SECURITIES PURCHASE AGREEMENT


 


This SECURITIES PURCHASE
AGREEMENT (the “Agreement”) is dated as of [—], 2012,
by and between AQUALIV TECHNOLOGIES, INC., a Nevada corporation (the “Company”) and TCA GLOBAL
CREDIT MASTER FUND, LP, a Cayman Islands limited partnership (the “Buyer”).


 


RECITALS


 


WHEREAS, Buyer desires
to purchase from Company, and the Company desires to sell and issue to Buyer, upon the terms and subject to the conditions contained
herein, Two Hundred Thousand Dollars ($200,000) of senior secured redeemable debentures in the form attached hereto as Exhibit
“A” (the “Debentures”), which Debentures shall be purchased on the date hereof (the
“Closing Date”), all for the total purchase price of Two Hundred Thousand Dollars ($200,000) (the “Purchase
Price”), and all otherwise subject to the terms and provisions hereinafter set forth; and


 


WHEREAS, the Company and
its subsidiaries have agreed to secure all of their respective “Obligations” (as hereinafter defined) to Buyer under
the Debentures, this Agreement and all other Transaction Documents by: (i) granting to the Buyer a continuing and first priority
security interest in all of the assets and properties of the Company pursuant to a Security Agreement dated as of the date hereof
(the “Security Agreement”); (ii) pledging to the Buyer all of its right, title and interest in and to
Aqualiv, Inc., a Washington corporation, a 50% owned subsidiary of the Company (“Aqua Sub”), pursuant
to a Pledge and Escrow Agreement dated as of the date hereof (the “Aqua Sub Pledge Agreement”) (iii)
causing Focus Systems, Inc., a Washington corporation (“Focus”), a wholly owned subsidiary of the Company,
to guaranty all of the Company’s Obligations pursuant to a guaranty agreement executed by Focus in favor of Buyer (the “Focus
Guaranty”); (iv) causing Focus to grant to the Buyer a continuing and first priority lien and security interest in
all of the assets and properties of Focus pursuant to a Security Agreement dated as of the date hereof (the “Focus
Security Agreement”); (v) agreeing to the filing of UCC-1 Financing Statements covering all of the assets and properties
of the Company and Focus, and covering the Company’s 50% ownership interest in Aqua Sub (collectively, the “UCC-1’s”);
and (vi) granting to the Buyer a continuing and first priority security interest and lien in certain stock (the “Pledged
Stock”) of the Company pursuant to a Stock Pledge and Escrow Agreement dated as of the date hereof (the “Pledge
Agreement”);


 


NOW, THEREFORE, in consideration
of the premises and the mutual covenants of the parties hereinafter expressed and other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties hereto, each intending to be legally bound, agree as follows:


 


ARTICLE
I 


RECITALS, EXHIBITS,
SCHEDULES


 


The foregoing recitals
are true and correct and, together with the Schedules and Exhibits referred to hereafter, are hereby incorporated into this Agreement
by this reference.


 



     

     

    

 


ARTICLE
II 


DEFINITIONS


 


For purposes of this Agreement,
except as otherwise expressly provided or otherwise defined elsewhere in this Agreement, or unless the context otherwise requires,
the capitalized terms in this Agreement shall have the meanings assigned to them in this Article as follows:


 


2.1            
“Affiliate” means, with respect to a Person, any other Person directly or indirectly controlling,
controlled by, or under common control with, such Person at any time during the period for which the determination of affiliation
is being made. For purposes of this definition, the term “control,” “controlling,”
“controlled” and words of similar import, when used in this context, means, with respect to any Person,
the possession, directly or indirectly, of the power to direct, or cause the direction of, management policies of such Person,
whether through the ownership of voting securities, by contract or otherwise.


 


2.2            
“Assets” means all of the properties and assets of the Company, whether real, personal or mixed,
tangible or intangible, wherever located, whether now owned or hereafter acquired.


 


2.3            
“Claims” means any Proceedings, Judgments, Obligations, threats, losses, damages, deficiencies,
settlements, assessments, charges, costs and expenses of any nature or kind.


 


2.4            
“Common Stock” means the Company’s common stock, $0.001 par value per share.


 


2.5            
“Consent” means any consent, approval, order or authorization of, or any declaration, filing or
registration with, or any application or report to, or any waiver by, or any other action (whether similar or dissimilar to any
of the foregoing) of, by or with, any Person, which is necessary in order to take a specified action or actions, in a specified
manner and/or to achieve a specific result.


 


2.6            
“Contract” means any written or oral contract, agreement, order or commitment of any nature whatsoever,
including, any sales order, purchase order, lease, sublease, license agreement, services agreement, loan agreement, mortgage, security
agreement, guarantee, management contract, employment agreement, consulting agreement, partnership agreement, shareholders agreement,
buy-sell agreement, option, warrant, debenture, subscription, call or put.


 


2.7            
“Effective Date” means the date set forth in the introductory paragraph of this Agreement.


 


2.8            
“Encumbrance” means any lien, security interest, pledge, mortgage, easement, leasehold, assessment,
tax, covenant, restriction, reservation, conditional sale, prior assignment, or any other encumbrance, claim, burden or charge
of any nature whatsoever.


 


2.9            
“Environmental Requirements” means all Laws and requirements relating to human, health, safety
or protection of the environment or to emissions, discharges, releases or threatened releases of pollutants, contaminants, or Hazardous
Materials in the environment (including, without limitation, ambient air, surface water, ground water, land surface or subsurface
strata), or otherwise relating to the treatment, storage, disposal, transport or handling of any Hazardous Materials.


 


2.10         
“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.


 


2.11         
“GAAP” means generally accepted accounting principles, methods and practices set forth in the
opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants, and
statements and pronouncements of the Financial Accounting Standards Board, the SEC or of such other Person as may be approved by
a significant segment of the U.S. accounting profession, in each case as of the date or period at issue, and as applied in the
U.S. to U.S. companies.


 


2.12         
“Governmental Authority” means any foreign, federal, state or local government, or any political
subdivision thereof, or any court, agency or other body, organization, group, stock market or exchange exercising any executive,
legislative, judicial, quasi-judicial, regulatory or administrative function of government.


 


2.13         
“Hazardous Materials” means: (i) any petroleum or petroleum products, radioactive materials, asbestos
in any form that is or could become friable, urea formaldehyde foam insulation and transformers or other equipment that contain
dielectric fluid containing levels of polychlorinated biphenyls (PCB’s); (ii) any chemicals, materials, substances or wastes
which are now or hereafter become defined as or included in the definition of “hazardous substances,” “hazardous
wastes,” “hazardous materials,” “extremely hazardous wastes,” “restricted hazardous wastes,”
“toxic substances,” “toxic pollutants” or words of similar import, under any Law; and (iii) any other chemical,
material, substance, or waste, exposure to which is now or hereafter prohibited, limited or regulated by any Governmental Authority.


 


2.14         
“Incentive Shares” means the shares of the Company’s Common Stock to be issued by the Company
to Buyer in accordance with Section 7.5 below.


 


2.15         
“Judgment” means any order, writ, injunction, fine, citation, award, decree, or any other judgment
of any nature whatsoever of any Governmental Authority.


 


2.16         
“Law” means any provision of any law, statute, ordinance, code, constitution, charter, treaty,
rule or regulation of any Governmental Authority.


 


2.17         
“Leases” means all leases for real or personal property.


 


2.18         
“Material Adverse Effect” means with respect to the event, item or question at issue, that such
event, item or question would not have or reasonably be expected to result in: (i) a material adverse effect on the legality, validity
or enforceability of this Agreement or any of the Transaction Documents; (ii) a material adverse effect on the results of operations,
Assets, business or condition (financial or otherwise) or prospects of the Company or any of its subsidiaries, either individually
or taken as a whole; (iii) a material adverse effect on the Company’s or its subsidiaries’ ability to perform, on a
timely basis, its or their respective Obligations under this Agreement or any Transaction Documents; or (iv) a material adverse
effect on the Buyer’s ability to sell or dispose of any of the Securities, whether on the Principal Trading Market, or otherwise,
in accordance with applicable securities laws.


 


2.19         
“Material Contract” shall mean any Contract to which the Company is a party or by which the Company
or any of its Assets are bound and which: (i) involves aggregate payments of Twenty-Five Thousand Dollars ($25,000) or more to
or from the Company; (ii) involves delivery, purchase, licensing or provision, by or to the Company, of any goods, services, assets
or other items having a value (or potential value) over the term of such Contract of Twenty-five Thousand Dollars ($25,000) or
more or is otherwise material to the conduct of the Company’s business as now conducted and as contemplated to be conducted
in the future; (iii) involves a Company Lease; (iv) imposes any guaranty, surety or indemnification Obligations on the Company;
or (v) prohibits the Company from engaging in any business or competing anywhere in the world.


 


2.20         
“Obligation” means any debt, liability or obligation of any nature whatsoever, whether secured,
unsecured, recourse, nonrecourse, liquidated, unliquidated, accrued, absolute, fixed, contingent, ascertained, unascertained, known,
unknown or obligations under executory Contracts.


 


2.21         
“Ordinary Course of Business” means the ordinary course of business consistent with past custom
and practice (including with respect to quantity, quality and frequency).


 


2.22         
“Permit” means any license, permit, approval, waiver, order, authorization, right or privilege
of any nature whatsoever, granted, issued, approved or allowed by any Governmental Authority.


 


2.23         
“Person” means any individual, sole proprietorship, joint venture, partnership, company, corporation,
association, cooperation, trust, estate, Governmental Authority, or any other entity of any nature whatsoever.


 


2.24         
“Principal Trading Market” shall mean the Nasdaq Global Select Market, the Nasdaq Global Market,
the Nasdaq Capital Market, the OTC Markets, including the Bulletin Board and Pink Sheets, the NYSE Euronext or the New York Stock
Exchange, whichever is at the time the principal trading exchange or market for the Common Stock.


 


2.25         
“Proceeding” means any demand, claim, suit, action, litigation, investigation, audit, study, arbitration,
administrative hearing, or any other proceeding of any nature whatsoever.


 


2.26         
“Real Property” means any real estate, land, building, structure, improvement, fixture or other
real property of any nature whatsoever, including, but not limited to, fee and leasehold interests.


 


2.27         
“SEC” means the United States Securities and Exchange Commission.


 


2.28         
“Securities” means, collectively, the Debentures and the Incentive Shares.


 


2.29         
“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder.


