1  Survival.  The
representations, warranties, covenants and agreements contained in this
Agreement shall survive the Closing of the transactions contemplated by this
Agreement.

    


    8.2  Indemnification.  The
Company agrees to indemnify and hold harmless the Investor and its Affiliates
and their respective directors, officers, employees and agents from and against
any and all losses, claims, damages, liabilities and expenses (including without
limitation reasonable attorney fees and disbursements and other expenses
incurred in connection with investigating, preparing or defending any action,
claim or proceeding, pending or threatened and the costs of enforcement thereof)
(collectively, “Losses”) to which such Person may become subject as a result of
any breach of representation, warranty, covenant or agreement made by or to be
performed on the part of the Company under the Transaction Documents, and will
reimburse any such Person for all such amounts as they are incurred by such
Person unless such action is based upon a breach of Investor’s representations,
warranties or covenants under the Transaction Documents which causes a material
adverse effect on the Company or any conduct by Investor which constitutes
fraud, gross negligence, willful misconduct or malfeasance related to the
transactions contemplated by the Transaction Documents.

    


    8.3  Conduct of Indemnification
Proceedings.  Promptly
after receipt by any Person (the “Indemnified Person”) of
notice of any demand, claim or circumstances which would or might give rise to a
claim or the commencement of any action, proceeding or investigation in respect
of which indemnity may be sought pursuant to Section 8.2, such Indemnified
Person shall promptly notify the Company in writing and the Company shall assume
the defense thereof, including the employment of counsel reasonably satisfactory
to such Indemnified Person, and shall assume the payment of all fees and
expenses; provided, however, that the failure of any
Indemnified Person so to notify the Company shall not relieve the Company of its
obligations hereunder except to the extent that the Company is materially
prejudiced by such failure to notify.  In any such proceeding, any
Indemnified Person shall have the right to retain its own counsel, but the fees
and expenses of such counsel shall be at the expense of such Indemnified Person
unless: (i) the Company and the Indemnified Person shall have mutually agreed to
the retention of such counsel; or (ii) in the reasonable judgment of counsel to
such Indemnified Person representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between
them.  The Company shall not be liable for any settlement of any
proceeding effected without its written consent, which consent shall not be
unreasonably withheld, but if settled with such consent, or if there be a final
judgment for the plaintiff, the Company shall indemnify and hold harmless such
Indemnified Person from and against any loss or liability (to the extent stated
above) by reason of such settlement or judgment.  Without the prior
written consent of the Indemnified Person, which consent shall not be
unreasonably withheld, the Company shall not effect any settlement of any
pending or threatened proceeding in respect of which any Indemnified Person is
or could have been a party and indemnity could have been sought hereunder by
such Indemnified Party, unless such settlement includes an unconditional release
of such Indemnified Person from all liability arising out of such
proceeding.

    


    9.           Miscellaneous.

    


    9.1           Successors and
Assigns.  This Agreement may not be assigned by a party hereto
without the prior written consent of the Company or the Investor, as applicable,
provided, however, that an Investor may assign its rights and delegate its
duties hereunder in whole or in part to an Affiliate or to a third party
acquiring some or all of its Securities in a private transaction without the
prior written consent of the Company, after notice duly given by Investor to the
Company provided, that no such assignment or obligation shall affect the
obligations of Investor hereunder.  The provisions of this Agreement
shall inure to the benefit of and be binding upon the respective permitted
successors and assigns of the parties.  Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the parties
hereto or their respective successors and assigns any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.

    


    9.2           Counterparts;
Faxes.  This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.  This Agreement
may also be executed via facsimile, which shall be deemed an
original.

    


    9.3           Titles and
Subtitles.  The titles and subtitles used in this Agreement are
used for convenience only and are not to be considered in construing or
interpreting this Agreement.

     

    
      
        
        

      

      
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    9.4           Notices.  Unless
otherwise provided, any notice required or permitted under this Agreement shall
be given in writing and shall be deemed effectively given as hereinafter
described (i) if given by personal delivery, then such notice shall be deemed
given upon such delivery, (ii) if given by telex or telecopier, then such notice
shall be deemed given upon receipt of confirmation of complete transmittal,
(iii) if given by mail, then such notice shall be deemed given upon the earlier
of (A) receipt of such notice by the recipient or (B) three days after such
notice is deposited in first class mail, postage prepaid, and (iv) if given by
an internationally recognized overnight air courier, then such notice shall be
deemed given one Business Day after delivery to such carrier.  All
notices shall be addressed to the party to be notified at the address as
follows, or at such other address as such party may designate by ten days’
advance written notice to the other party:

    


    If to the Company:

    


    Amber
Alert Safety Centers, Inc.

    101
Roundhill Drive, 2nd Floor

    Rockaway,
NJ 07866

    Attention:   Kai
Patterson

     
 

    


    With a copy to:

    


    Sichenzia
Ross Friedman Ference LLP

    61
Broadway, 32nd
Floor

    New York,
New York 10006

    Attention:  Marc J. Ross,
Esq.

    


    If to the Investor, to the address set
forth on the signature page.

