securitypruchaseagreement.htm


    SECURITIES
      PURCHASE AGREEMENT

     

    


     

    SECURITIES
      PURCHASE AGREEMENT (this “Agreement”), dated as of October 25,
      2007, by and among EDOORWAYS CORP, a Delaware corporation, with headquarters
      located at 2602 Yorktown Place, Houston, Texas 77056 (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 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.  Buyers
      desire to purchase and the Company desires to issue and sell, upon the terms
      and
      conditions set forth in this Agreement (i) 8% secured convertible notes of
      the Company, in the form attached hereto as Exhibit “A”,
      in the aggregate principal amount of Two Hundred Fifty Thousand Dollars
      ($250,000) (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 $.001 per share, of the Company (the
“Common Stock”), upon the terms and subject to the limitations
      and conditions set forth in such Notes and (ii) warrants, in the forms
      attached hereto as Exhibit “B”, to purchase an aggregate of
      10,000,000 shares of Common Stock (the
“Warrants”).

     

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

     

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

     

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

     

    1.  PURCHASE
      AND SALE OF NOTES AND WARRANTS.

     

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

     

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

     

    c.  Closing
      Date.  Subject to the satisfaction (or
      written waiver) of the conditions thereto set forth in Section 6 and Section
      7
      below, the date and time of the issuance and sale of the Notes and the Warrants
      pursuant to this Agreement (the “Closing Date”) shall be 12:00
      noon, Eastern Standard Time on October 25, 2007, 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 Warrants and the shares of Common
      Stock issuable upon exercise thereof (the “Warrant Shares” and,
      collectively with the Notes, Warrants and Conversion Shares, the
“Securities”) for its own account and not with a present view
      towards the public sale or distribution thereof, except pursuant to sales
      registered or exempted from registration under the 1933 Act; provided,
however, that by making the representations herein, the Buyer does
      not
      agree to hold any of the Securities for any minimum or other specific term
      and
      reserves the right to dispose of the Securities at any time in accordance with
      or pursuant to a registration statement or an exemption under the 1933
      Act.

     

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

     

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

     

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

     

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

     

    f.  Transfer
      or Re-sale.  The Buyer understands that
      (i) except as provided in the Registration Rights Agreement, the sale or
      re-sale of the Securities has not been and is not being registered under the
      1933 Act or any applicable state securities laws, and the Securities may not
      be
      transferred unless (a) the Securities are sold pursuant to an effective
      registration statement under the 1933 Act, (b) the Buyer shall have
      delivered to the Company 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 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, 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 Company (“Standard
      Liquidated Damages Amount”).  If the Company elects to be pay
      the Standard Liquidated Damages Amount in shares of Common Stock, such shares
      shall be issued at the Conversion Price at the time of payment.

     

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

     

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

     

    The
      legend set forth above shall be removed and the Company shall issue a
      certificate without such legend to the holder of any Security upon which it
      is
      stamped, if, unless otherwise required by applicable state securities laws,
      (a)
      such Security is registered for sale under an effective registration statement
      filed under the 1933 Act or otherwise may be sold pursuant to Rule 144 or
      Regulation S without any restriction as to the number of securities as of a
      particular date that can then be immediately sold, or (b) 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.

     

    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,
      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 of (i) a
      material and adverse effect on the legality, validity or enforceability of
      any
      document executed in connection with this financing, (ii) a material and adverse
      effect on the results of operations, assets, prospects, business or condition
      (financial or otherwise) of the Company and the Subsidiaries, taken as a whole,
      or (iii) an adverse impairment to the Company’s ability to perform under any of
      the documents executed in connection with this
      financing.  “Subsidiaries” means any corporation or
      other organization, whether incorporated or unincorporated, in which the Company
      owns, directly or indirectly, any equity or other ownership
      interest.

