art8k120808-securitiespur.htm


    Exhibit 10.10

    
      

      

    

    
      SECURITIES
PURCHASE AGREEMENT

       

      


       

      SECURITIES
PURCHASE AGREEMENT (this “Agreement”), dated as of
December 1, 2008, by and among AmeriResource Technologies, Inc., a Delaware
corporation, with headquarters located at 3440 E. Russell Road, Suite 217, Las
Vegas, NV 89120 (the “Company”), and each of the
purchasers set forth on the signature pages hereto (the “Buyers”).

       

      WHEREAS:

       

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

       

      B.        
Buyers desire to purchase and the Company desires to issue and sell, upon the
terms and conditions set forth in this Agreement  10% secured convertible
notes of the Company, in the form attached hereto as Exhibit “A”, in the aggregate
principal amount of Three Hundred Thousand Dollars ($300,000) (together with any
note(s) issued in replacement thereof or otherwise with respect thereto in
accordance with the terms thereof, the “Notes”), convertible into
shares of common stock, par value $.0001 per share, of the Company (the “Common Stock”), upon the terms
and subject to the limitations and conditions set forth in such Notes and
 warrants, in the form attached hereto as Exhibit “B”, to purchase an
aggregate of Three Hundred Million (300,000,000) shares of Common Stock (the
“Warrants”).

       

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

       

      D.         Contemporaneous
with the execution and delivery of this Agreement, the parties hereto are
executing and delivering a Registration Rights Agreement, in the form attached
hereto as Exhibit “C”
(the “Registration Rights
Agreement”), pursuant to which the Company has agreed to provide certain
registration rights under the 1933 Act and the rules and regulations promulgated
thereunder, and applicable state securities laws.

       

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

       

      1.         PURCHASE
AND SALE OF NOTES
AND WARRANTS.

       

      a.        
 Purchase
of Notes and Warrants.  On the Closing Date (as defined below),
the Company shall issue and sell to each Buyer and each Buyer severally agrees
to purchase from the Company such principal amount of Notes and number of
Warrants as is set forth immediately below such Buyer’s name on the signature
pages hereto, which, together with the subsequent closings provided in Section
1(d) below, aggregate $300,000 principal amount of Notes and Warrants to
purchase an aggregate of 300,000,000 shares of Common Stock.

       


      
        
           


        

        
           


          
            

          

        

        
           


        

      

       

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

       

      c.     
   Closing
Date.  Subject to the satisfaction (or written waiver) of the
conditions thereto set forth in Section 6 and Section 7 below, the date and time
of the issuance and sale of the Notes and the Warrants pursuant to this
Agreement (the “Closing
Date”) shall be 12:00 noon, Eastern Standard Time on December 1, 2008 or
such other mutually agreed upon time.  The closing of the transactions
contemplated by this Agreement (the “Closing”) shall occur on the
Closing Date at such location as may be agreed to by the parties.

       

      d.         Subsequent
Closings.  On a subsequent date to be agreed to by the parties
hereto (each, a “Funding
Date”), investment will be made by the Investor in tranches, the first
amount of $150,000 upon signing the definitive investment Agreements and
additional warrants to purchase an aggregate of 150,000,000 shares. On each
Funding Date, the Buyers will transfer by wire transfer of immediately available
funds to the Company.  In addition, on each Funding Date, an
authorized officer of the Company shall deliver to the Buyers a closing
certificate in form and substance satisfactory to the
Buyers.  Notwithstanding the foregoing, either the Company or a
majority-in-interest of the Buyers may terminate their obligations under this
Section 1(d) upon thirty (30) days written notice to the other
party.

       

      2.         BUYERS’
REPRESENTATIONS AND WARRANTIES.  Each Buyer severally (and not
jointly) represents and warrants to the Company solely as to such Buyer
that:

       

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

       

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

       


      
        
           


        

        
           


          
            

          

        

        
           


        

      

       

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

       

      d.          Information.  The
Buyer and its advisors, if any, have been, and for so long as the Notes and
Warrants remain outstanding will continue to be, furnished with all materials
relating to the business, finances and operations of the Company and materials
relating to the offer and sale of the Securities which have been requested by
the Buyer or its advisors.  The Buyer and its advisors, if any, have
been, and for so long as the Notes and Warrants remain outstanding will continue
to be, afforded the opportunity to ask questions of the
Company.  Notwithstanding the foregoing, the Company has not disclosed
to the Buyer any material nonpublic information and will not disclose such
information unless such information is disclosed to the public prior to or
promptly following such disclosure to the Buyer.  Neither such
inquiries nor any other due diligence investigation conducted by Buyer or any of
its advisors or representatives shall modify, amend or affect Buyer’s right to
rely on the Company’s representations and warranties contained in Section 3
below.  The Buyer understands that its investment in the Securities
involves a significant degree of risk.

