Document:

Securities Purchase Agreement

 Exhibit 10(a) 
  
 SECURITIES PURCHASE AGREEMENT 
  

SECURITIES PURCHASE AGREEMENT (the “Agreement”), dated as of February 15, 2006, by and among Universal Food &
Beverage Company, a Nevada corporation, with headquarters located at 3830 Commerce Drive, St. Charles, Illinois 60174 (the ”Company”), and the investors listed on the Schedule of Buyers attached hereto (individually, a
“Buyer” and collectively, the “Buyers”). 
  
 WHEREAS: 
  
 A. The Company
and each Buyer is executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by Section 4(2) of the Securities Act of 1933, as amended (the “1933 Act”), and Rule 506 of
Regulation D (“Regulation D”) as promulgated by the United States Securities and Exchange Commission (the “SEC”) under the 1933 Act. 
  
 B. The Company has authorized a new series of convertible preferred shares of the Company designated as Series A Convertible
Preferred Stock, the terms of which are set forth in the certificate of designations for such series of preferred shares (the “Certificate of Designations”) in the form attached hereto as Exhibit A (together with any
convertible preferred shares issued in replacement thereof in accordance with the terms thereof, the “Preferred Shares”), which Preferred Shares shall be convertible into the Company’s common stock, $0.01 par value per share
(the “Common Stock”), in accordance with the terms of the Certificate of Designations. 
  
 C. Each Buyer wishes to purchase, and the Company wishes to sell, upon the terms and conditions stated in this Agreement, (i) that aggregate number
of Preferred Shares set forth opposite such Buyer’s name in column (3) on the Schedule of Buyers (which aggregate number for all Buyers shall be 20,704 (as converted, collectively, the “Conversion Shares”) and
(ii) Warrants in substantially the form attached hereto as Exhibit B (the “Warrants”), to acquire that number of shares of Common Stock (as exercised, collectively, the “Warrant Shares”) set forth
opposite such Buyer’s name in column (4) on the Schedule of Buyers. 
  
 D. The Preferred Shares may be entitled to dividends, which at the option of the Company, subject to certain conditions, may be paid in shares of Common Stock (the “Dividend Shares”). 
  
 E. Contemporaneously with the execution and delivery of this Agreement, the
parties hereto are executing and delivering a Registration Rights Agreement, substantially in the form attached hereto as Exhibit C (the “Registration Rights Agreement”), pursuant to which the Company has agreed to provide
certain registration rights with respect to the Registrable Securities (as defined in the Registration Rights Agreement) under the 1933 Act and the rules and regulations promulgated thereunder, and applicable state securities laws. 

 F. The Preferred Shares, the Conversion Shares, the Dividend Shares, the Warrants and the Warrant Shares
are collectively are referred to herein as the “Securities”. 
  
 G. The Company will consummate, contemporaneously with the Closing, the transactions contemplated by the Savannah Purchase Agreement (as defined below). 
  
 NOW, THEREFORE, the Company and each Buyer hereby agree as follows: 
  
 1. PURCHASE AND SALE OF PREFERRED SHARES AND WARRANTS. 
  
 (a) Preferred Shares and Warrants. Subject to the satisfaction (or
waiver) of the conditions set forth in Sections 6 and 7 below, the Company shall issue and sell to each Buyer, and each Buyer severally, but not jointly, agrees to purchase from the Company on the Closing Date (as defined below), the number of
Preferred Shares as is set forth opposite such Buyer’s name in column (3) on the Schedule of Buyers, along with Warrants to acquire that number of Warrant Shares as is set forth opposite such Buyer’s name in column (4) on the
Schedule of Buyers. 
  
 (b) Closing. The closing (the
“Closing”) of the purchase of the Preferred Shares and the Warrants by the Buyers shall occur at the offices of Schulte Roth & Zabel LLP, 919 Third Avenue, New York, New York 10022. The date and time of the Closing (the
“Closing Date”) shall be 10:00 a.m., New York City Time, on the date hereof, subject to notification of satisfaction (or waiver) of the conditions to the Closing set forth in Sections 6 and 7 below (or such later date as is mutually
agreed to by the Company and each Buyer). 
  
 (c) Purchase
Price. The aggregate purchase price for the Preferred Shares and the Warrants to be purchased by each Buyer (the “Purchase Price”) shall be the amount set forth opposite such Buyer’s name in column (5) on
the Schedule of Buyers. Each Buyer shall pay $1,000 for each Preferred Share and related Warrants to be purchased by such Buyer at the Closing. 
  
 (d) Form of Payment. On the Closing Date, (A) each Buyer shall pay its portion of the Purchase Price to the Company for the Preferred Shares
and the Warrants to be issued and sold to such Buyer at the Closing, (i) by wire transfer of immediately available funds in accordance with the Company’s written wire instructions or (ii) by exchange of the Exchangeable Notes (as
defined below) pursuant to the terms thereof, and (B) the Company shall deliver to each Buyer the number of Preferred Shares as is set forth opposite such Buyer’s name in column (3) on the Schedule of Buyers, along with the Warrants
exercisable for the number of shares of Common Stock as is set forth opposite such Buyer’s name in column (4) on the Schedule of Buyers, each duly executed on behalf of the Company and registered in the name of such Buyer or its designee.

  
 2. BUYER’S REPRESENTATIONS AND WARRANTIES.

  
 Each Buyer represents and warrants with respect to only
itself that: 
  
 (a) Organization; Authority. Such Buyer
is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with the 
  

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 requisite power and authority to enter into and to consummate the transactions contemplated by the Transaction Documents
(as defined below) to which it is a party and otherwise to carry out its obligations hereunder and thereunder. 
  
 (b) No Public Sale or Distribution. Such Buyer (i) is acquiring the Preferred Shares and the Warrants (ii) upon conversion of the
Preferred Shares will acquire the Conversion Shares and (ii) upon exercise of the Warrants will acquire the Warrant Shares, in each case, for its own account and not with a view towards, or for resale in connection with, the public sale or
distribution thereof, except pursuant to sales registered or exempted under the 1933 Act; provided, however, that by making the representations herein, such 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. Such Buyer is acquiring the Securities hereunder in the ordinary course of its business.
Such Buyer does not presently have any agreement or understanding, directly or indirectly, with any Person to distribute any of the Securities. 
  
 (c) Accredited Investor Status. Such Buyer is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D.

  
 (d) Reliance on Exemptions. Such Buyer understands that
the Securities are being offered and sold to it in reliance on specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying in part upon the truth and accuracy of, and such
Buyer’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of such Buyer set forth herein in order to determine the availability of such exemptions and the eligibility of such Buyer to acquire the
Securities. 
  
 (e) Information. Such Buyer and its
advisors, if any, have been 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 such Buyer. Such Buyer and its
advisors, if any, have been afforded the opportunity to ask questions of the Company. Neither such inquiries nor any other due diligence investigations conducted by such Buyer or its advisors, if any, or its representatives shall modify, amend or
affect such Buyer’s right to rely on the Company’s representations and warranties contained herein. Such Buyer understands that its investment in the Securities involves a high degree of risk. Such Buyer has sought such accounting, legal
and tax advice as it has considered necessary to make an informed investment decision with respect to its acquisition of the Securities. 
  
 (f) No Governmental Review. Such Buyer understands that no United States federal or state agency or any other government or governmental agency has
passed on or made any recommendation or endorsement of the Securities or the fairness or suitability of the investment in the Securities nor have such authorities passed upon or endorsed the merits of the offering of the Securities. 
  
 (g) Transfer or Resale. Such Buyer understands that except as provided
in the Registration Rights Agreement: (i) the Securities have not been and are not being registered under the 1933 Act or any state securities laws, and may not be offered for sale, sold, assigned or 
  

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 transferred unless (A) subsequently registered thereunder, (B) such Buyer shall have delivered to the Company
an opinion of counsel, by counsel reasonably acceptable to the Company and in form and substance reasonably satisfactory to the Company, to the effect that such Securities to be sold, assigned or transferred may be sold, assigned or transferred
pursuant to an exemption from such registration, or (C) such Buyer provides the Company with reasonable assurance that such Securities can be sold, assigned or transferred pursuant to Rule 144 or Rule 144A promulgated under the 1933 Act, as
amended, (or a successor rule thereto) (collectively, “Rule 144”); (ii) any sale of the Securities made in reliance on Rule 144 may be made only in accordance with the terms of Rule 144 and further, if Rule 144 is not
applicable, any resale of the Securities under circumstances in which the seller (or the Person (as defined in Section 3(s)) 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 the Securities under the 1933 Act or any state
securities laws or to comply with the terms and conditions of any exemption thereunder. The Securities may be pledged pursuant to an available exemption from registration under the 1933 Act in connection with a bona fide margin account or other loan
or financing arrangement secured by the Securities and such pledge of Securities shall not be deemed to be a transfer, sale or assignment of the Securities hereunder, and no Buyer effecting a pledge of Securities shall be required to provide the
Company with any notice thereof or otherwise make any delivery to the Company pursuant to this Agreement or any other Transaction Document (as defined in Section 3(b)), including, without limitation, this Section 2(g). 
  
 (h) Legends. Such Buyer understands that the certificates or other
instruments representing the Preferred Shares and the Warrants and, until such time as the resale of the Conversion Shares and the Warrant Shares have been registered under the 1933 Act as contemplated by the Registration Rights Agreement, the stock
certificates representing the Conversion Shares and the Warrant Shares, except as set forth below, shall bear any legend as required by the “blue sky” laws of any state and a restrictive legend in substantially the following form (and a
stop-transfer order may be placed against transfer of such stock certificates): 
  
 [NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE [CONVERTIBLE] [EXERCISABLE] HAVE BEEN][THE SECURITIES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN] REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS, OR (B) AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT AND APPLICABLE STATE
SECURITIES LAWS OR (II) UNLESS SOLD PURSUANT TO RULE 144(K) UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED PURSUANT TO AN AVAILABLE EXEMPTION FROM 
  

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 REGISTRATION UNDER THE 1933 ACT IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING
ARRANGEMENT SECURED BY THE SECURITIES. 
  
 The legend set forth above shall be
removed and the Company shall issue a certificate without such legend to the holder of the Securities upon which it is stamped, if, unless otherwise required by state securities laws, (i) such Securities are registered for resale under the 1933
Act, (ii) in connection with a sale, assignment or other transfer, such holder provides the Company with an opinion of counsel, by counsel reasonably acceptable to the Company and in form and substance reasonably satisfactory to the Company, to
the effect that such sale, assignment or transfer of the Securities may be made without registration under the applicable requirements of the 1933 Act, or (iii) such holder provides the Company with reasonable assurance that the Securities can
be sold, assigned or transferred pursuant to Rule 144(k). 
  
 (i)
Validity; Enforcement. This Agreement and the Registration Rights Agreement to which such Buyer is a party have been duly and validly authorized, executed and delivered on behalf of such Buyer and shall constitute the legal, valid and binding
obligations of such Buyer enforceable against such Buyer in accordance with their respective terms, except as such enforceability may be limited by general principles of equity or to applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation and other similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies. 
  
 (j) No Conflicts. The execution, delivery and performance by such Buyer of this Agreement and the Registration Rights Agreement to which such Buyer
is a party and the consummation by such Buyer of the transactions contemplated hereby and thereby will not (i) result in a violation of the organizational documents of such Buyer or (ii) conflict with, or constitute a default (or an event
which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which such Buyer is a party, or
(iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws) applicable to such Buyer, except in the case of clauses (ii) and (iii) above, for such conflicts,
defaults, rights or violations which would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of such Buyer to perform its obligations hereunder. 
  
 (k) Residency. Such Buyer is a resident of that jurisdiction specified
below its address on the Schedule of Buyers. 
  
 3.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY. 
  
 The Company
represents and warrants to each of the Buyers that: 
  
 (a)
Organization and Qualification. The Company and its “Subsidiaries” (which for purposes of this Agreement means any entity in which the Company, directly or indirectly, owns capital stock or holds an equity or similar
interest) are entities duly organized and validly existing in good standing under the laws of the jurisdiction in which they are formed, and have the requisite power and authorization to own their properties and to carry on their 
  

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 business as now being conducted. Each of the Company and its Subsidiaries is duly qualified as a foreign entity to do
business and is in good standing in every jurisdiction in which its ownership of property or the nature of the business conducted by it makes such qualification necessary, except to the extent that the failure to be so qualified or be in good
standing would not have a Material Adverse Effect. As used in this Agreement, “Material Adverse Effect” means any material adverse effect on the business, properties, assets, operations, results of operations, condition (financial
or otherwise) or prospects of the Company and its Subsidiaries, taken as a whole, or on the transactions contemplated hereby and by the other Transaction Documents or by the agreements and instruments to be entered into in connection herewith or
therewith, or on the authority or ability of the Company to perform its obligations under the Transaction Documents. The Company has no Subsidiaries, except as set forth on Schedule 3(a). 
  
