Del Toro Silver Corp.: Exhibit 10.12 - Filed by newsfilecorp.com






SECURITIES PURCHASE AGREEMENT

     This SECURITIES PURCHASE
AGREEMENT (the “Agreement”), dated as of August 25, 2010, by and between
DEL TORO SILVER CORP., a Nevada corporation, with headquarters located at
409 Granville Street- Suite 400, Vancouver, BC V6C 1T2 (the “Company”), and
ASHER ENTERPRISES, INC., a Delaware corporation, with its address at 1
Linden Place, Suite 207, Great Neck, NY 11021 (the “Buyer”).

WHEREAS:

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

     B. Buyer desires to purchase and
the Company desires to issue and sell, upon the terms and conditions set forth
in this Agreement an 8% convertible note of the Company, in the form attached
hereto as Exhibit A, in the aggregate principal amount of $55,000.00 (together
with any note(s) issued in replacement thereof or as a dividend thereon or
otherwise with respect thereto in accordance with the terms thereof, the
“Note”), convertible into shares of common stock, $0.001 par value per share, of
the Company (the “Common Stock”), upon the terms and subject to the limitations
and conditions set forth in such Note.

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

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

     1. Purchase and Sale of
Note.

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

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




          c.
Closing Date. Subject to the satisfaction (or written waiver) of the
conditions thereto set forth in Section 6 and Section 7 below, the date and time
of the issuance and sale of the Note pursuant to this Agreement (the “Closing
Date”) shall be 12:00 noon, Eastern Standard Time on August 27, 2010, or such
other mutually agreed upon time. The closing of the transactions contemplated by
this Agreement (the “Closing”) shall occur on the Closing Date at such location
as may be agreed to by the parties.

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

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

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

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

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

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

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

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

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




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

          h.
Authorization; Enforcement. This Agreement has been duly and validly
authorized. This Agreement has been duly executed and delivered on behalf of the
Buyer, and this Agreement constitutes a valid and binding agreement of the Buyer
enforceable in accordance with its terms. i. Residency. The Buyer is a
resident of the jurisdiction set forth immediately below the Buyer’s name on the
signature pages hereto. 

     3. Representations and
Warranties of the Company. The Company represents and warrants to the Buyer
that:

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

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

          c. Capitalization. As of the date hereof,
  the authorized capital stock of the Company consists of: (i) 100,000,000 shares
  of Common Stock, $0.001 par value per share, of which 9,835,135 shares are issued
  and outstanding; and (ii) 100,000,000 shares of Preferred Stock, $0.001 par
  value per share, of which no shares are issued and outstanding; no shares are
  reserved for issuance pursuant to the Company’s stock option plans, no
  shares are reserved for issuance pursuant to securities (other than the Note)
  exercisable for, or convertible into or exchangeable for shares of Common Stock
  and 2,123,006 shares are reserved for issuance upon conversion of the Note (subject
  to adjustment pursuant to the Company’s covenant set forth in Section 4(g)
  below). All of such outstanding shares of capital stock are, or upon issuance
  will be, duly authorized, validly issued, fully paid and non-assessable. No
  shares of capital stock of the Company are subject to preemptive rights or any
  other similar rights of the shareholders of the Company or any liens or encumbrances
  imposed through the actions or failure to act of the Company.

5




  
  

 Except as disclosed
  in Schedule 3(c), as of the effective date of this Agreement, (i) there are
  no outstanding options, warrants, scrip, rights to subscribe for, puts, calls,
  rights of first refusal, agreements, understandings, claims or other commitments
  or rights of any character whatsoever relating to, or securities or rights convertible
  into or exchangeable for any shares of capital stock of the Company or any of
  its Subsidiaries, or arrangements by which the Company or any of its Subsidiaries
  is or may become bound to issue additional shares of capital stock of the Company
  or any of its Subsidiaries, (ii) there are no agreements or arrangements under
  which the Company or any of its Subsidiaries is obligated to register the sale
  of any of its or their securities under the 1933 Act and (iii) there are no
  anti-dilution or price adjustment provisions contained in any security issued
  by the Company (or in any agreement providing rights to security holders) that
  will be triggered by the issuance of the Note or the Conversion Shares. The
  Company has furnished to the Buyer true and correct copies of the Company’s
  Certificate of Incorporation as in effect on the date hereof (“Certificate
  of Incorporation”), the Company’s Bylaws, as in effect on the date
  hereof (the “By-laws”), and the terms of all securities convertible
  into or exercisable for Common Stock of the Company and the material rights
  of the holders thereof in respect thereto. The Company shall provide the Buyer
  with a written update of this representation signed by the Company’s Chief
Executive on behalf of the Company as of the Closing Date.