       

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

       

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

       


      
        
           


        

        
           


          
            

          

        

        
           


        

      

       

      g.      
  Legends.  The
Buyer understands that the Notes and the Warrants and, until such time as the
Conversion Shares and Warrant Shares have been registered under the 1933 Act as
contemplated by the Registration Rights Agreement or otherwise may be sold
pursuant to Rule 144 or Regulation S without any restriction as to the number of
securities as of a particular date that can then be immediately sold, the
Conversion Shares and Warrant Shares may bear a restrictive legend in
substantially the following form (and a stop-transfer order may be placed
against transfer of the certificates for such Securities):

       

      “The
securities represented by this certificate have not been registered under the
Securities Act of 1933, as amended.  The securities may not be sold,
transferred or assigned in the absence of an effective registration statement
for the securities under said Act, or an opinion of counsel, in form, substance
and scope customary for opinions of counsel in comparable transactions, that
registration is not required under said Act or unless sold pursuant to Rule 144
or Regulation S under said Act.”

       

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

       

      h.         Authorization;
Enforcement. This Agreement and the Registration Rights Agreement have
been duly and validly authorized.  This Agreement has been duly
executed and delivered on behalf of the Buyer, and this Agreement constitutes,
and upon execution and delivery by the Buyer of the Registration Rights
Agreement, such agreement will constitute, valid and binding agreements of the
Buyer enforceable in accordance with their terms.

       

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

       


      
        
           


        

        
           


          
            

          

        

        
           


        

      

       

      3.         REPRESENTATIONS
AND WARRANTIES OF THE COMPANY.  The Company represents and
warrants to each Buyer that:

       

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

       

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

       


      
        
           


        

        
           


          
            

          

        

        
           


        

      

       

      c.      
  Capitalization.  As
of the date hereof, the authorized capital stock of the Company consists of (i)
50,000,000,000 shares of Common Stock, of which 4,398,674,337 shares are issued
and outstanding, 7,000,000,000 shares are reserved for issuance pursuant to
the Company’s stock option plans, 30,000,000,000 shares are reserved for
issuance pursuant to securities (other than the Notes and the Warrants)
exercisable for, or convertible into or exchangeable for shares of Common Stock
and 3,000,000,000 shares are reserved for issuance upon conversion of the
Notes and exercise of the Warrants; and (ii) 10,000,000 shares of preferred
stock, of which 2,000,000 shares have been designated as Class A Preferred
Stock, of which 131,275 are issued and outstanding; 2,000,000 shares have
been designated as Class B Preferred Stock of which 177,012 shares are issued
and outstanding; 1,000,000 shares have been designated as Class C Preferred
Stock of which 750,000 shares issued and outstanding; 1,000,000 shares are
designated as Class D Preferred stock of which 250,000 shares are issued
and outstanding; and, 1,000,000 shares designated as Class E Preferred
stock of which zero (0) are issued and outstanding; All of such outstanding
shares of capital stock are, or upon issuance will be, duly authorized, validly
issued, fully paid and nonassessable.  No shares of capital stock of
the Company are subject to preemptive rights or any other similar rights of the
shareholders of the Company or any liens or encumbrances imposed through the
actions or failure to act of the Company.  Except as disclosed in
Schedule 3(c), as of the
effective date of this Agreement, (i) there are no outstanding options,
warrants, scrip, rights to subscribe for, puts, calls, rights of first refusal,
agreements, understandings, claims or other commitments or rights of any
character whatsoever relating to, or securities or rights convertible into or
exchangeable for any shares of capital stock of the Company or any of its
Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is
or may become bound to issue additional shares of capital stock of the Company
or any of its Subsidiaries, (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 1933 Act (except the Registration
Rights Agreement) and (iii) there are no anti-dilution or price adjustment
provisions contained in any security issued by the Company (or in any agreement
providing rights to security holders) that will be triggered by the issuance of
the Notes, the Warrants, the Conversion Shares or Warrant Shares.  The
Company has furnished to the Buyer true and correct copies of the Company’s
Articles of Incorporation as in effect on the date hereof (“Articles of Incorporation”),
the Company’s By-laws, as in effect on the date hereof (the “By-laws”), and the terms of
all securities convertible into or exercisable for Common Stock of the Company
and the material rights of the holders thereof in respect
thereto.  The Company shall provide the Buyer with a written update of
this representation signed by the Company’s Chief Executive or Chief Financial
Officer on behalf of the Company as of the Closing Date.

       

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

       

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

       


      
        
           


        

        
           


          
            

          

        

        
           


        

      

       

