ibii8k20100416ex4-11.htm


    
      

      

    

    EXHIBIT 4.11

     

    SECURITIES
PURCHASE AGREEMENT

    


    This
SECURITIES PURCHASE
AGREEMENT (the “Agreement”), dated as of April 16, 2010March 1, 2010, by
and between Island Breeze
International Inc.Island
Breeze International Inc., a Delaware corporation, with headquarters
located at 211 Benigno Blvd., Suite 201, Bellmawr, New Jersey 080311001 North
America Way, Suite 201 (the “Company”), and (Insert) a Delaware
corporation, with its address (Insert) (the “Buyer”).

    


    WHEREAS:

    


    A.           The
Company and the Buyer is executing and delivering this Agreement in reliance
upon the exemption from securities registration afforded by the rules and
regulations as promulgated by the United States Securities and Exchange
Commission (the “SEC”) under the Securities Act of 1933, as amended (the “1933
Act”);

    


    B.                Buyer
desires to purchase and the Company desires to issue and sell, upon the terms
and conditions set forth in this Agreement an 8% convertible note of the
Company, in the form attached hereto as Exhibit A, in the aggregate principal
amount of $85,000.0085,000.00 (together with any note(s) issued in replacement
thereof or as a dividend thereon or otherwise with respect thereto in accordance
with the terms thereof, the “Note”), convertible into shares of Class A Common
Stock, $0.0010.001 par value per share, of the Company (the “Common Stock”),
upon the terms and subject to the limitations and conditions set forth in such
Note.

    


    C.    
       The Buyer wishes to purchase, upon the
terms and conditions stated in this Agreement, such principal amount of Note as
is set forth immediately below its name on the signature pages hereto;
and

    


    NOW THEREFORE, the Company and
the Buyer severally (and not jointly) hereby agree as follows:

    


    1.           Purchase and Sale of
Note.

    


    a.  
    Purchase of
Note.  On the Closing Date (as defined below), the Company
shall issue and sell to the Buyer and the Buyer agrees to purchase from the
Company such principal amount of Note as is set forth immediately below the
Buyer’s name on the signature pages hereto.

    


    b.      Form of
Payment.  On the Closing Date (as defined
below),  the Buyer shall pay the purchase price for the Note to be
issued and sold to it at the Closing (as defined below) (the “Purchase Price”)
by wire transfer of immediately available funds to the Company, in accordance
with the Company’s written wiring instructions, against delivery of the Note in
the principal amount equal to the Purchase Price as is set forth immediately
below the Buyer’s name on the signature pages hereto, and  the Company
shall deliver such duly executed on behalf of the Company, to the Buyer, against
delivery of such Purchase Price.

    


    
      
        
           


        

        
           


          
            

          

        

        
           


        

      

    

    


    c.       Closing
Date.  Subject to the satisfaction (or written waiver) of the
conditions thereto set forth in Section 6 and Section 7 below, the date and time
of the issuance and sale of the Note pursuant to this Agreement (the “Closing
Date”) shall be 12:00 noon, Eastern Standard Time on April 16, 2010March 3,
2010, or such other mutually agreed upon time.  The closing of the
transactions contemplated by this Agreement (the “Closing”) shall occur on the
Closing Date at such location as may be agreed to by the parties.

    


    d.      Buyer’s Representations and
Warranties.  The Buyer represents and warrants to the Company
that:

     

    e.      Investment
Purpose.  As of the date hereof, the Buyer is purchasing the
Note and the shares of Common Stock issuable upon conversion of or otherwise
pursuant to the Note (including, without limitation, such additional shares of
Common Stock, if any, as are issuable  on account of interest on the Note,
 as a result of the events described in Sections 1.3 and 1.4(g) of the Note
or  in payment of the Standard Liquidated Damages Amount (as defined in
Section 2(f) below) pursuant to this Agreement, such shares of Common Stock
being collectively referred to herein as the “Conversion Shares” and,
collectively with the Note, the “Securities”) for its own account and not with a
present view towards the public sale or distribution thereof, except pursuant to
sales registered or exempted from registration under the 1933 Act; provided, however, that by
making the representations herein, the Buyer does not agree to hold any of the
Securities for any minimum or other specific term and reserves the right to
dispose of the Securities at any time in accordance with or pursuant to a
registration statement or an exemption under the 1933 Act.

    


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

    


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

    


    h.      Information.  The
Buyer and its advisors, if any, have been, and for so long as the Note remain
outstanding will continue to be, furnished with all materials relating to the
business, finances and operations of the Company and materials relating to the
offer and sale of the Securities which have been reasonably requested by the
Buyer or its advisors in writing.  The Buyer and its advisors, if any,
have been, and for so long as the Note remain outstanding will continue to be,
afforded the opportunity to ask questions of the
Company.  Notwithstanding the foregoing, the Company shall not
disclose to the Buyer any material nonpublic information.  Neither
such inquiries nor any other due diligence investigation conducted by Buyer or
any of its advisors or representatives
shall modify, amend or affect Buyer’s right to rely on the Company’s
representations and warranties contained in Section 3 below.  The
Buyer understands that its investment in the Securities involves a significant
degree of risk. The Buyer is not aware of any facts that may constitute a breach
of any of the Company's representations and warranties made
herein.

    


    
      
        
           


        

        
           


          
            

          

        

        
           


        

      

    

     

    i.      Governmental
Review.  The Buyer understands that no United States federal or
state agency or any other government or governmental agency has passed upon or
made any recommendation or endorsement of the Securities.

    


