Li3
ENERGY INC.

    


    INVESTMENT
AGREEMENT

    


    THE
SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE OR OTHER SECURITIES
AUTHORITIES.  THEY MAY NOT BE SOLD OR TRANSFERRED EXCEPT PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT OR AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE FEDERAL AND STATE SECURITIES LAWS.

    


    THIS
INVESTMENT AGREEMENT DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF
AN OFFER TO PURCHASE, ANY OF THE SECURITIES DESCRIBED HEREIN BY OR TO ANY PERSON
IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION WOULD BE
UNLAWFUL.  THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL
OR STATE SECURITIES AUTHORITIES, NOR HAVE SUCH AUTHORITIES CONFIRMED THE
ACCURACY OR DETERMINED THE ADEQUACY OF THIS DOCUMENT.  ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

    


    AN
INVESTMENT IN THESE SECURITIES INVOLVES A HIGH DEGREE OF RISK.  THE
INVESTOR MUST RELY ON ITS OWN ANALYSIS OF THE INVESTMENT AND ASSESSMENT OF THE
RISKS INVOLVED.  SEE THE RISK FACTORS SET FORTH IN THE ATTACHED
DISCLOSURE DOCUMENTS AS EXHIBIT
I.

    


    THIS INVESTMENT AGREEMENT (this
”Agreement“ or “Investment Agreement”) is made as of the 2nd day of December,
2010, by and between Li3 Energy, Inc., a corporation duly organized and existing
under the laws of the State of Nevada (the "Company"), and Centurion Private
Equity, LLC, a Georgia Limited Liability Company ("Investor").

    


    RECITALS:

    


    WHEREAS, the parties desire
that, upon the terms and subject to the conditions contained herein, the Company
shall issue to the Investor, and the Investor shall purchase from the Company,
from time to time as provided herein, shares of the Company's Common Stock, as
part of an offering of Common Stock by the Company to Investor, for a maximum
aggregate offering amount of up to Ten Million Dollars ($10,000,000) (the
"Maximum Offering Amount"); and 

    


    WHEREAS, the solicitation of
this Investment Agreement and, if accepted by the Company, the offer and sale of
the Common Stock are being made in reliance upon the provisions of Regulation D
("Regulation D") promulgated under the Act, Section 4(2) of the Act, and/or upon
such other exemption from the registration requirements of the Act as may be
available with respect to any or all of the purchases of Common Stock to be made
hereunder.


    
      
         


      

      
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    TERMS:

    


    NOW, THEREFORE, the parties
hereto agree as follows:

    


    1.           
Certain
Definitions.  As used in this Agreement (including the recitals
above), the following terms shall have the following meanings (such meanings to
be equally applicable to both the singular and plural forms of the terms
defined):

    


    “4.9% Limitation” shall have the
meaning set forth in Section 2.3.1(f).

    


    “Accredited Investor” shall have the
meaning set forth in Section 3.1.

    


    “Act” shall mean the Securities Act of
1933, as amended.

    


    “Additional Registration Statement”
shall have the meaning set forth in the Registration Rights
Agreement.

    


    “Advance Put Notice” shall have the
meaning set forth in Section 2.3.1(a), the form of which is attached hereto as
Exhibit
A.

    


    “Advance Put Notice Date” shall have
the meaning set forth in Section 2.3.1(a).

    


    “Affiliate” shall have the meaning as
set forth Section 6.5.

    


    “Aggregate Issued Shares” equals the
aggregate number of shares of Common Stock issued to Investor pursuant to the
terms of this Agreement or the Registration Rights Agreement as of a given date,
including Put Shares.

    


    “Agreed Upon Procedures Report” shall
have the meaning set forth in Section 2.4.3(b).

    


    “Agreement” shall mean this Investment
Agreement.

    


    “Approved Primary Market” shall mean
any of the following: the O.T.C. Bulletin Board, the NASDAQ Capital Market, the
NASDAQ Global Select Market, the NYSE Amex, or the New York Stock
Exchange.

    


    “Automatic Termination” shall have the
meaning set forth in Section 2.3.2.

    


    “Bring Down Cold Comfort Letters” shall
have the meaning set forth in Section 2.3.7(b).

    


    “Business Day” shall mean any day
during which the Principal Market is open for trading.

    


    “Calendar
Month” shall mean the
period of time beginning on the numeric day in question in a calendar month and
for Calendar Months thereafter, beginning on the earlier of (i) the same numeric
day of the next calendar month or (ii) the last day of the next calendar
month.  Each Calendar Month shall end on the day immediately preceding
the beginning of the next succeeding Calendar Month.


    
      
         


      

      
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    “Cap Amount” shall have the meaning set
forth in Section 2.3.11.

    


    “Capitalization Schedule” shall have
the meaning set forth in Section 3.2.4, attached hereto as Exhibit
B.

    


    “Change in Control” shall have the
meaning set forth within the definition of Major Transaction,
below.

    


    “Closing” shall mean one of (i) the
Investment Commitment Closing and (ii) each closing of a purchase and sale of
Common Stock pursuant to Section 2.

    


    "Closing
Bid Price" means, for any security as of any date, the last closing bid price
for such security during Normal Trading on the O.T.C. Bulletin Board, or, if the
O.T.C. Bulletin Board is not the principal securities exchange or trading market
for such security, the last closing bid price during Normal Trading of such
security on the principal securities exchange or trading market where such
security is listed or traded as reported by such principal securities exchange
or trading market, or if the foregoing do not apply, the last closing bid price
during Normal Trading of such security in the over-the-counter market on the
electronic bulletin board for such security, or, if no closing bid price is
reported for such security, the average of the bid prices of any market makers
for such security as reported in the "pink sheets" by the Pink OTC Markets,
Inc. If the Closing
Bid Price cannot be calculated for such security on such date on any of the
foregoing bases, the Closing Bid Price of such security on such date shall be
the fair market value as mutually determined by the Company and the Investor in
this Offering.  If the Company and the Investor in this Offering are
unable to agree upon the fair market value of the Common Stock, then such
dispute shall be resolved by an investment banking firm mutually acceptable to
the Company and the Investor in this offering and any fees and costs associated
therewith shall be paid by the Company.

    


     “Commission
Documents” shall mean (1) all reports, schedules, registrations, forms,
statements, information and other documents filed with or furnished to the SEC
by the Company pursuant to the reporting requirements of the Exchange Act,
including all material filed or furnished pursuant to Section 13(a) or
15(d) of the Exchange Act, which have been filed or furnished by the
Company since June 30, 2009, including, without
limitation, the Annual Report on Form 10-K filed by the Company for the
year ended June 30, 2009 (the “2009
Form 10-K”), the Company’s Quarterly Report on Form 10-Q for its
fiscal quarter ended March 31, 2010 and such reports which
hereafter shall be filed with or furnished to the SEC by the Company, including,
without limitation, the Current Report, (2) the Registration Statement, as
the same may be amended from time to time, the Prospectus and each Prospectus
Supplement and (3) all information contained in such filings and all
documents and disclosures that have been and heretofore shall be incorporated by
reference therein.

    


    “Commitment Closing Date” means the date of the
Investment Commitment Closing.

     

    “Commitment
Shares” shall have the meaning set forth in Section 9.10(ii).


    
      
         


      

      
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    “Commitment Period” shall have the
meaning set forth in Section 2.3.2(g).

    


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

    


    “Common Stock” shall mean the common
stock of the Company.

    


    “Company” shall have the meaning set
forth in the opening paragraph hereof.

    


    “Company Designated Maximum Put Dollar
Amount” shall have the meaning set forth in Section 2.3.1(a).

    


    “Company Designated Minimum Put Share
Price” shall have the meaning set forth in Section 2.3.1(a).

    


    “Company Termination” shall have the
meaning set forth in Section 2.3.12.

    


    “Conditions to Investment Commitment
Closing” shall have the meaning as set forth in Section 2.2.2.

    


    “Current Report” shall have the meaning
ascribed to it in Section 6.10 hereof.

    


     “Delisting Event” shall mean any
time during the term of this Investment Agreement, that the Company’s Common
Stock is not listed for and actively trading on an Approved Primary Market or is
suspended or delisted with respect to the trading of the shares of Common Stock
on such market or exchange.

    


    “Disclosure Documents” shall have the
meaning as set forth in Section 3.2.4.

    


    “Due Diligence Review” shall have the
meaning as set forth in Section 2.4.

    


    “Effective Date” shall have the meaning
set forth in Section 2.3.1.

    


    “Equity Securities” shall have the
meaning set forth in Section 6.6.1.

    


    “Evaluation Day” shall have the meaning
set forth in Section 2.3.1(b).

    


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

    


    “Excluded Day” shall have the meaning
set forth in Section 2.3.1(b).

    


    “Extended Put Period” shall mean the
period of time between the Advance Put Notice Date until the Pricing Period End
Date.

    


    “Fee
Shares” shall have the meaning set forth in Section 9.10(ii).

    


    “FINRA” shall mean the Financial
Industry Regulatory Authority.


    
      
         


      

      
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    “Indemnified Liabilities” shall have
the meaning set forth in Section 8.

    


    “Indemnitees” shall have the meaning
set forth in Section 8.

    


    “Indemnitor” shall have the meaning set
forth in Section 8.

    


    “Individual Put Limit” shall have the
meaning set forth in Section 2.3.1 (b).

    


    “Ineffective Period” shall mean any
period of time after the Effective Date during the term hereof that the
Registration Statement or any Supplemental Registration Statement (each as
defined herein) becomes ineffective or unavailable for use for the sale or
resale, as applicable, of any or all of the Registrable Securities (as defined
herein) for any reason (or in the event the prospectus under either of the above
is not current and deliverable).

    


    “Intended Put Share Amount” shall have
the meaning set forth in Section 2.3.1(a).

    


    “Investment Commitment Closing” shall
have the meaning set forth in Section 2.2.1.

    


    “Investment Agreement” shall mean this
Investment Agreement.

    


    “Investment Commitment Opinion of
Counsel” shall mean an opinion from Company’s independent counsel, substantially
in the form attached as Exhibit C, or such
other form as agreed upon by the parties, as to the Investment Commitment
Closing.

    


    “Investment Date” shall mean the date
of the Investment Commitment Closing.

    


    “Investor” shall have the meaning set
forth in the preamble hereto.

    


    “Key Employee” shall have the meaning
set forth in Section 5.20, as set forth in Exhibit
D.

    


    “Knowledge”
means the actual knowledge of the Company’s Chief Executive Officer or Chief
Financial Officer, after reasonable inquiry of all officers, directors and
employees of the Company who could reasonably be expected to have knowledge or
information with respect to the matter in question.

    


    “Legend” shall have the meaning set
forth in Section 9.10(iii).

    


    “Legend Removal Condition” shall have
the meaning set forth in Section 9.10(iv).

    


    “Liquidity Date” shall have the meaning
set forth in Section 2.3.5(t).

    


    “Major Transaction" shall mean and
shall be deemed to have occurred at such time upon any of the following
events:


    
      
         


      

      
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    (i) a consolidation, merger or other
business combination or event or transaction following which the holders of
Common Stock of the Company immediately preceding such consolidation, merger,
combination or event either (i) no longer hold a majority of the shares of
Common Stock of the Company or (ii) no longer have the ability to elect the
board of directors of the Company (a “Change of Control”);

    


    (ii) the sale or transfer of a portion
of the Company's assets not in the ordinary course of business;

    


    (iii) the purchase of assets by the
Company not in the ordinary course of business; or

    


    (iv) a purchase, tender or exchange
offer made to the holders of outstanding shares of Common Stock.

    


    “Market Price” shall equal the average
of the three lowest daily VWAPS for the Common Stock on the Principal Market
during the Pricing Period for the applicable Put.

    


    “Material
Adverse Effect” means (i) any condition, occurrence, state of facts or
event having, or insofar as reasonably can be foreseen would likely have, any
material adverse effect on the legality, validity or enforceability of the
Transaction Documents or the transactions contemplated thereby, (ii) any
condition, occurrence, state of facts or event having, or insofar as reasonably
can be foreseen would likely have, any effect on the business, operations,
properties or condition (financial or otherwise) of the Company that is material
and adverse to the Company and its Subsidiaries, taken as a whole, and/or
(iii) any condition, occurrence, state of facts or event that would, or
insofar as reasonably can be foreseen would likely, prohibit or otherwise
materially interfere with or delay the ability of the Company to perform any of
its obligations under any of the Transaction Documents to which it is a party;
provided ,
however , that
none of the following, individually or in the aggregate, shall be taken into
account in determining whether a Material Adverse Effect has occurred or insofar
as reasonably can be foreseen would likely occur: (a) changes in conditions
in the U.S. or global capital, credit or financial markets generally, including
changes in the availability of capital or currency exchange rates, provided such
changes shall not have affected the Company in a materially disproportionate
manner as compared to other similarly situated companies; (b) changes
generally affecting the industries in which the Company is engaged, provided
such changes shall not have affected the Company in a materially
disproportionate manner as compared to other similarly situated companies;
(c) any effect of the announcement of, or the consummation of the
transactions contemplated by, this Agreement and the other Transaction Documents
on the Company’s relationships, contractual or otherwise, with customers,
suppliers, vendors, bank lenders, strategic venture partners or employees; and
(d) the receipt of any notice that the Common Stock may be ineligible to
continue listing or quotation on the Trading Market, other than a final and
non-appealable notice that the listing or quotation of the Common Stock on the
Trading Market shall be terminated on a date certain.

    


    “Material Facts” shall have the meaning
set forth in Section 2.3.7(a).


    
      
         


      

      
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    “Maximum Put Dollar Amount” shall mean
the lesser of (i) the Company Designated Maximum Put Dollar Amount, if any,
specified by the Company in a Put Notice, and (ii) $250,000.

    


    “Maximum Offering Amount” shall mean
have the meaning set forth in the recitals hereto.

    


    “Nasdaq 20% Rule” shall have the
meaning set forth in Section 2.3.11.

    


    “NASDAQ Market” shall mean NASDAQ
Capital Market, the NASDAQ Global Select Market or the NASDAQ Global
Market.

    


    “Normal Trading” shall mean trading
that occurs between 9:30 AM and 4:00 PM, New York City Time, on any Business
Day, and shall expressly exclude “after hours” trading.

    


    “Numeric Day” shall mean the numerical
day of the month of the Investment Date or the last day of the calendar month in
question, whichever is less.

    


    “Offering” shall mean the Company’s
offering of Common Stock issued under this Investment Agreement.

    


    “Officer’s Certificate” shall have the
meaning set forth in Section 2.2.2(e).

    


    “Opinion of Counsel” shall mean, as
applicable, the Investment Commitment Opinion of Counsel, the Put Opinion of
Counsel and the Registration Opinion.

    


    “Payment Due Date” shall have the
meaning set forth in Section 2.3.9.

    


    “Pricing
Period” shall mean, unless otherwise shortened under the terms of this
Agreement, the period beginning on the Business Day immediately following the
Put Date and ending on and including the date which is 15 Business Days after
such Put Date.

    


    “Pricing
Period End Date” shall mean the last Business Day of any Pricing
Period.

    


    “Principal Market” shall mean the
single principal trading exchange, over the counter market or other market on
which the Common Stock is then listed or traded in the United
States.

    


    “Proceeding” shall have the meaning as
set forth Section 5.1.

    


    “Prospectus
Supplement” means any prospectus supplement to the Prospectus filed with the SEC
from time to time pursuant to Rule 424(b) under the Securities Act,
including the documents incorporated by reference therein.

    


    “Purchase” shall have the meaning set
forth in Section 2.3.8.

    


    “Put” shall have the meaning set forth
in Section 2.3.1(d).


    
      
         


      

      
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    “Put Closing” shall have the meaning
set forth in Section 2.3.9.

    


    “Put Closing Date” shall have the
meaning set forth in Section 2.3.9.

    


    “Put Conditions” shall have the meaning
set forth in Section 2.3.5.

    


    “Put Date” shall mean the date that is
specified by the Company in any Put Notice for which the Company intends to
exercise a Put under Section 2.3.1, unless the Put Date is postponed pursuant to
the terms hereof, in which case the “Put Date” is such postponed
date.

    


    “Put Dollar Amount” shall be determined
by multiplying the Put Share Amount by the respective Put Share Prices with
respect to such Put Shares, subject to the limitations herein.

    


    “Put Interruption Date” shall have the
meaning set forth in Section 2.3.4.

    


    “Put Interruption Event” shall have the
meaning set forth in Section 2.3.4.

    


    “Put Interruption Notice” shall have
the meaning set forth in Section 2.3.4.

    


    “Put Notice” shall have the meaning set
forth in Section 2.3.1(d), the form of which is attached hereto as Exhibit
E.

    


    “Put Opinion of Counsel” shall mean an
opinion from Company’s independent counsel, in the form attached as Exhibit F, or such
other form as agreed upon by the parties, as to any Put Closing.

    


    “Put Share Amount” shall have the
meaning as set forth Section 2.3.1(b).

    


    “Put Share Price” shall have the
meaning set forth in Section 2.3.1(c).

    


    “Put Shares” shall mean shares of
Common Stock that are purchased by the Investor pursuant to a Put.

    


    “Registrable Securities” shall have the
meaning as set forth in the Registration Rights Agreement.

    


    “Registration Opinion” shall have the
meaning set forth in Section 2.3.7(a), the form of which is attached hereto as
Exhibit
G.

    


    “Registration Opinion Deadline” shall
have the meaning set forth in Section 2.3.7(a).

    


    “Registration Rights Agreement” shall
mean that certain registration rights agreement entered into by the Company and
Investor on even date herewith, in the form attached hereto as Exhibit H, or such
other form as agreed upon by the parties.

    


    “Registration Statement” shall have the
meaning as set forth in the Registration Rights Agreement.


    
      
         


      

      
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    “Regulation D” shall have the meaning
set forth in the recitals hereto.

    


    “Reporting Issuer” shall have the
meaning set forth in Section 6.2.

    


    “Required Put Documents” shall have the
meaning set forth in Section 2.3.6.

    


    “Resolutions” shall have the meaning
set forth in Section 2.3.5(u).

    


    “Right of First Refusal” shall have the
meaning set forth in Section 6.6.2.

    


    “Risk Factors” shall have the meaning
set forth in Section 3.2.4.

    


    “Schedule of Exceptions” shall have the
meaning set forth in Section 5, and is attached hereto as Exhibit
I.

    


    “SEC” shall mean the United States
Securities and Exchange Commission or any successor entity.

    


    “Secretary’s Certificate” shall have
the meaning set forth in Section 2.2.2(a).

    


    “Securities” shall mean the Common
Stock of the Company issuable pursuant to this Investment Agreement, including
but not limited to the Commitment Shares, the Fee Shares and the Put
Shares.

    


    “Securities Act” shall mean the
Securities Act of 1933, as amended.

    


     “Short
Sales” shall mean “short sales” as defined in Rule 200 promulgated under
Regulation SHO under the Exchange Act.

    


    “SOX ”
shall mean the Sarbanes-Oxley Act of 2002 and the rules and regulations of
the SEC thereunder.

    


    “Stockholder 20% Approval” shall have
the meaning set forth in Section 2.3.11.

    


    “Subsidiary”
shall mean any corporation or other entity of which at least a majority of the
securities or other ownership interest having ordinary voting power (absolutely
or contingently) for the election of directors or other persons performing
similar functions are at the time owned directly or indirectly by the Company
and/or any of its other Subsidiaries.

    


    “Term” shall mean the term of this
Agreement, which shall be a period of time beginning on the date of this
Agreement and ending on the Termination Date.

    


    “Termination Date” shall mean the
earlier of (i) the date that is two (2) years after the Effective Date, (ii) the
date that is thirty (30) calendar months after the date of this Agreement, or
(iii) the date that is thirty (30) Business Days after the later of (a) the Put
Closing Date on which the sum of the aggregate Put Share Price for all Put
Shares equal the Maximum Offering Amount, (b) the date that the Company has
delivered a Termination Notice to the Investor, and (c) the date of an Automatic
Termination.


    
      
         


      

      
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    “Termination Notice” shall have the
meaning as set forth in Section 2.3.12.