      f.     
    No
Conflicts.  The execution, delivery and performance of this
Agreement, the Registration Rights Agreement, the Notes, the Security Agreement
and the Warrants by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby (including, without limitation, the
issuance and reservation for issuance of the Conversion Shares and Warrant
Shares) will not (i) conflict with or result in a violation of any provision of
the Articles of Incorporation or By-laws or (ii) violate or conflict with, or
result in a breach of any provision of, or constitute a default (or an event
which with notice or lapse of time or both could become a default) under, or
give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture, patent, patent license or instrument
to which the Company or any of its Subsidiaries is a party, or
(iii)  result in a violation of any law, rule, regulation, order,
judgment or decree (including federal and state securities laws and regulations
and regulations of any self-regulatory organizations to which the Company or its
securities are subject) applicable to the Company or any of its Subsidiaries or
by which any property or asset of the Company or any of its Subsidiaries is
bound or affected (except for such conflicts, defaults, terminations,
amendments, accelerations, cancellations and violations as would not,
individually or in the aggregate, have a Material Adverse
Effect).  Neither the Company nor any of its Subsidiaries is in
violation of its Articles of Incorporation, By-laws or other organizational
documents and neither the Company nor any of its Subsidiaries is in default (and
no event has occurred which with notice or lapse of time or both could put the
Company or any of its Subsidiaries in default) under, and neither the Company
nor any of its Subsidiaries has taken any action or failed to take any action
that would give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Company or
any of its Subsidiaries is a party or by which any property or assets of the
Company or any of its Subsidiaries is bound or affected, except for possible
defaults as would not, individually or in the aggregate, have a Material Adverse
Effect. The businesses of the Company and its Subsidiaries, if any, are not
being conducted, and shall not be conducted so long as a Buyer owns any of the
Securities, in violation of any law, ordinance or regulation of any governmental
entity.  Except as specifically contemplated by this Agreement and as
required under the 1933 Act and any applicable state securities laws, the
Company is not required to obtain any consent, authorization or order of, or
make any filing or registration with, any court, governmental agency, regulatory
agency, self regulatory organization or stock market or any third party in order
for it to execute, deliver or perform any of its obligations under this
Agreement, the Registration Rights Agreement, the Notes or the Warrants in
accordance with the terms hereof or thereof or to issue and sell the Notes and
Warrants in accordance with the terms hereof and to issue the Conversion Shares
upon conversion of the Notes and the Warrant Shares upon exercise of the
Warrants.  Except as disclosed in Schedule 3(f), all consents,
authorizations, orders, filings and registrations which the Company is required
to obtain pursuant to the preceding sentence have been obtained or effected on
or prior to the date hereof.  The Company is not in violation of the
listing requirements of the Over-the-Counter Bulletin Board (the “OTCBB”) and does not
reasonably anticipate that the Common Stock will be delisted by the OTCBB in the
foreseeable future.  The Company and its Subsidiaries are unaware of
any facts or circumstances which might give rise to any of the
foregoing.

       


      
        
           


        

        
           


          
            

          

        

        
           


        

      

       

      g.    
    SEC
Documents; Financial Statements.  Except as disclosed in Schedule 3(g), the Company has
timely filed all reports, schedules, forms, statements and other documents
required to be filed by it with the SEC pursuant to the reporting requirements
of the Securities Exchange Act of 1934, as amended (the “1934 Act”) (all of the
foregoing filed prior to the date hereof and all exhibits included therein and
financial statements and schedules thereto and documents (other than exhibits to
such documents) incorporated by reference therein, being hereinafter referred to
herein as the “SEC
Documents”).  The Company has delivered to each Buyer true and
complete copies of the SEC Documents, except for such exhibits and incorporated
documents.  As of their respective dates, the SEC Documents complied
in all material respects with the requirements of the 1934 Act and the rules and
regulations of the SEC promulgated thereunder applicable to the SEC Documents,
and none of the SEC Documents, at the time they were filed with the SEC,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.  None of the statements made in any such SEC Documents is,
or has been, required to be amended or updated under applicable law (except for
such statements as have been amended or updated in subsequent filings prior the
date hereof).  As of their respective dates, the financial statements
of the Company included in the SEC Documents complied as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto.  Such financial
statements have been prepared in accordance with United States generally
accepted accounting principles, consistently applied, during the periods
involved (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 fairly present in all material respects the consolidated
financial position of the Company and its consolidated Subsidiaries as of the
dates thereof and the consolidated results of their operations and cash flows
for the periods then ended (subject, in the case of unaudited statements, to
normal year-end audit adjustments).  Except as set forth in the
financial statements of the Company included in the SEC Documents, the Company
has no liabilities, contingent or otherwise, other than (i) liabilities incurred
in the ordinary course of business subsequent to December 31, 2007 and (ii)
obligations under contracts and commitments incurred in the ordinary course of
business and not required under generally accepted accounting principles to be
reflected in such financial statements, which, individually or in the aggregate,
are not material to the financial condition or operating results of the
Company.

       

      h.          Absence
of Certain Changes.  Since December 31, 2007, there has been no
material adverse change and no material adverse development in the assets,
liabilities, business, properties, operations, financial condition, results of
operations or prospects of the Company or any of its Subsidiaries.

       

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

       


      
        
           


        

        
           


          
            

          

        

        
           


        

      

       

      j.    
     Patents,
Copyrights, etc.    The Company and each of its
Subsidiaries owns or possesses the requisite licenses or rights to use all
patents, patent applications, patent rights, inventions, know-how, trade
secrets, trademarks, trademark applications, service marks, service names, trade
names and copyrights (“Intellectual Property”)
necessary to enable it to conduct its business as now operated (and, except as
set forth in Schedule
3(j) hereof, to the best of the Company’s knowledge, as presently
contemplated to be operated in the future); there is no claim or action by any
person pertaining to, or proceeding pending, or to the Company’s knowledge
threatened, which challenges the right of the Company or of a Subsidiary with
respect to any Intellectual Property necessary to enable it to conduct its
business as now operated (and, except as set forth in Schedule 3(j) hereof, to the
best of the Company’s knowledge, as presently contemplated to be operated in the
future); to the best of the Company’s knowledge, the Company’s or its
Subsidiaries’ current and intended products, services and processes do not
infringe on any Intellectual Property or other rights held by any person; and
the Company is unaware of any facts or circumstances which might give rise to
any of the foregoing.  The Company and each of its Subsidiaries have
taken reasonable security measures to protect the secrecy, confidentiality and
value of their Intellectual Property.