 (b) Authorization; Enforcement; Validity. The Company has the
requisite corporate power and authority to enter into and perform its obligations under this Agreement, the Certificate of Designations, the Warrants, the Registration Rights Agreement, the Irrevocable Transfer Agent Instructions (as defined in
Section 5(b)), and each of the other agreements entered into by the parties hereto in connection with the transactions contemplated by this Agreement (collectively, the “Transaction Documents”) and to issue the Securities in
accordance with the terms hereof and thereof. The execution and delivery of the Transaction Documents by the Company and the consummation by the Company of the transactions contemplated hereby and thereby, including, without limitation, the issuance
of the Preferred Shares, the reservation for issuance and the issuance of the Conversion Shares issuable upon conversion of the Preferred Shares, the reservation for issuance and the issuance of the Dividend Shares issuable with respect to the
Preferred Shares, the issuance of the Warrants and the reservation for issuance and issuance of the Warrant Shares issuable upon exercise of the Warrants, have been duly authorized by the Company’s Board of Directors and (other than the filing
with the SEC of one or more Registration Statements in accordance with the requirements of the Registration Rights Agreement and any other filings as may be required by any state securities agencies) no further filing, consent, or authorization is
required by the Company, its Board of Directors or its stockholders. This Agreement and the other Transaction Documents of even date herewith have been duly executed and delivered by the Company, and constitute the legal, valid and binding
obligations of the Company, enforceable against the Company in accordance with their respective terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies and except as rights to indemnification and to contribution may be limited by federal or state securities law. The
Certificate of Designations in the form attached hereto as Exhibit A has been filed with the Secretary of State of the State of Nevada and is in full force and effect, enforceable against the Company in accordance with its terms and has not
been amended. 
  
 (c) Issuance of Securities. The issuance
of the Preferred Shares and the Warrants are duly authorized and upon issuance in accordance with the terms of the Transaction Documents shall be free from all taxes, liens and charges with respect to the issue thereof, and the Preferred Shares
shall be entitled to the rights and preferences set forth in the Certificate of Designations. As of the Closing, the Company shall have reserved from its duly authorized capital stock not less than all of its available authorized shares of Common
Stock not otherwise 
  

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 reserved for issuance, and shall, on the Business Day immediately following the earlier of the Stockholder Approval and
the Stockholder Approval Deadline, authorize and reserve for issuance such additional shares of Common Stock such that there shall be reserved from the Company’s capital stock not less than the sum of (i) 125% of the maximum number of
shares of Common Stock issuable upon conversion of the Preferred Shares (assuming for purposes hereof, that the Preferred Shares are convertible at the Conversion Price and without taking into account any limitations on the conversion of the
Preferred Shares set forth in the Certificate of Designations), (ii) 125% of the maximum number of shares of Common Stock issuable upon exercise of the Warrants (without taking into account any limitations on the exercise of the Warrants set
forth in the Warrants) and (iii) 100% of the maximum number of shares of Common Stock issuable as Dividend Shares with respect to the Preferred Shares as of the Trading Day immediately prior to the applicable date of determination. Upon
issuance or conversion in accordance with the Certificate of Designations or exercise in accordance with the Warrants, as the case may be, the Conversion Shares, the Dividend Shares and the Warrant Shares, respectively, will be validly issued, fully
paid and nonassessable and free from all preemptive or similar rights, taxes, liens and charges with respect to the issue thereof, with the holders being entitled to all rights accorded to a holder of Common Stock. Subject to the representations and
warranties of the Buyers in this Agreement, the offer and issuance by the Company of the Securities is exempt from registration under the 1933 Act. 
  
 (d) No Conflicts. The execution, delivery and performance of the Transaction Documents by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby (including, without limitation, the issuance of the Preferred Shares, the Warrants, and reservation for issuance of the Conversion Shares, the Warrant Shares and the Dividend Shares) will not
(i) result in a violation of the Certificate of Incorporation (as defined in Section 3(r)) of the Company or any of its Subsidiaries or the Certificate of Designations of the Company, or the Bylaws (as defined in Section 3(r)) or
(ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or 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 (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws and regulations and the rules and
regulations of the OTC Bulletin Board (the “Principal Market”) 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, in the case
of clause (ii) or (iii) above, to the extent such conflict, default, termination right or violation would not reasonably be expected to have a Material Adverse Effect. 
  
 (e) Consents. Except as set forth in Schedule 3(e), the Company is not required to obtain any consent, authorization
or order of, or make any filing or registration with, any court, governmental agency or any regulatory or self-regulatory agency or any other Person in order for it to execute, deliver or perform any of its obligations under or contemplated by the
Transaction Documents, in each case in accordance with the terms hereof or thereof. 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 Closing Date, and the Company and its Subsidiaries are unaware of any facts or circumstances which might prevent the Company from obtaining or effecting any of the registration, application 
  

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 or filings pursuant to the preceding sentence. The Company is not in violation of the requirements of the Principal
Market and has no knowledge of any facts which would reasonably lead to delisting or suspension of the Common Stock in the foreseeable future. 
  
 (f) Acknowledgment Regarding Buyer’s Purchase of Securities. The Company acknowledges and agrees that each Buyer is acting solely in the
capacity of arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated hereby and thereby and that no Buyer is (i) an officer or director of the Company, (ii) an “affiliate” of the
Company (as defined in Rule 144) or (iii) to the knowledge of the Company, a “beneficial owner” of more than 10% of the shares of Common Stock (as defined for purposes of Rule 13d-3 of the Securities Exchange Act of 1934, as amended
(the “1934 Act”)). 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 the Transaction Documents and the transactions contemplated
hereby and thereby, and any advice given by a Buyer or any of its representatives or agents in connection with the Transaction Documents and the transactions contemplated hereby and thereby is merely incidental to such Buyer’s purchase of the
Securities. The Company further represents to each Buyer that the Company’s decision to enter into the Transaction Documents has been based solely on the independent evaluation by the Company and its representatives. 
  
 (g) No General Solicitation; Placement Agent’s Fees. Neither the
Company, nor any of its affiliates, nor any Person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with the offer or sale of the Securities. The
Company shall be responsible for the payment of any placement agent’s fees, financial advisory fees, or brokers’ commissions (other than for persons engaged by any Buyer or its investment advisor) relating to or arising out of the
transactions contemplated hereby. The Company shall pay, and hold each Buyer harmless against, any liability, loss or expense (including, without limitation, attorney’s fees and out-of-pocket expenses) arising in connection with any such claim.
The Company acknowledges that it has engaged Illington Capital Inc. as placement agent (the “Agent”) in connection with the sale of the Securities. Other than the Agent, the Company has not engaged any placement agent or other agent
in connection with the sale of the Securities. 
  
 (h) No
Integrated Offering. None of the Company, its Subsidiaries, any of their affiliates, and any Person acting on their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under
circumstances that would require registration of any of the Securities under the 1933 Act or cause this offering of the Securities to be integrated with prior offerings by the Company for purposes of the 1933 Act or any applicable stockholder
approval provisions, including, without limitation, under the rules and regulations of any exchange or automated quotation system on which any of the securities of the Company are listed or designated. None of the Company, its Subsidiaries, their
affiliates and any Person acting on their behalf will take any action or steps referred to in the preceding sentence that would require registration of any of the Securities under the 1933 Act or cause the offering of the Securities to be integrated
with other offerings. 
  
 (i) Dilutive Effect. The Company
understands and acknowledges that the number of Conversion Shares issuable upon conversion of the Preferred Shares, the number of 
  

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 Dividend Shares issuable with respect to the Preferred Shares and the Warrant Shares issuable upon exercise of the
Warrants, will increase in certain circumstances. The Company further acknowledges that its obligation to issue Conversion Shares upon conversion of the Preferred Shares in accordance with this Agreement and the Certificate of Designations and its
obligation to issue the Warrant Shares upon exercise of the Warrants in accordance with this Agreement and the Warrants is, in each case, absolute and unconditional regardless of the dilutive effect that such issuance may have on the ownership
interests of other stockholders of the Company. 
  
 (j)
Application of Takeover Protections; Rights Agreement. The Company and its Board of Directors have taken all necessary action, if any, in order to render inapplicable any poison pill (including any distribution under a rights agreement) or
other similar anti-takeover provision which is or could become applicable to any Buyer as a result of the transactions contemplated by this Agreement, including, without limitation, the Company’s issuance of the Securities and any Buyer’s
ownership of the Securities. The Company has not adopted a stockholder rights plan or similar arrangement relating to accumulations of beneficial ownership of Common Stock or a change in control of the Company. 
  
 (k) SEC Documents; Financial Statements. During the two (2) years
prior to the date hereof, the Company has 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 1934 Act (all of the foregoing filed prior to the
date hereof and all exhibits included therein and financial statements, notes and schedules thereto and documents incorporated by reference therein being hereinafter referred to as the “SEC Documents”). The Company has delivered to
the Buyers or their respective representatives true, correct and complete copies of each of the SEC Documents not available on the EDGAR system that have been requested by each Buyer. 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 the light of the circumstances under which they were made, not misleading. 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 as in effect as
of the time of filing. Such financial statements have been prepared in accordance with generally accepted accounting principles, consistently applied, during the periods involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto, or (ii) in the case of unaudited interim statements, to the extent they may exclude footnotes or may be condensed or summary statements) and fairly present in all material respects the financial position of the
Company as of the dates thereof and the results of its operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments). 
  
 (l) Absence of Certain Changes. Except as disclosed in
Section 3(l), since the date of the Company’s most recent financial statements contained in a Form 10-QSB, there has been no material adverse change and no material adverse development in the business, assets, properties, operations,
condition (financial or otherwise), results of operations or prospects of the Company. Except as disclosed in Schedule 3(l), since the date of the Company’s most recent 
  

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 financials statements contained in a Form 10-QSB, the Company has not (i) declared or paid any dividends,
(ii) sold any assets, individually or in the aggregate, in excess of $50,000 outside of the ordinary course of business or (iii) had capital expenditures, individually or in the aggregate, in excess of $50,000. The Company has not taken
any steps to seek protection pursuant to any bankruptcy law nor does the Company have any knowledge or reason to believe that its creditors intend to initiate involuntary bankruptcy proceedings or any actual knowledge of any fact which would
reasonably lead a creditor to do so. The Company is not as of the date hereof, and after giving effect to the transactions contemplated hereby to occur at the Closing, will not be Insolvent (as defined below). For purposes of this Section 3(l),
“Insolvent” means (i) the present fair saleable value of the Company’s assets is less than the amount required to pay the Company’s total Indebtedness (as defined in Section 3(s)), (ii) the Company is unable
to pay its debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured, (iii) the Company intends to incur or believes that it will incur debts that would be beyond its ability to pay
as such debts mature or (iv) the Company has unreasonably small capital with which to conduct the business in which it is engaged as such business is now conducted and is proposed to be conducted. 
  
 (m) No Undisclosed Events, Liabilities, Developments or Circumstances.
No event, liability, development or circumstance has occurred or exists, or is contemplated to occur with respect to the Company, its Subsidiaries or their respective business, properties, prospects, operations or financial condition, that would be
required to be disclosed by the Company under applicable securities laws on a registration statement on Form S-1 filed with the SEC relating to an issuance and sale by the Company of its Common Stock and which has not been publicly announced.

  
 (n) Conduct of Business; Regulatory Permits. Neither
the Company nor its Subsidiaries is in violation of any term of or in default under its Certificate of Incorporation, the Certificate of Designations, any other certificate of designation, preferences or rights of any other outstanding series of
preferred stock of the Company or Bylaws or their organizational charter or certificate of incorporation or bylaws, respectively. Neither the Company nor any of its Subsidiaries is in violation of any judgment, decree or order or any statute,
ordinance, rule or regulation applicable to the Company or its Subsidiaries, and neither the Company nor any of its Subsidiaries will conduct its business in violation of any of the foregoing, except in all cases for possible violations which would
not, individually or in the aggregate, have a Material Adverse Effect. Without limiting the generality of the foregoing, the Company is not in violation of any of the rules, regulations or requirements of the Principal Market and has no knowledge of
any facts or circumstances that would reasonably lead to delisting or suspension of the Common Stock by the Principal Market in the foreseeable future. During the two (2) years prior to the date hereof, (i) the Common Stock has been
designated for quotation on the Principal Market, (ii) trading in the Common Stock has not been suspended by the SEC or the Principal Market and (iii) the Company has received no communication, written or oral, from the SEC or the
Principal Market regarding the suspension or delisting of the Common Stock from the Principal Market. The Company and its Subsidiaries possess all certificates, authorizations and permits issued by the appropriate regulatory authorities necessary to
conduct their respective businesses, except where the failure to possess such certificates, authorizations or permits would not have, individually or in the aggregate, a Material Adverse Effect, and neither the Company nor any such Subsidiary has
received any notice of proceedings relating to the revocation or modification of any such certificate, authorization or permit. 
  