    


    9.5           Expenses.  The
parties hereto shall pay their own costs and expenses in connection herewith,
except that the Company shall pay $20,000 of the fees and expenses of Brewer
& Pritchard, P.C., $25,000 of the fees and expenses of Meister Seelig &
Fein LLP, and $5,000 of the fees and expenses of Investor.  It is
understood that Brewer & Pritchard has only rendered legal advice to the
Investor and not to the Company in connection with the transactions contemplated
hereby, and that the Company has relied for such matters on the advice of its
own respective counsel.  Such expenses shall be paid not later than
the Closing.  The Company shall reimburse the Investor upon demand for
all reasonable out-of-pocket expenses incurred by the Investor, including
without limitation reimbursement of attorneys’ fees and disbursements, in
connection with any amendment, modification or waiver of this Agreement or the
other Transaction Documents.  In the event that legal proceedings are
commenced by any party to this Agreement against another party to this Agreement
in connection with this Agreement or the other Transaction Documents, the party
or parties which do not prevail in such proceedings shall severally, but not
jointly, pay their pro rata share of the reasonable attorneys’ fees and other
reasonable out-of-pocket costs and expenses incurred by the prevailing party in
such proceedings.

    


    9.6           Amendments and
Waivers.  Any term of this Agreement may be amended and the
observance of any term of this Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of the Company and the Investor.  Any amendment or
waiver effected in accordance with this paragraph shall be binding upon each
holder of any Securities purchased under this Agreement at the time outstanding,
each future holder of all such Securities, and the Company.

    


    9.7           Publicity.  Except
as set forth below, no public release or announcement concerning the
transactions contemplated hereby shall be issued by the Company or the Investor
without the prior consent of the Company or the Investor.

    


    9.8           Severability.  Any
provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof but shall be interpreted as if it were written so as to be
enforceable to the maximum extent permitted by applicable law, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.  To the
extent permitted by applicable law, the parties hereby waive any provision of
law which renders any provision hereof prohibited or unenforceable in any
respect.

    


    9.9           Entire
Agreement.  This Agreement, including the Exhibits and the
Disclosure Schedules, and the other Transaction Documents constitute the entire
agreement among the parties hereof with respect to the subject matter hereof and
thereof and supersede all prior agreements and understandings, both oral and
written, between the parties with respect to the subject matter hereof and
thereof.

    


    9.10           Further
Assurances.  The parties shall execute and deliver all such
further instruments and documents and take all such other actions as may
reasonably be required to carry out the transactions contemplated hereby and to
evidence the fulfillment of the agreements herein contained.

    


    9.11           Governing Law; Consent to
Jurisdiction; Waiver of Jury Trial.  This Agreement shall be
governed by, and construed in accordance with, the internal laws of the State of
Texas without regard to the choice of law principles thereof.  Each of
the parties hereto irrevocably submits to the exclusive jurisdiction of the
courts of the State of Texas located in Harris County and the United States
District Court for the Southern District of Texas for the purpose of any suit,
action, proceeding or judgment relating to or arising out of this Agreement and
the transactions contemplated hereby.  Service of process in
connection with any such suit, action or proceeding may be served on each party
hereto anywhere in the world by the same methods as are specified for the giving
of notices under this Agreement.  Each of the parties hereto
irrevocably consents to the jurisdiction of any such court in any such suit,
action or proceeding and to the laying of venue in such court.  Each
party hereto irrevocably waives any objection to the laying of venue of any such
suit, action or proceeding brought in such courts and irrevocably waives any
claim that any such suit, action or proceeding brought in any such court has
been brought in an inconvenient forum. EACH OF THE PARTIES HERETO WAIVES ANY
RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS
AGREEMENT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS
WAIVER.

    


    [signature
page follows]

     

    
      
        
        

      

      
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    IN WITNESS WHEREOF, the parties have
executed this Agreement or caused their duly authorized officers to execute this
Agreement as of the date first above written.

    


    


    The
Company:                                                    AMBER
ALERT SAFETY CENTERS, INC.

    


    


    


    By: /s/ KAI
PATTERSON

    Name:  Kai
Patterson

    Title:    Chief
Executive Officer

    


    


    


    The
Investor:                                                      JOHN
THOMAS BRIDGE & OPPORTUNITY FUND

    


    


    


    By: /s/ GEORGE R. JARKESY,
JR.

    Name:  George R. Jarkesy,
Jr.

    Title:    Managing
Member of the General Partner

    


    Aggregate
Purchase Price:  $750,000

    Principal
Amount of Debenture:  $740,000

    Number of
Shares 7,500,000

    Consideration
for Shares $10,000

    


    Address
for Notice:

    3
Riverway, Suite 1800

    Houston,
TX  77056

    Attention:  Patty
Villa/George Jarkesy

    Facsimile:
__________________

    


    with a copy to:

    


    Brewer & Pritchard,
P.C.

    3 Riverway, Suite 1800

    Houston,
Texas  77056

    Attn:  Thomas C.
Pritchard

    Telephone:    (713)
209-2911

    Facsimile:       (713)
209-2921

    Email:                      Pritchard@bplaw.com

    


    
 

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