       

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

       

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

       

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

       


      
        
           


        

        
           


          
            

          

        

        
           


        

      

       

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

       

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

       

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

       

      q.         No
Brokers.  The Company has taken no action which would give rise
to any claim by any person for brokerage commissions, transaction fees or
similar payments relating to this Agreement or the transactions contemplated
hereby.

       

      r.      
   Permits;
Compliance.  The Company and each of its Subsidiaries is in
possession of all franchises, grants, authorizations, licenses, permits,
easements, variances, exemptions, consents, certificates, approvals and orders
necessary to own, lease and operate its properties and to carry on its business
as it is now being conducted (collectively, the “Company Permits”), and there
is no action pending or, to the knowledge of the Company, threatened regarding
suspension or cancellation of any of the Company Permits.  Neither the
Company nor any of its Subsidiaries is in conflict with, or in default or
violation of, any of the Company Permits, except for any such conflicts,
defaults or violations which, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect.  Since
December 31, 2007, neither the Company nor any of its Subsidiaries has received
any notification with respect to possible conflicts, defaults or violations of
applicable laws, except for notices relating to possible conflicts, defaults or
violations, which conflicts, defaults or violations would not have a Material
Adverse Effect.

       


      
        
           


        

        
           


          
            

          

        

        
           


        

      

       

      s.       
  Environmental
Matters.

       

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

       

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

       

      (iii)         Except
as set forth in Schedule
3(s), there are no underground storage tanks on or under any real
property owned, leased or used by the Company or any of its Subsidiaries that
are not in compliance with applicable law.

       

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

       


      
        
           


        

        
           


          
            

          

        

        
           


        

      

       

      u.         Insurance.  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 any reason to believe that it will not be
able to renew its existing insurance coverage as and when such coverage expires
or to obtain similar coverage from similar insurers as may be necessary to
continue its business at a cost that would not have a Material Adverse
Effect.  The Company has provided to Buyer true and correct copies of
all policies relating to directors’ and officers’ liability coverage, errors and
omissions coverage, and commercial general liability coverage.

       

      v.      
  Internal
Accounting Controls.  The Company and each of its Subsidiaries
maintain a system of internal accounting controls sufficient, in the judgment of
the Company’s board of directors, to provide reasonable assurance that (i)
transactions are executed in accordance with management’s general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability, (iii) access to
assets is permitted only in accordance with management’s general or specific
authorization and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.

       

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

       

      x.       
 Solvency.  Except
as set forth in Schedule 3(x), the Company (after giving effect to the
transactions contemplated by this Agreement) is solvent (i.e., its assets have
a fair market value in excess of the amount required to pay its probable
liabilities on its existing debts as they become absolute and matured) and
currently the Company has no information that would lead it to reasonably
conclude that the Company would not, after giving effect to the transaction
contemplated by this Agreement, have the ability to, nor does it intend to take
any action that would impair its ability to, pay its debts from time to time
incurred in connection therewith as such debts mature.  The Company
did not receive a qualified opinion from its auditors with respect to its most
recent fiscal year end and, after giving effect to the transactions contemplated
by this Agreement, does not anticipate or know of any basis upon which its
auditors might issue a qualified opinion in respect of its current fiscal
year.

       


      
        
           


        

        
           


          
            

          

        

        
           


        

      

       

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

       

      z.      
  Breach of
Representations and Warranties by the Company.  If the Company
breaches any of the representations or warranties set forth in this Section 3,
and in addition to any other remedies available to the Buyers pursuant to this
Agreement, the Company shall pay to the Buyer the Standard Liquidated Damages
Amount in cash or in shares of Common Stock at the option of the Company, until
such breach is cured.  If the Company elects to  pay the
Standard Liquidated Damages Amounts in shares of Common Stock, such shares shall
be issued at the Conversion Price at the time of payment.

       

      4.         COVENANTS.

       

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

       

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

       

      c.     
   Reporting Status;
Eligibility to Use Form S-3 or FormS-1.  The Company’s
Common Stock is registered under Section 12(g) of the 1934 Act. The Company
represents and warrants that it meets the requirements for the use of Form S-3
(or if the Company is not eligible for the use of Form S-3 as of the Filing Date
(as defined in the Registration Rights Agreement), the Company may use the form
of registration for which it is eligible at that time) for registration of the
sale by the Buyer of the Registrable Securities (as defined in the Registration
Rights Agreement).  So long as the Buyer beneficially owns any of the
Securities, the Company shall timely file all reports required to be filed with
the SEC pursuant to the 1934 Act, and the Company shall not terminate its status
as an issuer required to file reports under the 1934 Act even if the 1934 Act or
the rules and regulations thereunder would permit such
termination.  The Company further agrees to file all reports required
to be filed by the Company with the SEC in a timely manner so as to become
eligible, and thereafter to maintain its eligibility, for the use of Form
S-3.  The Company shall issue a press release describing the materials
terms of the transaction contemplated hereby as soon as practicable following
the Closing Date but in no event more than two (2) business days of the Closing
Date, which press release shall be subject to prior review by the
Buyers.  The Company agrees that such press release shall not disclose
the name of the Buyers unless expressly consented to in writing by the Buyers or
unless required by applicable law or regulation, and then only to the extent of
such requirement.