 


2.30         
“Tax” means (i) any foreign, federal, state or local income, profits, gross receipts, franchise,
sales, use, occupancy, general property, real property, personal property, intangible property, transfer, fuel, excise, accumulated
earnings, personal holding company, unemployment compensation, social security, withholding taxes, payroll taxes, or any other
tax of any nature whatsoever, (ii) any foreign, federal, state or local organization fee, qualification fee, annual report fee,
filing fee, occupation fee, assessment, rent, or any other fee or charge of any nature whatsoever, or (iii) any deficiency, interest
or penalty imposed with respect to any of the foregoing.


 


2.31         
“Tax Return” means any tax return, filing, declaration, information statement or other form or
document required to be filed in connection with or with respect to any Tax.


 


2.32         
“Transaction Documents” means any documents or instruments to be executed by Company in connection
with this Agreement, including the Debentures, the Security Agreement, the UCC-1’s, the Aqua Sub Pledge Agreement, the Focus
Guaranty, the Focus Security Agreement and the Pledge Agreement, together with all modifications, amendments, extensions, future
advances, renewals, and substitutions thereof.


 


ARTICLE
III 


INTERPRETATION


 


In this Agreement,
unless the express context otherwise requires: (i) the words “herein,” “hereof” and “hereunder”
and words of similar import refer to this Agreement as a whole and not to any particular provision of this Agreement; (ii) references
to the words “Article” or “Section” refer to the respective Articles and Sections of this Agreement, and
references to “Exhibit” or “Schedule” refer to the respective Exhibits and Schedules annexed hereto; (iii)
references to a “party” mean a party to this Agreement and include references to such party’s permitted successors
and permitted assigns; (iv) references to a “third party” mean a Person not a party to this Agreement; (v) the terms
“dollars” and “$” means U.S. dollars; (vi) wherever the word “include,” “includes”
or “including” is used in this Agreement, it will be deemed to be followed by the words “without limitation.”


 


ARTICLE
IV 


PURCHASE AND SALE
OF DEBENTURES


 


4.1            
Purchase and Sale of Debentures. Subject to the satisfaction (or waiver) of the terms and conditions of this Agreement,
Buyer agrees to purchase, on the Closing Date, and Company agrees to sell and issue to Buyer, on the Closing Date, Debentures in
the amount of the Purchase Price as more specifically set forth below.


 


4.2            
Closing. The closing of the purchase and sale of the Debentures (the “Closing”) shall take
place on the Closing Date, subject to satisfaction of the conditions to the Closing set forth in this Agreement. The Closing shall
occur on the Closing Date through the use of overnight mails and subject to customary escrow instructions from Buyer and its counsel,
or in such other manner as is mutually agreed to by the Company and the Buyer.


 


4.3            
Form of Payment. Subject to the satisfaction of the terms and conditions of this Agreement, on the Closing Date:
(i) the Buyer shall deliver to the attorney trust account of Lucosky Brookman, LLP, acting as counsel to the Company, the aggregate
proceeds for the Debentures to be issued and sold to Buyer at the Closing, minus the fees to be paid directly from the proceeds
of such Closing as set forth in this Agreement, in the form of wire transfers of immediately available U.S. funds; and (ii) the
Company shall deliver to Buyer the Securities which Buyer is purchasing hereunder at the Closing, duly executed on behalf of the
Company, together with any other documents required to be delivered pursuant to this Agreement.


 


ARTICLE
V 


BUYER’S REPRESENTATIONS
AND WARRANTIES


 


Buyer represents and warrants to the Company,
that:


 


5.1            
Investment Purpose. Buyer is acquiring the Securities for its own account for investment only and not with a view
towards, or for resale in connection with, the public sale or distribution thereof, except pursuant to sales registered or exempted
under the Securities Act; provided, however, that by making the representations herein, Buyer reserves the right to dispose of
the Securities at any time in accordance with or pursuant to an effective registration statement covering such Securities or an
available exemption under the Securities Act.


 


5.2            
Accredited Buyer Status. Buyer is an “accredited investor” as that term is defined in Rule 501(a) (3)
of Regulation D, as promulgated under the Securities Act.


 


5.3            
Reliance on Exemptions. Buyer understands that the Securities are being offered and sold to it in reliance on specific
exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying
in part upon the truth and accuracy of, and Buyer’s compliance with, the representations, warranties, agreements, acknowledgments
and understandings of Buyer set forth herein in order to determine the availability of such exemptions and the eligibility of Buyer
to acquire the Securities.


 


5.4            
Information. Buyer and its advisors, if any, have been furnished with all materials relating to the business, finances
and operations of the Company and information Buyer deemed material to making an informed investment decision regarding its purchase
of the Securities, which have been requested by Buyer. Buyer and its advisors, if any, have been afforded the opportunity to ask
questions of the Company and its management. Neither such inquiries, nor any other due diligence investigations conducted by Buyer
or its advisors, if any, or its representatives, shall modify, amend or affect Buyer’s right to rely on the Company’s
representations and warranties contained in Article VI below. Buyer understands that its investment in the Securities involves
a high degree of risk. Buyer is in a position regarding the Company, which, based upon employment, family relationship or economic
bargaining power, enabled and enables Buyer to obtain information from the Company in order to evaluate the merits and risks of
this investment. Buyer has sought such accounting, legal and tax advice as it has considered necessary to make an informed investment
decision with respect to its acquisition of the Securities.


 


5.5            
No Governmental Review. Buyer understands that no United States federal or state Governmental Authority has passed
on or made any recommendation or endorsement of the Securities, or the fairness or suitability of the investment in the Securities,
nor have such Governmental Authorities passed upon or endorsed the merits of the offering of the Securities.


 


5.6            
Authorization, Enforcement. This Agreement has been duly and validly authorized, executed and delivered on behalf
of Buyer and is a valid and binding agreement of Buyer, enforceable in accordance with its terms, except as such enforceability
may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and
other similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies.


 


ARTICLE
VI 


REPRESENTATIONS AND WARRANTIES OF THE SELLER


 


Except as set forth and
disclosed in the disclosure schedule attached to this Agreement and made a part hereof, the Company hereby makes the following
representations and warranties to the Buyer:


 


6.1            
Subsidiaries. Except for a fifty percent (50%) interest in Aqua Sub and one hundred percent (100%) ownership in Focus
and otherwise set forth in Schedule 6.1, the Company has no subsidiaries and the Company does not own, directly or
indirectly, any outstanding voting securities of or other interests in, or have any control over, any other Person. With respect
to Aqua Sub, Focus, and to the extent the Company has any other subsidiaries disclosed in Schedule 6.1, all representations
and warranties in this Article VI and elsewhere in this Agreement shall be deemed repeated and re-made from and by Aqua Sub, Focus,
and any such other subsidiaries, as if such representations and warranties were independently made by Aqua Sub, Focus, and each
of such other subsidiaries, in this Agreement. In addition, each representation and warranty contained in this Article VI or otherwise
set forth in this Agreement shall be deemed to mean and be construed to include the Company and each of its subsidiaries, as applicable,
regardless of whether each of such representations and warranties in Article VI specifically refers to the Company’s subsidiaries
or not.


 


6.2            
Organization. The Company and its subsidiaries are corporations, duly organized, validly existing and in good standing
under the Laws of the jurisdiction in which they are incorporated. The Company has the full corporate power and authority and all
necessary certificates, licenses, approvals and Permits to: (i) enter into and execute this Agreement and the Transaction Documents
and to perform all of its Obligations hereunder and thereunder; and (ii) own and operate its Assets and properties and to conduct
and carry on its business as and to the extent now conducted. The Company is duly qualified to transact business and is in good
standing as a foreign corporation in each jurisdiction where the character of its business or the ownership or use and operation
of its Assets or properties requires such qualification. Schedule 6.2 contains a correct and complete list of the
jurisdictions in which the Company is qualified to do business as a foreign corporation.


 


6.3            
Authority and Approval of Agreement; Binding Effect. The execution and delivery by Company of this Agreement and
the Transaction Documents, and the performance by Company of all of its Obligations hereunder and thereunder, including the issuance
of the Securities, have been duly and validly authorized and approved by Company and its board of directors pursuant to all applicable
Laws and no other corporate action or Consent on the part of Company, its board of directors, stockholders or any other Person
is necessary or required by the Company to execute this Agreement and the Transaction Documents, consummate the transactions contemplated
herein and therein, perform all of Company’s Obligations hereunder and thereunder, or to issue the Securities. This Agreement
and each of the Transaction Documents have been duly and validly executed by Company (and the officer executing this Agreement
and all such other Transaction Documents is duly authorized to act and execute same on behalf of Company) and constitute the valid
and legally binding agreements of Company, enforceable against Company in accordance with their respective terms, except as such
enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation and other similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and
remedies.


 


6.4            
Capitalization. The authorized capital stock of the Company consists of 1,000,000,000 shares of Common Stock and
50,000,000 shares of preferred stock, par value $0.001 per share (the “Preferred Stock”), of which 342,117,428
shares of Common Stock are issued and outstanding as of the date hereof, and 911,618 shares of Preferred Stock are issued and outstanding
as of the date hereof.  All of such outstanding shares have been validly issued and are fully paid and nonassessable. The
Common Stock is currently quoted on the OTC Markets under the trading symbol “AQLV”. The
Company has received no notice, either oral or written, with respect to the continued eligibility of the Common Stock for quotation
on the Principal Trading Market, and the Company has maintained all requirements on its part for the continuation of such quotation. 
Except as disclosed in the “SEC Documents” (as hereinafter defined), no shares of Common Stock are subject to preemptive
rights or any other similar rights or any Encumbrances suffered or permitted by the Company.  Except as disclosed in the SEC
Documents, as of the date hereof: (i) there are no outstanding options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights convertible into, 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; (ii) there are no outstanding debt securities,
notes, credit agreements, credit facilities or other Contracts or instruments evidencing indebtedness of the Company or any of
its subsidiaries, or by which the Company or any of its subsidiaries is or may become bound; (iii) there are no outstanding
registration statements with respect to the Company or any of its securities; (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 Securities
Act (except pursuant to this Agreement); (v) there are no financing statements securing obligations filed in connection with the
Company or any of its Assets; (vi) there are no securities or instruments containing anti-dilution or similar provisions that
will be triggered by this Agreement or any related agreement or the consummation of the transactions described herein or therein;
and (vii) there are no outstanding securities or instruments of the Company which contain any redemption or similar provisions,
and there are no Contracts by which the Company is or may become bound to redeem a security of the Company. The Company has furnished
to the Buyer true, complete and correct copies of: (I) the Company’s Certificate of Incorporation, as amended and as in effect
on the date hereof (the “Certificate of Incorporation”); and (II) the Company’s Bylaws, as in effect
on the date hereof (the “Bylaws”). Except for the Certificate of Incorporation and the Bylaws, there
are no other shareholder agreements, voting agreements or other Contracts of any nature or kind that restrict, limit or in any
manner impose Obligations on the governance of the Company.