     

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

     

    c.  Capitalization.  As
      of the date hereof, the authorized capital stock of the Company consists of
      (i)
      500,000,000 shares of Common Stock, $0.001 par value, of which [] 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 and the Warrants) exercisable for, or
      convertible into or exchangeable for shares of Common Stock and, 300,000,000
      shares are reserved for issuance upon conversion of the Notes and exercise
      of
      the Warrants (subject to adjustment pursuant to the Company’s covenant set forth
      in Section 4(h) below); and (ii) 10,000,000 shares of preferred stock of which
      200,000 shares are issued and outstanding.  All of such outstanding
      shares of capital stock are, or upon issuance will be, duly authorized, validly
      issued, fully paid and nonassessable.  No shares of capital stock of
      the Company are subject to preemptive rights or any other similar rights of
      the
      shareholders of the Company or any liens or encumbrances imposed through the
      actions or failure to act of the Company.  Except as disclosed in
Schedule 3(c), as of the effective date of this Agreement, (i)
      there are no outstanding options, warrants, scrip, rights to subscribe for,
      puts, calls, rights of first refusal, agreements, understandings, claims or
      other commitments or rights of any character whatsoever relating to, or
      securities or rights convertible into or exchangeable for any shares of capital
      stock of the Company or any of its Subsidiaries, or arrangements by which the
      Company or any of its Subsidiaries is or may become bound to issue additional
      shares of capital stock of the Company or any of its Subsidiaries, (ii) there
      are no agreements or arrangements under which the Company or any of its
      Subsidiaries is obligated to register the sale of any of its or their securities
      under the 1933 Act (except the Registration Rights Agreement) and (iii) there
      are no anti-dilution or price adjustment provisions contained in any security
      issued by the Company (or in any agreement providing rights to security holders)
      that will be triggered by the issuance of the Notes, the Warrants, the
      Conversion Shares or Warrant Shares.  The Company has furnished to the
      Buyer true and correct copies of the Company’s Certificate of Incorporation as
      in effect on the date hereof (“Certificate of Incorporation”),
      the Company’s By-laws, as in effect on the date hereof (the
“By-laws”), and the terms of all securities convertible into or
      exercisable for Common Stock of the Company and the material rights of the
      holders thereof in respect thereto.  The Company shall provide the
      Buyer with a written update of this representation signed by the Company’s Chief
      Executive or Chief Financial Officer on behalf of the Company as of the Closing
      Date.

     

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

     

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

     

    f.  No
      Conflicts.  The execution, delivery and
      performance of this Agreement, the Registration Rights Agreement, the Notes
      and
      the Warrants by the Company and the consummation by the Company of the
      transactions contemplated hereby and thereby (including, without limitation,
      the
      issuance and reservation for issuance of the Conversion Shares and Warrant
      Shares) will not (i) conflict with or result in a violation of any provision
      of
      the 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).  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 Registration Rights Agreement, the Notes or the
      Warrants in accordance with the terms hereof or thereof or to issue and sell
      the
      Notes and Warrants in accordance with the terms hereof and to issue the
      Conversion Shares upon conversion of the Notes and the Warrant Shares upon
      exercise of the Warrants.  Except as disclosed in Schedule
      3(f), all consents, authorizations, orders, filings and registrations
      which the Company is required to obtain pursuant to the preceding sentence
      have
      been obtained or effected on or prior to the date hereof.  The Company
      is not in violation of the quotation requirements of the Over-the-Counter
      Bulletin Board (the “OTCBB”) and does not reasonably anticipate
      that the Common Stock will be delisted by the OTCBB in the foreseeable
      future.  The Company and its Subsidiaries are unaware of any facts or
      circumstances which might give rise to any of the foregoing.

     

