Document:

SECURITIES
        PURCHASE AGREEMENT

      UNITS

      

      This
        Securities Purchase Agreement - Units (the “Agreement”),
        is
        made as of the date set forth on the signature page by and among THE JON
        ASHTON
        CORPORATION, a Texas corporation (the “Company”),
        and
        the purchaser whose name appears on the signature page (the “Purchaser”).

      

      RECITALS

      

      WHEREAS,
        the Company proposes to offer (the “Offering”)
        and
        sell an aggregate of $300,000 of units (the “Units”),
        each
        Unit offered at $1,000 and consisting of 1,000 shares of common stock, $0.001
        par value (the “Common
        Stock”),
        and
        9,000 shares of Series B Convertible Preferred Stock, $0.001 par value (the
        “Series
        B Preferred Stock”),
        the
        terms of the Series B Preferred Stock being as set forth in the Certificate
        of
        Designation attached to the Memorandum (the “Series
        B Certificate of Designation”);
        and

       

      WHEREAS,
        the Units will be offered and sold to the Purchaser, pursuant to the terms
        set
        out in the Confidential Private Placement Memorandum dated October 19, 2005
        (the
“Memorandum”)
        without being registered under the Securities Act of 1933, as amended, and
        the
        rules and regulations of the Securities and Exchange Commission thereunder,
        in
        reliance upon Section 4(2) thereof and/or Regulation D thereunder.

       

      The
        parties hereby agree as follows:

       

      1.   Purchase
        and Sale of Units.

       

         1.1.   Sale
        and Issuance of Units.

       

      (a)  Subject
        to the terms and conditions of this Agreement, the Purchaser agrees to purchase
        at the Closing, and the Company agrees to sell and issue to the Purchaser
        at the
        Closing, the number of Units set forth on the signature page for a purchase
        price of $1,000.00 per Unit (the “Purchase
        Price”).
        The
        shares of Common Stock issued to the Purchaser pursuant to this Agreement
        shall
        be referred to as the “Common
        Shares”,
        the
        shares of Series B Preferred Stock issued to the Purchasers pursuant to
        this Agreement shall be referred to in this Agreement as the “Preferred
        Shares”
and
        the
        Common Shares and Preferred Shares, collectively, shall be referred to as
        the
“Shares”.

       

      (b)  The
        Purchaser shall deliver this Agreement, fully executed, along with a completed
        and executed Investor Questionnaire and a check payable to “Michael W. Sanders,
        Esq.” in the full amount of the Purchase Price to Michael W. Sanders (the
“Escrow
        Agent”)
        to be
        held until Closing. 

       

      1.2.   Closing;
        Delivery.

       

         (a) The purchase
        and sale of the Shares shall take place remotely via the exchange of documents
        and signatures, at such time as the Company shall have received not less
        than
        $300,000 in subscription proceeds from the offer and sale of Units (which
        time
        is designated as the “Closing”),
        but
        not later than December 31, 2005 unless the Company, in its sole discretion,
        shall extend the closing to a date not later than March 31, 2006 (the
“Offering
        Termination Date”).

       

         (b) At
        the
        Closing, the Company shall deliver to the Purchaser certificates representing
        the Shares being purchased by the Purchaser and the Escrow Agent shall deliver
        to the Company the Purchase Price.

       

      (c)  In
        the
        event that the Closing has not occurred on or before the Offering Termination
        Date or the Offering is terminated by the Company prior to the Closing, the
        Escrow Agent shall promptly return to the Purchaser the full Purchase Price
        without interest thereon or deduction therefrom.

       

      
        
          
          

        

        
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      1.3.  Defined
        Terms Used in this Agreement.
        In
        addition to the terms defined above, the following terms used in this Agreement
        shall be construed to have the meanings set forth or referenced
        below.

       

      “Affiliate”
means
        with respect to any person or entity (a “Person”)
        any
        Person which, directly or indirectly, controls, is controlled by, or is under
        common control with such Person, including, without limitation, any partner,
        officer, director, or member of such Person.

       

      “Code”
means
        the Internal Revenue Code of 1986, as amended.

       

      “Investor
        Rights Agreement”
means
        the agreement between the Company and the Purchaser dated as of the date
        of the
        Closing, in the form attached to the Memorandum.

       

      “Key
        Employee”
means
        any executive-level employee (including division director and Vice President
        level positions) as well as any employee who either alone or in concert with
        others develops, invents, programs or designs any Company Intellectual Property
        (as defined in Section
        2.8).

       

      “Material
        Adverse Effect”
means
        a
        material adverse effect on the business, assets (including intangible assets),
        liabilities, financial condition, property, prospects or
        results of operations of the Company.

       

      “Securities
        Act”
means
        the Securities Act of 1933, as amended.

       

      “Transaction
        Agreements”
means
        this Agreement and the Investor Rights Agreement.

       

      2. 
Representations
        and Warranties of the Company.
        The
        Company hereby represents and warrants to the Purchaser that the following
        representations are true and complete as of the date of the Closing.

       

      For
        purposes of these representations and warranties, the phrase “to the Company’s
        knowledge” shall mean the actual knowledge after reasonable investigation of the
        following officers: Mark Trimble and John Peper. 
        In
        addition, for purposes of these representations and warranties (other than
        those
        in Sections
        2.2, 2.3, 2.4, 2.5 and 2.6),
        the
        term “the Company” shall include any subsidiaries of the Company, unless
        otherwise noted herein.