    j.      Transfer or
Re-sale.  The Buyer understands that  (i) the sale or
re-sale of the Securities has not been and is not being registered under the
1933 Act or any applicable state securities laws, and the Securities may not be
transferred unless  the Securities are sold pursuant to an effective
registration statement under the 1933 Act,  the Buyer shall have delivered
to the Company, at the cost of the Company, an opinion of counsel that shall be
in form, substance and scope customary for opinions of counsel in comparable
transactions to the effect that the Securities to be sold or transferred may be
sold or transferred pursuant to an exemption from such registration, which
opinion shall be accepted by the Company,  the Securities are sold or
transferred to an “affiliate” (as defined in Rule 144 promulgated under the 1933
Act (or a successor rule) (“Rule 144”)) of the Buyer who agrees to sell or
otherwise transfer the Securities only in accordance with this Section 2(f) and
who is an Accredited Investor,  the Securities are sold pursuant to Rule
144, or  the Securities are sold pursuant to Regulation S under the 1933
Act (or a successor rule) (“Regulation S”), and the Buyer shall have delivered
to the Company, at the cost of the Company, an opinion of counsel that shall be
in form, substance and scope customary for opinions of counsel in corporate
transactions, which opinion shall be accepted by the Company; (ii) any sale of
such Securities made in reliance on Rule 144 may be made only in accordance with
the terms of said Rule and further, if said Rule is not applicable, any re-sale
of such Securities under circumstances in which the seller (or the person
through whom the sale is made) may be deemed to be an underwriter (as that term
is defined in the 1933 Act) may require compliance with some other exemption
under the 1933 Act or the rules and regulations of the SEC thereunder; and (iii)
neither the Company nor any other person is under any obligation to register
such Securities under the 1933 Act or any state securities laws or to comply
with the terms and conditions of any exemption thereunder (in each
case).  Notwithstanding the foregoing or anything else contained
herein to the contrary, the Securities may be pledged as collateral in
connection with a bonafide margin account
or other lending arrangement.  In the event that the Company does not
accept the opinion of counsel provided by the Buyer with respect to the transfer
of Securities pursuant to an exemption from registration, such as Rule 144 or
Regulation S, within three (3) business days of delivery of the opinion to the
Company, the Company shall pay to the Buyer liquidated damages of five percent
(5%) of the outstanding amount of the Note including accrued and unpaid interest
on the Note for each 3 business-day period, prorated for partial months, in cash
or shares at the option of the Buyer (“Standard Liquidated Damages Amount”);
provided, however, that this provision shall not apply if within one (1)
business day of delivery of the opinion to the Company, the Company’s counsel
advises the
Company and the Buyer that such opinion is inconsistent with the 1933
Act.  If the Buyer elects to be pay the Standard Liquidated Damages
Amount in shares of Common Stock, such shares shall be issued at the Conversion
Price (as defined in the Note) at the time of payment.

    


    
      
        
           


        

        
           


          
            

          

        

        
           


        

      

    

     

    k.      Legends.  The
Buyer understands that the Note and, until such time as the Conversion Shares
may be sold pursuant to Rule 144 or Regulation S without any restriction as to
the number of securities as of a particular date that can then be immediately
sold, the Conversion Shares may bear a restrictive legend in substantially the
following form (and a stop-transfer order may be placed against transfer of the
certificates for such Securities):

    


    “NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE
SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS.  THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION
OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS
SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID
ACT.  NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING
ARRANGEMENT SECURED BY THE SECURITIES.”

    


    The
legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of any Security upon which it is
stamped, if, unless otherwise required by applicable state securities laws, (a)
such Security is registered for sale under an effective registration statement
filed under the 1933 Act or otherwise may be sold pursuant to Rule 144 or
Regulation S without any restriction as to the number of securities as of a
particular date that can then be immediately sold, or (b) such holder provides
the Company with an opinion of counsel, in form, substance and scope customary
for opinions of counsel in comparable transactions, to the effect that a public
sale or transfer of such Security may be made without registration under the
1933 Act, which opinion shall be accepted by the Company so that the sale or
transfer is effected or (c) such holder provides the Company with reasonable
assurances that such Security can be sold pursuant to Rule 144 or Regulation
S.  The Buyer agrees to sell all Securities, including those
represented by a certificate(s) from which the legend has been removed, in
compliance with applicable prospectus delivery requirements, if
any.


    


    
      
        
           


        

        
           


          
            

          

        

        
           


        

      

    

     

    
      l.      Authorization;
Enforcement. This Agreement has been duly and validly
authorized.  This Agreement has been duly executed and delivered on
behalf of the
Buyer, and this Agreement constitutes a valid and binding agreement of the Buyer
enforceable in accordance with its terms.

    

    


    m.      Residency.  The
Buyer is a resident of the jurisdiction set forth immediately below the Buyer’s
name on the signature pages hereto.

    


    2.           Representations and
Warranties of the Company.   Except as set forth in the in the SEC
Documents (as hereinafter defined) and in the schedules hereto, which SEC
Documents and schedules shall be deemed a part hereof and shall qualify any
representation or warranty made herein to the extent of the disclosure therein,
the Company represents and warrants to the Buyer that:

    


    a.      Organization and
Qualification.  The Company and each of its Subsidiaries (as
defined below), if any, is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction in which it is incorporated,
with full power and authority (corporate and other) to own, lease, use and
operate its properties and to carry on its business as and where now owned,
leased, used, operated and conducted.  Schedule 3(a) sets forth a list
of all of the Subsidiaries of the Company and the jurisdiction in which each is
incorporated.  The Company and each of its Subsidiaries is duly
qualified as a foreign corporation to do business and is in good standing in
every jurisdiction in which its ownership or use of property or the nature of
the business conducted by it makes such qualification necessary except where the
failure to be so qualified or in good standing would not have a Material Adverse
Effect.  “Material Adverse Effect” means any material adverse effect
on the business, operations, assets, financial condition or prospects of the
Company or its Subsidiaries, if any, taken as a whole, or on the transactions
contemplated hereby or by the agreements or instruments to be entered into in
connection herewith.  “Subsidiaries” means any corporation or other
organization, whether incorporated or unincorporated, in which the Company owns,
directly or indirectly, any equity or other ownership interest.

    


    b.      Authorization;
Enforcement.  (i) The Company has all requisite corporate power
and authority to enter into and perform this Agreement, the Note and to
consummate the transactions contemplated hereby and thereby and to issue the
Securities, in accordance with the terms hereof and thereof, (ii) the execution
and delivery of this Agreement the Note by the Company and the consummation by
it of the transactions contemplated hereby and thereby (including without
limitation, the issuance of the Note and the issuance and reservation for
issuance of the Conversion Shares issuable upon conversion or exercise thereof)
have been duly authorized by the Company’s Board of Directors and no further
consent or authorization of the Company, its Board of Directors, or its
shareholders is required, (iii) this Agreement has been duly executed and
delivered by the Company by its authorized representative, and such authorized
representative is the true and official representative with authority to sign
this Agreement and the other documents executed in connection herewith and bind
the Company
accordingly, and (iv) this Agreement constitutes, and upon execution and
delivery by the Company of the Note, each of such instruments will constitute, a
legal, valid and binding obligation of the Company enforceable against the
Company in accordance with its terms.

