helix_8k-ex1001.htm


    
      
        

      

      Exhibit 10.1

      
 

      NOTE
AND WARRANT PURCHASE AGREEMENT

      


      THIS NOTE AND WARRANT PURCHASE
AGREEMENT, dated as of March 30, 2010 (this “Agreement”), is entered into
by and between Helix Wind, Corp., a Nevada corporation (the “Company”), with its principal
executive office at 1848 Commercial Street, San Diego, CA 92113, and St. George
Investments, LLC, an Illinois limited liability company, its successors or
assigns (the “Buyer”),
with its principal executive office at 303 East Wacker Drive, Suite 311,
Chicago, Illinois 60601.

      


      W I T N E S S E T
H:

      


      WHEREAS, the Company and the
Buyer are executing and delivering this Agreement in reliance upon the exemption
from securities registration for offers and sales to accredited investors
afforded, inter
alia, by Rule
506 under Regulation D (“Regulation D”) as promulgated
by the United States Securities and Exchange Commission (the “SEC”) under the Securities
Act of 1933, as amended (the “1933 Act”), and/or Section
4(2) of the 1933 Act; and

      


      WHEREAS, the Buyer wishes to
acquire from the Company, and the Company desires to issue and sell to the
Buyer, (i) the First Note (as defined hereafter), which First Note will be
convertible into shares of Common Stock, $0.0001 par value, of the Company (the
“Common Stock”), (ii)
the First Warrant (as defined hereafter), which will be exercisable for shares
of Common Stock and (iii) certain Additional Notes and Additional Warrants (as
defined hereafter), upon the terms and subject to the conditions of the First
Note, the First Warrant, the Additional Notes, the Additional Warrants, this
Agreement and the other Transaction Documents (as defined
hereafter).

      


      NOW THEREFORE, in
consideration of the premises and the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows:

      


      1.           CERTAIN DEFINITIONS.  As used herein,
each of the following terms has the meaning set forth below, unless the context
otherwise requires:

      


      “Affiliate” means, with
respect to a specific Person referred to in the relevant provision, another
Person who or which controls or is controlled by or is under common control with
such specified Person.

      


      “Buyer’s Counsel” means
Bennett Tueller Johnson & Deere, P.C.

      


      “Buyer Control Person” means
each director, executive officer, promoter, and such other Persons as may be
deemed in control of the Buyer pursuant to Rule 405 under the 1933 Act or
Section 20 of the 1934 Act (as defined hereafter).

      


      “Certificate of Incorporation”
means the certificate of incorporation, articles of incorporation or other
charter document (howsoever denominated) of the Company, as amended to
date.

      


      “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.

      


      “Company Counsel” means Steven
James Davis, a Professional Corporation.

      


      “Company’s SEC Documents”
means the Company’s filings on the SEC’s EDGAR system.


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      “Conversion Date” means the
date a Holder submits a Notice of Conversion, as provided in the applicable Note
(as defined hereafter).

      


      “Conversion Shares” means the
shares of Common Stock issuable upon conversion of the Notes and/or in payment
of accrued interest, as contemplated in the Notes.

      


      “Delivery Date” has the
meaning ascribed to it in the applicable Note (with respect to Conversion
Shares).

      


      “Holder” means the Person
holding the relevant Securities at the relevant time.

      


      “Initial Closing Date” means
the date of the closing of the purchase and sale of the First Note and First
Warrant.

      


      “Last Audited Date” means
December 31, 2008.

      


      “Material Adverse Effect”
means an event or combination of events, which individually or in the aggregate,
would reasonably be expected to (a) adversely affect the legality, validity or
enforceability of the Purchased Securities (as defined hereafter) or any of the
Transaction Documents, (b)  have or result in a material adverse
effect on the results of operations, assets, or financial condition of the
Company and its subsidiaries, taken as a whole, or (c) adversely impair the
Company’s ability to perform fully on a timely basis its material obligations
under any of the Transaction Documents or the transactions contemplated
thereby.

      


      “Maturity Date” has the
meaning ascribed to it in the applicable Note.

      


      “Person” means any living
person or any entity, such as, but not necessarily limited to, a corporation,
partnership or trust.

      


      “Principal Trading Market”
means (a) the American Stock Exchange, (b) the New York Stock Exchange, (c) the
Nasdaq Global Market, (d) the Nasdaq Capital Market, or (e) the Nasdaq OTC
Bulletin Board, or (f) such other market on which the Common Stock is
principally traded at the relevant time, but shall not include the “pink sheets.”

      


      “Rule 144” means (i) Rule 144
promulgated under the 1933 Act or (ii) any other similar rule or regulation of
the SEC that may at any time permit Holder to sell securities of the Company to
the public without registration under the 1933 Act.

      


      “Securities” means the
Purchased Securities and the Shares.

      


      “Shares” means the shares of
Common Stock representing any or all of the Conversion Shares and/or the Warrant
Shares (as defined hereafter).

      


      “State of Incorporation” means
Nevada.

      


      “Subsidiary” means, as of the
relevant date, any subsidiary of the Company (whether or not included or
identified in the Company’s SEC Documents) whether now existing or hereafter
acquired or created.

      



      
        
           


        

        
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      “Trading Day” means any day
during which the Principal Trading Market shall be open for
business.

      


      “Transaction Documents” means
(i) this Agreement, (ii) each of the Notes (as defined hereafter), (iii) each of
the Warrants (as defined hereafter), (iv) the Registration Rights Agreement
substantially in the form attached hereto as Annex
IV (the “Registration
Rights Agreement”), (v) the Consent to Entry of Judgment by Confession
substantially in the form attached hereto as Annex
V (the “Confession of
Judgment”), (vi) the Unanimous Written Consent of the Board substantially
in the form attached hereto as Annex
VI, (vii) the Pledge Agreement substantially in the form attached hereto
as Annex
XI (the
“Pledge Agreement”),
(viii) the opinion of Company Counsel regarding the applicability of Rule 144 to
a potential sale of the shares of Common Stock pledged under the Pledge
Agreement substantially in the form attached hereto as Annex
XII (the “Rule 144
Opinion”), (ix) the irrevocable transfer agent instruction letter
substantially in the form attached hereto as Annex
XIII (the “Transfer
Agent Letter”), and (x) all other certificates, documents, agreements,
resolutions and instruments delivered to any party under or in connection with
this Agreement.

      


      “Transfer Agent” means, at any
time, the transfer agent for the Company’s Common Stock.

      


      “Warrant Shares” means the
shares of Common Stock issuable upon exercise of the Warrants.

      


      “Wire Instructions” means the
Company wire instructions set forth on Annex
III.

      


      2.           AGREEMENT
TO PURCHASE; INITIAL NET PURCHASE PRICE; INITIAL CLOSING.

      


      a.           Purchase.

      


      (i)           Subject
to the terms and conditions of this Agreement and the other Transaction
Documents, the undersigned Buyer hereby agrees to loan to the Company the
Initial Net Purchase Price (as defined hereafter) set forth on the Buyer’s
signature page of this Agreement.


      


      (ii)           The
obligation to repay the loan from the Buyer shall be evidenced by the Company’s
issuance of a Convertible Promissory Note to the Buyer in the principal amount
of $779,500.00 substantially in the form attached hereto as Annex
IX (the “First
Note”).  The First Note shall provide for a Conversion Price
(as defined in the First Note), which price may be adjusted from time to as
provided in the First Note.

      


      (iii)           As
additional consideration for the Initial Net Purchase Price, the Company shall
also issue to the Buyer a warrant to purchase 2,500,000 shares of the Common
Stock substantially in the form attached hereto as Annex
X (the “First
Warrant”).

      


      b.           Initial Closing; Delivery of
Transaction Documents. The sale and purchase of the First Note and
the First Warrant shall take place at a closing (the “Initial Closing”) to be held
at the offices of the Buyer on the Initial Closing Date pursuant to Section 8
hereof.  Subject to the terms and conditions of this Agreement,
including without limitation subsection (d) below, at the Initial Closing the
Company will deliver to the Buyer the Transaction Documents required under
Section 10 hereof against receipt by the Company of the Initial Net Purchase
Price.

      


      c.           Initial Net Purchase
Price.  The First Note carries an original issue discount of
$180,000.00 (the “OID”).  In
addition, the Company agrees to pay $7,500 to the Buyer to cover the Buyer’s
legal fees, accounting costs, due diligence, monitoring and other transaction
costs incurred in connection with the purchase and sale of the Purchased
Securities (the “Transaction
Expenses”).  The Transaction Expenses shall be withheld by the
Buyer at the Initial the Closing.  Accordingly, the “Initial Net Purchase Price”
shall be $592,000.00, computed as follows: $779,500.00 less the OID less the Transaction
Expenses.

      


        
          
             


          

          
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      d.           Method of
Payment.  Payment of the Initial Net Purchase Price, less the Prepayment Amount
set forth in Section 6(b)(iv) below, shall be made to the Company in immediately
available funds of the United States as provided in the Wire
Instructions.

      


      3.           ADDITIONAL
NOTES AND ADDITIONAL WARRANTS.

      


      a.           Additional
Purchases.