       

      2.1.  Organization,
        Good Standing, Corporate Power and Qualification.
        The
        Company is a corporation duly organized, validly existing and in good standing
        under the laws of the State of Texas and has all requisite corporate power
        and
        authority to carry on its business as presently conducted and as proposed
        to be
        conducted. The Company is duly qualified to transact business and is in good
        standing in each jurisdiction in which the failure to so qualify would have
        a
        Material Adverse Effect.

       

      2.2.  Capitalization.
        The
        authorized capital of the Company consists, immediately prior to the Closing,
        of:

       

      (a)  100,000,000
        shares of Common Stock, $0.001 par value, 21,000,000 shares of which are
        issued
        and outstanding immediately prior to the Closing. All of the outstanding
        shares
        of Common Stock have been duly authorized, are fully paid and nonassessable
        and
        were issued in compliance with all applicable federal and state securities
        laws.
        The Company holds no treasury stock.

       

      (b)  20,000,000
        shares of Preferred Stock, $0.001 par value, of which 6,000,000 shares have
        been
        designated Series A Preferred Stock, 6,000,000 of which are issued and
        outstanding immediately prior to the Closing, and 2,700,000 shares have been
        designated Series B Preferred Stock, none of
        which
        are issued and outstanding immediately prior to the Closing. The rights,
        privileges and preferences of the Preferred Stock are as stated in the Amended
        and Restated Articles of Incorporation, the Series A Certificate of Designation
        and the Series B Certificate of Designation, each of which is an exhibit
        to the
        Memorandum, and as provided by the general corporation law of the jurisdiction
        of the Company’s formation. 

       

      
        
          
          

        

        
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      (c)  The
        Company has reserved 1,000,000 shares of Common Stock for issuance to officers,
        directors, employees and consultants of the Company pursuant to its 2005
        Stock
        Option Plan duly adopted by the Board of Directors and approved by the Company
        stockholders (the “Stock
        Plan”).
        Of
        such reserved shares of Common Stock, no shares have been issued pursuant
        to
        restricted stock purchase agreements, no options to purchase shares have
        been
        granted and are currently outstanding, and 1,000,000 shares of Common Stock
        remain available for issuance to officers, directors, employees and consultants
        pursuant to the Stock Plan.

       

      (d)  Except
        for (A) the conversion privileges of the outstanding Series A Preferred Stock
        and the Series B Preferred Shares to be issued under this Agreement, and
        (B) the
        rights provided in the Investor Rights Agreement, there are no outstanding
        options, warrants, rights (including conversion or preemptive rights and
        rights
        of first refusal or similar rights) or agreements, orally or in writing,
        to
        purchase or acquire from the Company any shares of Common Stock or any
        securities convertible into or exchangeable for shares of Common
        Stock.

       

      (e)  None
        of
        the Company’s stock purchase agreements or stock option documents contains a
        provision for acceleration of vesting (or lapse of a repurchase right) upon
        the
        occurrence of any event or combination of events. The Company has never adjusted
        or amended the exercise price of any stock options previously awarded, whether
        through amendment, cancellation, replacement grant, repricing, or any other
        means.

       

      2.3.  Subsidiaries.
        The
        Company does not currently own or control, directly or indirectly, any interest
        in any other corporation, partnership, trust, joint venture, limited liability
        company, association, or other business entity. 

       

      2.4.  Authorization.
        All
        corporate action required to be taken by the Company’s Board of Directors and
        stockholders in order to authorize the Company to enter into the Transaction
        Agreements, and to issue the Shares at the Closing and the Common Stock issuable
        upon conversion of the Series B Preferred Shares, has been taken or will
        be
        taken prior to the Closing. All action on the part of the officers of the
        Company necessary for the execution and delivery of the Transaction Agreements,
        the performance of all obligations of the Company under the Transaction
        Agreements to be performed as of the Closing, and the issuance and delivery
        of
        the Shares has been taken or will be taken prior to the Closing. The Transaction
        Agreements, when executed and delivered by the Company, shall constitute
        valid
        and legally binding obligations of the Company, enforceable against the Company
        in accordance with their respective terms except (i) as limited by
        applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
        conveyance, or other laws of general application relating to or affecting
        the
        enforcement of creditors’ rights generally, (ii) as limited by laws relating to
        the availability of specific performance, injunctive relief, or other equitable
        remedies, or (iii) to the extent the indemnification provisions contained
        in the Investor Rights Agreement may be limited by applicable federal or
        state
        securities laws.

       

      2.5.  Valid
        Issuance of Shares.
        The
        Shares, when issued, sold and delivered in accordance with the terms and
        for the
        consideration set forth in this Agreement, will be validly issued, fully
        paid
        and nonassessable and free of restrictions on transfer other than restrictions
        on transfer under this Agreement, the Investor Rights Agreement, applicable
        state and federal securities laws and liens or encumbrances created by or
        imposed by the Purchaser. Assuming the accuracy of the representations of
        the
        Purchasers in Section
        3
        of this
        Agreement and subject to the filings described in Section 2.6(ii)
        below,
        the Shares will be issued in compliance with all applicable federal and state
        securities laws. The Common Stock issuable upon conversion of the Series
        B
        Preferred Shares has been duly reserved for issuance, and upon issuance in
        accordance with the terms of the Series B Certificate of Designation, will
        be
        validly issued, fully paid and nonassessable and free of restrictions on
        transfer other than restrictions on transfer under the Transaction Agreements,
        applicable federal and state securities laws and liens or encumbrances created
        by or imposed by the Purchaser. Based in part upon the representations of
        the
        Purchaser in Section
        3
        of this
        Agreement, and subject to Section
        2.6
        below,
        the Common Stock issuable upon conversion of the Series B Preferred Shares
        will
        be issued in compliance with all applicable federal and state securities
        laws.

