Cyplasin Biomedical Ltd.: Exhibit 10.4 - Filed by newsfilecorp.com






SECURITIES PURCHASE AGREEMENT

     THIS AGREEMENT dated as of
the 19th day of July 2010 (the “Agreement”) between TANGIERS
INVESTORS, LP, a Delaware limited partnership (the “Investor”), and
CYPLASIN BIOMEDICAL LTD., a corporation organized and existing under the
laws of the State of Nevada the “Company”).

     WHEREAS, the parties
desire that, upon the terms and subject to the conditions contained herein, the
Company shall issue and sell to the Investor, as provided herein, and the
Investor shall purchase from the Company up to Ten Million Dollars ($10,000,000)
of the Company’s common stock, par value $0.001 per share (the “Common
Stock”); and

     WHEREAS, such investments
will be made in reliance upon the provisions of Regulation D (“Regulation
D”) of the Securities Act of 1933, as amended, and the regulations
promulgated thereunder (the “Securities Act”), and or upon such other
exemption from the registration requirements of the Securities Act as may be
available with respect to any or all of the investments to be made
hereunder.

     NOW, THEREFORE, the
parties hereto agree as follows:

ARTICLE I. 
Certain Definitions

     Section 1.1. “Advance”
shall mean the portion of the Commitment Amount requested by the Company in the
Advance Notice.

     Section 1.2. “Advance
Date” shall mean the first (1st) Trading Day after expiration of
the applicable Pricing Period for each Advance.

     Section 1.3. “Advance
Notice” shall mean a written notice in the form of Exhibit A attached
hereto to the Investor executed by an officer of the Company and setting forth
the Advance amount that the Company requests from the Investor.

     Section 1.4. “Advance Notice
Date” shall mean each date the Company delivers (in accordance with Section
2.2(b) of this Agreement) to the Investor an Advance Notice requiring the
Investor to advance funds to the Company, subject to the terms of this
Agreement. No Advance Notice Date shall be less than ten (10) Trading Days after
the prior Advance Notice Date.

     Section 1.5. “Bid Price”
shall mean, on any date, the closing bid price (as reported by Bloomberg L.P.)
of the Common Stock on the Principal Market or if the Common Stock is not traded
on a Principal Market, the highest reported bid price for the Common Stock, as
furnished by the Financial Industry Regulatory Authority.

     Section 1.6. “Closing”
shall mean one of the closings of a purchase and sale of Common Stock pursuant
to Section 2.3.

     Section 1.7. “Commitment
Amount” shall mean the aggregate amount of up to Ten Million Dollars
($10,000,000) that the Investor has agreed to provide to the Company in order to
purchase the Company’s Common Stock pursuant to the terms and conditions of this
Agreement.

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     Section 1.8. “Commitment
Period” shall mean the period commencing on the Effective Date, and expiring
on the earliest to occur of (x) the date on which the Investor shall have made
payment of Advances pursuant to this Agreement in the aggregate amount of the
Commitment Amount, (y) the date this Agreement is terminated pursuant to Section
10.2 or (z) the date occurring twenty-four (24) months after the Effective
Date.

     Section 1.9. “Common
Stock” shall mean the Company’s common stock, par value $0.001per share
whether issued to the Investor directly or underlying warrants issued to the
Investor.

     Section 1.10. “Condition
Satisfaction Date” shall have the meaning set forth in Section 7.2.

     Section 1.11. “Damages”
shall mean any loss, claim, damage, liability, costs and expenses (including,
without limitation, reasonable attorney’s fees and disbursements and costs and
expenses of expert witnesses and investigation).

     Section 1.12. “Effective
Date” shall mean the date on which the SEC first declares effective a
Registration Statement registering the resale of the Registrable Securities as
set forth in Section 7.2(a) .

     Section 1.13. “Exchange
Act” shall mean the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.

     Section 1.14. “Material
Adverse Effect” shall mean any condition, circumstance, or situation that
would prohibit or otherwise materially interfere with the ability of the Company
to enter into and perform any of its obligations under this Agreement or the
Registration Rights Agreement in any material respect.

     Section 1.15. “Market
Price” shall mean the lowest daily volume weighted average price of the
Common Stock during the Pricing Period.

     Section 1.16. “Maximum Advance
Amount” The maximum dollar amount of each Advance will be equal to the
average daily trading volume in dollar amount during the ten (10) trading days
preceding the Advance Date. No Advance will be made in an amount lower than the
Minimum Advance Amount (defined below) or higher than Two Hundred Fifty Thousand
Dollars ($250,000).

     Section 1.17. “Minimum Advance
Amount” shall be Five Thousand Dollars ($5,000) per Advance Notice.

     Section 1.18. “FINRA” shall
mean the Financial Industry Regulatory Authority.

     Section 1.19. “Person”
shall mean an individual, a corporation, a partnership, an association, a trust
or other entity or organization, including a government or political subdivision
or an agency or instrumentality thereof.

     Section 1.20. “Pricing
Period” shall mean the five (5) consecutive Trading Days after the Advance
Notice Date subject to the terms and conditions provided herein.

     Section 1.21. “Principal
Market” shall mean the Nasdaq Global Select Market, the Nasdaq Global
Market, the Nasdaq Capital Market, the American Stock Exchange, the OTC Bulletin
Board or the New York Stock Exchange, or whichever is at the time the principal
trading exchange or market for the Common Stock.

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     Section 1.22. “Purchase
Price” shall be set at eighty-five percent (85%) of the Market Price during
the Pricing Period.

     Section 1.23. “Registrable
Securities” shall mean the shares of Common Stock to be issued hereunder and
underlying any warrants that may be issued by the Company to the Investor from
time to time pursuant to this Agreement; (i) in respect of which the
Registration Statement has not been declared effective by the SEC, (ii) which
have not been sold under circumstances meeting all of the applicable conditions
of Rule 144 (or any similar provision then in force) under the Securities Act
(“Rule 144”) or (iii) which have not been otherwise transferred to a
holder who may trade such shares without restriction under the Securities Act,
and the Company has delivered a new certificate or other evidence of ownership
for such securities not bearing a restrictive legend.

     Section 1.24. “Registration
Rights Agreement” shall mean the Registration Rights Agreement dated the
date hereof, regarding the filing of the Registration Statement for the resale
of the Registrable Securities, entered into between the Company and the
Investor.

     Section 1.25. “Registration
Statement” shall mean a registration statement on Form S-1 (if use of such
form is then available to the Company pursuant to the rules of the SEC and, if
not, on such other form promulgated by the SEC for which the Company then
qualifies and which counsel for the Company shall deem appropriate, and which
form shall be available for the resale of the Registrable Securities to be
registered thereunder in accordance with the provisions of this Agreement and
the Registration Rights Agreement, and in accordance with the intended method of
distribution of such securities), for the registration of the resale by the
Investor of the Registrable Securities under the Securities Act.

     Section 1.26. “Regulation
D” shall have the meaning set forth in the recitals of this Agreement.

     Section 1.27. “SEC” shall mean
the United States Securities and Exchange Commission.