      


      (i)           Subject
to the terms and conditions of this Agreement and the other Transaction
Documents, and so long as (1) the Registration Statement (as defined hereafter)
has been filed with the SEC within sixty (60) days of the Initial Closing Date,
and (2) no Event of Default has occurred under any of the Notes, the undersigned
Buyer hereby agrees to loan to the Company an additional $100,000.00 (each an
“Additional Net Purchase
Price”) on or about each monthly anniversary of the issuance of the First
Note  during the four consecutive calendar months immediately
following such issuance of the First Note, for a total aggregate Additional Net
purchase Price of $400,000.00.


      


      (ii)           The
obligation to repay such additional loans from the Buyer shall be evidenced by
the Company’s issuance of four additional corresponding Convertible Promissory
Notes to the Buyer each in the principal amount of $130,000.00 substantially in
the form attached hereto as Annex
XIV (the “Second
Note,” “Third
Note,” “Fourth
Note,” and “Fifth
Note,” respectively, and collectively, the “Additional
Notes”).  The First Note, together with each of the Additional
Notes shall be referred to herein each as a “Note” and collectively as the
“Notes.”  Each of
the Additional Notes shall provide for a Conversion Price (as defined therein),
which price may be adjusted from time to as provided in such Additional
Note.

      


      (iii)           As
additional consideration for each Additional Net Purchase Price, the Company
shall also issue to the Buyer a warrant to purchase 250,000 shares of the Common
Stock substantially in the form attached hereto as Annex
XV (the “Second
Warrant,” “Third
Warrant,” “Fourth
Warrant,” and “Fifth
Warrant,” respectively, and collectively, the “Additional
Warrants”).  The First Warrant, together with each of the
Additional Warrants shall be referred to herein each as a “Warrant” and collectively as the
“Warrants.”  The
Warrants, together with the Notes, shall be referred to herein as the “Purchased
Securities.”

      


      b.           Subsequent Closings; Delivery of
Certain Transaction Documents. The sale and purchase of each of the
Additional Notes and corresponding Additional Warrants shall take place at four
subsequent closings to be held at the offices of the Buyer pursuant to Section 8
hereof (each a “Subsequent
Closing”), with the Second Note and Second Warrant being sold and
purchased together, then the Third Note and Third Warrant, then the Fourth Note
and Fourth Warrant, and then the Fifth Note and Fifth Warrant at each such
Subsequent Closing.  At each Subsequent Closing the Company will
deliver to the Buyer the applicable Additional Note and Additional Warrant as
required under Section 12 hereof against receipt by the Company of the
applicable Additional Net Purchase Price.  The Initial Closing,
together with each of the Subsequent Closings shall be referred to herein
individually as a “Closing,” and collectively as
the “Closings.”

      


      c.           Additional Net Purchase
Price.  Each of the Additional Notes carries
an original issue discount of $30,000.00.  Accordingly, each “Additional Net Purchase
Price” shall be $100,000.00, computed as follows: $130,000.00 less such original issue
discount.

      


        
          
             


          

          
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      d.           Method of
Payment.  Payment of the applicable Additional Net Purchase
Price shall be made to the Company in immediately available funds of the United
States as provided in the Wire Instructions.

      


      4.           BUYER REPRESENTATIONS AND
WARRANTIES.  The Buyer represents and warrants to the Company,
as of the date hereof and as of the Initial Closing Date and the date of each
Subsequent Closing, as follows:

      


      a.           Binding
Obligation.  The Transaction Documents to which the Buyer is a
party, and the transactions contemplated hereby and thereby, have been duly and
validly authorized by the Buyer.  This Agreement has been executed and
delivered by the Buyer, and this Agreement is, and each of the other Transaction
Documents to which the Buyer is a party, when executed and delivered by the
Buyer (if necessary), will be valid and binding obligations of the Buyer
enforceable in accordance with their respective terms, subject as to
enforceability to general principles of equity and to bankruptcy, insolvency,
moratorium and other similar laws affecting the enforcement of creditors’ rights
generally.

      


      b.           Access to
Information.  The Buyer acknowledges that the Company has
offered the Buyer access to the corporate records and accounts of the Company
and to all information in its possession relating to the Company, has made its
officers and representatives available for interview by the Buyer, and has
furnished the buyer with all documents and other information required for the
Buyer to make an informed decision with respect to the purchase of the Purchased
Securities.

      


      c.           Accredited Investor
Status.  The Buyer is an “accredited investor” as that
term is defined in Rule 501 of the General Rules and Regulations under the 1933
Act.

      


      5.           COMPANY REPRESENTATIONS AND
WARRANTIES.   The Company represents and warrants to the Buyer
as of the date hereof and as of the Initial Closing Date and the date of each
Subsequent Closing that:

      


      a.           Rights of Others Affecting the
Transactions.  There are no preemptive rights of any
stockholder of the Company, as such, to acquire the Purchased Securities or the
Shares.  No other party has a currently exercisable right of first
refusal which would be applicable to any or all of the transactions contemplated
by the Transaction Documents.

      


      b.           Status.  The Company
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Incorporation and has the requisite corporate power to own
its properties and to carry on its business as now being
conducted.  The Company is duly qualified as a foreign corporation to
do business and is in good standing in each jurisdiction where the nature of the
business conducted or property owned by it makes such qualification necessary,
other than those jurisdictions in which the failure to so qualify would not have
or result in a Material Adverse Effect.  The Company has registered
its stock under Section 12(g) of the Securities and Exchange Act of 1934, as
amended (the “1934
Act”), and is obligated to file reports pursuant to Section 13 or Section
15(d) of the 1934 Act.   The Company has taken no action designed
to terminate, or which to its knowledge is likely to have the effect of,
terminating the registration of the Common Stock under the 1934 Act, nor has the
Company received any notification that the SEC is contemplating terminating such
registration.  The Common Stock is quoted on the Principal Trading
Market.  The Company has received no notice, either oral or written,
with respect to the continued eligibility of the Common Stock for quotation on
the Principal Trading Market, and the Company has maintained all requirements on
its part for the continuation of such quotation. The Company has not, in the
twelve (12) months preceding the date hereof, received notice from the Principal
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 Principal Trading Market. The Company 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.

      



      
        
           


        

        
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      c.           Authorized
Shares.

       

      (i)           Other
than as set forth in the Company’s SEC Documents, there are no outstanding
securities which are convertible into or exchangeable for shares of Common
Stock, whether such conversion is currently exercisable or exercisable only upon
some future date or the occurrence of some event in the future.

      


      (ii)           All
issued and outstanding shares of Common Stock have been duly authorized and
validly issued and are fully paid and non-assessable.  After
considering all other commitments that may require the issuance of Common Stock,
the Company has sufficient authorized and unissued shares of Common Stock as may
be necessary to effect the issuance of the Shares on the Initial Closing Date
and the date of each Subsequent Closing, were all of the Notes fully converted,
and all of the Warrants fully exercised, on that date.

      


      (iii)           The
Shares have been duly authorized by all necessary corporate action on the part
of the Company, and, when issued on conversion of, or in payment of interest on
any of the Notes, or upon exercise of any of the Warrants, in each case in
accordance with their respective terms, will have been duly and validly issued,
fully paid and non-assessable, free from all taxes, liens, claims, pledges,
mortgages, restrictions, obligations, security interests and encumbrances of any
kind, nature and description, and will not subject the Holder thereof to
personal liability by reason of being such Holder.

      


      d.           Transaction Documents and
Stock.  This Agreement and each of the other Transaction
Documents, and the transactions contemplated hereby and thereby, have been duly
and validly authorized by the Company.  This Agreement has been duly
executed and delivered by the Company and this Agreement is, and the First Note,
and each of the other Transaction Documents (including without limitation all of
the other Notes), when executed and delivered by the Company (if necessary),
will be, valid and binding obligations of the Company enforceable in accordance
with their respective terms, subject as to enforceability to general principles
of equity and to bankruptcy, insolvency, moratorium, and other similar laws
affecting the enforcement of creditors’ rights generally.

      


      e.           Non-contravention.  The
execution and delivery of this Agreement and each of the other Transaction
Documents by the Company, the issuance of the Securities in accordance with the
terms hereof, and the consummation by the Company of the other transactions
contemplated by this Agreement, the Notes, and the other Transaction Documents
do not and will not conflict with or result in a breach by the Company of any of
the terms or provisions of, or constitute a default under (i) the Certificate of
Incorporation or by-laws of the Company, each as currently in effect, (ii) any
indenture, mortgage, deed of trust, or other material agreement or instrument to
which the Company is a party or by which it or any of its properties or assets
are bound, including any listing agreement for the Common Stock except as herein
set forth, or (iii) to its knowledge, any existing applicable law, rule, or
regulation or any applicable decree, judgment, or order of any court, United
States federal or state regulatory body, administrative agency, or other
governmental body having jurisdiction over the Company or any of its properties
or assets, except such conflict, breach or default which would not have or
result in a Material Adverse Effect.

      


      f.           Approvals.  No
authorization, approval or consent of any court, governmental body, regulatory
agency, self-regulatory organization, or stock exchange or market or the
stockholders of the Company is required to be obtained by the Company for the
issuance and sale of the Securities to the Buyer as contemplated by this
Agreement, except such authorizations, approvals and consents that have been
obtained.