 


6.5            
No Conflicts; Consents and Approvals. The execution, delivery and performance of this Agreement and the Transaction
Documents, and the consummation of the transactions contemplated hereby and thereby, including the issuance of any of the Securities,
will not: (i) constitute a violation of or conflict with the Certificate of Incorporation, Bylaws or any other organizational or
governing documents of Company; (ii) constitute a violation of, or a default or breach under (either immediately, upon notice,
upon lapse of time, or both), or conflicts with, or gives to any other Person any rights of termination, amendment, acceleration
or cancellation of, any provision of any Contract to which Company is a party or by which any of its Assets or properties may be
bound; (iii) constitute a violation of, or a default or breach under (either immediately, upon notice, upon lapse of time, or both),
or conflicts with, any Judgment; (iv) constitute a violation of, or conflict with, any Law (including United States federal and
state securities Laws and the rules and regulations of any market or exchange on which the Common Stock is quoted); or (v) result
in the loss or adverse modification of, or the imposition of any fine, penalty or other Encumbrance with respect to, any Permit
granted or issued to, or otherwise held by or for the use of, Company or any of Company’s Assets. The Company is not in violation
of its Certificate of Incorporation, Bylaws or other organizational or governing documents and the Company is not in default or
breach (and no event has occurred which with notice or lapse of time or both could put the Company in default or breach) under,
and the Company has not taken any action or failed to take any action that would give to any other Person any rights of termination,
amendment, acceleration or cancellation of, any Contract to which the Company is a party or by which any property or Assets of
the Company are bound or affected. The businesses of the Company are not being conducted, and shall not be conducted so long as
Buyer owns any of the Securities, in violation of any Law. Except as specifically contemplated by this Agreement, the Company is
not required to obtain any Consent of, from, or with any Governmental Authority, or any other Person, in order for it to execute,
deliver or perform any of its Obligations under this Agreement or the Transaction Documents in accordance with the terms hereof
or thereof, or to issue and sell the Securities in accordance with the terms hereof. Except as disclosed in Schedule 6.5,
all Consents which the Company is required to obtain pursuant to the immediately preceding sentence have been obtained or effected
on or prior to the date hereof. The Company is not aware of any facts or circumstances which might give rise to any of the foregoing.


 


6.6            
Issuance of Securities. The Securities are duly authorized and, upon issuance in accordance with the terms hereof,
shall be duly issued, fully paid and non-assessable, and free from all Encumbrances with respect to the issue thereof, and will
be issued in compliance with all applicable United States federal and state securities Laws. Assuming
the accuracy of the representations and warranties of the Buyer set forth in Article V above, the offer and sale by the Company
of the Securities is exempt from: (i) the registration and prospectus delivery requirements of the Securities Act; and (ii) the
registration and/or qualification provisions of all applicable state and provincial securities and “blue sky” laws.


 


6.7            
SEC Documents; Financial Statements. The Common Stock is registered pursuant to Section 12 of the Exchange Act and
the Company has timely filed all reports, schedules, forms, statements and other documents required to be filed by it with the
SEC under the Exchange Act (all of the foregoing filed within the two (2) years preceding the date hereof or amended after 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 is current with its filing
obligations under the Exchange Act and all SEC Documents have been filed on a timely basis or the Company has received a valid
extension of such time of filing and has filed any such SEC Document prior to the expiration of any such extension. The Company
represents and warrants that true and complete copies of the SEC Documents are available on the SEC’s website (www.sec.gov)
at no charge to Buyer, and Buyer acknowledges that it may retrieve all SEC Documents from such website and Buyer’s access
to such SEC Documents through such website shall constitute delivery of the SEC Documents to Buyer; provided, however, that if
Buyer is unable to obtain any of such SEC Documents from such website at no charge, as result of such website not being available
or any other reason beyond Buyer’s control, then upon request from Buyer, the Company shall deliver to Buyer true and complete
copies of such SEC Documents. The Buyer shall also deliver to Buyer true and complete copies of all draft filings, reports, schedules,
statements and other documents required to be filed with the SEC that have been prepared but not filed with the SEC as of the date
hereof. As of their respective dates, the SEC Documents complied in all material respects with the requirements of the Exchange
Act, and none of the SEC Documents, at the time they were filed with the SEC, contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading. None of the statements made in any such SEC Documents is, or has
been, required to be amended or updated under applicable Law (except as set forth in Schedule 6.7 or such statements
as have been amended or updated in subsequent filings prior the date hereof, which amendments or updates are also part of the SEC
Documents). As of their respective dates, except as set forth in Schedule 6.7, the financial statements of the Company
included in the SEC Documents (“Financial Statements”) complied in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with respect thereto. All of the Financial Statements
have been prepared in accordance with GAAP, 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 consolidated
financial position of the Company as of the dates thereof and the consolidated 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). To the knowledge of the
Company and its officers, no other information provided by or on behalf of the Company to the Buyer which is not included in the
SEC Documents contains any untrue statement of a material fact or omits to state any material fact necessary in order to make the
statements therein, in the light of the circumstance under which they are or were made, not misleading.


 


6.8            
Absence of Certain Changes. Since the date the last of the SEC Documents was filed with the SEC, none of the following
have occurred:


 


(a)             
There has been no event or circumstance of any nature whatsoever that has resulted in, or could reasonably be expected to
result in, a Material Adverse Effect; or


 


(b)            
Any transaction, event, action, development, payment, or any other matter of any nature whatsoever entered into by the Company
other than in the Ordinary Course of Business.


 


6.9            
Absence of Litigation or Adverse Matters. Except as set forth in Schedule 6.9: (i) there is no Proceeding
before or by any Governmental Authority or any other Person, pending, or the best of Company’s knowledge, threatened or contemplated
by, against or affecting the Company, its business or Assets; (ii) there is no outstanding Judgments against or affecting the Company,
its business or Assets; (iii) the Company is not in breach or violation of any Contract; and (iv) the Company has not received
any material complaint from any customer, supplier, vendor or employee.


 


6.10         
Liabilities and Indebtedness of the Company. The Company does not have any Obligations of any nature whatsoever,
except: (i) as disclosed in Schedule 6.10; (ii) as disclosed in the Financial Statements; or (iii) Obligations incurred
in the Ordinary Course of Business since the date of the last Financial Statements filed by the Company with the SEC which do not
or would not, individually or in the aggregate, exceed Ten Thousand Dollars ($10,000) or otherwise have a Material Adverse Effect.


 


6.11         
Title to Assets. The Company has good and marketable title to, or a valid leasehold interest in, all of its Assets
which are material to the business and operations of the Company as presently conducted, free and clear of all Encumbrances or
restrictions on the transfer or use of same. Except as set forth in Schedule 6.11 and except as would not have a
Material Adverse Effect, the Company’s Assets are in good operating condition and repair, ordinary wear and tear excepted,
and are free of any latent or patent defects which might impair their usefulness, and are suitable for the purposes for which they
are currently used and for the purposes for which they are proposed to be used.


 


6.12         
Real Estate.


 


(a)             
Real Property Ownership. The Company does not own any Real Property.


 


(b)            
Real Property Leases. Except for the Leases described in Schedule 6.12(b) (the “Company
Leases”), the Company does not lease any other Real Property. With respect to each of the Company Leases: (i) the
Company has been in peaceful possession of the property leased thereunder and neither the Company nor the landlord is in default
thereunder; (ii) no waiver, indulgence or postponement of any of the Obligations thereunder has been granted by the Company or
landlord thereunder; and (iii) there exists no event, occurrence, condition or act known to the Company which, upon notice or lapse
of time or both, would be or could become a default thereunder or which could result in the termination of the Company Leases,
or any of them, or have a Material Adverse Effect on the business of the Company, its Assets or its operations or financial results.
The Company has not violated nor breached any provision of any such Company Leases, and all Obligations required to be performed
by the Company under any of such Company Leases have been fully, timely and properly performed. The Company has delivered to the
Buyer true, correct and complete copies of all Company Leases, including all modifications and amendments thereto, whether in writing
or otherwise. The Company has not received any written or oral notice to the effect that any of the Company Leases will not be
renewed at the termination of the term of such Company Leases, or that any of such Company Leases will be renewed only at higher
rents.


 


6.13         
Material Contracts. An accurate, current and complete copy of each of the Material Contracts has been furnished to
Buyer and/or is readily available as part of the SEC Documents, and each of the Material Contracts constitutes the entire agreement
of the respective parties thereto relating to the subject matter thereof. There are no outstanding offers, bids, proposals or quotations
made by Company which, if accepted, would create a Material Contract with Company. Each of the Material Contracts is in full force
and effect and is a valid and binding Obligation of the parties thereto in accordance with the terms and conditions thereof. To
the knowledge of the Company and its officers, all Obligations required to be performed under the terms of each of the Material
Contracts by any party thereto have been fully performed by all parties thereto, and no party to any Material Contracts is in default
with respect to any term or condition thereof, nor has any event occurred which, through the passage of time or the giving of notice,
or both, would constitute a default thereunder or would cause the acceleration or modification of any Obligation of any party thereto
or the creation of any Encumbrance upon any of the Assets of the Company. Further, the Company has received no notice, nor does
the Company have any knowledge, of any pending or contemplated termination of any of the Material Contracts and, no such termination
is proposed or has been threatened, whether in writing or orally.


 


6.14         
Compliance with Laws. To the knowledge of the Company and its officers, the Company is and at all times has been
in full compliance with all Laws. The Company has not received any notice that it is in violation of, has violated, or is under
investigation with respect to, or has been threatened to be charged with, any violation of any Law.


 


6.15         
Intellectual Property. The Company owns or possesses adequate and legally enforceable 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 all other intellectual property rights necessary to conduct
its business as now conducted. The Company does not have any knowledge of any infringement by the Company of trademark, trade name
rights, patents, patent rights, copyrights, inventions, licenses, service names, service marks, service mark registrations, trade
secret or other intellectual property rights of others, and, to the knowledge of the Company, there is no Claim being made or brought
against, or to the Company’s knowledge, being threatened against, the Company regarding trademark, trade name, patents, patent
rights, invention, copyright, license, service names, service marks, service mark registrations, trade secret or other intellectual
property infringement; and the Company is unaware of any facts or circumstances which might give rise to any of the foregoing.