     Section 1.28. “Securities
Act” shall have the meaning set forth in the recitals of this Agreement.

     Section 1.29. “SEC
Documents” shall mean Annual Reports on Form 10-K, Quarterly Reports on Form
10-Q, Current Reports on Form 8-K and Proxy Statements of the Company as
supplemented to the date hereof, filed by the Company for a period of at least
twelve (12) months immediately preceding the date hereof or the Advance Date, as
the case may be, until such time as the Company no longer has an obligation to
maintain the effectiveness of a Registration Statement as set forth in the
Registration Rights Agreement.

     Section 1.30. “Trading
Day” shall mean any day during which the New York Stock Exchange shall be
open for business.

     Section 1.31. “VWAP” shall
mean the volume weighted average price of the Company’s Common Stock as quoted
by Bloomberg, LP.

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ARTICLE II.

Advances

     Section 2.1. Advances.

     Subject to the terms and
conditions of this Agreement (including, without limitation, the provisions of
Article VII hereof), the Company, at its sole and exclusive option, may issue
and sell to the Investor, and the Investor shall purchase from the Company,
shares of the Company’s Common Stock by the delivery, in the Company’s sole
discretion, of Advance Notices. The number of shares of Common Stock that the
Investor shall purchase pursuant to each Advance shall be determined by dividing
the amount of the Advance by the Purchase Price. No fractional shares shall be
issued. Fractional shares shall be rounded to the next higher whole number of
shares. The aggregate maximum amount of all Advances that the Investor shall be
obligated to make under this Agreement shall not exceed the Commitment
Amount.

     Section 2.2. Mechanics.

     (a) Advance Notice. At any
time during the Commitment Period, the Company may require the Investor to
purchase shares of Common Stock by delivering an Advance Notice to the Investor,
subject to the conditions set forth in Section 7.2; provided, however, the
amount for each Advance as designated by the Company in the applicable Advance
Notice shall not be less than the Minimum Advance Amount, nor more than the
Maximum Advance Amount and the aggregate amount of the Advances pursuant to this
Agreement shall not exceed the Commitment Amount. The Company acknowledges that
the Investor may sell shares of the Company’s Common Stock corresponding with a
particular Advance Notice after the Advance Notice is received by the Investor.
There shall be a minimum of ten (10) Trading Days between each Advance Notice
Date.

     (b) Date of Delivery of
Advance Notice. An Advance Notice shall be deemed delivered on (i) the
Trading Day it is received by facsimile or otherwise by the Investor if such
notice is received prior to 5:00 pm Eastern Time, or (ii) the immediately
succeeding Trading Day if it is received by facsimile or otherwise after 5:00 pm
Eastern Time on a Trading Day or at any time on a day which is not a Trading
Day. No Advance Notice may be deemed delivered on a day that is not a Trading
Day.

     Section 2.3. Closings. On
each Advance Date (i) the Company shall deliver to the Investor such number of
shares of the Common Stock registered in the name of the Investor as shall equal
(x) the amount of the Advance specified in such Advance Notice pursuant to
Section 2.1 herein, divided by (y) the Purchase Price and (ii) upon receipt of
such shares, the Investor shall deliver to the Company the amount of the Advance
specified in the Advance Notice by wire transfer of immediately available funds.
Provided, however, that if the Company is not DWAC eligible, then the Investor
shall be allowed to deliver the amount of any Advance specified in the Advance
Notice within three (3) to five (5) business days after the Pricing Period. The
parties understand that the Company’s DWAC eligibility will not affect their
ability to obtain Advances under this Agreement, but may extend the timing of an
Advance Date. In addition, on or prior to the Advance Date, each of the Company
and the Investor shall deliver to the other all documents, instruments and
writings required to be delivered by either of them pursuant to this Agreement
in order to implement and effect the transactions contemplated herein. To the
extent the Company has not paid the fees, expenses, and disbursements in
accordance with Section 12.4, the undisputed amount of such fees, expenses, and
disbursements may be deducted by the Investor (and shall be paid to the relevant
party) directly out of the proceeds of the Advance with no reduction in the
amount of shares of the Company’s Common Stock to be delivered on such Advance
Date.

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     (a) Company’s Obligations Upon
Closing. 

          On each
Advance Date:

          (i) The
Company shall deliver to the Investor the shares of Common Stock applicable to
the Advance in accordance with Section 2.3. The certificates evidencing such
shares shall be free of restrictive legends, provided such shares are registered
pursuant to an effective registration statement.

          (ii) the
Company’s Registration Statement with respect to the resale of the shares of
Common Stock delivered in connection with the Advance shall have been declared
effective by the SEC;

          (iii)
the Company shall have obtained all material permits and qualifications required
by any applicable state for the offer and sale of the Registrable Securities, or
shall have the availability of exemptions therefrom. The sale and issuance of
the Registrable Securities shall be legally permitted by all laws and
regulations to which the Company is subject;

          (iv) the
Company shall have filed with the SEC in a timely manner all reports, notices
and other documents required of a “reporting company” under the Exchange Act and
applicable Commission regulations; and

          (v) the
fees as set forth in Section 12.4 below shall have been paid or can be withheld
as provided in Section 2.3.

     (b) Investor’s Obligations
Upon Closing. Upon receipt of the shares referenced in Section 2.3(a)(i)
above and provided the Company is in compliance with its obligations in Section
2.3, the Investor shall deliver to the Company the amount of the Advance
specified in the Advance Notice by wire transfer of immediately available
funds.

     Section 2.5. Hardship. In
the event the Investor sells shares of the Company’s Common Stock after receipt
of an Advance Notice and the Company fails to perform its obligations as
mandated in Section 2.3, and specifically the Company fails to deliver to the
Investor on the Advance Date the shares of Common Stock corresponding to the
applicable Advance pursuant to Section 2.3(a)(i), the Company acknowledges that
the Investor shall suffer financial hardship and, provided that the Investor has
performed its obligations pursuant to Section 2.3, and therefore the Company
shall be liable for any and all losses, commissions, fees, or financial hardship
caused to the Investor, provided, however that the amount of any such losses
shall not in any event exceed the applicable Advance.

ARTICLE III. 
Representations and Warranties of
Investor

     Investor hereby represents and
warrants to, and agrees with, the Company that the following are true and
correct as of the date hereof and as of each Advance Date:

     Section 3.1. Organization and
Authorization. The Investor is duly incorporated or organized and validly
existing in the jurisdiction of its incorporation or organization and has all
requisite power and authority to purchase and hold the securities issuable
hereunder. The decision to invest and the execution and delivery of this
Agreement by such Investor, the performance by such Investor of its obligations
hereunder and the consummation by such Investor of the transactions contemplated
hereby have been duly authorized and requires no other proceedings on the part
of the Investor. The undersigned has the right, power and authority to execute
and deliver this Agreement and all other instruments (including, without limitations, the Registration Rights Agreement), on behalf of
the Investor. This Agreement has been duly executed and delivered by the
Investor and, assuming the execution and delivery hereof and acceptance thereof
by the Company, will constitute the legal, valid and binding obligations of the
Investor, enforceable against the Investor in accordance with its terms.