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 (o) 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 of its Subsidiaries has, in the course of its actions for, or on behalf of, the Company (i) used any corporate funds for any unlawful contribution, gift,
entertainment or other unlawful expenses relating to political activity; (ii) made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; (iii) violated or is in violation
of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any foreign or domestic government official or employee.

  
 (p) Sarbanes-Oxley Act. The Company is in compliance
with any and all applicable requirements of the Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and any and all applicable rules and regulations promulgated by the SEC thereunder that are effective as of the date hereof, except
where such noncompliance would not have, individually or in the aggregate, a Material Adverse Effect. 
  
 (q) Transactions With Affiliates. Except as set forth in the SEC Documents filed at least ten days prior to the date hereof and other than
disclosed on Schedule 3(q), 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 ordinary course services as employees, officers or
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 such officer, director
or employee or, to the knowledge of the Company, any corporation, partnership, trust or other entity in which any such officer, director, or employee has a substantial interest or is an officer, director, trustee or partner. 
  
 (r) Equity Capitalization. As of the date hereof, the authorized
capital stock of the Company consists of (i) 100,000,000 shares of Common Stock and (ii) 25,000,000 shares of preferred stock, $0.01 par value. As of the date of this Agreement, the capitalization of the Company is as set forth on Schedule
3(r) to this Agreement, which is specifically incorporated herein by this reference. Other than as set forth in Schedule 3(r) to this Agreement, there are no other shares of capital stock of the Company issued, outstanding or reserved for issuance
pursuant to securities (other than the Preferred Shares and the Warrants) exercisable or exchangeable for, or convertible into, shares of Common Stock. All of such outstanding shares have been, or upon issuance will be, validly issued and are fully
paid and nonassessable. Except as disclosed in Schedule 3(r): (i) none of the Company’s share capital is subject to preemptive rights or any other similar rights or any liens or encumbrances suffered or permitted by the Company;
(ii) there are no outstanding options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any share capital of the
Company or any of its Subsidiaries, or contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional share capital of the Company or any of its Subsidiaries or
options, warrants, scrip, rights to subscribe to, calls or commitments of any 
  

 11 

 character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any share
capital of the Company or any of its Subsidiaries; (iii) there are no outstanding debt securities, notes, credit agreements, credit facilities or other agreements, documents or instruments evidencing Indebtedness of the Company or any of its
Subsidiaries or by which the Company or any of its Subsidiaries is or may become bound; (iv) there are no financing statements securing obligations in any material amounts, either singly or in the aggregate, filed in connection with the Company
or any of its Subsidiaries; (v) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of their securities under the 1933 Act (except the Registration Rights
Agreement); (vi) there are no outstanding securities or instruments of the Company or any of its Subsidiaries which contain any redemption or similar provisions, and there are no contracts, commitments, understandings or arrangements by which
the Company or any of its Subsidiaries is or may become bound to redeem a security of the Company or any of its Subsidiaries; (vii) there are no securities or instruments containing anti-dilution or similar provisions that will be triggered by
the issuance of the Securities; (viii) the Company does not have any stock appreciation rights or “phantom stock” plans or agreements or any similar plan or agreement; and (ix) the Company and its Subsidiaries have no liabilities
or obligations required to be disclosed in the SEC Documents but not so disclosed in the SEC Documents, other than those incurred in the ordinary course of the Company’s or its Subsidiaries’ respective businesses and which, individually or
in the aggregate, do not or would not have a Material Adverse Effect. The Company has furnished to the Buyer true, correct and complete copies of the Company’s Certificate of Incorporation, as amended and as in effect on the date hereof (the
“Certificate of Incorporation”) and the Company’s Bylaws, as amended and as in effect on the date hereof (the “Bylaws”), and the terms of all securities convertible into, or exercisable or exchangeable for,
shares of Common Stock and the material rights of the holders thereof in respect thereto. 
  
 (s) Indebtedness and Other Contracts. Except as set forth on Schedule 3(s), neither the Company nor any of its Subsidiaries (i) has any outstanding Indebtedness (as defined below), (ii) is in
violation of any term of or in default under any contract, agreement or instrument relating to any Indebtedness, except where such violations and defaults would not result, individually or in the aggregate, in a Material Adverse Effect, or
(iii) is a party to any contract, agreement or instrument relating to any Indebtedness, the performance of which, in the judgment of the Company’s officers, has or is expected to have a Material Adverse Effect. Schedule 3(s)
provides a detailed description of the material terms of any such outstanding Indebtedness. For purposes of this Agreement: (x) “Indebtedness” of any Person means, without duplication (A) all indebtedness for borrowed
money, (B) all obligations issued, undertaken or assumed as the deferred purchase price of property or services (including, without limitation, “capital leases” in accordance with generally accepted accounting principals) (other than
trade payables entered into in the ordinary course of business), (C) all reimbursement or payment obligations with respect to letters of credit, surety bonds and other similar instruments, (D) all obligations evidenced by notes, bonds,
debentures or similar instruments, including obligations so evidenced incurred in connection with the acquisition of property, assets or businesses, (E) all indebtedness created or arising under any conditional sale or other title retention
agreement, or incurred as financing, in either case with respect to any property or assets acquired with the proceeds of such indebtedness (even though the rights and remedies of the seller or bank under such agreement in the event of default are
limited to repossession or sale of such property), (F) all monetary obligations under any leasing or similar arrangement which, in 
  

 12 

 connection with generally accepted accounting principles, consistently applied for the periods covered thereby, is
classified as a capital lease, (G) all indebtedness referred to in clauses (A) through (F) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any mortgage,
lien, pledge, charge, security interest or other encumbrance upon or in any property or assets (including accounts and contract rights) owned by any Person, even though the Person which owns such assets or property has not assumed or become liable
for the payment of such indebtedness, and (H) all Contingent Obligations in respect of indebtedness or obligations of others of the kinds referred to in clauses (A) through (G) above; (y) “Contingent Obligation”
means, as to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect to any indebtedness, lease, dividend or other obligation of another Person if the primary purpose or intent of the Person incurring such
liability, or the primary effect thereof, is to provide assurance to the obligee of such liability that such liability will be paid or discharged, or that any agreements relating thereto will be complied with, or that the holders of such liability
will be protected (in whole or in part) against loss with respect thereto; and (z) “Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated
organization and a government or any department or agency thereof. 
  
 (t) Absence of Litigation. There is no action, suit, proceeding, inquiry or investigation before or by the Principal Market, any court, public board, government agency, self-regulatory organization or body pending or, to the
knowledge of the Company, threatened against or affecting the Company, the Common Stock or any of the Company’s Subsidiaries or any of the Company’s or its Subsidiaries’ officers or directors, that could, individually or in the
aggregate, reasonably be expected to result in 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 been refused any insurance coverage sought or applied for and 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. 
  
 (v) Employee
Relations. (i) Neither Company nor any of its Subsidiaries is a party to any collective bargaining agreement or employs any member of a union. The Company and its Subsidiaries believe that their relations with their employees are good.
Except as set forth on Schedule 3(v), no executive officer of the Company or any of its Subsidiaries (as defined in Rule 501(f) of the 1933 Act) has notified the Company or any such Subsidiary that such officer intends to leave the Company or any
such Subsidiary or otherwise terminate such officer’s employment with the Company or any such Subsidiary. No executive officer of the Company or any of its Subsidiaries, to the knowledge of the Company or any such Subsidiary, is, or is now
expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement, non-competition agreement, or any other contract or agreement or any restrictive covenant, and the
continued employment of each such executive officer does not subject the Company or any such Subsidiary to any liability with respect to any of the foregoing matters. 
  

 13 

 (ii) The Company and its Subsidiaries are in compliance with all federal, state, local and foreign laws
and regulations respecting labor, employment and employment practices and benefits, terms and conditions of employment and wages and hours, except where failure to be in compliance would not, either individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect. 
  
 (w)
Title. Except as set forth in Schedule 3(w), 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 do not materially affect the value of such property and do not interfere with the use made and proposed to be made of
such property by the Company and any of its Subsidiaries. Any real property and facilities held under lease by the Company and any of its Subsidiaries are held by them under valid, subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and proposed to be made of such property and buildings by the Company and its Subsidiaries. 
  
 (x) Intellectual Property Rights. The Company and its Subsidiaries own or possess adequate rights or licenses to use all trademarks, trade names,
service marks, service mark registrations, service names, patents, patent rights, copyrights, inventions, licenses, approvals, governmental authorizations, trade secrets and other intellectual property rights (“Intellectual Property
Rights”) necessary to conduct their respective businesses as now conducted except where the failure to so own or possess would not reasonably be expected to result in a Material Adverse Effect. None of the Company’s Intellectual
Property Rights have expired or terminated, or are expected to expire or terminate, within three years from the date of this Agreement. The Company does not have any knowledge of any infringement by the Company or its Subsidiaries of Intellectual
Property Rights of others. There is no claim, action or proceeding being made or brought, or to the knowledge of the Company, being threatened, against the Company or its Subsidiaries regarding its Intellectual Property Rights. The Company is
unaware of any facts or circumstances which might give rise to any of the foregoing infringements or claims, actions or proceedings. The Company and its Subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality and
value of all of their intellectual properties. 
  
 (y)
Environmental Laws. The Company and its Subsidiaries (i) are in compliance with any and all Environmental Laws (as hereinafter defined), (ii) have received all permits, licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (iii) are in compliance with all terms and conditions of any such permit, license or approval where, in each of the foregoing clauses (i), (ii) and (iii), the failure to so
comply could be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect. 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 
  

 14 

 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. 
  
 (z) Subsidiary Rights. The Company or one of its Subsidiaries has the unrestricted right to vote, and (subject to
limitations imposed by applicable law) to receive dividends and distributions on, all capital securities of its Subsidiaries as owned by the Company or such Subsidiary. 
  
 (aa) Investment Company Status. The Company is not, and upon consummation of the sale of the Securities will not be,
an “investment company,” a company controlled by an “investment company” or an “affiliated person” of, or “promoter” or “principal underwriter” for, an “investment company” as such terms
are defined in the Investment Company Act of 1940, as amended. 
  
 (bb) Tax Status. The Company and each of its Subsidiaries (i) has made or filed all foreign, Canadian, federal and state income and all other tax returns, reports and declarations required by any jurisdiction to which it is
subject, (ii) 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 (iii) has
set aside on its books provision 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. 
  
 (cc) Internal Accounting and Disclosure Controls. The Company maintains a system of internal accounting controls sufficient 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 and liability accountability, (iii) access to assets or incurrence of liabilities is permitted only in accordance with management’s general or specific authorization and (iv) the
recorded accountability for assets and liabilities is compared with the existing assets and liabilities at reasonable intervals and appropriate action is taken with respect to any difference. The Company maintains disclosure controls and procedures
(as such term is defined in Rule 13a-14 under the 1934 Act) that are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the 1934 Act is recorded, processed, summarized and
reported, within the time periods specified in the rules and forms of the SEC, including, without limitation, controls and procedures designed in to ensure that information required to be disclosed by the Company in the reports that it files or
submits under the 1934 Act is accumulated and communicated to the Company’s management, including its principal executive officer or officers and its principal financial officer or officers, as appropriate, to allow timely decisions regarding
required disclosure. During the twelve months prior to the date hereof neither the Company nor any of its Subsidiaries have received any notice or correspondence from any accountant relating to any potential material weakness in any part of the
system of internal accounting controls of the Company or any of its Subsidiaries. 
  

 15 

 (dd) Off Balance Sheet Arrangements. There is no transaction, arrangement, or other relationship
between the Company and an unconsolidated or other off balance sheet entity that is required to be disclosed by the Company in its 1934 Act filings and is not so disclosed or that otherwise would be reasonably likely to have a Material Adverse
Effect. 
  
 (ee) Transfer Taxes. On the Closing Date, all
stock transfer or other taxes (other than income or similar taxes) which are required to be paid in connection with the sale and transfer of the Securities to be sold to each Buyer hereunder will be, or will have been, fully paid or provided for by
the Company, and all laws imposing such taxes will be or will have been complied with. 
  
 (ff) Registration Eligibility. The Company is eligible to register the Conversion Shares, the Dividend Shares and the Warrant Shares for resale by the Buyers using Form SB-2 promulgated under the 1933 Act.

  
 (gg) Manipulation of Price. The Company has not, and to
its knowledge no one acting on its behalf has, (i) taken, directly or indirectly, any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of any
of the Securities, (ii) other than the Agent, sold, bid for, purchased, or paid any compensation for soliciting purchases of, any of the Securities, or (iii) other than the Agent, paid or agreed to pay to any person any compensation for
soliciting another to purchase any other securities of the Company. 
  