      



      
        
           


        

        
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      g.           Filings; Financial
Statements.  None of the Company’s SEC Documents contained, at
the time they were filed, any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they were
made, not misleading.  The Company has filed all reports, schedules,
forms, statements and other documents required to be filed by the Company with
the SEC under the 1934 Act on a timely basis or has received a valid extension
of such time of filing and has filed any such SEC Document prior to the
expiration of any such extension.  As of their respective dates, the
financial statements of the Company included in the Company’s 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 generally accepted accounting principles, consistently applied, during the
periods involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto, or (ii) in the case of unaudited interim
statements, to the extent they may exclude footnotes or may be condensed or
summary statements) and fairly present in all material respects the financial
position of the Company as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments).

      


      h.           Absence of Certain
Changes.  Since the Last Audited Date, there has been no
Material Adverse Effect, except as disclosed in the Company’s SEC Documents.
Since the Last Audited Date, except as provided in the Company’s SEC Documents,
the Company has not (i) incurred or become subject to any material liabilities
(absolute or contingent) except liabilities incurred in the ordinary course of
business consistent with past practices; (ii) discharged or satisfied any
material lien or encumbrance or paid any material obligation or liability
(absolute or contingent), other than current liabilities paid in the ordinary
course of business consistent with past practices; (iii) declared or made any
payment or distribution of cash or other property to stockholders with respect
to its capital stock, or purchased or redeemed, or made any agreements to
purchase or redeem, any shares of its capital stock; (iv) sold, assigned or
transferred any other material tangible assets, or canceled any material debts
owed to the Company by any third party or material claims of the Company against
any third party, except in the ordinary course of business consistent with past
practices; (v) waived any rights of material value, whether or not in the
ordinary course of business, or suffered the loss of any material amount of
existing business; (vi) made any increases in employee compensation, except in
the ordinary course of business consistent with past practices; or (vii)
experienced any material problems with labor or management in connection with
the terms and conditions of their employment.

      


      i.           Full
Disclosure.  There is no fact known to the Company or that the
Company should know after having made all reasonable inquiries (other than
conditions known to the public generally or as disclosed in the Company’s SEC
Documents) that has not been disclosed in writing to the Buyer that would
reasonably be expected to have or result in a Material Adverse
Effect.

      


      j.           Absence of
Litigation.  There is no action, suit, proceeding, inquiry or
investigation before or by any court, public board or body pending or, to the
knowledge of the Company, threatened against or affecting the Company before or
by any governmental authority or non-governmental department, commission, board,
bureau, agency or instrumentality or any other person, wherein an unfavorable
decision, ruling or finding would have a Material Adverse Effect or which would
adversely affect the validity or enforceability of, or the authority or ability
of the Company to perform its obligations under, any of the Transaction
Documents, except as disclosed in the Company’s SEC Documents.  The
Company is not aware of any valid basis for any such claim that (either
individually or in the aggregate with all other such events and circumstances)
could reasonably be expected to have a Material Adverse Effect. There are no
outstanding or unsatisfied judgments, orders, decrees, writs, injunctions or
stipulations to which the Company is a party or by which it or any of its
properties is bound, that involve the transaction contemplated herein or that,
alone or in the aggregate, could reasonably be expected to have a Material
Adverse Effect.

      



      
        
           


        

        
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      k.           Absence of Events of
Default. Neither the Company nor any of its Subsidiaries is in
violation of or in default with respect to (i) its certificate of
incorporation or by-laws or other organizational documents, each as currently in
effect, or any material judgment, order, writ, decree, statute, rule or
regulation applicable to such entity; or (ii) any material mortgage,
indenture, agreement, instrument or contract to which such entity is a party or
by which it or any of its properties or assets are bound (nor is there any
waiver in effect which, if not in effect, would result in such a violation or
default), except such breach or default which would not have or result in a
Material Adverse Effect.

      


      l.           Absence of Certain Company Control
Person Actions or Events.  Other than as set forth in the
Company’s SEC Documents, none of the following has occurred during the past five
(5) years with respect to a Company Control Person:


      


      (i)      
      A petition under the federal bankruptcy laws or
any state insolvency law was filed by or against, or a 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 or she was a general
partner at or within two years before the time of such filing, or any
corporation or business association of which he or she was an executive officer
at or within two years before the time of such filing;

      


      (ii)         
  Such 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);

      


      (iii)           Such
Company Control Person was the subject of any order, judgment or decree, not
subsequently reversed, suspended or vacated, of any court of competent
jurisdiction, permanently or temporarily enjoining him or her from, or otherwise
limiting, the following activities:

      


         (1)           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;

      


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

      


         (3)           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;

      


      (iv)    
      Such Company Control Person was 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 subsection (3) immediately above, or to be
associated with Persons engaged in any such activity; or

      


      (v)       
    Such 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.



      
        
           


        

        
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      m.          No Undisclosed Liabilities or
Events.  The Company has no liabilities or obligations other
than those disclosed in the Transaction Documents or the Company’s SEC Documents
or those incurred in the ordinary course of the Company’s business since the
Last Audited Date, or which individually or in the aggregate, do not or would
not have a Material Adverse Effect.  No event or circumstance has
occurred or exists with respect to the Company or its properties, business,
operations, condition (financial or otherwise), or results of operations, which,
under applicable law, rule or regulation, requires public disclosure or
announcement prior to the date hereof by the Company but which has not been so
publicly announced or disclosed.  There are no proposals currently
under consideration or currently anticipated to be under consideration by the
Board of Directors or the executive officers of the Company which proposal would
(i) change the Certificate of Incorporation or by-laws of the Company, each as
currently in effect, with or without stockholder approval, which change would
reduce or otherwise adversely affect the rights and powers of the stockholders
of the Common Stock or (ii) materially or substantially change the business,
assets or capital of the Company, including its interests in
Subsidiaries.

      


      n.           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
offer or sales of any security or solicited any offers to buy any security under
circumstances that would eliminate the availability of the exemption from
registration under Regulation D in connection with the offer and sale of the
Securities as contemplated hereby.

      


      o.           Dilution.  Each of
the Company and its executive officers and directors is aware that the number of
shares issuable on conversion of the Notes, or upon exercise of the Warrants or
pursuant to the other terms of the Transaction Documents, may have a dilutive
effect on the ownership interests of the other stockholders (and Persons having
the right to become stockholders) of the Company.  The Company
specifically acknowledges that its obligations to issue the Conversion Shares
upon conversion of the Notes and Warrant Shares upon exercise of the Warrants
are binding upon the Company and enforceable regardless of the dilution such
issuance may have on the ownership interests of other stockholders of the
Company, and the Company will honor such obligations, including honoring every
Notice of Conversion (as contemplated by the Notes), unless the Company is
subject to an injunction (which injunction was not sought by the Company)
prohibiting the Company from doing so.

      


      p.           Fees to Brokers, Placement Agents and
Others.  Except for commissions which the Company will owe
Dominick & Dominick LLC upon completion of each Closing hereunder, the
Company has taken no action which would give rise to any claim by any Person for
brokerage commission, placement agent or finder’s fees or similar payments by
Buyer relating to this Agreement or the transactions contemplated
hereby.  Except for such fees arising as a result of any agreement or
arrangement entered into by the Buyer without the knowledge of the Company (a
“Buyer’s Fee”), Buyer
shall have no obligation with respect to such fees or with respect to any claims
made by or on behalf of other Persons for fees of a type contemplated in this
subsection that may be due in connection with the transactions contemplated
hereby.  The Company shall indemnify and hold harmless each of Buyer,
its employees, officers, directors, agents, and partners, and their respective
Affiliates, from and against all claims, losses, damages, costs (including the
costs of preparation and attorney’s fees) and expenses suffered in respect of
any such claimed or existing fees (other than a Buyer’s Fee).

      


      q.           Disclosure.  All
information relating to or concerning the Company set forth in the Transaction
Documents or in the Company’s public filings with the SEC or otherwise provided
by or on behalf of the Company to the Buyer, 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, 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 its business, properties, prospects,
operations or financial conditions, which under applicable law, rule or
regulation, requires public disclosure or announcement by the
Company.

      



      
        
           


        

        
          9

          
            

          

        

        
           


        

      


      r.           Confirmation.  The
Company agrees that, if, to the knowledge of the Company, any events occur or
circumstances exist prior to the payment of the Initial Net Purchase Price or
any Additional Net Purchase Price to the Company which would make any of the
Company’s representations or warranties set forth herein materially untrue or
materially inaccurate as of such date, the Company shall immediately notify the
Buyer in writing prior to such date of such fact, specifying which
representation, warranty or covenant is affected and the reasons
therefor.

       

      s.           Title. The Company and its
Subsidiaries, if applicable, own and have good and marketable title in fee
simple absolute to, or a valid leasehold interest in, all their respective real
properties and good title to their other respective assets and properties,
subject to no liens except as have been disclosed to the Buyer.

       

      t.       
    Intellectual Property.

