SECURITIES
PURCHASE AGREEMENT DATED SEPTEMBER 1, 2010

    Exhibit
4.1

     

    SECURITIES
PURCHASE AGREEMENT

     

    SECURITIES
PURCHASE AGREEMENT (this “Agreement”), dated as of
September 1, 2010 by and among Univec, Inc., a Delaware corporation, with
headquarters located at 9722 Groffs Mill Drive, Suite 116, Owings Mills, MD
21117 (the “Company”),
and each of the purchasers set forth on the signature pages hereto (the “Buyers”).

     

    WHEREAS:

     

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

     

    B.           Buyers
desire to purchase and the Company desires to issue and sell, upon the terms and
conditions set forth in this Agreement (i) 12% convertible notes of the Company,
in the form attached hereto as Exhibit “A”, in the aggregate principal
amount of  Sixty Thousand Dollars ($60,000) (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 “Notes”), convertible into
shares of common stock, par value $0.001 per share, of the Company (the “Common Stock”), upon the terms
and subject to the limitations and conditions set forth in such
Notes.

     

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

     

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

     

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

     

    1.           PURCHASE AND SALE OF
NOTES.

     

    a.      Purchase
of Notes.  On the Closing Date (as defined below), the Company
shall issue and sell to each Buyer and each Buyer severally agrees to purchase
from the Company such principal amount of Notes as is set forth immediately
below such Buyer’s name on the signature pages hereto, which, together with the
subsequent closings provided in Section 1(d) below, aggregate Sixty Thousand
Dollars ($60,000) principal amount of Notes.

     

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

     

    
      
         


      

      
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    c.      Closing
Date.  Subject to the satisfaction (or written waiver) of the
conditions thereto set forth in Section 6 and Section 7 below, the date and time
of the issuance and sale of the Notes pursuant to this Agreement (the “Closing Date”) shall be 12:00
noon, Eastern Standard Time on September 1, 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.           BUYERS’
REPRESENTATIONS AND WARRANTIES.  Each Buyer severally (and not
jointly) represents and warrants to the Company solely as to such Buyer
that:

     

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

     

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

     

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

     

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

     

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

     

    
      
         


      

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

     

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

     

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

     

    The
legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of any Security upon which it is
stamped, if, unless otherwise required by applicable state securities laws, (a)
such Security is registered for sale under an effective registration statement
filed under the 1933 Act or otherwise may be sold pursuant to Rule 144 or
Regulation S without any restriction as to the number of securities as of a
particular date that can then be immediately sold, or (b) 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 and the Registration Rights Agreement have
been duly and validly authorized.  This Agreement has been duly
executed and delivered on behalf of the Buyer, and this Agreement constitutes,
and upon execution and delivery by the Buyer of the Registration Rights
Agreement, such agreement will constitute, valid and binding agreements of the
Buyer enforceable in accordance with their terms.

     

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

     

    
      
         


      

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

     

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

     

    b.      Authorization;
Enforcement.  (i) The Company has all requisite corporate power
and authority to enter into and perform this Agreement, the Registration Rights
Agreement, the Notes and to consummate the transactions contemplated hereby and
thereby and to issue the Securities, in accordance with the terms hereof and
thereof, (ii) the execution and delivery of this Agreement, the Registration
Rights Agreement, and the Notes by the Company and the consummation by it of the
transactions contemplated hereby and thereby (including without limitation, the
issuance of the Notes and the issuance and reservation for issuance of the
Conversion Shares issuable upon conversion) 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
Registration Rights Agreement, and the Notes, 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)
500,000,000 shares of Common Stock, of which 181,210,422 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 Notes) exercisable for, or convertible into or exchangeable for
shares of Common Stock and 100,000,000 shares are reserved for issuance upon
conversion of the Notes (subject to (A) adjustment pursuant to the Company’s
covenant set forth in Section 4(h) below); and (ii) 5,000,000 shares of
preferred stock, of which 2,000shares have been designated as  Series
C  Cumulative Convertible Preferred Stock and are issued and
outstanding and of which 1,250,000 shares have been designated as Series D
Cumulative Convertible Preferred Stock and are issued and
outstanding.  All of such outstanding shares of capital stock are, or
upon issuance will be, duly authorized, validly issued, fully paid and
nonassessable.  No shares of capital stock of the Company are subject
to preemptive rights or any other similar rights of the shareholders of the
Company or any liens or encumbrances imposed through the actions or failure to
act of the Company.  Except as disclosed in Schedule 3(c), as of the
effective date of this Agreement, (i) there are no outstanding options,
warrants, scrip, rights to subscribe for, puts, calls, rights of first refusal,
agreements, understandings, claims or other commitments or rights of any
character whatsoever relating to, or securities or rights convertible into or
exchangeable for any shares of capital stock of the Company or any of its
Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is
or may become bound to issue additional shares of capital stock of the Company
or any of its Subsidiaries, (ii) there are no agreements or arrangements under
which the Company or any of its Subsidiaries is obligated to register the sale
of any of its or their securities under the 1933 Act (except the Registration
Rights Agreement) and (iii) there are no anti-dilution or price adjustment
provisions contained in any security issued by the Company (or in any agreement
providing rights to security holders) that will be triggered by the issuance of
the Notes, and the Conversion Shares.  The Company has furnished
to the Buyer true and correct copies of the Company’s Articles of Incorporation
as in effect on the date hereof (“Articles of Incorporation”),
the Company’s By-laws, as in effect on the date hereof (the “By-laws”), and the terms of
all securities convertible into or exercisable for Common Stock of the Company
and the material rights of the holders thereof in respect
thereto.  The Company shall provide the Buyer with a written update of
this representation signed by the Company’s Chief Executive or Chief Financial
Officer on behalf of the Company as of the Closing Date.