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     Section 3.2. Evaluation of
Risks. The Investor has such knowledge and experience in financial, tax and
business matters as to be capable of evaluating the merits and risks of, and
bearing the economic risks entailed by, an investment in the Company and of
protecting its interests in connection with this transaction. It recognizes that
its investment in the Company involves a high degree of risk.

     Section 3.3. No Legal Advice
From the Company. The Investor acknowledges that it had the opportunity to
review this Agreement and the transactions contemplated by this Agreement with
his or its own legal counsel and investment and tax advisors. The Investor is
relying solely on such counsel and advisors and not on any statements or
representations of the Company or any of its representatives or agents for
legal, tax or investment advice with respect to this investment, the
transactions contemplated by this Agreement or the securities laws of any
jurisdiction.

     Section 3.4. Investment
Purpose. The securities are being purchased by the Investor for its own
account, and for investment purposes. The Investor agrees not to assign or in
any way transfer the Investor’s rights to the securities or any interest therein
and acknowledges that the Company will not recognize any purported assignment or
transfer except in accordance with applicable Federal and state securities laws.
No other person has or will have a direct or indirect beneficial interest in the
securities. The Investor agrees not to sell, hypothecate or otherwise transfer
the Investor’s securities unless the securities are registered under Federal and
applicable state securities laws or unless, in the opinion of counsel
satisfactory to the Company, an exemption from such laws is available.

     Section 3.5. Accredited
Investor. The Investor is and shall be on each Advance Date, an
“Accredited Investor” as that term is defined in Rule 501(a)(3) of
Regulation D of the Securities Act. The Company may seek any written reasonable
assurances from the Investor of the Investor’s status as an “accredited
investor” on or prior to any Advance Date.

     Section 3.6. Information.
The Investor and its advisors (and its counsel), if any, have been furnished
with all materials relating to the business, finances and operations of the
Company and information it deemed material to making an informed investment
decision. The Investor 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 such Investor
or its advisors, if any, or its representatives shall modify, amend or affect
the Investor’s right to rely on the Company’s representations and warranties
contained in this Agreement. The Investor understands that its investment
involves a high degree of risk. The Investor has sought such accounting, legal
and tax advice, as it has considered necessary to make an informed investment
decision with respect to this transaction.

     Section 3.7. Receipt of
Documents. The Investor and its counsel have received and read in their
entirety: (i) this Agreement and the Exhibits annexed hereto; (ii) all due
diligence and other information necessary to verify the accuracy and
completeness of such representations, warranties and covenants; (iii) the
Company’s most recent periodic filings filed with the SEC; and (iv) answers to
all questions the Investor submitted to the Company regarding an investment in
the Company; and the Investor has relied on the information contained therein
and has not been furnished any other documents, literature, memorandum or
prospectus.

     Section 3.8. Registration
Rights Agreement. The Investor has entered into the Registration Rights
Agreement dated the date hereof.

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     Section 3.9. Not an
Affiliate. The Investor is not an officer, director or a person that
directly, or indirectly through one or more intermediaries, controls or is
controlled by, or is under common control with the Company or any
“Affiliate” of the Company (as that term is defined in Rule 405 of the
Securities Act).

     Section 3.10. Trading
Activities. The Investor’s trading activities with respect to the Company’s
Common Stock shall be in compliance with all applicable federal and state
securities laws, rules and regulations and the rules and regulations of the
Principal Market on which the Company’s Common Stock is listed or traded.
Neither the Investor nor its affiliates has an open short position in the Common
Stock of the Company, the Investor agrees that it shall not, and that it will
cause its affiliates not to, engage in any short sales of or hedging
transactions with respect to the Common Stock, 

     Section 3.11 Reliance on
  Exemptions. The Investor understands that the Common Stock is being offered
  and sold to it in reliance on specific exemptions from the registration
  requirements of United States federal and state securities laws and that the
  Company is relying in part upon the truth and accuracy of, and such Investor’
  compliance with, the representations, warranties, agreements, acknowledgements
  and understandings of such Investor set forth here in order to determine the
  availability of such exemptions and the eligibility of such Investor to acquire
the Common Stock.

     Section 3.12 No Governmental
Review. The Investor understands that no United States, federal or state
agency or any other government or governmental agency has passed on or made any
recommendation or endorsement of the Common Stock issuable pursuant to this
Agreement or the fairness or suitability of the investment in the Common Stock
nor have such authorities passed upon or endorsed the merits of the offering of
the Common Stock.

ARTICLE IV. 
Representations and Warranties of the
Company

     Except as stated below, on the
disclosure schedules attached hereto or in the SEC Documents (as defined
herein), the Company hereby represents and warrants to, and covenants with, the
Investor that the following are true and correct as of the date hereof:

     Section 4.1. Organization and
Qualification. The Company is duly incorporated or organized and validly
existing in the jurisdiction of its incorporation or organization and has all
requisite corporate power to own its properties and to carry on its business as
now being conducted. Each of the Company and its subsidiaries (if any) is duly
qualified as a foreign corporation to do business and is in good standing in
every jurisdiction in which the nature of the business conducted by it makes
such qualification necessary, except to the extent that the failure to be so
qualified or be in good standing would not have a Material Adverse Effect on the
Company and its subsidiaries taken as a whole.

     Section 4.2. Authorization,
Enforcement, Compliance with Other Instruments. (i) The Company has the
requisite corporate power and authority to enter into and perform this
Agreement, the Registration Rights Agreement, and any related agreements, in
accordance with the terms hereof and thereof, (ii) the execution and delivery of
this Agreement, the Registration Rights Agreement and any related agreements by
the Company and the consummation by it of the transactions contemplated hereby
and thereby, have been duly authorized by the Company’s Board of Directors and
no further consent or authorization is required by the Company, its Board of
Directors or its stockholders, (iii) this Agreement, the Registration Rights
Agreement and any related agreements have been duly executed and delivered by
the Company, (iv) this Agreement, the Registration Rights Agreement and assuming
the execution and delivery thereof and acceptance by the Investor and any
related agreements constitute the valid and binding obligations of the Company
enforceable against the Company in accordance with their terms, except as such
enforceability may be limited by general principles of equity or applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally, the enforcement of creditors’ rights and
remedies.

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     Section 4.3. Capitalization. The authorized capital stock of the Company consists of
_100,000,000 shares of Common Stock and _100,000,000shares of Preferred Stock
(with various series), $0.001 par value per share (“Preferred Stock”), of
which approximately 12 million shares of Common Stock and zero shares of
Preferred Stock are issued and outstanding. All of such outstanding shares have
been validly issued and are fully paid and nonassessable. No shares of Common
Stock are subject to preemptive rights or any other similar rights or any liens
or encumbrances suffered or permitted by the Company. As of the date hereof,
except for the financing transactions and acquisitions previously disclosed to
the Investor and as set forth in Schedule 4.3; (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 (iii) there are no outstanding registration statements other
than on Form S-8 and (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 the
Registration Rights Agreement). 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. The Company has furnished to the Investor true and
correct copies of the Company’s Certificate of Incorporation, as amended and as
in effect on the date hereof (the “Certificate of Incorporation”), and
the Company’s By-laws, as in effect on the date hereof (the “By-laws”),
and the terms of all securities convertible into or exercisable for Common Stock
and the material rights of the holders thereof in respect thereto.