       

      (i)    
       Ownership.  The
Company owns or possesses or can obtain on commercially reasonable terms
sufficient legal rights to all patents, trademarks, service marks, trade names,
copyrights, trade secrets, licenses (software or otherwise), information,
processes and similar proprietary rights (“Intellectual Property”)
necessary to the business of the Company as presently conducted, the lack of
which could reasonably be expected to have a Material Adverse
Effect.  Except for agreements with its own employees or consultants,
standard end-user license agreements, support/maintenance agreements and
agreements entered in the ordinary course of the Company’s business, all of
which have been made available for review by the Buyer, there are no outstanding
options, licenses or agreements relating to the Intellectual Property, and the
Company is not bound by or a party to any options, licenses or agreements with
respect to the Intellectual Property of any other person or
entity.  The Company has not received any written communication
alleging that the Company has violated or, by conducting its business as
currently conducted, would violate any of the Intellectual Property of any other
person or entity, nor is the Company aware of any basis therefor.  The
Company is not obligated to make any payments by way of royalties, fees or
otherwise to any owner or licensor of or claimant to any Intellectual Property
with respect to the use thereof in connection with the present conduct of its
business other than in the ordinary course of its business.  There are
no agreements, understandings, instruments, contracts, judgments, orders or
decrees to which the Company is a party or by which it is bound which involve
indemnification by the Company with respect to infringements of Intellectual
Property, other than in the ordinary course of its business.

       

      (ii)           
No Breach by
Employees.  The Company is not aware that any of its employees
is obligated under any contract or other agreement, or subject to any judgment,
decree or order of any court or administrative agency, that would materially
interfere with the use of his or her efforts to promote the interests of the
Company or that would conflict with the Company’s business as presently
conducted.  Neither the execution nor delivery of this Agreement, nor
the carrying on of the Company’s business by the employees of the Company, nor
the conduct of the Company’s business as presently conducted, will, to the
Company’s knowledge, conflict with or result in a breach of the terms,
conditions or provisions of, or constitute a default under, any contract,
covenant or instrument under which any such employee is now
obligated.  The Company does not believe it is or will be necessary to
use any inventions of any of its employees made prior to their employment by the
Company of which it is aware.

      



      
        
           


        

        
          10

          
            

          

        

        
           


        

      


      6.           CERTAIN
COVENANTS AND ACKNOWLEDGMENTS.

      


      a.           Covenants
and Acknowledgements of Buyer.

      


      (i)        
    Transfer
Restrictions.  The Buyer acknowledges that (1) the Securities
may not be transferred until (A) the Registration Statement is filed and deemed
effective, or (B) the Buyer shall have delivered to the Company an opinion of
counsel, reasonably satisfactory in form, scope and substance to the Company, to
the effect that the Securities to be sold or transferred may be sold or
transferred pursuant to an exemption from such registration; and (2) any sale of
the 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 resale
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 used in the 1933 Act, may require compliance with some other exemption under
the 1933 Act or the rules and regulations of the SEC thereunder.

      


      (ii)       
    Restrictive
Legend.  The Buyer acknowledges and agrees that, until such
time as the relevant Shares have been registered under the 1933 Act pursuant to
Section 10(b)(iii) hereof, and may be sold in accordance with the effective
Registration Statement, or until such Shares can otherwise be sold without
restriction, whichever is earlier, the certificates and other instruments
representing any of the Securities shall bear a restrictive legend in
substantially the following form (and a stop-transfer order may be placed
against transfer of any such Securities):

      


      THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OFFERED FOR
SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES OR
AN OPINION OF COUNSEL OR OTHER EVIDENCE ACCEPTABLE TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED.

      


      (iii)           Shorting.  So
long as any amounts remain owing under any of the Notes, neither the Buyer nor
any of its Affiliates shall engage in any short sales of, or sell put options or
similar instruments with respect to, the Common
Stock.  Notwithstanding the above, if the Buyer elects to receive
shares of Common Stock in payment of the Company’s obligations under the Notes,
the Buyer may sell shares of Common Stock against delivery of the Conversion
Shares, pursuant to Section 7.

      


      (iv)           Confession of
Judgment.  The Buyer agrees it will not file a Confession of
Judgment unless and until an Event of Default or a Liquidity Default (as defined
in the Notes) under a Note has occurred; provided, however, that upon
such an Event of Default, the Buyer shall be entitled to immediately file such
Confession in an ex
parte fashion.

      


      b.           Covenants, Acknowledgements and
Agreements of the Company.  As a condition to the Buyer’s
obligation to purchase the Securities contemplated by this Agreement, and as a
material inducement for the Buyer to enter into this Agreement and the other
Transaction Documents, until all of the Company’s obligations hereunder and all
of the Notes are paid and performed in full, or within the timeframes otherwise
specifically set forth below, the Company shall comply with the following
covenants:

       

      (i)       
     Filings.  From
the date hereof until all the Conversion Shares and Warrant Shares either have
been sold by the Buyer, or may permanently be sold by the Buyer without any
restrictions pursuant to Rule 144, (the “Registration Period”), the
Company shall  timely make all filings required to be made by it under
the 1933 Act, the 1934 Act, Rule 144 or any United States state securities laws
and regulations thereof applicable to the Company or by the rules and
regulations of the Principal Trading Market, and such reports shall conform to
the requirement of the applicable laws, regulations and government agencies,
and, unless such filing is publicly available on the SEC’s EDGAR system (via the
SEC’s web site at no additional charge), the Company shall provide, upon written
request, a copy thereof to the Buyer promptly after such filing.  The
Company shall furnish to the Buyer, upon written request, so long as the Buyer
owns any Purchased Securities or Common Stock, promptly upon request, (1) a
written statement by the Company that it has complied with the reporting
requirements of Rule 144, the 1933 Act and the 1934 Act, (2) a copy of the most
recent annual or quarterly report of the Company and such other reports and
documents so filed by the Company, and (3) such other information as may be
reasonably requested to permit the Buyer to sell such securities pursuant to
Rule 144 without registration.

      


        
          
             


          

          
            11

            
              

            

          

          
             


          

        



       

      (ii)        
   Reporting
Status.  So long as the Buyer beneficially owns any of the
Purchased Securities and for at least twenty (20) Trading Days thereafter, the
Company shall file all reports required to be filed with the SEC pursuant to
Section 13 or 15(d) of the 1934 Act, shall take all reasonable action under its
control to ensure that adequate current public information with respect to the
Company, as required in accordance with Rule 144(c)(2) of the 1933 Act, is
publicly available, and 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.

      


      (iii)           Listing.  The
Company’s Common Stock shall be listed or quoted for trading on any of (a) the
American Stock Exchange, (b) New York Stock Exchange, (c) the Nasdaq Global
Market, (d) the Nasdaq Capital Market, or (e) the Nasdaq OTC Bulletin Board. The
Company shall promptly secure the listing of all of the Conversion Shares and
Warrant Shares upon each national securities exchange and automated quotation
system, if any, upon which the Common Stock is then listed (subject to official
notice of issuance) and shall maintain such listing of all securities from time
to time issuable under the terms of the Transaction Documents.  The
Company will comply in all material respects with the Company’s reporting,
filing and other obligations under the by-laws or rules of the Principal Trading
Market and/or the Financial Industry Regulatory Authority, Inc. (“FINRA”) or any successor
thereto, as the case may be, applicable to it at least through the date which is
sixty (60) days after the later of the date on which (1) all of the Notes have
been converted, (2) all of the Notes have been paid in full, or (3) all of the
Warrants have been fully exercised.

      


      (iv)           Use of
Proceeds.  The Company will use the net proceeds received
hereunder (a) to prepay in the amount of $102,500 that certain Convertible
Promissory Note dated March 5, 2010 executed by the Company in favor of the
Buyer (the “Prepayment
Amount”), and (b) the remainder for working capital and general corporate
purposes.  The Company agrees that the Prepayment Amount shall be
withheld by the Buyer at the Initial Closing and that the Initial Net Purchase
Price payable at the Initial Closing shall be reduced accordingly.

      


      (v)           Publicity, Filings,
Releases, Etc.  Each of the parties agrees that it will not
disseminate any information relating to the Transaction Documents or the
transactions contemplated thereby, including issuing any press releases, holding
any press conferences or other forums, or filing any reports (collectively,
“Publicity”), without
giving the other party reasonable advance notice and an opportunity to comment
on the contents thereof.  Neither party will include in any such
Publicity any statement or statements or other material to which the other party
reasonably objects, unless in the reasonable opinion of counsel to the party
proposing such statement, such statement is legally required to be
included.  In furtherance of the foregoing, the Company will provide
to the Buyer’s Counsel drafts of the applicable text of the first filing of a
current report on Form 8-K or a Quarterly or Annual Report on Form 10-Q or 10-K
(or equivalent SB forms), as the case may be, intended to be made with the SEC
which refers to the Transaction Documents or the transactions contemplated
thereby as soon as practicable (but at least two (2) Trading Days before such
filing will be made) and will not include in such filing (or any other filing
filed before then) any statement or statements or other material to which the
other party reasonably objects, unless in the reasonable opinion of counsel to
the party proposing such statement, such statement is legally required to be
included.  Notwithstanding the foregoing, each of the parties hereby
consents to the inclusion of the text of the Transaction Documents in filings
made with the SEC (but any descriptive text accompanying or part of such filing
shall be subject to the other provisions of this
subsection).  Notwithstanding, but subject to, the foregoing
provisions of this  provision, the Company will, within four business
days after the Initial Closing Date, promptly issue a press release and file a
current report on Form 8-K or, if appropriate, a quarterly or annual report on
the appropriate form, describing the terms of the transactions contemplated by
the Transaction Documents in the form required by the 1934 Act and approved by
Buyer and attaching the material Transaction Documents as exhibits to such
filing.