 (hh) Acknowledgement Regarding Buyers’ Trading Activity. It is understood and acknowledged by the Company (i) that, except as set forth in Section 4(r), none of the Buyers have been asked by the Company or its
Subsidiaries to agree, nor has any Buyer agreed with the Company or its Subsidiaries, to desist from purchasing or selling, long and/or short, securities of the Company, or “derivative” securities based on securities issued by the Company
or to hold the Securities for any specified term; (ii) that any Buyer, and counter parties in “derivative” transactions to which any such Buyer is a party, directly or indirectly, presently may have a “short” position in the
Common Stock, and (iii) that each Buyer shall not be deemed to have any affiliation with or control over any arm’s length counter party in any “derivative” transaction. The Company further understands and acknowledges that,
except as restricted by the provisions of Section 4(r), one or more Buyers may engage in hedging and/or trading activities at various times during the period that the Securities are outstanding, including, without limitation, during the periods
that the value of the Conversion Shares and the Warrant Shares deliverable with respect to Securities are being determined and such hedging and/or trading activities, if any, can reduce the value of the existing Shareholders’ equity interest in
the Company both at and after the time the hedging and/or trading activities are being conducted. The Company acknowledges that, except if in violation of Section 4(r), such aforementioned hedging and/or trading activities do not constitute a
breach of this Agreement, the Certificate of Designations, the Warrants or any of the documents executed in connection herewith. 
  

 16 

 (ii) Disclosure. Except for information that will be disclosed in a periodic report on Form 8-K to
be filed in accordance with the provisions of Section 4(i), the Company confirms that neither it nor any other Person acting on its behalf has provided any of the Buyers or their agents or counsel with any information that constitutes or could
reasonably be expected to constitute material, nonpublic information. The Company understands and confirms that each of the Buyers will rely on the foregoing representations in effecting transactions in securities of the Company. All disclosure
provided to the Buyers regarding the Company, its business and the transactions contemplated hereby, including the Schedules to this Agreement, furnished by or on behalf of the Company is true and correct and does not contain any untrue statement of
a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. Each press release issued by the Company during the twelve
(12) months preceding the date of this Agreement did not at the time of release contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein,
in the light of the circumstances under which they are made, not misleading. No event or circumstance has occurred or information 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. 
  
 4. COVENANTS. 
  
 (a) Best Efforts. Each party shall use its best efforts timely to satisfy each of the conditions to be satisfied by
it as provided in Sections 6 and 7 of this Agreement. 
  
 (b)
Form D and Blue Sky. 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 in order to obtain an exemption for or to qualify the Securities for sale to the Buyers at the Closing pursuant to this Agreement under applicable securities or “Blue
Sky” laws of the states of the United States (or to obtain an exemption from such qualification), and shall provide evidence of any such action so taken to the Buyers on or prior to the Closing Date. The Company shall make all filings and
reports relating to the offer and sale of the Securities required under applicable securities or “Blue Sky” laws of the states of the United States following the Closing Date. 
  
 (c) Reporting Status. Until the date on which (i) the Investors (as defined in the Registration Rights
Agreement) shall have sold all the Conversion Shares, Dividend Shares and Warrant Shares, and (ii) none of the Preferred Shares or Warrants is outstanding (the “Reporting Period”), the Company shall 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 otherwise permit such
termination. 
  
 (d) Use of Proceeds. The Company will use
the proceeds from the sale of the Securities as set forth on Schedule 4(d), and not for, except as specifically set forth on Schedule 4(d), (A) repayment of any outstanding Indebtedness of the Company or any of its Subsidiaries or
(B) redemption or repurchase of any of its or its Subsidiaries’ equity securities. 
  

 17 

 (e) Financial Information. The Company agrees to send the following to each Investor (as defined
in the Registration Rights Agreement) during the Reporting Period (i) unless the following are filed with the SEC through EDGAR and are available to the public through the EDGAR system, within one (1) Business Day after the filing thereof
with the SEC, a copy of its Annual Reports on Form 10-K or 10-KSB, any interim reports or any consolidated balance sheets, income statements, stockholders’ equity statements and/or cash flow statements for any period other than annual, any
Current Reports on Form 8-K and any registration statements or amendments filed pursuant to the 1933 Act, (ii) on the same day as the release thereof, facsimile or e-mailed copies of all press releases issued by the Company or any of its
Subsidiaries, and (iii) copies of any notices and other information made available or given to the stockholders of the Company generally, contemporaneously with the making available or giving thereof to the stockholders. 
  
 (f) Listing. The Company shall promptly secure the listing of all of
the Registrable Securities (as defined in the Registration Rights Agreement) upon each national securities exchange and automated quotation system, if any, upon which the Common Stock is then listed (subject to official notice of issuance) and shall
maintain such listing of all Registrable Securities from time to time issuable under the terms of the Transaction Documents. The Company shall maintain the authorization for quotation of the Common Stock on the Principal Market. Neither the Company
nor any of its Subsidiaries shall take any action which would be reasonably expected to result in the delisting or suspension of the Common Stock on the Principal Market. The Company shall pay all fees and expenses in connection with satisfying its
obligations under this Section 4(f). 
  
 (g) Fees. The
Company shall reimburse Magnetar Financial LLC or its designee(s) (in addition to any other expense amounts paid to any Buyer prior to the date of this Agreement) for all reasonable costs and expenses, not to exceed $85,000, incurred in connection
with the transactions contemplated by the Transaction Documents (including all reasonable legal fees and disbursements in connection therewith, documentation and implementation of the transactions contemplated by the Transaction Documents and due
diligence in connection therewith), which amount shall be non-accountable and withheld by Magnetar Capital Master Fund, Ltd. from its Purchase Price at the Closing. The Company shall be responsible for the payment of any placement agent’s fees,
financial advisory fees, or broker’s commissions (other than for Persons engaged by any Buyer) relating to or arising out of the transactions contemplated hereby, including, without limitation, any fees payable to the Agent. The Company shall
pay, and hold each Buyer harmless against, any liability, loss or expense (including, without limitation, reasonable attorney’s fees and out-of-pocket expenses) arising in connection with any claim relating to any such payment. 
  
 (h) Pledge of Securities. The Company acknowledges and agrees that the
Securities may be pledged pursuant to an available exemption from registration under the 1933 Act by an Investor (as defined in the Registration Rights Agreement) in connection with a bona fide margin agreement or other loan or financing arrangement
that is secured by the Securities. The pledge of Securities shall not be deemed to be a transfer, sale or assignment of the Securities 
  

 18 

 hereunder, and no Investor effecting a pledge of Securities shall be required to provide the Company with any notice
thereof or otherwise make any delivery to the Company pursuant to this Agreement or any other Transaction Document, including, without limitation, Section 2(g) hereof; provided that an Investor and its pledgee shall be required to comply with
the provisions of Section 2(g) hereof in order to effect a sale, transfer or assignment of Securities to such pledgee. The Company hereby agrees to execute and deliver such documentation as a pledgee of the Securities may reasonably request in
connection with a pledge of the Securities to such pledgee by an Investor. 
  
 (i) Disclosure of Transactions and Other Material Information. On or before 8:30 a.m., New York Time, on the first Business Day following the date of this Agreement, the Company shall file a Current Report on
Form 8-K describing the terms of the transactions contemplated by the Transaction Documents in the form required by the 1934 Act and attaching the material Transaction Documents (including, without limitation, this Agreement (and all schedules to
this Agreement), the form of Certificate of Designations, the form of Warrant and the Registration Rights Agreement) (including all attachments, the “8-K Filing”). From and after the filing of the 8-K Filing with the SEC, the
Company shall have disclosed any material nonpublic information delivered to the Buyers by the Company or any of its Subsidiaries, or any of their respective officers, directors, employees or agents. The Company shall not, and shall cause each of
its Subsidiaries and its and each of their respective officers, directors, employees and agents, not to, provide any Buyer with any material, nonpublic information regarding the Company or any of its Subsidiaries from and after the date of this
Agreement without the express written consent of such Buyer. In the event of a breach of the foregoing covenant by the Company, or any of its Subsidiaries, or any of its or their respective officers, directors, employees and agents, in addition to
any other remedy provided herein or in the Transaction Documents, a Buyer shall have the right to make a public disclosure, in the form of a press release, public advertisement or otherwise, of such material, nonpublic information without the prior
approval by the Company, its Subsidiaries, or any of its or their respective officers, directors, employees or agents. No Buyer shall have any liability to the Company, its Subsidiaries, or any of its or their respective officers, directors,
employees, stockholders or agents, for any such disclosure. Subject to the foregoing, neither the Company, its Subsidiaries nor any Buyer shall issue any press releases 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 any Buyer, to make any press release or other public disclosure with respect to such transactions (i) in substantial conformity with the
8-K Filing and contemporaneously therewith and (ii) as is required by applicable law and regulations (provided that in the case of clause (i) each Buyer shall be consulted by the Company in connection with any such press release or other
public disclosure prior to its release). Without the prior written consent of any applicable Buyer, the Company shall not disclose the name of any Buyer in any filing, announcement, release or otherwise. 
  
 (j) Restriction on Redemption and Cash Dividends; Additional Registration
Statements. So long as any Preferred Shares are outstanding, the Company shall not, directly or indirectly, redeem, or declare or pay any cash dividend or distribution on, the Common Stock without the prior express written consent of the holders
of Preferred Shares representing not less than a majority of the aggregate number of the then outstanding Preferred Shares. Until the Effective Date of the last Registration Statement required to be filed pursuant to the Registration 
  

 19 

 Rights Agreement, the Company shall not file a registration statement under the 1933 Act relating to securities that are
not the Securities, other than as required by the Registration Rights Agreement dated as of December 30, 2005 to which the Company is a party. 
  
 (k) Additional Preferred Shares; Variable Securities; Dilutive Issuances. So long as any Buyer beneficially owns any Securities, the Company will
not, without the prior written consent of Buyers holding a majority of the Preferred Shares, issue any Preferred Shares (other than to the Buyers as contemplated hereby or under the Certificate of Designations) and the Company shall not issue any
other securities that would cause a breach or default under the Certificate of Designations or the Warrants. From and after the date of this Agreement, and for so long as any Preferred Shares or Warrants remain outstanding, the Company shall not, in
any manner, issue or sell any rights, warrants or options to subscribe for or purchase Common Stock or securities directly or indirectly convertible into or exchangeable or exercisable for Common Stock at a conversion, exchange or exercise price
which varies or may vary after issuance with the market price of the Common Stock, including by way of one or more reset(s) to any fixed price unless the conversion, exchange or exercise price of any such security cannot be less than the then
applicable Conversion Price (as defined in the Certificate of Designations) with respect to the Common Stock into which any Preferred Shares are convertible or the then applicable Exercise Price (as defined in the Warrants) with respect to the
Common Stock into which any Warrant is exercisable. For purposes of clarification, this does not prohibit (i) the issuance of securities with customary “weighted average” or “full ratchet” anti-dilution adjustments which
adjust a fixed conversion or exercise price of securities sold by the Company in the future or (ii) the issuance of any securities under the terms and conditions of any rights, warrants, options or securities of the Company issued and
outstanding as of the date of this Agreement; provided that none of such rights, options or securities are modified or amended. For so long as any Preferred Shares or Warrants remain outstanding, the Company shall not, in any manner, enter
into or affect any dilutive issuance if the effect of such dilutive issuance is to cause the Company to be required to issue upon conversion of any Preferred Shares or exercise of any Warrant any shares of Common Stock in excess of that number of
shares of Common Stock which the Company may issue upon conversion of the Preferred Shares and exercise of the Warrants without breaching the Company’s obligations under the rules or regulations of the Principal Market. 
  
 (l) Corporate Existence. So long as any Buyer beneficially owns any
Securities, the Company shall not be party to any Fundamental Transaction (as defined in the Certificate of Designations) unless the Company is in compliance with the applicable provisions governing Fundamental Transactions set forth in the
Certificate of Designations and the Warrants. 
  
 (m)
Reservation of Shares. The Company shall take all action necessary to at all times have authorized, and reserved for the purpose of issuance, no less than the sum of (1) 125% of the number of shares of Common Stock issuable upon
conversion of the issued and outstanding Preferred Shares, (2) 100% of the number of Dividend Shares issuable pursuant to the terms of the Preferred Shares as of the Trading Day immediately prior to the applicable date of determination and
(3) 125% of the number of shares of Common Stock issuable upon exercise of the issued and outstanding Warrants; provided, that the parties acknowledge that the number of shares of Common Stock authorized on the date hereof are, and, on
the Closing Date, will be, less than the amount required to satisfy the requirements of this Section 4(m); provided, further, 
  

 20 

 that the Company hereby covenants and agrees to call a meeting of stockholders on or prior to May 15, 2006 (the
“Stockholder Approval Deadline”) to increase the number of authorized shares of Common Stock to 300,000,000 (the “Stockholder Approval”). 
  
 (n) Conduct of Business. The business of the Company and its
Subsidiaries shall not be conducted in violation of any law, ordinance or regulation of any governmental entity, except where such violations would not result, either individually or in the aggregate, in a Material Adverse Effect. 
  