 


6.16         
Labor and Employment Matters. The Company is not involved in any labor dispute or, to the knowledge of the Company,
is any such dispute threatened. To the knowledge of the Company and its officers, none of the Company’s employees is a member
of a union and the Company believes that its relations with its employees are good. To the knowledge of the Company and its officers,
the Company has complied in all material respects with all Laws relating to employment matters, civil rights and equal employment
opportunities.


 


6.17         
Employee Benefit Plans. Except as set forth in Schedule 6.17, the Company does not have and has not
ever maintained, and has no Obligations with respect to any employee benefit plans or arrangements, including employee pension
benefit plans, as defined in Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”),
multiemployer plans, as defined in Section 3(37) of ERISA, employee welfare benefit plans, as defined in Section 3(1) of ERISA,
deferred compensation plans, stock option plans, bonus plans, stock purchase plans, hospitalization, disability and other insurance
plans, severance or termination pay plans and policies, whether or not described in Section 3(3) of ERISA, in which employees,
their spouses or dependents of the Company participate (collectively, the “Employee Benefit Plans”).
To the Company’s knowledge, all Employee Benefit Plans meet the minimum funding standards of Section 302 of ERISA, where
applicable, and each such Employee Benefit Plan that is intended to be qualified within the meaning of Section 401 of the Internal
Revenue Code of 1986 is qualified. No withdrawal liability has been incurred under any such Employee Benefit Plans and no “Reportable
Event” or “Prohibited Transaction” (as such terms are defined in ERISA), has occurred with respect to any such
Employee Benefit Plans, unless approved by the appropriate Governmental Authority. To the Company’s knowledge, the Company
has promptly paid and discharged all Obligations arising under ERISA of a character which if unpaid or unperformed might result
in the imposition of an Encumbrance against any of its Assets or otherwise have a Material Adverse Effect.


 


6.18         
Tax Matters. The Company has made and timely filed all Tax Returns required by any jurisdiction to which it is subject,
and each such Tax Return has been prepared in compliance with all applicable Laws, and all such Tax Returns are true and accurate
in all respects. Except and only to the extent that the Company has set aside on its books provisions reasonably adequate for the
payment of all unpaid and unreported Taxes, the Company has timely paid all Taxes shown or determined to be due on such Tax Returns,
except those being contested in good faith, and the Company has set aside on its books provision reasonably adequate for the payment
of all Taxes for periods subsequent to the periods to which such Tax Returns 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.
The Company has withheld and paid all Taxes to the appropriate Governmental Authority required to have been withheld and paid in
connection with amounts paid or owing to any Person. There is no Proceeding or Claim for refund now in progress, pending or threatened
against or with respect to the Company regarding Taxes.


 


6.19         
Insurance. The Company is covered by valid, outstanding and enforceable policies of insurance which were issued to
it by reputable insurers of recognized financial responsibility, covering its properties, Assets and businesses against losses
and risks normally insured against by other corporations or entities in the same or similar lines of businesses as the Company
is engaged and in coverage amounts which are prudent and typically and reasonably carried by such other corporations or entities
(the “Insurance Policies”). Such Insurance Policies are in full force and effect, and all premiums due
thereon have been paid. None of the Insurance Policies will lapse or terminate as a result of the transactions contemplated by
this Agreement. The Company has complied with the provisions of such Insurance Policies. The Company has not been refused any insurance
coverage sought or applied for and the Company does not have any reason to believe that it will not be able to renew its existing
Insurance Policies as and when such Insurance Policies expire or to obtain similar coverage from similar insurers as may be necessary
to continue its business at a cost that would not materially and adversely affect the condition, financial or otherwise, or the
earnings, business or operations of the Company.


 


6.20         
Permits. The Company possesses all Permits necessary to conduct its business, and the Company has not received any
notice of, or is otherwise involved in any Proceedings relating to, the revocation or modification of any such Permits. All such
Permits are valid and in full force and effect and the Company is in full compliance with the respective requirements of all such
Permits.


 


6.21         
Bank Accounts; Business Location. Schedule 6.21 sets forth, with respect to each account of the Company
with any bank, broker or other depository institution: (i) the name and account number of such account; (ii) the name and address
of the institution where such account is held; (iii) the name of any Person(s) holding a power of attorney with respect to such
account, if any; and (iv) the names of all authorized signatories and other Persons authorized to withdraw funds from each such
account. The Company has no office or place of business other than as identified on Schedule 6.21 and the Company's
principal places of business and chief executive offices are indicated on Schedule 6.21. All books and records of
the Company and other material Assets of the Company are held or located at the principal offices of the Company indicated on Schedule
6.21.


 


6.22         
Environmental Laws. The Company is and has at all times been in compliance with any and all applicable Environmental
Requirements, and there are no pending Claims against the Company relating to any Environmental Requirements, nor to the best knowledge
of the Company, is there any basis for any such Claims.


 


6.23         
Illegal Payments. Neither the Company, nor any director, officer, agent, employee or other Person acting on behalf
of the Company has, in the course of his actions for, or on behalf of, the Company: (i) used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expenses relating to political activity; (ii) made any direct or indirect unlawful
payment to any foreign or domestic government official or employee from corporate funds; (iii) violated or is in violation of any
provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any bribe, rebate, payoff, influence payment,
kickback or other unlawful payment to any foreign or domestic government official or employee.


 


6.24         
Related Party Transactions. 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 third parties, none of the officers,
directors or employees of the Company, nor any stockholders who own, legally or beneficially, five percent (5%) or more of the
issued and outstanding shares of any class of the Company’s capital stock (each a “Material Shareholder”),
is presently a party to any transaction with the Company (other than for services as employees, officers and directors), including
any Contract 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 Material Shareholder or, to the best knowledge
of the Company, any other Person in which any officer, director, or any such employee or Material Shareholder has a substantial
or material interest in or of which any officer, director or employee of the Company or Material Shareholder is an officer, director,
trustee or partner. There are no Claims or disputes of any nature or kind between the Company and any officer, director or employee
of the Company or any Material Shareholder, or between any of them, relating to the Company and its business.


 


6.25         
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 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.


 


6.26         
Acknowledgment Regarding Buyer’s Purchase of the Securities. The Company acknowledges and agrees that Buyer
is acting solely in the capacity of an arm’s length purchaser with respect to this Agreement and the transactions contemplated
hereby. The Company further acknowledges that Buyer is not acting as a financial advisor or fiduciary of the Company (or in any
similar capacity) with respect to this Agreement and the transactions contemplated hereby and any advice given by Buyer or any
of its representatives or agents in connection with this Agreement and the transactions contemplated hereby is merely incidental
to Buyer’s purchase of the Securities. The Company further represents to Buyer that the Company’s decision to enter
into this Agreement has been based solely on the independent evaluation by the Company and its representatives.


 


6.27         
Seniority. No indebtedness or other equity or security of the Company is senior to the Debentures in right of payment,
whether with respect to interest or upon liquidation or dissolution, or otherwise, except only purchase money security interests
(which are senior only as to underlying Assets covered thereby).


 


6.28         
Brokerage Fees. There is no Person acting on behalf of the Company who is entitled to or has any claim for any brokerage
or finder’s fee or commission in connection with the execution of this Agreement or the consummation of the transactions
contemplated hereby.


 


6.29         
Full Disclosure. All the representations and warranties made by Company herein or in the Schedules hereto, and all
of the statements, documents or other information pertaining to the transaction contemplated herein made or given by Company, its
agents or representatives, are complete and accurate, and do not omit any information required to make the statements and information
provided, in light of the transaction contemplated herein and in light of the circumstances under which they were made, not misleading,
accurate and meaningful.


 


ARTICLE
VII 


COVENANTS


 


7.1            
Negative Covenants.


 


(a)             
Indebtedness. So long as Buyer owns, legally or beneficially, any of the Debentures, neither the Company, nor any
of its subsidiaries shall, either directly or indirectly, create, assume, incur or have outstanding any indebtedness for borrowed
money of any nature or kind (including purchase money indebtedness), or become liable, whether as endorser, guarantor, surety or
otherwise, for any Obligation of any other Person, except for: (i) the Debentures; (ii) Obligations for accounts payable, other
than for money borrowed, incurred in the Ordinary Course of Business; and (iii) indebtedness that matures by its terms after the
Maturity Date (as defined in the Debenture) and that is subordinated to the Obligations owed to Buyer under the Debentures as a
matter of law or pursuant to a subordination agreement, in form and content acceptable to Buyer in its sole discretion, which shall
include an indefinite standstill on remedies and payment blockage rights during any default hereunder.


 


(b)            
Encumbrances. So long as Buyer owns, legally or beneficially, any of the Debentures, neither the Company, nor any
of its subsidiaries shall, either directly or indirectly, create, assume, incur or suffer or permit to exist any Encumbrance upon
any Asset of the Company or any of its subsidiaries which is senior to the security interest and rights of the Buyer, whether owned
at the date hereof or hereafter acquired.


 


(c)             
Issuances. Neither the Company nor any of its subsidiaries shall, either directly or indirectly, issue any equity,
debt or convertible or derivative instruments whatsoever during the period from the date hereof until sixty (60) days following
the date hereof.


 


(d)            
Transfer; Merger. So long as Buyer owns, legally or beneficially, any of the Debentures, neither the Company, nor
any of its subsidiaries shall, either directly or indirectly, permit or enter into any transaction involving a “Change in
Control” (as hereinafter defined), or any other merger, consolidation, sale, transfer, license, lease, encumbrance or otherwise
disposition of all or substantially all of its properties or business or all or substantially all of its Assets, except for the
sale, lease or licensing of property or Assets of the Company in the Ordinary Course of Business. For purposes of this Agreement,
the term “Change of Control” shall mean any sale, conveyance, assignment or other transfer, directly
or indirectly, of any ownership interest of the Company or any of its subsidiaries which results in any change in the identity
of the individuals or entities previously having the power to direct, or cause the direction of, the management and policies of
the Company or any of its subsidiaries, or the grant of a security interest in any ownership interest of any Person directly or
indirectly controlling the Company, which could result in a change in the identity of the individuals or entities previously having
the power to direct, or cause the direction of, the management and policies of the Company or any of its subsidiaries.


 


(e)             
Distributions; Restricted Payments. So long as Buyer owns, legally or beneficially, any of the Debentures, neither
the Company, nor any of its subsidiaries shall, either directly or indirectly: (i) purchase or redeem any shares of its capital
stock; (ii) declare or pay any dividends or distributions, whether in cash or otherwise, or set aside any funds for any such purpose;
(iii) make any loans, advances or extensions of credit to, or investments in, any Person, including, without limitation, any Affiliates
of the Company or its subsidiaries, or the Company’s officers, directors, employees or Material Shareholders, or the officers,
directors, employees of any subsidiary of the Company; or (iv) increase the annual salary paid to any officers or directors of
the Company or any of its subsidiaries as of the Effective Date, unless any such increase is part of a written employment contract
with any such officers entered into prior to the Effective Date, a copy of which has been delivered to and approved by the Buyer.