     

    
      
         


      

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

     

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

     

    f.      No
Conflicts.  The execution, delivery and performance of this
Agreement, the Registration Rights Agreement, the Notes, and the Security
Agreement 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 Articles of Incorporation or
By-laws or (ii) violate or conflict with, or result in a breach of any provision
of, or constitute a default (or an event which with notice or lapse of time or
both could become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture, patent,
patent license or instrument to which the Company or any of its Subsidiaries is
a party, or (iii)  result in a violation of any law, rule, regulation,
order, judgment or decree (including federal and state securities laws and
regulations and regulations of any self-regulatory organizations to which the
Company or its securities are subject) applicable to the Company or any of its
Subsidiaries or by which any property or asset of the Company or any of its
Subsidiaries is bound or affected (except for such conflicts, defaults,
terminations, amendments, accelerations, cancellations and violations as would
not, individually or in the aggregate, have a Material Adverse Effect). 
Neither the Company nor any of its Subsidiaries is in violation of its Articles
of Incorporation, By-laws or other organizational documents and neither the
Company nor any of its Subsidiaries is in default (and no event has occurred
which with notice or lapse of time or both could put the Company or any of its
Subsidiaries in default) under, and neither the Company nor any of its
Subsidiaries has taken any action or failed to take any action that would give
to others any rights of termination, amendment, acceleration or cancellation of,
any agreement, indenture or instrument to which the Company or any of its
Subsidiaries is a party or by which any property or assets of the Company or any
of its Subsidiaries is bound or affected, except for possible defaults as would
not, individually or in the aggregate, have a Material Adverse Effect. The
businesses of the Company and its Subsidiaries, if any, are not being conducted,
and shall not be conducted so long as a Buyer owns any of the Securities, in
violation of any law, ordinance or regulation of any governmental
entity.  Except as specifically contemplated by this Agreement and as
required under the 1933 Act and any applicable state securities laws, the
Company is not required to obtain any consent, authorization or order of, or
make any filing or registration with, any court, governmental agency, regulatory
agency, self regulatory organization or stock market or any third party in order
for it to execute, deliver or perform any of its obligations under this
Agreement, the Registration Rights Agreement, the Notes in accordance with the
terms hereof or thereof or to issue and sell the Notes in accordance with the
terms hereof and to issue the Conversion Shares upon conversion of the
Notes.  Except as disclosed in Schedule 3(f), all consents,
authorizations, orders, filings and registrations which the Company is required
to obtain pursuant to the preceding sentence have been obtained or effected on
or prior to the date hereof.  The Company is not in violation of the
listing requirements of the Over-the-Counter Bulletin Board (the “OTCBB”) and does not
reasonably anticipate that the Common Stock will be delisted by the OTCBB in the
foreseeable future.  The Company and its Subsidiaries are unaware of
any facts or circumstances which might give rise to any of the
foregoing.