       

      
        
          
          

        

        
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      2.6.  Governmental
        Consents and Filings.
        Assuming the accuracy of the representations made by the Purchasers in
Section
        3
        of this
        Agreement, no consent, approval, order or authorization of, or registration,
        qualification, designation, declaration or filing with, any federal, state
        or
        local governmental authority is required on the part of the Company in
        connection with the consummation of the transactions contemplated by this
        Agreement, except for (i) the filing of the Series B Certificate of Designation,
        which will have been filed as of the Closing, and (ii) filings pursuant to
        Regulation D of the Securities Act, and applicable state securities laws,
        which have been made or will be made in a timely manner.

       

      2.7.  Litigation.
        There
        is no claim, action, suit, proceeding, arbitration, complaint, charge or
        investigation pending or to the Company’s knowledge, currently threatened (i)
        against the Company or any officer, director or Key Employee of the Company;
        or
        (ii) that questions the validity of the Transaction Agreements or the right
        of
        the Company to enter into them, or to consummate the transactions contemplated
        by the Transaction Agreements; or (iii) to the Company’s knowledge, that would
        reasonably be expected to have, either individually or in the aggregate,
        a
        Material Adverse Effect. Neither the Company nor, to the Company’s knowledge,
        any of its officers or directors, is a party or is named as subject to the
        provisions of any order, writ, injunction, judgment or decree of any court
        or
        government agency or instrumentality. There is no action, suit, proceeding
        or
        investigation by the Company pending or which the Company intends to initiate.
        The foregoing includes, without limitation, actions, suits, proceedings or
        investigations pending or threatened in writing (or any basis therefor known
        to
        the Company) involving the prior employment of any of the Company’s employees,
        their services provided in connection with the Company’s business, or any
        information or techniques allegedly proprietary to any of their former
        employers, or their obligations under any agreements with prior
        employers.

       

      2.8.  Intellectual
        Property.
        The
        Company owns or possesses sufficient legal rights to (i) all trademarks,
        service
        marks, tradenames, copyrights, trade secrets, licenses, information and
        proprietary rights and processes and (ii) to the Company’s knowledge, all
        patents and patent right, (such rights are collectively referred to herein
        as
        the “Company
        Intellectual Property”)
        as are
        necessary to the conduct of the Company’s business as now conducted and as
        presently proposed to be conducted,
        without
        any known conflict with, or infringement of, the rights of others.  To
        the
        Company’s knowledge, no product or service marketed or sold (or proposed to be
        marketed or sold) by the Company violates or will violate any license or
        infringe any intellectual property rights of any other party. Other than
        with
        respect to commercially available software products under standard end-user
        object code license agreements, there are no outstanding options, licenses,
        agreements, claims, encumbrances or shared ownership interests of any kind
        relating to the foregoing, nor is the Company bound by or a party to any
        options, licenses or agreements of any kind with respect to the patents,
        trademarks, service marks, trade names, copyrights, trade secrets, licenses,
        information, proprietary rights and processes of any other person or entity.
        The
        Company has not received any communications alleging that the Company has
        violated or, by conducting its business, would violate any of the patents,
        trademarks, service marks, tradenames, copyrights, trade secrets or other
        proprietary rights or processes of any other person or entity. The Company
        has
        obtained and possesses valid licenses to use all of the software programs
        present on the computers and other software-enabled electronic devices that
        it
        owns or leases or that it has otherwise provided to its employees for their
        use
        in connection with the Company’s business. To the Company’s knowledge, it will
        not be necessary to use any inventions of any of its employees (or persons
        it
        currently intends to hire) made prior to their employment by the Company.
        Each
        Key Employee has assigned to the Company all intellectual property rights
        he or
        she owns that are related to the Company’s business as now conducted. The
        Company has not embedded any open source, copyleft or community source code
        in
        any of its products generally available or in development, including but
        not
        limited to any libraries or code licensed under any General Public License,
        Lesser General Public License or similar license arrangement. For purposes
        of
        this Section
        2.8,
        the
        Company shall be deemed to have knowledge of a patent right if the Company
        has
        actual knowledge of the patent right or would be found to be on notice of
        such
        patent right as determine by reference to United States patent
        laws.

       

      2.9.  Compliance
        with Other Instruments.
        The
        Company is not in violation or default (i) of any provisions of its Restated
        Articles of Incorporation or Bylaws, (ii) of any instrument, judgment, order,
        writ or decree, (iii) under any note, indenture or mortgage, or (iv) under
        any
        lease, agreement, contract or purchase order to which it is a party or by
        which
        it is bound, or
        of any
        provision of federal or state statute, rule or regulation applicable to the
        Company, the violation of which would have a Material Adverse Effect. The
        execution, delivery and performance of the Transaction Agreements and the
        consummation of the transactions contemplated by the Transaction Agreements
        will
        not result in any such violation or be in conflict with or constitute, with
        or
        without the passage of time and giving of notice, either (i) a default under
        any
        such provision, instrument, judgment, order, writ, decree, contract or agreement
        or (ii) an event which results in the creation of any lien, charge or
        encumbrance upon any assets of the Company or the suspension, revocation,
        forfeiture, or nonrenewal of any material permit or license applicable to
        the
        Company.