     Section 4.4. No Conflict.
Subject to the Company’s Certificate of Incorporation, the execution, delivery
and performance of this Agreement by the Company and the consummation by the
Company of the transactions contemplated hereby will not (i) result in a
violation of the Certificate of Incorporation, any certificate of designations
of any outstanding series of preferred stock of the Company or By-laws or (ii)
conflict with or constitute a default (or an event which with notice or lapse of
time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which the Company or any of its subsidiaries is a
party, or result in a violation of any law, rule, regulation, order, judgment or
decree (including federal and state securities laws and regulations and the
rules and regulations of the Principal Market on which the Common Stock is
quoted) applicable to the Company or any of its subsidiaries or by which any
material property or asset of the Company or any of its subsidiaries is bound or
affected and which would cause a Material Adverse Effect. Neither the Company
nor its subsidiaries is in violation of any term of or in default under its
Articles of Incorporation or By-laws or their organizational charter or by-laws,
respectively, or any material contract, agreement, mortgage, indebtedness,
indenture, instrument, judgment, decree or order or any statute, rule or
regulation applicable to the Company or its subsidiaries. The business of the
Company and its subsidiaries is not being conducted in violation of any material
law, ordinance, and regulation of any governmental entity. Except as
specifically contemplated by this Agreement and as required under the Securities
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 or governmental agency in order for it to execute,
deliver or perform any of its obligations under or contemplated by this
Agreement or the Registration Rights Agreement in accordance with the terms
hereof or thereof. 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.

     Section 4.5. SEC Documents;
Financial Statements. As of their respective dates, the financial statements
of the Company disclosed on the Company’s website and disclosed to the Investor
(the “Financial Statements”) complied as to form in all material respects
with applicable accounting requirements and the published rules and regulations with
respect thereto. Such Financial Statements have been prepared in accordance with
generally accepted accounting principles, consistently applied, during the
periods involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto, or (ii) in the case of unaudited interim
statements, to the extent they may exclude footnotes or may be condensed or
summary statements) and, fairly present in all material respects the financial
position of the Company as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments). No other
information provided by or on behalf of the Company to the Investor 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
circumstances under which they were made, not misleading.

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     Section 4.6. 10b-5. None
of the documents provided to the Investor include any untrue statements of
material fact, nor do they omit to state any material fact required to be stated
therein necessary to make the statements made, in light of the circumstances
under which they were made, not misleading.

     Section 4.7. No Default.
The Company is not in default in the performance or observance of any material
obligation, agreement, covenant or condition contained in any indenture,
mortgage, deed of trust or other material instrument or agreement to which it is
a party or by which it is or its property is bound (which has not been waived)
and neither the execution, nor the delivery by the Company, nor the performance
by the Company of its obligations under this Agreement or any of the exhibits or
attachments hereto will conflict with or result in the breach or violation
(which has not been waived) of any of the terms or provisions of, or constitute
a default or result in the creation or imposition of any lien or charge on any
assets or properties of the Company under its Certificate of Incorporation,
By-Laws, any material indenture, mortgage, deed of trust or other material
agreement applicable to the Company or instrument to which the Company is a
party or by which it is bound, or any statute, or any decree, judgment, order,
rules or regulation of any court or governmental agency or body having
jurisdiction over the Company or its properties, in each case which default,
lien or charge is likely to cause a Material Adverse Effect on the Company’s
business or financial condition.

     Section 4.8. Absence of Events
of Default. No Event of Default, as defined in the respective agreement to
which the Company is a party, and no event which, with the giving of notice or
the passage of time or both, would become an Event of Default (as so defined),
has occurred and is continuing, which would have a Material Adverse Effect on
the Company’s business, properties, prospects, financial condition or results of
operations.

     Section 4.9. Intellectual
Property Rights. The Company and its subsidiaries own or possess adequate
rights or licenses to use all material trademarks, trade names, service marks,
service mark registrations, service names, patents, patent rights, copyrights,
inventions, licenses, approvals, governmental authorizations, trade secrets and
rights necessary to conduct their respective businesses as now conducted. The
Company and its subsidiaries do not have any knowledge of any infringement by
the Company or its subsidiaries of trademark, trade name rights, patents, patent
rights, copyrights, inventions, licenses, service names, service marks, service
mark registrations, trade secret or other similar rights of others, and, to the
knowledge of the Company, there is no claim, action or proceeding being made or
brought against, or to the Company’s knowledge, being threatened against, the
Company or its subsidiaries regarding trademark, trade name, patents, patent
rights, invention, copyright, license, service names, service marks, service
mark registrations, trade secret or other infringement; and the Company and its
subsidiaries are unaware of any facts or circumstances which might give rise to
any of the foregoing.

     Section 4.10. Employee
Relations. Neither the Company nor any of its subsidiaries is involved in
any labor dispute nor, to the knowledge of the Company or any of its
subsidiaries, is any such dispute threatened. None of the Company’s or its
subsidiaries’ employees is a member of a union and the Company and its
subsidiaries believe that their relations with their employees are good.

9




     Section 4.11. Environmental
Laws. The Company and its subsidiaries are (i) in compliance with any and
all applicable material foreign, federal, state and local laws and regulations
relating to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants
(“Environmental Laws”), (ii) have received all permits, licenses or other
approvals required of them under applicable Environmental Laws to conduct their
respective businesses and (iii) are in compliance with all terms and conditions
of any such permit, license or approval.

     Section 4.12. Title. The
Company has good and marketable title to its properties and material assets
owned by it, free and clear of any pledge, lien, security interest, encumbrance,
claim or equitable interest other than such as are not material to the business
of the Company. 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 are not material and do not interfere with the
use made and proposed to be made of such property and buildings by the Company
and its subsidiaries.

     Section 4.13. Insurance.
The Company and each of its subsidiaries are insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts as
management of the Company believes to be prudent and customary in the businesses
in which the Company and its subsidiaries are engaged. Neither the Company nor
any such subsidiary has been refused any insurance coverage sought or applied
for and neither the Company nor any such subsidiary has any reason to believe
that it will not be able to renew its existing insurance coverage as and when
such coverage expires or to obtain similar coverage from similar insurers as may
be necessary to continue its business at a cost that would not materially and
adversely affect the condition, financial or otherwise, or the earnings,
business or operations of the Company and its subsidiaries, taken as a
whole.

     Section 4.14. Regulatory
Permits. The Company and its subsidiaries possess all material certificates,
authorizations and permits issued by the appropriate federal, state or foreign
regulatory authorities necessary to conduct their respective businesses, and
neither the Company nor any such subsidiary has received any notice of
proceedings relating to the revocation or modification of any such certificate,
authorization or permit.