    


    “Third Party Reports” shall have the
meaning set forth in Section 3.2.4.

    


    “Trading Day” shall mean any day on
which the Principal Market is open for trading including any day on which the
Principal Market is open for trading for a period of time less than the
customary time.

    


    “Transaction
Documents” means, collectively, this Agreement and the exhibits hereto, the
Registration Rights Agreement and each of the other agreements, documents,
certificates and instruments entered into or furnished by the parties hereto in
connection with the transactions contemplated hereby and thereby, including,
without limitation, the Disclosure Documents.

    


    “Trading
Market” means whichever Approved Primary Market is at the time the principal
trading exchange or market for the Common Stock.

    


    “Trading Volume” shall mean the volume
of shares of the Company’s Common Stock that trade between 9:30 AM and 4:00 PM,
New York City Time, on any Business Day, and shall expressly exclude any shares
trading during “after hours” trading.

    


    “Transfer Agent” shall have the meaning
set forth in Section 6.9.

    


    “Transfer Agent Instructions” shall
have the meaning set forth in Section 6.9.

    


    “Trigger Price” shall have the meaning
set forth in Section 2.3.1(b).

    


    “Unlegended Share Certificates” shall
mean a certificate or certificates (or electronically delivered shares, as
appropriate) (in denominations as instructed by Investor) representing the
shares of Common Stock to which the Investor is then entitled to receive,
registered in the name of Investor or its nominee (as instructed by Investor)
and not containing a restrictive legend or stop transfer order, including but
not limited to the Put Shares for the applicable Put, and the Commitment Shares
and the Fee Shares when a Legend Removal Condition has been met.

    


    “Use of Proceeds Schedule” shall have
the meaning as set forth in Section 3.2.4, attached hereto as Exhibit
K.

    


    “Volume Limitations” shall have the
meaning set forth in Section 2.3.1(b).


    
      
         


      

      
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    2.           
Purchase and Sale of Common
Stock.

    


    2.1         
Offer to
Subscribe.

    


    Subject to the terms and conditions
herein and the satisfaction of the conditions to closing set forth in Sections
2.2 and 2.3 below and the other terms and conditions set forth in this
Agreement, Investor hereby agrees to purchase such amounts of Common Stock as
the Company may, in its sole and absolute discretion, from time to time elect to
issue and sell to Investor according to one or more Puts pursuant to Section 2.3
below.

    


    2.2         
Investment
Commitment. 

    


    2.2.1  Investment Commitment
Closing.  The closing of this Agreement (the “Investment
Commitment Closing") shall be deemed to occur when this Agreement has been duly
executed and delivered by both the Company and the Investor, and the other
Conditions to Investment Commitment Closing set forth in Section 2.2.2 below
have been met.

    


    2.2.2Conditions to Investment Commitment
Closing.  As a prerequisite to the Investment Commitment
Closing, all of the following (the “Conditions to Investment Commitment
Closing”) shall have been satisfied within five (5) Business Days of the
Company’s execution and delivery of this Agreement:

    


    
      
        	
              	
                (a)

              	
                the
      following documents shall have been delivered to the Investor: (i) the
      Registration Rights Agreement (duly executed by the Company and Investor),
      (ii) the Investment Commitment Opinion of Counsel (signed by the Company’s
      counsel) and  (iii) the Transfer Agent Instructions (executed by
      the Company and the Transfer Agent), and (iv) a Secretary's Certificate,
      in the form of Exhibit L hereto (“Secretary’s Certificate”), (A) attaching
      the Resolutions of the Company's board of directors authorizing this
      transaction and certifying that they remain in full force and effect
      without any amendment or supplement thereto as of the Commitment Closing
      Date, (B) attaching a certified copy of the Company's Certificate of
      Incorporation evidencing the incorporation and good standing of the
      Company in its state of incorporation, issued by the secretary of state of
      the state of incorporation within the ten (10) Business Days prior to the
      Commitment Closing Date, and (C)attaching a true and
      complete copy of the Bylaws of the Company and certifying that they remain
      in full force and
effect;

              


      

    

    


    
      
        	
              	
                (b)

              	
                this
      Investment Agreement, duly executed by the Company, shall have been
      received by the Investor;

              


      

    

    


    
      
        	
              	
                (c)

              	
                the
      Company’s Common Stock shall be listed for trading and actually trading on
      an Approved Primary Market;

              


      

    

    


    
      
        	
              	
                (d)

              	
                other
      than continuing losses described in the Risk Factors set forth in the
      Disclosure Documents (provided for in Section 3.2.4), up through the
      Investment Commitment Closing there have been no
      material adverse changes in the Company’s business prospects or financial
      condition since the date of the last balance sheet included in the
      Disclosure Documents, including but not limited to incurring material
      liabilities; 

              


      

    


    
      
         


      

      
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                (e)

              	
                the
      representations and warranties of the Company in this Agreement shall be
      true and correct in all material respects and the Conditions to Investment
      Commitment Closing set forth in this Section 2.2.2 shall have been
      satisfied on the date of such Investment Commitment Closing and all of the
      conditions and limitations set forth in this Agreement for the applicable
      Closing has been satisfied; and the Company shall deliver an Officer’s
      Certificate in the form of Exhibit M hereto (“Officer’s Certificate”),
      signed by an officer of the Company, to such effect to the Investor;
      and

              


      

    

    


    
      
        	
              	
                (f)

              	
                the
      Company shall have paid by wire transfer of immediately available funds to
      an account designated by the Investor’s counsel, the Cash Document
      Preparation Fee in accordance with Section 9.10(i) hereof, all of which
      fees shall be non-refundable regardless of whether any Puts are exercised
      by the Company or settled hereunder. The Company shall have issued to the
      Investor, or shall have caused its transfer agent to issue to the
      investor, certificates representing the Commitment Shares and the Fee
      Shares, respectively, in the name of the Investor or its designee (in
      which case such designee name shall have been provided to the Company
      prior to the Commitment Closing Date), in consideration for the Investor’s
      execution and delivery of this Agreement.  Such certificate
      shall be delivered to the Investor by overnight courier at its address set
      forth in Section 9.12 hereof.  For the avoidance of doubt, all
      of the Commitment Shares and Fee Shares shall be fully earned upon receipt
      regardless of whether any Puts are exercised by the Company or settled
      hereunder.

              


      

    

    


    2.3         
Puts of Common Shares
to the Investor.

    


    2.3.1   Procedure  to Exercise a
Put. Subject to the Individual Put Limit, the Maximum Offering Amount and
the Cap Amount (if applicable), and subject to the satisfaction of the Put
Conditions and the other conditions and limitations set forth in this Agreement,
at any time beginning on the date on which the Registration Statement is
declared effective by the SEC (the “Effective Date”), the Company may, in its
sole and absolute discretion, elect to exercise one or more Puts according to
the following procedure, provided that each subsequent Put Date after the first
Put Date shall be no sooner than five (5) Business Days following the preceding
Pricing Period End Date:

    


    (a) Delivery of Advance Put
Notice.At least one (1) Business Day but not more than twenty (20)
Business Days prior to any intended Put Date, the Company shall deliver advance
written notice (the “Advance Put Notice,” the form of which is attached hereto
as Exhibit A,
the date of such Advance Put Notice being the “Advance Put Notice Date”) to
Investor stating the Put Date for which the Company shall, subject to the
limitations and restrictions contained herein, exercise a Put and stating the
number of shares of Common Stock (subject to the Individual Put Limit and the
Maximum Put Dollar Amount) which the Company intends to sell to the Investor for
the Put (the “Intended Put Share Amount”).   


    
      
         


      

      
        12

        
          

        

      

      
         


      

    

    


    The Company may, at its option, also
designate in any Advance Put Notice (i) a maximum dollar amount of Common Stock,
not to exceed $250,000, which it shall sell to Investor during the Put (the
“Company Designated Maximum Put Dollar Amount”) and/or (ii) a minimum purchase
price per Put Share at which the Investor may purchase shares of Common Stock
pursuant to such Put Notice (a "Company Designated Minimum Put Share
Price").  The Company Designated Minimum Put Share Price, if
applicable, shall be no greater than the lesser of (i) 80% of the Closing Bid
Price of the Company’s common stock on the Business Day immediately preceding
the Advance Put Notice Date, or (ii) the Closing Bid Price of the Company’s
common stock on the Business Day immediately preceding the Advance Put Notice
Date minus $0.0125.  The Company may decrease (but not increase) the
Company Designated Minimum Put Share Price for a Put at any time by giving the
Investor written notice of such decrease not later than 12:00 Noon, New York
City time, on the Business Day immediately preceding the Business Day that such
decrease is to take effect.  A decrease in the Company Designated
Minimum Put Share Price shall have no retroactive effect on the determination of
Trigger Prices and Excluded Days for days preceding the Business Day that such
decrease takes effect, provided that the Put Share Price for all shares in a Put
shall be calculated using the lowest Company Designated Minimum Put Share Price,
as decreased.

    


    (b) Put Share Amount. The
“Put Share Amount” is the number of shares of Common Stock that the Investor
shall be obligated to purchase in a given Put, and shall equal the lesser of (i)
the Intended Put Share Amount, and (ii) the Individual Put Limit.  The
“Individual Put Limit” shall equal the lesser of (A) 1,500,000 shares, (B) 15%
of the sum of the aggregate daily reported Trading Volumes in the outstanding
Common Stock on the Company’s Principal Market, excluding any block trades that
exceed 20,000 shares of Common Stock, for all Evaluation Days (as
defined below) in the Pricing Period, (C) the number of Put Shares which, when
multiplied by their respective Put Share Prices, equals the Maximum Put Dollar
Amount, and (D) the 4.9% Limitation (collectively referred to
herein as the “Volume Limitations”).  Company agrees not to
trade Common Stock or arrange for Common Stock to be traded for the purpose of
artificially increasing the Volume
Limitations.    

    


    For purposes of this
Agreement:

    


    "Trigger Price" for any Pricing Period
shall mean the greater of (i) the Company Designated Minimum Put Share Price,
plus $0.01, or (ii) the Company Designated Minimum Put Share Price divided by
..96.

    


    An “Excluded Day” shall mean each
Business Day during a Pricing Period where the lowest intra-day trading price of
the Common Stock is less than the Trigger Price and each Business Day defined in
Section 2.3.4 as an “Excluded Day”.

    


    An “Evaluation Day” shall mean each
Business Day during a Pricing Period that is not an Excluded
Day.


    
      
         


      

      
        13

        
          

        

      

      
         


      

    

    


    (c) Put Share
Price.  The purchase price for the Put Shares (the “Put Share
Price”) shall equal the lesser of (i) the Market Price for such Put, minus
$0.01, or (ii) 96% of the Market Price for such Put, but shall in no event be
less than the Company Designated Minimum Put Share Price for such Put, if
applicable. 

    


    (d) Delivery of Put
Notice.  After delivery of an Advance Put Notice, on the Put
Date specified in the Advance Put Notice the Company shall deliver written
notice (the “Put Notice,” the form of which is attached hereto as Exhibit E) to
Investor stating (i) the Put Date, (ii) the Intended Put Share Amount as
specified in the Advance Put Notice (such exercise a “Put”), (iii) the Company
Designated Maximum Put Dollar Amount (if applicable), and (iv) the Company
Designated Minimum Put Share Price (if applicable).  In order to
effect delivery of the Put Notice, the Company shall (i) send the Put Notice by
facsimile on the Put Date so that such notice is received by the Investor by
6:00 p.m., New York, NY time, and (ii) surrender such notice on the Put Date to
a courier for overnight delivery to the Investor (or two (2) day delivery in the
case of an Investor residing outside of the U.S.). 

    


    (e) Delivery of Required Put
Documents. On or before the Put Date for such Put, the Company shall
deliver the Required Put Documents (as defined in Section 2.3.6 below) to the
Investor (or to an agent of Investor, if Investor so directs).  Unless
otherwise specified by the Investor or not permitted by DTC, the Put Shares of
Common Stock shall be delivered to the Investor in accordance with Section 2.3
by crediting the Investor’s or its designees’ account at DTC through its
Deposit/Withdrawal at Custodian (DWAC) system.

    


     (f)
Limitation on
Investor's Obligation to Purchase Shares. Notwithstanding anything to the
contrary in this Agreement, in no event shall the Investor be required to
purchase, and an Intended Put Share Amount may not include, an amount of Put
Shares, which when added to the number of shares of Common Stock of the Company
then beneficially owned by the Investor would exceed 4.9% of the number of
shares of Common Stock outstanding after issuance of such Put Shares, as
determined in accordance with Section 13(d) of the Exchange Act.  Each
Put Notice shall include a representation of the Company as to the number of
shares of Common Stock outstanding on the related Put Date.  In the
event that the number of shares of Common Stock outstanding decreases during a
Pricing Period from the number as of the Put Date associated with such Pricing
Period, then the number of shares of Common Stock outstanding on such date
during such Pricing Period shall govern for purposes of determining whether the
number of shares beneficially owned by the Investor following the issuance of
the subject Put Shares, would constitute in excess of 4.9% of the number of
shares of Common Stock outstanding.  The limitation set forth in this
Section 2.3.1(f) is referred to as the “4.9%
Limitation.”

    


    2.3.2  Termination of Right to
Put.  The Company’s right to initiate subsequent Puts to the
Investor shall terminate permanently (each, an “Automatic Termination”) upon the
occurrence of any of the following:

    


    (a) if,
at any time, either the Company or any director or executive officer of the
Company has engaged in a transaction or conduct related to the Company that has
resulted in (i) a Securities and Exchange Commission enforcement action, or (ii)
a civil judgment or criminal conviction for fraud or misrepresentation, or for
any other offense that, if prosecuted criminally, would constitute a felony
under applicable law;


    
      
         


      

      
        14

        
          

        

      

      
         


      

    

    


    (b) on
any date after a cumulative time period or series of time periods, consisting
only of Ineffective Periods, that continues for a period of ten (10) consecutive
Business Days or for more than an aggregate of thirty (30) Business Days in any
365-day period;

    


    (c) if at
any time the Company has filed for and/or is subject to any bankruptcy,
insolvency, reorganization or liquidation proceedings or other proceedings for
relief under any bankruptcy law or any law for the relief of debtors instituted
by or against the Company or any subsidiary of the Company;

    


    (d)
 if any Person commences a proceeding against the Company pursuant to or
within the meaning of any Bankruptcy Law;

    


    (e)
 if the Company pursuant to or within the meaning of any Bankruptcy Law;
(A) commences a voluntary case, (B) consents to the entry of an order for relief
against it in an involuntary case, (C) consents to the appointment of a
Custodian of it or for all or substantially all of its property, (D) makes a
general assignment for the benefit of its creditors or is generally unable to
pay its debts as the same become due;

    


    (f)  a
court of competent jurisdiction enters an order or decree under any Bankruptcy
Law that (A) is for relief against the Company in an involuntary case, (B)
appoints a Custodian of the Company or for all or substantially all of its
property, or (C) orders the liquidation of the Company or any
Subsidiary;

    


    (g) after
the sooner of (i) the date that is two (2) years after the Effective Date, (ii)
the date that is thirty (30) calendar months after the date of this Agreement,
or (iii) the Put Closing Date on which the aggregate of the Put Dollar Amounts
for all Puts equal the Maximum Offering Amount (the period from the date of this
Agreement to the sooner or (i), (ii) or (iii) is referred to as the “Commitment
Period”);

    


    (h) the
Company has breached any covenant in Section 5, Section 6, Section 8 or Section
9 hereof;

    


    (i) if no
Registration Statement has been declared effective by the date that is one (1)
year after the date of this Agreement, the Automatic Termination shall occur on
the date that is one (1) year after the date of this Agreement.

    


    (j)  the
suspension from trading or failure of the Common Stock to be listed on an
Approved Primary Market for a period of three (3) consecutive Business
days;

    


    (k)  the
delisting of the Company’s Common Stock from the Principal Market, provided,
however, that the Common Stock is not immediately thereafter trading on another
Approved Primary Market;


    
      
         


      

      
        15

        
          

        

      

      
         


      

    

    


    (l)  the
failure for any reason by the Transfer Agent to issue Commitment Shares or Fee
Shares to the Investor, without restrictive legends, pursuant to a legend
removal request, within five (5) Business Days after the applicable Required
Delivery Date; or

    


    (m)  the
Company breaches any representation, warranty, covenant or other term or
condition under any Transaction Document if such breach could have a Material
Adverse Effect and except, in the case of a breach of a covenant which is
reasonably curable, only if such breach continues for a period of at least five
(5) Business Days after notice thereof is provided to the Company by
Investor.

    


    For
purposes of clarification, notwithstanding any Automatic Termination hereunder,
the Investor shall retain all of the Cash Document Preparation Fee, the
Commitment Shares and the Fee Shares in consideration for this
Agreement.

    


    2.3.3     Maximum Offering
Amount.  The Investor shall not be obligated to purchase any
additional Put Shares once the aggregate Put Dollar Amount paid by Investor
equals the Maximum Offering Amount.

    


    2.3.4     Put
Interruption.  Once the Company delivers an Advance Put Notice
to the Investor, the Company may not cancel the Put.  In the event of
a Put Interruption Event (as defined below), in each case during any Pricing
Period, then (A) the Company shall notify the Investor in writing (a “Put
Interruption Notice”) as soon as possible by facsimile and overnight courier,
but no later than the end of the Business Day in which the Company becomes aware
of such facts, (B) the Pricing Period shall be extended or shortened, as
applicable, such that the Pricing Period End Date is the tenth (10th)
Business Day after the date of such Put Interruption Notice from the Company,
(the “Put Interruption Date”), (C) each Business Day from and including the Put
Interruption Date through and including the Pricing Period End Date for the
applicable Put (as extended or shortened, if applicable), shall be considered to
be an “Excluded Day,” as that term is used in this Agreement, and (D) the
Company Designated Minimum Put Share Price, if any, shall not apply to the
affected Put.  In the event that a Put Interruption Event occurs after
an Advance Put Notice Date, but before the applicable Put Date, that Put shall
be deemed to be terminated, and the Company may deliver an Advance Put Notice
for a new Put anytime beginning on the following Business Day, if otherwise
allowed under this Agreement.  A “Put Interruption Event” shall mean
any of the following: (i) an Automatic Termination, (ii) the failure of one of
the items specified in Section 2.3.5 below to be true and correct on any day
during an Extended Pricing Period, or (iii) the occurrence of one of the
following events:

    


    (a) the
Company has announced a subdivision or combination, including a reverse split,
of its Common Stock or has subdivided or combined its Common Stock;

    


    (b) the
Company has paid a dividend of its Common Stock or has made any other
distribution of its Common Stock;


    
      
         


      

      
        16

        
          

        

      

      
         


      

    

    


    (c) the
Company has made a distribution of all or any portion of its assets or evidences
of indebtedness to the holders of its Common Stock;

    


    (d) a
Major Transaction has occurred; or

    


    (e)  the
Company discovers or is notified of the existence of Material Facts or any
Ineffective Period or Delisting Event occurs.