       

      
        
          
          

        

        
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      2.10.  Memorandum.
        The
        Memorandum did not as of its date, and will not as of the Closing Date, contain
        any untrue statement of a material fact or omit to state a material fact
        necessary in order to make the statements therein, in the light of the
        circumstances under which they were made, not misleading.

       

      2.11.  Changes.
        Since
        the date of Memorandum there
        has
        not been:

       

      (a)  any
        change in the assets, liabilities, financial condition or operating results
        of
        the Company from that reflected in the financial statements included in the
        Memorandum, except changes in the ordinary course of business that have not
        caused, in the aggregate, a Material Adverse Effect;

       

      (b)  any
        damage, destruction or loss, whether or not covered by insurance, that would
        have a Material Adverse Effect;

       

      (c)  any
        waiver or compromise by the Company of a valuable right or of a material
        debt
        owed to it;

       

      (d)  any
        satisfaction or discharge of any lien, claim, or encumbrance or payment of
        any
        obligation by the Company, except in the ordinary course of business and
        the
        satisfaction or discharge of which would not have a Material Adverse
        Effect;

       

      (e)  any
        material change to a material contract or agreement by which the Company
        or any
        of its assets is bound or subject;

       

      (f)  any
        material change in any compensation arrangement or agreement with any employee,
        officer, director or stockholder;

       

      (g)  any
        resignation or termination of employment of any officer or Key Employee of
        the
        Company; 

       

      (h)  any
        mortgage, pledge, transfer of a security interest in, or lien, created by
        the
        Company, with respect to any of its material properties or assets, except
        liens
        for taxes not yet due or payable and liens that arise in the ordinary course
        of
        business and do not materially impair the Company’s ownership or use of such
        property or assets;

       

      (i)  any
        loans
        or guarantees made by the Company to or for the benefit of its employees,
        officers or directors, or any members of their immediate families, other
        than
        travel advances and other advances made in the ordinary course of its
        business;

       

      (j)  any
        declaration, setting aside or payment or other distribution in respect of
        any of
        the Company’s capital stock, or any direct or indirect redemption, purchase, or
        other acquisition of any of such stock by the Company;

       

      (k)  any
        sale,
        assignment or transfer of any Company Intellectual Property that could
        reasonably be expected to result in a Material Adverse Effect;

       

      (l)  receipt
        of notice that there has been a loss of, or material order cancellation by,
        any
        major customer of the Company;

       

      (m)  to
        the
        Company’s knowledge, any other event or condition of any character, other than
        events affecting the economy or the Company’s industry generally, that
        could reasonably be expected to result in a Material Adverse Effect;
        or

       

      (n)  any
        arrangement or commitment by the Company to do any of the things described
        in
        this Section 2.11.

       

      
        
          
          

        

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

       

        
3.1.   Authorization.
        The
        Purchaser has full power and authority to enter into the Transaction Agreements.
        The Transaction Agreements, when executed and delivered by the Purchaser,
        will
        constitute valid and legally binding obligations of the Purchaser, enforceable
        in accordance with their terms, except (a) as limited by applicable
        bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance,
        and
        any other laws of general application affecting enforcement of creditors’ rights
        generally, and as limited by laws relating to the availability of a specific
        performance, injunctive relief, or other equitable remedies, or (b) to the
        extent the indemnification provisions contained in the Investor Rights Agreement
        may be limited by applicable federal or state securities laws.

       

        
3.2.   Purchase
        Entirely for Own Account.
        This
        Agreement is made with the Purchaser in reliance upon the Purchaser’s
        representation to the Company, which by the Purchaser’s execution of this
        Agreement, the Purchaser hereby confirms, that the Shares to be acquired
        by the
        Purchaser will be acquired for investment for the Purchaser’s own account, not
        as a nominee or agent, and not with a view to the resale or distribution
        of any
        part thereof, and that the Purchaser has no present intention of selling,
        granting any participation in, or otherwise distributing the same. By executing
        this Agreement, the Purchaser further represents that the Purchaser does
        not
        presently have any contract, undertaking, agreement or arrangement with any
        person to sell, transfer or grant participations to such person or to any
        third
        person, with respect to any of the Shares. The Purchaser has not been formed
        for
        the specific purpose of acquiring the Shares.

       

        
3.3.   Disclosure
        of Information.
        The
        Purchaser has received the Memorandum and had an opportunity to discuss the
        Company’s business, management, financial affairs and the terms and conditions
        of the offering of the Units with the Company’s management. The foregoing,
        however, does not limit or modify the representations and warranties of the
        Company in Section
        2
        of this
        Agreement or the right of the Purchasers to rely thereon.

       

        
3.4.   Restricted
        Securities.
        The
        Purchaser understands that the Units have not been registered under the
        Securities Act, by reason of a specific exemption from the registration
        provisions of the Securities Act which depends upon, among other things,
        the
        bona fide nature of the investment intent and the accuracy of the Purchaser’s
        representations as expressed herein. The Purchaser understands that the Shares
        are “restricted securities” under applicable U.S. federal and state securities
        laws and that, pursuant to these laws, the Purchaser must hold the Shares
        indefinitely unless they are registered with the Securities and Exchange
        Commission and qualified by state authorities, or an exemption from such
        registration and qualification requirements is available. The Purchaser
        acknowledges that the Company has no obligation to register or qualify the
        Shares, or the Common Stock into which it may be converted, for resale except
        as
        set forth in the Investor Rights Agreement. The Purchaser further acknowledges
        that if an exemption from registration or qualification is available, it
        may be
        conditioned on various requirements including, but not limited to, the time
        and
        manner of sale, the holding period for the Shares, and on requirements relating
        to the Company which are outside of the Purchaser’s control, and which the
        Company is under no obligation and
        may
        not be able to satisfy. 