      


        
          
             


          

          
            12

            
              

            

          

          
             


          

        



       

      (vi)           FINRA Rule 5110. In
the event the Corporate Financing Rule 5110 (“FINRA Rule 5110”) of FINRA is
or becomes applicable to the transactions contemplated by the Transaction
Documents or to the sale by a Holder of any of the Securities, then the Company
shall, to the extent required by such rule, timely make any filings and
cooperate with any broker or selling stockholder in respect of any consents,
authorizations or approvals that may be necessary for FINRA to timely and
expeditiously permit the Holder to sell the Securities.

      


      (vi)           Keeping of Records and Books
of Account. The Company shall keep and cause each Subsidiary, if any, to
keep adequate records and books of account, in which complete entries will be
made in accordance with GAAP consistently applied, reflecting all financial
transactions of the Company and such Subsidiaries, and in which, for each fiscal
year, all proper reserves for depreciation, depletion, obsolescence,
amortization, taxes, bad debts and other purposes in connection with its
business shall be made.

      


      (vii)          Corporate
Existence.  The Company shall (a) do all things necessary to
preserve and keep in full force and effect its corporate existence, including,
without limitation, all licenses or similar qualifications required by it to
engage in its business in all jurisdictions in which it is as of the date hereof
so engaged, (b) continue to engage in business of the same general type as
conducted as of the date hereof, and (c) continue to conduct its business
substantially as now conducted or as otherwise permitted
hereunder.



      (viii)         Taxes.  The
Company shall pay and discharge promptly when due all taxes, assessments and
governmental charges or levies imposed upon it or upon its income or profits or
in respect of its property before the same shall become delinquent or in
default, which, if unpaid, might reasonably be expected to give rise to liens or
charges upon such properties or any part thereof, unless, in each case, the
validity or amount thereof is being contested in good faith by appropriate
proceedings and the Company has maintained adequate reserves with respect
thereto in accordance with GAAP.

      


      (ix)           Compliance. The
Company shall comply in all material respects with all federal, state and local
laws and regulations, orders, judgments, decrees, injunctions, rules,
regulations, permits, licenses, authorizations and requirements applicable to it
(collectively, “Requirements”) of all
governmental bodies, departments, commissions, boards, companies or associations
insuring the premises, courts, authorities, officials or officers which are
applicable to the Company, its business, operations, or any of its properties,
except where the failure to so comply would not have a Material Adverse Effect
on the Company or any of its properties; provided, however, that nothing
provided herein shall prevent the Company from contesting in good faith the
validity or the application of any Requirements.

      


      (x)        
   Litigation.  From
and after the date hereof and until all of the Company’s obligations hereunder
and all of the Notes are paid and performed in full, the Company shall notify
the Buyer in writing, promptly upon learning thereof, of any litigation or
administrative proceeding commenced or threatened against the Company involving
a claim in excess of $100,000.

       

       

      
        
           


        

        
          13

          
            

          

        

        
           


        

      

      
 

      (xi)           Performance of
Obligations.  The Company shall promptly and in a timely
fashion perform and honor all demands, notices, requests and obligations that
exist or may arise under the Transaction Documents.

       

       (xii)          Authorized
Shares.  The Company shall take all action reasonably necessary
to at all times have authorized, and reserved for the purpose of issuance, such
number of shares of Common Stock as shall be necessary to effect the full
conversion of all of the Notes and exercise of all of the Warrants (the “Share
Reserve”). If at any time the Share Reserve is insufficient to effect the
full conversion of the Notes and exercise of the Warrants, the Company shall
immediately increase the Share Reserve accordingly. If the Company does not have
sufficient authorized and unissued shares of Common Stock available to increase
the Share Reserve, the Company shall call and hold a special meeting of the
shareholders within thirty days of such occurrence, for the sole purpose of
increasing the number of shares authorized. The Company’s management shall
recommend to the Company’s shareholders to vote in favor of increasing the
number of authorized shares of Common Stock.  Management shall also
vote all of its shares in favor of increasing the number of authorized shares of
Common Stock.

      


      (xiii)          Investor
Information.  Upon written request, the Company shall promptly
furnish the Buyer with the names and other identifying information of each party
with which the Company has completed a financing transaction including, without
limitation, any person or entity to whom the Company has issued or sold any
debt, equity, option, warrant or other security of any kind during the five year
period immediately preceding the request.

       

      (xiv)         Certain Negative Covenants
of the Company.  From and after the date hereof and until all
of the Company’s obligations hereunder and all of the Notes are paid and
performed in full, the Company shall not:

       

      1.           Incur
any new indebtedness for borrowed money without the prior written consent of the
Buyer; provided,
however, the Company may incur obligations under trade payables in the
ordinary course of business consistent with past practice without the consent of
the Buyer; or

      


      2.           Grant
or permit any security interest (or other lien or other encumbrance) in or on
any of its assets except as incurred in the ordinary course of business;
or

      


      3.           Enter
into any transaction, including, without limitation, any purchase, sale, lease
or exchange of property or the rendering of any service, with any Affiliate of
the Company, or amend or modify any agreement related to any of the foregoing,
except on terms that are no less favorable, in any material respect, than those
obtainable from any person or entity who is not an Affiliate of the Company;
or

      4.           Enter
into any financing transaction without giving the Buyer at least ten (10) days
notice of such prospective financing transaction (the “Transaction Notice”) and the
pre-emptive right to provide such financing on substantially the same terms upon
notice thereof to the Company within five (5) days of receiving the Transaction
Notice.

       

       

      
        
           


        

        
          14

          
            

          

        

        
           


        

      

      
 

      7.           TRANSFER
AGENT INSTRUCTIONS.

      


      a.           The
Company warrants that, with respect to the Securities, other than the stop
transfer instructions to give effect to Section 6(a)(i) hereof, it will give the
Transfer Agent no instructions inconsistent with instructions to issue Common
Stock from time to time upon conversion of the Notes or exercise of the
Warrants, as may be applicable from time to time, in such amounts as specified
from time to time by the Company to the Transfer Agent, bearing the restrictive
legend specified in Section 6(a)(ii) of this Agreement prior to registration of
the Shares under the 1933 Act, registered in the name of the Buyer or its
nominee and in such denominations to be specified by the Holder in connection
therewith.  Except as so provided, the Shares shall otherwise be
freely transferable on the books and records of the Company as and to the extent
provided in this Agreement and the other Transaction
Documents.  Nothing in this Section shall affect in any way the
Buyer’s obligations and agreement to comply with all applicable securities laws
upon resale of the Securities.  If the Buyer provides the Company with
an opinion of counsel reasonably satisfactory to the Company that registration
of a resale by the Buyer of any of the Securities in accordance with clause
(1)(B) of Section 6(a)(i) of this Agreement is not required under the 1933 Act
or upon request from a Holder while an applicable Registration Statement is
effective, the Company shall (except as provided in clause (2) of Section
6(a)(i) of this Agreement) permit the transfer of the Securities and, in the
case of the Conversion Shares, as may be applicable, use its best efforts to
cause the Transfer Agent to promptly electronically transmit to the Holder via
the Depository Trust Company (“DTC”) Fast Automated
Securities Transfer program such Conversion Shares.  The Company
specifically represents that, as of the date hereof and as of the Initial
Closing Date and the date of each Subsequent Closing, (i) the Company’s Transfer
Agent is (a) participating in the DTC program, (b) is DWAC eligible, and
(ii)  the Company is not aware of any plans of the Transfer Agent to
terminate such DTC participation or DWAC eligibility.  While any
Holder holds Securities, the Company shall at all times maintain a transfer
agent which participates in the DTC program and is DWAC eligible, and the
Company will not appoint any transfer agent which does not both participate in
the DTC program and maintain DWAC eligibility.  Nevertheless, in the
event the Transfer Agent is not participating in the DTC/DWAC program or the
Conversion Shares are not otherwise transferable via the DTC/DWAC program, then
the Company shall instruct the Transfer Agent to issue one or more certificates
for Common Stock without legend in such name and in such denominations as
specified by the Buyer.  In the event the Company’s transfer agent is
not DWAC eligible on any Conversion Date, and consequently the Company issues
Conversion Shares pursuant to the Notice of Conversion in certificated rather
than electronic form, then in such event if the closing bid price of the Common
Stock on the Principal Trading Market is lower on the date of delivery of the
certificates to the Buyer than on the Conversion Date, such difference in the
closing bid prices, multiplied by the number of Conversion Shares, shall be
added to the principal balance of the applicable Note.

      


      b.