     Section 4.15. No Material
Adverse Breaches, 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 on
the business, properties, operations, financial condition, results of operations
or prospects of the Company or its subsidiaries. Neither the Company nor any of
its subsidiaries is in breach of any contract or agreement which breach, in the
judgment of the Company’s officers, has or is expected to have a Material
Adverse Effect on the business, properties, operations, financial condition,
results of operations or prospects of the Company or its subsidiaries.

     Section 4.16. Absence of
Litigation. Except as disclosed in Schedule 4.16, there is no action, suit,
proceeding, inquiry or investigation before or by any court, public board,
government agency, self-regulatory organization or body pending against or
affecting the Company, the Common Stock or any of the Company’s subsidiaries,
wherein an unfavorable decision, ruling or finding would (i) have a Material
Adverse Effect on the transactions contemplated hereby (ii) adversely affect the
validity or enforceability of, or the authority or ability of the Company to
perform its obligations under, this Agreement or any of the documents
contemplated herein, or (iii) have a Material Adverse Effect on the business,
operations, properties, financial condition or results of operation of the
Company and its subsidiaries taken as a whole.

     Section 4.17.
Subsidiaries. The Company does not presently own or control, directly or
indirectly, any interest in any other corporation, partnership, association or
other business entity other than what is reported in the Company’s SEC
filings.

10




     Section 4.18. Tax Status.
Except as disclosed in Schedule 4.18, the Company and each of its subsidiaries
has made or filed all federal and state income and all other tax returns,
reports and declarations required by any jurisdiction to which it is subject and
(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) has paid all taxes and other governmental
assessments and charges that are material in amount, shown or determined to be
due on such returns, reports and declarations, except those being contested in
good faith and has set aside on its books provision reasonably adequate for the
payment of all taxes for periods subsequent to the periods to which such
returns, reports or declarations apply. There are no unpaid taxes in any
material amount claimed to be due by the taxing authority of any jurisdiction,
and the officers of the Company know of no basis for any such claim.

     Section 4.19. Certain
Transactions. Except as disclosed in Schedule 4.19, the Company is not
presently a party to any transaction with the Company (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.

     Section 4.20. Fees and Rights
of First Refusal. The Company is not obligated to offer the securities
offered hereunder on a right of first refusal basis or otherwise to any third
parties including, but not limited to, current or former shareholders of the
Company, underwriters, brokers, agents or other third parties.

     Section 4.21. Use of
Proceeds. The Company shall use the net proceeds from this offering for
general corporate purposes, including, without limitation, the payment of loans
incurred by the Company. However, in no event shall the Company use the net
proceeds from this offering for the payment (or loan to any such person for the
payment) of any judgment, or other liability, incurred by any executive officer,
officer, director or employee of the Company, except for any liability owed to
such person for services rendered, expense reimbursement or if any judgment or
other liability is incurred by such person originating from services rendered to
the Company, or the Company has indemnified such person from liability.

     Section 4.22. Further
Representation and Warranties of the Company. For so long as any securities
issuable hereunder held by the Investor remain outstanding, the Company
acknowledges, represents, warrants and agrees that it will use its best efforts
to maintain the listing of its Common Stock on the Principal Market.

     Section 4.23. Opinion of
Counsel. The Company will obtain, subject to applicable securities laws, for
the Investor, at the Company’s expense, any and all opinions of counsel which
may be reasonably required in order to sell the securities issuable hereunder
without restriction.

     Section 4.24. Dilution.
The Company is aware and acknowledges that issuance of shares of the Company’s
Common Stock could cause dilution to existing shareholders and could
significantly increase the outstanding number of shares of Common Stock.

ARTICLE V. 
Indemnification

     The Investor and the Company represent
to the other the following with respect to itself:

11




     Section 5.1.
Indemnification.

     (a) In consideration of the
Investor’s execution and delivery of this Agreement, and in addition to all of
the Company’s other obligations under this Agreement, the Company shall defend,
protect, indemnify and hold harmless the Investor, and all of its officers,
directors, partners, employees and agents (including, without limitation, those
retained in connection with the transactions contemplated by this Agreement)
(collectively, the “Investor Indemnitees”) from and against any and all
actions, causes of action, suits, claims, losses, costs, penalties, fees,
liabilities and damages, and expenses in connection therewith (irrespective of
whether any such Investor Indemnitee is a party to the action for which
indemnification hereunder is sought), and including reasonable attorneys’ fees
and disbursements (the “Indemnified Liabilities”), incurred by the
Investor Indemnitees or any of them as a result of, or arising out of, or
relating to (a) any material misrepresentation or breach of any representation
or warranty made by the Company in this Agreement or the Registration Rights
Agreement or any other certificate, instrument or document contemplated hereby
or thereby, (b) any material breach of any covenant, agreement or obligation of
the Company contained in this Agreement or the Registration Rights Agreement or
any other certificate, instrument or document contemplated hereby or thereby,
(c) any cause of action, suit or claim brought or made against such Investor
Indemnitee not arising out of any action or inaction of an Investor Indemnitee,
and arising out of or resulting from the execution, delivery, performance or
enforcement of this Agreement or any other instrument, document or agreement
executed pursuant hereto by any of the Investor Indemnity, or (d) any failure
(whether purposeful or not) on the part of the transfer agent to effectuate the
transfer of shares or any of the transactions contemplated hereunder. To the
extent that the foregoing undertaking by the Company may be unenforceable for
any reason, the Company shall make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities, which is permissible under
applicable law.

     (b) In consideration of the
Company’s execution and delivery of this Agreement, and in addition to all of
the Investor’s other obligations under this Agreement, the Investor shall
defend, protect, indemnify and hold harmless the Company and all of its
officers, directors, shareholders, employees and agents (including, without
limitation, those retained in connection with the transactions contemplated by
this Agreement) (collectively, the “Company Indemnitees”) from and
against any and all Indemnified Liabilities incurred by the Company Indemnitees
or any of them as a result of, or arising out of, or relating to (a) any
material misrepresentation or breach of any representation or warranty made by
the Investor in this Agreement, the Registration Rights Agreement, or any
instrument or document contemplated hereby or thereby executed by the Investor,
(b) any material breach of any covenant, agreement or obligation of the
Investor(s) contained in this Agreement, the Registration Rights Agreement or
any other certificate, instrument or document contemplated hereby or thereby
executed by the Investor, or (c) any cause of action, suit or claim brought or
made against such Company Indemnitee based on misrepresentations or due to a
breach by the Investor and arising out of or resulting from the execution,
delivery, performance or enforcement of this Agreement or any other instrument,
document or agreement executed pursuant hereto by any of the Company
Indemnitees. To the extent that the foregoing undertaking by the Investor may be
unenforceable for any reason, the Investor shall make the maximum contribution
to the payment and satisfaction of each of the Indemnified Liabilities, which is
permissible under applicable law.

     (c) The obligations of the
parties to indemnify or make contribution under this Section 5.1 shall survive
termination.

ARTICLE VI. 
Covenants of the Company

     Section 6.1. RESERVED.

12




     Section 6.2. Listing of Common
Stock. the Company shall maintain the Common Stock’s authorization for
quotation on the Over-the-Counter Bulletin Board during the term of the
Commitment Period.