     

    
      
         


      

      
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    g.      SEC
Documents; Financial Statements.  Except as disclosed in Schedule 3(g), the Company has
timely filed all reports, schedules, forms, statements and other documents
required to be filed by it with the SEC pursuant to the reporting requirements
of the Securities Exchange Act of 1934, as amended (the “1934 Act”) (all of the
foregoing filed prior to the date hereof and all exhibits included therein and
financial statements and schedules thereto and documents (other than exhibits to
such documents) incorporated by reference therein, being hereinafter referred to
herein as the “SEC
Documents”).  The Company has delivered to each Buyer true and
complete copies of the SEC Documents, except for such exhibits and incorporated
documents.  As of their respective dates, the SEC Documents complied
in all material respects with the requirements of the 1934 Act and the rules and
regulations of the SEC promulgated thereunder applicable to the SEC Documents,
and none of the SEC Documents, at the time they were filed with the SEC,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.  None of the statements made in any such SEC Documents is,
or has been, required to be amended or updated under applicable law (except for
such statements as have been amended or updated in subsequent filings prior the
date hereof).  As of their respective dates, the financial statements
of the Company included in the SEC Documents complied as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto.  Such financial
statements have been prepared in accordance with United States generally
accepted accounting principles, consistently applied, during the periods
involved (except (i) as may be otherwise indicated in such financial statements
or the notes thereto, or (ii) in the case of unaudited interim statements, to
the extent they may not include footnotes or may be condensed or summary
statements) and fairly present in all material respects the consolidated
financial position of the Company and its consolidated Subsidiaries as of the
dates thereof and the consolidated results of their operations and cash flows
for the periods then ended (subject, in the case of unaudited statements, to
normal year-end audit adjustments).  Except as set forth in the financial
statements of the Company included in the SEC Documents, the Company has no
liabilities, contingent or otherwise, other than (i) liabilities incurred in the
ordinary course of business subsequent to December 31, 2006 and (ii) obligations
under contracts and commitments incurred in the ordinary course of business and
not required under generally accepted accounting principles to be reflected in
such financial statements, which, individually or in the aggregate, are not
material to the financial condition or operating results of the
Company.

     

    h.      Absence
of Certain Changes.  Since December 31, 2006, there has been no
material adverse change and no material adverse development in the assets,
liabilities, business, properties, operations, financial condition, results of
operations or prospects of the Company or any of its Subsidiaries.

     

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

     

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

     

    
      
         


      

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

     

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

     

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

     

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

     

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

     

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

     

    
      
         


      

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

     

    r.    
 Permits;
Compliance. The Company and each of its Subsidiaries is in possession of
all franchises, grants, authorizations, licenses, permits, easements, variances,
exemptions, consents, certificates, approvals and orders necessary to own, lease
and operate its properties and to carry on its business as it is now being
conducted (collectively, the “Company Permits”), and there
is no action pending or, to the knowledge of the Company, threatened regarding
suspension or cancellation of any of the Company Permits. Neither the Company
nor any of its Subsidiaries is in conflict with, or in default or violation of,
any of the Company Permits, except for any such conflicts, defaults or
violations which, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect. Since December 31, 2006, neither the
Company nor any of its Subsidiaries has received any notification with respect
to possible conflicts, defaults or violations of applicable laws, except for
notices relating to possible conflicts, defaults or violations, which conflicts,
defaults or violations would not have a Material Adverse Effect.

     

    s.      Environmental
Matters.

     

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

     

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

     

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

     

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

     

    
      
         


      

      
        8

        
          

        

      

      
         


      

    

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
         


      

      
        9

        
          

        

      

      
         


      

    

     

    4.           COVENANTS.

     

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

     

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

     

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

     

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

     