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

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

          f.
  No Conflicts. The execution, delivery and performance of this Agreement,
  the Note by the Company and the consummation by the Company of the transactions
  contemplated hereby and thereby (including, without limitation, the issuance
  and reservation for issuance of the Conversion Shares) will not (i) conflict
  with or result in a violation of any provision of the Certificate of Incorporation
  or By-laws or (ii) violate or conflict with, or result in a breach of any provision
  of, or constitute a default (or an event which with notice or lapse of time
  or both could become a default) under, or give to others any rights of termination,
  amendment, acceleration or cancellation of, any agreement, indenture, patent,
  patent license or instrument to which the Company or any of its Subsidiaries
  is a party, or (iii) result in a violation of any law, rule, regulation, order,
  judgment or decree (including federal and state securities laws and regulations
  and regulations of any self-regulatory organizations to which the Company or
  its securities are subject) applicable to the Company or any of its Subsidiaries
  or by which any property or asset of the Company or any of its Subsidiaries
  is bound or affected (except for such conflicts, defaults, terminations, amendments,
  accelerations, cancellations and violations as would not, individually or in
  the aggregate, have a Material Adverse Effect).

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 Neither the Company nor any of its Subsidiaries is in violation
  of its Certificate of Incorporation, By-laws or other organizational documents
  and neither the Company nor any of its Subsidiaries is in default (and no event
  has occurred which with notice or lapse of time or both could put the Company
  or any of its Subsidiaries in default) under, and neither the Company nor any
  of its Subsidiaries has taken any action or failed to take any action that would
  give to others any rights of termination, amendment, acceleration or cancellation
  of, any agreement, indenture or instrument to which the Company or any of its
  Subsidiaries is a party or by which any property or assets of the Company or
  any of its Subsidiaries is bound or affected, except for possible defaults as
  would not, individually or in the aggregate, have a Material Adverse Effect.
  The businesses of the Company and its Subsidiaries, if any, are not being conducted,
  and shall not be conducted so long as a Buyer owns any of the Securities, in
  violation of any law, ordinance or regulation of any governmental entity. Except
  as specifically contemplated by this Agreement and as required under the 1933
  Act and any applicable state securities laws, the Company is not required to
  obtain any consent, authorization or order of, or make any filing or registration
  with, any court, governmental agency, regulatory agency, self regulatory organization
  or stock market or any third party in order for it to execute, deliver or perform
  any of its obligations under this Agreement, the Note in accordance with the
  terms hereof or thereof or to issue and sell the Note in accordance with the
  terms hereof and to issue the Conversion Shares upon conversion of the Note.
  All consents, authorizations, orders, filings and registrations which the Company
  is required to obtain pursuant to the preceding sentence have been obtained
  or effected on or prior to the date hereof. The Company is not in violation
  of the listing requirements of the Over-the-Counter Bulletin Board (the “OTCBB”)
  and does not reasonably anticipate that the Common Stock will be delisted by
  the OTCBB in the foreseeable future. The Company and its Subsidiaries are unaware
  of any facts or circumstances which might give rise to any of the foregoing.