 


(f)             
Use of Proceeds. The proceeds from the purchase and sale of the Debentures shall be used by the Company for general
working capital purposes.


 


(g)            
Business Activities; Change of Legal Status and Organizational Documents. Neither the Company, nor any of its subsidiaries,
shall: (i) engage in any line of business other than the businesses engaged in as of the Effective Date and business reasonably
related thereto; (ii) change its respective name, organizational identification number, its type of organization, its jurisdiction
of organization or other legal structure; or (iii) permit its Certificate of Incorporation, Bylaws or other organizational documents
to be amended or modified in any way which could reasonably be expected to have a Material Adverse Effect.


 


(h)            
Transactions with Affiliates. Neither the Company, nor any of its subsidiaries, shall enter into any transaction
with any of its Affiliates, officers, directors, employees, Material Shareholders or other insiders, except in the Ordinary Course
of Business and upon fair and reasonable terms that are no less favorable to the Company or its subsidiaries, as applicable, than
it would obtain in a comparable arm’s length transaction with a Person not an Affiliate of the Company or any of its subsidiaries.


 


7.2            
Affirmative Covenants.


 


(a)             
Corporate Existence. The Company and each of its subsidiaries shall at all times preserve and maintain their respective:
(i) existence and good standing in the jurisdiction of its and their organization; and (ii) its and their qualification to do business
and good standing in each jurisdiction where the nature of its and their business makes such qualification necessary, and shall
at all times continue as a going concern in the business which the Company is presently conducting.


 


(b)            
Tax Liabilities. The Company and each of its subsidiaries shall at all times pay and discharge all Taxes upon, and
all Claims (including claims for labor, materials and supplies) against the Company and each of its subsidiaries or any of its
or their properties or Assets, before the same shall become delinquent and before penalties accrue thereon, unless and to the extent
that the same are being contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP
are being maintained.


 


(c)             
Notice of Proceedings. The Company shall, promptly, but not more than five (5) days after knowledge thereof shall
have come to the attention of any officer of the Company, give written notice to the Buyer of all threatened or pending Proceedings
before any Governmental Authority.


 


(d)            
Material Adverse Effect. The Company shall, promptly, but not more than five (5) days after knowledge thereof shall
have come to the attention of any officer of the Company, give written notice to the Buyer of any event, circumstance, fact or
other matter that could in any way have or be reasonably expected to have a Material Adverse Effect.


 


(e)             
Notice of Default. The Company shall, promptly, but not more than five (5) days after the commencement thereof, give
notice to the Buyer in writing of the occurrence of any “Event of Default” (as such term is defined in any of the Transaction
Documents) or of any event which, with the lapse of time, the giving of notice or both, would constitute an Event of Default hereunder
or under any other Transaction Documents.


 


(f)             
Maintain Property. The Company and each of its subsidiaries shall at all times maintain, preserve and keep all of
their respective Assets in good repair, working order and condition, normal wear and tear excepted, and shall from time to time,
as the Company deems appropriate in its reasonable judgment, make all needful and proper repairs, renewals, replacements, and additions
thereto so that at all times the efficiency thereof shall be fully preserved and maintained. The Company shall permit Buyer to
examine and inspect such Assets (and all assets and properties of its subsidiaries) at all reasonable times upon reasonable notice
during business hours. During the continuance of any Event of Default hereunder or under any Transaction Documents, the Buyer shall,
at the Company’s expense, have the right to make additional inspections without providing advance notice.


 


(g)            
Maintain Insurance. The Company and its subsidiaries shall at all times insure and keep insured with insurance companies
acceptable to Buyer, all insurable property owned by the Company and its subsidiaries, respectively and as applicable, which is
of a character usually insured by companies similarly situated and operating like properties, against loss or damage from environmental,
fire and such other hazards or risks as are customarily insured against by companies similarly situated and operating like properties;
and shall similarly insure employers’, public and professional liability risks. Prior to the Closing Date, the Company shall
deliver to the Buyer a certificate setting forth in summary form the nature and extent of the insurance maintained pursuant to
this Section. All such policies of insurance must be satisfactory to Buyer in relation to the amount and term of the Debentures
and type and value of the Assets of the Company and the assets and properties of its subsidiaries, shall identify Buyer as sole/lender’s
loss payee and as an additional insured. In the event the Company fails to provide Buyer with evidence of the insurance coverage
required by this Section or at any time hereafter shall fail to obtain or maintain any of the policies of insurance required above,
or to pay any premium in whole or in part relating thereto, then the Buyer, without waiving or releasing any obligation or default
by the Company hereunder, may at any time (but shall be under no obligation to so act), obtain and maintain such policies of insurance
and pay such premium and take any other action with respect thereto, which Buyer deems advisable. This insurance coverage: (i)
may, but need not, protect the Company’s interest in such property; and (ii) may not pay any claim made by, or against, the
Company in connection with such property. The Company may later request that the Buyer cancel any such insurance purchased by Buyer,
but only after providing Buyer with evidence that the insurance coverage required by this Section is in force. The costs of such
insurance obtained by Buyer, through and including the effective date such insurance coverage is canceled or expires, shall be
payable on demand by the Company to Buyer, together with interest at the highest non-usurious rate permitted by law on such amounts
until repaid and any other charges by Buyer in connection with the placement of such insurance. The costs of such insurance, which
may be greater than the cost of insurance which the Company may be able to obtain on its own, together with interest thereon at
the highest non-usurious rate permitted by Law and any other charges incurred by Buyer in connection with the placement of such
insurance may be added to the total Obligations due and owing by the Company hereunder and under the Debentures to the extent not
paid by the Company.


 


(h)            
Reporting Status; Listing. So long as Buyer owns, legally or beneficially, any of the Securities, the Company shall:
(i) file in a timely manner all reports required to be filed under the Securities Act, the Exchange
Act or any securities Laws and regulations thereof applicable to the Company of any state of the United States, or by the rules
and regulations of the Principal Trading Market, and, to provide a copy thereof to the Buyer promptly after such filing; (ii) not
terminate its status as an issuer required to file reports under the Exchange Act even if the Exchange Act or the rules and regulations
thereunder would otherwise permit such termination; (iii) if required by the rules and regulations of the Principal Trading Market,
promptly secure the listing of the Incentive Shares upon the Principal Trading Market (subject to official notice of issuance)
and, take all reasonable action under its control to maintain the continued listing, quotation and trading
of its Common Stock (including, without limitation, the Incentive Shares) on the Principal Trading Market, and the Company
shall comply in all respects with the Company’s reporting, filing and other Obligations under the bylaws or rules of the
Principal Trading Market, the Financial Industry Regulatory Authority, Inc. and such other Governmental Authorities, as applicable.
The Company shall promptly provide to Buyer copies of any notices it receives from the SEC or any Principal Trading Market, to
the extent any such notices could in any way have or be reasonably expected to have a Material Adverse Effect.


 


(i)              
Rule 144. With a view to making available to Buyer the benefits of Rule 144 under the Securities Act (“Rule
144”), or any similar rule or regulation of the SEC that may at any time permit Buyer to sell the Incentive Shares
to the public without registration, the Company represents and warrants that: (i) the Company is, and has been for a period of
at least ninety (90) days immediately preceding the date hereof, subject to the reporting requirements of Section 13 or 15(d) of
the Exchange Act; (ii) the Company has filed all required reports under Section 13 or 15(d) of the Exchange Act, as applicable,
during the twelve (12) months preceding the Closing Date (or for such shorter period that the Company was required to file such
reports); (iii) the Company is not an issuer defined as a “Shell Company” (as hereinafter defined); and (iv) if the
Company has, at any time, been an issuer defined as a Shell Company, the Company has: (A) not been an issuer defined as a Shell
Company for at least six (6) months prior to the Closing Date; and (B) has satisfied the requirements of Rule 144(i) (including,
without limitation, the proper filing of “Form 10 information” at least six (6) months prior to the Closing Date).
For the purposes hereof, the term “Shell Company” shall mean an issuer that meets the description defined
under Rule 144. In addition, so long as Buyer owns, legally or beneficially, any of the Securities, the Company shall, at its sole
expense:


 


(i)              
Make, keep and ensure that adequate current public information with respect to the Company, as
required in accordance with Rule 144, is publicly available;


 


(ii)            
furnish to the Buyer, promptly upon reasonable request: (A) a written statement by the Company that it has complied with
the reporting requirements of Rule 144, the Securities Act and the Exchange Act; and (b) such other information as may be reasonably
requested by Buyer to permit the Buyer to sell any of the Securities pursuant to Rule 144 without limitation or restriction; and


 


(iii)          
promptly at the request of the Buyer, give the Company’s transfer agent instructions to the effect that, upon the
transfer agent’s receipt from the Buyer of a certificate (a “Rule 144 Certificate”)
certifying that the Buyer’s holding period (as determined in accordance with the provisions of Rule 144) for any portion
of the Incentive Shares which the Buyer proposes to sell (the “Securities Being Sold”)
is not less than six (6) months, and receipt by the transfer agent of the “Rule 144 Opinion” (as hereinafter defined)
from the Company or its counsel, the transfer agent is to effect the transfer of the Securities Being Sold and issue to the Buyer(s)
or transferee(s) thereof one or more stock certificates representing the transferred Securities Being Sold without any restrictive
legend and without recording any restrictions on the transferability of such shares on the transfer agent’s books and records.
In this regard, upon Buyer’s request, the Company shall have an affirmative obligation to cause its counsel to promptly issue
to the transfer agent a legal opinion providing that, based on the Rule 144 Certificate, the Securities Being Sold may be sold
pursuant to the provisions of Rule 144, even in the absence of an effective registration statement (the “Rule 144 Opinion”).
If the transfer agent requires any additional documentation in connection with any proposed transfer by the Buyer of any Securities
Being Sold, the Company shall promptly deliver or cause to be delivered to the transfer agent or to any other Person, all such
additional documentation as may be necessary to effectuate the transfer of the Securities being Sold and the issuance of an unlegended
certificate to any transferee thereof, all at the Company’s expense.


 


(j)              
Matters With Respect to Securities.