    g.  SEC
      Documents; Financial Statements.  Except
      as disclosed in Schedule 3(g), the Company has timely filed all
      reports, schedules, forms, statements and other documents required to be filed
      by it with the SEC pursuant to the reporting requirements of the Securities
      Exchange Act of 1934, as amended (the “1934 Act”) (all of the
      foregoing filed prior to the date hereof and all exhibits included therein
      and
      financial statements and schedules thereto and documents (other than exhibits
      to
      such documents) incorporated by reference therein, being hereinafter referred
      to
      herein as the “SEC Documents”).  The Company has
      delivered to each Buyer true and complete copies of the SEC Documents, except
      for such exhibits and incorporated documents.  As of their respective
      dates, the SEC Documents complied in all material respects with the requirements
      of the 1934 Act and the rules and regulations of the SEC promulgated thereunder
      applicable to the SEC Documents, and none of the SEC Documents, at the time
      they
      were filed with the SEC, contained any untrue statement of a material fact
      or
      omitted to state a material fact required to be stated therein or necessary
      in
      order to make the statements therein, in light of the circumstances under which
      they were made, not misleading.  None of the statements made in any
      such SEC Documents is, or has been, required to be amended or updated under
      applicable law (except for such statements as have been amended or updated
      in
      subsequent filings prior the date hereof).  As of their respective
      dates, the financial statements of the Company included in the SEC Documents
      complied as to form in all material respects with applicable accounting
      requirements and the published rules and regulations of the SEC with respect
      thereto.  Such financial statements have been prepared in accordance
      with United States generally accepted accounting principles, consistently
      applied, during the periods involved (except (i) as may be otherwise indicated
      in such financial statements or the notes thereto, or (ii) in the case of
      unaudited interim statements, to the extent they may not include footnotes
      or
      may be condensed or summary statements) and fairly present in all material
      respects the consolidated financial position of the Company and its consolidated
      Subsidiaries as of the dates thereof and the consolidated results of their
      operations and cash flows for the periods then ended (subject, in the case
      of
      unaudited statements, to normal year-end audit adjustments).  Except
      as set forth in the financial statements of the Company included in the SEC
      Documents, the Company has no liabilities, contingent or otherwise, other than
      (i) liabilities incurred in the ordinary course of business subsequent to
      December 31, 2004 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,
      2005, 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.

     

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

     

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

     

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

     

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

     

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

     

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

     

    q.  No
      Brokers.  Except as set forth in
Schedule 3(q), 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, 2004, neither the Company
      nor any of its Subsidiaries has received any notification with respect to
      possible conflicts, defaults or violations of applicable laws, except for
      notices relating to possible conflicts, defaults or violations, which conflicts,
      defaults or violations would not have a Material Adverse Effect.

     

    s.  Environmental
      Matters.

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    4.  COVENANTS.

     

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

     

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

     

    c.  Reporting
      Status; Eligibility to Use Form S-3, SB-2 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
      or
      such other form of registration for which it is eligible.  The Company
      shall issue a press release describing the material 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
      net proceeds from the sale of the Notes and the Warrants in the manner set
      forth
      in Schedule 4(d) attached hereto and made a part hereof and
      shall not, directly or indirectly, use such proceeds for (i) 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); (ii) the satisfaction of any portion of the Company’s debt (other
      than payment of trade payables and accrued expenses in the ordinary course
      of
      the Company’s business and consistent with prior past practices), or (iii) the
      redemption of any Common Stock.

     

    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, 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 on the later of (i) two hundred seventy
      (270) days from the Closing Date and (ii) one hundred eighty (180) days from
      the
      date the Registration Statement (as defined in the Registration Rights
      Agreement) is declared effective (plus any days in which sales cannot be made
      thereunder).  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, an equity line of credit or similar financing
      arrangement) resulting in net proceeds to the Company of in excess of
      $15,000,000, 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 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.  Notwithstanding anything in  this section 4(e) to
      the contrary, in the event the Company’s Board of Directors decides, in good
      faith, to enter into a transaction or relationship in which the Company issues
      shares of Common Stock or other securities of the Company to a person or any
      entity which is, itself or through its subsidiaries, an operating company in
      a
      business synergistic with the business of the Company and in which the Company
      received benefits in addition to the investment of funds, but shall not include
      a transaction in which the Company is issuing securities primarily for the
      purpose of raising capital or to an entity whose business is investing in
      securities, the Company shall be permitted to do so.