          g.
  SEC Documents; Financial Statements. The Company has timely filed all
  reports, schedules, forms, statements and other documents required to be filed
  by it with the SEC pursuant to the reporting requirements of the Securities
  Exchange Act of 1934, as amended (the “1934 Act”) (all of the foregoing
  filed prior to the date hereof and all exhibits included therein and financial
  statements and schedules thereto and documents (other than exhibits to such
  documents) incorporated by reference therein, being hereinafter referred to
  herein as the “SEC Documents”). The Company has delivered to the Buyer
  true and complete copies of the SEC Documents, except for such exhibits and
  incorporated documents. As of their respective dates, the SEC Documents complied
  in all material respects with the requirements of the 1934 Act and the rules
  and regulations of the SEC promulgated thereunder applicable to the SEC Documents,
  and none of the SEC Documents, at the time they were filed with the SEC, contained
  any untrue statement of a material fact or omitted to state a material fact
  required to be stated therein or necessary in order to make the statements therein,
  in light of the circumstances under which they were made, not misleading. None
  of the statements made in any such SEC Documents is, or has been, required to
  be amended or updated under applicable law (except for such statements as have
  been amended or updated in subsequent filings prior the date hereof). As of
  their respective dates, the financial statements of the Company included in
  the SEC Documents complied as to form in all material respects with applicable
  accounting requirements and the published rules and regulations of the SEC with
  respect thereto. Such financial statements have been prepared in accordance
  with United States generally accepted accounting principles, consistently applied,
  during the periods involved and fairly present in all material respects the
  consolidated financial position of the Company and its consolidated Subsidiaries
  as of the dates thereof and the consolidated results of their operations and
  cash flows for the periods then ended (subject, in the case of unaudited statements,
  to normal year-end audit adjustments). Except as set forth in the financial
  statements of the Company included in the SEC Documents, the Company has no
  liabilities, contingent or otherwise, other than (i) liabilities incurred in
  the ordinary course of business subsequent to April 30, 2010, and (ii) obligations
  under contracts and commitments incurred in the ordinary course of business
  and not required under generally accepted accounting principles to be reflected
  in such financial statements, which, individually or in the aggregate, are not
  material to the financial condition or operating results of the Company. The
  Company is subject to the reporting requirements of the 1934 Act.

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          h.
  Absence of Certain Changes. Since April 30, 2010, there has been no material
  adverse change and no material adverse development in the assets, liabilities,
  business, properties, operations, financial condition, results of operations,
  prospects or 1934 Act reporting status of the Company or any of its Subsidiaries.

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

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

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

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

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

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

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

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

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


          r.
Permits; Compliance. The Company and each of its Subsidiaries is in
possession of all franchises, grants, authorizations, licenses, permits,
easements, variances, exemptions, consents, certificates, approvals and orders
necessary to own, lease and operate its properties and to carry on its business
as it is now being conducted (collectively, the “Company Permits”), and there is
no action pending or, to the knowledge of the Company, threatened regarding
suspension or cancellation of any of the Company Permits. Neither the Company
nor any of its Subsidiaries is in conflict with, or in default or violation of,
any of the Company Permits, except for any such conflicts, defaults or
violations which, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect. Since April 30, 2010, neither the
Company nor any of its Subsidiaries has received any notification with respect
to possible conflicts, defaults or violations of applicable laws, except for
notices relating to possible conflicts, defaults or violations, which conflicts,
defaults or violations would not have a Material Adverse Effect.

          s.
Environmental Matters.

                    (i)
  There are, to the Company’s knowledge, with respect to the Company or any
  of its Subsidiaries or any predecessor of the Company, no past or present violations
  of Environmental Laws (as defined below), releases of any material into the
  environment, actions, activities, circumstances, conditions, events, incidents,
  or contractual obligations which may give rise to any common law environmental
  liability or any liability under the Comprehensive Environmental Response, Compensation
  and Liability Act of 1980 or similar federal, state, local or foreign laws and
  neither the Company nor any of its Subsidiaries has received any notice with
  respect to any of the foregoing, nor is any action pending or, to the Company’s
  knowledge, threatened in connection with any of the foregoing.

10




 The term “Environmental Laws” means all federal, state,
  local or foreign laws relating to pollution or protection of human health or
  the environment (including, without limitation, ambient air, surface water,
  groundwater, land surface or subsurface strata), including, without limitation,
  laws relating to emissions, discharges, releases or threatened releases of chemicals,
  pollutants contaminants, or toxic or hazardous substances or wastes (collectively,
  “Hazardous Materials”) into the environment, or otherwise relating
  to the manufacture, processing, distribution, use, treatment, storage, disposal,
  transport or handling of Hazardous Materials, as well as all authorizations,
  codes, decrees, demands or demand letters, injunctions, judgments, licenses,
  notices or notice letters, orders, permits, plans or regulations issued, entered,
  promulgated or approved thereunder.