 (o) Additional Issuances of Securities. 
  
 (i) For purposes of this Section 4(o), the following definitions
shall apply. 
  
 (1) “Convertible
Securities” means any stock or securities (other than Options) convertible into or exercisable or exchangeable for shares of Common Stock. 
  
 (2) “Options” means any rights, warrants or options to subscribe for or purchase shares of Common Stock or Convertible
Securities. 
  
 (3) “Common Stock
Equivalents” means, collectively, Options and Convertible Securities. 
  
 (ii) The Company will not, directly or indirectly, (A) from the date hereof until two hundred seventy (270) days after the Effective Date of the last Registration Statement required to be filed pursuant to
the Registration Rights Agreement, file any registration statement with the SEC other than the Registration Statement (as defined in the Registration Rights Agreement), a registration statement on Form S-8 pursuant to the 1933 Act to register shares
of Common Stock issuable pursuant to the Stock Option Program or the Registration Statement contemplated pursuant to the Registration Rights Agreement dated as of December 30, 2005 or,(B) from and after the date hereof until the Effective Date
of the last Registration Statement required to be filed pursuant to the registration statement, directly or indirectly, offer, sell, grant any option to purchase, or otherwise dispose of (or announce any offer, sale, grant or any option to purchase
or other disposition of) any of its or its Subsidiaries’ equity or equity equivalent securities, including without limitation any debt, preferred stock or other instrument or security that is, at any time during its life and under any
circumstances, convertible into or exchangeable or exercisable for shares of Common Stock or Common Stock Equivalents (any such offer, sale, grant, disposition or announcement being referred to as a “Subsequent Placement”).

  
 (iii) The Company will not, directly or indirectly, effect
any Subsequent Placement unless the Company shall have first complied with this Section 4(o)(iii). 
  
 (1) The Company shall deliver to each Buyer that owns, at such time, at least 50% of the Securities that such Buyer purchased at the
Closing (including the Securities into which such Preferred Shares and Warrants are convertible or exercisable into), a written notice (the ”Offer Notice”) of any proposed or intended 
  

 21 

 issuance or sale or exchange (the ”Offer”) of the securities being offered (the
“Offered Securities”) in a Subsequent Placement, which Offer Notice shall (w) identify and describe the Offered Securities, (x) describe the price and other terms upon which they are to be issued, sold or exchanged, and
the number or amount of the Offered Securities to be issued, sold or exchanged, (y) identify the persons or entities (if known) to which or with which the Offered Securities are to be offered, issued, sold or exchanged and (z) offer to
issue and sell to or exchange with such eligible Buyers all of the Offered Securities, allocated among such eligible Buyers (a) based on such Buyer’s pro rata portion of the aggregate number of Preferred Shares purchased hereunder by all
such eligible Buyers (the “Basic Amount”), and (b) with respect to each eligible Buyer that elects to purchase its Basic Amount, any additional portion of the Offered Securities attributable to the Basic Amounts of other
eligible Buyers as such eligible Buyer shall indicate it will purchase or acquire should the other eligible Buyers subscribe for less than their Basic Amounts (the “Undersubscription Amount”). 
  
 (2) To accept an Offer, in whole or in part, such eligible
Buyer must deliver a written notice to the Company prior to the end of the fifth (5th) Business Day after such
eligible Buyer’s receipt of the Offer Notice (the “Offer Period”), setting forth the portion of such eligible Buyer’s Basic Amount that such eligible Buyer elects to purchase and, if such eligible Buyer shall elect to
purchase all of its Basic Amount, the Undersubscription Amount, if any, that such eligible Buyer elects to purchase (in either case, the “Notice of Acceptance”). If the Basic Amounts subscribed for by all eligible Buyers are less
than the total of all of the Basic Amounts, then each eligible Buyer who has set forth an Undersubscription Amount in its Notice of Acceptance shall be entitled to purchase, in addition to the Basic Amounts subscribed for, the Undersubscription
Amount it has subscribed for; provided, however, that if the Undersubscription Amounts subscribed for exceed the difference between the total of all the Basic Amounts and the Basic Amounts subscribed for (the “Available
Undersubscription Amount”), each eligible Buyer who has subscribed for any Undersubscription Amount shall be entitled to purchase only that portion of the Available Undersubscription Amount as the Basic Amount of such eligible Buyer bears
to the total Basic Amounts of all eligible Buyers that have subscribed for Undersubscription Amounts, subject to rounding by the Company to the extent its deems reasonably necessary. 
  
 (3) The Company shall have five (5) Business Days from the expiration of the Offer Period above to
offer, issue, sell or exchange all or any part of such Offered Securities as to which a Notice of Acceptance has not been given by the Buyers (the “Refused Securities”), but only to the offerees described in the Offer Notice (if so
described therein) and only upon terms and conditions (including, without limitation, unit prices and interest rates) that are not more favorable to the acquiring person or persons or less favorable to the Company than those set forth in the Offer
Notice. 
  
 (4) In the event the Company shall
propose to sell less than all the Refused Securities (any such sale to be in the manner and on the terms specified in Section 4(o)(iii)(3) above), then each Buyer may, at its sole option and in its sole discretion, reduce the number or amount
of the Offered Securities specified in its Notice 
  

 22 

 of Acceptance to an amount that shall be not less than the number or amount of the Offered Securities
that such Buyer elected to purchase pursuant to Section 4(o)(iii)(2) above multiplied by a fraction, (i) the numerator of which shall be the number or amount of Offered Securities the Company actually proposes to issue, sell or exchange
(including Offered Securities to be issued or sold to Buyers pursuant to Section 4(o)(iii)(3) above prior to such reduction) and (ii) the denominator of which shall be the original amount of the Offered Securities. In the event that any
Buyer so elects to reduce the number or amount of Offered Securities specified in its Notice of Acceptance, the Company may not issue, sell or exchange more than the reduced number or amount of the Offered Securities unless and until such securities
have again been offered to the Buyers in accordance with Section 4(o)(iii)(1) above. 
  
 (5) Upon the closing of the issuance, sale or exchange of all or less than all of the Refused Securities, the Buyers shall acquire from
the Company, and the Company shall issue to the Buyers, the number or amount of Offered Securities specified in the Notices of Acceptance, as reduced pursuant to Section 4(o)(iii)(3) above if the Buyers have so elected, upon the terms and
conditions specified in the Offer. The purchase by the Buyers of any Offered Securities is subject in all cases to the preparation, execution and delivery by the Company and the Buyers of a purchase agreement relating to such Offered Securities
reasonably satisfactory in form and substance to the Buyers and their respective counsel. 
  
 (6) Any Offered Securities not acquired by the Buyers or other persons in accordance with Section 4(o)(iii)(3) above may not be
issued, sold or exchanged until they are again offered to the Buyers under the procedures specified in this Agreement. 
  
 (iv) The restrictions contained in subsections (ii) and (iii) of this Section 4(o) shall not apply in connection with the issuance of any
Excluded Securities (as defined in the Certificate of Designations). 
  
 (p) Appointment of CFO. Not later than 90 days after the Closing Date, the Company shall have appointed a chief financial officer (other than John Levy) reasonably acceptable to Magnetar Capital Master Fund, Ltd. 
  
 (q) Investor Relations Firm. Not later than 120 days after the Closing
Date, the Company shall have hired an investor relations firm reasonably acceptable to Magnetar Capital Master Fund, Ltd. 
  
 (r) Restrictions on Short Sales. Until the earlier of the first Effective Date and the 50% Effectiveness Deadline (as such terms are defined in the
Registration Rights Agreement), each Buyer hereby agrees not to enter into any Short Sales with respect to the Common Stock of the Company. As used herein, “Short Sales” shall have the meaning ascribed to such term in Rule 3b-3 of
the Exchange Act and Rule 200 promulgated under Regulation SHO under the Exchange Act. 
  

 23 

 (s) Incurrence of Indebtedness. Until such time as the Buyers hold less than 20% of the
Registrable Securities (as defined in the Registration Rights Agreement), the Company shall not, and the Company shall not permit any of its Subsidiaries to, directly or indirectly, incur or guarantee, assume or suffer to exist any Indebtedness
other than as provided in Schedule 3(s) hereto or as contemplated in Schedule 4(s) hereto. 
  
 5. REGISTER; TRANSFER AGENT INSTRUCTIONS. 
  
 (a) Register. The Company shall maintain at its principal executive offices (or such other office or agency of the Company as it may designate by notice to each holder of Securities), a register for the
Preferred Shares and the Warrants in which the Company shall record the name and address of the Person in whose name the Preferred Shares and the Warrants have been issued (including the name and address of each transferee), the number of Preferred
Shares held by such Person, the number of Conversion Shares issuable upon conversion of the Preferred Shares and Warrant Shares issuable upon exercise of the Warrants held by such Person. The Company shall keep the register open and available at all
times during business hours for inspection of any Buyer or its legal representatives. 
  
 (b) Transfer Agent Instructions. The Company shall issue irrevocable instructions to its transfer agent, and any subsequent transfer agent, to issue certificates or credit shares to the applicable balance
accounts at The Depository Trust Company (“DTC”), registered in the name of each Buyer or its respective nominee(s), for the Conversion Shares, and the Warrant Shares in such amounts as specified from time to time by each Buyer to
the Company upon conversion of the Preferred Shares or exercise of the Warrants in the form of Exhibit D attached hereto (the “Irrevocable Transfer Agent Instructions”). The Company warrants that no instruction other than the
Irrevocable Transfer Agent Instructions referred to in this Section 5(b), and stop transfer instructions to give effect to Section 2(g) hereof, will be given by the Company to its transfer agent with respect to the Securities, and that the
Securities shall otherwise be freely transferable on the books and records of the Company, as applicable, and to the extent provided in this Agreement and the other Transaction Documents. If a Buyer effects a sale, assignment or transfer of the
Securities in accordance with Section 2(g), the Company shall permit the transfer and shall promptly instruct its transfer agent to issue one or more certificates or credit shares to the applicable balance accounts at DTC in such name and in
such denominations as specified by such Buyer to effect such sale, transfer or assignment. In the event that such sale, assignment or transfer involves Conversion Shares and Warrant Shares sold, assigned or transferred pursuant to an effective
registration statement or pursuant to Rule 144, the transfer agent shall issue such Securities to the Buyer, assignee or transferee, as the case may be, without any restrictive legend. The Company acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to a Buyer. Accordingly, the Company acknowledges that the remedy at law for a breach of its obligations under this Section 5(b) will be inadequate and agrees, in the event of a breach or threatened breach
by the Company of the provisions of this Section 5(b), that a Buyer shall be entitled, in addition to all other available remedies, to an order and/or injunction restraining any breach and requiring immediate issuance and transfer, without the
necessity of showing economic loss and without any bond or other security being required. 
  

 24 

 6. CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL. 
  
 (a) The obligation of the Company hereunder to issue and sell the Preferred
Shares and the related Warrants to each Buyer at the Closing is subject to the satisfaction, at or before the Closing Date, of each of the following conditions, provided that these conditions are for the Company’s sole benefit and may be waived
by the Company at any time in its sole discretion by providing each Buyer with prior written notice thereof: 
  
 (i) Such Buyer shall have executed each of the Transaction Documents to which it is a party and delivered the same to the Company. 
  
 (ii) Such Buyer and each other Buyer shall have delivered to the Company the
Purchase Price (less, in the case of Magnetar Capital Master Fund, Ltd., the amount withheld pursuant to Section 4(g)) for the Preferred Shares and the related Warrants being purchased by such Buyer at the Closing (i) by wire transfer of
immediately available funds pursuant to the wire instructions provided by the Company or (ii) by exchange of the outstanding principal and interest of the Exchangeable Notes pursuant to the terms thereof. 
  
 (iii) The representations and warranties of such 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 such 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 such Buyer at or prior to the Closing Date. 
  
 7. CONDITIONS TO EACH BUYER’S OBLIGATION TO PURCHASE. 
  
 (a) The obligation of each Buyer hereunder to purchase the Preferred Shares
and the related 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 each Buyer’s sole benefit and may be waived by such Buyer at any
time in its sole discretion by providing the Company with prior written notice thereof: 
  
 (i) The Company shall have executed and delivered to such Buyer (A) each of the Transaction Documents and (B) the number of Preferred Shares as is set forth across from such Buyer’s name in column
(3) of the Schedule of Buyers and the related Warrants for that number of shares of Common Stock as is set forth across from such Buyer’s name in column (4) of the Schedule of Buyers being purchased by such Buyer at the Closing
pursuant to this Agreement. 
  
 (ii) Such Buyer shall have
received the opinion of Holland & Knight, LLP, the Company’s outside counsel, dated as of the Closing Date, in substantially the form of Exhibit E attached hereto. 
  
 (iii) The Company shall have delivered to such Buyer a copy of the Irrevocable Transfer Agent Instructions, in the form of
Exhibit D attached hereto, which instructions shall have been delivered to and acknowledged in writing by the Company’s transfer agent. 
  