    


    
      
        
           


        

        
           


          
            

          

        

        
           


        

      

    

    


    c.      Capitalization.  As
of the date hereof, the authorized capital stock of the Company consists of: (i)
100,000,000 shares of Class A Common Stock, $0.0010.001 0.001par value per
share, of which 23,571,344 shares are issued and outstanding; (ii) 16,110,500
shares of Class B Common Stock, $0.001 par value per share, of which 16,110,500
shares are issued and outstanding; and (iii) 1,000,000 shares of Preferred
Stock, $0.001 par value per share, of which no shares are issued and
outstanding; no shares are reserved for issuance pursuant to the Company’s stock
option plans, no shares are reserved for issuance pursuant to securities (other
than the Note) exercisable for, or convertible into or exchangeable for shares
of Common Stock and 671,642  shares are reserved for issuance upon
conversion of the Note (subject to adjustment pursuant to the Company’s covenant
set forth in Section 4(g) below).  All of such outstanding shares of
capital stock are, or upon issuance will be, duly authorized, validly issued,
fully paid and non-assessable.  No shares of capital stock of the
Company are subject to preemptive rights or any other similar rights of the
shareholders of the Company or any liens or encumbrances imposed through the
actions or failure to act of the Company.  Except as disclosed in
Schedule 3(c), as of the effective date of this Agreement, (i) there are no
outstanding options, warrants, scrip, rights to subscribe for, puts, calls,
rights of first refusal, agreements, understandings, claims or other commitments
or rights of any character whatsoever relating to, or securities or rights
convertible into or exchangeable for any shares of capital stock of the Company
or any of its Subsidiaries, 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 and (ii) there are no anti-dilution or
price adjustment provisions contained in any security issued by the Company (or
in any agreement providing rights to security holders) that will be triggered by
the issuance of the Note or the Conversion Shares.  The Company has
furnished to the Buyer true and correct copies of the Company’s Certificate of
Incorporation as in effect on the date hereof (“Certificate of Incorporation”),
the Company’s By-laws, as in effect on the date hereof (the “By-laws”), and the
terms of all securities convertible into or exercisable for Common Stock of the
Company and the material rights of the holders thereof in respect
thereto.  The Company shall provide the Buyer with a written update of
this representation signed by the Company’s Chief Executive on behalf of the
Company as of the Closing Date.

    


    d.      Issuance of
Shares.  The Conversion Shares are duly authorized and reserved
for issuance and, upon conversion of the Note in accordance with its respective
terms, will be validly issued, fully paid and non-assessable, and free from all
taxes, liens, claims and encumbrances with respect to the issue thereof and
shall not be subject to preemptive rights or other similar rights of
shareholders of the Company and will not impose personal liability upon the
holder thereof.

    


    e.      Acknowledgment of
Dilution.  The Company understands and acknowledges the
potentially dilutive effect to the Common Stock upon the issuance of the
Conversion Shares upon conversion of the Note.  The Company further
acknowledges that its obligation to issue Conversion Shares upon conversion of
the Note in accordance with this Agreement, the Note is absolute and
unconditional regardless of the dilutive effect that such issuance may have on
the ownership interests of other shareholders of the
Company.

    


    
      
        
           


        

        
           


          
            

          

        

        
           


        

      

    

     

    f.      No
Conflicts.  The execution, delivery and performance of this
Agreement, the Note by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby (including, without limitation, the
issuance and reservation for issuance of the Conversion Shares) will not (i)
conflict with or result in a violation of any provision of the Certificate of
Incorporation or By-laws or (ii) violate or conflict with, or result in a breach
of any provision of, or constitute a default (or an event which with notice or
lapse of time or both could become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture, patent, patent license or instrument to which the Company
or any of its Subsidiaries is a party, or (iii)  result in a violation
of any law, rule, regulation, order, judgment or decree (including federal and
state securities laws and regulations and regulations of any self-regulatory
organizations to which the Company or its securities are subject) applicable to
the Company or any of its Subsidiaries or by which any property or asset of the
Company or any of its Subsidiaries is bound or affected (except for such
conflicts, defaults, terminations, amendments, accelerations, cancellations and
violations as would not, individually or in the aggregate, have a Material
Adverse Effect).  Neither the Company nor any of its Subsidiaries is
in violation of its Certificate of Incorporation, By-laws or other
organizational documents and neither the Company nor any of its Subsidiaries is
in default (and no event has occurred which with notice or lapse of time or both
could put the Company or any of its Subsidiaries in default) under, and neither
the Company nor any of its Subsidiaries has taken any action or failed to take
any action that would give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture or instrument to which
the Company or any of its Subsidiaries is a party or by which any property or
assets of the Company or any of its Subsidiaries is bound or affected, except
for possible defaults as would not, individually or in the aggregate, have a
Material Adverse Effect. The businesses of the Company and its Subsidiaries, if
any, are not being conducted, and shall not be conducted so long as a Buyer owns
any of the Securities, in violation of any law, ordinance or regulation of any
governmental entity that would have a Material Adverse Effect on the
business.  Except as specifically contemplated by this Agreement and
as required under the 1933 Act and any applicable state securities laws, the
Company is not required to obtain any consent, authorization or order of, or
make any filing or registration with, any court, governmental agency, regulatory
agency, self regulatory organization or stock market or any third party in order
for it to execute, deliver or perform any of its obligations under this
Agreement, the Note in accordance with the terms hereof or thereof or to issue
and sell the Note in accordance with the terms hereof and to issue the
Conversion Shares upon conversion of the Note.  All consents,
authorizations, orders, filings and registrations which the Company is required
to obtain pursuant to the preceding sentence have been obtained or effected on
or prior to the date hereof.  The Company is not in violation of the
listing requirements
of the Over-the-Counter Bulletin Board (the “OTCBB”) and does not reasonably
anticipate that the Common Stock will be delisted by the OTCBB in the
foreseeable future.  The Company and its Subsidiaries are unaware of
any facts or circumstances which might give rise to any of the
foregoing.

    


    
      
        
           


        

        
           


          
            

          

        

        
           


        

      

    

     

    g.      SEC Documents; Financial
Statements.  The Company has timely filed all reports,
schedules, forms, statements and other documents required to be filed by it with
the SEC pursuant to the reporting requirements of the Securities Exchange Act of
1934, as amended (the “1934 Act”) (all of the foregoing filed prior to the date
hereof and all exhibits included therein and financial statements and schedules
thereto and documents (other than exhibits to such documents) incorporated by
reference therein, being hereinafter referred to herein as the “SEC
Documents”).  The Company has delivered to the Buyer true and complete
copies of the SEC Documents, except for such exhibits and incorporated
documents.  As of their respective dates, the SEC Documents complied
in all material respects with the requirements of the 1934 Act and the rules and
regulations of the SEC promulgated thereunder applicable to the SEC Documents,
and none of the SEC Documents, at the time they were filed with the SEC,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary 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 for
such statements as have been amended or updated in subsequent filings prior the
date hereof).  As of their respective dates, the financial statements
of the Company included in the SEC Documents complied as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto.  Such financial
statements have been prepared in accordance with United States generally
accepted accounting principles, consistently applied, during the periods
involved  and fairly present in all material respects the consolidated
financial position of the Company and its consolidated Subsidiaries as of the
dates thereof and the consolidated results of their operations and cash flows
for the periods then ended (subject, in the case of unaudited statements, to
normal year-end audit adjustments).  Except as set forth in the
financial statements of the Company included in the SEC Documents, the Company
has no liabilities, contingent or otherwise, other than (i) liabilities incurred
in the ordinary course of business subsequent to September 30, 2009, and (ii)
obligations under contracts and commitments incurred in the ordinary course of
business and not required under generally accepted accounting principles to be
reflected in such financial statements, which, individually or in the aggregate,
are not material to the financial condition or operating results of the Company.
The Company is subject to the reporting requirements of the 1934
Act.