       

        
3.5.   No
        Public Market.
        The
        Purchaser understands that no public market now exists for the Shares, and
        that
        the Company has made no assurances that a public market will ever exist for
        the
        Shares.

       

        
3.6.   Legends.
        The
        Purchaser understands that the Shares and any securities issued in respect
        of or
        exchange for the Shares, may bear one or all of the following
        legends:

       

      (a) “THE
        SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
        SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH
        A
        VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH
        TRANSFER MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED
        THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT
        SUCH
        REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.”

       

      (b) Any
        legend set forth in, or required by, the other Transaction
        Agreements.

       

      
        
          
          

        

        
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      (c) Any
        legend required by the securities laws of any state to the extent such laws
        are
        applicable to the Shares represented by the certificate so
        legended.

       

        
3.7.   Investor
        Suitability.
        The
        Purchaser has accurately completed and delivered to the Company an Investor
        Questionnaire reflecting that the Purchaser is an accredited investor as
        defined
        in Rule 501(a) of Regulation D promulgated under the Securities Act or otherwise
        meets the suitability standards set forth in the Memorandum.

       

      3.8.   No
        General Solicitation.
        Neither
        the Purchaser, nor any of its officers, directors, employees, agents,
        stockholders or partners has been solicited, either directly or indirectly,
        including through a broker or finder, by means of (a) any general
        solicitation, or (b) any advertisement published in connection with the
        offer and sale of the Shares.

       

        
3.9.   Offering
        Risks.
        Purchaser is aware that the Units are speculative and that it may lose its
        entire investment and affirms that it can afford to bear the risks of an
        investment in the Company, including the risk of losing its entire
        investment.

       

      4.    Conditions
        to the Purchaser’s Obligations at Closing.
        The
        obligations of the Purchaser to purchase Units at the Closing are subject
        to the
        fulfillment, on or before such Closing, of each of the following conditions,
        unless otherwise waived:

       

        
4.1.   Representations
        and Warranties.
        The
        representations and warranties of the Company contained in Section 2
        shall be
        true and correct in all material respects as of such Closing, except that
        any
        such representations and warranties shall be true and correct in all respects
        where such representation and warranty is qualified with respect to
        materiality.

       

        
4.2.   Performance.
        The
        Company shall have performed and complied with all covenants, agreements,
        obligations and conditions contained in this Agreement that are required
        to be
        performed or complied with by it on or before Closing.

       

        
4.3.   Compliance
        Certificate.
        The
        President of the Company shall deliver to the Escrow Agent at Closing a
        certificate certifying that the conditions specified in Sections
        4.1 and 4.2
        have
        been fulfilled.

       

        
4.4.   Qualifications.
        All
        authorizations, approvals or permits, if any, of any governmental authority
        or
        regulatory body of the United States or of any state that are required in
        connection with the lawful issuance and sale of the Units pursuant to this
        Agreement shall be obtained and effective as of Closing.

       

        
4.5.   Investor
        Rights Agreement.
        The
        Company and each
        other purchaser of Units (other than the Purchaser relying upon this condition
        to excuse such Purchaser’s performance hereunder) shall have executed and
        delivered the Investor Rights Agreement.

       

      4.6.   Series
        B Certificate of Designation.
        The
        Company shall have filed the Series B Certificate of Designation with the
        Secretary of State of Texas on or prior to the Closing, which shall continue
        to
        be in full force and effect as of the Closing.

       

      4.7.   Sale
        of All Units.
        The
        Company shall have received duly completed Stock Purchase Agreements and
        subscription proceeds from the sale of all $300,000 of Units offered pursuant
        to
        the Memorandum and the Offering.

       

      5.    Conditions
        of the Company’s Obligations at Closing.
        The
        obligations of the Company to sell Units to the Purchasers at the Closing
        are
        subject to the fulfillment, on or before the Closing, of each of the following
        conditions, unless otherwise waived:

       

        
5.1.   Representations
        and Warranties.
        The
        representations and warranties of each Purchaser contained in Section 3
        shall be
        true and correct in all material respects as of such Closing.

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

       

        
5.2.   Performance.
        The
        Purchaser shall have performed and complied with all covenants, agreements,
        obligations and conditions contained in this Agreement that are required
        to be
        performed or complied with by them on or before Closing.

       

        
5.3.   Qualifications.
        All
        authorizations, approvals or permits, if any, of any governmental authority
        or
        regulatory body of the United States or of any state that are required in
        connection with the lawful issuance and sale of the Units pursuant to this
        Agreement shall be obtained and effective as of the Closing.

       

        
5.4.   Investor
        Rights Agreement.
         Each
        Purchaser of Units shall have executed and delivered the Investor Rights
        Agreement.

       

                        5.5.   Sale
        of All Units.
        The
        Company shall have received duly completed Stock Purchase Agreements and
        subscription proceeds from the sale of all $300,000 of Units offered pursuant
        to
        the Memorandum and the Offering.