 25 

 (iv) The Company shall have delivered to such Buyer a certificate evidencing the formation and good
standing of the Company and each of its Subsidiaries by the Secretary of State (or equivalent) in its jurisdiction of formation as of a date within ten (10) days of the Closing Date. 
  
 (v) The Company shall have delivered to such Buyer a certificate evidencing the Company’s qualification as a foreign
corporation and good standing issued by the Secretary of State (or comparable office) of each jurisdiction in which the Company conducts business and is required to so qualify, as of a date within 10 days of the Closing Date. 
  
 (vi) The Company shall have delivered to such Buyer a certified copy of the
Certificate of Incorporation as certified by the Secretary of State of the State of Nevada within ten (10) days of the Closing Date. 
  
 (vii) The Company shall have delivered to such Buyer a certificate, executed by the Secretary of the Company and dated as of the Closing Date, as to
(i) the resolutions consistent with Section 3(b) as adopted by the Company’s Board of Directors in a form reasonably acceptable to such Buyer, (ii) the Certificate of Incorporation and (iii) the Bylaws, each as in effect at
the Closing, in the form attached hereto as Exhibit F. 
  
 (viii) The representations and warranties of the Company shall be true and correct 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 Company shall have performed, satisfied and complied in all respects with the covenants, agreements and conditions required by the Transaction Documents to be performed, satisfied or complied with by the Company at or prior to the Closing
Date. Such Buyer shall have received a certificate, 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 in the form
attached hereto as Exhibit G. 
  
 (ix) The Company shall
have delivered to such Buyer a letter from the Company’s transfer agent certifying the number of shares of Common Stock outstanding as of a date within five days of the Closing Date. 
  
 (x) The Common Stock (I) shall be designated for quotation or listed on the Principal Market and (II) shall not have
been suspended, as of the Closing Date, by the SEC or the Principal Market from trading on the Principal Market nor shall suspension by the SEC or the Principal Market have been threatened, as of the Closing Date, either (A) in writing by the
SEC or the Principal Market or (B) by falling below the minimum maintenance requirements of the Principal Market. 
  
 (xi) The Company shall have obtained all governmental, regulatory or third party consents and approvals, if any, necessary for the sale of the
Securities. 
  
 (xii) The Certificate of Designations in the form
attached hereto as Exhibit A shall have been filed with the Secretary of State of the State of Nevada and shall be in full force and effect, enforceable against the Company in accordance with its terms and shall not have been amended.

  

 26 

 (xiii) The Company, contemporaneously with the Closing, shall have consummated the transactions
contemplated by the Asset Purchase Agreement dated as of February 16, 2006 by and among the Company and California Natural Products, Inc. (the “Savannah Purchase Agreement”) in the form attached hereto as Exhibit H.

  
 (xiv) The Board of Directors of the Company shall have
authorized a formal stock option program (the “Stock Option Program”) on terms acceptable to the Buyers. 
  
 (xv) The Company shall have taken all necessary action to authorize the designation of one member of the board of directors of the Company by Magnetar
Capital Master Fund, Ltd., such that at any time that Magnetar Capital Master Fund, Ltd. continues to own any Preferred Shares, it shall have the right, by written request to the Company, to designate a representative, chosen by it in its sole
discretion, to the board of directors of the Company 
  
 (xvi)
The Company and Duane N. Martin, Marc R. Fry, Ralph M. Passino, Joseph Balistreri, Charles Sizer, Newlin Martin and Bruce Neviaser shall have executed and delivered to the Buyers a Voting Agreement in the form attached hereto as Exhibit I.

  
 (xvii) The Company shall have delivered a duly executed
lock-up agreement from each of Duane N. Martin and Marc R. Fry, each in the form attached hereto as Exhibit J. 
  
 (xviii) The Company shall have delivered to such Buyer such other documents relating to the transactions contemplated by this Agreement as such Buyer or
its counsel may reasonably request. 
  
 8. TERMINATION. In the
event that the Closing shall not have occurred with respect to a Buyer on or before five (5) Business Days from the date hereof due to the Company’s or such Buyer’s failure to satisfy the conditions set forth in Sections 6 and 7 above
(and the nonbreaching party’s failure to waive such unsatisfied condition(s)), the nonbreaching party shall have the option to terminate this Agreement with respect to such breaching party at the close of business on such date without liability
of any party to any other party; provided, however, if this Agreement is terminated pursuant to this Section 8, the Company shall remain obligated to reimburse the non-breaching Buyers for the expenses described in Section 4(g) above.

  
 9. MISCELLANEOUS. 
  
 (a) Governing Law; Jurisdiction; Jury Trial. All questions concerning
the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of
New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in
The City of New York, Borough of Manhattan, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, 
  

 27 

 action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement
and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. EACH PARTY HEREBY
IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.  
  
 (b) Counterparts. This Agreement may be executed in two or more
identical counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party; provided that a facsimile signature shall be considered
due execution and shall be binding upon the signatory thereto with the same force and effect as if the signature were an original, not a facsimile signature. 
  
 (c) Headings. The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this
Agreement. 
  
 (d) Severability. If any provision of this
Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of any
provision of this Agreement in any other jurisdiction. 
  
 (e)
Entire Agreement; Amendments. This Agreement and the other Transaction Documents supersede all other prior oral or written agreements between the Buyers, the Company, their Affiliates and Persons acting on their behalf with respect to the
matters discussed herein, and this Agreement, the other Transaction Documents and the instruments referenced herein and therein 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 any Buyer makes any representation, warranty, covenant or undertaking with respect to such matters. No provision of this Agreement may be amended other than by an instrument in
writing signed by the Company and the holders of at least a majority of the Preferred Shares issued and issuable hereunder, and any amendment to this Agreement made in conformity with the provisions of this Section 9(e) shall be binding on all
Buyers and holders of Securities, as applicable. No provision hereof may be waived other than by an instrument in writing signed by the party against whom enforcement is sought. No such amendment shall be effective to the extent that it applies to
less than all of the holders of the Preferred Shares then outstanding. No consideration shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision of any of the Transaction Documents unless the same
consideration also is offered to all of the parties to the Transaction Documents, holders of Preferred Shares or holders of the Warrants, as the case may be. The Company has not, directly or indirectly, made any agreements with any Buyers relating
to the terms or conditions of the transactions contemplated by the Transaction Documents except as set forth in the Transaction 
  

 28 

 Documents. Without limiting the foregoing, the Company confirms that, except as set forth in this Agreement, no Buyer has
made any commitment or promise or has any other obligation to provide any financing to the Company or otherwise. 
  
 (f) Notices. Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in
writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file
by the sending party); or (iii) one Business Day after deposit with an overnight courier service, in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be:

  
 If to the Company: 
  
 Universal Food & Beverage Company 
 3830 Commerce Drive, 
 St. Charles, Illinois
60174 
 Telephone:        (630) 584-8670 
 Facsimile:         (630) 584-8674 
 Attention:          Chief Executive Officer 
  
 With a copy (for informational purposes only) to: 
  
 Holland & Knight, LLP 
 131 S. Dearborn, 30th Floor 
 Chicago, IL 60603 
 Telephone:        (312) 263-3600 
 Facsimile:         (312) 578-6666 
 Attention:          Carl Neumann, Esq. 
  
 If to the Transfer Agent: 
  
 Interwest Transfer Co., Inc. 
 1981 East
4800 South, Suite 100 
 Salt Lake City, UT 84117 
 Telephone:        (801) 272-9294 
 Facsimile:         (801) 277-3147 
 Attention:          Melina Orth 
  
 If to a Buyer, to its address and facsimile number set forth on the Schedule of Buyers, with copies to such Buyer’s representatives as set forth on the Schedule of Buyers, 
  
 with a copy (for informational purposes only) to: 
  
 Schulte Roth & Zabel LLP 
 919 Third Avenue 
 New York, New York 10022

 Telephone:        (212) 756-2000 
 Facsimile:         (212) 593-5955 
 Attention:          Eleazer N. Klein, Esq. 
  

 29 

 or to such other address and/or facsimile number and/or to the attention of such other Person as the recipient party has
specified by written notice given to each other party five (5) days prior to the effectiveness of such change. Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication,
(B) mechanically or electronically generated by the sender’s facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (C) provided by an overnight courier service
shall be rebuttable evidence of personal service, receipt by facsimile or receipt from an overnight courier service in accordance with clause (i), (ii) or (iii) above, respectively. 
  
 (g) Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and assigns, including any purchasers of the Preferred Shares or the Warrants. The Company shall not assign this Agreement or any rights or obligations hereunder without the prior
written consent of the holders of at least a majority of the aggregate number of Registrable Securities issued and issuable hereunder, including by way of a Fundamental Transaction (unless the Company is in compliance with the applicable provisions
governing Fundamental Transactions set forth in the Certificate of Designations and the Warrants). A Buyer may assign some or all of its rights hereunder in connection with transfer of any of its Securities without the consent of the Company, in
which event such assignee shall be deemed to be a Buyer hereunder with respect to such assigned rights. 
  
 (h) No Third Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and
assigns, and, except as set forth in Section 9(k) below, is not for the benefit of, nor may any provision hereof be enforced by, any other Person. 
  
 (i) Survival. Unless this Agreement is terminated under Section 8, the representations and warranties of the Company and the Buyers contained
in Sections 2 and 3 and the agreements and covenants set forth in Sections 4, 5 and 9 shall survive the Closing. Each Buyer shall be responsible only for its own representations, warranties, agreements and covenants hereunder. 
  
 (j) 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 any 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. 
  
 (k) Indemnification. In consideration of each Buyer’s execution and delivery of the Transaction Documents and acquiring the Securities thereunder and in addition to all of the Company’s other
obligations under the Transaction Documents, the Company shall defend, protect, indemnify and hold harmless each Buyer and each other holder of the Securities and all of their stockholders, partners, members, officers, directors, employees and
direct or indirect 
  

 30 

 investors and any of the foregoing Persons’ agents or other representatives (including, without limitation, those
retained in connection with the transactions contemplated by this Agreement) (collectively, the “Indemnitees”) from and against any and all actions, causes of action, suits, claims, losses, costs, penalties, fees, liabilities and
damages, and expenses in connection therewith (irrespective of whether any such Indemnitee is a party to the action for which indemnification hereunder is sought), and including reasonable attorneys’ fees and disbursements (the
“Indemnified Liabilities”), incurred by any Indemnitee as a result of, or arising out of, or relating to (a) any misrepresentation or breach of any representation or warranty made by the Company in the Transaction Documents or
any other certificate, instrument or document contemplated hereby or thereby, (b) any breach of any covenant, agreement or obligation of the Company contained in the Transaction Documents or any other certificate, instrument or document
contemplated hereby or thereby or (c) any cause of action, suit or claim brought or made against such Indemnitee by a third party (including for these purposes a derivative action brought on behalf of the Company) and arising out of or
resulting from (i) the execution, delivery, performance or enforcement of the Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby, (ii) any transaction financed or to be financed in whole
or in part, directly or indirectly, with the proceeds of the issuance of the Securities, (iii) any disclosure made by such Buyer pursuant to Section 4(i), or (iv) the status of such Buyer or holder of the Securities as an investor in
the Company pursuant to the transactions contemplated by the Transaction Documents. To the extent that the foregoing undertaking by the Company may be unenforceable for any reason, the Company shall make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities which is permissible under applicable law. Except as otherwise set forth herein, the mechanics and procedures with respect to the rights and obligations under this Section 9(l) shall be the
same as those set forth in Section 6 of the Registration Rights Agreement. 
  
 (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. Each Buyer and each
holder of the Securities shall have all rights and remedies set forth in the Transaction Documents and all rights and remedies which such holders have been granted at any time under any other agreement or contract and all of the rights which such
holders have under any law. Any Person having any rights under any provision of this Agreement shall be entitled to enforce such rights specifically (without posting a bond or other security), to recover damages by reason of any breach of any
provision of this Agreement and to exercise all other rights granted by law. Furthermore, the Company recognizes that in the event that it fails to perform, observe, or discharge any or all of its obligations under the Transaction Documents, any
remedy at law may prove to be inadequate relief to the Buyers. The Company therefore agrees that the Buyers shall be entitled to seek temporary and permanent injunctive relief in any such case without the necessity of proving actual damages and
without posting a bond or other security. 
  
 (n) Payment Set
Aside. To the extent that the Company makes a payment or payments to the Buyers hereunder or pursuant to any of the other Transaction Documents or the Buyers enforce or exercise their rights hereunder or thereunder, and such payment or payments
or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, 
  

 31 

 declared to be fraudulent or preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid
or otherwise restored to the Company, a trustee, receiver or any other Person under any law (including, without limitation, any bankruptcy law, foreign, state or federal law, common law or equitable cause of action), then to the extent of any such
restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred. 
  