    


    h.      Absence of Certain
Changes.  Since September 30, 2009, there has been no material adverse change and
no material adverse development in the assets, liabilities, business,
properties, operations, financial condition, results of operations, prospects or
1934 Act reporting status of the Company or any of its
Subsidiaries.

    


    
      
        
           


        

        
           


          
            

          

        

        
           


        

      

    

    


    i.        Absence of
Litigation.  There is no action, suit, claim, proceeding,
inquiry or investigation before or by any court, public board, government
agency, self-regulatory organization or body pending or, to the knowledge of the
Company or any of its Subsidiaries, threatened against or affecting the Company
or any of its Subsidiaries, or their officers or directors in their capacity as
such, that could have a Material Adverse Effect.  Schedule 3(i)
contains a complete list and summary description of any pending or, to the
knowledge of the Company, threatened proceeding against or affecting the Company
or any of its Subsidiaries, without regard to whether it would have a Material
Adverse Effect.  The Company and its Subsidiaries are unaware of any
facts or circumstances which might give rise to any of the
foregoing.

    


    j.    
  Patents,
Copyrights, etc.  The Company and each of its Subsidiaries owns
or possesses the requisite licenses or rights to use all patents, patent
applications, patent rights, inventions, know-how, trade secrets, trademarks,
trademark applications, service marks, service names, trade names and copyrights
(“Intellectual Property”) necessary to enable it to conduct its business as now
operated (and, as presently contemplated to be operated in the future); there is
no claim or action by any person pertaining to, or proceeding pending, or to the
Company’s knowledge threatened, which challenges the right of the Company or of
a Subsidiary with respect to any Intellectual Property necessary to enable it to
conduct its business as now operated (and, as presently contemplated to be
operated in the future); to the best of the Company’s knowledge, the Company’s
or its Subsidiaries’ current and intended products, services and processes do
not infringe on any Intellectual Property or other rights held by any person;
and the Company is unaware of any facts or circumstances which might give rise
to any of the foregoing.  The Company and each of its Subsidiaries
have taken reasonable security measures to protect the secrecy, confidentiality
and value of their Intellectual Property.

    


    k.      No Materially Adverse
Contracts, Etc.  Neither the Company nor any of its
Subsidiaries is subject to any charter, corporate or other legal restriction, or
any judgment, decree, order, rule or regulation which in the judgment of the
Company’s officers has or is expected in the future to have a Material Adverse
Effect.  Neither the Company nor any of its Subsidiaries is a party to
any contract or agreement which in the judgment of the Company’s officers has or
is expected to have a Material Adverse Effect.

    


    l.   
   Tax
Status. Except as set forth in Schedule 3.l, the Company and each of its
Subsidiaries has made or filed all federal, state and foreign income and all
other tax returns, reports and declarations required by any jurisdiction to
which it is subject (unless and only to the extent that the Company and each of
its Subsidiaries has set aside on its books provisions reasonably adequate for
the payment of all unpaid and unreported taxes) and has paid all taxes and other
governmental assessments and charges that are material in amount, shown or
determined to be due on such returns, reports and declarations, except those
being contested in good faith and has set aside on its books provisions
reasonably adequate for the payment of all taxes for periods subsequent to the
periods to which such returns, reports or declarations apply.  There
are no unpaid taxes in any
material amount claimed to be due by the taxing authority of any jurisdiction,
and the officers of the Company know of no basis for any such
claim.  The Company has not executed a waiver with respect to the
statute of limitations relating to the assessment or collection of any foreign,
federal, state or local tax.  None of the Company’s tax returns is
presently being audited by any taxing authority.

    


    
      
        
           


        

        
           


          
            

          

        

        
           


        

      

    

     

    m.      Certain
Transactions.  Except for arm’s length transactions pursuant to
which the Company or any of its Subsidiaries makes payments in the ordinary
course of business upon terms no less favorable than the Company or any of its
Subsidiaries could obtain from third parties and other than the grant of stock
options disclosed on Schedule 3(c), none of the officers, directors, or
employees of the Company is presently a party to any transaction with the
Company or any of its Subsidiaries (other than for services as employees,
officers and directors), including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for rental of real
or personal property to or from, or otherwise requiring payments to or from any
officer, director or such employee or, to the knowledge of the Company, any
corporation, partnership, trust or other entity in which any officer, director,
or any such employee has a substantial interest or is an officer, director,
trustee or partner.

    


    n.      Disclosure.  All
information relating to or concerning the Company or any of its Subsidiaries set
forth in this Agreement and provided to the Buyer pursuant to Section 2(d)
hereof and otherwise in connection with the transactions contemplated hereby is
true and correct in all material respects and the Company has not knowingly
omitted to state any material fact necessary in order to make the statements
made herein or therein, in light of the circumstances under which they were
made, not misleading.  No event or circumstance has occurred or exists
with respect to the Company or any of its Subsidiaries or its or their business,
properties, prospects, operations or financial conditions, which, under
applicable law, rule or regulation, requires public disclosure or announcement
by the Company but which has not been so publicly announced or disclosed
(assuming for this purpose that the Company’s reports filed under the 1934 Act
are being incorporated into an effective registration statement filed by the
Company under the 1933 Act).

    


    o.      Acknowledgment Regarding
Buyer’ Purchase of Securities.  The Company acknowledges and
agrees that the Buyer is acting solely in the capacity of arm’s length
purchasers with respect to this Agreement and the transactions contemplated
hereby.  The Company further acknowledges that no Buyer is 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
statement made by any Buyer or any of their respective representatives or agents
in connection with this Agreement and the transactions contemplated hereby is
not advice or a recommendation and is merely incidental to the Buyer’ purchase
of the Securities.  The Company further represents to the Buyer that
the Company’s decision to enter into this Agreement has been based solely on the
independent evaluation of the Company and its representatives.

    


    
      
        
           


        

        
           


          
            

          

        

        
           


        

      

    

    


    p.      No Integrated
Offering.  Neither the Company, nor any of its affiliates, nor
any person acting on its or their behalf, has knowingly directly or indirectly
made any offers or sales in any security or solicited any offers to buy any
security under circumstances that would require registration under the 1933 Act
of the issuance of the Securities to the Buyer.  The issuance of the
Securities to the Buyer will not be integrated with any other issuance of the
Company’s securities (past, current or future) for purposes of any shareholder
approval provisions applicable to the Company or its securities.

    


    q.      No
Brokers.  Except as set forth on Schedule 3(q), the Company has
taken no action which would give rise to any claim by any person for brokerage
commissions, transaction fees or similar payments relating to this Agreement or
the transactions contemplated hereby.