       


      
        
           


        

        
           


          
            

          

        

        
           


        

      

       

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

       

      e.    
    Future
Offerings.  Subject to the exceptions described below, the
Company will not, without the prior written consent of a majority-in-interest of
the Buyers, which shall not be unreasonably withheld by buyers, negotiate or
contract with any party to obtain additional equity financing (including debt
financing with an equity component) that involves (A) the issuance of Common
Stock at a discount to the market price of the Common Stock on the date of
issuance (taking into account the value of any warrants or options to acquire
Common Stock issued in connection therewith) or (B) the issuance of convertible
securities that are convertible into an indeterminate number of shares of Common
Stock or (C) the issuance of warrants during the period (the “Lock-up Period”) beginning on
the Closing Date and ending one hundred and eighty (180) days from the Closing
Date.

       

      f.     
    In addition, subject to the exceptions described below
and the additional financings for the Company which have already been agreed
upon between the buyers and the Company, the Company will not conduct any equity
financing (including debt with an equity component) (“Future Offerings”) during the
period beginning on the Closing Date and ending two (2) years after the end of
the Lock-up Period unless it shall have first delivered to each Buyer, at least
twenty (20) business days prior to the closing of such Future Offering, written
notice describing the proposed Future Offering, including the terms and
conditions thereof and proposed definitive documentation to be entered into in
connection therewith, and providing each Buyer an option during the fifteen (15)
day period following delivery of such notice to purchase its pro rata share
(based on the ratio that the aggregate principal amount of Notes purchased by it
hereunder bears to the aggregate principal amount of Notes purchased hereunder)
of the securities being offered in the Future Offering on the same terms as
contemplated by such Future Offering (the limitations referred to in this
sentence and the preceding sentence are collectively referred to as the “Capital Raising
Limitations”).  In the event the terms
and conditions of a proposed Future Offering are amended in any respect after
delivery of the notice to the Buyers concerning the proposed Future Offering,
the Company shall deliver a new notice to each Buyer describing the amended
terms and conditions of the proposed Future Offering and each Buyer thereafter
shall have an option during the fifteen (15) day period following delivery of
such new notice to purchase its pro rata share of the securities being offered
on the same terms as contemplated by such proposed Future Offering, as
amended.  The foregoing sentence shall apply to successive amendments
to the terms and conditions of any proposed Future Offering.  The
Capital Raising Limitations shall not apply to any transaction involving (i)
issuances of securities in a firm commitment underwritten public offering
(excluding a continuous offering pursuant to Rule 415 under the 1933 Act), (ii)
issuances of securities as consideration for a merger, consolidation or purchase
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 (iii) issuances of restricted securities at a discount to the market price of
the Company’s Common Stock, provided that no registration rights are given to
such purchaser.  The Capital Raising Limitations also shall not apply
to the issuance of securities upon exercise or conversion of the Company’s
options, warrants or other convertible securities outstanding as of the date
hereof or to the grant of additional options or warrants, or the issuance of
additional securities, under any Company stock option or restricted stock plan
approved by the shareholders of the Company.

       


      
        
           


        

        
           


          
            

          

        

        
           


        

      

       

      g.    
    Expenses.  At
the Closing, the Company shall reimburse Buyers for expenses incurred by them in
connection with the negotiation, preparation, execution, delivery and
performance of this Agreement and the other agreements to be executed in
connection herewith (“Documents”), including, without limitation, attorneys’ and
consultants’ fees and expenses, transfer agent fees, fees for stock quotation
services, fees relating to any amendments or modifications of the Documents or
any consents or waivers of provisions in the Documents, fees for the preparation
of opinions of counsel, escrow fees, and costs of restructuring the transactions
contemplated by the Documents.  When possible, the Company must pay
these fees directly, otherwise the Company must make immediate payment for
reimbursement to the Buyers for all fees and expenses immediately upon written
notice by the Buyer or the submission of an invoice by the Buyer  If
the Company fails to reimburse the Buyer in full within three (3) business days
of the written notice or submission of invoice by the Buyer, the Company shall
pay interest on the total amount of fees to be reimbursed at a rate of 15% per
annum.

       

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

       