 (o) Independent Nature of Buyers’ Obligations and Rights. The
obligations of each Buyer under any Transaction Document are several and not joint with the obligations of any other Buyer, and no Buyer shall be responsible in any way for the performance of the obligations of any other Buyer under any Transaction
Document. Nothing contained herein or in any other Transaction Document, and no action taken by any Buyer pursuant hereto or thereto, shall be deemed to constitute the Buyers as a partnership, an association, a joint venture or any other kind of
entity, or create a presumption that the Buyers are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Documents and the Company acknowledges that the Buyers are not acting
in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Documents. Each Buyer confirms that it has independently participated in the negotiation of the transaction contemplated hereby with the
advice of its own counsel and advisors. Each Buyer shall be entitled to independently protect and enforce its rights, including, without limitation, the rights arising out of this Agreement or out of any other Transaction Documents, and it shall not
be necessary for any other Buyer to be joined as an additional party in any proceeding for such purpose. 
  
 [Signature Page Follows] 
  

 32 

 IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to this
Securities Purchase Agreement to be duly executed as of the date first written above. 
  

			
	COMPANY:
	
	UNIVERSAL FOOD & BEVERAGE COMPANY
		
	By:	 	 /s/ Duane N. Martin

	Name:	 	Duane N. Martin
	Title:	 	Chief Executive Officer
	
	[BUYERS’ SIGNATURE PAGES]

 EXHIBITS 
  

			
	Exhibit A	  	Form of Certificate of Designations
	Exhibit B	  	Form of Warrants
	Exhibit C	  	Form of Registration Rights Agreement
	Exhibit D	  	Form of Irrevocable Transfer Agent Instructions
	Exhibit E	  	Form of Outside Company Counsel Opinion
	Exhibit F	  	Form of Secretary’s Certificate
	Exhibit G	  	Form of Officer’s Certificate
	Exhibit H	  	Form of Savannah Purchase Agreement
	Exhibit I	  	Form of Voting Agreement
	Exhibit J	  	Form of Lock-up Agreement

 Schedules to 
 Securities Purchase Agreement 
 dated as of February 15, 2006 
 by and between 
 Universal
Food & Beverage Company 
 and the Buyers Identified in that Agreement 

 Schedule 3(a) 
  
 1. Universal Food & Beverage Company, a Delaware Corporation (“Delaware Subsidiary”). 

 
 2. Universal Food & Beverage Company of Virginia, a Virginia
Corporation (“Virginia Subsidiary”). The Virginia Subsidiary is wholly-owned by the Delaware Subsidiary. 
  
 3. Universal Food & Beverage Company of Georgia, a Georgia Corporation (“Georgia Subsidiary”). 

 Schedule 3(e) 
  
 None. 

 Schedule 3(l) 
  
 1. The Company issued $3,250,000 in Senior Convertible Exchangeable Notes (“Senior Notes”) and related
Warrants on December 30, 2005 and January 11, 2006. 
  
 2. The Company entered into a letter of intent on June 30, 2005 with respect to the acquisition of certain assets of California Natural Products, Inc. (“CNP”) located in Savannah, Georgia and used in the operation of
an aseptic processing and packaging facility (“Savannah Acquisition”). 
  
 3. The Company organized the Georgia Subsidiary on February 3, 2006 in connection with the Savannah Acquisition. 
  
 4. The Company will enter into an Asset Purchase Agreement to be dated February 16, 2006 with CNP with respect to the Savannah Acquisition (the
“Savannah Acquisition Agreement”). 

 Schedule 3(q) 
  
 1. There is an outstanding contractual obligation to provide options to purchase 460,000 shares of the Company’s common
stock to John F. Levy at an exercise price of $0.70 per share (the closing price of the Common Stock on the day prior to the November 28, 2005 agreement) pursuant to a stock option agreement to be approved by the Board of Directors. 

 
 2. There is a lease for a pick-up truck between the Company and Marc Fry.
The rent is $225 per month. The truck is used at the water plant in Independence, Virginia. 
  
 3. The following shareholder notes (the “Shareholder Notes”) are outstanding: 
  

				
	 Maker

	  	Principal Amount

	 Duane Martin
	  	$	204,000.00
	 Ralph Passino
	  	$	 45,000.00
	 Bruce Neviaser
	  	$	450,000.00

  
 4. The Company owes
the following executive officers the following amounts as defined compensation as of the date of this Agreement (officers agreed to defer 50% of their compensation until the Company’s operations reaches an annual revenue rate of $4 million):

  

				
	 Name

	  	Deferred Compensation Owed

	 Duane N. Martin
	  	$	167,788.55
	 Marc R. Fry
	  	$	119,471.18
	 Ralph M. Passino
	  	$	94,791.71
	 Joseph Balistreri
	  	$	67,115.40
	 Charles Sizer
	  	$	97,451.96

 Schedule 3(r) 
  
 A. As of the date of this Agreement, there were issued and outstanding 37,439,536 shares of our common stock and no shares
of our preferred stock. As of the date of this Agreement, there are outstanding rights, warrants and options to acquire up to 19,947,453 shares of our common stock, including the common stock issuable on conversion of the Senior Notes and the
outstanding common stock purchase warrants and options for our common stock described below. We have reserved 21,847,585 shares of our common stock as of the date of this Agreement. 
  

								
	 Description

	  	 No. of Shares
 Subject to Rights

	  	 Exercise or
 Conversion Price

	  	 Shares Reserved
 For Issuance

	 Common stock purchase warrants issued as a result of the share exchange
	  	5,914,345	  	$	2.50	  	5,914,345
	 Common stock purchase warrants issued in connection with acquisition of IWG assets
	  	2,945,000	  	$	1.00	  	2,945,000
	 Common stock awards under the consultants’ compensation plan
	  	0	  	 	N/A	  	837,500
	 Options to purchase common stock under agreement with interim chief financial officer
	  	460,000	  	$	0.70	  	460,000
	 Common stock issuable on conversion of senior secured convertible exchangeable notes
	  	8,125,000	  	$	0.40	  	8,937,500
	 Common stock purchase warrants issued to senior note holders
	  	2,503,108	  	$	0.01	  	2,753,420

  
 B. Following the sale
of the Preferred Shares contemplated by this Agreement, and assuming 20,704 Preferred Shares are sold, the Company will have outstanding 20,704 shares of Series A Convertible Preferred Stock. In connection with the sale of the Preferred Shares, the
Senior Notes will be exchanged for Preferred Shares, and the 8,937,500 shares of common stock shown as reserved in the table in Item A for conversion of the Senior Notes will no longer be reserved. Following the sale of the Preferred Shares, we will
have outstanding additional rights, warrants and options to acquire 77,240,053 shares of our common stock, including conversion rights provided with respect to the Preferred Shares and common stock purchase warrants as described below. In connection
with the sale of the Preferred Shares, we will reserve 87,245,600 shares of our common stock for issuance upon conversion of the Preferred Shares, issuance of dividends in connection with the Preferred Shares and exercise of the warrants. We will
also reserve 14,000,000 shares of common stock for awards under our 2006 Omnibus Stock Plan. 
  

								
	 Description

	  	 No. of Shares
 Subject to Rights

	  	 Exercise or
 Conversion Price

	  	 Shares Reserved
 For Issuance

	 Common stock issuable in conversion of convertible preferred stock
	  	41,408,000	  	$	0.50	  	51,760,000
	 Common stock issuable as dividend on convertible preferred stock
	  	N/A	  	 	N/A	  	6,500,000
	 Common stock purchase warrants issued to convertible preferred stock holders
	  	20,704,000	  	$	0.70	  	25,880,000
	 Common stock purchase warrants issued to Illington Capital, Inc.
	  	3,105,600	  	$	0.50	  	3,105,600
	 Common stock issuable on exercise of awards under 2006 Omnibus Stock Plan
	  	0	  	 	As provided in plan	  	14,000,000
	 Total
	  	65,217,600	  	 	 	  	101,245,600

 (ii) See tables above under Item A and Item B. 
  
 (iii) 1. Secured Mortgage Note dated March 31, 2005 payable by the
Virginia Subsidiary to Grayson National Bank in the original principal amount of $2,500,000 due March 31, 2035 (“Virginia Mortgage Note”). 
  

2. Secured Equipment Note dated March 31, 2005 payable by the Virginia Subsidiary to Grayson National Bank in the original principal amount of
$500,000, due March 31, 2006 (“Virginia Equipment Note”). 
  
 3. Secured Subordinated Promissory Note dated March 31, 2005 payable by the Virginia Subsidiary to Independence Water Group, LLC (“IWG Note”) in the original principal amount of $850,000 due
March 31, 2006. 
  
 4. The Senior Notes. 
  
 5. Promissory Note dated May 23, 2005 payable to Sterling Trust Company,
fbo Dalton L. Lott Roth IRA #065038 (“Lott Note”) in the original principal amount of $60,000. 
  
 6. Promissory Note dated May 23, 2005 payable to Sterling Trust Company, fbo Kenneth W. Bain Roth IRA #027584 (“Bain Note”) in the
original principal amount of $40,000. 
  
 (iv) 1. Financing
statements filed by Grayson National Bank in connection with the Virginia Equipment Note. 
  
 2. Financing Statements filed by Independence Water Group LLC in connection with the IWG Note. 
  
 3. Deed of Trust dated March 31, 2005 between Grayson National Bank and the Virginia Subsidiary securing the Virginia Mortgage Note. 
  
 (v) 1. Registration Rights Agreement dated as of December 30, 2005.

  
 2. Registration Rights Agreement dated as of February 16,
2006. 
  
 (vi) 1. The Senior Notes. 
  
 2. The Preferred Shares. 

 Schedule 3(s) 
  
 1. The Virginia Mortgage Note. The current amount outstanding on this note is $2,461,858.29. 
  
 2. The Virginia Equipment Note. The current amount outstanding on this note
is $505,589.00. 
  
 3. The IWG Note. The current amount
outstanding on this note is $610,513.83. 
  
 4. The Senior Notes.
The current amount outstanding on the Senior Notes is $3,250,000. 
  
 5. The Shareholder Notes. The current amounts outstanding on the Shareholder Notes are $708,536. 
  
 6. The Bain Note. The current amount outstanding on the Bain Note is $42,239. 
  
 7. The Lott Note. The current amount outstanding on the Lott Note is $63,358. 
  
 8. Guaranty of the Company dated March 31, 2005 in favor of Grayson
National Bank with respect to Virginia Subsidiary obligations under the Virginia Mortgage Note. 
  
 9. Guaranty of the Delaware Subsidiary dated March 31, 2005 in favor of Grayson National Bank with respect to Virginia Subsidiary obligations under
the Virginia Mortgage Note. 
  
 10. Guaranty of the Delaware
Subsidiary dated March 31, 2005 in favor of Grayson National Bank with respect to Virginia Subsidiary obligations under the Virginia Equipment Note. 
  
 11. Guaranty of the Company dated March 31, 2005 in favor of Grayson National Bank with respect to Virginia Subsidiary obligations under the Virginia
Equipment Note. 
  
 $3,000,000 in principal amount (and
$303,863.01 in related buy-in amounts) of the Senior Notes and $204,000 in principal amount of the Shareholder Notes payable to Duane Martin will be exchanged for Preferred Shares and Warrants and cancelled. The proceeds from the sale of the
Preferred Shares and Warrants will be used to pay off the balance of the Senior Notes, the Virginia Equipment Note, the IWG Note, the Bain Note, the Lott Note and the Shareholder Notes payable to Ralph Passino and Bruce Neviaser, and the related
Guarantees will be terminated. 

 Schedule 3(v) 
  
 1. The term of the employment agreement with John Levy expires March 31, 2006. 

 Schedule 3(w) 
  
 There are liens on the assets of the Company and its Subsidiaries established by the following agreements: 
  
 1. Grayson National Bank Deed of Trust dated March 31, 2005.

  
 2. Grayson National Bank Equipment Loan Security Agreement
dated March 31, 2005.* 
  
 3. The IWG Note.* 
  

	*	These liens will be released at the Closing of the sale of the Preferred Shares on satisfaction of the underlying obligations. 

 Schedule 4(d) 
  
 The following Schedule was prepared assuming all 20,704 Preferred Shares are sold. 
  