 


(i)              
Issuance of Conversion Shares. The parties hereto acknowledge that pursuant to the terms of the Debentures, Buyer
has the right, at its discretion, to convert amounts due under the Debentures into Common Stock in accordance with the terms of
the Debentures. In the event, for any reason, the Company fails to issue, or cause its transfer agent (the “Transfer
Agent”) to issue, any portion of the Common Stock issuable upon conversion of the Debentures (the “Conversion
Shares”) to Buyer in connection with the exercise by Buyer of any of its conversion rights under the Debentures,
then the parties hereto acknowledge that Buyer shall irrevocably be entitled to deliver to the Transfer Agent, on behalf of itself
and the Company, a “Conversion Notice” (as defined in the Debentures) requesting the issuance of the Conversion Shares
then issuable in accordance with the terms of the Debentures, and the Transfer Agent, provided they are the acting transfer agent
for the Company at the time, shall, and the Company hereby irrevocably authorizes and directs the Transfer Agent to, without any
further confirmation or instructions from the Company, issue the Conversion Shares applicable to the Conversion Notice then being
exercised, and surrender to a nationally recognized overnight courier for delivery to Buyer at the address specified in the Conversion
Notice, a certificate of the Common Stock of the Company, registered in the name of Buyer, for the number of Conversion Shares
to which Buyer shall be then entitled under the Debentures, as set forth in the Conversion Notice.


 


(ii)            
Issuance of Additional Common Stock Under Section 7.5. The parties hereto acknowledge that pursuant to Section 7.5
below, the Company has agreed to issue, simultaneously with the execution of this Agreement and in the future, certain shares of
the Company’s Common Stock in accordance with the terms of Section 7.5 below. In the event, for any reason, the Company fails
to issue, or cause its Transfer Agent to issue, any portion of the Common Stock issuable to Buyer under Section 7.5, either now
or in the future, then the parties hereto acknowledge that Buyer shall irrevocably be entitled to deliver to the Transfer Agent,
on behalf of itself and the Company, a written instruction requesting the issuance of the shares of Common Stock then issuable
in accordance with Section 7.5 below, and the Transfer Agent, provided they are the acting transfer agent for the Company at the
time, shall, and the Company hereby irrevocably authorizes and directs the Transfer Agent to, without any further confirmation
or instructions from the Company, issue such shares of the Company’s Common Stock as directed by Buyer, and surrender to
a nationally recognized overnight courier for delivery to Buyer at the address specified in the Buyer’s notice, a certificate
of the Common Stock of the Company, registered in the name of Buyer, for the number of shares of Common Stock issuable to Buyer
in accordance with Section 7.5.


 


(iii)          
Removal of Restrictive Legends. In the event that Buyer has any shares of the Company’s Common Stock bearing
any restrictive legends, and Buyer, through its counsel or other representatives, submits to the Transfer Agent any such shares
for the removal of the restrictive legends thereon, whether in connection with a sale of such shares pursuant to any
exemption to the registration requirements under the Securities Act, or otherwise, and the Company and or its counsel refuses or
fails for any reason to render an opinion of counsel or any other documents or certificates required for the removal of the restrictive
legends, then the Company hereby agrees and acknowledges that Buyer is hereby irrevocably and expressly authorized to have counsel
to Buyer render any and all opinions and other certificates or instruments which may be required for purposes of removing such
restrictive legends, and the Company hereby irrevocably authorizes and directs the Transfer Agent to, without any further confirmation
or instructions from the Company, issue any such shares without restrictive legends as instructed by Buyer, and surrender to a
common carrier for overnight delivery to the address as specified by Buyer, certificates, registered in the name of Buyer or its
designees, representing the shares of Common Stock to which Buyer is entitled, without any restrictive legends and otherwise freely
transferable on the books and records of the Company.


 


(iv)           
Authorized Agent of the Company. The Company hereby irrevocably appoints the Buyer and its counsel and its representatives,
each as the Company’s duly authorized agent and attorney-in-fact for the Company for the purposes of authorizing and instructing
the Transfer Agent to process issuances, transfers and legend removals upon instructions from Buyer, or any counsel or representatives
of Buyer, as specifically contemplated herein. The authorization and power of attorney granted hereby is coupled with an interest
and is irrevocable so long as any obligations of the Company under Debentures remain outstanding, and so long as the Buyer owns
or has the right to receive, any shares of the Company’s Common Stock hereunder. In this regard, the Company hereby confirms
to the Transfer Agent and the Buyer that it can NOT and will NOT give instructions, including stop orders or otherwise,
inconsistent with the terms of this Agreement with regard to the matters contemplated herein, and that the Buyer shall have the
absolute right to provide a copy of this Agreement to the Transfer Agent as evidence of the Company’s irrevocable authority
for Buyer and Transfer Agent to process issuances, transfers and legend removals upon instructions from Buyer, or any counsel or
representatives of Buyer, as specifically contemplated herein, without any further instructions, orders or confirmations from the
Company.


 


(v)            
Injunction and Specific Performance. The Company specifically acknowledges and agrees that in the event of a breach
or threatened breach by the Company of any provision of this Section 7.2(j), the Buyer will be irreparably damaged and that damages
at law would be an inadequate remedy if this Agreement were not specifically enforced.  Therefore, in the event of a breach
or threatened breach of any provision of this Section (j) by the Company, the Buyer shall be entitled to obtain, in addition to
all other rights or remedies Buyer may have, at law or in equity, an injunction restraining such breach, without being required
to show any actual damage or to post any bond or other security, and/or to a decree for specific performance of the provisions
of this Section (j).


 


7.3            
Reporting Requirements. The Company shall agree as follows:


 


(a)             
Annual Audited Financial Statements. At or before the time required by the SEC for filing of the Company’s
Form 10-K (including extensions), to file with the SEC and to deliver a copy of such filing to the Buyer, of the annual audited
financial statements of the Company, including all information required by the SEC to be included in a Form 10-K filing; and


 


(b)            
Quarterly Financial Statements. At or before the time required by the SEC for filing of the Company’s Form
10-Q (including extensions), to file with the SEC and to deliver a copy of such filing to the Company, of the financial statements
of the Company regarding such fiscal quarter including all information required by the SEC to be included in a Form 10-Q filing;


 


(c)             
Monthly Compliance Certificate. On the first (1st) day of every month, the Company shall deliver to the
Buyer a compliance certificate in substantial substance and form as attached hereto as Exhibit “B”, including
a balance sheet and income statement of the Company, on a consolidated basis, as of the then ended calendar month.


 


7.4            
Fees and Expenses.


 


(a)             
Transaction Fees. The Company agrees to pay to Buyer a transaction advisory fee equal to three percent (3%) of the
amount of the Debentures purchased by Buyer at the Closing, which fee shall be due and payable on the Effective Date and withheld
from the gross purchase price paid by Buyer for the Debentures.


 


(b)            
Due Diligence Fees. The Company agrees to pay to the Buyer a due diligence fee equal to Four Thousand and No/100
Dollars ($4,000.00), which shall be due and payable in full on the Effective Date, or any remaining portion thereof shall be due
and payable on the Effective Date if a portion of such fee was paid upon the execution of any term sheet related to this Agreement.


 


(c)             
Document Review and Legal Fees. The Company agrees to pay to the Buyer or its counsel a document review and legal
fee equal to Ten Thousand and No/100 Dollars ($10,000.00), which shall be due and payable in full on the Effective Date, or any
remaining portion thereof shall be due and payable on the Effective Date if a portion of such fee was paid upon the execution of
any term sheet related to this Agreement. The Company also agrees to be responsible for the prompt payment of all legal fees and
expenses of the Company and its own counsel and other professionals incurred by the Company in connection with the negotiation
and execution of this Agreement and the Transaction Documents.


 


(d)            
Other Fees. The Company also agrees to pay to the Buyer (or any designee of the Buyer), upon demand, or to otherwise
be responsible for the payment of, any and all other costs, fees and expenses, including the reasonable fees, costs, expenses and
disbursements of counsel for the Buyer and of any experts and agents, which the Buyer may incur or which may otherwise be due and
payable in connection with: (i) the administration, amendment, waiver or other modification or termination of this Agreement
or any other Transaction Documents; (ii) any documentary stamp taxes, intangibles taxes, recording fees, filing fees, or other
similar taxes, fees or charges imposed by or due to any Governmental Authority in connection with this Agreement or any other Transaction
Documents; (iii) the exercise or enforcement of any of the rights of the Buyer under this Agreement or the Transaction Documents;
or (iv) the failure by the Company to perform or observe any of the provisions of this Agreement or any of the Transaction
Documents. Included in the foregoing shall be the amount of all expenses paid or incurred by Buyer in consulting with counsel concerning
any of its rights under this Agreement or any other Transaction Document or under applicable law. To the extent any such costs,
fees, charges, taxes or expenses are incurred prior to the funding of proceeds from the Closing, same shall be paid directly from
the proceeds of the Closing. All such costs and expenses, if not so immediately paid when due or upon demand thereof, shall bear
interest from the date of outlay until paid, at the highest rate set forth in the Debenture, or if none is so stated, the highest
rate allowed by law. All of such costs and expenses shall be additional Obligations of the Company to Buyer secured under the Transaction
Documents. The provisions of this Subsection shall survive the termination of this Agreement. Notwithstanding anything which may
be contained herein to the contrary, the only cash fees and expenses (other than stamp and UCC Financing Statement filing expenses)
which shall be assessed by the Buyer upon Closing are provided in Sections 7.4(a), (b) and (c).


 


7.5            
Incentive Shares.


 


(a)             
Share Issuance. The Company shall pay to Buyer a fee for corporate advisory and investment banking services provided
by the Buyer to the Company prior to the Effective Date by issuing to Buyer that number of shares of the Company’s Common
Stock that equal to a dollar amount equal to $25,000.00 (the “Share Value”). For purposes of determining
the number of Incentive Shares issuable to Buyer under this Section 7.5(a), the Company’s Common Stock shall be valued at
the volume weighted average price as of the close of the business day immediately prior to the date the Company executes this Agreement
(the “Valuation Date”), as reported by Bloomberg (the “VWAP”). The Buyer shall
confirm to the Company in writing, the VWAP for the Common Stock as of the Valuation Date, and the corresponding number of Shares
issuable to the Buyer based on such price. The Company shall instruct its transfer agent to issue certificates representing the
Incentive Shares issuable to the Buyer immediately upon the Company’s execution of this Agreement, and shall cause its transfer
agent to deliver such certificates to Buyer within five (5) business days from the date the Company executes this Agreement. In
the event such certificates representing the Incentive Shares issuable hereunder shall not be delivered to the Buyer within said
five (5) business day period, same shall be an immediate default under this Agreement and the other Transaction Documents. The
Incentive Shares, when issued, shall be deemed to be validly issued, fully paid, and non-assessable shares of the Company’s
Common Stock. The Incentive Shares are and shall be deemed fully earned in connection with the corporate advisory and investment
banking services provided by the Buyer to the Company prior to the Effective Date.