      


      (i)           
The Company understands that a delay in the delivery of Shares, whether on
conversion of a Note and/or in payment of accrued interest, or exercise of a
Warrant, beyond the relevant Delivery Date (as defined in the applicable Note or
Warrant, as applicable) could result in economic loss to the
Holder.  As compensation to the Holder for such loss, in addition to
any other available remedies at law or equity, the Company agrees to pay late
payments to the Holder for late delivery of the Shares in accordance with the
following schedule (where “No.
Business Days Late” is defined as the number of Trading Days beyond two
(2) Trading Days after the Delivery Date):

      


        
          
             


          

          
            15

            
              

            

          

          
             


          

        



       

      
        	 	 
      	 
      	Late
      Payment for Each $10,000 of
	 	 
      	 
      	Principal
      or Interest Being Converted or
	  No. Business Days Late	 
      	Amount of Warrant Exercise (Cash or
      Cashless)
	 	 
      	 
      	 	 
      
	 	
                1

              	 
      	 	
                $100

              
	 	
                2

              	 
      	 	
                $200

              
	 	
                3

              	 
      	 	
                $300

              
	 	
                4

              	 
      	 	
                $400

              
	 	
                5

              	 
      	 	
                $500

              
	 	
                6

              	 
      	 	
                $600

              
	 	
                7

              	 
      	 	
                $700

              
	 	
                8

              	 
      	 	
                $800

              
	 	
                9

              	 
      	 	
                $900

              
	 	
                10

              	 
      	 	
                $1,000

              
	 	
                >10

              	 
      	 	
                $1,000
      + $200 for each Business 
Day Late beyond 10
  days

              


      

      


      The
amount of any payments incurred under this Section 7(b) shall be automatically
added to the principal balance of the applicable Note and the Company shall pay
any such payments in immediately available funds upon demand. Nothing herein
shall limit the Holder’s right to pursue actual damages for the Company’s
failure to issue and deliver the Shares to the Holder within a reasonable
time.  Furthermore, in addition to any other remedies which may be
available to a Holder, in the event that the Company fails for any reason to
effect delivery of such Shares within two (2) Trading Days after the Delivery
Date, the Holder will be entitled to revoke the relevant Notice of Conversion or
Notice of Exercise (under the applicable Warrant) by delivering a notice to such
effect to the Company prior to the Holder’s receipt of the relevant Shares,
whereupon the Company and the Holder shall each be restored to their respective
positions immediately prior to delivery of such Notice of Conversion or Notice
of Exercise, as the case may be; provided, however, that any
payments contemplated by this Section 7(b) which have accrued through the date
of such revocation notice shall remain due and owing to the Holder
notwithstanding such revocation.


      (ii)           If,
by the tenth Trading Day after the  relevant Delivery Date, the
Company fails for any reason to deliver the Shares, but at any time after the
Delivery Date, the Holder purchases, in an arm’s-length open market transaction
or otherwise, shares of Common Stock (the “Covering Shares”) in order to
make delivery in satisfaction of a sale of Common Stock by the Holder (the
“Sold Shares”), which
delivery such Holder anticipated to make using the shares to be issued upon such
conversion or exercise (a “Buy-In”), the Holder shall
have the right to require the Company to pay to the Holder, in addition to and
not in lieu of  the amounts contemplated in other provisions of the
Transaction Documents, including, but not limited to, the provisions of the
immediately preceding Section 7(b)(i)), the Buy-In Adjustment Amount (as defined
hereafter).  The “Buy-In Adjustment Amount” is
the amount equal to the number of Sold Shares multiplied by the excess, if any,
of (1) the Holder’s total purchase price per share (including brokerage
commissions, if any) for the Covering Shares over (2) the net proceeds per share
(after brokerage commissions, if any) received by the Holder from the sale of
the Sold Shares.  The Company shall pay the Buy-In Adjustment Amount
to the Holder in immediately available funds immediately upon demand by the
Holder.  By way of illustration and not in limitation of the
foregoing, if the Holder purchases shares of Common Stock having a total
purchase price (including brokerage commissions) of $11,000 to cover a Buy-In
with respect to shares of Common Stock it sold for net proceeds of $10,000, the
Buy-In Adjustment Amount which Company will be required to pay to the Holder
will be $1,000.

      


      c.           
The Company shall assume any fees or charges of the Transfer Agent or Company
Counsel regarding (i) the removal of a legend or stop transfer instructions with
respect to the Securities, and (ii) the issuance of certificates or DTC
registration to or in the name of the Holder or the Holder’s designee or to a
transferee as contemplated by an effective Registration
Statement.  Notwithstanding the foregoing, it shall be the Holder’s
responsibility to obtain all needed formal requirements (specifically: medallion
guarantee and prospectus delivery compliance) in connection with any electronic
issuance of shares of Common Stock.

       

       

      
        
           


        

        
          16

          
            

          

        

        
           


        

      

      
 

      d.           The
Holder of a Note shall be entitled to exercise its conversion privilege with
respect to such Note, as the case may be, notwithstanding the commencement of
any case under 11 U.S.C. §101 et seq. (the “Bankruptcy
Code”).  In the event the Company is a debtor under the
Bankruptcy Code, the Company hereby waives, to the fullest extent permitted, any
rights to relief it may have under 11 U.S.C. §362 in respect of such Holder’s
exercise privilege.  The Company hereby waives, to the fullest extent
permitted, any rights to relief it may have under 11 U.S.C. §362 in respect of
the conversion of such Note. The Company agrees, without cost or expense to such
Holder, to take or to consent to any and all action necessary to effectuate
relief under 11 U.S.C. §362.

      


      8.           CLOSING
DATES.

      


      a.           The
Initial Closing Date shall occur on the date which is the first Trading Day
after each of the conditions contemplated by Sections 9 and 10 hereof shall have
either been satisfied or been waived by the party in whose favor such conditions
run, but in any event shall not be later than March 30, 2010.  Closing
of the purchase and sale of the First Note and First Warrant, which the parties
anticipate shall occur concurrently with the execution of this Agreement, shall
occur at the offices of the Buyer and shall take place no later than 3:00 P.M.,
Eastern Time, or on such day or such other time as is mutually agreed upon by
the Company and the Buyer.


      b.           Each
of the four Subsequent Closings shall occur, one per month, on the date which is
the first Trading Day after the one-month anniversary of the issuance of the
most recently issued Note hereunder (each an “Issuance Date”) and after
each of the conditions contemplated by Sections 11 and 12 hereof shall have
either been satisfied or been waived by the party in whose favor such conditions
run, but in any event shall not be later than thirty-five (35) days after the
applicable Issuance Date.  Closing of the purchase and sale of each of
the Additional Notes and corresponding Additional Warrants pursuant to Section 3
above shall occur, if at all, as described above at the offices of the Buyer and
shall take place no later than 3:00 P.M., Eastern Time, or on such day or such
other time as is mutually agreed upon by the Company and the Buyer.

      


      9.           CONDITIONS TO THE COMPANY’S
OBLIGATION TO SELL AT THE INITIAL CLOSING.  The Buyer
understands that the Company’s obligation to sell the First Note and First
Warrant to the Buyer pursuant to this Agreement on the Initial Closing Date is
conditioned upon and subject to the fulfillment of all of the following
conditions, any of which may be waived in whole or in part by the
Company:

      


      a.           The
execution and delivery of this Agreement and, as applicable, the other
Transaction Documents by the Buyer on or before such Initial Closing
Date;

      


      b.           Delivery
by the Buyer by the Initial Closing Date of good funds as payment in full of an
amount equal to the Initial Net Purchase Price, less the Prepayment Amount, in
accordance with this Agreement;

      


      c.           The
accuracy on the Initial Closing Date of the representations and warranties of
the Buyer contained in this Agreement, each as if made on such date, and the
performance by the Buyer on or before such date of all covenants and agreements
of the Buyer required to be performed on or before such date; and

       

       

      
        
           


        

        
          17

          
            

          

        

        
           


        

      

      
 

      d.           There
shall not be 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.

      


      10.           CONDITIONS TO THE BUYER’S OBLIGATION
TO PURCHASE AT THE INITIAL CLOSING.  The Buyer’s obligation to
purchase the First Note and First Warrant is conditioned upon and subject to the
fulfillment, on or prior to the Initial Closing Date, of all of the following
conditions, any of which may be waived in whole or in part by the
Buyer:

      


      a.           The
execution and delivery of this Agreement and, as applicable, the other
Transaction Documents by the Company and all other necessary parties on or
before the Initial Closing Date;

      


      b.           Without
limiting the generality of the requirement in the immediately preceding
subsection, the delivery by the Company of:

      


      (i)        
    the First Note, duly executed by the
Company;

      


      (ii)       
    the First Warrant, duly executed by the
Company;

      


      (iii)           the
Registration Rights Agreement, duly executed by the Company, whereby the Company
shall agree to file a registration statement (the “Registration Statement”)
covering all of the Conversion Shares and Warrant Shares, and grant the Buyer
piggyback registration rights, among other things;


      (iv)           the
Pledge Agreement, duly executed by Kenneth O. Morgan, a shareholder of the
Company, whereby Mr. Morgan pledges four million eight hundred thousand
(4,800,000) shares of the Common Stock as security for payment and performance
of all of the Company’s obligations under all of the Notes;

      


      
        (v)           
the
Rule 144 Opinion, prepared and executed by Company Counsel;
and

      

      


      (vi)           the
Transfer Agent Letter, duly executed by the Company and Kenneth O. Morgan and
acknowledged by the Transfer Agent.