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

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

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

          u.
Insurance. The Company and each of its Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as management of the Company believes to be prudent and
customary in the businesses in which the Company and its Subsidiaries are
engaged. Neither the Company nor any such Subsidiary has any reason to believe
that it will not be able to renew its existing insurance coverage as and when
such coverage expires or to obtain similar coverage from similar insurers as may
be necessary to continue its business at a cost that would not have a Material
Adverse Effect. The Company has provided to Buyer true and correct copies of all
policies relating to directors’ and officers’ liability coverage, errors and
omissions coverage, and commercial general liability coverage.

11




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

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

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

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

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


12



     4. COVENANTS.

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

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

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

          d.
  Right of First Refusal. Unless it shall have first delivered to the Buyer,
  at least seventy two (72) hours prior to the closing of such Future Offering
  (as defined herein), written notice describing the proposed Future Offering,
  including the terms and conditions thereof and proposed definitive documentation
  to be entered into in connection therewith, and providing the Buyer an option
  during the seventy two (72) hour period following delivery of such notice to
  purchase the securities being offered in the Future Offering on the same terms
  as contemplated by such Future Offering (the limitations referred to in this
  sentence and the preceding sentence are collectively referred to as the “Right
  of First Refusal”) (and subject to the exceptions described below), the
  Company will not conduct any equity financing (including debt with an equity
  component) (“Future Offerings”) during the period beginning on the
  Closing Date and ending twelve (12) months following the Closing Date. In the
  event the terms and conditions of a proposed Future Offering are amended in
  any respect after delivery of the notice to the Buyer concerning the proposed
  Future Offering, the Company shall deliver a new notice to the Buyer describing
  the amended terms and conditions of the proposed Future Offering and the Buyer
  thereafter shall have an option during the seventy two (72) hour period following
  delivery of such new notice to purchase its pro rata share of the securities
  being offered on the same terms as contemplated by such proposed Future Offering,
  as amended. The foregoing sentence shall apply to successive amendments to the
  terms and conditions of any proposed Future Offering. The Right of First Refusal
  shall not apply to any transaction involving (i) issuances of securities in
  a firm commitment underwritten public offering (excluding a continuous offering
  pursuant to Rule 415 under the 1933 Act) or (ii) issuances of securities as
  consideration for a merger, consolidation or purchase of assets, or in connection
  with any strategic partnership or joint venture (the primary purpose of which
  is not to raise equity capital), or in connection with the disposition or acquisition
  of a business, product or license by the Company. The Right of First Refusal
  also shall not apply to the issuance of securities upon exercise or conversion
  of the Company’s options, warrants or other convertible securities outstanding
  as of the date hereof or to the grant of additional options or warrants, or
  the issuance of additional securities, under any Company stock option or restricted
  stock plan approved by the shareholders of the Company.

13




          e.
  Expenses. At the Closing, the Company shall reimburse Buyer for expenses
  incurred by them in connection with the negotiation, preparation, execution,
  delivery and performance of this Agreement and the other agreements to be executed
  in connection herewith (“Documents”), including, without limitation,
  reasonable attorneys’ and consultants’ fees and expenses, transfer
  agent fees, fees for stock quotation services, fees relating to any amendments
  or modifications of the Documents or any consents or waivers of provisions in
  the Documents, fees for the preparation of opinions of counsel, escrow fees,
  and costs of restructuring the transactions contemplated by the Documents. When
  possible, the Company must pay these fees directly, otherwise the Company must
  make immediate payment for reimbursement to the Buyer for all fees and expenses
  immediately upon written notice by the Buyer or the submission of an invoice
  by the Buyer Notwithstanding anything herein to the contrary, the Company’s
  obligation to reimburse Buyer’ expenses shall be $2,000.

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

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

14




If the Buyer elects to be paid the Standard Liquidated Damages
  Amount in shares of Common Stock, such shares shall be issued at the Conversion
  Price at the time of payment. In order to ensure that the Company has authorized
  a sufficient amount of shares to meet the Reserved Amount at all times, the
  Company must deliver to the Buyer at the end of every month a list detailing
  (1) the current amount of shares authorized by the Company and reserved for
  the Buyer; and (2) amount of shares issuable upon conversion of the Note and
  as payment of interest accrued on the Note for one year. If the Company fails
  to provide such list within five (5) business days of the end of each month,
  the Company shall pay the Standard Liquidated Damages Amount, in cash or in
  shares of Common Stock at the option of the Buyer, until the list is delivered.
  If the Buyer elects to be paid the Standard Liquidated Damages Amount in shares
  of Common Stock, such shares shall be issued at the Conversion Price at the
  time of payment.