    e.      Future
Offerings.  Subject to the exceptions described below, the
Company will not, without the prior written consent of a majority-in-interest of
the Buyers, not to be unreasonably withheld, negotiate or contract with any
party to obtain additional equity financing (including debt financing with an
equity component) that involves (A) the issuance of Common Stock at a discount
to the market price of the Common Stock on the date of issuance (taking into
account the value of any warrants or options to acquire Common Stock issued in
connection therewith) or (B) the issuance of convertible securities that are
convertible into an indeterminate number of shares of Common Stock or (C) the
issuance of warrants during the period (the “Lock-up Period”) beginning on
the Closing Date and ending one hundred and eighty (180) days from the Closing
Date.  In addition, 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
two (2) years after the end of the Lock-up Period unless it shall have first
delivered to each Buyer, at least twenty (20) business days prior to the closing
of such Future Offering, written notice describing the proposed Future Offering,
including the terms and conditions thereof and proposed definitive documentation
to be entered into in connection therewith, and providing each Buyer an option
during the fifteen (15) day period following delivery of such notice to
purchase its pro rata share (based on the ratio that the aggregate principal
amount of Notes purchased by it hereunder bears to the aggregate principal
amount of Notes purchased hereunder) of the securities being offered in the
Future Offering on the same terms as contemplated by such Future Offering (the
limitations referred to in this sentence and the preceding sentence are
collectively referred to as the “Capital Raising
Limitations”).  In the event the terms
and conditions of a proposed Future Offering are amended in any respect after
delivery of the notice to the Buyers concerning the proposed Future Offering,
the Company shall deliver a new notice to each Buyer describing the amended
terms and conditions of the proposed Future Offering and each Buyer thereafter
shall have an option during the fifteen (15) day period following delivery of
such new notice to purchase its pro rata share of the securities being offered
on the same terms as contemplated by such proposed Future Offering, as
amended.  The foregoing sentence shall apply to successive amendments
to the terms and conditions of any proposed Future Offering.  The
Capital Raising Limitations shall not apply to any transaction
involving (i) issuances of securities in a firm commitment underwritten
public offering (excluding a continuous offering pursuant to Rule 415 under the
1933 Act), (ii) issuances of securities as consideration for a merger,
consolidation or purchase of assets, or in connection with any strategic
partnership or joint venture (the primary purpose of which is not to raise
equity capital), or in connection with the disposition or acquisition of a
business, product or license by the Company or (iii) issuances of restricted
securities at a discount to the market price of the Company’s Common Stock,
provided that no registration rights are given to such purchaser.  The
Capital Raising Limitations also shall not apply to the issuance of securities
upon exercise or conversion of the Company’s options, warrants or other
convertible securities outstanding as of the date hereof or to the grant of
additional options or warrants, or the issuance of additional securities, under
any Company stock option or restricted stock plan approved by the shareholders
of the Company.

     

    
      
         


      

      
        10

        
          

        

      

      
         


      

    

     

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

     

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

     

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

     

    
      
         


      

      
        11

        
          

        

      

      
         


      

    

     

    i.       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
Notes.  The Company will obtain and, so long as any Buyer owns any of
the Securities, maintain the listing and trading of its Common Stock on the
OTCBB or any equivalent replacement exchange, the Nasdaq National Market (“Nasdaq”), the Nasdaq SmallCap
Market (“Nasdaq
SmallCap”), the New York Stock Exchange (“NYSE”), or the American Stock
Exchange (“AMEX”) and
will comply in all respects with the Company’s reporting, filing and other
obligations under the bylaws or rules of the Financial Industry Regulatory
Authority (“FINRA”) and
such exchanges, as applicable.  The Company shall promptly provide to
each Buyer copies of any notices it receives from the OTCBB and any other
exchanges or quotation systems on which the Common Stock is then listed
regarding the continued eligibility of the Common Stock for listing on such
exchanges and quotation systems.

     

    j.       Corporate
Existence.  So long as a Buyer beneficially owns any Notes, 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.

     

    k.      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.

     

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

     

    
      
         


      

      
        12

        
          

        

      

      
         


      

    


    5.         
 TRANSFER
AGENT INSTRUCTIONS. The Company shall issue irrevocable instructions to
its transfer agent to issue certificates, registered in the name of each Buyer
or its nominee, for the Conversion Shares in such amounts as specified from time
to time by each Buyer to the Company upon conversion of the Notes in accordance
with the terms thereof (the “Irrevocable Transfer Agent
Instructions”). 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 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
Registration Rights Agreement. Nothing in this Section shall affect in any way
the Buyer’s obligations and agreement set forth in Section 2(g) hereof to comply
with all applicable prospectus delivery requirements, if any, upon re-sale of
the Securities. If a Buyer provides the Company with (i) an opinion of counsel
in form, substance and scope customary for opinions in comparable transactions,
to the effect that a public sale or transfer of such Securities may be made
without registration under the 1933 Act and such sale or transfer is effected or
(ii) the Buyer provides reasonable assurances that the Securities can be sold
pursuant to Rule 144, the Company shall permit the transfer, and, in the case of
the Conversion Shares, promptly instruct its transfer agent to issue one or more
certificates, free from restrictive legend, in such name and in such
denominations as specified by such Buyer. The Company acknowledges that a breach
by it of its obligations hereunder will cause irreparable harm to the Buyers, by
vitiating the intent and purpose of the transactions contemplated hereby.
Accordingly, the Company acknowledges that the remedy at law for a breach of its
obligations under this Section 5 may be inadequate and agrees, in the event of a
breach or threatened breach by the Company of the provisions of this Section,
that the Buyers shall be entitled, in addition to all other available remedies,
to an injunction restraining any breach and requiring immediate transfer,
without the necessity of showing economic loss and without any bond or other
security being required.