    


    2.3.5   Conditions Precedent to the Right of
the Company to Deliver an Advance Put Notice or a Put
Notice.  The right of the Company to deliver an Advance Put
Notice or a Put Notice is subject to the satisfaction, on the date of delivery
of such Advance Put Notice or Put Notice, of each of the following conditions
(the “Put Conditions”):

    


    
      	
               
      

            	
              (a)

            	
              Investment Commitment
      Closing. The Conditions to Investment Commitment Closing shall have
      been timely satisfied as required in this Agreement and the Investment
      Commitment Closing shall have
occurred;

            


    

    


    
      	
               
      

            	
              (b)

            	
              Time Since Prior Put
      Notice. At least five Business Days shall have passed from the most
      recent Pricing Period End Date until the Put Date for the proposed Put;
      

            


    

    


    
      	
               
      

            	
              (c)

            	
              Required Put
      Documents. The Investor shall have received the Required Put
      Documents on or before the applicable Put
Date;

            


    

    


    
      	
               
      

            	
              (d)

            	
              Listing. The
      Company’s Common Stock shall be listed for and actively trading on and
      Approved Primary Market and the Commitment Shares, the Fee Shares and the
      Put Shares shall be so listed;

            


    

    


    
      
        	
              	
                (e)

              	
                No Suspension of
      Trading in or Delisting of Common Stock.  Trading in the
      Common Stock shall not have been suspended or delisted by the SEC, the
      Trading Market or the FINRA, the Company shall not have received any final
      and non-appealable notice that the listing or quotation of the Common
      Stock on the Trading Market shall be terminated on a date certain, and, at
      any time prior to the applicable Put Date and applicable Put Closing Date,
      trading in securities generally as reported on the Trading Market shall
      not have been suspended or limited, nor shall a banking moratorium have
      been declared either by the United States or New York State authorities,
      nor shall there have occurred any material outbreak or escalation of
      hostilities or other national or international calamity or crisis of such
      magnitude in its effect on, or any material adverse change in, any
      financial, credit or securities
market;

              


      

    


    
      
         


      

      
        17

        
          

        

      

      
         


      

    


    
      
        	
              	
                (f)

              	
                Registration
      Effective; No Stop Order. The Company shall
      have satisfied any and all obligations pursuant to the Registration Rights
      Agreement, including, but not limited to, the filing of the Registration
      Statement with the SEC with respect to the resale of all Registrable
      Securities and the requirement that the Registration Statement shall have
      been declared effective under the Securities Act by the SEC and shall
      remain current and effective such that the Investor shall be permitted to
      utilize the Prospectus therein to resell (a) all of the Commitment Shares,
      (b) all of the Fee Shares, (c) all of the Shares issued pursuant to all
      prior Put Notices, and (d) all of the Shares issuable pursuant to the
      applicable Put Notice, there shall exist no Material Facts or material
      non-public information that is not covered by the Prospectus (as
      supplemented or amended) and the Company shall have satisfied and shall be
      in compliance with any and all obligations pursuant to this Agreement and
      the Registration Rights Agreement. The Registration Statement is not
      subject to an Ineffective Period as defined in the Registration Rights
      Agreement, the prospectus included therein is current and deliverable, and
      to the Company’s knowledge there is no notice of any investigation or
      inquiry concerning any stop order with respect to the Registration
      Statement;   

              


      

    

    


    
      
        	
              	
                (g)

              	
                No Knowledge of Events
      Which Would Suspend Registration.  The Company shall
      have no knowledge of any event that, in the Company’s opinion, is more
      likely than not to have the effect of causing any Registration Statement
      to be suspended or otherwise ineffective (which event is more likely than
      not to occur within the thirty Business Days following the date on which
      such Advance Put Notice and Put Notice is deemed
    delivered);

              


      

    

    


    
      
        	
              	
                (h)

              	
                No Material
      Notices. None of the following events shall have occurred and be
      continuing: (a) receipt of any request by the SEC or any other federal or
      state governmental authority for any additional information relating to
      the Registration Statement, the Prospectus or any Prospectus Supplement,
      or for any amendment of or supplement to the Registration Statement, the
      Prospectus, or any Prospectus Supplement; (b) 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 prohibiting
      or suspending the use of the Prospectus or any Prospectus Supplement, or
      of the suspension of qualification or exemption from qualification of the
      securities for offering or sale in any jurisdiction, or the initiation or
      contemplated initiation of any proceeding for such purpose; or (c) the
      occurrence of any event or the existence of any condition or state of
      facts, which makes any statement of a material fact made in the
      Registration Statement, the Prospectus or any Prospectus Supplement untrue
      or which requires the making of any additions to or changes to the
      statements then made in the Registration Statement, the Prospectus or any
      Prospectus Supplement in order to state a material fact required by the
      Securities Act to be stated therein or necessary in order to make the
      statements then made therein (in the case of the Prospectus or any
      Prospectus Supplement, in light of the circumstances under which they were
      made) not misleading, or which requires an amendment to the Registration
      Statement or a supplement to the Prospectus or any Prospectus Supplement
      to comply with the Securities Act or any other law (other than the
      transactions contemplated by the applicable Put Notice and the settlement
      thereof). The Company shall have no Knowledge of any event that could
      reasonably be expected to have the effect of causing the suspension of the
      effectiveness of the Registration Statement or the prohibition or
      suspension of the use of the Prospectus or any Prospectus Supplement in
      connection with the resale of the Registrable Securities by the
      Investor;

              


      

    


    
      
         


      

      
        18

        
          

        

      

      
         


      

    

    


    
      
        	
              	
                (i)

              	
                Representations and
      Warranties True and Correct.  The
      representations and warranties of the Company in Section 5 hereof (except
      for Sections 5.11 and 5.13 and all but the first and last sentences of
      Section 5.12, which speak only as of the date of this Agreement) are true
      and correct as of the Put Date in all material respects as if made on such
      date, the Company has satisfied its obligations under Section 2.3 hereof
      and the conditions to Investor’s obligations set forth in this Section
      2.3.5 are satisfied as of such Closing, and the Company shall deliver a
      certificate, signed by an officer of the Company, to such effect to the
      Investor; 

              


      

    

    


    
      
        	
              	
                (j)

              	
                Authorization and
      Reservation of Shares.  The Company shall have authorized
      by all necessary corporate action and reserved for issuance a sufficient
      number of Common Shares for the purpose of enabling the Company to satisfy
      any obligation to issue Common Shares pursuant to any
  Put;

              


      

    

    


    
      
        	
              	
                (k)

              	
                Cap Amount Not
      Exceeded.  If the Aggregate
      Issued Shares after the Closing of the Put would exceed the Cap Amount,
      the Company shall have obtained the Stockholder 20% Approval as specified
      in Section 2.3.11, if the Company’s Common Stock is listed on a NASDAQ
      Market, and such approval is required by the rules of the
      NASDAQ;

              


      

    

    


    
      
        	
              	
                (l)

              	
                4.9% Limitation Not
      Exceeded. The aggregate
      number of Put Shares to be issued in the Put, when combined with the
      number of shares of Common Stock of the Company then beneficially owned by
      the Company, would not cause the Investor to exceed the 4.9% Limitation
      (as defined herein);

              


      

    

    


    
      
        	
              	
                (m)

              	
                Maximum Offering
      Amount Not Exceeded. The aggregate
      number of Put Shares to be issued in the Put, when combined with all Put
      Share issued in prior Puts, would not cause the Maximum Offering Amount to
      be exceeded;

              


      

    

    


    
      
        	
              	
                (n)

              	
                No Adverse Law, Rule,
      Regulation, or Pending Proceeding.  There is not then in
      effect any law, rule or regulation prohibiting or restricting the
      transactions contemplated hereby, or requiring any consent or approval
      which shall not have been obtained, nor is there any pending or threatened
      proceeding or investigation which may have the effect of prohibiting or
      adversely affecting any of the transactions contemplated by this
      Agreement;

              


      

    


    
      
         


      

      
        19

        
          

        

      

      
         


      

    

    


    
      
        	
              	
                (o)

              	
                No Pending or
      Threatened Injunctions. No statute, rule, regulation, executive
      order, decree, ruling or injunction shall have been enacted, entered,
      promulgated or adopted by any court or governmental authority of competent
      jurisdiction that prohibits the transactions contemplated by this
      Agreement, and no actions, suits or proceedings shall be in progress,
      pending or threatened by any person (other than the Investor or any
      affiliate of the Investor), that seek to enjoin or prohibit the
      transactions contemplated by this Agreement.  For purposes of
      this paragraph (i), no proceeding shall be deemed pending or threatened
      unless one of the parties has received written or oral notification
      thereof prior to the applicable Put Closing Date;
  

              


      

    

    


    
      
        	
              	
                (p)

              	
                Put Shares DTC
      Eligible.  The Put Shares
      delivered to the Investor are DTC eligible and can be immediately
      converted into electronic form;


              


      

    

    


    
      
        	
              	
                (q)

              	
                No Allegation of
      Section 5 Violation.  There has been no assertion by the
      SEC that there has been a violation of Section 5 of the Securities Act
      caused by the integration of the private sale of common stock to the
      Investor and the public offering pursuant to the Registration Statement,
      and there have been no claims made by third parties against the Investor
      based on a such an alleged Section 5
violation;

              


      

    

    


    
      
        	
              	
                (r)

              	
                Compliance with
      Laws.  The Company shall have complied with all applicable
      federal, state and local governmental laws, rules, regulations and
      ordinances in connection with the execution, delivery and performance of
      this Agreement and the other Transaction Documents to which it is a party
      and the consummation of the transactions contemplated hereby and thereby,
      including, without limitation, the Company shall have obtained all permits
      and qualifications required by any applicable state securities or “blue
      sky” laws for the offer and sale of the Securities by the Company to the
      Investor and the subsequent resale of the Registrable Securities by the
      Investor (or shall have the availability of exemptions
      therefrom);

              


      

    

      

    
      	
               
      

            	
              (s)

            	
              No Material Adverse
      Effect. No condition, occurrence, state of facts or event
      constituting a Material Adverse Effect shall have occurred and be
      continuing;

            


    

     

    
      
        	
              	
                (t)

              	
                No Restrictive
      Legends. If requested by the Investor from and after the earlier of
      (x) the Effective Date, or (y) the date that the Commitment Shares and Fee
      Shares can be sold under Rule 144 without volume restrictions (the earlier
      of (x) and (y) is referred to in this Agreement as the “Liquidity Date”),
      the Company shall have either (i) issued and delivered (or caused to be
      issued and delivered) to the Investor certificates representing the
      Commitment Shares and the Fee Shares, respectively, that are free from all
      restrictive and other legends or (ii) caused the Company’s transfer agent
      to credit the Investor’s or its designee’s account at DTC through its
      Deposit/Withdrawal at Custodian (DWAC) system with a number of shares of
      Common Stock equal to the number of Commitment Shares and Fee Shares
      represented by the certificate delivered by the Investor to the Company in
      accordance with Section 9.10(iv) of this
  Agreement.

              


      

    


    
      
         


      

      
        20

        
          

        

      

      
         


      

    

    


    
      	
               
      

            	
              (u)

            	
              Resolutions
      Adopted.  The Board of Directors of the Company shall
      have adopted resolutions (“Resolutions”) in the form attached hereto as
      Exhibit N, which shall be in full force and effect without any amendment
      or supplement thereto as of the Put
Date;

            


    

    


    
      
        	
              	
                (v)

              	
                No Material Non-Public
      Information.  The Investor shall not be in possession of
      any material non-public information.  If the Company discovers
      or is notified of Material Facts or of the existence of material
      non-public information that is not included in the Prospectus or any
      Ineffective Period occurs, the Company shall not initiate a Put until the
      Prospectus is amended to include any material non-public information or
      Material Facts and the Company’s counsel provides in a Registration
      Opinion that no Material Facts or material non-public information exists
      that is not included in the
Prospectus.

              


      

    

    


    
      	
               
      

            	
              (w)

            	
              Requested Due
      Diligence Information Provided.  The Company shall have
      provided the Investor with the information requested by the Investor in
      connection with its due diligence requests made prior to, or in connection
      with, the Put in accordance with Section 2.4
  hereof.

            


    

    


    
      	
               
      

            	
              (x)

            	
              Reporting
      Issuer.  The Company shall be a Reporting Issuer and
      shall have a class of securities registered under Section 12 of the
      Exchange Act.

            


    

    


    2.3.6  Documents Required to be Delivered
on the Put Date as Conditions to Closing of any Put.  The
Closing of any Put and Investor’s obligations hereunder shall additionally be
conditioned upon the delivery to the Investor of each of the following (the
“Required Put Documents”) on or within three (3) Business Days before the
applicable Put Date (or such earlier time as may be specifically required under
the terms hereof):

    


    (a) a
number of Unlegended Share Certificates equal to the Intended Put Share Amount,
which shall be delivered by crediting the Investor’s or its designees’ account
at DTC through its Deposit/Withdrawal at Custodian (DWAC) system (unless the
Investor requests physical certificates, in which such certificates shall be in
denominations of not more than 50,000 shares per certificate);

    


    (b) the
following documents: Put Opinion of Counsel, Registration Opinion, Officer’s
Certificate, Secretary’s Certificate, Resolutions, Put Notice, and any report or
disclosure required under Section 2.3.7 or Section 2.4 hereof, each dated as of
the Put Date or a date within three Business Days prior to the Put
Date;


    
      
         


      

      
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    (c) all
documents, instruments and other writings required to be delivered on or before
the Put Date pursuant to any provision of this Agreement in order to implement
and effect the transactions contemplated herein.

    


    
      2.3.7   Accountant’s Letter and Registration
Opinion.

    

    


    (a)  The Company shall have
caused to be delivered to the Investor, (i) whenever required by Section
2.3.7(b) or by Section 2.5.3, and (ii) on the date that is three (3) Business
Days prior to each Put Date (the “Registration Opinion Deadline”), an opinion of
the Company's independent counsel, in substantially the form of Exhibit G (the
“Registration Opinion”), addressed to the Investor stating, inter alia, that no
facts (“Material Facts”) have come to such counsel's attention that have caused
it to believe that the Registration Statement is subject to an Ineffective
Period or to believe that the Registration Statement, any Supplemental
Registration Statement (as each may be amended, if applicable), and any related
prospectuses, contain an untrue statement of material fact or omits a material
fact required to make the statements contained therein, in light of the
circumstances under which they were made, not misleading.  If a
Registration Opinion cannot be delivered by the Company's independent counsel to
the Investor on the Registration Opinion Deadline due to the existence of
Material Facts or an Ineffective Period, the Company shall promptly notify the
Investor and as promptly as possible amend each of the Registration Statement
and any Supplemental Registration Statements, as applicable, and any related
prospectus or cause such Ineffective Period to terminate, as the case may be,
and deliver such Registration Opinion and updated prospectus as soon as possible
thereafter.  If at any time after a Put Notice shall have been
delivered to Investor but before the related Pricing Period End Date, the
Company acquires knowledge of such Material Facts or any Ineffective Period
occurs, the Company shall promptly notify the Investor and shall deliver a Put
Interruption Notice to the Investor pursuant to Section 2.3.4 by facsimile and
overnight courier by the end of that Business Day.  

    


    (b)        
(i)  the Company shall engage its independent auditors to perform the
procedures in accordance with the provisions of Statement on Auditing Standards
No. 71, as amended, as agreed to by the parties hereto, and reports thereon (the
“Bring Down Cold Comfort Letters”) as shall have been reasonably requested by
the Investor with respect to certain financial information contained in the
Registration Statement and shall have delivered to the Investor such a report
addressed to the Investor, on the date that is three (3) Business Days prior to
each Put Date.

    


    (ii)  in the event that the
Investor shall have requested delivery of an Agreed Upon Procedures Report
pursuant to Section 2.4.3, the Company shall engage its independent auditors to
perform certain agreed upon procedures and report thereon as shall have been
reasonably requested by the Investor with respect to certain financial
information of the Company and the Company shall deliver to the Investor a copy
of such report addressed to the Investor.  In the event that the
report required by this Section 2.3.7(b) cannot be delivered by the Company's
independent auditors, the Company shall, if necessary, promptly revise the
Registration Statement and the Company shall not deliver a Put Notice until such
report is delivered.


    
      
         


      

      
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    2.3.8   Investor’s Obligation and Right to
Purchase Shares.    Subject to the conditions set
forth in this Agreement, following the Investor's receipt of a validly delivered
Put Notice, the Investor shall be required to purchase (each a “Purchase”) from
the Company a number of Put Shares equal to the Put Share Amount, in the manner
described below.

    


    2.3.9   Mechanics of Put
Closing.  Each of the Company and the Investor shall deliver
all documents, instruments and writings required to be delivered by either of
them pursuant to this Agreement at or prior to each Put
Closing.  Subject to such delivery and the satisfaction of the
conditions set forth in this Section 2, the closing of the purchase by the
Investor of Put Shares shall occur by 5:00 PM, New York City Time, on the date
which is five (5) Business Days following the applicable Pricing Period End Date
(the “Payment Due Date”) at the offices of Investor.  On each or
before each Payment Due Date, the Investor shall deliver to the Company, in the
manner specified in Section 7 below, the Put Dollar Amount to be paid for such
Put Shares, determined as aforesaid.  The closing (each a “Put
Closing”) for each Put shall occur on the date that (i) the Company has
delivered to the Investor all Required Put Documents, (ii)_each of the Put
Conditions have been met and (iii) the Investor has delivered to the Company
such Put Dollar Amount (each a “Put Closing Date”).

    


    2.3.10  Limitation on Short
Sales.  The Investor and its affiliates shall not engage in
short sales of the Company's Common Stock; provided, however, that the Investor
may enter into any short exempt sale or any short sale or other hedging or
similar arrangement it deems appropriate with respect to Put Shares after it
receives a Put Notice with respect to such Put Shares so long as such sales or
arrangements do not involve more than the number of such Put Shares specified in
the Put Notice.

    


    2.3.11  Cap Amount.  If the
Company becomes listed on a NASDAQ Market, then, unless the Company has obtained
the necessary approval (“Stockholder 20% Approval”) of its shareholders as
required under the Nasdaq 20% Rule or unless otherwise permitted by Nasdaq, in
no event shall the Aggregate Issued Shares exceed the maximum number of shares
of Common Stock (the “Cap Amount”) that the Company can, without stockholder
approval, so issue pursuant to Nasdaq Rule 4350(i)(1)(d)(i) (or any other
applicable Nasdaq Rules or any successor rule) (the “Nasdaq 20%
Rule”).

    


    2.3.12   Investment Agreement
Termination.   The Company may terminate (a “Company
Termination”) its right to initiate future Puts by providing written notice
(“Termination Notice”) to the Investor, by facsimile and overnight courier, at
any time other than during an Extended Put Period, provided that such
termination shall have no effect on the parties’ other rights and obligations
under this Agreement, the Registration Rights Agreement, and the Transfer Agent
Instructions.  Notwithstanding the above, any Put Interruption Notice
occurring during an Extended Put Period is governed by Section
2.3.4.

    


    2.3.13  Return of Excess Common
Shares.  In the event that the number of Put Shares purchased
by the Investor in any Put pursuant to its obligations hereunder is less than
the Intended Put Share Amount, the Investor shall promptly return to the Company
any shares of Common Stock in the Investor’s possession that are not being
purchased by the Investor, unless the parties mutually agree for the Investor to
retain such excess Common Shares to apply to the next Put.


    
      
         


      

      
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    2.4          
Due Diligence
Review.  The Company shall make available for inspection and
review by the Investor (the “Due Diligence Review”), advisors to and
representatives of the Investor (who may or may not be affiliated with the
Investor and who are reasonably acceptable to the Company), any underwriter
participating in any disposition of Common Stock on behalf of the Investor
pursuant to the Registration Statement, any Supplemental Registration
Statement, or
amendments or supplements thereto or any blue sky, FINRA or other filing, all
financial and other records, all filings with the SEC, and all other corporate
documents and properties of the Company as may be reasonably necessary for the
purpose of such review, and cause the Company's officers, directors and
employees to supply all such information reasonably requested by the Investor or
any such representative, advisor or underwriter in connection with such
Registration Statement (including, without limitation, in response to all
questions and other inquiries reasonably made or submitted by any of them),
prior to and from time to time after the filing and effectiveness of the
Registration Statement for the sole purpose of enabling the Investor and such
representatives, advisors and underwriters and their respective accountants and
attorneys to conduct initial and ongoing due diligence with respect to the
Company and the accuracy of the Registration Statement.

    


    2.4.1 
Treatment of Nonpublic
Information.  Following the Liquidity Date, the Company shall
not disclose nonpublic information to the Investor or to its advisors or
representatives unless prior to disclosure of such information the Company
identifies such information as being nonpublic information and provides the
Investor and such advisors and representatives with the opportunity to accept or
refuse to accept such nonpublic information for review. The Company and Investor
agree to be bound by the terms of the Confidentiality Agreement between them,
dated as of September 29, 2010.  The Company shall ensure that any
information disclosed by the Company to Investor in connection with the
Agreement shall cease to be material nonpublic information on or prior to the
Liquidity Date.