     Section 6.3. Exchange Act
Registration. During the term of the Commitment Period, the Company will
cause its Common Stock to continue to be registered under Section 12(g) of the
Exchange Act, will file in a timely manner all reports and other documents
required of it as a reporting company under the Exchange Act and will not take
any action or file any document (whether or not permitted by Exchange Act or the
rules thereunder) to terminate or suspend such registration or to terminate or
suspend its reporting and filing obligations under said Exchange Act.

     Section 6.4. Transfer Agent
Instructions. Upon effectiveness of the Registration Statement the Company
shall deliver instructions to its transfer agent to issue shares of Common Stock
to the Investor free of restrictive legends on or before each Advance Date.

     Section 6.5. Corporate
Existence. During the Commitment period, the Company will take all steps
necessary to preserve and continue the corporate existence of the Company.

     Section 6.6. Notice of Certain
Events Affecting Registration; Suspension of Right to Make an
Advance. The Company will immediately notify the Investor upon its becoming
aware of the occurrence of any of the following events in respect of a
registration statement or related prospectus relating to an offering of
Registrable Securities: (i) receipt of any request for additional information by
the SEC or any other Federal or state governmental authority during the period
of effectiveness of the Registration Statement for amendments or supplements to
the registration statement or related prospectus; (ii) the issuance by the SEC
or any other Federal or state governmental authority of any stop order
suspending the effectiveness of the Registration Statement or the initiation of
any proceedings for that purpose; (iii) receipt of any notification with respect
to the suspension of the qualification or exemption from qualification of any of
the Registrable Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose; (iv) the happening of any event
that makes any statement made in the Registration Statement or related
prospectus of any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires the making of any
changes in the Registration Statement, related prospectus or documents so that,
in the case of the Registration Statement, it will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading, and
that in the case of the related prospectus, it will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and (v) the Company’s
reasonable determination that a post-effective amendment to the Registration
Statement would be appropriate; and the Company will promptly make available to
the Investor any such supplement or amendment to the related prospectus. The
Company shall not deliver to the Investor any Advance Notice during the
continuation of any of the foregoing events. The Investor understands and
acknowledges that receipt of any of the information requested herein may, at the
time provided to the Investor, constitute material, non-public inside
information, and the Investor agrees to conduct itself accordingly based on
applicable law,

     Section 6.7. Restriction on
Sale of Capital Stock. Following the effectiveness of the Registration
Statement, the Company shall not, without the prior written consent of the
Investor, (i) issue or sell any Common Stock or Preferred Stock without
consideration or for a consideration per share less than the Bid Price of the
Common Stock determined immediately prior to its issuance, or (ii) issue or sell
any Preferred Stock warrant, option, right, contract, call, or other security or
instrument granting the holder thereof the right to acquire Common Stock without
consideration or for a consideration per share less than the Bid Price of the
Common Stock determined immediately prior to its issuance. 

13




Notwithstanding the
foregoing this Section shall not apply in respect of an Exempt Issuance or an
underwritten public offering of Common Stock. For purposes of this Agreement “Exempt Issuance” means the issuance of (a) shares of Common Stock or
options to employees, officers, directors or consultants of the Company pursuant
to any stock or option plan duly adopted for such purpose, by a
majority of the non-employee members of the Board of Directors or a majority of
the members of a committee of non-employee directors established for such
purpose, (b) securities upon the exercise or exchange of or conversion of any
Securities issued hereunder and/or other securities exercisable or exchangeable
for or convertible into shares of Common Stock issued and outstanding on the
date of this Agreement, provided that such securities have not been amended
since the date of this Agreement to increase the number of such securities or to
decrease the exercise, exchange or conversion price of such securities, (c) any
financing that the Company has in place prior to the date of this Agreement, (d)
a private placement(s) of the Company’s stock in an amount equal to $ 6,000,000
and (e) securities issued pursuant to acquisitions or strategic transactions
approved by a majority of the disinterested directors of the Company, provided
that any such issuance shall only be to a Person which is, itself or through its
subsidiaries, an operating company in a business synergistic with the business
of the Company and in which the Company receives benefits in addition to the
investment of funds, but shall not include a transaction in which the Company is
issuing securities primarily for the purpose of raising capital or to an entity
whose primary business is investing in securities. In no event may the Investor
withhold approval of additional financing to the Company from third parties
except as such financing is an equity line of credit financing. In the event the
Company elects to obtain additional financing during the term of this Agreement,
the Company shall immediately provide the Investor written notice of such intent
(the “Financing Notice”). The Financing Notice shall contain all of the terms,
and parties related to the financing.

     Section 6.8. Consolidation;
Merger. During the Commitment Period, the Company shall not, at any time
after the date hereof, effect any merger or consolidation of the Company with or
into, or a transfer of all or substantially all the assets of the Company to
another entity (a “Consolidation Event”) unless the resulting successor
or acquiring entity (if not the Company) assumes by written instrument the
obligation to deliver to the Investor such shares of stock and/or securities as
the Investor is entitled to receive pursuant to this Agreement.

     Section 6.9. Issuance of the
Company’s Common Stock. The sale of the shares of Common Stock shall be made
in accordance with the provisions and requirements of Regulation D and any
applicable state securities law.

     Section 6.10. Review of Public
Disclosures. All SEC filings (including, without limitation, all filings
required under the Exchange Act, which include Forms 10-Q and 10-QSB, 10-K and
10K-SB, 8-K, etc) and other public disclosures made by the Company, including,
without limitation, all press releases, investor relations materials, and
scripts of analysts meetings and calls, shall be reviewed and approved for
release by the Company’s attorneys and, if containing financial information, the
Company’s independent certified public accountants.

     Section 6.11. Market
Activities. The Company will not, directly or indirectly, (i) take any
action designed to cause or result in, or that constitutes or might reasonably
be expected to constitute, the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the Common Stock or
(ii) sell, bid for or purchase the Common Stock, or pay anyone any compensation
for soliciting purchases of the Common Stock.

ARTICLE VII. 
Conditions Precedent

     Section 7.1. Conditions
Precedent to the Obligations of the Company. The obligation hereunder of the
Company to issue and sell the shares of Common Stock to the Investor incident to
each Closing is subject to the satisfaction, or waiver by the Company, at or
before each such Closing, of each of the conditions set forth below.

14




     (a) Accuracy of the Investor’s
Representations and Warranties. The representations and warranties of the
Investor shall be true and correct in all material respects.

     (b) Performance by the
Investor. The Investor shall have performed, satisfied and complied in all
respects with all covenants, agreements and conditions required by this
Agreement and the Registration Rights Agreement to be performed, satisfied or
complied with by the Investor at or prior to such Closing.