     

    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-KSB its Quarterly
      Reports on Form 10-QSB 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.  Upon the
      increase in the number of authorized shares of the Company’s Common Stock to
      500,000,000 shares within forty-five (45) days from the date hereof and subject
      to Stockholder Approval, the Company shall at all times have authorized, and
      reserved for the purpose of issuance, a sufficient number of shares of Common
      Stock to provide for the full conversion or exercise of the outstanding Notes
      and Warrants and issuance of the Conversion Shares and Warrant Shares in
      connection therewith (based on the Conversion Price of the Notes or Exercise
      Price of the Warrants in effect from time to time) and as otherwise required
      by
      the Notes.  The Company shall not reduce the number of shares of
      Common Stock reserved for issuance upon conversion of Notes and exercise of
      the
      Warrants without the consent of each Buyer.  The Company shall at all
      times maintain the number of shares of Common Stock so reserved for issuance
      at
      an amount (“Reserved Amount”) equal to no less than two (2)
      times the number that is then actually issuable upon full conversion of the
      Notes and Additional Notes and upon exercise of the Warrants and the Additional
      Warrants (based on the Conversion Price of the Notes or the Exercise Price
      of
      the Warrants in effect from time to time).  If at any time the number
      of shares of Common Stock authorized and reserved for issuance
      (“Authorized and Reserved Shares”) is below the Reserved
      Amount, the Company will promptly take all corporate action necessary to
      authorize and reserve a sufficient number of shares, including, without
      limitation, calling a special meeting of shareholders to authorize additional
      shares to meet the Company’s obligations under this Section 4(h), in the case of
      an insufficient number of authorized shares, obtain shareholder approval of
      an
      increase in such authorized number of shares, and voting the management shares
      of the Company in favor of an increase in the authorized shares of the Company
      to ensure that the number of authorized shares is sufficient to meet the
      Reserved Amount.  If the Company fails to obtain such shareholder
      approval within thirty (30) days following the date on which the number of
      Reserved Amount exceeds the Authorized and Reserved Shares, the Company shall
      pay to the Borrower the Standard Liquidated Damages Amount, in cash or in shares
      of Common Stock at the option of the Buyer.  If the Buyer elects to be
      paid the Standard Liquidated Damages Amount in shares of Common Stock, such
      shares shall be issued at the Conversion Price at the time of
      payment.  In order to ensure that the Company has authorized a
      sufficient amount of shares to meet the Reserved Amount at all times, the
      Company must deliver to the Buyer at the end of every month a list detailing
      (1)
      the current amount of shares authorized by the Company and reserved for the
      Buyer; and (2) amount of shares issuable upon conversion of the Notes and upon
      exercise of the Warrants and as payment of interest accrued on the Notes for
      one
      year.  If the Company fails to provide such list within five (5)
      business days of the end of each month, the Company shall pay the Standard
      Liquidated Damages Amount, in cash or in shares of Common Stock at the option
      of
      the Buyer, until the list is delivered.  If the Buyer elects to be
      paid the Standard Liquidated Damages Amount in shares of Common Stock, such
      shares shall be issued at the Conversion Price at the time of
      payment.

     

    i.  Listing.  The
      Company shall promptly secure the listing or quotation, as the case may be,
      of
      the Conversion Shares and Warrant Shares upon each national securities exchange
      or automated quotation system, if any, upon which shares of Common Stock are
      then listed or quoted, as the case may be, (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 or quoted, as
      the
      case may be, such listing or quotation, as the case may be, of all Conversion
      Shares and Warrant Shares from time to time issuable upon conversion of the
      Notes or exercise of the Warrants.  The Company will obtain and, so
      long as any Buyer owns any of the Securities, maintain the listing or quotation,
      as the case may be, 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 National Association of Securities Dealers
      (“NASD”) 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 or quoted, as the case may be, regarding the continued
      eligibility of the Common Stock for listing or quotation, as the case may be,
      on
      such exchanges and quotation systems.

     

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

     

    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.  Key
      Man Insurance.  The Company shall use
      its best efforts to obtain, on or before five (5) business days from the date
      hereof, key man life insurance on all key executive employees.

     

    m.  Restriction
      on Short Sales.  The Buyers agree that,
      so long as any of the Notes remain outstanding, but in no event less than two
      (2) years from the date hereof, the Buyers will not enter into or effect any
      “short sales” (as such term is defined in Rule 3b-3 of the 1934 Act) of the
      Common Stock or hedging transaction which establishes a net short position
      with
      respect to the Common Stock.

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    8.  GOVERNING
      LAW; MISCELLANEOUS.