    


    Nothing
herein shall require the Company to disclose any information to the Investor or
its advisors or representatives that will constitute material nonpublic
information after the Liquidity Date, and the Company represents that it does
not disseminate material nonpublic information to any investors who purchase
stock in the Company in a public offering, to money managers or to securities
analysts, provided, however, that notwithstanding anything herein to the
contrary, the Company will, as hereinabove provided, immediately notify the
advisors and representatives of the Investor and, if any, underwriters, of any
event or the existence of any circumstance (without any obligation to disclose
the specific event or circumstance) of which it becomes aware, constituting
nonpublic information (whether or not requested of the Company specifically or
generally during the course of due diligence by and 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.


    
      
         


      

      
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    2.4.2   Disclosure of Misstatements and
Omissions. The Investor's advisors
or representatives shall make complete disclosure to the Investor's counsel of
all events or circumstances constituting nonpublic information discovered by
such advisors or representatives in the course of their due diligence upon which
such advisors or representatives form the opinion that the Registration
Statement contains an untrue statement of a material fact or omits a material
fact required to be stated in the Registration Statement or necessary to make
the statements contained therein, in the light of the circumstances in which
they were made, not misleading.  Upon receipt of such disclosure, the
Investor's counsel shall consult with the Company's independent counsel in order
to address the concern raised as to the existence of a material misstatement or
omission and to discuss appropriate disclosure with respect thereto; provided,
however, that such consultation shall not constitute the advice of the Company's
independent counsel to the Investor as to the accuracy of the Registration
Statement and related Prospectus. 

    


    2.4.3   Procedure if Material Facts are
Reasonably Believed to be Untrue or are Omitted.  In the event
after such consultation the Investor or the Investor's counsel reasonably
believes that the Registration Statement contains an untrue statement of a
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, and the Company, after a
request from the Investor, has failed to promptly provide reasonable information
indicating that that the Registration Statement is in fact complete, accurate
and current, then 

    


    (a) the Company shall promptly file
with the SEC an amendment to the Registration Statement responsive to such
alleged untrue statement or omission and provide the Investor, as promptly as
practicable, with copies of the Registration Statement and related Prospectus,
as so amended, or

    


    (b) if the Company disputes the
existence of any such material misstatement or omission, (i) the Company's
independent counsel (who is a member of a law firm having at least 20 attorneys)
shall provide the Investor's counsel with a Registration Opinion, at the
Company’s expense, and (ii) in the event the dispute relates to the adequacy of
financial disclosure and the Investor shall reasonably request, the Company
shall promptly cause its independent auditors to provide to the Company a letter
(“Agreed Upon Procedures Report”) outlining the performance of such "agreed upon
procedures" as shall be reasonably requested by the Investor and the Company
shall promptly provide the Investor with a copy of such letter.

    


    2.5         
Legending of
Shares.  In the event that, at any time after unlegended shares
are issued to the Investor by the Company under this Agreement, the Registration
Statement becomes subject to an Ineffective Period, and such unlegended shares
may not at that time be resold by the Investor without volume limitations
pursuant to Rule 144, if so requested by the Company in writing, the Investor
shall promptly return such shares to the Company or its Transfer Agent to have
restrictive legends placed on the shares until such time as the Ineffective
Period ends or a Legend Removal Condition has otherwise been met.  In
the event that, at any time after unlegended shares are issued to the Investor
by the Company under this Agreement, any such shares are transferred by Investor
pursuant to an exemption from the registration requirements of the Securities
Act other than Rule 144, the Investor shall promptly notify the Company thereof
and return such shares to the Company or its Transfer Agent to have restrictive
legends placed on the shares.


    
      
         


      

      
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    3.          
Representations, Warranties
and Covenants of Investor. Investor hereby represents and warrants to and
agrees with the Company as follows:

    


    3.1         
Accredited
Investor.  Investor is an accredited investor (“Accredited
Investor”), as defined in Rule 501 of Regulation D.

    


    3.2         
Investment Experience;
Access to Information; Independent Investigation.

    


    3.2.1   Access to
Information.  Investor or Investor’s professional advisor has
been granted the opportunity to ask questions of and receive answers from
representatives of the Company, its officers, directors, employees and agents
concerning the terms and conditions of this Offering, the Company and its
business and prospects, and to obtain any additional information which Investor
or Investor’s professional advisor deems necessary to verify the accuracy and
completeness of the information received.

    


    3.2.2   Reliance on Own
Advisors.  Investor has relied completely on the advice of, or
has consulted with, Investor’s own personal tax, investment, legal or other
advisors and has not relied on the Company or any of its affiliates, officers,
directors, attorneys, accountants or any affiliates of any thereof and each
other person, if any, who controls any of the foregoing, within the meaning of
Section 15 of the Act for any tax or legal advice (other than reliance on
information in the Disclosure Documents as defined in Section 3.2.4 below and on
the Opinion of Counsel).  The foregoing, however, does not limit or
modify Investor’s right to rely upon covenants, representations and warranties
of the Company in this Agreement.

    


    3.2.3 Capability to
Evaluate.  Investor has such knowledge and experience in
financial and business matters so as to enable such Investor to utilize the
information made available to it in connection with the Offering in order to
evaluate the merits and risks of the prospective investment, which are
substantial, including without limitation those set forth in the Disclosure
Documents (as defined in Section 3.2.4 below).

    


    3.2.4   Disclosure
Documents.  Investor, in making Investor’s investment decision
to subscribe for the Investment Agreement hereunder, represents that (a)
Investor has received and had an opportunity to review (i) the Company’s Annual
Report on Form 10-K for the year ended June 30, 2009, (ii) the Company’s
quarterly reports on Form 10-Q for the quarters ended September 30, 2009,
December 31, 2009, and March 31, 2010, (iii) the Company’s current Report on
Form 8-K filed on May 14, 2010, (iv) the Risk Factors, attached as Exhibit O, (the “Risk
Factors”) (v) the Capitalization Schedule, attached as Exhibit B, (the
“Capitalization Schedule”) and (vi) the Use of Proceeds Schedule, attached as
Exhibit K, (the
“Use of Proceeds Schedule”); (b) Investor has read, reviewed, and relied solely
on the documents described in (a) above, the Company’s representations and
warranties and other information in this Agreement, including the exhibits,
documents prepared by the Company which have been specifically provided to
Investor in connection with this Offering (the documents described in this
Section 3.2.4 (a) and (b) are collectively referred to as the “Disclosure
Documents”), and an independent investigation made by Investor and Investor’s
representatives, if any; (c) Investor has, prior to the date of this Agreement,
been given an opportunity to review material contracts and documents of the
Company which have been filed as exhibits to the Company’s filings under the Act
and the Exchange Act and has had an opportunity to ask questions of and receive
answers from the Company’s officers and directors; and (d) is not relying on any
oral representation of the Company or any other person, nor any written
representation or assurance from the Company other than those contained in the
Disclosure Documents or incorporated herein or therein.  The
foregoing, however, does not limit or modify Investor’s right to rely upon
covenants, representations and warranties of the Company in Sections 5 and 6 of
this Agreement.  Investor acknowledges and agrees that the Company has
no responsibility for, does not ratify, and is under no responsibility
whatsoever to comment upon or correct any reports, analyses or other comments
made about the Company by any third parties, including, but not limited to,
analysts’ research reports or comments (collectively, “Third Party Reports”),
and Investor has not relied upon any Third Party Reports in making the decision
to invest.


    
      
         


      

      
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    3.2.5  Investment Experience; Fend for
Self.  Investor has substantial experience in investing in
securities and it has made investments in securities other than those of the
Company.  Investor acknowledges that Investor is able to fend for
Investor’s self in the transaction contemplated by this Agreement, that Investor
has the ability to bear the economic risk of Investor’s investment pursuant to
this Agreement and that Investor is an "Accredited Investor" by virtue of the
fact that Investor meets the investor qualification standards set forth in
Section 3.1 above.  Investor has not been organized for the purpose of
investing in securities of the Company, although such investment is consistent
with Investor’s purposes.

    


    3.3         Exempt Offering Under
Regulation D.

    


    3.3.1  No General
Solicitation.  The Investment Agreement was not offered to
Investor through, and Investor is not aware of, any form of general solicitation
or general advertising, including, without limitation, (i) any advertisement,
article, notice or other communication published in any newspaper, magazine or
similar media or broadcast over television or radio, and (ii) any seminar or
meeting whose attendees have been invited by any general solicitation or general
advertising.

    


    3.3.2  Restricted
Securities.  Investor understands that the Investment Agreement
is, the Common Stock issued at each Put Closing will be characterized as
"restricted securities" under the federal securities laws inasmuch as they are
being acquired from the Company in a transaction exempt from the registration
requirements of the federal securities laws and that under such laws and
applicable regulations such securities may not be transferred or resold without
registration under the Act or pursuant to an exemption therefrom.  In
this connection, Investor represents that Investor is familiar with Rule 144
under the Act, as presently in effect, and understands the resale limitations
imposed thereby and by the Act.

    


    3.3.3  Disposition.  Investor
further agrees not to sell, transfer, assign, or pledge the Securities (except
for any bona fide pledge arrangement to the extent that such pledge does not
require registration under the Act or unless an exemption from such registration
is available and provided further that if such pledge is realized upon, any
transfer to the pledgee shall comply with the requirements set forth herein), or
to otherwise dispose of all or any portion of the Securities unless and
until:

    


    (a)There is then in effect a
registration statement under the Act and any applicable state securities laws
covering such proposed disposition and such disposition is made in accordance
with such registration statement and in compliance with applicable prospectus
delivery requirements; or


    
      
         


      

      
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    (b)          
(i) Investor shall have notified the Company of the proposed disposition and
shall have furnished the Company with a statement of the circumstances
surrounding the proposed disposition to the extent relevant for determination of
the availability of an exemption from registration, and (ii) if reasonably
requested by the Company, Investor shall have furnished the Company with an
opinion of counsel, reasonably satisfactory to the Company, that such
disposition will not require registration of the Securities under the Act or
state securities laws.  It is agreed that the Company will not require
the Investor to provide opinions of counsel for transactions made pursuant to
Rule 144 provided that Investor and Investor’s broker, if necessary, provide the
Company with the necessary representations and documents for counsel to the
Company to issue an opinion with respect to such transaction.

    


    The Investor is entering into this
Agreement for its own account and the Investor has no present arrangement or
intention to sell the security represented by this Agreement to or through any
person or entity, has no present arrangement (whether or not legally binding) to
sell the Common Stock to or through any person or entity and has no present
intention to sell such Common Stock to or through any person or entity;
provided, however, that by making the representations herein, the Investor does
not agree to hold the Common Stock for any minimum or other specific term and
reserves the right to dispose of the Common Stock at any time in accordance with
federal and state securities laws applicable to such disposition.

    


    3.4         
Due
Authorization.

    


    3.4.1  Authority.  The
person executing this Investment Agreement, if executing this Agreement in a
representative or fiduciary capacity, has full power and authority to execute
and deliver this Agreement and each other document included herein for which a
signature is required in such capacity and on behalf of the subscribing
individual, partnership, trust, estate, corporation or other entity for whom or
which Investor is executing this Agreement.  Investor has reached the
age of majority (if an individual) according to the laws of the state in which
he or she resides.

    


    3.4.2   Due
Organization.  Investor is duly and validly organized, validly
existing and in good standing as a limited liability company under the laws of
Georgia with full power and authority to purchase the Securities to be purchased
by Investor and to execute and deliver this Agreement.

    


    3.4.3   Partnerships.  If
Investor is a partnership, the representations, warranties, agreements and
understandings set forth above are true with respect to all partners of Investor
(and if any such partner is itself a partnership, all persons holding an
interest in such partnership, directly or indirectly, including through one or
more partnerships), and the person executing this Agreement has made due inquiry
to determine the truthfulness of the representations and warranties made
hereby.


    
      
         


      

      
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    3.5          No Registration As A
Dealer. The Investor is not and will not be required to be registered as
a "dealer" under the 1934 Act, either as a result of its execution and
performance of its obligations under this Agreement or otherwise.

    


    3.6          Beneficial
Owner.  Upon the initial issuance thereof, the Investor will be
the sole beneficial owner of all Put Shares purchased under this
Agreement.

    


    3.7          Investor has Sufficient
Funds.  Investor and its affiliates have sufficient financial
resources to satisfy its obligations under this Agreement.  Investor
and its affiliate shall, at all times from the Effective Date until the
Termination Date, maintain cash, cash equivalents and other highly liquid assets
in sufficient quantities to satisfy its obligations to purchase Put Shares when
and as required pursuant to this Agreement.

    


    4.           
Acknowledgments and
Agreements  Investor is aware that:

    


    4.1          Risks of
Investment.  Investor recognizes that an investment in the
Company involves substantial risks, including the potential loss of Investor's
entire investment herein.  Investor recognizes that the Disclosure
Documents, this Agreement and the exhibits hereto do not purport to contain all
the information which would be contained in a registration statement under the
Act; 

    


    4.2          No Government
Approval.  No federal or state agency has passed upon the
Securities, recommended or endorsed the Offering, or made any finding or
determination as to the fairness of this transaction;

    


    4.3          No Registration,
Restrictions on Transfer.  As of the date of this Agreement,
the Securities and any component thereof have not been registered under the Act
or any applicable state securities laws by reason of exemptions from the
registration requirements of the Act and such laws, and may not be sold, pledged
(except for any limited pledge in connection with a margin account of Investor
to the extent that such pledge does not require registration under the Act or
unless an exemption from such registration is available and provided further
that if such pledge is realized upon, any transfer to the pledgee shall comply
with the requirements set forth herein), assigned or otherwise disposed of in
the absence of an effective registration of the Securities and any component
thereof under the Act or unless an exemption from such registration is
available;

    


    4.4          Restrictions on
Transfer.  Investor may not attempt to sell, transfer, assign,
pledge or otherwise dispose of all or any portion of the Securities or any
component thereof in the absence of either an effective registration statement
or an exemption from the registration requirements of the Act and applicable
state securities laws; 

    


    4.5          No Assurances of
Registration.  There can be no assurance that any registration
statement will become effective at the scheduled time, or ever, or remain
effective when required, and Investor acknowledges that it may be required to
bear the economic risk of Investor's investment for an indefinite period of
time;


    
      
         


      

      
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    4.6          Exempt
Transaction.  Investor understands that the Securities are
being offered and sold in reliance on specific exemptions from the registration
requirements of federal and state law and that the representations, warranties,
agreements, acknowledgments and understandings set forth herein are being relied
upon by the Company in determining the applicability of such exemptions and the
suitability of Investor to acquire such Securities.

    


    4.7          Legends.  The
certificates representing the Put Shares shall not bear a legend restricting the
sale or transfer thereof.

    


    5.          
Representations, Warranties
and Covenants of the Company.  The Company hereby makes the
following representations and warranties to Investor (which shall be true at the
signing of this Agreement, and as of any such later date as specified hereunder)
and agrees with Investor that, except as set forth in the “Schedule of
Exceptions” attached hereto as Exhibit
I:

    


    5.1           Organization, Good Standing,
and Qualification.  The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Nevada, USA and has all requisite corporate power and authority to carry on its
business as now conducted and as proposed to be conducted.  The
Company is duly qualified to transact business and is in good standing in each
jurisdiction in which the failure to so qualify would, in the Company’s opinion,
have a material adverse effect on the business or properties of the Company and
its subsidiaries taken as a whole.  The Company is not the subject of
any pending, threatened or, to its knowledge, contemplated investigation or
administrative or legal proceeding (a “Proceeding”) by the Internal Revenue
Service, the taxing authorities of any state or local jurisdiction, or the
Securities and Exchange Commission, the FINRA, the Nasdaq Stock Market, Inc. or
any state securities commission, or any other governmental entity, which have
not been disclosed in the Disclosure Documents.  None of the disclosed
Proceedings, if any, will, in the Company’s opinion, have a material adverse
effect upon the Company. Each of the Company’s
subsidiaries, if any, the jurisdiction of incorporation or organization of each,
and the percentage of the Company’s ownership of each is listed in Schedule 5.1
hereto.

    


    5.2          Corporate
Condition.  The Company's condition is, in all material
respects, as described in the Disclosure Documents (as further set forth in any
subsequently filed Disclosure Documents, if applicable), except for changes in
the ordinary course of business and normal year-end adjustments that are not, in
the aggregate, materially adverse to the Company.  Except for
continuing losses, there have been no material adverse changes to the Company’s
business, financial condition, or prospects from the dates of such Disclosure
Documents through the date of the Investment Commitment Closing.  The
financial statements as contained in the 10-K and 10-Q have been prepared in
accordance with generally accepted accounting principles, consistently applied
(except as otherwise permitted by Regulation S-X of the Exchange Act, or
Generally Accepted Accounting Principles, as applicable), subject, in the case
of unaudited interim financial statements, to customary year end adjustments and
the absence of certain footnotes, and fairly present the financial condition of
the Company as of the dates of the balance sheets included therein and the
consolidated results of its operations and cash flows for the periods then
ended.  Without limiting the foregoing, there are no material
liabilities, contingent or actual, that are not disclosed in the Disclosure
Documents (other than liabilities incurred by the Company in the ordinary course
of its business, consistent with its past practice, after the period covered by
the Disclosure Documents).  The Company has paid all material taxes
that are due, except for taxes that it reasonably disputes.  There is
no material claim, litigation, or administrative proceeding pending or, to the
best of the Company’s knowledge, threatened against the Company, except as
disclosed in the Disclosure Documents.  This Agreement and the
Disclosure Documents do not contain any untrue statement of a material fact and
do not omit to state any material fact required to be stated therein or herein
necessary to make the statements contained therein or herein not misleading in
the light of the circumstances under which they were made.  No event
or circumstance exists relating to the Company which, under applicable law,
requires public disclosure but which has not been so publicly announced or
disclosed.


    
      
         


      

      
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    5.3          Commission Documents,
Financial Statements. 

    


    (a)           Except
as set forth in the Schedule of Exceptions, the Company has timely filed (giving
effect to permissible extensions in accordance with Rule 12b-25 under the
Exchange Act) all Commission Documents.  The Company has delivered or made
available to the Investor via EDGAR or otherwise true and complete copies of the
Commission Documents filed with or furnished to the SEC prior to the Commitment
Closing Date (including, without limitation, the 2009 Form 10-K). No
Subsidiary of the Company is required to file or furnish any report, schedule,
registration, form, statement, information or other document with the SEC. As of
its filing date, each Commission Document filed with or furnished to the SEC
prior to the Commitment Closing Date (including, without
limitation, the 2009 Form 10-K) complied in all material respects with the
requirements of the Securities Act or the Exchange Act, as applicable, and other
federal, state and local laws, rules and regulations applicable to it, and,
as of its filing date (or, if amended or superseded by a filing prior to the
Commitment Closing Date,
on the date of such amended or superseded filing), such Commission Document did
not contain any untrue statement of a material fact or omit 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. The Registration Statement, on the date it is filed with the SEC, on
the date it is declared effective by the SEC, on each Put Date and on each Put
Closing Date, shall comply in all material respects with the requirements of the
Securities Act (including, without limitation, Rule 415 under the
Securities Act) and shall not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein not misleading, except that this
representation and warranty shall not apply to statements in or omissions from
the Registration Statement made in reliance upon and in conformity with
information relating to the Investor furnished to the Company in writing by
or on behalf of the Investor expressly for use therein (which to the Company’s
Knowledge are not false or misleading). The Prospectus and each Prospectus
Supplement required to be filed pursuant to this Agreement or the Registration
Rights Agreement, when taken together, on its date, on each Put Date and on each
Put Closing Date, shall comply in all material respects with the requirements of
the Securities Act (including, without limitation, Rule 424(b) under
the Securities Act) and shall not contain any untrue statement of a material
fact or omit 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, except that this representation and
warranty shall not apply to statements in or omissions from the Prospectus or
any Prospectus Supplement made in reliance upon and in conformity with
information relating to the Investor furnished to the Company in writing by or
on behalf of the Investor expressly for use therein (which to the Company’s
Knowledge are not false or misleading). Each Commission Document (other than the
Registration Statement, the Prospectus or any Prospectus Supplement) to be filed
with or furnished to the SEC after the Commitment Closing Date and incorporated
by reference in the Registration Statement, the Prospectus or any Prospectus
Supplement required to be filed pursuant to this Agreement or the Registration
Rights Agreement (including, without limitation, the Current Report), when such
document is filed with or furnished to the SEC and, if applicable, when such
document becomes effective, as the case may be, shall comply in all material
respects with the requirements of the Securities Act or the Exchange Act, as
applicable, and other federal, state and local laws, rules and regulations
applicable to it, and shall not contain any untrue statement of a material fact
or omit 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. The Company has delivered or made available to
the Investor via EDGAR or otherwise true and complete copies of all comment
letters and substantive correspondence received by the Company from the SEC
relating to the Commission Documents filed with or furnished to the SEC as of
the Commitment Closing Date, together with all written responses of the Company
thereto. There are no outstanding or unresolved comments or undertakings in such
comment letters received by the Company from the SEC. The SEC has not issued any
stop order or other order suspending the effectiveness of any registration
statement filed by the Company under the Securities Act or the Exchange
Act.