 


(b)            
Adjustments. It is the intention of the Company and Buyer that by a date that is nine (9) months after the Valuation
Date (the “Nine Month Valuation Date”) the Buyer shall have generated net proceeds from the sale of the
Incentive Shares equal to the Share Value. The Buyer shall have the right to sell the Incentive Shares in the Principal Trading
Market or otherwise, at any time in accordance with applicable securities laws. At any time the Buyer may elect after the Nine
Month Valuation Date (or prior to such Nine Month Valuation Date, if Buyer has sold all Incentive Shares prior to such Nine Month
Valuation Date), the Buyer may deliver to the Company a reconciliation statement showing the net proceeds actually received by
the Buyer from the sale of the Incentive Shares (the “Sale Reconciliation”). If, as of the date of the
delivery by Buyer of the Sale Reconciliation, the Buyer has not realized net proceeds from the sale of such Incentive Shares equal
to at least the Share Value, as shown on the Sale Reconciliation, then the Company shall immediately take all required action necessary
or required in order to cause the issuance of additional shares of Common Stock to the Buyer in an amount sufficient such that,
when sold and the net proceeds thereof are added to the net proceeds from the sale of any of the previously issued and sold Incentive
Shares, the Buyer shall have received total net funds equal to the Share Value. If additional shares of Common Stock are issued
pursuant to the immediately preceding sentence, and after the sale of such additional issued shares of Common Stock, the Buyer
still has not received net proceeds equal to at least the Share Value, then the Company shall again be required to immediately
take all required action necessary or required in order to cause the issuance of additional shares of Common Stock to the Buyer
as contemplated above, and such additional issuances shall continue until the Buyer has received net proceeds from the sale of
such Common Stock equal to the Share Value. In the event the Buyer receives net proceeds from the sale of Incentive Shares equal
to the Share Value, and the Buyer still has Incentive Shares remaining to be sold, the Buyer shall return all such remaining Incentive
Shares to the Company. In the event additional Common Stock is required to be issued as outlined above, the Company shall instruct
its transfer agent to issue certificates representing such additional shares of Common Stock to the Buyer immediately subsequent
to the Buyer’s notification to the Company that additional shares of Common Stock are issuable hereunder, and the Company
shall in any event cause its transfer agent to deliver such certificates to Buyer within three (3) business days following the
date Buyer notifies the Company that additional shares of Common Stock are to be issued hereunder. In the event such certificates
representing such additional shares of Common Stock issuable hereunder shall not be delivered to the Buyer within said three (3)
business day period, same shall be an immediate default under this Agreement and the Transaction Documents. Notwithstanding anything
contained in this Section 7.5 to the contrary, at any time on or prior to the Nine Month Valuation Date, but not thereafter (unless
agreed to by the Buyer), the Company shall have the right, at any time during such period, to redeem any Incentive Shares then
in the Buyer’s possession for an amount payable by the Company to Buyer in cleared U.S. funds equal to the Share Value, less
any net cash proceeds received by the Buyer from any previous sales of Incentive Shares. Upon Buyer’s receipt of such cash
payment in accordance with the immediately preceding sentence, the Buyer shall return any then remaining Incentive Shares in its
possession back to the Company.


 


(c)             
Mandatory Redemption. In the event that the five (5) day average trading volume of the Company’s Common Stock
declines by greater than seventy-five percent (75%) in any given five (5) day period at any time after the Buyer may lawfully begin
to sell any Incentive Shares, then Buyer may require, upon written notice to the Company, that the Company redeem all Incentive
Shares then in Buyer’s possession for cash equal to the Share Value, less any cash proceeds received by the Buyer from any
previous sales of Incentive Shares, if any. In the event such redemption notice is given by the Buyer, the Company shall redeem
the then remaining Incentive Shares in Buyer’s possession for cash payable in cleared and good U.S. funds equal to the Share
Value, less any cash proceeds received by the Buyer from any previous sales of Incentive Shares, if any, within five (5) business
days from the date the Buyer delivers such redemption notice to the Company.


 


7.6            
Pledged Stock.


 


(a)             
Number of Shares for Pledged Stock. As additional security for the Company’s obligations under the Debentures
and the other Transaction Documents, the Company shall issue and pledge to the Buyer under the Pledge Agreement a number of shares
of the Company’s Common Stock in a number to be calculated such that, when added to the number of Incentive Shares issued
to the Buyer hereunder, the Buyer shall own or have shares of Common Stock pledged to it under the Pledge Agreement equal to the
lesser of: (i) 4.99% of the then issued and outstanding shares of Common Stock of the Company; or (ii) 200% of the then outstanding
amount owed pursuant to the Debentures (using VWAP as of the close of business on the day immediately prior to the date such calculation
is made). The shares representing the Pledged Stock shall be delivered to the escrow agent under the Pledge Agreement on or prior
to the Closing Date in accordance with the terms of the Pledge Agreement.


 


7.7            
Adjustment to Pledged Stock. The Company agrees that the Buyer shall have full anti-dilution protection with respect
to the Pledged Stock while the Debentures are outstanding. In that regard, if the Company issues any Common Stock, or any securities
convertible into Common Stock, or options to purchase Common Stock or securities convertible into Common Stock, at any time while
the Debentures remain outstanding to any Person other than Buyer or an Affiliate of Buyer, the Company shall immediately take all
required action necessary or required in order to cause the issuance of additional shares of Common Stock to be pledged under the
Pledge Agreement and delivered to the escrow agent thereunder, such that the number of shares Common Stock pledged under the Pledge
Agreement, together with any Incentive Shares owned by Buyer as of the time of such calculation, is always the lesser of: (i) 4.99%
of the then issued and outstanding shares of Common Stock of the Company; or (ii) 200% of the then outstanding amount owed pursuant
to the Debentures.


 


ARTICLE
VIII 


CONDITIONS PRECEDENT TO THE COMPANY’S
OBLIGATIONS TO SELL


 


The obligation of the
Company hereunder to issue and sell the Securities to the Buyer at the Closings is subject to the satisfaction, at or before the
respective Closing Dates, of each of the following conditions, provided that these conditions are for the Company’s sole
benefit and may be waived by the Company at any time in its sole discretion:


 


8.1            
Buyer shall have executed the Transaction Documents and delivered them to the Company.


 


8.2            
The representations and warranties of the Buyer shall be true and correct in all material respects as of the date when made
and as of the Closing Dates as though made at that time (except for representations and warranties that speak as of a specific
date), and the Buyer shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by the Buyer at or prior to the Closing Dates.


 


8.3            
That certain Drawdown Equity Facility Agreement and Registration Rights Agreement, each by and between the Company and Auctus
Private Equity Fund, LLC, shall have been fully executed and be in full force and effect.


 


ARTICLE
IX 


CONDITIONS PRECEDENT
TO THE BUYER’S OBLIGATIONS TO PURCHASE


 


The obligation of the
Buyer hereunder to purchase the Debentures at the Closing is subject to the satisfaction, at or before the Closing Date, of each
of the following conditions (in addition to any other conditions precedent elsewhere in this Agreement), provided that these conditions
are for the Buyer’s sole benefit and may be waived by the Buyer at any time in its sole discretion:


 


9.1            
The Company shall have executed and delivered the Transaction Documents and delivered the same to the Buyer.


 


9.2            
The representations and warranties of the Company shall be true and correct in all material respects (except to the extent
that any of such representations and warranties are already qualified as to materiality in Article VI above, in which case, such
representations and warranties shall be true and correct in all respects without further qualification) as of the date when made
and as of the Closing Date as though made at that time (except for representations and warranties that speak as of a specific date)
and the Company shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by the Company at or prior to the Closing Date.


 


9.3            
The Buyer shall have received an opinion of counsel from counsel to the Company in a form satisfactory to the Buyer and
its counsel.


 


9.4            
The Buyer shall have issued an irrevocable issuance instruction letter and board resolution, authorizing the issuance of
the Incentive Shares and directing its transfer agent to issue and deliver the Incentive Shares to Buyer or its designee.


 


9.5            
The Company shall have executed and delivered to Buyer a closing certificate in substance and form required by Buyer, which
closing certificate shall include and attach as exhibits: (i) a true copy of a certificate of good standing evidencing the formation
and good standing of the Company from the secretary of state (or comparable office) from the jurisdiction in which the Company
is incorporated, as of a date within ten (10) days of the Closing Date; (ii) the Company’s Certificate of Incorporation;
(iii) the Company’s Bylaws; and (iv) copies of the resolutions of the board of directors of the Company consistent with Section
6.3, as adopted by the Company’s board of directors in a form reasonably acceptable to Buyer.


 


9.6            
No event shall have occurred which could reasonably be expected to have a Material Adverse Effect.


 


9.7            
The Company shall have executed such other agreements, certificates, confirmations or resolutions as the Buyer may required
to consummate the transactions contemplated by this Agreement and the Transaction Documents, including a closing statement and
joint disbursement instructions as may be required by Buyer.


 


ARTICLE
X 


INDEMNIFICATION


 


10.1         
Company’s Obligation to Indemnify. In consideration of the Buyer’s execution and delivery of this Agreement
and acquiring the Securities hereunder, and in addition to all of the Company’s other obligations under this Agreement, the
Company hereby agrees to defend and indemnify Buyer and its Affiliates and subsidiaries and their respective directors, officers,
employees, agents and representatives, and the successors and assigns of each of them (collectively, the “Buyer Indemnified
Parties”) and Company does hereby agree to hold the Buyer Indemnified Parties forever harmless, from and against
any and all Claims made, brought or asserted against the Buyer Indemnified Parties, or any one of them, and Company hereby agrees
to pay or reimburse the Buyer Indemnified Parties for any and all Claims payable by any of the Buyer Indemnified Parties to any
Person, including reasonable attorneys’ and paralegals’ fees and expenses, court costs, settlement amounts, costs of
investigation and interest thereon from the time such amounts are due at the highest non-usurious rate of interest permitted by
applicable Law, through all negotiations, mediations, arbitrations, trial and appellate levels, as a result of, or arising out
of, or relating to: (i) any misrepresentation or breach of any representation or warranty made by the Company or any of its subsidiaries
in this Agreement, the Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby; (ii)
any breach of any covenant, agreement or Obligation of the Company or its subsidiaries contained in this Agreement, the Transaction
Documents or any other certificate, instrument or document contemplated hereby or thereby; or (iii) any Claims brought or made
against the Buyer Indemnified Parties, or any one of them, by a third party and arising out of or resulting from the execution,
delivery, performance or enforcement of this Agreement, the Transaction Documents or any other instrument, document or agreement
executed pursuant hereto or thereto, any transaction financed or to be financed in whole or in part, directly or indirectly, with
the proceeds of the issuance of the Debentures, or the status of the Buyer or holder of any of the Securities, as a buyer of such
Securities in the Company. To the extent that the foregoing undertaking by the Company may be unenforceable for any reason, the
Company shall make the maximum contribution to the payment and satisfaction of each of the Claims covered hereby, which is permissible
under applicable Law.