    


    r.      Permits;
Compliance.  The Company and each of its Subsidiaries is in
possession of all franchises, grants, authorizations, licenses, permits,
easements, variances, exemptions, consents, certificates, approvals and orders
necessary to own, lease and operate its properties and to carry on its business
as it is now being conducted (collectively, the “Company Permits”), and there is
no action pending or, to the knowledge of the Company, threatened regarding
suspension or cancellation of any of the Company Permits.  Neither the
Company nor any of its Subsidiaries is in conflict with, or in default or
violation of, any of the Company Permits, except for any such conflicts,
defaults or violations which, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect.  Since
September 30, 2009September 30, 2009, neither the Company nor any of its
Subsidiaries has received any notification with respect to possible conflicts,
defaults or violations of applicable laws, except for notices relating to
possible conflicts, defaults or violations, which conflicts, defaults or
violations would not have a Material Adverse Effect.

    


    s.      Environmental
Matters.

    


    (i)              There
are, to the Company’s knowledge, with respect to the Company or any of its
Subsidiaries or any predecessor of the Company, no past or present violations of
Environmental Laws (as defined below), releases of any material into the
environment, actions, activities, circumstances, conditions, events, incidents,
or contractual obligations which may give rise to any common law environmental
liability or any liability under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 or similar federal, state, local or
foreign laws and neither the Company nor any of its Subsidiaries has received
any notice with respect to any of the foregoing, nor is any action pending or,
to the Company’s knowledge, threatened in connection with any of the
foregoing.  The term “Environmental Laws” means all federal, state,
local or foreign laws relating to pollution or protection of human health or the
environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata), including, without limitation,
laws relating to emissions, discharges, releases or threatened releases of
chemicals, pollutants contaminants, or toxic or hazardous substances or wastes
(collectively, “Hazardous Materials”) into the environment, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials, as well as all authorizations,
codes, decrees, demands or demand letters, injunctions, judgments, licenses,
notices or notice letters, orders, permits, plans or regulations issued,
entered, promulgated or approved thereunder.

    


    
      
        
           


        

        
           


          
            

          

        

        
           


        

      

    

    


    


    (ii)              Other
than those that are or were stored, used or disposed of in compliance with
applicable law, no Hazardous Materials are contained on or about any real
property currently owned, leased or used by the Company or any of its
Subsidiaries, and no Hazardous Materials were released on or about any real
property previously owned, leased or used by the Company or any of its
Subsidiaries during the period the property was owned, leased or used by the
Company or any of its Subsidiaries, except in the normal course of the Company’s
or any of its Subsidiaries’ business.

    


    (iii)              There
are no underground storage tanks on or under any real property owned, leased or
used by the Company or any of its Subsidiaries that are not in compliance with
applicable law.

     
 

    t.      Title to
Property.  The Company and its Subsidiaries have good and
marketable title in fee simple to all real property and good and marketable
title to all personal property owned by them which is material to the business
of the Company and its Subsidiaries, in each case free and clear of all liens,
encumbrances and defects except such as are described in Schedule 3(t) or such
as would not have a Material Adverse Effect.  Any real property and
facilities held under lease by the Company and its Subsidiaries are held by them
under valid, subsisting and enforceable leases with such exceptions as would not
have a Material Adverse Effect.

    


    u.      Insurance.  Within
15 days following the date hereof, the Company and each of its Subsidiaries
shall be insured by insurers of recognized financial responsibility against such
losses and risks and in such amounts as management of the Company believes to be
prudent and customary in the businesses in which the Company and its
Subsidiaries are engaged.

    


    v.      Internal Accounting
Controls.  The Company and each of its Subsidiaries maintain a
system of internal accounting controls sufficient, in the judgment of the
Company’s board of directors, to provide reasonable assurance that (i)
transactions are executed in accordance with management’s general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles 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.

    


    w.      Foreign Corrupt
Practices.  Neither the Company, nor any of its Subsidiaries,
nor any director, officer, agent, employee or other person acting on behalf of
the Company or any Subsidiary has, in the course of his actions for, or on
behalf of, the Company, knowingly used any corporate funds for any unlawful
contribution,
gift, entertainment or other unlawful expenses relating to political activity;
made any direct or indirect unlawful payment to any foreign or domestic
government official or employee from corporate funds; violated or is in
violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as
amended, or made any bribe, rebate, payoff, influence payment, kickback or other
unlawful payment to any foreign or domestic government official or
employee.


    
      
        
           


        

        
           


          
            

          

        

        
           


        

      

    

     

    x.      Solvency.  The
Company (after giving effect to the transactions contemplated by this Agreement)
is solvent (i.e., its assets have
a fair market value in excess of the amount required to pay its probable
liabilities on its existing debts as they become absolute and matured) and ,
except as set forth on Schedule 3.x, currently the Company has no information
that would lead it to reasonably conclude that the Company would not, after
giving effect to the transaction contemplated by this Agreement, have the
ability to, nor does it intend to take any action that would impair its ability
to, pay its debts from time to time incurred in connection therewith as such
debts mature.

    


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

    


    z.      Breach of Representations
and Warranties by the Company.  If the Company materially
breaches any of the representations or warranties set forth in this Section 3,
and in addition to any other remedies available to the Buyer pursuant to this
Agreement, the Company shall pay to the Buyer the Standard Liquidated Damages
Amount in cash or in shares of Common Stock at the option of the Company, until
such breach is cured.  Notwithstanding the above, the Company’s
obligation to pay Standard Liquidated for any breach or resulting from an
inaccurate representation made by the Company in Section 3 shall not be due if
the Buyer has knowledge of that inaccuracy prior to the Closing.  If
the Company elects to pay the Standard Liquidated Damages Amounts in shares of
Common Stock, such shares shall be issued at the Conversion Price at the time of
payment.

    


    3.           COVENANTS.

    


    a.      Best
Efforts.  The parties shall use their best efforts to satisfy
timely each of the conditions described in Section 6 and 7 of this
Agreement.

    


    b.      Form D; Blue Sky
Laws.  The Company agrees to file a Form D with respect to the
Securities as required under Regulation D and to provide a copy thereof to the
Buyer promptly after such filing.  The Company shall, on or before the
Closing Date, take such action as the Company shall reasonably determine is
necessary to qualify the Securities for sale to the Buyer at the applicable
closing pursuant to this Agreement under applicable securities or “blue sky”
laws of the states of the United States
(or to obtain an exemption from such qualification), and shall provide evidence
of any such action so taken to the Buyer on or prior to the Closing
Date.

    


    
      
        
           


        

        
           


          
            

          

        

        
           


        

      

    

     

    c.      Use of
Proceeds.  The Company shall use the proceeds from the sale of
the Note in the manner set forth in Schedule 4(d) attached hereto and made a
part hereof and shall not, directly or indirectly, use such proceeds for any
loan to or investment in any other corporation, partnership, enterprise or other
person (except in connection with its currently existing direct or indirect
Subsidiaries).