    
      
         


      

      
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    (b) 
       The financial statements, together with the
related notes and schedules, of the Company included in the Commission Documents
comply as to form in all material respects with all applicable accounting
requirements and the published rules and regulations of the SEC and all
other applicable rules and regulations with respect thereto as may be
subject to any applicable out of period adjustments disclosed in the Commission
Documents. Such financial statements, together with the related notes and
schedules, have been prepared in accordance with GAAP applied on a consistent
basis 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 not include footnotes or
may be condensed or summary statements and are subject to customary year-end
audit adjustments), and fairly present in all material respects the financial
condition of the Company and its consolidated Subsidiaries as of the dates
thereof and the results of operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments).

     

    (c)           The
Company has timely filed with the SEC and made available to the Investor via
EDGAR or otherwise all certifications and statements required by
(x) Rule 13a-14 or Rule 15d-14 under the Exchange Act or
(y) 18 U.S.C. Section 1350 (Section 906 of the Sarbanes-Oxley Act
of 2002 (“ SOXA ”))
with respect to all relevant Commission Documents.  The Company is in
compliance in all material respects with the provisions of SOXA applicable to it
as of the date hereof.  The Company maintains disclosure controls and
procedures required by Rule 13a-15 or Rule 15d-15 under the Exchange
Act; except to the extent disclosed in the Commission Documents, such controls
and procedures are effective to ensure that all material information concerning
the Company and its Subsidiaries is made known on a timely basis to the
individuals responsible for the timely and accurate preparation of the Company’s
Commission filings and other public disclosure documents.  As used in this
Section 5.3(c), the term “file” shall be broadly construed to include any
manner in which a document or information is furnished, supplied or otherwise
made available to the SEC.


    
      
         


      

      
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    (d)           GBH
CPAs, PC who shall express their opinion on the audited financial statements and
related schedules to be included or incorporated by reference in the
Registration Statement and the Prospectus are, with respect to the Company,
independent public accountants as required by the Securities Act and is an
independent registered public accounting firm within the meaning of SOXA as
required by the rules of the Public Company Accounting Oversight
Board.

    


    5.4          Authorization.  All
corporate action on the part of the Company by its officers, directors and
stockholders necessary for the authorization, execution and delivery of this
Agreement and all of the Transaction Documents, the performance of all
obligations of the Company hereunder and the authorization, issuance and
delivery of the Common Stock being sold hereunder have been taken, and this
Agreement and the Registration Rights Agreement constitute valid and legally
binding obligations of the Company, enforceable in accordance with their terms,
except insofar as the enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, or other similar laws affecting creditors’ rights
generally or by principles governing the availability of equitable
remedies.  The Company has obtained all consents and approvals
required for it to execute, deliver and perform each agreement referenced in the
previous sentence.  The Board of
Directors of the Company shall have adopted resolutions granting the above
authorizations (the "Resolutions") and, as a condition to each Put, such
Resolutions shall not have been amended or rescinded prior to such Put
Date.

    


    5.5          Valid Issuance of Common
Stock.  The Commitment Shares, Fee Shares and Put Shares, when
issued, sold and delivered in accordance with the terms hereof, for the
consideration expressed herein, will be validly issued, fully paid and
nonassessable, will be issued free of any preemptive rights and, based in part
upon the representations of Investor in this Agreement, will be issued in
compliance with all applicable U.S. federal and state securities
laws.  

    


    5.6.        
Securities Act.
The Company has complied and shall comply with all applicable federal and state
securities laws in connection with the offer, issuance and sale of the
Securities hereunder, including, without limitation, the applicable requirements
of the Securities Act. Without limiting the generality of the foregoing, the
Company satisfies, and the Registration Statement upon filing with the SEC and
at the time it is declared effective by the SEC shall satisfy, all of the
requirements of the Securities Act to register the resale of the Registrable
Securities by the Investor in accordance with the Registration Rights Agreement
on a delayed or continuous basis under Rule 415 under the Securities Act at
then-prevailing market prices, and not fixed prices. The Company is not, and has
never been, an issuer identified in, or subject to,
Rule 144(i).


    
      
         


      

      
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    5.7          Compliance with Other
Instruments.  The Company is not in violation or default of any
provisions of its Certificate of Incorporation or Bylaws, each as amended and in
effect on and as of the date of the Agreement, or, except as disclosed in
Disclosure Documents, of any material provision of any material instrument or
material contract to which it is a party or by which it is bound or of any
provision of any federal or state judgment, writ, decree, order, statute, rule
or governmental regulation applicable to the Company, which would, in the
Company’s opinion, have a material adverse effect on the Company's business or
prospects, or on the performance of its obligations under this Agreement or the
Registration Rights Agreement.  The execution, delivery and
performance of this Agreement and the other agreements entered into in
conjunction with the Offering and the consummation of the transactions
contemplated hereby and thereby will not (a) result in any such violation or be
in conflict with or constitute, with or without the passage of time and giving
of notice, either a default under any such provision, instrument or contract or
an event which results in the creation of any lien, charge or encumbrance upon
any assets of the Company, which would, in the Company’s opinion, have a
material adverse effect on the Company’s business or prospects, or on the
performance of its obligations under this Agreement, the Registration Rights
Agreement, or (b) violate the Company’s Certificate of Incorporation or By-Laws
or (c) violate any statute, rule or governmental regulation applicable to the
Company which violation would, in the Company’s opinion, have a material adverse
effect on the Company's business or prospects.

    


    5.8          Reporting
Company.  The Company is subject to the reporting requirements
of the Exchange Act, has a class of securities registered under Section 12 of
the Exchange Act, and has filed all reports required by the Exchange Act since
the date the Company first became subject to such reporting obligations. The
Company undertakes to furnish Investor with copies of such reports as may be
reasonably requested by Investor prior to consummation of this Offering and
thereafter, to make such reports available, for the full term of this Agreement,
including any extensions thereof, and for as long as Investor holds the
Securities.  The Common Stock is duly listed or approved for quotation
on the O.T.C. Bulletin Board.  The Company is not in violation of the
listing requirements of the O.T.C. Bulletin Board and does not reasonably
anticipate that the Common Stock will be delisted by the O.T.C. Bulletin Board
for the foreseeable future.  The Company has filed all reports
required under the Exchange Act.  

    


    5.9.        
Listing and
Maintenance Requirements. The Company’s Common Stock is registered
pursuant to Section 12(b) or 12(g) of the Exchange Act, and the
Company has taken no action designed to, or which to its Knowledge is likely to
have the effect of, terminating the registration of the Common Stock under the
Exchange Act, nor has the Company received any notification that the SEC is
contemplating terminating such registration. The Company has not, in the 12
months preceding the Commitment Closing Date, received notice from any Trading
Market on which the Common Stock is or has been listed or quoted to the effect
that the Company is not in compliance with the listing or maintenance
requirements of such Trading Market. The Company currently is, and has no reason
to believe that it will not in the foreseeable future continue to be, in
compliance with all such listing and maintenance requirements.

    


    5.10.       Indebtedness. 
The Company’s Quarterly Report on Form 10-Q for its fiscal quarter ended
March 31, 2010 sets forth, as of March 31, 2010, all outstanding secured and
unsecured Indebtedness of the Company or any Subsidiary, or for which the
Company or any Subsidiary has commitments through such date.  For the
purposes of this Agreement, “Indebtedness ” shall mean (a) any liabilities
for borrowed money or amounts owed in excess of $100,000 (other than trade
accounts payable incurred in the ordinary course of business), (b) all
guaranties, endorsements, indemnities and other contingent obligations in
respect of Indebtedness of others in excess of $100,000, whether or not the same
are or should be reflected in the Company’s balance sheet (or the notes
thereto), except guaranties by endorsement of negotiable instruments for deposit
or collection or similar transactions in the ordinary course of business; and
(c) the present value of any lease payments in excess of $100,000 due under
leases required to be capitalized in accordance with GAAP.  There is no
existing or continuing default or event of default in respect of any
Indebtedness of the Company or any of its Subsidiaries. The Company has not
taken any steps, and does not currently expect to take any steps, to seek
protection pursuant to Title 11 of the United States Code or any similar federal
or state bankruptcy law or law for the relief of debtors, nor does the Company
have any Knowledge that its creditors intend to initiate involuntary bankruptcy,
insolvency, reorganization or liquidation proceedings or other proceedings for
relief under Title 11 of the United States Code or any other federal or state
bankruptcy law or any law for the relief of debtors.


    
      
         


      

      
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    5.11        
Capitalization.  The
capitalization of the Company as of the date hereof subject to exercise of any
outstanding warrants and/or exercise of any outstanding stock options, and after
taking into account all other share issuances occurring prior to this Offering,
is as set forth in the Capitalization Schedule as set forth in Exhibit
B.  Except as disclosed in the Capitalization Schedule, there
are no securities or instruments containing anti-dilution or similar provisions
that will be triggered by the issuance of the Securities.  Except as
disclosed in the Capitalization Schedule, as of the date of this Agreement, (i)
there are no outstanding options, warrants, scrip, rights to subscribe for,
calls or commitments of any character whatsoever relating to, or securities or
rights convertible into or exercisable 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 agreements or arrangements under which the Company or any
of its subsidiaries is obligated to register the sale of any of its or their
securities under the Act (except the Registration Rights
Agreement).

    


    5.12         Intellectual
Property.  The Company has valid, unrestricted and exclusive
ownership of or rights to use the patents, trademarks, trademark registrations,
trade names, copyrights, know-how, technology and other intellectual property
necessary to the conduct of its business.  Exhibit P lists all
patents, trademarks, trademark registrations, trade names and copyrights of the
Company.  The Company has granted such licenses or has assigned or
otherwise transferred a portion of (or all of) such valid, unrestricted and
exclusive patents, trademarks, trademark registrations, trade names, copyrights,
know-how, technology and other intellectual property necessary to the conduct of
its business as set forth in Exhibit
P.  The Company has been granted licenses, know-how, technology
and/or other intellectual property necessary to the conduct of its business as
set forth in Exhibit
P.  To the best of the Company’s knowledge after due inquiry,
the Company is not infringing on the intellectual property rights of any third
party, nor is any third party infringing on the Company’s intellectual property
rights.  There are no restrictions in any agreements, licenses,
franchises, or other instruments that preclude the Company from engaging in its
business as presently conducted.

    


    5.13         Use of
Proceeds.  As of the date hereof, the Company expects to use
the proceeds from this Offering (less fees and expenses) for the purposes and in
the approximate amounts set forth on the Use of Proceeds Schedule set forth
as Exhibit K
hereto.  These purposes and amounts are estimates and are subject to
change without notice to any Investor.

    


    5.14         No Rights of
Participation.  No person or entity, including, but not limited
to, current or former stockholders of the Company, underwriters, brokers, agents
or other third parties, has any right of first refusal, preemptive right, right
of participation, or any similar right to participate in the financing
contemplated by this Agreement which has not been waived.


    
      
         


      

      
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    5.15         No Advance Regulatory
Approval.  The Company acknowledges that this Investment
Agreement, the transaction contemplated hereby and the Registration Statement
contemplated hereby have not been approved by the SEC, or any other regulatory
body and there is no guarantee that this Investment Agreement, the transaction
contemplated hereby and the Registration Statement contemplated hereby will ever
be approved by the SEC or any other regulatory body.  The Company is
relying on its own analysis and is not relying on any representation by Investor
that either this Investment Agreement, the transaction contemplated hereby or
the Registration Statement contemplated hereby has been or will be approved by
the SEC or other appropriate regulatory body.

    


    5.16         Underwriter’s Fees and
Rights of First Refusal.  The Company is not obligated to pay
any compensation or other fees, costs or related expenditures in cash or
securities to any underwriter, broker, agent or other representative in
connection with this Offering.

     

    5.17         Availability of Suitable
Form for Registration.  The Company is currently eligible and
agrees to maintain its eligibility to register the resale of its Common Stock on
a registration statement on a suitable form under the Act.

    


    5.18         No Integrated
Offering.  Neither the Company, nor any of its affiliates, nor
any person acting on its or their behalf, has directly or indirectly made any
offers or sales of any of the Company’s securities or solicited any offers to
buy any security under circumstances that would prevent the parties hereto from
consummating the transactions contemplated hereby pursuant to an exemption from
registration under Regulation D of the Act or would require the issuance of any
other securities to be integrated with this Offering under the Rules of the
SEC.  The Company has not engaged in any form of general solicitation
or advertising in connection with the offering of the Common Stock.

    


    5.19         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 its actions for, or on
behalf of, the Company, 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.

    


    5.20         Key
Employees.  As of the date of this Agreement, each “Key
Employee” (as defined in Exhibit D) is
currently serving the Company in the capacity disclosed in Exhibit D, or, if
modified after the date hereof, as disclosed in the Commission Documents. No Key
Employee, to the best knowledge of the Company and its subsidiaries, is, or is
now expected to be, in violation of any material term of any employment
contract, confidentiality, disclosure or proprietary information agreement,
non-competition agreement, or any other contract or agreement or any restrictive
covenant, and the continued employment of each Key Employee does not subject the
Company or any of its subsidiaries to any liability with respect to any of the
foregoing matters.  No Key Employee has, to
the best knowledge of the Company and its subsidiaries, any intention to
terminate his employment with, or services to, the Company or any of its
subsidiaries.


    
      
         


      

      
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    5.21         Absence of Certain Company
Control Person Actions Or Events.  For purposes hereof,
“Company Control Person” means each director, executive officer, promoter, and
such other Persons as may be deemed in control of the Company pursuant to Rule
405 under the 1933 Act or Section 20 of the 1934 Act.  To the
Company’s knowledge, during the past ten (10) years:

    


    (i) No
petition under the federal bankruptcy laws or any state insolvency law was filed
by or against, and no receiver, fiscal agent or similar officer was appointed by
a court for the business or property of such Company Control Person, or any
partnership in which he was a general partner at or within two years before the
time of such filing, or any corporation or business association of which he was
an executive officer at or within two years before the time of such
filing;

    


    (ii) No Company Control
Person was convicted in a criminal proceeding or is a named subject of a pending
criminal proceeding (excluding traffic violations and other minor
offenses), or
has not been convicted of, found guilty of, or have pled guilty nolo
contendere of a crime or felony, entered into a pre trial diversion for or
otherwise been charged for any action, misdemeanor or felony, involving fraud,
dishonesty, breach of trust, contract or money laundering, or which may be
considered to be a crime concerning moral turpitude, including but not limited
to any disciplinary action by any branch of the United State military,
regulatory bodies, including but not limited to any professional licensing
authority [or has been the Defendant in a civil action for fraud or material
breach of a financing agreement];

    


    (iii) No
Company Control Person has been the subject of any order, judgment or decree,
that was not subsequently reversed, suspended or vacated, of any court of
competent jurisdiction, permanently or temporarily enjoining him from, or
otherwise limiting, the following activities:

    


    (A)
acting, as an investment advisor, underwriter, broker or dealer in securities,
or as an affiliated person, director or employee of any investment company,
bank, savings and loan association or insurance company, as a futures commission
merchant, introducing broker, commodity trading advisor, commodity pool
operator, floor broker, any other Person regulated by the Commodity Futures
Trading Commission (“CFTC”) or engaging in or continuing any conduct or practice
in connection with such activity;

    


    (B)
engaging in any type of business practice; or

    


    (C)
engaging in any activity in connection with the purchase or sale of any security
or commodity or in connection with any violation of federal or state securities
laws or federal commodities laws;


    
      
         


      

      
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    (iv) No
Company Control Person has been the subject of any order, judgment or decree,
not subsequently reversed, suspended or vacated, of any federal or state
authority barring, suspending or otherwise limiting for more than 60 days the
right of such Company Control Person to engage in any activity described in
paragraph (iii) of this item, or to be associated with Persons engaged in any
such activity; or

    


    (v) No
Company Control Person was found by a court of competent jurisdiction in a civil
action or by the CFTC or SEC to have violated any federal or state securities
law, and the judgment in such civil action or finding by the CFTC or SEC has not
been subsequently reversed, suspended, or vacated.

    


    5.22         Representations
Correct.  The
foregoing representations, warranties and agreements are true, correct and
complete in all material respects, and shall survive any Put Closing and the
issuance of the shares of Common Stock thereby.

    


    5.23         Tax
Status.  The Company 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 (unless and only to the extent that the
Company has set aside on its books provisions reasonably adequate for the
payment of all unpaid and unreported taxes) and has paid all taxes and other
governmental assessments and charges that are material in amount, shown or
determined to be due on such returns, reports and declarations, except those
being contested in good faith and has set aside on its books provision
reasonably adequate for the payment of all taxes for periods subsequent to the
periods to which such returns, reports or declarations apply.  There
are no unpaid taxes in any material amount claimed to be due by the taxing
authority of any jurisdiction, and the officers of the Company know of no basis
for any such claim.

    


    5.24         Material
Agreements.  Except as set forth in the Commission Documents,
neither the Company nor any Subsidiary of the Company is a party to any written
or oral contract, instrument, agreement commitment, obligation, plan or
arrangement, a copy of which would be required to be filed with the SEC as an
exhibit to an annual report on Form 10-K (collectively, “ Material
Agreements ”). 
Except as set forth in the Disclosure Documents, the Company and each of its
Subsidiaries have performed in all material respects all the obligations
required to be performed by them under the Material Agreements, have received no
notice of default or an event of default by the Company or any of its
Subsidiaries thereunder and are not aware of any basis for the assertion
thereof, and neither the Company or any of its Subsidiaries nor, to the
Knowledge of the Company, any other contracting party thereto are in default
under any Material Agreement now in effect, the result of which would have a
Material Adverse Effect.  Except as set forth in the Disclosure Documents,
each of the Material Agreements is in full force and effect, and constitutes a
legal, valid and binding obligation enforceable in accordance with its terms
against the Company and/or any of its Subsidiaries and, to the Knowledge of the
Company, each other contracting party thereto, except as such enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation, conservatorship, receivership or similar laws relating to, or
affecting generally the enforcement of, creditor’s rights and remedies or by
other equitable principles of general application.


    
      
         


      

      
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    5.25         Transactions With
Affiliates.  Except as set forth in the Disclosure Documents,
none of the officers, directors, or employees of the Company is 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.

    


            5.26         Application of Takeover
Protections.  The Company has not adopted and will not adopt
any “poison pill” provision that will be applicable to Investor as a result of
transactions contemplated by this Agreement.

    


    5.27         Investment Company Act
Status.  The Company is not, and as a result of the consummation of
the transactions contemplated by the Transaction Documents and the application
of the proceeds from the sale of the Shares as set forth in the Prospectus and
any Prospectus Supplement shall not be, an “investment company” or a company
“controlled” by an “investment company,” within
the meaning of the Investment Company Act of 1940, as amended.