 


ARTICLE
XI 


MISCELLANEOUS


 


11.1         
Notices. All notices of request, demand and other communications hereunder shall be addressed to the parties as follows:


 


If to the Company:Aqualiv Technologies,
Inc.


4550 NW Newberry Hill Road,
Suite 202


Silverdale, WA 98383


Attn: Mr. William Wright,
CEO


Telephone: (360) 536-4220


Facsimile: (360) 473-1160


E-Mail: bwright@aqualivtech.com


 


With a copy to:Seth Brookman,
Esq.


(which shall not constitute notice)Lucosky
Brookman, LLP


33 Wood Avenue South, 6th
Floor


Iselin, New Jersey 08830


Phone: (732) 395-4400


Fax: (732) 395-4401


Email: sbrookman@lucbro.com


 


If to the Buyer:TCA Global Credit Master
Fund, LP


1404 Rodman Street


Hollywood, FL 33020


Attn: Mr. Robert Press


Telephone: (786) 323-1650


Facsimile: (786) 323-1651


E-Mail: bpress@trafcap.com


 


With a copy to:David Kahan, P.A.


6420 Congress Ave., Suite
1800


Boca Raton, FL 33487


Attn: David Kahan, Esq.


Telephone: (561) 672-8330


Facsimile: (561) 672-8301


E-Mail: david@dkpalaw.com


 


unless the address is changed by the party
by like notice given to the other parties. Notice shall be in writing and shall be deemed delivered: (i) if mailed by certified
mail, return receipt requested, postage prepaid and properly addressed to the address below, then three (3) business days after
deposit of same in a regularly maintained U.S. Mail receptacle; or (ii) if mailed by Federal Express, UPS or other nationally recognized
overnight courier service, next business morning delivery, then one (1) business day after deposit of same in a regularly maintained
receptacle of such overnight courier; or (iii) if hand delivered, then upon hand delivery thereof to the address indicated on or
prior to 5:00 p.m., EST, on a business day. Any notice hand delivered after 5:00 p.m., EST, shall be deemed delivered on the following
business day. Notwithstanding the foregoing, notice, consents, waivers or other communications referred to in this Debenture may
be sent by facsimile, e-mail, or other method of delivery, but shall be deemed to have been delivered only when the sending party
has confirmed (by reply e-mail or some other form of written confirmation from the receiving party) that the notice has been received
by the other party.


 


11.2         
Entire Agreement. This Agreement, including the Exhibits and Schedules attached hereto and the documents delivered
pursuant hereto, including the Transaction Documents, set forth all the promises, covenants, agreements, conditions and understandings
between the parties hereto with respect to the subject matter hereof and thereof, and supersede all prior and contemporaneous agreements,
understandings, inducements or conditions, expressed or implied, oral or written, except as contained herein and in the Transaction
Documents.


 


11.3         
Assignment. The Buyer may at any time assign its rights in this Agreement or any of the other Transaction Documents,
or any part thereof, without the Company’s consent or approval. In addition, the Buyer may at any time sell one or more participations
in the Debentures. The Company may not sell or assign this Agreement or any of the Transaction Documents, or any portion thereof,
either voluntarily or by operation of law, nor delegate any of its duties of obligations hereunder or thereunder, without the prior
written consent of the Buyer, which consent may be withheld in Buyer’s sole and absolute discretion.


 


11.4         
Binding Effect. This Agreement shall be binding upon the parties hereto, their respective successors and permitted
assigns.


 


11.5         
Amendment. The parties hereby irrevocably agree that no attempted amendment, modification, or change of this Agreement
shall be valid and effective, unless the parties shall unanimously agree in writing to such amendment, modification or change.


 


11.6         
No Waiver. No waiver of any provision of this Agreement shall be effective, unless it is in writing and signed by
the party against whom it is asserted, and any such written waiver shall only be applicable to the specific instance to which it
relates and shall not be deemed to be a continuing or future waiver.


 


11.7         
Gender and Use of Singular and Plural. All pronouns shall be deemed to refer to the masculine, feminine, neuter,
singular or plural, as the identity of the party or parties or their personal representatives, successors and assigns may require.


 


11.8         
Counterparts. This Agreement and any amendments hereto may be executed in one or more counterparts, each of which
shall be deemed an original and all of which together will constitute one and the same instrument.


 


11.9         
Electronic Signatures. The Buyer is hereby authorized to rely upon and accept as an original for all purposes, this
Agreement, any other Transaction Document or other communication which is sent to Buyer or its counsel by facsimile, telegraphic,
..pdf, or other electronic transmission (each, a “Communication”) which Buyer or its counsel in good faith
believes has been signed by the Company and has been delivered to Buyer or its counsel by a properly authorized representative
of the Company, whether or not that is in fact the case. Notwithstanding the foregoing, the Buyer shall not be obligated to accept
any such Communication as an original and may in any instance require that an original document be submitted to Buyer in lieu of,
or in addition to, any such Communication.


 


11.10      
Headings. The article and section headings contained in this Agreement are inserted for convenience only and shall
not affect in any way the meaning or interpretation of the Agreement.


 


11.11      
Governing Law. This Agreement shall be construed in accordance with the laws of the State of Nevada, without regard
to the principles of conflicts of laws. The parties further agree that any action between them shall be heard in Clark County,
Nevada and expressly consent to the jurisdiction and venue of the State Courts sitting in Clark County, Nevada and the United States
District Court for the District of Nevada for the adjudication of any civil action asserted pursuant to this Agreement; provided,
however, nothing contained herein shall limit the Buyer’s ability to bring suit or enforce this Agreement or any other Transaction
Documents in any other jurisdiction.


 


11.12      
Further Assurances. The parties hereto will execute and deliver such further instruments and do such further acts
and things as may be reasonably required to carry out the intent and purposes of this Agreement.


 


11.13      
Survival. All covenants, agreements, representations and warranties made by the Company herein shall, notwithstanding
any investigation by the Buyer, be deemed material and relied upon by Buyer and shall survive the making and execution of this
Agreement and the Transaction Documents and the issuance of the Debentures, and shall be deemed to be continuing representations
and warranties until such time as the Company has fulfilled all of its Obligations to Buyer, the Debentures have been repaid in
full and Buyer no longer owns any of the Incentive Shares.


 


11.14      
Time is of the Essence. The parties hereby agree that time is of the essence with respect to performance of each
of the parties’ Obligations under this Agreement. The parties agree that in the event that any date on which performance
is to occur falls on a Saturday, Sunday or state or national holiday, then the time for such performance shall be extended until
the next business day thereafter occurring.


 


11.15      
Joint Preparation. The preparation of this Agreement has been a joint effort of the parties and the resulting documents
shall not, solely as a matter of judicial construction, be construed more severely against one of the parties than the other.


 


11.16      
Severability. If any one of the provisions contained in this Agreement, for any reason, shall be held invalid, illegal
or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement,
and this Agreement shall remain in full force and effect and be construed as if the invalid, illegal or unenforceable provision
had never been contained herein.


 


11.17      
No Third Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective
permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.


 


11.18      
WAIVER OF JURY TRIAL. THE BUYER AND THE COMPANY, AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL,
EACH KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES, IRREVOCABLY, THE RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY LEGAL PROCEEDING
BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT OR ANY OTHER AGREEMENT
EXECUTED OR CONTEMPLATED TO BE EXECUTED IN CONJUNCTION WITH THIS AGREEMENT, OR ANY COURSE OF CONDUCT OR COURSE OF DEALING IN WHICH
THE BUYER AND THE COMPANY ARE ADVERSE PARTIES. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE BUYER TO PURCHASE THE DEBENTURES.


 


11.19      
Compliance with Federal Law. The Company shall: (i) ensure that no Person who owns a controlling interest in or otherwise
controls the Company is or shall at any time be listed on the Specially Designated Nationals and Blocked Person List or other similar
lists maintained by the Office of Foreign Assets Control (“OFAC”), the Department of the Treasury, included
in any Executive Orders or in any other similar lists of any Governmental Authority; (ii) not use or permit the use of the proceeds
of the purchase of the Debentures to violate any of the foreign asset control regulations of OFAC or any enabling statute, Executive
Order relating thereto or any other requirements or restrictions imposed by any Governmental Authority; and (iii) comply with all
applicable Lender Secrecy Act (“BSA”) laws and regulations, as amended. As required by federal law and
Buyer’s policies and practices, Buyer may need to obtain, verify and record certain customer identification information and
documentation in connection with opening or maintaining accounts or establishing or continuing to provide services.


 


[SIGNATURES ON THE FOLLOWING PAGE]


 



     

     

    

 


 


IN WITNESS WHEREOF, the
parties hereto have caused this Agreement to be executed as of the date and year set forth above.


 


COMPANY:


 


 AQUALIV TECHNOLOGIES, INC., a Nevada corporation


 





 


 


By:_______________________________________


Name:_____________________________________


Title:______________________________________


 


Date:______________________________________


 


 


BUYER:


 


TCA GLOBAL CREDIT MASTER FUND, LP


 


By: TCA Global Credit Fund GP,
Ltd.


Its: General Partner


 


By:________________________________________


Name:______________________________________


			Title:____________________________________



 


Date:____________________________________


 


Aqua Sub and Focus are each hereby executing
this Agreement for the purpose of making and confirming all of the representations and warranties deemed made by Aqua Sub and Focus
under this Agreement (specifically Article VI hereof) pursuant to Section 6.1 of this Agreement.


 


 


AQUALIV, INC.FOCUS SYSTEMS, INC.


 


By:________________________________By:________________________________


Name:______________________________Name:_____________________________


		Title:______________________________	Title:______________________________



 


Date:_______________________________Date:_______________________________


 



     

     

    

 


 


EXHIBIT “A”


 


FORM OF DEBENTURE


 


EXHIBIT “B”


 


Form of Compliance Certificate

DISCLOSURE SCHEDULES FOR COMPANY AND ITS SUBSIDIARIES