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

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

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

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

15




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

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

     5. Transfer Agent Instructions.
  The Company shall issue irrevocable instructions to its transfer agent to issue
  certificates, registered in the name of the Buyer or its nominee, for the Conversion
  Shares in such amounts as specified from time to time by the Buyer to the Company
  upon conversion of the Note in accordance with the terms thereof (the “Irrevocable
  Transfer Agent Instructions”). In the event that the Borrower proposes
  to replace its transfer agent, the Borrower shall provide, prior to the effective
  date of such replacement, a fully executed Irrevocable Transfer Agent Instructions
  in a form as initially delivered pursuant to the Purchase Agreement (including
  but not limited to the provision to irrevocably reserve shares of Common Stock
  in the Reserved Amount) signed by the successor transfer agent to Borrower and
  the Borrower. Prior to registration of the Conversion Shares under the 1933
  Act or the date on which the Conversion Shares may be sold pursuant to Rule
  144 without any restriction as to the number of Securities as of a particular
  date that can then be immediately sold, all such certificates shall bear the
  restrictive legend specified in Section 2(g) of this Agreement. The Company
  warrants that: (i) no instruction other than the Irrevocable Transfer Agent
  Instructions referred to in this Section 5, and stop transfer instructions to
  give effect to Section 2(f) hereof (in the case of the Conversion Shares, prior
  to registration of the Conversion Shares under the 1933 Act or the date on which
  the Conversion Shares may be sold pursuant to Rule 144 without any restriction
  as to the number of Securities as of a particular date that can then be immediately
  sold), will be given by the Company to its transfer agent and that the Securities
  shall otherwise be freely transferable on the books and records of the Company
  as and to the extent provided in this Agreement and the Note; (ii) it will not
  direct its transfer agent not to transfer or delay, impair, and/or hinder its
  transfer agent in transferring (or issuing)(electronically or in certificated
  form) any certificate for Conversion Shares to be issued to the Buyer upon conversion
  of or otherwise pursuant to the Note as and when required by the Note and this
  Agreement; and (iii) it will not fail to remove (or directs its transfer agent
  not to remove or impairs, delays, and/or hinders its transfer agent from removing)
  any restrictive legend (or to withdraw any stop transfer instructions in respect
  thereof) on any certificate for any Conversion Shares issued to the Buyer upon
  conversion of or otherwise pursuant to the Note as and when required by the
  Note and this Agreement. Nothing in this Section shall affect in any way the
  Buyer’s obligations and agreement set forth in Section 2(g) hereof to comply
  with all applicable prospectus delivery requirements, if any, upon re-sale of
  the Securities. If a Buyer provides the Company, at the cost of the Buyer, with
  (i) an opinion of counsel in form, substance and scope customary for opinions
  in comparable transactions, to the effect that a public sale or transfer of
  such Securities may be made without registration under the 1933 Act and such
  sale or transfer is effected or (ii) the Buyer provides reasonable assurances
  that the Securities can be sold pursuant to Rule 144, the Company shall permit
  the transfer, and, in the case of the Conversion Shares, promptly instruct its
  transfer agent to issue one or more certificates, free from restrictive legend,
  in such name and in such denominations as specified by the Buyer. 

16




The Company acknowledges that a breach by it of its obligations
  hereunder will cause irreparable harm to the Buyer, by vitiating the intent
  and purpose of the transactions contemplated hereby. Accordingly, the Company
  acknowledges that the remedy at law for a breach of its obligations under this
  Section 5 may be inadequate and agrees, in the event of a breach or threatened
  breach by the Company of the provisions of this Section, that the Buyer shall
  be entitled, in addition to all other available remedies, to an injunction restraining
  any breach and requiring immediate transfer, without the necessity of showing
  economic loss and without any bond or other security being required.

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

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

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

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

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

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

17




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

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

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

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

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

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

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

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

     8. Governing Law;
Miscellaneous.

          a.
  Governing Law. This Agreement shall be governed by and construed in accordance
  with the laws of the State of New York without regard to principles of conflicts
  of laws. Any action brought by either party against the other concerning the
  transactions contemplated by this Agreement shall be brought only in the state
  courts of New York or in the federal courts located in the state and county
  of Nassau.