     

    5.28         Taxes.  The
Company and each of its Subsidiaries (i) has filed all necessary federal,
state and foreign income and franchise tax returns or has duly requested
extensions thereof, except for those the failure of which to file would not have
a Material Adverse Effect, (ii) has paid all federal, state, local and
foreign taxes due and payable for which it is liable, except to the extent that
any such taxes are being contested in good faith and by appropriate proceedings,
except for such taxes the failure of which to pay would not have a Material
Adverse Effect, and (iii) does not have any tax deficiency or claims
outstanding or assessed or, to the Company’s Knowledge, proposed against it
which would have a Material Adverse Effect. 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 and its Subsidiaries know of no basis for any
such claim. The Company is not operated in such a manner as to qualify as a
passive foreign investment company, as defined in Section 1297 of the U.S.
Internal Revenue Code of 1986, as amended.

     

    5.29         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 be unable to renew its existing insurance coverage as and when such
coverage expires or to obtain similar coverage from similar insurers as may be
necessary to continue its business at a cost that would not have a Material
Adverse Effect.

    


    5.30         U.S. Real Property Holding
Corporation. Neither the Company nor any of its Subsidiaries is, or has
ever been, and so long as any of the Securities are held by the Investor, shall
become a U.S. real property holding corporation within the meaning of
Section 897 of the Code.


    
      
         


      

      
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    5.31         Acknowledgment Regarding
Investor's Purchase of Shares. The Company acknowledges and agrees that
the Investor is acting solely in the capacity of an arm's length purchaser with
respect to the Equity Line Transaction Documents and the transactions
contemplated hereby and thereby. The Company further acknowledges that the
Investor is not acting as a financial advisor or fiduciary of the Company (or in
any similar capacity) with respect to the Equity Line Transaction Documents and
the transactions contemplated hereby and thereby and any advice given by the
Investor or any of its respective representatives or agents in connection with
the Equity Line Transaction Documents and the transactions contemplated hereby
and thereby is merely incidental to the Investor's purchase of the Securities,
and is not being relied on by the Company. The Company further represents to the
Investor that the Company's decision to enter into the Equity Line Transaction
Documents has been based solely on the independent evaluation by the Company and
its representatives.

    


    5.32         Lock-Up. The Company
shall cause its officers, directors, and any related parties under control
of the Company, to refrain from selling Common Stock during each Pricing Period,
and the Company shall use best efforts to cause other insiders or Affiliates to
refrain from selling any Stock during each Pricing Period.

    


    5.33         Other
Agreements.  The Company has not, directly or indirectly, made
any agreements with the Investor under a subscription in the form of this
Agreement for the purchase of Common Stock, relating to the terms or conditions
of the transactions contemplated hereby or thereby except as expressly set forth
herein, respectively, or in exhibits hereto or thereto.

    


    5.34         Major
Transactions.  As of the date of this Agreement, there are no
other Major Transactions currently pending or contemplated by the Company,
except as set forth in the Commission Documents.

    


    5.35         Financings.  As
of the date of this Agreement, there are no other financings currently pending
or contemplated by the Company.

    


    5.36         Acknowledgment of
Limitations on Put Amounts.  The Company understands and
acknowledges that the amounts available under this Investment Agreement are
limited, among other things, based upon the liquidity of the Company’s Common
Stock traded on its Principal Market.

    


    5.37         Dilution.  The number of
shares of Common Stock issuable as Put Shares may increase substantially in
certain circumstances, including, but not necessarily limited to, the
circumstance wherein the trading price of the Common Stock declines during the
period between the Effective Date and the end of the Commitment
Period.  The Company’s executive officers and directors fully
understand the nature of the transactions contemplated by this Agreement and
recognize that they have a potential dilutive effect.  The board of
directors of the Company has concluded, in its good faith business
judgment, that such issuance is in the best interests of the
Company.  The Company specifically acknowledges that, whenever the
Company elects to initiate a Put, its obligation to issue the Put Shares is
binding upon the Company and enforceable regardless of the dilution such
issuance may have on the ownership interests of other shareholders of the
Company.  The Company acknowledges that the Investor may sell shares
of Common Stock during any Pricing Period, and may enter into a short exempt sale or any
short sale or other hedging or similar arrangement in accordance with
Section 2.3.10 during any Pricing Period, and that such sales, short sales or
hedging arrangements may serve to lower the Purchase Price thereby having a
potential dilutive effect on the Company’s Common Stock. 


    
      
         


      

      
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    5.38.        No Brokers.  No
brokers, finders or financial advisory fees or commissions shall be payable by
the Company or any Subsidiary (or any of their respective Affiliates) with
respect to the transactions contemplated by the Transaction
Documents.

    


    5.39         No Material Non-Public
Information.  The Company has not furnished to the Investor any
information concerning the Company that will constitute material nonpublic
information on or after the Liquidity Date.

    


    6.          
Additional Covenants of the
Company.

    


    6.1         
Independent
Auditors.  The Company shall, until at least the Termination
Date, maintain as its independent auditors an accounting firm authorized to
practice before the SEC.

    


    6.2         
Corporate Existence
and Taxes; Change in Corporate Entity.  The Company shall,
until at least the Termination Date, maintain its corporate existence in good
standing and, once it becomes a “Reporting Issuer” (defined as a Company which
files periodic reports under the Exchange Act), remain a Reporting Issuer and
shall pay all its taxes when due except for taxes which the Company
disputes.  Notwithstanding the terms of Section 9.2 below, the Company
may, at any time after the date hereof, enter into any merger, consolidation or
corporate reorganization of the Company with or into, or transfer all or
substantially all of the assets of the Company to, another entity only if the
resulting successor or acquiring entity in such transaction, if not the Company
(the “Surviving Entity”), (i) has Common Stock listed for trading on a Nasdaq
Market or on another national stock exchange and is a Reporting Issuer,
(ii) assumes by
written instrument the Company's obligations with respect to this Investment
Agreement, the Registration Rights Agreement, the Transfer Agent Instructions
and the other agreements referred to herein, including but not limited to the
obligations to deliver to the Investor shares of Common Stock and/or securities
that Investor is entitled to receive pursuant to this Investment
Agreement.  

    


    6.3           Registration
Rights.  The Company will enter into a registration rights
agreement covering the resale of the Common Shares substantially in the form of
the Registration Rights Agreement attached as Exhibit
H.  During the period from the Effective Date through the
Termination Date, the Company shall use its best efforts to maintain the
continuous effectiveness of the Registration Statement under the Securities
Act.

     

    
      
         


      

      
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    6.4.          Blue Sky.  The
Company shall use its commercially reasonable efforts to register or qualify the
registration or qualification (or exemption from the registration or
qualification requirements) of the Securities for sale to the Investor pursuant
to the Transaction Documents and the subsequent resale of the Registrable
Securities by the Investor, in each case, under applicable state securities or
“blue sky” laws of such jurisdictions in which such qualification is legally
required in order for the Securities to be issued to the Investor and resold by
the Investor into the Principal Market and such other jurisdictions within the
United States as Investor reasonably requests in writing, to keep each
registration or qualification (or exemption therefrom) effective during the
period of effectiveness of the Registration Statement and to do any and all
other acts or things reasonably necessary to enable the disposition in such
jurisdictions of the Registrable Securities covered by the Registration
Statement, and to cooperate with the Investor in connection therewith; provided that the Company
shall not be required to qualify generally to do business in any jurisdiction
where it is not then so qualified or subject the Company to any material tax in
any such jurisdiction where it is not then so subject or file a general consent
to service of process in any such jurisdiction.  Upon the Investor’s
request therefor, the Company shall provide evidence of any such action so taken
to the Investor from time to time following the Commitment Closing
Date.

    


    6.5         
Asset
Transfers.  The Company shall not (i) transfer, sell, convey or
otherwise dispose of any of its material assets to any subsidiary except for a
cash or cash equivalent consideration and for a proper business purpose or (ii)
transfer, sell, convey or otherwise dispose of any of its material assets to any
Affiliate, as defined below, during the Term of this Agreement.  For
purposes hereof, “Affiliate” shall mean any officer of the Company, director of
the Company or owner of twenty percent (20%) or more of the Common Stock or
other securities of the Company.

    


    6.6         
Capital Raising
Limitations and Rights of First Refusal. 

    


    6.6.1        Capital Raising
Limitations.  During the period from the date of this Agreement
until the date that is thirty (30) days after the Termination Date, the Company
shall not issue or sell, or agree to issue or sell Variable Equity Securities
(as defined below).  For purposes hereof,
the following shall be collectively referred to herein as, the “Equity
Securities”: (i) Common Stock or any other equity securities, (ii) any debt or
equity securities which are convertible into, exercisable or exchangeable for,
or carry the right to receive additional shares of Common Stock or other equity
securities, or (iii) any securities of the Company pursuant to an equity line
structure or format similar in nature to this Offering.  For purposes
hereof, the following shall be collectively referred to herein as, the “Variable
Equity Securities”: any debt or Equity Securities which are convertible into,
exercisable or exchangeable for, or carry the right to receive additional shares
of Common Stock either (i) at any conversion, exercise or exchange rate or other
price that is based upon and/or varies with the trading prices of or quotations
for Common Stock at any time after the initial issuance of such debt or equity
security, or (ii) with a fixed conversion, exercise or exchange price that is
subject to being reset at some future date at any time after the initial
issuance of such debt or equity security or upon the occurrence of specified
contingent events directly or indirectly related to the business of the Company
or the market for the Common Stock.

    


    6.6.2        Investor’s Right of First
Refusal. For any private capital raising transactions of Equity
Securities which close after the date hereof and on or prior to the date that is
sixty (60) days after the Termination Date of this Agreement, the Company agrees
to deliver to Investor, at least ten (10) days prior to the closing of such
transaction, written notice describing the proposed transaction, including the
terms and conditions thereof, and providing the Investor and its affiliates an
option (the “Right of First Refusal”) during the ten (10) day period following
delivery of such notice to purchase the securities being offered in such
transaction on the same terms as contemplated by such
transaction.


    
      
         


      

      
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    6.6.3  Exceptions to Rights of
First Refusal.  Notwithstanding the above, the Rights of First
Refusal shall not apply to any transaction involving issuances of securities by
the Company to a company being acquired by the Company, as payment to such
company for such acquisition, in connection with a merger, consolidation,
acquisition or sale of assets, or in connection with any strategic partnership
or joint venture (the primary purpose of which is not to raise equity capital),
or in connection with the disposition or acquisition of a business, product or
license by the Company or any other transaction that is not for the primary
purpose of raising capital, or a primary underwritten offering of the Company’s
Common Stock.  The Rights of First Refusal also shall not apply to (a)
the issuance of securities upon exercise or conversion of the Company's options,
warrants or other convertible securities outstanding as of the date hereof, (b)
the grant of additional options or warrants, or the issuance of additional
securities, under any Company stock option or restricted stock plan for the
benefit of the Company's employees,  directors or eligible
consultants, or (c) the issuance of debt securities, with no equity feature,
incurred solely for working capital purposes.  

    


    6.7  Opinion of
Counsel.  Investor shall, concurrent with the Investment
Commitment Closing, receive an opinion letter from the Company’s legal counsel,
in the form of the Investment Commitment Opinion of Counsel attached as Exhibit C, or in such
form as agreed upon by the parties, and shall, concurrent with each Put Date,
receive an opinion letter from the Company’s legal counsel, in the form of the
Put Opinion of Counsel attached as Exhibit F or in such
form as agreed upon by the parties.

    


    6.8   Listing.  Subject
to the remainder of this Section 6.8, the Company shall ensure that, on or prior
to the Liquidity Date, its shares of Common Stock (including all Commitment
Shares, Fee Shares and Put Shares) are listed and available for trading (or
quotation, as the case may be) on an Approved Primary
Market.  Thereafter, the Company shall (i) use its best efforts to
continue the listing and trading of its Common Stock on an Approved Primary
Market; and (ii) comply in all material respects with the Company’s reporting,
filing and other obligations under the By-Laws or rules of FINRA and such
exchanges, as applicable.  The Company may maintain a dual listing of
its Common Stock on the TSX, TSX-V or the AIM (the “Approved Dual Listing
Markets”), provided that its Common Stock must also be listed on an Approved
Primary Exchange.



    
      
         


      

      
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    6.9     The Company’s Instructions
to Transfer Agent.  The Company will instruct the Transfer
Agent of the Common Stock (the “Transfer Agent”), by delivering irrevocable
instructions in the form of Exhibit J hereto (the
“Transfer Agent Instructions”), to issue certificates, registered in the name of
each Investor or its nominee, for the Commitment Shares, for the Fee Shares and
for the Put Shares in such amounts as specified from time to time by the Company
upon any exercise by the Company of a Put by the holder thereof.  Such
certificates shall not bear a Legend unless issuance with a Legend is permitted
by the terms of this Agreement and Legend removal is not permitted by Section
9.10(iv) hereof and the Company shall cause the Transfer Agent to issue such
certificates without a Legend, and the Irrevocable Instructions to Transfer
Agent shall so indicate.  Nothing in this Section shall affect in any
way Investor’s obligations and agreement set forth in Sections 3.3.2 or 3.3.3
hereof to resell the Securities pursuant to an effective registration statement
and to deliver a prospectus in connection with such sale or in compliance with
an exemption from the registration requirements of applicable securities
laws.  If (a) an Investor provides the Company with an opinion of
counsel, which opinion of counsel shall be in form, substance and scope
reasonably acceptable to counsel for the Company, to the effect that the
Securities to be sold or transferred may be sold or transferred pursuant to an
exemption from registration or (b) an Investor transfers Securities, pursuant to
Rule 144, to a transferee which is an accredited investor, then the Company
shall permit the transfer; provided, that Investor and
the Company shall cooperate to ensure that a legend in substantially the form
set forth in Section 9.10(iii) be affixed to any certificates representing
shares sold pursuant to an exemption from registration other than Rule
144.  The Company acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to an Investor 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 Section 6.9 will be inadequate and agrees, in the event of a breach
or threatened breach by the Company of the provisions of this Section 6.9, that
an Investor shall be entitled, in addition to all other available remedies, to
an injunction restraining any breach and requiring immediate issuance and
transfer, without the necessity of showing economic loss and without any bond or
other security being required. 

    


    6.10   Initial Public Announcements
and Required Filings.  The
Company shall, at or before 8:30 a.m., New York City time, on the first
Trading Day after the Commitment Closing Date, issue a press release (the “Press
Release”) reasonably acceptable to the Investor disclosing the execution of this
Agreement and the Registration Rights Agreement by the Company and the Investor
and the issuance of the Commitment Shares and the Fee Shares to the Investor,
and briefly describing the transactions contemplated thereby. Any Press Release
or other public announcement relating to this financing shall be submitted to
the Investor for review at least two (2) Business Days prior to the planned
release.  The Company shall not disclose the Investor’s name in any
press release or other public announcement without the Investor’s prior written
approval.  The Company shall obtain the Investor’s written approval of
the Press Release prior to issuance by the Company.  

    


    At or
before 8:30 a.m., New York City time, on the second Trading Day following
the Commitment Closing Date, the Company shall file a Current Report on
Form 8-K describing all the material terms of the transactions contemplated
by the Transaction Documents in the form required by the Exchange Act and
attaching copies of each of this Agreement, the Registration Rights Agreement
and the Press Release as exhibits thereto (including all exhibits thereto, the
“Current Report”). The Company shall provide the Investor a
reasonable opportunity to comment on a draft of such Current Report and has
given due consideration to such comments.  From and after the Liquidity
Date, the Company shall have disclosed all material, nonpublic information
delivered to the Investor (or the Investor’s representatives or agents) by the
Company or any of its Subsidiaries, or any of their respective officers,
directors, employees, agents or representatives (if any) in connection with the
transactions contemplated by the Transaction Documents. The Investor covenants
that until such time as the transactions contemplated by this Agreement are
publicly disclosed by the Company as described in this Section 6.10, the
Investor will maintain the confidentiality of all disclosures made to it in
connection with the transactions contemplated by the Transaction Documents
(including the existence and terms of the transactions), except that the
Investor may disclose the terms of such transactions to its financial,
accounting, legal and other advisors.  Not later than 15 calendar days
following the Commitment Closing Date, the Company shall file a Form D with
respect to the Securities in accordance with Regulation D and shall provide a
copy thereof to the Investor promptly after such filing. The Company shall
prepare and file with the SEC the Registration Statement (including the
prospectus therein) covering only the resale by the Investor of the Registrable
Securities in accordance with the Securities Act and the Registration Rights
Agreement.


    
      
         


      

      
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    6.11   Change in Law or
Policy.  In the event of a change in law, or policy of the SEC,
as evidenced by a No-Action letter or other written statements of the SEC or
FINRA which causes the Investor or the Company to be unable to perform its
obligations hereunder, this Agreement shall be automatically terminated,
provided that notwithstanding any termination under this Section 6.11, the
Investor shall retain full ownership of the Commitment Shares, the Fee Shares
and the Cash Document Preparation Fee as partial consideration for its
commitment hereunder.

    


    6.12    Notice of Certain
Litigation.  Promptly following the commencement thereof, the
Company shall provide the Investor written notice and a description in
reasonable detail of any litigation or proceeding to which the Company or any
subsidiary of the Company is a party; in which the amount involved is $250,000
or more and which is not covered by insurance or in which injunctive or similar
relief is sought and shall simultaneously file a Form 8-K covering such
occurrence.

    


    6.13    Broker/Dealer. 
The Investor shall use one or more broker-dealers to effectuate all sales, if
any, of Securities that it may purchase or otherwise acquire from the Company
pursuant to the Transaction Documents, as applicable, which (or whom) shall be
unaffiliated with the Investor and not then currently engaged or used by the
Company (collectively, the “Broker-Dealer”). The Investor shall be solely
responsible for all fees and commissions of the Broker-Dealer, which shall not
exceed customary brokerage fees and commissions.

    


    
      	
            	
              7.

            	
              Subscription and Wiring
      Instructions;
Irrevocability.

            


    

    


    
      
        	
              	
                (a)

              	
                Wire transfer of
      Subscription Funds.  Investor shall deliver Put Dollar
      Amounts (as payment towards any Put Share Price) by wire transfer, to the
      Company pursuant to a wire instruction letter to be provided by the
      Company, and signed by the
Company.

              


      

    

     

    
      
         


      

      
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                (b)

              	
                Irrevocable
      Subscription.  Investor
      hereby acknowledges and agrees, subject to the provisions of any
      applicable laws providing for the refund of subscription amounts submitted
      by Investor, that this Agreement is irrevocable and that Investor is not
      entitled to cancel, terminate or revoke this Agreement or any other
      agreements executed by such Investor and delivered pursuant hereto, and
      that this Agreement and such other agreements shall survive the death or
      disability of such Investor and shall be binding upon and inure to the
      benefit of the parties and their heirs, executors, administrators,
      successors, legal representatives and assigns.  If the
      Securities subscribed for are to be owned by more than one person, the
      obligations of all such owners under this Agreement shall be joint and
      several, and the agreements, representations, warranties and
      acknowledgments herein contained shall be deemed to be made by and be
      binding upon each such person and his heirs, executors, administrators,
      successors, legal representatives and
  assigns.  

              


      

    

    


    8.           Indemnification.

    


    In consideration of the Investor’s
execution and delivery of the Investment Agreement, the Registration Rights
Agreement and acquiring the Securities thereunder and in addition to all of the
Company’s other obligations under the Transaction Documents, the Company shall
defend, protect, indemnify and hold harmless Investor and all of its
stockholders, officers, directors, employees and direct or indirect investors
and any of the foregoing person’s agents, members, partners or other
representatives (including, without limitation, those retained in connection
with the transactions contemplated by this Agreement) (collectively, the
“Indemnitees”) from and against any and all actions, causes of action, suits,
claims, losses, costs, penalties, fees, liabilities and damages, and expenses in
connection therewith (irrespective of whether any such Indemnitee is a party to
the action for which indemnification hereunder is sought), and including
reasonable attorney’s fees and disbursements (the “Indemnified Liabilities”),
incurred by any Indemnitee 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 the Transaction Documents or any other certificate, instrument
or documents contemplated hereby or thereby, (b) any material breach of any
covenant, agreement or obligation of the Company contained in the Transaction
Documents or any other certificate, instrument or document contemplated hereby
or thereby, or (c) any cause of action, suit or claim, derivative or otherwise,
by any stockholder of the Company based on a breach or alleged breach by the
Company or any of its officers or directors of their fiduciary or other
obligations to the stockholders of the Company.