       

        6.  
         
        Miscellaneous.

       

      6.1.  Survival
        of Warranties.
        Unless
        otherwise set forth in this Agreement, the representations and warrants of
        the
        Company and the Purchaser contained in or made pursuant to this Agreement
        shall
        survive the execution and delivery of this Agreement and the Closing and
        shall
        in no way be affected by any investigation of the subject matter thereof
        made by
        or on behalf of the Purchaser or the Company.

       

      6.2.  Transfer;
        Successors and Assigns.
        The
        terms and conditions of this Agreement shall inure to the benefit of and
        be
        binding upon the respective successors and assigns of the parties. Nothing
        in
        this Agreement, express or implied, is intended to confer upon any party
        other
        than the parties hereto or their respective successors and assigns any rights,
        remedies, obligations, or liabilities under or by reason of this Agreement,
        except as expressly provided in this Agreement.

       

      6.3.  Governing
        Law.
        This
        Agreement shall be governed by and construed in accordance with the Business
        Corporation Act of the State of Texas as to matters within the scope thereof,
        and as to all other matters shall be governed by and construed in accordance
        with the internal laws of the State of Texas, without regard to its principles
        of conflicts of laws.

       

      6.4.  Counterparts.
        This
        Agreement may be executed in two or more counterparts, each of which shall
        be
        deemed an original, but all of which together shall constitute one and the
        same
        instrument. This Agreement may also be executed and delivered by facsimile
        signature and in two or more counterparts, each of which shall be deemed
        an
        original, but all of which together shall constitute one and the same
        instrument.

       

      6.5.  Titles
        and Subtitles.
        The
        titles and subtitles used in this Agreement are used for convenience only
        and
        are not to be considered in construing or interpreting this
        Agreement.

       

      6.6.  Notices.
        All
        notices and other communications given or made pursuant to this Agreement
        shall
        be in writing and shall be deemed effectively given: (a) upon personal delivery
        to the party to be notified, (b) when sent by confirmed electronic mail or
        facsimile if sent during normal business hours of the recipient, and if not
        so
        confirmed, then on the next business day, (c) five (5) days after having
        been
        sent by registered or certified mail, return receipt requested, postage prepaid,
        or (d) one (1) day after deposit with a nationally recognized overnight courier,
        specifying next day delivery, with written verification of receipt. All
        communications shall be sent to the respective parties at their address as
        set
        forth on the signature page, or to such e-mail address, facsimile number
        or
        address as subsequently modified by written notice given in accordance with
        this
Section
        6.6.
        

       

      6.7.  No
        Finder’s Fees.
        Each
        party represents that it neither is nor will be obligated for any finder’s fee
        or commission in connection with this transaction. The Purchaser agrees to
        indemnify and to hold harmless the Company from any liability for any commission
        or compensation in the nature of a finder’s fee arising out of this transaction
        (and the costs and expenses of defending against such liability or asserted
        liability) for which the Purchaser or any of its officers, employees, or
        representatives is responsible. The Company agrees to indemnify and hold
        harmless the Purchaser from any liability for any commission or compensation
        in the nature of a finder’s or broker’s fee arising out of this transaction
        (and the costs and expenses of defending against such liability or asserted
        liability) for which the Company or any of its officers, employees or
        representatives is responsible.

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

       

      6.8.  Attorney’s
        Fees.
        If any
        action at law or in equity (including arbitration) is necessary to enforce
        or
        interpret the terms of any of the Transaction Agreements, the prevailing
        party
        shall be entitled to reasonable attorney’s fees, costs and necessary
        disbursements in addition to any other relief to which such party may be
        entitled.

       

      6.9.  Amendments
        and Waivers.
        Any
        term of this Agreement may be amended, terminated or waived only with the
        written consent of the Company and the Purchaser.

       

      6.10.  Severability.
        The
        invalidity of unenforceability of any provision hereof shall in no way affect
        the validity or enforceability of any other provision.

       

      6.11.  Delays
        or Omissions.
        No
        delay or omission to exercise any right, power or remedy accruing to any
        party
        under this Agreement, upon any breach or default of any other party under
        this
        Agreement, shall impair any such right, power or remedy of such non-breaching
        or
        non-defaulting party nor shall it be construed to be a waiver of any such
        breach
        or default, or an acquiescence therein, or of or in any similar breach or
        default thereafter occurring; nor shall any waiver of any single breach or
        default be deemed a waiver of any other breach or default theretofore or
        thereafter occurring. Any waiver, permit, consent or approval of any kind
        or
        character on the part of any party of any breach or default under this
        Agreement, or any waiver on the part of any party of any provisions or
        conditions of this Agreement, must be in writing and shall be effective only
        to
        the extent specifically set forth in such writing. All remedies, either under
        this Agreement or by law or otherwise afforded to any party, shall be cumulative
        and not alternative.

       

      6.12.  Entire
        Agreement.
        This
        Agreement (including the Exhibits hereto, if any), the Series B Certificate
        of
        Designation and the other Transaction Agreements (as defined in this Agreement)
        constitute the full and entire understanding and agreement between the parties
        with respect to the subject matter hereof, and any other written or oral
        agreement relating to the subject matter hereof existing between the parties
        are
        expressly canceled. .