      


      c.           On
the Initial Closing Date, each of the Transaction Documents executed by the
Company on or before such date shall be in full force and effect and the Company
shall not be in default thereunder;

      


      d.           The
accuracy in all material respects on the Initial Closing Date of the
representations and warranties of the Company contained in this Agreement and
the other Transaction Documents, each as if made on such date, and the
performance by the Company on or before such date of all covenants and
agreements of the Company required to be performed on or before such
date;

      


      e.           There
shall not be 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;

       

       

      
        
           


        

        
          18

          
            

          

        

        
           


        

      

      
 

      f.           From
and after the date hereof to and including the Initial Closing Date, each of the
following conditions will remain in effect: (i) the trading of the Common Stock
shall not have been suspended by the SEC or on the Principal Trading Market;
(ii) trading in securities generally on the Principal Trading Market shall not
have been suspended or limited; (iii) no minimum prices shall been established
for securities traded on the Principal Trading Market; and (v) there shall not
have occurred any Material Adverse Effect;

      


      g.           Except
for any notices required or permitted to be filed after the Initial Closing Date
with certain federal and state securities commissions, the Company shall have
obtained (a) all governmental approvals required in connection with the lawful
sale and issuance of all of the Securities, and (b) all third party approvals
required to be obtained by the Company in connection with the execution and
delivery of the Transaction Documents by the Company or the performance of the
Company’s obligations thereunder;

      


      h.           Kenneth
O. Morgan shall have delivered to the Buyer all shares of Common Stock pledged
under the Pledge Agreement, together with stock powers (signed in blank and with
Medallion Guarantees annexed), all as required under the Pledge Agreement;
and

      


      i.           All
corporate and other proceedings in connection with the transactions contemplated
at the Initial Closing and all documents and instruments incident to such
transactions shall be reasonably satisfactory in substance and form to the
Buyer.

      


      11.           CONDITIONS TO THE COMPANY’S
OBLIGATION TO SELL AT THE SUBSEQUENT CLOSINGS.  The Buyer
understands that the Company’s obligation to sell each of the Additional Notes
and Additional Warrants to the Buyer pursuant to this Agreement on the date of
each Subsequent Closing is conditioned upon and subject to the fulfillment of
all of the following conditions, any of which may be waived in whole or in part
by the Company:

      



      
        
           


        

        
          19

          
            

          

        

        
           


        

      

       

       

      a.           The
execution and delivery of this Agreement and, as applicable, the other
Transaction Documents by the Buyer on or before such Subsequent Closing
date;

      


      b.           Delivery
by the Buyer by such Subsequent Closing date of good funds as payment in full of
an amount equal to the applicable Additional Net Purchase Price, in accordance
with this Agreement;

      


      c.           The
accuracy on such Subsequent Closing date of the representations and warranties
of the Buyer contained in this Agreement, each as if made on such date, and the
performance by the Buyer on or before such date of all covenants and agreements
of the Buyer required to be performed on or before such date; and

      


      d.           There
shall not be 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.

      


      12.           CONDITIONS TO THE BUYER’S OBLIGATION
TO PURCHASE AT THE SUBSEQUENT CLOSINGS.  The Buyer’s obligation
to purchase each Additional Note and Additional Warrant is conditioned upon and
subject to the fulfillment, on or prior to the applicable Subsequent Closing
date, of all of the following conditions, any of which may be waived in whole or
in part by the Buyer:

      


      a.           The
execution and delivery of this Agreement and, as applicable, the other
Transaction Documents by the Company and all other necessary parties on or
before such Subsequent Closing date;

      


      b.           Without
limiting the generality of the requirement in the immediately preceding
subsection, the delivery by the Company of:

       

       

      
        
           


        

        
          20

          
            

          

        

        
           


        

      

      
 

      (i)       
    the applicable Additional Note, duly executed by the
Company; and

      


      (ii)           the
corresponding Additional Warrant, duly executed by the Company.

      


      c.           On
such Subsequent Closing date, each of the Transaction Documents executed by the
Company on or before such date shall be in full force and effect and the Company
shall not be in default thereunder;

      


      d.           The
accuracy in all material respects on such Subsequent Closing date of the
representations and warranties of the Company contained in this Agreement and
the other Transaction Documents, each as if made on such date, and the
performance by the Company on or before such date of all covenants and
agreements of the Company required to be performed on or before such
date;

      


      e.           There
shall not be 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;

      


      f.           From
and after the date hereof to and including such Subsequent Closing date, each of
the following conditions will remain in effect: (i) the trading of the Common
Stock shall not have been suspended by the SEC or on the Principal Trading
Market; (ii) trading in securities generally on the Principal Trading Market
shall not have been suspended or limited; (iii) no minimum prices shall been
established for securities traded on the Principal Trading Market; and (v) there
shall not have occurred any Material Adverse Effect;

      



      
        
           


        

        
          21

          
            

          

        

        
           


        

      


      g.           Except
for any notices required or permitted to be filed after such Subsequent Closing
date with certain federal and state securities commissions, the Company shall
have obtained (a) all governmental approvals required in connection with the
lawful sale and issuance of all of the Securities, and (b) all third party
approvals required to be obtained by the Company in connection with the
execution and delivery of the Transaction Documents by the Company or the
performance of the Company’s obligations thereunder;

      


      h.           Without
limiting any of the foregoing, the satisfaction of all conditions set forth in
Section 3(a)(i) above; and

      


      i.           All
corporate and other proceedings in connection with the transactions contemplated
at such Subsequent Closing and all documents and instruments incident to such
transactions shall be reasonably satisfactory in substance and form to the
Buyer.

      


      13.           INDEMNIFICATION.

      


      a.           The
Company agrees to defend, indemnify and forever hold harmless the Buyer and its
officers, directors, employees, and agents, and each Buyer Control Person (the
“Buyer Parties”) from
and against any losses, claims, damages, liabilities or expenses incurred
(collectively, “Damages”), joint or several,
and any action in respect thereof to which the Buyer, its partners, Affiliates,
officers, directors, employees, and duly authorized agents, and any such Buyer
Control Person becomes subject, resulting from, arising out of or relating to
any misrepresentation, breach of warranty or nonfulfillment of or failure to
perform any covenant or agreement on the part of Company contained in this
Agreement, as such Damages are incurred.  The Buyer Parties with the
right to be indemnified under this Section (the “Indemnified Parties”) shall
have the right to defend any such action or proceeding with attorneys of their
own selection, and the Company shall be solely responsible for all costs and
expenses related thereto.  If the Indemnified Parties opt not to
retain their own counsel, the Company shall defend any such action or proceeding
with attorneys of its choosing at its sole cost and expense, provided that such
attorneys have been pre-approved by the Indemnified Parties, which approval
shall not be unreasonably withheld, and provided further that the Company may
not settle any such action or proceeding without first obtaining the written
consent of the Indemnified Parties.

       

       

      
        
           


        

        
          22

          
            

          

        

        
           


        

      

      
 

      b.           The
indemnity agreements contained herein shall be in addition to (i) any cause of
action or similar rights of the Buyer Parties against the Company or others, and
(ii) any liabilities the Company may be subject to.

      


      14.           SPECIFIC
PERFORMANCE.  The Company and  the Buyer acknowledge
and agree that irreparable damage would occur in the event that any provision of
this Agreement or any of the other Transaction Documents were not performed in
accordance with its specific terms or were otherwise breached.  It is
accordingly agreed that the parties (including any Holder) shall be entitled to
an injunction or injunctions, without (except as specified below) the necessity
to post a bond, to prevent or cure breaches of the provisions of this Agreement
or such other Transaction Document and to enforce specifically the terms and
provisions hereof or thereof, this being in addition to any other remedy to
which any of them may be entitled by law or equity; provided, however that the
Company, upon receipt of a Notice of Conversion or a Notice of Exercise, may not
fail or refuse to deliver the stock certificates and the related legal opinions,
if any, or if there is a claim for a breach by the Company of any other
provision of this Agreement or any of the other Transaction Documents, the
Company shall not raise as a legal defense any claim that the Holder or anyone
associated or affiliated with the Holder has violated any provision hereof or
any other Transaction Document or has engaged in any violation of law or any
other claim or defense, unless the Company has first posted a bond for one
hundred fifty percent (150%) of the principal amount and, if relevant, then
obtained a court order specifically directing it not to deliver said stock
certificates to the Holder. The proceeds of such bond shall be payable to the
Holder to the extent that the Holder obtains judgment or its defense is
recognized.  Such bond shall remain in effect until the completion of
the relevant proceeding and, if the Holder appeals therefrom, until all such
appeals are exhausted.  This provision is deemed incorporated by
reference into each of the Transaction Documents as if set forth therein in
full.

       

      15.           OWNERSHIP LIMITATION. If
at any time after the Initial Closing the Buyer shall or would receive shares of
the Common Stock in payment of interest or principal under a Note or upon
conversion of such Note or exercise of a Warrant so that the Buyer would hold by
virtue of such action or receipt of shares of Common Stock a number of shares
exceeding 9.99% of the number of shares of the Company’s Common Stock
outstanding on such date (the “9.99% Cap”), the Company shall
not be obligated and shall not issue to the Buyer shares of its Common Stock
which would exceed the 9.99% Cap, but only until such time as the 9.99% Cap
would no longer be exceeded by any such receipt of shares of Common Stock by the
Buyer.

      


      16.           GOVERNING LAW;
MISCELLANEOUS.  The Company and the Buyer hereby agree that the
provisions of this Section 17 shall apply to all of the Transaction
Documents.

      


      a.           Governing Law and
Venue.  This Agreement shall be governed by and interpreted in
accordance with the laws of the State of Illinois for contracts to be wholly
performed in such state and without giving effect to the principles thereof
regarding the conflict of laws.  Each of the parties consents to the
exclusive jurisdiction of the federal courts whose districts encompass any part
of the County of Cook or the state courts of the State of Illinois sitting in
the County of Cook in connection with any dispute arising under this Agreement
or any of the other Transaction Documents and hereby waives, to the maximum
extent permitted by law, any objection, including any objection based on forum non conveniens, to the
bringing of any such proceeding in such jurisdictions or any claim that such
venue of the suit, action or proceeding is improper.  Nothing in this
subsection shall affect or limit any right to serve process in any other manner
permitted by law.