     

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

     

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

     

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

     

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

     

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

     

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

     

    If
      to the
      Company:

    


    EDOORWAYS
      CORP

    2602
      Yorktown Place

    Houston,
      Texas 77056

     

    Attention:
      Chief Executive Officer

     

    Telephone:                                (281)
      658-5159

     

    Facsimile:                                (713)
      626-5333

     

    


     

    
      	
               

            	
              With
                a copy to:

            


    

    


    
      	
               

            	
              Anslow
                & Jaclin, LLP

            


    

    195
      Route 9, Suite 204

    Manalapan,
      NJ 07725

    Attention:   Gregg
      Jaclin, Esq.

    Telephone:  (732)
      409-1212

    Facsimile:   (732)
      577-1188

     

    


     

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

     

    With
      copy
      to:

     

    


     

    Ballard
      Spahr Andrews & Ingersoll, LLP

     

    1735
      Market Street, 51st Floor

     

    Philadelphia,
      Pennsylvania  19103

     

    Attention:  Gerald
      J. Guarcini, Esq.

     

    Telephone:  215-864-8625

     

    Facsimile:  215-864-8999

     

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

     

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

     

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

     

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

     

    j.  Publicity.  The
      Company and each of the Buyers shall have the right to review a reasonable
      period of time before issuance of any press releases, SEC, OTCBB or NASD
      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 NASD filings
      with
      respect to such transactions as is required by applicable law and regulations
      (although each of the Buyers shall be consulted by the Company in connection
      with any such press release prior to its release and shall be provided with
      a
      copy thereof and be given an opportunity to comment thereon).

     

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

     

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

     

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

     

    


     

    


     

    


     

    


     

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK]

     


    
      
         

      

      
         

        
          

        

      

      
         

      

    


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

     

    


    EDOORWAYS
      CORP

    


    


    


    Gary
      F.
      Kimmons

    Chief
      Executive Officer

    


    


    AJW
      PARTNERS, LLC

    By:  SMS
      Group, LLC

    


    


    


    Corey
      S.
      Ribotsky

    Manager

    


    


    RESIDENCE:  Delaware

    


    ADDRESS:                                1044
      Northern Boulevard

    Suite
      302

    Roslyn,
      New York 11576

    Facsimile:  (516)
      739-7115

    Telephone:  (516)
      739-7110

    


    AGGREGATE
      SUBSCRIPTION AMOUNT:

    


    Aggregate
      Principal Amount of
      Notes:                                                                                                           $________

    Number
      of
      Warrants:                                                                                                             ________

    Aggregate
      Purchase
      Price:                                                                                                           $________

    


    



    
      
         

      

      
         

        
          

        

      

      
         

      

    


    


    


    AJW
      MASTER FUND, LTD.

    By:  First
      Street Manager II, LLC

    


    


    


    Corey
      S.
      Ribotsky

    Manager

    


    


    RESIDENCE:  Cayman
      Islands

    


    ADDRESS:                                AJW
      Offshore, Ltd.

    P.O.
      Box 32021 SMB

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

    


    AGGREGATE
      SUBSCRIPTION AMOUNT:

    


    Aggregate
      Principal Amount of
      Notes:                                                                                                           $________

    Number
      of
      Warrants:                                                                                                             ________

    Aggregate
      Purchase
      Price:                                                                                                           $________

    



    
      
         

      

      
         

        
          

        

      

      
         

      

    


    


    


    


    


    NEW
      MILLENNIUM CAPITAL PARTNERS II, LLC

    By:  First
      Street Manager II, LLP

    


    


    


    Corey
      S.
      Ribotsky

    Manager

    


    


    RESIDENCE:  New
      York

    


    ADDRESS:                                1044
      Northern Boulevard

    Suite
      302

    Roslyn,
      New York 11576

    Facsimile:  (516)
      739-7115

    Telephone:  (516)
      739-7110

    


    AGGREGATE
      SUBSCRIPTION AMOUNT:

    


    Aggregate
      Principal Amount of
      Notes:                                                                                                           $________

    Number
      of
      Warrants:                                                                                                             ________

    Aggregate
      Purchase
      Price:                                                                                                           $________