       

      6.13 Dispute
        Resolution.
        Any
        unresolved controversy or claim arising out of or relating to this Agreement,
        except as (i) otherwise provided in this Agreement, or (ii) any such
        controversies or claims arising out of either party’s intellectual property
        rights for which a provisional remedy or equitable relief is sought, shall
        be
        submitted to arbitration by one arbitrator mutually agreed upon by the parties,
        and if no agreement can be reached within 30 days after names of potential
        arbitrators have been proposed by the American Arbitration Association (the
        “AAA”),
        then
        by one arbitrator having reasonable experience in corporate finance transactions
        of the type provided for in this Agreement and who is chosen by the AAA.
        The
        arbitration shall take place in Houston, Texas, in accordance with the AAA
        rules
        then in effect, and judgment upon any award rendered in such arbitration
        will be
        binding and may be entered in any court having jurisdiction thereof. There
        shall
        be limited discovery prior to the arbitration hearing as follows: (a) exchange
        of witness lists and copies of documentary evidence and documents relating
        to or
        arising out of the issues to be arbitrated, (b) depositions of all party
        witnesses and (c) such other depositions as may be allowed by the arbitrators
        upon a showing of good cause. Depositions shall be conducted in accordance
        with
        the Texas Code of Civil Procedure, the arbitrator shall be required to provide
        in writing to the parties the basis for the award or order of such arbitrator,
        and a court reporter shall record all hearings, with such record constituting
        the official transcript of such proceedings. The prevailing party shall be
        entitled to reasonable attorney’s fees, costs, and necessary disbursements in
        addition to any other relief to which such party may be entitled. Each of
        the
        parties to this Agreement consents to personal jurisdiction for any equitable
        action sought in the U.S. District Court for the Southern District of Texas
        or
        any court of the State of Texas having subject matter jurisdiction.

       

      [Remainder
        of Page Intentionally Left Blank]

      

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

       

      If
        the
        foregoing correctly sets forth the agreement between the Company and the
        Purchaser, please indicate your acceptance in the space provided for that
        purpose below. 

       

      

        
          	
                  Purchaser
                    Name:

                	 	
                  _________________________

                
	 	 	 
	
                  Purchaser
                    Address:

                	 	
                  _________________________

                
	 	 	 
	 	 	
                  _________________________

                
	 	 	 
	
                  Telephone
                    No.:

                	 	
                  _________________________

                
	 	 	 
	
                  Facsimile
                    No.:

                	 	
                  _________________________

                
	 	 	 
	
                  Tax
                    ID No.:

                	 	
                  _________________________

                
	 	 	 
	
                  Units
                    Subscribed:

                	 	
                  _________________________

                
	 	 	 
	
                  Purchase
                    Price

                	 	 
	
                  (Units
                    x $1,000):

                	 	
                  $________________________

                
	 	 	 
	 	 	 
	 	 	
                  PURCHASER:

                
	Date:
                  ___________,
                  200__	 	 
	 	 	
                  By:_____________________________

                  Name:

                  Title:

                

        

      

      

      Accepted
        and agreed, this ___ day

      of
        _____________, 200__, by: 

      

      The
        Jon
        Ashton Corporation

      

      By:                                                    
        

      Name:

      Title:

      

      Address:  5150
        Franz Rd., Suite 100

      Katy,
        Texas 77493

       

      
        
          
          

        

        
          10SETTLEMENT
      AGREEMENT AND RELEASE

    

    This
      Settlement Agreement and Release (the “Agreement”), dated as of April 27, 2007,
      is made by and between Cityplatz Limited (“Cityplatz”) and Power3 Medical
      Products, Inc., a New York corporation (“Power3”).

    

    WHEREAS,
      Power3
      issued to Cityplatz convertible debentures in the amount of $50,000 on October
      28, 2004 (the “October Debentures”) and $50,000 of convertible debentures on
      January 26, 2005 (the “January Debentures”) (the October Debentures and January
      Debentures, as well as all related documentation thereto, shall collectively
      be
      referred to as the “Transaction Documents”);

    

    WHEREAS,
      Power3
      desires to issue, and Cityplatz desires to accept, five hundred twenty six
      thousand three hundred and fifteen (526,315) shares of Power3’s common stock in
      full satisfaction of all principal and interest due under the October Debentures
      and January Debentures;

    

    WHEREAS,
      Power3
      desires to issue, and Cityplatz desires to accept, one hundred eighty seven
      thousand three hundred and ninety three (187,393) shares of common stock in
      full
      satisfaction of all damages, including liquidated damages, and all obligations
      arising pursuant to the Transaction Documents;

    

    WHEREAS,
      Power3
      agrees to reduce the exercise price on all warrants issued under the Transaction
      Documents (the “Warrants”) to $0.19, and Cityplatz accepts such price reduction,
      on condition that all provisions relating to cashless exercise of the Warrants
      be voided under the Transaction Documents. 

    

    NOW,
      THEREFORE,
      in
      consideration of the mutual conditions and covenants contained in this
      Agreement, and for other good and valuable consideration, the sufficiency and
      receipt of which is hereby acknowledged, it is hereby stipulated, consented
      to
      and agreed by and among Power3 and Cityplatz as follows:

    

    1. Power3
      shall issue an aggregate of seven hundred thirteen thousand seven hundred and
      eight (713,708) shares of common stock (the “Shares”) to Cityplatz in full
      satisfaction of the October Debenture and January Debenture and all obligations
      arising pursuant to the Transaction Documents. Upon issuance of the Shares,
      Cityplatz shall return, via overnight delivery, the original October Debenture
      and January Debenture to Power3. 