    


    d.      Expenses.  At
the Closing, the Company shall reimburse Buyer for expenses incurred by them in
connection with the negotiation, preparation, execution, delivery and
performance of this Agreement and the other agreements to be executed in
connection herewith (“Documents”), including, without limitation, reasonable
attorneys’ and consultants’ fees and expenses, transfer agent fees, fees for
stock quotation services, fees relating to any amendments or modifications of
the Documents or any consents or waivers of provisions in the Documents, fees
for the preparation of opinions of counsel, escrow fees, and costs of
restructuring the transactions contemplated by the Documents.  When
possible, the Company must pay these fees directly, otherwise the Company must
make immediate payment for reimbursement to the Buyer for all fees and expenses
immediately upon written notice by the Buyer or the submission of an invoice by
the Buyer Notwithstanding anything herein to the contrary, the Company’s
obligation to reimburse Buyer’ expenses shall be $2,500.

    


    e.      Financial
Information.  The Company agrees to send or make available the
following reports to the Buyer until the Buyer transfers, assigns, or sells all
of the Securities:  within ten (10) days after the filing with the SEC, a
copy of its Annual Report on Form 10-K its Quarterly Reports on Form 10-Q and
any Current Reports on Form 8-K;  within one (1) day after release, copies
of all press releases issued by the Company or any of its Subsidiaries; and
 contemporaneously with the making available or giving to the shareholders
of the Company, copies of any notices or other information the Company makes
available or gives to such shareholders.

    


    f.       Authorization and
Reservation of Shares.  The Company shall at all times have
authorized, and reserved for the purpose of issuance, a sufficient number of
shares of Common Stock to provide for the full conversion or exercise of the
outstanding Note and issuance of the Conversion Shares in connection therewith
(based on the Conversion Price of the Note in effect from time to time) and as
otherwise required by the Note.  The Company shall not reduce the
number of shares of Common Stock reserved for issuance upon conversion of Note
without the consent of the Buyer.  The Company shall at all times
maintain the number of shares of Common Stock so reserved for issuance at an
amount (“Reserved Amount”) equal to three times the number that is then actually
issuable upon full conversion of the Note and Additional Note (based on the
Conversion Price of the Note in effect from time to time).  If at any
time the number of shares of Common Stock authorized and reserved for issuance
(“Authorized and Reserved Shares”) is below the Reserved Amount, the Company
will promptly take all corporate action
necessary to authorize and reserve a sufficient number of shares, including,
without limitation, calling a special meeting of shareholders to authorize
additional shares to meet the Company’s obligations under this Section 4(g), in
the case of an insufficient number of authorized shares, obtain shareholder
approval of an increase in such authorized number of shares, and voting the
management shares of the Company in favor of an increase in the authorized
shares of the Company to ensure that the number of authorized shares is
sufficient to meet the Reserved Amount.  If the Company fails to
obtain such shareholder approval within thirty (30) days following the date on
which the number of Reserved Amount exceeds the Authorized and Reserved Shares,
the Company shall pay to the Buyer the Standard Liquidated Damages Amount, in
cash or in shares of Common Stock at the option of the Buyer.  If the
Buyer elects to be paid the Standard Liquidated Damages Amount in shares of
Common Stock, such shares shall be issued at the Conversion Price at the time of
payment.  In order to ensure that the Company has authorized a
sufficient amount of shares to meet the Reserved Amount at all times, the
Company must, at the request of the Buyer, deliver to the Buyer at the end of
the month covered by the requests a list detailing (1) the current amount of
shares authorized by the Company and reserved for the Buyer; and (2) amount of
shares issuable upon conversion of the Note and as payment of interest accrued
on the Note for one year.

    


    
      
        
           


        

        
           


          
            

          

        

        
           


        

      

    

     

    g.      Listing.  The
Company shall promptly secure the listing of the Conversion Shares upon each
national securities exchange or automated quotation system, if any, upon which
shares of Common Stock are then listed (subject to official notice of issuance)
and, so long as any Buyer owns any of the Securities, shall maintain, so long as
any other shares of Common Stock shall be so listed, such listing of all
Conversion Shares from time to time issuable upon conversion of the
Note.  The Company will obtain and, so long as any Buyer owns any of
the Securities, maintain the listing and trading of its Common Stock on the
OTCBB or any equivalent replacement exchange, the Nasdaq National Market
(“Nasdaq”), the Nasdaq SmallCap Market (“Nasdaq SmallCap”), the New York Stock
Exchange (“NYSE”), or the American Stock Exchange (“AMEX”) and will comply in
all respects with the Company’s reporting, filing and other obligations under
the bylaws or rules of the Financial Industry Regulatory Authority (“FINRA”) and
such exchanges, as applicable.  The Company shall promptly provide to
the Buyer copies of any notices it receives from the OTCBB and any other
exchanges or quotation systems on which the Common Stock is then listed
regarding the continued eligibility of the Common Stock for listing on such
exchanges and quotation systems.

    


    h.      Corporate
Existence.  So long as a Buyer beneficially owns any Note, the
Company shall maintain its corporate existence and shall not sell all or
substantially all of the Company’s assets, except in the event of a merger or
consolidation or sale of all or substantially all of the Company’s assets, where
the surviving or successor entity in such transaction (i) assumes the Company’s
obligations hereunder and under the agreements and instruments entered into in
connection herewith and (ii) is a publicly traded corporation whose Common Stock
is listed for trading on the OTCBB, Nasdaq, Nasdaq SmallCap, NYSE or
AMEX.

    


    
      
        
           


        

        
           


          
            

          

        

        
           


        

      

    

    


    i.       No
Integration.  The Company shall not make any offers or sales of
any security (other than the Securities) under circumstances that would require
registration of the Securities being offered or sold hereunder under the 1933
Act or cause the offering of the Securities to be integrated with any other
offering of securities by the Company for the purpose of any stockholder
approval provision applicable to the Company or its securities.

    


    j.    
  Breach of
Covenants.  If the Company breaches any of the covenants set
forth in this Section 4, and in addition to any other remedies available to the
Buyer pursuant to this Agreement, the Company shall pay to the Buyer the
Standard Liquidated Damages Amount, in cash or in shares of Common Stock at the
option of Buyer, until such breach is cured.  Notwithstanding the
above, the Company’s obligation to pay Standard Liquidated for any breach, shall
not be due if the Buyer has knowledge of the breach prior to the
Closing.  If the Buyer elects to pay the Standard Liquidated Damages
Amount in shares, such shares shall be issued at the Conversion Price at the
time of payment.

    


    k.      Failure to Comply with the
1934 Act.  So long as the Buyer beneficially owns the Note, the
Company shall comply with the reporting requirements of the 1934 Act; and the
Company shall continue to be subject to the reporting requirements of the 1934
Act.