    


    To the extent that the foregoing
undertaking by the Company may be unenforceable for any reason, the Company
shall make the maximum contribution to the payment and satisfaction of each of
the Indemnified Liabilities which it would be required to make if such foregoing
undertaking was enforceable which is permissible under applicable
law.

    


    Promptly after receipt by an
Indemnified Party of notice of the commencement of any action pursuant to which
indemnification may be sought, such Indemnified Party will, if a claim in
respect thereof is to be made against the other party (hereinafter “Indemnitor”)
under this Section 8, deliver to the Indemnitor a written notice of the
commencement thereof and the Indemnitor shall have the right to participate in
and to assume the defense thereof with counsel reasonably selected by the
Indemnitor.  The failure to deliver written notice to the Indemnitor
within a reasonable time of the commencement of any such action, if prejudicial
to the Indemnitor’s ability to defend such action, shall relieve the Indemnitor
of any liability to the Indemnified Party under this Section 8, but the omission
to so deliver written notice to the Indemnitor will not relieve it of any
liability that it may have to any Indemnified Party other than under this
Section 8 to the extent it is prejudicial.


    
      
         


      

      
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    9.           Miscellaneous.

    


    9.1     Representations and
Warranties Survive the Closing; Severability.  Investor’s and
the Company’s representations and warranties shall survive the Investment Date
and any Put Closing contemplated by this Agreement notwithstanding any due
diligence investigation made by or on behalf of the party seeking to rely
thereon.  In the event that any provision of this Agreement becomes or
is declared by a court of competent jurisdiction to be illegal, unenforceable or
void, or is altered by a term required by the Securities Exchange Commission to
be included in the Registration Statement, this Agreement shall continue in full
force and effect without said provision; provided that if the removal of such
provision materially changes the economic benefit of this Agreement to the
Investor, this Agreement shall terminate.

    


    9.2     Successors and
Assigns.  The Transaction Documents, including this Investment
Agreement, shall not be assignable by the Investor.  The Transaction
Documents, including this Investment Agreement, shall not be assignable by the
Company except in conjunction with a transaction permitted under the terms of
Section 6.2 above.

    


    9.3     Execution in Counterparts
Permitted.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement and shall become effective
when counterparts have been signed by each party and delivered to the other
parties.  This Agreement, once executed by a party, may be delivered
to the other parties hereto by facsimile transmission of, or an e-mail of a
“PDF” of, a copy of this Agreement bearing the signature of the party so
delivering this Agreement.

    


    9.4     Titles and Subtitles;
Gender.  The titles and subtitles used in this Agreement are
used for convenience only and are not to be considered in construing or
interpreting this Agreement.  The use in this Agreement of a
masculine, feminine or neuter pronoun shall be deemed to include a reference to
the others.

    


    9.5     Written Notices,
Etc. Any
notice, demand or request required or permitted to be given by the Company or
Investor pursuant to the terms of this Agreement shall be in writing and shall
be deemed given when delivered personally, or by facsimile or upon receipt if by
overnight or two (2) day courier, addressed to the parties at the addresses and/or facsimile
telephone number of the parties set forth at the end of this Agreement or such
other address as a party may request by notifying the other in writing;
provided, however, that in order for any notice to be effective as to the
Investor such notice shall be delivered and sent, as specified herein, to all
the addresses and
facsimile telephone numbers of the Investor set forth at the end of this
Agreement or such other address and/or facsimile telephone number as Investor
may request in writing.

    


    9.6     Expenses. Except as
set forth in the Registration Rights Agreement, each of the Company and Investor
shall pay all costs and expenses that it respectively incurs, with respect to
the negotiation, execution, delivery and performance of this
Agreement.


    
      
         


      

      
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    9.7     Entire Agreement; Written
Amendments Required.  This Agreement,
including the Exhibits attached hereto, the Common Stock certificates, the
Registration Rights Agreement, and the other documents delivered pursuant hereto
constitute the full and entire understanding and agreement between the parties
with regard to the subjects hereof and thereof, and no party shall be liable or
bound to any other party in any manner by any warranties, representations or
covenants, whether oral, written, or otherwise except as specifically set forth
herein or therein.  Except as expressly provided herein, neither this
Agreement nor any term hereof may be amended, waived, discharged or terminated
other than by a written instrument signed by the party against whom enforcement
of any such amendment, waiver, discharge or termination is sought. The
Disclosure Documents and all exhibits to this Agreement are hereby incorporated
by reference in, and made a part of, this Agreement as if set forth in full
herein.

    


    9.8     Headings.  The
article, section and subsection headings in this Agreement are for convenience
only and shall not constitute a part of this Agreement for any other purpose and
shall not be deemed to limit or affect any of the provisions hereof. Unless the
context clearly indicates otherwise, each pronoun herein shall be deemed to
include the masculine, feminine, neuter, singular and plural forms thereof. The
terms “including,” “includes,” “include” and words of like import shall be
construed broadly as if followed by the words “without limitation.”  The
terms “herein,” “hereunder,” “hereof” and words of like import refer to this
entire Agreement instead of just the provision in which they are found.
 

    


    9.9     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 the
Principal Market on any given Trading Day for the purposes of this Agreement
shall be the Bloomberg L.P.  The written mutual consent of the
Investor and the Company shall be required to employ any other reporting
entity.

     

    9.10     Fees and
Expenses.

     

    (i)  Counsel Fees; Diligence
Expenses. Each party shall bear its own fees and expenses related to the
transactions contemplated by this Agreement; provided , however , that
concurrently with the execution of this Agreement the Company shall pay, by wire
transfer of immediately available funds to an account designated by the
Investor’s counsel, a non-accountable and non-refundable Cash Document
Preparation Fee of $5,000, exclusive of disbursements and out-of-pocket expenses
(the “Cash Document Preparation Fee”), in connection with the preparation,
negotiation, execution and delivery of the Transaction Documents and legal due
diligence of the Company. For the avoidance of doubt, the Cash Document
Preparation Fee shall be non-refundable, regardless of whether any Put Shares
are issued by the Company or settled hereunder. The Company shall pay all U.S.
federal, state and local stamp and other similar transfer and other taxes and
duties levied in connection with issuance of the Securities pursuant
hereto.


    
      
         


      

      
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    (ii)
 Commitment Shares.
Concurrently with the execution and delivery of this Agreement, in consideration
for the Investor’s execution and delivery of this Agreement, the Company shall
issue to the Investor a number of shares of restricted Common Stock (the
“Commitment Shares”) having a value equal to 2% of the Maximum Offering Amount
and a number of shares of restricted Common Stock (the “Fee Shares”) having a
value equal to $20,000, in each case based upon a deemed valuation per share
equal to 96% of the VWAP of the Company’s Common Stock for the 5 trading days
immediately preceding the issuance date of such shares.  Concurrently
with the execution and delivery of this Agreement, the Company shall deliver
irrevocable Transfer Agent Instructions to its transfer agent to issue to the
Investor, not later than 4:00 p.m. (New York City time) on the second Trading
Day immediately following the Commitment Closing Date, a certificate
representing the Commitment Shares and a certificate representing the Fee
Shares, each in the name of the Investor or its designee (in which case such
designee’s name shall have been provided to the Company prior to the Commitment
Closing Date and such designee shall have executed and delivered to the Company
an Investment Letter in substantially the form attached hereto as Annex 9.10), in
consideration for the Investor’s execution and delivery of this Agreement. Such
certificate shall be delivered to the Investor by overnight courier at its
address set forth in Section 9.12 hereof. For the avoidance of doubt, all of the
Commitment Shares and Fee Shares shall be fully earned as of the Commitment
Closing Date regardless of whether any Puts are issued by the Company or settled
hereunder. Upon issuance, the Commitment Shares and the Fee Shares shall
constitute “restricted securities” as such term is defined in Rule
144(a)(3) under the Securities Act and, subject to the provisions of subsection
(iv) of this Section 9.10, the certificate(s) representing the Commitment Shares
and the Fee Shares shall bear the restrictive legend set forth below in
subsection (iii) of this Section 9.10. The Commitment Shares and the Fee Shares
shall constitute Registrable Securities and shall be included in the
Registration Statement in accordance with the terms of the Registration Rights
Agreement.

    


    (iii)  Legends. The
certificate representing the Commitment Shares and the certificated representing
the Fee Shares, except as set forth below, shall each bear a restrictive legend
(“Legend”) in substantially the following form (and a stop-transfer order may be
placed against transfer of such stock certificate):

     

    THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS, AND NEITHER
SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED
OR OTHERWISE TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT WITH RESPECT
THERETO IS EFFECTIVE UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR
(2) AN EXEMPTION FROM SUCH REGISTRATION EXISTS AND EITHER (A) THE COMPANY
RECEIVES AN OPINION OF COUNSEL TO THE HOLDER OF SUCH SECURITIES, WHICH COUNSEL
AND OPINION ARE SATISFACTORY TO THE COMPANY, THAT SUCH SECURITIES MAY BE
OFFERED, SOLD, PLEDGED, ASSIGNED OR TRANSFERRED IN THE MANNER CONTEMPLATED
WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR APPLICABLE STATE
SECURITIES LAWS OR (B) SUCH SECURITIES ARE SOLD OR ELIGIBLE TO BE SOLD PURSUANT
TO RULE 144 UNDER SAID ACT.


    
      
         


      

      
        49

        
          

        

      

      
         


      

    


    Investor
acknowledges and agrees that the Company was, at one time, a “shell company” as
defined in Rule 12b-2 under the Exchange Act.  Pursuant to Rule 144(i)
under the Securities Act, securities issued by a current or former shell company
(such as the Securities) that otherwise meet the holding period and other
requirements of Rule 144 nevertheless cannot be sold in reliance on Rule 144
until one year after the date on which such company filed current “Form 10
information” (as defined in Rule 144(i)) with the SEC reflecting that it ceased
being a shell company (and that, in the Company’s case, such Form 10 Information
was filed on May 14, 2010), and provided that at the time of a proposed sale
pursuant to Rule 144, the issuer is subject to the reporting requirements of
section 13 or 15(d) of the Exchange Act and has filed all reports and other
materials required to be filed by section 13 or 15(d) of the Exchange Act, as
applicable, during the preceding 12 months (or for such shorter period that the
issuer was required to file such reports and materials), other than Form 8-K
reports.  As a result, shares issued without legend may need to be
returned to have such legend affixed to them in the event that the Registration
Statement is not effective and the Company ceases to be subject to the reporting
requirements of section 13 or 15(d) of the Exchange Act or fails to file a
required report, subject to legend removal once a Legend Removal Condition has
again been met. Investor acknowledges the need to place such legend on any
shares transferred by Investor otherwise than pursuant to an effective
registration under the Securities Act or pursuant to Rule 144 and its agreement
to do so pursuant to Section 2.5 hereof, subject to legend removal once a Legend
Removal Condition has been met.

    


    Notwithstanding
the foregoing and for the avoidance of doubt, all Shares to be issued in respect
of any Put Notice delivered to the Investor pursuant to this Agreement shall be
issued to the Investor in accordance with Section 2.3 by crediting the
Investor’s or its designees’ account at DTC through its Deposit/Withdrawal at
Custodian (DWAC) system, and all such Shares shall be transferable pursuant to
the effective Registration Statement (and no stop-transfer order shall be placed
against transfer thereof), and the Company shall not take any action or give
instructions to any transfer agent of the Company otherwise, except as otherwise
provided in Section 6.9.

     

    (iv)
 Removal
of Legend.  If either (a) the Registration Statement is
Effective, or (b) such holder provides the Company with an opinion of counsel,
in form, substance and scope reasonably acceptable to counsel for the Company
(the reasonable cost of which shall be borne by the Investor), to the effect
that such shares can be sold or have been sold pursuant to Rule 144 (each, a
“Legend Removal Condition”), then the Company shall, no later than two Trading
Days following the delivery by the Investor to the Company or the Company’s
transfer agent (with notice to the Company) of a legended certificate
representing  the Commitment Shares and a legended certificate
representing  the Fee Shares (each endorsed or with stock powers
attached, signatures guaranteed, and otherwise in form necessary to affect the
reissuance and/or transfer, if applicable), as directed by the Investor, either:
(A) issue and deliver (or cause to be issued and delivered) to the Investor a
certificate(s) representing such Commitment Shares and Fee Shares that is free
from all restrictive and other legends or (B) cause the Company’s transfer agent
to credit the investor’s or its designee’s account at DTC through its
Deposit/Withdrawal at Custodian (DWAC) system with a number of shares of Common
Stock equal to the number of Commitment Shares and Fee Shares represented by the
certificate(s) so delivered by the Investor (the date by which such certificate
is required to be delivered to the investor or such credit is so required to be
made to the account of the Investor or its designee at DTC pursuant to the
foregoing is referred to herein as the “Required Delivery
Date”).


    
      
         


      

      
        50

        
          

        

      

      
         


      

    

    


    9.11         Specific Enforcement,
Governing Law, Consent to Jurisdiction, Waiver of Jury
Trial.

     

    (i)  The
Company and the Investor acknowledge and agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that either party shall be entitled to an injunction or
injunctions to prevent or cure breaches of the provisions of this Agreement by
the other party 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), this being in addition to any other remedy to which
either party may be entitled by law or equity.

     

    (ii) Governing Law and
Jurisdiction.  All questions concerning the construction,
validity, enforcement and interpretation of this Agreement and the other
Transaction Documents shall be governed by and construed and enforced in
accordance with the internal laws of the State of Georgia without regard to the
principles of conflicts of law thereof.  Each party agrees that all
legal proceedings concerning the interpretations, enforcement and defense of the
transactions contemplated by this Agreement and any other Transaction Documents
(whether brought against a party hereto or its respective affiliates, directors,
officers, shareholders, employees or agents) shall be commenced exclusively in
the state and federal courts sitting in the City of Atlanta, Georgia. Each party hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in the City of Atlanta, Georgia for the adjudication of
any dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein (including with respect to the
enforcement of any of the Transaction Documents), and hereby irrevocably waives,
and agrees not to assert in any suit, action or proceeding, any claim that it is
not personally subject to the jurisdiction of any such court, that such suit,
action or proceeding is improper or is an inconvenient venue for such
proceeding.  If either party shall commence an action or proceeding to
enforce any provisions of the Transaction Documents, then the prevailing party
in such action or proceeding shall be reimbursed by the other party for its
reasonable attorneys’ fees and other costs and expenses incurred with the
investigation, preparation and prosecution of such action or
proceeding.  THE
PARTIES HEREBY WAIVE ALL RIGHTS TO, AND AGREES NOT TO REQUEST, A TRIAL BY JURY
FOR ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT
OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR BY ANY OF THE
TRANSACTION DOCUMENTS.  

    


    9.12        Notices.  Any
notice, demand, request, waiver or other communication required or permitted to
be given hereunder shall be in writing and shall be effective (a) upon hand
delivery or facsimile (with facsimile machine confirmation of delivery received)
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 address for such communications shall
be:


    
      
         


      

      
        51

        
          

        

      

      
         


      

    

    


    If to the
Company:

     

    Li3
Energy, Inc.

    Attn:
Luis Saenz, Chief Executive Officer

    Av. Pardo
y Aliaga 699 Of. 802

    San
Isidro, Lima

    PERU

    Telephone
Number: +511 (212) 1880

    Fax:
+511 421-1649

     

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

     

    Gottbetter
& Partners, LLP

    Attn:
Adam S. Gottbetter

    488
Madison Avenue, 12th
Floor

    New York,
NY  10022

    Telephone
Number:  (212) 400-6900

    Fax:
(212) 400-6901

     

    If to the
Investor:

     

    Attn:
Eric S. Swartz

    1120
Sanctuary Parkway, Suite 325

    Alpharetta,
GA 30009

    Telephone
Number: (770) 640-8130

    Fax: 
(770) 777-5844

     

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

     

    Attn: P.
Bradford Hathorn, Esq.

    1120
Sanctuary Parkway, Suite 325

    Alpharetta,
GA 30009

    Telephone
Number: (770) 640-8130

    Fax: 
(770) 777-5844

    Email:
BradHathorn@RoswellCapitalPartners.com

    


    Either
party hereto may from time to time change its address for notices by giving at
least 10 days advance written notice of such changed address to the other party
hereto.

    


    9.13        Construction. The
parties agree that each of them and their respective counsel has reviewed and
had an opportunity to revise the Transaction Documents and, therefore, the
normal rule of construction to the effect that any ambiguities are to be
resolved against the drafting party shall not be employed in the interpretation
of the Transaction Documents. In addition, each and every reference to share
prices and shares of Common Stock in any Transaction Document shall be subject
to adjustment for any stock splits, stock combinations, stock dividends,
recapitalizations and other similar transactions that occur on or after the date
of this Agreement.


    
      
         


      

      
        52

        
          

        

      

      
         


      

    

     

    IN WITNESS WHEREOF, the undersigned
Investor has caused this Agreement to be executed as of the date and year set
forth below by its duly authorized officer.

    


    The undersigned Investor hereby
subscribes for the Maximum Offering Amount and acknowledges that this Agreement
and the subscription represented hereby shall not be effective unless accepted
by the Company as indicated below.

    


    Dated
this 2nd day of
December,
2010.


    


    
      
        	
                CENTURION
      PRIVATE EQUITY, LLC

              
	 
      	 
      
	
                By:

              	
                /s/ Eric S. Swartz

              
	 
      	
                Eric
      S. Swartz, Manager

              


      

    

    


    SECURITY DELIVERY
INSTRUCTIONS:

    Centurion
Private Equity, LLC

    c/o Eric
S. Swartz

    1120
Sanctuary Parkway, Suite 325

    Alpharetta,
GA 30009

    Telephone:
(770) 640-8130

    Fax:
770-777-5844

     

    THIS
AGREEMENT IS ACCEPTED BY THE COMPANY IN THE AMOUNT OF THE MAXIMUM OFFERING
AMOUNT ON THE 2nd DAY OF DECEMBER,
2010.

     

    
      
        
          	
                  Li3
      ENERGY, INC.

                
	 
      	 
      
	
                  By:

                	
                  /s/ Luis Saenz

                
	 
      	
                  Name:
      Luis Saenz

                
	 
      	
                  Title:  Chief
      Executive Officer

                


        

      

    


    
      
         


      

      
        53

        
          

        

      

      
         


      

    


    Exhibit
List to the

    INVESTMENT
AGREEMENT


    


    
      
        	
                Exhibit

              	
                A

              	
                Advance
      Put Notice

              
	
                Exhibit

              	
                B

              	
                Capitalization
      Schedule

              
	
                Exhibit

              	
                C

              	
                Investment
      Commitment Opinion of Counsel

              
	
                Exhibit

              	
                D

              	
                Key
      Employees

              
	
                Exhibit

              	
                E

              	
                Put
      Notice

              
	
                Exhibit

              	
                F

              	
                Put
      Opinion of Counsel

              
	
                Exhibit

              	
                G

              	
                Registration
      Opinion of Counsel

              
	
                Exhibit

              	
                H

              	
                Registration
      Rights Agreement

              
	
                Exhibit

              	
                I

              	
                Schedule
      of Exceptions

              
	
                Exhibit

              	
                J

              	
                Transfer
      Agent Instructions

              
	
                Exhibit

              	
                K

              	
                Use
      of Proceeds

              
	
                Exhibit

              	
                L

              	
                Secretary’s
      Certificate

              
	
                Exhibit

              	
                M

              	
                Officer’s
      Certificate

              
	
                Exhibit

              	
                N

              	
                Resolutions

              
	
                Exhibit

              	
                O

              	
                Risk
      Factors

              
	
                Exhibit

              	
                P

              	
                Intellectual
      Property

              


      

    

     

    
      
        	
                Schedule
      5.1

              	 
      	
                Organizational
      Structure

              
	
                Annex
      9.10

              	 
      	
                Form
      of Investment Letter

              


      

    

     

    
      
         


      

      
        54

        
          

        

      

      
         


      

    


    ADVANCE
PUT NOTICE

    


    Li3
ENERGY, INC. (the "Company") hereby intends, subject to the Individual Put Limit
(as defined in the Investment Agreement), to elect to exercise a Put to sell the
number of shares of Common Stock of the Company specified below, to Centurion
Private Equity, LLC, as of the Intended Put Date written below, all pursuant to
that certain Investment Agreement (the “Investment Agreement”) by and between
the Company and Centurion Private Equity, LLC dated on or about December 2,
2010.