      i.     
    Authorization
and Reservation of Shares.  The Company shall at all times have
authorized, and reserved for the purpose of issuance, a sufficient number of
shares of Common Stock to provide for the full conversion or exercise of the
outstanding Notes and Warrants and issuance of the Conversion Shares and Warrant
Shares in connection therewith (based on the Conversion Price of the Notes or
Exercise Price of the Warrants in effect from time to time) and as otherwise
required by the Notes.  The Company shall not reduce the number of
shares of Common Stock reserved for issuance upon conversion of Notes and
exercise of the Warrants without the consent of each Buyer.  The
Company shall at all times maintain the number of shares of Common Stock so
reserved for issuance at an amount (“Reserved Amount”) equal to no
less than two (2) times the number that is then actually issuable upon full
conversion of the Notes and Additional Notes and upon exercise of the Warrants
and the Additional Warrants (based on the Conversion Price of the Notes or the
Exercise Price of the Warrants in effect from time to time).  If at
any time the number of shares of Common Stock authorized and reserved for
issuance (“Authorized and
Reserved Shares”) is below the Reserved Amount, the Company will promptly
take all corporate action necessary to authorize and reserve a sufficient number
of shares, including, without limitation, calling a special meeting of
shareholders to authorize additional shares to meet the Company’s obligations
under this Section 4(h), in the case of an insufficient number of authorized
shares, obtain shareholder approval of an increase in such authorized number of
shares, and voting the management shares of the Company in favor of an increase
in the authorized shares of the Company to ensure that the number of authorized
shares is sufficient to meet the Reserved Amount.  If the Company
fails to obtain such shareholder approval within thirty (30) days following the
date on which the Reserved Amount exceeds the number of Authorized and Reserved
Shares, the Company shall pay to the Borrower the Standard Liquidated Damages
Amount, in cash or in shares of Common Stock at the option of the
Buyer.  If the Buyer elects to be paid the Standard Liquidated Damages
Amount in shares of Common Stock, such shares shall be issued at the Conversion
Price at the time of payment.  In order to ensure that the Company has
authorized a sufficient amount of shares to meet the Reserved Amount at all
times, the Company must deliver to the Buyer at the end of every month a list
detailing (1) the current amount of shares authorized by the Company and
reserved for the Buyer; and (2) amount of shares issuable upon conversion of the
Notes and upon exercise of the Warrants and as payment of interest accrued on
the Notes for one year.  If the Company fails to provide such list
within five (5) business days of the end of each month, the Company shall pay
the Standard Liquidated Damages Amount, in cash or in shares of Common Stock at
the option of the Buyer, until the list is delivered.  If the Buyer
elects to be paid the Standard Liquidated Damages Amount in shares of Common
Stock, such shares shall be issued at the Conversion Price at the time of
payment.

       


      
        
           


        

        
           


          
            

          

        

        
           


        

      

       

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

       

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

       

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

       

      m.        Breach of
Covenants.  If the Company
breaches any of the covenants set forth in this Section 4, and in addition to
any other remedies available to the Buyers pursuant to this Agreement, the
Company shall pay to the Buyers the Standard Liquidated Damages Amount, in cash
or in shares of Common Stock at the option of the Company, until such breach is
cured. If the Company elects to pay the Standard Liquidated Damages Amount in
shares, such shares shall be issued at the Conversion Price at the time of
payment.

       


      
        
           


        

        
           


          
            

          

        

        
           


        

      

       

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

       


      
        
           


        

        
           


          
            

          

        

        
           


        

      

       

      6.         CONDITIONS
TO THE COMPANY’S OBLIGATION TO SELL.  The obligation of the
Company hereunder to issue and sell the Notes and Warrants to a Buyer at the
Closing is subject to the satisfaction, at or before the Closing Date of each of
the following conditions thereto, provided that these conditions are for the
Company’s sole benefit and may be waived by the Company at any time in its sole
discretion:

       

      a.    
    The applicable Buyer shall have executed this Agreement
and the Registration Rights Agreement, and delivered the same to the
Company.

       

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

       

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

       

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

       

      7.         CONDITIONS
TO EACH BUYER’S OBLIGATION TO PURCHASE.  The obligation of each
Buyer hereunder to purchase the Notes and Warrants at the Closing or on each
subsequent Funding Date is subject to the satisfaction, at or before the Closing
Date or Funding Date, as applicable, of each of the following conditions,
provided that these conditions are for such Buyer’s sole benefit and may be
waived by such Buyer at any time in its sole discretion:

       

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

       

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

       

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

       

      d.         The
representations and warranties of the Company shall be true and correct in all
material respects as of the date when made and as of the Closing Date as though
made at such time (except for representations and warranties that speak as of a
specific date) and the Company shall have performed, satisfied and complied in
all material respects with the covenants, agreements and conditions required by
this Agreement to be performed, satisfied or complied with by the Company at or
prior to the Closing Date.  The Buyer shall have received a
certificate or certificates, executed by the chief executive officer of the
Company, dated as of the Closing Date, to the foregoing effect and as to such
other matters as may be reasonably requested by such Buyer including, but not
limited to certificates with respect to the Company’s Articles of Incorporation,
By-laws and Board of Directors’ resolutions relating to the transactions
contemplated hereby.

       


      
        
           


        

        
           


          
            

          

        

        
           


        

      

       

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

       

      f.    
     No event shall have occurred which could
reasonably be expected to have a Material Adverse Effect on the
Company.

       

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

       

      h.         The
Buyer shall have received an opinion of the Company’s counsel, dated as of the
Closing Date, in form, scope and substance reasonably satisfactory to the Buyer
and in substantially the same form as Exhibit “D” attached
hereto.