    


    l.      
Trading
Activities.  Neither the Buyer nor their affiliates has an open
short position in the Common Stock of the Company and the Buyer agree that they
shall not, and that they will cause their affiliates not to, engage in any short
sales of or hedging transactions with respect to the Common Stock of the
Company.

    


    4.           Transfer Agent
Instructions.  The Company shall issue irrevocable instructions
to its transfer agent to issue certificates, registered in the name of the Buyer
or its nominee, for the Conversion Shares in such amounts as specified from time
to time by the Buyer to the Company upon conversion of the Note in accordance
with the terms thereof (the “Irrevocable Transfer Agent
Instructions”).  Prior to registration of the Conversion Shares under
the 1933 Act or the date on which the Conversion Shares may be sold pursuant to
Rule 144 without any restriction as to the number of Securities as of a
particular date that can then be immediately sold, all such certificates shall
bear the restrictive legend specified in Section 2(g) of this
Agreement.  The Company warrants that no instruction other than the
Irrevocable Transfer Agent Instructions referred to in this Section 5, and stop
transfer instructions to give effect to Section 2(f) hereof (in the case of the
Conversion Shares, prior to registration of the Conversion Shares under the 1933
Act or the date on which the Conversion Shares may be sold pursuant to Rule 144
without any restriction as to the number of Securities as of a particular date
that can then be immediately sold), will be given by the Company to its transfer
agent and that the Securities shall otherwise be freely transferable on the
books and records of the Company as and to the extent provided in this
Agreement.  Nothing in this Section shall affect in any way the
Buyer’s obligations and agreement set forth in Section 2(g) hereof to comply
with all applicable prospectus delivery requirements, if any, upon re-sale of
the Securities.  If a Buyer provides the Company, at the cost of the
Company, with (i) an opinion of counsel in form, substance and scope customary
for opinions in comparable transactions, to the effect that a public sale or
transfer
of such Securities may be made without registration under the 1933 Act and such
sale or transfer is effected or (ii) the Buyer provides reasonable assurances
that the Securities can be sold pursuant to Rule 144, the Company shall permit
the transfer, and, in the case of the Conversion Shares, promptly instruct its
transfer agent to issue one or more certificates, free from restrictive legend,
in such name and in such denominations as specified by the Buyer.  The
Company acknowledges that a breach by it of its obligations hereunder will cause
irreparable harm to the Buyer, by vitiating the intent and purpose of the
transactions contemplated hereby.  Accordingly, the Company
acknowledges that the remedy at law for a breach of its obligations under this
Section 5 may be inadequate and agrees, in the event of a breach or threatened
breach by the Company of the provisions of this Section, that the Buyer shall be
entitled, in addition to all other available remedies, to an injunction
restraining any breach and requiring immediate transfer, without the necessity
of showing economic loss and without any bond or other security being
required.

    


    
      
        
           


        

        
           


          
            

          

        

        
           


        

      

    

     

    5.           Conditions to the Company’s
Obligation to Sell.  The obligation of the Company hereunder to
issue and sell the Note to a Buyer at the Closing is subject to the
satisfaction, at or before the Closing Date of each of the following conditions
thereto, 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:

    


    a.      The
Buyer shall have executed this Agreement and delivered the same to the
Company.

    


    b.      The
Buyer shall have delivered the Purchase Price in accordance with Section 1(b)
above.

    


    c.      The
representations and warranties of the applicable Buyer shall be true and correct
in all material respects 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 applicable 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 applicable Buyer at or prior to the Closing Date.

    


    d.      No
litigation, statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or endorsed by or in
any court or governmental authority of competent jurisdiction or any
self-regulatory organization having authority over the matters contemplated
hereby which prohibits the consummation of any of the transactions contemplated
by this Agreement.

    


    6.           Conditions to The Buyer’s
Obligation to Purchase.  The obligation of the Buyer hereunder
to purchase the Note at the Closing is subject to the satisfaction, at or before
the Closing Date of each of the following conditions, provided that these
conditions are for the Buyer’s sole benefit and may be waived by the Buyer at
any time in its sole discretion:

    


    
      
        
           


        

        
           


          
            

          

        

        
           


        

      

    

    


    a.      The
Company shall have executed this Agreement and delivered the same to the
Buyer.

    


    b.      The
Company shall have delivered to the Buyer duly executed Note (in such
denominations as the Buyer shall request) in accordance with Section 1(b)
above.

    


    c.      The
Irrevocable Transfer Agent Instructions, in form and substance satisfactory to a
majority-in-interest of the Buyer, shall have been delivered to and acknowledged
in writing by the Company’s Transfer Agent.

    


    d.      The
representations and warranties of the Company shall be true and correct in all
material respects as of the date when made and as of the Closing Date as though
made at such 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.  The Buyer shall have received a
certificate or certificates, executed by the chief executive officer of the
Company, dated as of the Closing Date, to the foregoing effect and as to such
other matters as may be reasonably requested by the Buyer including, but not
limited to certificates with respect to the Company’s Certificate of
Incorporation, By-laws and Board of Directors’ resolutions relating to the
transactions contemplated hereby.

    


    e.      No
litigation, statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or endorsed by or in
any court or governmental authority of competent jurisdiction or any
self-regulatory organization having authority over the matters contemplated
hereby which prohibits the consummation of any of the transactions contemplated
by this Agreement.

    


    f.      No
event shall have occurred which could reasonably be expected to have a Material
Adverse Effect on the Company including but not limited to a change in the 1934
Act reporting status of the Company or the failure of the Company to be timely
in its 1934 Act reporting obligations.

    


    g.      The
Conversion Shares shall have been authorized for quotation on the OTCBB and
trading in the Common Stock on the OTCBB shall not have been suspended by the
SEC or the OTCBB.

    


    h.      The
Buyer shall have received an officer’s certificate described in Section 3(c)
above, dated as of the Closing Date.

     

    7.           Governing Law;
Miscellaneous.

    


    a.      Governing
Law.  This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without regard to principles
of conflicts of laws.  Any action brought by either party against the
other concerning the transactions contemplated by this Agreement shall be
brought only in the state courts of New York or in the federal courts located in
the state and county of Nassau.  The parties to this Agreement hereby
irrevocably waive any objection to jurisdiction and venue of any action
instituted hereunder and shall not assert any defense based on lack of
jurisdiction or venue or based upon forum non
conveniens.  The Company and Buyer waive trial by
jury.  The prevailing party shall be entitled to recover from the
other party its reasonable attorney's fees and costs.  In the event
that any provision of this Agreement or any other agreement delivered in
connection herewith is invalid or unenforceable under any applicable statute or
rule of law, then such provision shall be deemed inoperative to the extent that
it may conflict therewith and shall be deemed modified to conform with such
statute or rule of law.  Any such provision which may prove invalid or
unenforceable under any law shall not affect the validity or enforceability of
any other provision of any agreement.   Each party hereby
irrevocably waives personal service of process and consents to process being
served in any suit, action or proceeding in connection with this Agreement or
any other Transaction Document by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to such party
at the address in effect for notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof.  Nothing contained herein shall be deemed to limit in any way
any right to serve process in any other manner permitted by
law.