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
         


      

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

     

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

     

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

     

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

     

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

     

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

     

    8.           GOVERNING
LAW; MISCELLANEOUS.

     

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

     

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

     

    
      
         


      

      
        14

        
          

        

      

      
         


      

    

     

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

     

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

     

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

     

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

     

    If to the
Company:

     

    
      Univec,
Inc.

    

     

    
      9722
Groffs Mill Drive, Suite 116

    

    Owings Mills, MD 21117

     

    Attention:  Chief
Executive Officer

    Telephone:  (410)
486-1987

    Facsimile:   (410)
486-3085

     

    With a
copy to:

    


    Edsel J.
Guydon, Esq.

     

    Guydon
Law Group

    1100
Connecticut Avenue, NW, Suite 900

    Washington,
DC 20036

    Telephone:  (202)
223-9797

    
      Facsimile:   (202)
223-9796

    

     

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

     

    
      
         


      

      
        15

        
          

        

      

      
         


      

    

     

    With a
copy to:

     

    Yoel
Goldfeder

    The NIR
Group, LLC

    1044
Northern Blvd Suite 305

    Roslyn,
NY 11576

    
      	 	
              Telephone:

            	
              516-739-7110

            


    

    
      	 	
              Facsimile:

            	
              516-739-7110

            


    

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
         


      

      
        16

        
          

        

      

      
         


      

    


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

     

    [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

     

    
      
         


      

      
        17

        
          

        

      

      
         


      

    


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

     

    
      
        	
                UNIVEC,
      INC.

              
	 
      	 
      
	
                /s/ David Dalton

              	 
      
	
                David
      Dalton

              	 
      
	
                Chief
      Executive Officer

              	 
      


      

    

     

    
      
         


      

      
        18

        
          

        

      

      
         


      

    

     

    
      
        
          	
                  AJW
      PARTNERS, LLC

                
	
                  By:  SMS
      Group, LLC

                
	 
      
	
                  /s/  Corey S.
      Ribotsky

                	 
      
	
                  Corey
      S. Ribotsky

                	 
      
	
                  Manager

                
	 
      
	
                  RESIDENCE:  Delaware

                
	 
      
	
                  ADDRESS:

                	
                  1044
      Northern Boulevard

                
	 
      	
                  Suite
      305

                
	 
      	
                  Roslyn,
      New York 11576

                
	 
      	
                  Facsimile: 
       (516) 739-7115

                
	 
      	
                  Telephone:  (516)
      739-7110

                


        

      

    

     

    AGGREGATE
SUBSCRIPTION AMOUNT:

     

    
      
        
          
            	
                    Aggregate
      Principal Amount of Notes:

                  	 	$	170.46	 


          

        

      

    

     

    
      
         


      

      
        19

        
          

        

      

      
         


      

    

     

    
      
        	
                AJW
      PARTNERS II, LLC

              
	
                By:  SMS
      Group, LLC

              
	 
      
	
                /s/  Corey S.
      Ribotsky

              	 
      
	
                Corey
      S. Ribotsky

              	 
      
	
                Manager

              
	 
      
	
                RESIDENCE:  Delaware

              
	 
      
	
                ADDRESS:

              	
                1044
      Northern Boulevard

              
	 
      	
                Suite
      305

              
	 
      	
                Roslyn,
      New York 11576

              
	 
      	
                Facsimile:   (516)
      739-7115

              
	 
      	
                Telephone:  (516)
      739-7110

              


      

      


      AGGREGATE
SUBSCRIPTION AMOUNT:

      


      
        
          
            	
                    Aggregate
      Principal Amount of Notes:

                  	 	$	4,847.82	 


          

        

      

    

     

    
      
         


      

      
        20

        
          

        

      

      
         


      

    

     

    
      
        
          	
                  AJW
      MASTER FUND, LTD.