       

       

      
        
           


        

        
          23

          
            

          

        

        
           


        

      

      
 

      b.           No Waiver.  Failure
of any party to exercise any right or remedy under this Agreement or otherwise,
or delay by a party in exercising such right or remedy, shall not operate as a
waiver thereof.

      


      c.           Successors and
Assigns.  This Agreement shall inure to the benefit of and be
binding upon the successors and permitted assigns of each of the parties
hereto.

      


      d.           Pronouns.  All
pronouns and any variations thereof refer to the masculine, feminine or neuter,
singular or plural, as the context may permit or require.

      


      e.           Counterparts.  This
Agreement may be signed in one or more counterparts, each of which shall be
deemed an original, but all of which together shall be deemed to constitute one
instrument.  Facsimile and email copies of signed signature pages will
be deemed binding originals.

      


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

      


      g.           Severability.  Whenever
possible, each provision of this Agreement shall be interpreted in such a manner
as to be effective and valid under applicable law, but if any provision of this
Agreement shall be invalid or unenforceable in any jurisdiction, such provision
shall be modified to achieve the objective of the parties to the fullest extent
permitted and such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement or the validity or
enforceability of this Agreement in any other jurisdiction.

      


      h.           Amendment.  This
Agreement may be amended only by an instrument in writing signed by the party to
be charged with enforcement thereof.



      i.           Entire
Agreement.  This Agreement together with the other Transaction
Documents constitute and contain the entire agreement between the Company and
the Buyer and supersede all prior agreements and understandings among the
parties hereto with respect to the subject matter hereof.

      


      j.           Currency.  All
dollar amounts referred to or contemplated by this Agreement or any other
Transaction Document shall be deemed to refer to US Dollars, unless otherwise
explicitly stated to the contrary.

      


      k.           Expenses.  The
Company, without regard to whether any Closing is effectuated, will pay Buyer
the Transaction Expenses, which the parties acknowledge shall be withheld by the
Buyer at the Initial Closing pursuant to Section 2(c) above; provided, however,
that in the event a Closing does not occur for whatever reason, the Company
shall promptly pay the Transaction Expenses to the Buyer in
cash.  Except as provided in the immediately preceding sentence, the
Company and the Buyer shall be responsible for paying such party’s own fees and
expenses (including legal expenses) incurred in connection with the preparation
and negotiation of this Agreement and the other Transaction Documents and the
closing of the transactions contemplated hereby and thereby.

      


      l.           Assignment by the
Company.  Notwithstanding anything to the contrary herein, the
rights, interests or obligations hereunder may not be assigned, by operation of
law or otherwise, in whole or in part, by the Company without the prior written
consent of the Buyer, which consent may be withheld at the sole discretion of
the Buyer; provided,
however, that in the case of a merger, sale of substantially all of the
Company’s assets or other corporate reorganization, the Buyer shall not
unreasonably withhold, condition or delay such consent.

       

       

      
        
           


        

        
          24

          
            

          

        

        
           


        

      

      
 

      m.           Advice of Counsel. In
connection with the preparation of this Agreement and all other Transaction
Documents, each of the Company, its shareholders, officers, agents, and
representatives acknowledges and agrees that the attorney that prepared this
Agreement and all of the other Transaction Documents acted as legal counsel to
the Buyer only.  Each of the Company, its shareholders, officers,
agents, and representatives (i) hereby acknowledges that he/she/it has been, and
hereby is, advised to seek legal counsel and to review this Agreement and all of
the other Transaction Documents with legal counsel of his/her/its choice, and
(ii) either has sought such legal counsel or hereby waives the right to do
so.

      


      n.           No Strict Construction. The
language used in this Agreement is the language chosen mutually by the parties
hereto and no doctrine of construction shall be applied for or against any
party.

      


      o.           Attorney’s Fees.  In
the event of any action at law or in equity to enforce or interpret the terms of
this Agreement or any of the other Transaction Documents, the Prevailing Party
(as defined hereafter) shall be entitled to reasonable attorneys’ fees, court
costs and collection costs in addition to any other relief to which such party
may be entitled.  “Prevailing
Party” shall mean the party in any litigation or enforcement action that
prevails in the highest number of final rulings, counts or judgments adjudicated
by a court of competent jurisdiction.



      p.           Replacement of the Notes.
Subject to any restrictions on or conditions to transfer set forth in the Notes,
the Holder of a Note, at its option, may in person or by duly authorized
attorney surrender the same for exchange at the Company’s chief executive
office, and promptly thereafter and at the Company’s expense, except as provided
below, receive in exchange therefor one or more new convertible secured
promissory note(s), each in the principal requested by such Holder, dated the
date to which interest shall have been paid on the Note so surrendered or, if no
interest shall have yet been so paid, dated the date of the Note so surrendered
and registered in the name of such person or persons as shall have been
designated in writing by such holder or its attorney for the same principal
amount as the then unpaid principal amount of the Note so surrendered. As
applicable, upon receipt by the Company of evidence reasonably satisfactory to
it of the ownership of and the loss, theft, destruction or mutilation of a Note
and (a) in the case of loss, theft or destruction, of indemnity reasonably
satisfactory to it; or (b) in the case of mutilation, upon surrender
thereof, the Company, at its expense, will execute and deliver in lieu thereof a
new convertible secured promissory note executed in the same manner as the Note
being replaced, in the same principal amount as the unpaid principal amount of
such Note and dated the date to which interest shall have been paid on such Note
or, if no interest shall have yet been so paid, dated the date of such
Note.

      


      q.           Agent
Liability.  The Buyer acknowledges and agrees
that Dominick & Dominick LLC assumes no responsibility or liability of any
nature for the accuracy, adequacy or completeness of any information provided to
the Buyer concerning the Company, nor does Dominick & Dominick LLC make any
representation or warranty of any nature regarding the Company or its current
and future viability. Dominick & Dominick LLC is deemed to be a third party
beneficiary of this Agreement for the limited purpose of this subsection
(q).

       
 

      
        
           


        

        
          25

          
            

          

        

        
           


        

      

       

       

      18.           NOTICES.  Any notice
required or permitted hereunder shall be given in writing (unless otherwise
specified herein) and shall be deemed effectively given on the earliest of
(a) the date
delivered, if delivered by personal delivery as against written receipt therefor
or by confirmed facsimile transmission, (b)  the fifth Trading Day
after deposit, postage prepaid, in the United States Postal Service by
registered or certified mail, (c) the third Trading Day after mailing by
domestic or international express courier, with delivery costs and fees prepaid,
or (d) when faxed or sent by electronic mail, upon confirmation of receipt, in
each case, addressed to the other party thereunto entitled at the following
addresses (or at such other addresses as such party may designate by ten (10)
days’ advance written notice similarly given to the other party
hereto):

      


      If to the Company:

      


      Helix Wind, Corp.

      c/o Scott Weinbrandt

      1848
Commercial Street

      San
Diego, California  92113

      


      If to the Buyer:

      


      St. George Investments,
LLC

      Attn: John M. Fife

      303 East Wacker Drive, Suite
301

      Chicago,
Illinois  60601

      


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

      


      Bennett Tueller Johnson & Deere,
P.C.

      Attn: Jonathan K. Hansen

      3165 East Millrock Drive, Suite
500

      Salt Lake City, Utah
84121



      19.           SURVIVAL OF COVENANTS,
REPRESENTATIONS AND WARRANTIES.  The Company’s and the Buyer’s
covenants, agreements, representations and warranties contained herein shall
survive the execution and delivery of this Agreement and the other Transaction
Documents and each Closing hereunder and shall inure to the benefit of the Buyer
and the Company and their respective successors and permitted
assigns.

      


      


      


      [BALANCE
OF PAGE INTENTIONALLY LEFT BLANK]

       

       


      
        
           


        

        
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      IN WITNESS WHEREOF, each of
the undersigned represents that the foregoing statements made by it above are
true and correct and that it has caused this Agreement to be duly executed on
its behalf (if an entity, by one of its officers thereunto duly authorized) as
of the date first above written.

      


      INITIAL NET PURCHASE
PRICE:        
 $592,000.00

      


       

      
        
          	 	
                  THE COMPANY:

                	 
	 	 	 
	 	
                  HELIX WIND,
      CORP.,

                  a
      Nevada corporation

                	 
	 	 	 	 
	
                   

                	
                  By:
      

                	/s/ Scott
      Weinbrandt	 
	 	 	Name:
      Scott Weinbrandt	 
	 	 	Title:
      Chief Executive Officer	 
	 	 	 	 


        

         

         

        
          
            	 	
                    
                      THEBUYER:

                    

                  	 
	 	 	 
	 	
                    
                      ST. GEORGE INVESTMENTS,
      LLC,

                      an
      Illinois limited liability
    company

                    

                  	 
	 	 	 	 
	
                     

                  	
                    By:
      

                  	/s/ John
      Fife	 
	 	 	Name:
      John Fife	 
	 	 	Title:
      Manager	 
	 	 	 	 


          




      

      


      


      


      [SIGNATURE
PAGE TO NOTE AND WARRANT PURCHASE AGREEMENT]

       

      
        
           

        

        
          27