    
      
        
           


        

        
           


          
            

          

        

        
           


        

      

    

     

    b.      Counterparts; Signatures by
Facsimile.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other
party.  This Agreement, once executed by a party, may be delivered to
the other party hereto by facsimile transmission of a copy of this Agreement
bearing the signature of the party so delivering this Agreement.

    


    c.      Headings.  The
headings of this Agreement are for convenience of reference only and shall not
form part of, or affect the interpretation of, this Agreement.

    


    d.      Severability.  In
the event that any provision of this Agreement is invalid or unenforceable under
any applicable statute or rule of law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be deemed
modified to conform with such statute or rule of law.  Any provision
hereof which may prove invalid or unenforceable under any law shall not affect
the validity or enforceability of any other provision hereof.

    


    e.      Entire Agreement;
Amendments.  This Agreement and the instruments referenced
herein contain the entire understanding of the parties with respect to the
matters covered herein and therein and, except as specifically set forth herein
or therein, neither the Company nor the Buyer makes any representation,
warranty, covenant
or undertaking with respect to such matters.  No provision of this
Agreement may be waived or amended other than by an instrument in writing signed
by the majority in interest of the Buyer.

    


    
      
        
           


        

        
           


          
            

          

        

        
           


        

      

    

     

    f.      Notices.  All
notices, demands, requests, consents, approvals, and other communications
required or permitted hereunder shall be in writing and, unless otherwise
specified herein, shall be (i) personally served, (ii) deposited in the mail,
registered or certified, return receipt requested, postage prepaid, (iii)
delivered by reputable air courier service with charges prepaid, or (iv)
transmitted by hand delivery, telegram, or facsimile, addressed as set forth
below or to such other address as such party shall have specified most recently
by written notice.  Any notice or other communication required or
permitted to be given hereunder shall be deemed effective (a) upon hand delivery
or delivery by facsimile, with accurate confirmation generated by the
transmitting facsimile machine, at the address or number designated below (if
delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received) or (b) on the second business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur.  The
addresses for such communications shall be:

    


    If to the
Company, to:

    Island
Breeze International Inc.

    1001
North America Way

    Suite
201

    Island
Breeze International, Inc.Miami, FL 33132

    Attn:
Bradley T. Prader Bradley T. Prader, President

    211
Benigno Blvd., Suite 201

    Bellmawr,
New Jersey 08031

    Attn:           Bradley
T. Prader

    Chairman,
President, CEO

    facsimile:
[enter fax number]

    


    With a
copy by fax only to (which copy shall not constitute notice):

    Eaton
& Van Winkle LLP

    Attn:
Joseph L. Cannella, Esq.

    3 Park
Avenue

    New York,
NY 10016

    facsimile:
(212) 779-9928

    


    If to the
Buyer:

    


    (INSERT)

    


    With a
copy by fax only to (which copy shall not constitute notice):

    


    (INSERT)

    


    
      
        
           


        

        
           


          
            

          

        

        
           


        

      

    

     

    Each
party shall provide notice to the other party of any change in
address.

    


    g.      Successors and
Assigns.  This Agreement shall be binding upon and inure to the
benefit of the parties and their successors and assigns.  Neither the
Company nor any Buyer shall assign this Agreement or any rights or obligations
hereunder without the prior written consent of the
other.  Notwithstanding the foregoing, subject to Section 2(f),
any Buyer may assign its rights hereunder to any person that purchases
Securities in a private transaction from a Buyer or to any of its “affiliates,”
as that term is defined under the 1934 Act, without the consent of the
Company.

    


    h.      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.

    


    i.  
    Survival.  The
representations and warranties of the Company and the agreements and covenants
set forth in this Agreement shall survive the closing hereunder notwithstanding
any due diligence investigation conducted by or on behalf of the
Buyer.  The Company agrees to indemnify and hold harmless each of the
Buyer and all their officers, directors, employees and agents for loss or damage
arising as a result of or related to any breach or alleged breach by the Company
of any of its representations, warranties and covenants set forth in this
Agreement or any of its covenants and obligations under this Agreement,
including advancement of expenses as they are incurred.

    


    j.      
Publicity.  The
Company, and each of the Buyer shall have the right to review a reasonable
period of time before issuance of any press releases, SEC, OTCBB or FINRA
filings, or any other public statements with respect to the transactions
contemplated hereby; provided, however, that the
Company shall be entitled, without the prior approval of each of the Buyer, to
make any press release or SEC, OTCBB (or other applicable trading market) or
FINRA filings with respect to such transactions as is required by applicable law
and regulations (although each of the Buyer shall be consulted by the Company in
connection with any such press release prior to its release and shall be
provided with a copy thereof and be given an opportunity to comment
thereon).

    


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

    


    l.    
  No Strict
Construction.  The language used in this Agreement will be
deemed to be the language chosen by the parties to express their mutual intent,
and no rules of strict construction will be applied against any
party.

    


    
      
        
           


        

        
           


          
            

          

        

        
           


        

      

    

     

    m.      Remedies.  The
Company acknowledges that a breach by it of its obligations hereunder will cause
irreparable harm to the Buyer by vitiating the intent and purpose of the
transaction contemplated hereby.  Accordingly, the Company
acknowledges that the remedy at law for a breach of its obligations under this
Agreement will be inadequate and agrees, in the event of a breach or threatened
breach by the Company of the provisions of this Agreement, that the Buyer shall
be entitled, in addition to all other available remedies at law or in equity,
and in addition to the penalties assessable herein, to an injunction or
injunctions restraining, preventing or curing any breach of this Agreement and
to enforce specifically the terms and provisions hereof, without the necessity
of showing economic loss and without any bond or other security being
required.

    


    n.      To
the extent that this Agreement requires that the Company pay for the cost of a
legal opinion, such cost shall not exceed $500.

     

     

    


    
      
        
           


        

        
           


          
            

          

        

        
           


        

      

    

    


    IN
WITNESS WHEREOF, the undersigned Buyer and the Company have caused this
Agreement to be duly executed as of the date first above written.

    


    


    Island
Breeze International Inc.

    


    By:________________________________

    Bradley T. Prader

    Chairman,
President, CEO

    
 

    (Insert
Name of Buyer)

    


    By:              
                                                            

    Name:

    Title:

    


    


    


    AGGREGATE
SUBSCRIPTION AMOUNT:

    


    
      	
              Aggregate
      Principal Amount of Note:

            	
              $85,000.00

            
	 
      	 
      
	
              Aggregate
      Purchase Price:

            	
              $85,000.00