       

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

       

      8.         GOVERNING
LAW; MISCELLANEOUS.

       

      a.     
   Governing
Law.  THIS AGREEMENT SHALL BE ENFORCED, GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD
TO THE PRINCIPLES OF CONFLICT OF LAWS.  THE PARTIES HERETO HEREBY
SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE UNITED STATES FEDERAL COURTS LOCATED
IN NEW YORK, NEW YORK WITH RESPECT TO ANY DISPUTE ARISING UNDER THIS AGREEMENT,
THE AGREEMENTS ENTERED INTO IN CONNECTION HEREWITH OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY. BOTH PARTIES IRREVOCABLY WAIVE THE DEFENSE OF AN
INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH SUIT OR
PROCEEDING.  BOTH PARTIES FURTHER AGREE THAT SERVICE OF PROCESS UPON A
PARTY MAILED BY FIRST CLASS MAIL SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE
SERVICE OF PROCESS UPON THE PARTY IN ANY SUCH SUIT OR
PROCEEDING.  NOTHING HEREIN SHALL AFFECT EITHER PARTY’S RIGHT TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.  BOTH PARTIES AGREE THAT
A FINAL NON-APPEALABLE JUDGMENT IN ANY SUCH SUIT OR PROCEEDING SHALL BE
CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON SUCH JUDGMENT
OR IN ANY OTHER LAWFUL MANNER.  THE PARTY WHICH DOES NOT PREVAIL IN
ANY DISPUTE ARISING UNDER THIS AGREEMENT SHALL BE RESPONSIBLE FOR ALL FEES AND
EXPENSES, INCLUDING ATTORNEYS’ FEES, INCURRED BY THE PREVAILING PARTY IN
CONNECTION WITH SUCH DISPUTE.

       


      
        
           


        

        
           


          
            

          

        

        
           


        

      

       

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

       

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

       

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

       

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

       

      f.        
 Notices.  Any
notices required or permitted to be given under the terms of this Agreement
shall be sent by certified or registered mail (return receipt requested) or
delivered personally or by courier (including a recognized overnight delivery
service) or by facsimile and shall be effective five days after being placed in
the mail, if mailed by regular United States mail, or upon receipt, if delivered
personally or by courier (including a recognized overnight delivery service) or
by facsimile, in each case addressed to a party.  The addresses for
such communications shall be:

       


      
        
           


        

        
           


          
            

          

        

        
           


        

      

       

      
        	 
      	
                If
      to the Company:

              
	 
      	 
      
	 
      	
                AmeriResource
      Technologies, Inc.

              
	 
      	
                3440
      E. Russell Road, Suite 217

              
	 
      	
                Las
      Vegas, NV 89120

              
	 
      	
                Attention:
      Delmar Janovec

              
	 
      	
                Telephone:
      (702) 214-4249

              
	 
      	
                Facsimile:  (702)
      214-4221

              
	 
      	 
      
	 
      	
                With
      a copy to:

              
	 
      	 
      
	 
      	
                Gregg
      Jaclin

              
	 	Anslow
      & Jaclin LLP 
	 	195
      Route 9 South Suite 204
	 	Attention: Gregg
      Jaclin
	 	Manalapan,
      NJ 07726
	 	Telephone:
      (732) 409-1212
	 	Facsimile:
      (732) 577-1188
	 	 


      

       

      If to a
Buyer:  To the address set forth immediately below such Buyer’s name
on the signature pages hereto.

       

      
        	 
      	
                With
      a copy to:

              
	 
      	
                Ballard
      Spahr Andrews & Ingersoll, LLP

              
	 
      	
                1735
      Market Street

              
	 
      	
                51st
      Floor

              
	 
      	
                Philadelphia,
      Pennsylvania  19103

              
	 
      	
                Attention:  Gerald
      J. Guarcini, Esq.

              
	 
      	
                Telephone:  215-864-8625

              
	 
      	
                Facsimile:   215-864-8999

              


      

       

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

       

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

       

      h.         Third
Party Beneficiaries.  This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.

       


      
        
           


        

        
           


          
            

          

        

        
           


        

      

       

      i.       
  Survival.  The
representations and warranties of the Company and the agreements and covenants
set forth in Sections 3, 4, 5 and 8 shall survive the closing hereunder
notwithstanding any due diligence investigation conducted by or on behalf of the
Buyers.  The Company agrees to indemnify and hold harmless each of the
Buyers and all their officers, directors, employees and agents for loss or
damage arising as a result of or related to any breach or alleged breach by the
Company of any of its representations, warranties and covenants set forth in
Sections 3 and 4 hereof or any of its covenants and obligations under this
Agreement or the Registration Rights Agreement, including advancement of
expenses as they are incurred.

       

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

       

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

       

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

       

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

       

      


      


      [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

      



      
        
           


        

        
           


          
            

          

        

        
           


        

      


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

       

      


      


      AMERIRESOURCE
TECHNOLOGIES, INC.