     Section 7.2. Conditions
Precedent to the Right of the Company to Deliver an Advance Notice. The
right of the Company to deliver an Advance Notice is subject to the fulfillment
by the Company, on such Advance Notice (a “Condition Satisfaction Date”),
of each of the following conditions:

     (a) Registration of the Common
Stock with the SEC. The Company shall have filed with the SEC a Registration
Statement with respect to the resale of the Registrable Securities in accordance
with the terms of the Registration Rights Agreement. As set forth in the
Registration Rights Agreement, the Registration Statement shall have previously
become effective and shall remain effective on each Condition Satisfaction Date
and (i) neither the Company nor the Investor shall have received notice that the
SEC has issued or intends to issue a stop order with respect to the Registration
Statement or that the SEC otherwise has suspended or withdrawn the effectiveness
of the Registration Statement, either temporarily or permanently, or intends or
has threatened to do so (unless the SEC’s concerns have been addressed and the
Investor is reasonably satisfied that the SEC no longer is considering or
intends to take such action), and (ii) no other suspension of the use or
withdrawal of the effectiveness of the Registration Statement or related
prospectus shall exist. The Registration Statement must have been declared
effective by the SEC prior to the first Advance Notice Date.

     (b) Authority. The Company
shall have obtained all permits and qualifications required by any applicable
state in accordance with the Registration Rights Agreement for the offer and
sale of the shares of Common Stock, or shall have the availability of exemptions
therefrom. The sale and issuance of the shares of Common Stock shall be legally
permitted by all laws and regulations to which the Company is subject.

     (c) Fundamental Changes.
There shall not exist any fundamental changes to the information set forth in
the Registration Statement which would require the Company to file a
post-effective amendment to the Registration Statement.

     (d) Performance by the
Company. The Company shall have performed, satisfied and complied in all
material respects with all covenants, agreements and conditions required by this
Agreement and the Registration Rights Agreement to be performed, satisfied or
complied with by the Company at or prior to each Condition Satisfaction
Date.

     (e) No Injunction. No
statute, rule, regulation, executive order, decree, ruling or injunction shall
have been enacted, entered, promulgated or endorsed by any court or governmental
authority of competent jurisdiction that prohibits or directly and adversely
affects any of the transactions contemplated by this Agreement, and no
proceeding shall have been commenced that may have the effect of prohibiting or
adversely affecting any of the transactions contemplated by this Agreement.

     (f) No Suspension of Trading
in or Delisting of Common Stock. The trading of the Common Stock is not
suspended by the SEC or the Principal Market (if the Common Stock is traded on a
Principal Market). The issuance of shares of Common Stock with respect to the
applicable Closing, if any, shall not violate the shareholder approval
requirements of the Principal Market (if the Common Stock is traded on a
Principal Market). The Company shall not have received any notice threatening
the continued listing of the Common Stock on the Principal Market (if the
Common Stock is traded on a Principal Market).

15




     (g) Maximum Advance
Amount. The amount of an Advance requested by the Company shall not exceed
the Maximum Advance Amount. In addition, in no event shall the number of shares
issuable to the Investor pursuant to an Advance cause the aggregate number of
shares of Common Stock beneficially owned by the Investor and its affiliates to
exceed nine and 9/10 percent (9.9%) of the then outstanding Common Stock of the
Company. For the purposes of this section beneficial ownership shall be
calculated in accordance with Section 13(d) of the Exchange Act.

     (h) No Knowledge. The
Company has no knowledge of any event which would be more likely than not to
have the effect of causing such Registration Statement to be suspended or
otherwise ineffective.

     (i) Executed Advance
Notice. The Investor shall have received the Advance Notice executed by an
officer of the Company and the representations contained in such Advance Notice
shall be true and correct as of each Condition Satisfaction Date.

ARTICLE VIII.
Due Diligence Review; Non-Disclosure
of Non-Public Information

     Section 8.1. Non-Disclosure of
Non-Public Information.

     (a) Except as may be required by
the Investor herein, the Company covenants and agrees that it shall refrain from
disclosing, and shall cause its officers, directors, employees and agents to
refrain from disclosing, any material non-public information to the Investor
without also disseminating such information to the public, unless prior to
disclosure of such information the Company identifies such information as being
material non-public information and provides the Investor with the opportunity
to accept or refuse to accept such material non-public information for
review.

     (b) Except as provided herein,
nothing herein shall require the Company to disclose non-public information to
the Investor or its advisors or representatives, and the Company represents that
it does not disseminate non-public information to any investors who purchase
stock in the Company in a public offering, to money managers or to securities
analysts, provided, however, that notwithstanding anything herein to the
contrary, the Company will, as hereinabove provided, immediately notify the
advisors and representatives of the Investor and, if any, underwriters, of any
event or the existence of any circumstance (without any obligation to disclose
the specific event or circumstance) of which it becomes aware, constituting
non-public information (whether or not requested of the Company specifically or
generally during the course of due diligence by such persons or entities),
which, if not disclosed in the prospectus included in the Registration Statement
would cause such prospectus to include a material misstatement or to omit a
material fact required to be stated therein in order to make the statements,
therein, in light of the circumstances in which they were made, not misleading.
Nothing contained in this Section 8.2 shall be construed to mean that such
persons or entities other than the Investor (without the written consent of the
Investor prior to disclosure of such information) may not obtain non-public
information in the course of conducting due diligence in accordance with the
terms of this Agreement and nothing herein shall prevent any such persons or
entities from notifying the Company of their opinion that based on such due
diligence by such persons or entities, that the Registration Statement contains
an untrue statement of material fact or omits a material fact required to be
stated in the Registration Statement or necessary to make the statements
contained therein, in light of the circumstances in which they were made, not
misleading.

16




ARTICLE IX. 
Choice of Law/Jurisdiction

     Section 9.1. Governing
Law. This Agreement shall be governed by and interpreted in accordance with
the laws of the State of California without regard to the principles of conflict
of laws. The parties further agree that any action between them shall be heard
in the State of California, and expressly consent to the jurisdiction and venue
of the courts, sitting in California and the United States District Court of
California for the adjudication of any civil action asserted pursuant to this
paragraph.

ARTICLE X.
Assignment; Termination

     Section 10.1. Assignment.
Neither this Agreement nor any rights of the Company hereunder may be assigned
to any other Person.

     Section 10.2. Termination.

     (a) The obligations of the
Investor to make Advances under Article II hereof shall terminate twenty-four
(24) months after the Effective Date or 

     (b) The obligation of the Investor to
make an Advance to the Company pursuant to this Agreement shall terminate
permanently (including with respect to an Advance Date that has not yet
occurred) in the event that (i) there shall occur any stop order or suspension
of the effectiveness of the Registration Statement for an aggregate of ninety
(80) Trading Days, other than due to the acts of the Investor, during the
Commitment Period, or (ii) the Company shall at any time fail materially to
comply with the requirements of Article VI and such failure is not cured within
thirty (30) days after receipt of written notice from the Investor, provided,
however, that this termination provision shall not apply to any period
commencing upon the filing of a post-effective amendment to such Registration
Statement and ending upon the date on which such post effective amendment is
declared effective by the SEC.