18




 The parties to this Agreement hereby irrevocably waive any objection
  to jurisdiction and venue of any action instituted hereunder and shall not assert
  any defense based on lack of jurisdiction or venue or based upon forum non
  conveniens. The Company and Buyer waive trial by jury. The prevailing party
  shall be entitled to recover from the other party its reasonable attorney's
  fees and costs. In the event that any provision of this Agreement or any other
  agreement delivered in connection herewith is invalid or unenforceable under
  any applicable statute or rule of law, then such provision shall be deemed inoperative
  to the extent that it may conflict therewith and shall be deemed modified to
  conform with such statute or rule of law. Any such provision which may prove
  invalid or unenforceable under any law shall not affect the validity or enforceability
  of any other provision of any agreement. Each party hereby irrevocably waives
  personal service of process and consents to process being served in any suit,
  action or proceeding in connection with this Agreement or any other Transaction
  Document by mailing a copy thereof via registered or certified mail or overnight
  delivery (with evidence of delivery) to such party at the address in effect
  for notices to it under this Agreement and agrees that such service shall constitute
  good and sufficient service of process and notice thereof. Nothing contained
  herein shall be deemed to limit in any way any right to serve process in any
  other manner permitted by law.

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

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

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

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

          f.
  Notices. All notices, demands, requests, consents, approvals, and other
  communications required or permitted hereunder shall be in writing and, unless
  otherwise specified herein, shall be (i) personally served, (ii) deposited in
  the mail, registered or certified, return receipt requested, postage prepaid,
  (iii) delivered by reputable air courier service with charges prepaid, or (iv)
  transmitted by hand delivery, telegram, or facsimile, addressed as set forth
  below or to such other address as such party shall have specified most recently
  by written notice. 

19




Any notice or other communication required or permitted to be
  given hereunder shall be deemed effective (a) upon hand delivery or delivery
  by facsimile, with accurate confirmation generated by the transmitting facsimile
  machine, at the address or number designated below (if delivered on a business
  day during normal business hours where such notice is to be received), or the
  first business day following such delivery (if delivered other than on a business
  day during normal business hours where such notice is to be received) or (b)
  on the second business day following the date of mailing by express courier
  service, fully prepaid, addressed to such address, or upon actual receipt of
  such mailing, whichever shall first occur. The addresses for such communications
  shall be:

	 	If to the Company, to: 
	 	         DEL TORO
      SILVER CORP. 
	 	         409 Granville
      Street- Suite 400 
	 	         Vancouver, BC
      V6C 1T2 
	 	         Attn: MARK
      MCLEARY, President 
	 	         facsimile:
      [enter fax number] 
	 	  
	 	With a copy by fax only to (which copy shall
      not constitute notice): 
	 	         [enter name
      of law firm] 
	 	         Attn:
      [attorney name] 
	 	         [enter
      address line 1] 
	 	         [enter city,
      state, zip] 
	 	         facsimile:
      [enter fax number] 
	 	  
	 	         If to the
      Buyer: 
	 	         ASHER
      ENTERPRISES, INC. 
	 	         1 Linden Pl.,
      Suite 207 
	 	         Great Neck,
      NY. 11021 
	 	         Attn: Curt
      Kramer, President 
	 	         facsimile:
      516-498-9894 
	 	  
	 	With a copy by fax only to (which copy shall
      not constitute notice): 
	 	  
	 	         Naidich
      Wurman Birnbaum & Maday, LLP 
	 	         80 Cuttermill
      Road, Suite 410 
	 	         Great Neck,
      NY 11021 
	 	         Attn: Bernard
      S. Feldman, Esq. 
	 	         facsimile:
      516-466-3555 


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

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

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

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

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

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

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

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

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

	DEL TORO SILVER CORP. 
	  
	By: /s/ Mark McLeary
	        MARK MCLEARY 
	        President 
	  
	ASHER ENTERPRISES, INC. 
	  
	  
	By: /s/ Curt Kramer 
	Name: Curt Kramer 
	Title: President 


1 Linden Pl., Suite 207 
Great Neck, NY. 11021

	AGGREGATE SUBSCRIPTION AMOUNT: 	 	  	 
	Aggregate Principal Amount of Note: 	$	55,000.00 	 
	Aggregate Purchase Price: 	$	55,000.00 	 


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