       

      


      Delmar
Janovec

      ________________________________

      Delmar
Janovec

      President

      


      


      AJW
PARTNERS, LLC

      By:  SMS
Group, LLC

      


      


      ______________________________________

      Corey S.
Ribotsky

      Manager

      


      


      RESIDENCE:  Delaware

      


      ADDRESS:      1044
Northern Boulevard

      Suite 302

      Roslyn, New York 11576

      Facsimile:  (516)
739-7115

      Telephone:  (516)
739-7110

      


      AGGREGATE
SUBSCRIPTION AMOUNT:

      


      
        	 
      	
                Aggregate
      Principal Amount of Notes:

              	
                $

              
	 
      	
                Number
      of Warrants:

              	 
      
	 
      	
                Aggregate
      Purchase Price:

              	
                $

              


      

       


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      AJW
PARTNERS II, LLC

      By:  SMS
Group, LLC

      


      


      ______________________________________

      Corey S.
Ribotsky

      Manager

      


      


      RESIDENCE:  Delaware

      


      ADDRESS:      1044
Northern Boulevard

      Suite 302

      Roslyn, New York 11576

      Facsimile:  (516)
739-7115

      Telephone:  (516)
739-7110

      


      AGGREGATE
SUBSCRIPTION AMOUNT:

      


      
        	 
      	
                Aggregate
      Principal Amount of Notes:

              	
                $

              
	 
      	
                Number
      of Warrants:

              	 
      
	 
      	
                Aggregate
      Purchase Price:

              	
                $

              


      

       


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      AJW
MASTER FUND, LTD.

      By:  First
Street Manager II, LLC

      


      


      ______________________________________

      Corey S.
Ribotsky

      Manager

      


      


      RESIDENCE:  Cayman
Islands

      


      ADDRESS:      AJW
Offshore, Ltd.

      P.O. Box
32021 SMB

      Grand
Cayman, Cayman Island, B.W.I.

      


      AGGREGATE
SUBSCRIPTION AMOUNT:

      


      
        	 
      	
                Aggregate
      Principal Amount of Notes:

              	
                $

              
	 
      	
                Number
      of Warrants:

              	 
      
	 
      	
                Aggregate
      Purchase Price:

              	
                $

              


      

       


      
        
           


        

        
           


          
            

          

        

        
           


        

      

      


      AJW
MASTER FUND II, LTD.

      By:  First
Street Manager II, LLC

      


      


      ______________________________________

      Corey S.
Ribotsky

      Manager

      


      


      RESIDENCE:  Cayman
Islands

      


      ADDRESS:      AJW
Offshore, Ltd.

      P.O. Box
32021 SMB

      Grand
Cayman, Cayman Island, B.W.I.

      


      AGGREGATE
SUBSCRIPTION AMOUNT:

      


      
        	 
      	
                Aggregate
      Principal Amount of Notes:

              	
                $

              
	 
      	
                Number
      of Warrants:

              	 
      
	 
      	
                Aggregate
      Purchase Price:

              	
                $

              


      

      



      
        
           


        

        
           


          
            

          

        

        
           


        

      

      


      NEW
MILLENNIUM CAPITAL PARTNERS III, LLC

      By:  First
Street Manager II, LLP

       

      ____________________________________

      Corey S.
Ribotsky

      Manager

       

      


      RESIDENCE:  New
York

      


      ADDRESS:      1044
Northern Boulevard

      Suite 302

      Roslyn, New York 11576

      Facsimile:          (516)
739-7115

      Telephone:        (516)
739-7110

      


      


      AGGREGATE
SUBSCRIPTION AMOUNT:

      


      


      
        	 
      	
                Aggregate
      Principal Amount of Notes:

              	
                $

              
	 
      	
                Number
      of Warrants:

              	 
      
	 
      	
                Aggregate
      Purchase Price:

              	
                $

              


      

       


      
        
           


        

        
           


          
            

          

        

        
           


        

      

      


      SCHEDULE
3(c)

      


      
        	
                Name
      of Shareholder

              	
                Amount
      of stock

              	
                Class
      of Preferred

              
	 
      	 
      	 
      
	
                Delmar
      Janovec

              	
                1,000,000

              	
                Series
      C

              
	 
      	 
      	 
      
	
                Rod
      Clawson

              	
                250,000

              	
                Series
      D

              


      

       

      



      
        
           


        

        
           


          
            

          

        

        
           


        

      

      


      SCHEDULE
3 (i)

       

      


      As listed
in the Company’s Form 10-KSB for 12-31-08 and most recent Form 10 Q for
9-30-08.

      



      
        
           


        

        
           


          
            

          

        

        
           


        

      

       

      SCHEDULE
3 (j)

      


      


      None

      



      
        
           


        

        
           


          
            

          

        

        
           


        

      

       

      SCHEDULE
3(k)

      


      


      None

       


      
        
           


        

        
           


          
            

          

        

        
           


        

      

       

      SCHEDULE
3 (l)

      


      


      None

      


      



      
        
           


        

        
           


          
            

          

        

        
           


        

      

       

      SCHEDULE
3 (m)

       

      


      
        Delmar
Janovec- Officer         ARRT
RECEIVABLES, INC.

      

       


      
        
           


        

        
           


          
            

          

        

        
           


        

      

       

      SCHEDULE
3 (s)

       

       

      None

       


      
        
           


        

        
           


          
            

          

        

        
           


        

      

       

      SCHEDULE
3 (s)

      


      


      None

       


      
        
           


        

        
           


          
            

          

        

        
           


        

      

       

      SCHEDULE
3 (t)

      


      


      None

      


       

      
        
           


        

        
           


          
            

          

        

        
           


        

      

       

      SCHEDULE
4 (d)

       

      


      General
operating expenditures in the normal course of day to day business
requirements.