                
	
                  By:  First
      Street Manager II, LLC

                
	
                  /s/  Corey S.
      Ribotsky

                	 
      
	
                  Corey
      S. Ribotsky

                	 
      
	
                  Manager

                
	 
      
	
                  RESIDENCE:

                	
                  Cayman
      Islands

                
	 
      	 
      
	
                  ADDRESS:

                	
                  AJW
      Offshore, Ltd.

                
	 
      	
                  P.O.
      Box 32021 SMB

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

                


        

      

      


      AGGREGATE
SUBSCRIPTION AMOUNT:

      


      
        
          
            	
                    Aggregate
      Principal Amount of Notes:

                  	 	$	11,511.36	 


          

        

      

      


      
        
          
          

        

        
          21

          
            

          

        

         

      

      
        	
                AJW
      MASTER FUND II, LTD.

              
	
                By:  First
      Street Manager II, LLC

              
	
                /s/  Corey S.
      Ribotsky

              	 
      
	
                Corey
      S. Ribotsky

              	 
      
	
                Manager

              
	 
      
	
                RESIDENCE:

              	
                Cayman
      Islands

              
	 
      	 
      
	
                ADDRESS:

              	
                AJW
      Offshore, Ltd.

              
	 
      	
                P.O.
      Box 32021 SMB

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

              


      

      


      AGGREGATE
SUBSCRIPTION AMOUNT:

      


      
        
          
            	
                    Aggregate
      Principal Amount of Notes:

                  	 	$	42,060.36	 


          

        

      

      


      
        
          
          

        

        
          22

          
            

          

        

        
          
          

        

      

       

      
        	
                NEW
      MILLENNIUM CAPITAL PARTNERS III, LLC

              
	
                By:  First
      Street Manager II, LLC

              
	 
      
	
                /s/  Corey S.
      Ribotsky

              	 
      
	
                Corey
      S. Ribotsky

              	 
      
	
                Manager

              
	 
      
	
                RESIDENCE:

              	
                New
      York

              
	 
      	 
      
	
                ADDRESS:

              	
                1044
      Northern Boulevard

              
	 
      	
                Suite
      305

              
	 
      	
                Roslyn,
      New York 11576

              
	 
      	
                Facsimile:

              	
                (516)
      739-7115

              
	 
      	
                Telephone:

              	
                (516)
      739-7110

              


      

      


      AGGREGATE
SUBSCRIPTION AMOUNT:

       

      
        
          
            	
                    Aggregate
      Principal Amount of Notes:

                  	 	$	1,410.00	 


          

        

      

      


      
        
          
          

        

        
          23

          
            

          

        

        
          
          

        

      

       

    

    Schedule
3(a)

     

    Subsidiaries

     

    Physician
and Pharmaceutical Services, Inc. (NY Corporation)

     

    
      
         


      

      
        24

        
          

        

      

      
         


      

    

     

    Schedule
3(f)

     

    No
Conflicts

     

    The
Company is not in violation of the listing requirements of the Over-the Counter
Bulletin
Board (the “OTCBB”) .

     

    
      
         


      

      
        25

        
          

        

      

      
         


      

    

     

    Schedule
3 (i)

     

    Absence
of Litigation

     

    The
Company is absent of any litigation.

     

    
      
         


      

      
        26

        
          

        

      

      
         


      

    

     

    Schedule
3 (j)

     

    Patents,
Copyrights, etc.

     

    The
Company at present has no patents or copyrights.

     

    
      
         


      

      
        27

        
          

        

      

      
         


      

    

     

    Schedule
3 (l)

     

    Tax
Status

     

    The
company has filed all required tax documents with taxing
authorities.

     

    
      
         


      

      
        28

        
          

        

      

      
         


      

    

     

    Schedule
3 (m)

     

    Certain
Transactions

     

    None
applicable.

     

    
      
         


      

      
        29

        
          

        

      

      
         


      

    

     

    Schedule
3 (s)

     

    Environmental
Matters

     

    None
applicable.

     

    
      
         


      

      
        30

        
          

        

      

      
         


      

    

     

    Schedule
3 (t)

     

    Title
to Property

     

    None
applicable.


    
      
         


      

      
        31