    

    2. In
      consideration of the foregoing, Cityplatz releases and discharges Power3,
      Power3’s officers, directors, principals, control persons, past and present
      employees, insurers, successors, and assigns (“Power3 Parties”) from all
      actions, cause of action, suits, debts, dues, sums of money, accounts,
      reckonings, bonds, bills, specialties, covenants, contracts, controversies,
      agreements, promises, variances, trespasses, damages, judgments, extents,
      executions, claims, and demands whatsoever, in law, admiralty or equity, which
      against Power3 Parties ever had, now have or hereafter can, shall or may, have
      for, upon, or by reason of any matter, cause or thing whatsoever, whether or
      not
      known or unknown, from the beginning of the world to the day of the date of
      this
      Release arising under the Transaction Documents.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    3. In
      consideration of the foregoing, Power3 releases and discharges Cityplatz,
      Cityplatz’s officers, directors, principals, control persons, past and present
      employees, insurers, successors, and assigns (“Cityplatz Parties”) from all
      actions, cause of action, suits, debts, dues, sums of money, accounts,
      reckonings, bonds, bills, specialties, covenants, contracts, controversies,
      agreements, promises, variances, trespasses, damages, judgments, extents,
      executions, claims, and demands whatsoever, in law, admiralty or equity, which
      against Cityplatz Parties ever had, now have or hereafter can, shall or may,
      have for, upon, or by reason of any matter, cause or thing whatsoever, whether
      or not known or unknown, from the beginning of the world to the day of the
      date
      of this Release arising under the Transaction Documents.

    

    4. Power3
      and Cityplatz each understand and agree that this Agreement (including all
      of
      its terms) is forever deemed confidential between them. Except as required
      under
      the statutes, rules or regulations of any federal or state government,
      government agency or court of competent jurisdiction, each of Power3 and
      Cityplatz, and their respective counsel, shall not disclose or divulge any
      of
      the matters underlying this Agreement, or any of the terms or substance of
      this
      Agreement to others. 

    

    5. All
      parties acknowledge and represent that: (a) they have read the Agreement; (b)
      they clearly understand the Agreement and each of its terms; (c) they fully
      and
      unconditionally consent to the terms of this Agreement; (d) they have had the
      benefit and advice of counsel of their own selection; (e) they have executed
      this Agreement, freely, with knowledge, and without influence or duress; (f)
      they have not relied upon any other representations, either written or oral,
      express or implied, made to them by any person; and (g) the consideration
      received by them has been actual and adequate.

    

    6. This
      Agreement contains the entire agreement and understanding concerning the subject
      matter hereof between the parties and supersedes and replaces all prior
      negotiations, proposed agreement and agreements, written or oral. Each of the
      parties hereto acknowledges that neither any of the parties hereto, nor agents
      or counsel of any other party whomsoever, has made any promise, representation
      or warranty whatsoever, express or implied, not contained herein concerning
      the
      subject hereto, to induce it to execute this Agreement and acknowledges ands
      warrants that it is not executing this Agreement in reliance on any promise,
      representation or warranty not contained herein.

    

    7. This
      Agreement may not be modified or amended in any manner except by an instrument
      in writing specifically stating that it is a supplement, modification or
      amendment to the Agreement and signed by each of the parties
      hereto.

    

    8. Should
      any provision of this Agreement be declared or be determined by any court or
      tribunal to be illegal or invalid, the validity of the remaining parts, terms
      or
      provisions shall not be affected thereby and said illegal or invalid part,
      term
      or provision shall be severed and deemed not to be part of this
      Agreement.

    

    9. This
      Agreement shall be governed by and construed in accordance with the laws of
      the
      State of New York, without regard to principles of conflicts of laws. Any action
      brought by either party against the other concerning the transactions
      contemplated by this Agreement shall be brought only in the state courts of
      New
      York or in the federal courts located in the state of New York. Both parties
      and
      the individuals executing this Agreement and other agreements on behalf of
      the
      Company agree to submit to the jurisdiction of such courts and waive trial
      by
      jury. The prevailing party shall be entitled to recover from the other party
      its
      reasonable attorney’s fees and costs. 

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    10. This
      Agreement may be executed in counterparts, each of which, when all parties
      have
      executed at least one such counterpart, shall be deemed an original, with the
      same force and effect as if all signatures were appended to one instrument,
      but
      all of which together shall constitute one and the same Agreement.

    

    IN
      WITNESS WHEREOF,
      the
      parties have duly executed this Agreement as of the date first indicated
      above.

    

    

    
      	
              CITYPLATZ
                LIMITED

               

              By:
                /s/
                Gordon
                Mundy                             
                

              Name:
                Gordon Mundy

              Title:  
                Director

            	
              P.O.
                Box 175

              12-14
                Finch Road

              Douglas

              Isle
                of Man, IM99 1TT

              British
                Isles

              Tel:
                (01624) 646700

              Fax:
                (01624) 620588

              Email:
                gmundy@tridenttrust.com

            
	 	 
	
              POWER3
                MEDICAL PRODUCTS, INC.

               

              By:
                /s/
                Steven B.
                Rash                              
                

              Name:
                Steven B. Rash

              Title:  
                Chief Executive Officer

            	
              3400
                Research Forest Drive, Suite B2-3

              Woodlands,
                Texas 77381

              Tel:
                (281) 466-1600

              Fax:
                (281) 466-1481

              Email:
                srash@power3medical.com

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