     

    
      
        
          
            	
                    Date
      of Advance Put Notice:                                               
      

                  
	 
      
	
                    Intended
      Put Date:                                                                  
      

                  
	 
      
	
                    Intended
      Put Share Amount:                                               
      

                  
	 
      
	
                    Company
      Designation Maximum Put Dollar Amount (Optional):

                  
	
                    _______________________________________.

                  
	 
      
	
                    Company
      Designation Minimum Put Share Price (Optional):

                  
	
                    _______________________________________.

                  


          

        

      

    

    
 

    
      
        
          
            	 
      	
                    Li3
      ENERGY, INC.

                  
	 
      	 
      
	
                    By:

                  	 
      
	 
      	
                    Name:

                  
	 
      	
                    Title:

                  


          

        

      

    

    


    
      
        
          	
                  Address:

                
	 
      
	
                  Attn:
      Chief Executive Officer

                
	
                  Av.
      Pardo y Aliaga 699

                
	
                  Oficina
      802

                
	
                  San
      Isidro, Lima, Peru

                


        

      

    

     

    EXHIBIT
A


    
      
         


      

      
        55

        
          

        

      

      
         


      

    
EXHIBIT
B


(Capitalization
Schedule)


 


	 	 	Shares	 
	 	 	 	 
	Currently Outstanding[1]	 	 	91,109,033	 
	Outstanding Warrants[2] [3]	 	 	29,574,124	 
	2009 Equity Incentive Plan[4]	 	 	5,000,000	 
	Double Option [5]	 	 	8,000,000	 
	Convertible Note[6]	 	 	362,622	 
	 	 	 	 	 
	Total Fully Diluted	 	 	134,045,779	 



  


		[1]	Includes the 87,096 Fee Shares issued to Roswell Capital Partners, LLC, pursuant to the Agreement.
Does not include the Commitment Shares issuable pursuant to the Agreement. Includes 236,842 shares issued to an affiliate of the
Company’s Chief Operating Officer as part of a signing bonus in connection with his employment, but does not include 2,500,000
shares issuable to the same affiliate pursuant to an award of restricted stock granted under the 2009 Equity Incentive Plan (see
below, under footnote 4).



 


Does not include additional shares of Common Stock
that the Company may issue in settlement of certain outstanding claims or liabilities that the Company is in the process of negotiating.


 


		[2]	The outstanding warrants consist of:



		(i)	Warrants to purchase up to 8,647,223 shares of Common Stock for $0.4106 per share (“A Warrants”);



		(ii)	Warrants to purchase up to 9,257,695 shares of Common Stock for $0.7671 per share (“B Warrants”);



		(iii)	Warrants to purchase 7,188,035 shares of Common Stock for $0.4285 per share (“C Warrants”);



		(iv)	Warrants to purchase up to 481,171 shares of Common Stock for $0.2182 per share (“PPO Agent
Warrants”); and



		(v)	Warrants to purchase up to 4,000,000 shares of Common Stock for $0.05 per share (“D Warrants”).



 


Although certain of the A Warrants and B Warrants
do not explicitly provide for inverse adjustment to the number of shares of Common Stock issuable upon exercise thereof whenever
the exercise price is adjusted, the Company may determine to make such adjustment. The numbers of shares reported as issuable upon
exercise of the A Warrants and B Warrants in the Commission Documents do not reflect any such adjustment, however the figures in
this table do.


 



    	 



    	 



    

 


		[3]	The A Warrants, B Warrants, C Warrants, PPO Agent Warrants and D Warrants each provide for weighted-average
anti-dilution adjustments that may be triggered, among other things, by issuances of Common Stock pursuant to the Agreement.



 


		[4]	Includes all shares reserved for issuance pursuant to awards granted under the Plan. The Issuer
currently has outstanding options granted under the Plan to purchase an aggregate of 1,800,000 shares of Common Stock. In addition,
in connection with the Company’s employment of R. Thomas Currin, Jr., as Chief Operating Officer, the Company has granted
to MIZ Comercializadora, S. de R.L., an award of “Restricted Stock” under the Plan pursuant to which the Company must
issue an additional 2,500,000 shares of Common Stock.



 


		[5]	The subscription agreements between the Company and each investor in the private placement offering
that closed on November 8 and 15, 2010, provide each such investor with the right (the “Double Option”), subject to
certain conditions, to purchase, at any time prior to November 8, 2011, a number of additional units of common stock and D Warrants
(“Five Cent Units”) up to the number of Five Cent Units purchased at the closing of such offering by such investor.
In the aggregate, the Double Option permits such investors to purchase Five Cent Units consisting of up to 4,000,000 shares of
Common Stock and D Warrants to purchase an additional 4,000,000 shares of Common Stock.



 


		[6]	Assumes conversion of $45,000 principal and interest accrued thereon through November 18, 2010,
at $0.14 per share (the closing price on November 18, 2010). Does not include shares issuable upon conversion of interest accrued
after such date. Since the Convertible Note is future priced, to the extent the issuance of the Securities may depress the market
price for the Common Stock, the Convertible Note may be deemed to have anti-dilution protection.



 



    	 



    	 



    

 


Registration Rights


 


The Company has agreed, pursuant to a Registration
Rights Agreement, to use its commercially reasonable efforts to file a registration statement under the Securities Act, covering
the shares of Common Stock included in the Units and the shares of Common Stock issuable upon exercise of the Current PPO Warrants,
within 60 days after the final closing of the PPO (the “Registration Filing Date”) and to have such registration statement
declared effective within 180 days of such final closing date (the “Registration Effectiveness Date”). The Company
will, in certain circumstances, be obliged to pay the holders of such registrable securities liquidated damages if the registration
statement is not filed by the Registration Filing Date or declared effective by the Registration Effectiveness Date, of if another
Registration Event, as such term is defined in the Registration Rights Agreement, occurs, in the amount of 1% of the purchase price
in the PPO of the Units which are affected by such Registration Event, for each full thirty (30) days during which such Registration
Event continues to affect such shares (which shall be pro-rated for any period less than 30 days), up to a maximum of 10% of the
purchase price paid in the PPO for such Units. The Company is required to keep the registration statement effective until the earlier
of one year from the date the registration statement is declared effective or until all of the registrable securities may be sold
under Rule 144 during any 90 day period.


 


The Company has granted “piggy-back”
registration rights to the investors purchasing units in the 2009 Private Placement. If the Company determines to register for
sale for cash any of its Common Stock for its own account or for the account of others, then the holders of 14,000,000 shares of
Common Stock and the A Warrants and B Warrants will have the right to have such shares, and the shares of Common Stock issuable
upon exercise of the A Warrants and B Warrants, included in such registration statement, subject to customary exceptions and scale
backs.


 


The Company has also granted “piggy-back”
registration rights with respect to 4,000,000 shares of Common Stock issued in connection with the Company’s acquisition
of certain options from Next Lithium.


 


The Company has also granted “piggyback”
registration rights with respect to the 4,000,000 shares of Common Stock included in the Five Cent Units (including any Five Cent
Units issued upon exercise of the Double Option) and the shares of Common Stock issuable upon exercise of the D Warrants (including
D Warrants included in any Five Cent Units issued upon exercise of the Double Option).


 



    	 



    	 



    

 


EXHIBIT D


(Key Employees)


 


The following persons are employed as executive officers (“Key
Employees”) of the Company in the capacities indicated:


 


Luis Francisco Saenz, Chief Executive Officer


David Rector, President, Treasurer, Secretary and
Director


Eric E. Marin, Interim Chief Financial Officer



R. Thomas Currin, Jr., Chief Operating Officer



 



    	 



    	 



    

 



    PUT
NOTICE

    


    Li3
ENERGY, INC., (the "Company") hereby elects to exercise a Put to sell shares of
common stock ("Common Stock") of the Company to Centurion Private Equity, LLC
(the “Investor”), as of the Put Date, at the Put Share Price and for the number
of Put Shares written below, all pursuant to that certain Investment Agreement
(the “Investment Agreement”) by and between the Company and Centurion Private
Equity, LLC dated on or about December 2, 2010.

     

    
      
        	
                Put
      Date: _________________

              
	 
      
	
                Intended
      Put Share Amount (from Advance Put Notice): _________________ Common
      Shares

              
	 
      
	 
      
	
                Company
      Designation Maximum Put Dollar Amount (Optional):

              
	
                ________________________________________.

              
	 
      
	
                Company
      Designation Minimum Put Share Price (Optional):

              
	________________________________________.
      


      

    

    


    Note:  Capitalized
terms shall have the meanings ascribed to them in this Investment
Agreement.

    


    
      
        
          
            	
                    Li3
      ENERGY, INC.

                  
	 
      	 
      
	
                    By:

                  	 
      
	 
      	
                    Name:

                  
	 
      	
                    Title:

                  


          

        

      

    

    


    
      
        
          	
                  Address:

                
	 
      
	
                  Attn:
      Chief Executive Officer

                
	
                  Av.
      Pardo y Aliaga 699

                
	
                  Oficina
      802

                
	
                  San
      Isidro, Lima, Peru

                


        

      

    

     

    EXHIBIT
E


    
      
         


      

      
        56

        
          

        

      

      
         


 

      

    
EXHIBIT I


(Schedule of Exceptions)


 


Section 5.2Any claim, litigation, or administrative proceeding
pending or, to the best of the Company’s knowledge, threatened against the Company and not disclosed in Commission Documents.


None


 


Section 5.3Failures to timely file Commission Documents.


 


The Company did not timely file its Annual Report on Form 10-K
for the year ended June 30, 2010.


 


Without conceding that such filing would be required by applicable
law, the Company hereby discloses that it has not yet filed a Current Report on Form 8-K reporting its default under the Company’s
Option Agreements with GeoXplor Corp., with respect to certain mining claims in Nevada.


 


The Company failed to file a Current Report on Form 8-K reporting
the appointment, as of August 12, 2010, of R. Thomas Currin, Jr. as its Chief Operating Officer, and the entry into an Employment
Services Agreement, a Restricted Stock Agreement and an Option Agreement with Mr. Currin’s affiliate, MIZ Comercializadora,
S. de R.L., in connection therewith.


 


A Current Report on Form 8-K reporting certain matters that
occurred as early as February 18, 2010 (note: the reference therein to February 18, 2008 was a typo), was not filed until March
3, 2010.


 


The Company may have failed to timely file additional Commission
Documents that were due prior to September 25, 2009 – the date that the Company filed its Annual Report on Form 10-K for
the year ended June 30, 2009.


 


Section 5.7Failures to Comply with Other Instruments.


 


The Company is in default under the Company’s Option Agreements
with GeoXplor Corp.


 


Section 5.8Reporting Company Exceptions.


 


The Company is not subject to the reporting requirements of
the Exchange Act, and does not have any class of securities registered under Section 12 of the Exchange Act. This failure to register
is a violation of the requirements of the O.T.C. Bulletin Board and may jeopardize the Common Stock’s quotation by the O.T.C.
Bulletin Board.


 



    	 



    	 



    

 


 


Section 5.9Listing and Maintenance Exceptions.


 


The Company is not subject to the reporting requirements of
the Exchange Act, and does not have any class of securities registered under Section 12 of the Exchange Act. This failure to register
is a violation of the requirements of the O.T.C. Bulletin Board and may jeopardize the Common Stock’s quotation by the O.T.C.
Bulletin Board.


 


Section 5.24Material Agreements Exceptions.


 


The Company has not disclosed its entry, as of August 12, 2010,
into an Employment Services Agreement, a Restricted Stock Agreement and an Option Agreement with Mr. Currin’s affiliate,
MIZ Comercializadora, S. de R.L., in connection with Mr. Currin’s employment as Chief Operating Officer.


 


The Company has not filed a copy of its Addendum to Master Option
Agreement with Lacus Minerals S.A., dated July 29, 2010.


 


The Company is in default under the Company’s Option Agreements
with GeoXplor Corp. GeoXplor Corp. has cancelled such Option Agreements.


 


Section 5.25Transactions With Affiliates.


 


Starting in November 2009, the Company started utilizing the
administrative personnel and office space of a company, with an office located in Lima, Peru in which the Company’s Chief
Executive Officer and Interim Chief Financial Officer function in the same capacities (the “Related Party Company”).
As such, certain net common costs initially paid by the Related Party Company for the year ended June 30, 2010 and 2009, were allocable
to the Company, as follows:


 


	 	 	Year Ended  
June 30,	 
	 	 	2010	 	 	2009	 
	Administrative salaries	 	$	5,100	 	 	$	-	 
	Utilities and maintenance expenses	 	 	16,759	 	 	 	-	 
	 	 	$	21,859	 	 	$	-	 





 


During the year ended June 30, 2010, the Company paid $11,188
to the Related Party Company. As of June 30, 2010, the payable due to the Related Party Company arising from these net common costs
amounting to $10,671 is presented as “Payable to related party” in the Company’s consolidated balance sheet.


 


Section 5.33Other Agreements.


 


The Company has issued 87,096 shares of Common Stock to Roswell
Capital Partners, LLC (the “Roswell Shares”), pursuant to the Confidential Term Sheet for the transaction that is being
memorialized in the Agreement. Notwithstanding anything to the contrary in the Agreement, the Roswell Shares constitute, and are
co-extensive with, the Fee Shares described in the Agreement.


 



    	 



    	 



    

  


Section 5.34Major Transactions.


 


None.


 



    	 



    	 



    

 


EXHIBIT K


(Use of Proceeds)


 


The proceeds of the Offering (after any placement and finder
fees, legal fees and other offering expenses) shall be used by the Issuer towards payment of certain amounts due from time to time
to vendors and other counterparties, the Company’s committed expenditures with respect to its existing properties, possibly
towards costs of acquiring additional properties and for additional expenditures with respect to any additional properties it may
acquire, and for working capital and general corporate purposes.


 


Without limiting the generality of the foregoing, the Company
plans to spend the following amounts on the following items on or prior to December 31, 2010:


 


		·	$150,000 as the cash component of the settlement of certain potential
claims related to our Master Option Agreement with Lacus Minerals S.A., and the termination thereof;



 


		·	Approximately $500,000 to satisfy certain accounts payable; and



 


		·	$280,000 in option payments with respect to the Alfredo Property.



 



    	 



    	 



    

 


EXHIBIT P


(Patents, Trademarks, Trademark Registrations,
Trade Names and Copyrights)


 


Other than its name “Li3 Energy, Inc.,” the Company
does not own, either legally or beneficially, any patent, trademark, trademark registration, trade names or copyrights nor any
material license, and are not dependent on any such rights.


 



    	 



    	 



    

 


SCHEDULE 5.1


(Subsidiaries)


 


Li3 Energy Peru SRL, a private limited company organized under
the laws of Peru (“Li3 Peru”). The Company owns 100% of Li3 Peru.


 


Alfredo Holdings, Ltd., an exempted limited company incorporated
under the laws of the Cayman Islands (“Alfredo”). The Company owns 100% of Alfredo.


 


Pacific Road Mining Chile, SA, a Chilean corporation (“PRMC”).
Alfredo owns 873,863 of the 873,865 (approximately 99.9998%) issued share capital of PRMC.


 


Noto
Energy S.A., an Argentinean corporation (“Noto”). The Company owns 90% of Noto, and Li3 Peru owns the other
10% of Noto.


 



    	 



    	 



    

 



    Annex
9.10

    Form of
Investment Letter

    


    Li3
Energy, Inc.

    Av. Pardo
y Aliaga 699 Of. 802

    San
Isidro, Lima

    PERU

    


    Dear
Gentlemen:

    


    In connection with the undersigned’s
receipt of ________ shares (the “Securities”) of common stock, par value $0.001
per share (the “Common Stock”), of Li3 Energy, Inc., a Nevada corporation (the
“Company”), as the designee of Investor (as defined below) pursuant to the
Investment Agreement, dated as of _________ __, 2010, between the Company and
Centurion Private Equity, LLC (“Investor”), the undersigned represents that the
undersigned is aware that the Securities have not been registered under the
Securities Act of 1933, as amended (the “Securities Act”), and that the
undersigned has received the Securities for investment purposes and not with a
view to distribution or resale, or otherwise for transfer of the Securities or
any interest therein without an effective registration statement with respect
thereto or an opinion of counsel that registration is not required under the
Securities Act.

    


    The undersigned further represents and
warrants to the Company as follows:

    


    1.           
The undersigned is an “accredited investor” within the meaning of Regulation D
of the Securities Act and/or the undersigned has such knowledge and experience
in financial, tax, and business matters so as to utilize information made
available to me in order to evaluate the merits and risks of an investment
decision with respect thereto.

    


    2.           
The undersigned has no contract, undertaking, agreement or arrangement with any
person to sell, transfer or pledge to such person or anyone else the Securities
or any part thereof, and the undersigned has no present plans to enter into any
such contract, undertaking, agreement or arrangement.

    


    3.           
The undersigned will not attempt to dispose of any Securities or any interest
therein, unless and until the Company shall have determined to its satisfaction
that the proposed disposition does not violate the registration requirements of
the Securities Act; the undersigned understands that the Company may require an
opinion of counsel, satisfactory in form and substance to the foregoing effect
before permitting a transfer.

    


    4.           
The undersigned understands that there is no assurance that there will be a
public market for any of the Securities and that the undersigned recognizes, in
light of these considerations and those set forth above, that it may not be
possible for the undersigned to liquidate such securities readily, or at all,
and that the undersigned may not be able to dispose of them for a lengthy period
of time, if at all.


    
      
         


      

      
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    5.           
The undersigned acknowledges and understands that the certificate(s)
representing the Securities to be issued to the undersigned may bear the
following, or similar, legend:

    


    THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY STATE SECURITIES LAWS,
AND NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD,
PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT
WITH RESPECT THERETO IS EFFECTIVE UNDER THE ACT AND ANY APPLICABLE STATE
SECURITIES LAWS, OR (2) AN EXEMPTION FROM SUCH REGISTRATION EXISTS AND THE
COMPANY RECEIVES AN OPINION OF COUNSEL TO THE HOLDER OF SUCH SECURITIES, WHICH
COUNSEL AND OPINION ARE SATISFACTORY TO THE COMPANY, THAT SUCH SECURITIES MAY BE
OFFERED, SOLD, PLEDGED, ASSIGNED OR TRANSFERRED IN THE MANNER CONTEMPLATED
WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR APPLICABLE STATE
SECURITIES LAWS.

    


    6.           
The undersigned acknowledges and agrees that the Company was, at one time, a
“shell company” as defined in Rule 12b-2 under the Exchange
Act.  Pursuant to Rule 144(i) under the Securities Act, securities
issued by a current or former shell company (such as the Securities) that
otherwise meet the holding period and other requirements of Rule 144
nevertheless cannot be sold in reliance on Rule 144 until one year after the
date on which such company filed current “Form 10 information” (as defined in
Rule 144(i)) with the SEC reflecting that it ceased being a shell company (and
that, in the Company’s case, such Form 10 Information was filed on May 14,
2010), and provided that at the time of a proposed sale pursuant to Rule 144,
the issuer is subject to the reporting requirements of section 13 or 15(d) of
the Exchange Act and has filed all reports and other materials required to be
filed by section 13 or 15(d) of the Exchange Act, as applicable, during the
preceding 12 months (or for such shorter period that the issuer was required to
file such reports and materials), other than Form 8-K reports.  As a
result, the restrictive legends on certificates for the Securities set forth
above cannot be removed except in connection with an actual sale meeting the
foregoing requirements.


    


    
      
        
          
            
              
                
                  
                    
                      	
                              Very
      truly yours,

                            
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	
                              Name:

                            	 
      	 
      	
                              Date

                            	 
      


                    

                  

                

              

            

          

        

      

    


    
      
         


      

      
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