ARTICLE XI. 
Notices

     Section 11.1. Notices. Any
notices, consents, waivers, or other communications required or permitted to be
given under the terms of this Agreement must be in writing and will be deemed to
have been delivered (i) upon receipt, when delivered personally; (ii) upon
receipt, when sent by facsimile, provided a copy is mailed by U.S. certified
mail, return receipt requested; (iii) three (3) days after being sent by U.S.
certified mail, return receipt requested, or (iv) one (1) day after deposit with
a nationally recognized overnight delivery service, in each case properly
addressed to the party to receive the same. The addresses and facsimile numbers
for such communications shall be:

	If to the Company, to: 	Cyplasin Biomedical Ltd. 
	  	9650-20 Avenue, 
	  	Edmonton, Alberta, Canada TGN 1G1 
	  	c/o Garth Likes 
	  	Telephone: (780) 469-2975 
	  	Facsimile: 780.669.3971 
	  	  
	  	  
	  	Tangiers Investors, LP 


17





	If to the Investor(s): 	Michael Sobeck 
	  	402 West Broadway 
	  	Suite 400 
	  	San Diego, California 92101 
	  	Telephone: 619-615-4255 
	  	Facsimile: 619-566-2011 


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

ARTICLE XII.
 Miscellaneous

     Section 12.1.
Counterparts. This Agreement may be executed in two or more identical
counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party. In the event any signature page is delivered by
facsimile transmission, the party using such means of delivery shall cause four
(4) additional original executed signature pages to be physically delivered to
the other party within five (5) days of the execution and delivery hereof,
though failure to deliver such copies shall not affect the validity of this
Agreement.

     Section 12.2. Entire
Agreement; Amendments. This Agreement supersedes all other prior oral or
written agreements between the Investor, the Company, their affiliates and
persons acting on their behalf with respect to the matters discussed herein, and
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 Investor 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 party to
be charged with enforcement.

     Section 12.3. Reporting Entity
for the Common Stock. The reporting entity relied upon for the determination
of the trading price or trading volume of the Common Stock on any given Trading
Day for the purposes of this Agreement shall be Bloomberg, L.P. or any successor
thereto. The written mutual consent of the Investor and the Company shall be
required to employ any other reporting entity.

     Section 12.4. Commitment
Fee. Upon the date of execution of the Securities Purchase Agreement, the
Company shall be required to issue the Purchaser three hundred thousand dollars
($300,000) worth of restricted Common Stock as a commitment fee. The commitment
fee shares shall have piggyback registration rights and shall be issued in
tranches in accordance with the following schedule:

a) $150,000 worth of Common Stock shall
be issued 25 days after the execution of the Securities Purchase Agreement
(“Tranche #1”);

b) $150,000 worth of Common Stock shall
be issued to the Investor upon the earlier of the Company’s S-1 Registration
Statement being declared effective by the SEC or 90 days following the execution
of this Agreement (“Tranche #2”).

The amount of the Investor Shares issued to the Investor in
each of aforementioned Tranches shall be calculated by dividing the dollar
amount of each such Tranche by the lowest VWAP of the Company’s Common Stock
during the ten (10) business days immediately preceding the date on which such
Tranche is issued, as quoted on Bloomberg, LP.

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It is the Company’s full intention that the Investor receives
the full value of the Commitment Fee. Therefore, in the event that the Investor
is unable to obtain at least $250,000 of value through the sale of the Shares
underlying the Commitment Fee, whether because of a decline in the Company’s
stock price or for whatever reason, then the Company shall issue to the Company
that number of shares to the Investor that would allow the Investor to obtain a
minimum of $250,000 through the sale of such Shares. The Investor shall provide
the Company any and all documentation necessary to confirm to the Company that
it has received or not received at least $250,000 worth of value from the sale
of the Shares underlying the Commitment Fee.

     Section 12.5. Brokerage.
Each of the parties hereto represents that it has had no dealings in connection
with this transaction with any finder or broker who will demand payment of any
fee or commission from the other party. The Company on the one hand, and the
Investor, on the other hand, agree to indemnify the other against and hold the
other harmless from any and all liabilities to any person claiming brokerage
commissions or finder’s fees on account of services purported to have been
rendered on behalf of the indemnifying party in connection with this Agreement
or the transactions contemplated hereby.

     Section 12.6.
Confidentiality. If for any reason the transactions contemplated by this
Agreement are not consummated, each of the parties hereto shall keep
confidential any information obtained from any other party (except information
publicly available or in such party’s domain prior to the date hereof, and
except as required by court order) and shall promptly return to the other
parties all schedules, documents, instruments, work papers or other written
information without retaining copies thereof, previously furnished by it as a
result of this Agreement or in connection herein.

[SIGNATURE PAGE TO FOLLOW]

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     IN WITNESS WHEREOF, the
parties hereto have caused this Securities Purchase Agreement to be executed by
the undersigned, thereunto duly authorized, as of the date first set forth
above.

	 	 COMPANY: 
	 	 CYPLASIN BIOMEDICAL LTD.
    
	 	  	  
	 	  	  
	 	  /s/
      Garth Likes	  
	 	Name:Garth Likes 
	 	Title: Chief Executive Officer 
	 	  	  
	 	  	  
	 	INVESTOR: 
	 	TANGIERS INVESTORS, LP 
	 	  	  
	 	  	  
	 	By: Tangiers Capital, LLC 
	 	Its: General Partner 	


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EXHIBIT A

ADVANCE NOTICE

CYPLASIN BIOMEDICAL LTD

     The undersigned,
__________________________ hereby certifies, with respect to the sale of shares
of Common Stock of CYPLASIN BIOMEDICAL LTD. (the “Company”)
issuable in connection with this Advance Notice, delivered pursuant to the
Securities Purchase Agreement (the “Agreement”), as follows:

     1. The undersigned is the duly elected
_______of the Company.

     2. There are no fundamental
changes to the information set forth in the Registration Statement which would
require the Company to file a post effective amendment to the Registration
Statement.

     3. The Company has performed in
all material respects all covenants and agreements to be performed by the
Company and has complied in all material respects with all obligations and
conditions contained in the Agreement on or prior to the Advance Notice Date,
and shall continue to perform in all material respects all covenants and
agreements to be performed by the Company through the applicable Advance Date.
All conditions to the delivery of this Advance Notice are satisfied as of the
date hereof.

     4. The undersigned hereby
represents, warrants and covenants that it has made all filings (“SEC
Filings”) required to be made by it pursuant to applicable securities laws
(including, without limitation, all filings required under the Securities
Exchange Act of 1934, which include Forms 10-Q, 10-K or 8-K, etc.). All SEC
Filings and other public disclosures made by the Company, including, without
limitation, all press releases, analysts meetings and calls, etc. (collectively,
the “Public Disclosures”), have been reviewed and approved for release by
the Company’s attorneys and, if containing financial information, the Company’s
independent certified public accountants. None of the Company’s Public
Disclosures contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.

     5. The Advance requested is
___________.

     The undersigned has executed this
Certificate this ____ day of .

	 	CYPLASIN BIOMEDICAL LTD. 
	 	 
	 	
      By: 

	 	 
	 	 
	 	Name: 
	 	 
	 	Title: 


If Returning This Advance Notice via Facsimile Please Send
To:

If by Mail, via Federal Express Tangiers Investors, LP To:

402 West Broadway Suite 400, Suite 400, San Diego, CA 92101

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