				
	 Use

	  	Amount

	 Bridge Payout/Buy-In
	  	$	3,342,493.00
	 Duane Martin Notes Rollover
	  	$	204,000.00
	 Savannah Purchase Price
	  	$	8,738,537.78
	 Cipher Senior Note Payout
	  	$	202,081.41
	 Reifler Senior Note Payout
	  	$	50,520.36
	 IWG Note Payout
	  	$	610,513.83
	 Virginia Equipment Note Payout
	  	$	505,589.05
	 Bruce Neviaser Note Payout
	  	$	459,535.71
	 Lott Note Payout
	  	$	63,358.00
	 Bain Note Payout
	  	$	42,239.00
	 Ralph Passino Note Payout
	  	$	45,000.00
	 Agent Fees
	  	$	1,514,710.20
	 Buyers’ Legal Fees
	  	$	85,000.00
	 Working Capital
	  	$	4,840,420.97
	 	  	
	

	 Total
	  	$	20,704,000.00

 Schedule 4(s) 
  
 The Company may incur the following Indebtedness: 
  

	 	(i)	Indebtedness received pursuant to any Permitted Receivables and Inventory Financing; 

  

	 	(ii)	Indebtedness consisting of Approved Obligations; 

  

	 	(iii)	Indebtedness consisting of Purchase Money Indebtedness (including Indebtedness that is in existence with respect to any asset or other property at the time such asset or other
property is acquired), industrial revenue bonds, or Capital Lease Obligations incurred to finance capital expenditures, provided that the Indebtedness incurred shall not exceed the purchase price of the assets financed thereby;

  

	 	(iii)	The Guarantee of any of the Indebtedness outstanding as of the date of this Agreement or incurred in connection with any of the Indebtedness permitted under subsections (i),
(ii) or (iii) above; and 

  

	 	(iv)	Indebtedness relating to Trade Payables. 

  
 For purpose of this Schedule 4(s), the following terms shall have the following meanings: 
  
 “Approved Obligations” means obligations of the Company or a Subsidiary in connection with the financing
related to the acquisition, lease or other use of (i) aseptic bottle or bag filling equipment for the Savannah facilities or (ii) equipment for the Virginia facilities. 
  
 “Capital Lease Obligation” shall mean an obligation of the Company or its Subsidiaries that is required to
be classified and accounted for as a capital lease for financial reporting purposes in accordance with GAAP, and the amount of such obligation shall be the capitalized amount thereof determined in accordance with GAAP. 
  
 “Guarantee” means any obligation, contingent or otherwise,
of any Person directly or indirectly guaranteeing any Indebtedness or other obligation of any other Person and any obligation, direct or indirect, contingent or otherwise, by such Person. 
  
 “Permitted Receivables and Inventory Financing” shall mean
any monetary obligations under factoring or similar arrangement entered into by the Company or any Subsidiary from time to time and any financing secured by receivables (and related assets) or inventory originated by the Company or any Subsidiary in
any amount, provided that such financing is non-recourse to the Company and its Subsidiaries except to a limited extent customary for such financing. 
  
 “Purchase Money Indebtedness” means Indebtedness (i) consisting of the deferred purchase price of an asset, any conditional sale
obligation, any obligation under any title retention agreement or any other purchase money obligation, in each case where the maturity of such Indebtedness does not exceed the anticipated useful life of the asset being financed, and
(ii) incurred to finance the acquisition by the Company or a Subsidiary of such asset, including additions and improvements; provided, that such Indebtedness is incurred within ninety days after the acquisition by the Company of such asset, or
is in existence with respect to any asset or other property at the time such asset or property is acquired. 

 “Trade Payables” means any accounts payable or any unsecured indebtedness or monetary
obligation to trade creditors of the Company or its Subsidiaries created, assumed or guaranteed by any of the Company or its Subsidiaries arising in the ordinary course of business in connection with the acquisition of goods or services and not
outstanding for more than 90 days after the date such payable was created.Registration Rights Agreement

 Exhibit 10(b) 
  
 REGISTRATION RIGHTS AGREEMENT 
  

REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of February 16, 2006, by and among Universal Food &
Beverage Company, a Nevada corporation, with headquarters located at 3830 Commerce Drive, St. Charles, Illinois 60174 (the ”Company”), and the undersigned buyers (each, a “Buyer”, and collectively, the
“Buyers”). 
  
 WHEREAS: 
  
 A. In connection with the Securities Purchase Agreement by and among the
parties hereto of even date herewith (the “Securities Purchase Agreement”), the Company has agreed, upon the terms and subject to the conditions set forth in the Securities Purchase Agreement, to issue and sell to each Buyer
(i) preferred shares of the Company designated as Series A Convertible Preferred Stock, the terms of which are set forth in the certificate of designation for such series of preferred shares (the “Certificate of Designations”)
in the form attached as Exhibit A to the Securities Purchase Agreement (the “Preferred Shares”), which will, among other things, be convertible into shares of the Company’s common stock, par value $0.01 per share (the
“Common Stock”) (as converted, the “Conversion Shares”), in accordance with the terms of the Certificate of Designations, and (ii) warrants (the “Warrants”) which will be exercisable to
purchase shares of Common Stock (as exercised collectively, the “Warrant Shares”). 
  
 B. The Preferred Shares may be entitled to dividends, which at the option of the Company, subject to certain conditions, may be paid in shares of Common
Stock (the “Dividend Shares”). 
  
 C. To induce
the Buyers to execute and deliver the Securities Purchase Agreement, the Company has agreed to provide certain registration rights under the Securities Act of 1933, as amended, and the rules and regulations thereunder, or any similar successor
statute (collectively, the “1933 Act”), and applicable state securities laws. 
  
 NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company
and each of the Buyers hereby agree as follows: 
  
 1.
Definitions. 
  
 Capitalized terms used herein and not
otherwise defined herein shall have the respective meanings set forth in the Securities Purchase Agreement. As used in this Agreement, the following terms shall have the following meanings: 
  
 a. “Additional Registration Statement”
means a Registration Statement registering no less than 19% of the Required Registration Amount of the Registrable Securities. 

 b. “Business Day” means any day other than Saturday, Sunday or any other
day on which commercial banks in The City of New York are authorized or required by law to remain closed. 
  
 c. “Closing Date” shall have the meaning set forth in the Securities Purchase Agreement. 
  
 d. “Effective Date” means the date that a
Registration Statement has been declared effective by the SEC. 
  
 e. “Effectiveness Deadline” shall mean the 50% Effectiveness Deadline or the 100% Effectiveness Deadline, as applicable. 
  
 f. “50% Effectiveness Deadline” means 120 days after the Closing Date. 
  
 g. “100% Effectiveness Deadline” means 180
days after the Closing Date. 
  
 h.
“Effectiveness Failure” means a 50% Effectiveness Failure or a 100% Effectiveness Failure, as applicable. 
  
 i. “Initial Filing Deadline” means with respect to the Initial Registration Statement, April 7, 2006. 
  
 j. “Initial Registration Statement” means a
Registration Statement registering no less than 19% of the Required Registration Amount of the Registrable Securities. 
  
 k. “Investor” means a Buyer or any transferee or assignee of the Preferred Shares or Warrants, as applicable, to whom a
Buyer assigns its rights under this Agreement and who agrees to become bound by the provisions of this Agreement in accordance with Section 9 and any transferee or assignee thereof to whom a transferee or assignee of the Preferred Shares or
Warrants, as applicable, assigns its rights under this Agreement and who agrees to become bound by the provisions of this Agreement in accordance with Section 9 and, in each case, is identified in the register of the Company. 
  
 l. “Person” means an individual, a limited
liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization and a government or any department or agency thereof. 
  

m. “register,” “registered,” and “registration” refer to a registration effected by
preparing and filing one or more Registration Statements (as defined below) in compliance with the 1933 Act and pursuant to Rule 415 and the declaration of effectiveness of such Registration Statement(s) by the SEC. 
  
 n. “Registrable Securities” means
(i) the Conversion Shares issued or issuable upon conversion of the Preferred Shares, (ii) the Warrant Shares issued or issuable upon exercise of the Warrants (iii) Dividend Shares issued or issuable with respect to the Preferred
Shares and (iv) any share capital of the Company issued or issuable, with respect to the Conversion Shares, the Preferred Shares, the Dividend Shares, the Warrant Shares or the 
  

 2 

 Warrants as a result of any share split, share dividend, recapitalization, exchange or similar event or
otherwise, without regard to any limitations on conversions of the Preferred Shares or exercises of the Warrants. 
  
 o. “Registration Statement” means a registration statement or registration statements of the Company filed under the 1933
Act and pursuant to Rule 415 covering some or all of the Registrable Securities pursuant to Section 2(a). 
  
 p. “Required Holders” means the holders of at least a majority of the Registrable Securities. 
  
 q. “Required Registration Amount” means the
sum of (i) 125% of the number of Conversion Shares issued and issuable pursuant to conversion of the Preferred Shares as of the trading day immediately preceding the applicable date of determination, (ii) 125% of the number of Warrant
Shares issued and issuable pursuant to the Warrants as of the trading day immediately preceding the applicable date of determination and (iii) 100% of the number of Dividend Shares issuable pursuant to the terms on the Certificate of
Designations as of the Trading Day immediately prior to the applicable date of determination, all subject to adjustment as provided in Section 2(e). 
  
 r. “Rule 415” means Rule 415 under the 1933 Act or any successor rule providing for offering securities on a continuous
or delayed basis. 
  
 s. “SEC”
means the United States Securities and Exchange Commission. 
  
 2.
Registration. 
  
 a. Mandatory
Registration. The Company shall use its best efforts to prepare, and, as soon as practicable, but in no event later than the Initial Filing Deadline, file with the SEC the Initial Registration Statement on Form S-3. The Company shall use its
best efforts, if the Initial Registration Statement does not cover all of the Required Registration Amount of the Registrable Securities, to prepare, and, as soon as practicable, but in no event later than 5 Business Days following the Effective
Date of the Initial Registration Statement, file with the SEC an Additional Registration Statement on Form S-3. The Company shall continue to file Additional Registration Statements in accordance with the provisions of the preceding sentence until
the Required Registration Amount of the Registrable Securities have been registered. In the event that Form S-3 is unavailable for such a registration, the Company shall use Form SB-2 or such other form as is available for such a registration on
another appropriate form reasonably acceptable to the Required Holders, subject to the provisions of Section 2(d). The Registration Statements prepared pursuant hereto, taken as a whole, shall register for resale at least the number of shares
of Common Stock equal to the Required Registration Amount as of the date the final Registration Statement is filed with the SEC. Each Registration Statement shall contain (except if otherwise directed by the Required Holders) the “Selling
Shareholders” and “Plan of Distribution” sections in substantially the form attached hereto as Exhibit B. The Company shall use its best efforts to have each of the Registration Statements declared effective by the
SEC as soon as practicable, but in no event shall (i) Registration Statements covering at least 50% of the Required Registration Amount of the Registrable Securities be 
  

 3 

 declared effective later than the 50% Effectiveness Deadline and (ii) Registration Statements
covering the Required Registration Amount of the Registrable Securities be declared effective later than the 100% Effectiveness Deadline. By 9:30 am on the first Business Day following each Effective Date, the Company shall file with the SEC in
accordance with Rule 424 under the 1933 Act the final prospectus to be used in connection with sales pursuant to such Registration Statement. 
  
 b. Allocation of Registrable Securities. The initial number of Registrable Securities included in any Registration Statement and
any increase in the number of Registrable Securities included therein shall be allocated pro rata among the Investors based on the number of Registrable Securities held by each Investor at the time the Registration Statement covering such initial
number of Registrable Securities or increase thereof is declared effective by the SEC. In the event that an Investor sells or otherwise transfers any of such Investor’s Registrable Securities, each transferee that becomes an Investor shall be
allocated a pro rata portion of the then remaining number of Registrable Securities included in such Registration Statement for such transferor. Any Shares of Common Stock included in a Registration Statement and which remain allocated to any Person
which ceases to hold any Registrable Securities covered by such Registration Statement shall be allocated to the remaining Investors, pro rata based on the number of Registrable Securities then held by such Investors which are covered by such
Registration Statement. In no event shall the Company include any securities other than Registrable Securities and the Warrants issued pursuant to the Securities Purchase Agreement dated as of December 30, 2005 on any Registration Statement
without the prior written consent of the Required Holders. 
  
 c. Legal Counsel. Subject to Section 5 hereof, the Required Holders shall have the right to select one legal counsel to review and oversee any registration pursuant to this Section 2 (“Legal
Counsel”), which shall be Schulte Roth & Zabel LLP or such other counsel as thereafter designated by the Required Holders. The Company and Legal Counsel shall reasonably cooperate with each other in regards to the performance of
the Company’s obligations under this Agreement. 
  
 d. Ineligibility for Form S-3. In the event that Form S-3 is not available for the registration of the resale of Registrable Securities hereunder, the Company shall (i) register the resale of the Registrable Securities on
another appropriate form reasonably acceptable to the Required Holders and (ii) undertake to register the Registrable Securities on Form S-3 as soon as such form is available, provided that the Company shall maintain the effectiveness of the
Registration Statement then in effect until such time as a Registration Statement on Form S-3 covering the Registrable Securities has been declared effective by the SEC, or if earlier, until the end of the Registration Period (as defined below).

  
 e. Sufficient Number of Shares
Registered. In the event the number of shares available under the Registration Statements filed pursuant to Section 2(a) are insufficient to cover all of the Registrable Securities required to be covered by such Registration Statement or an
Investor’s allocated portion of the Registrable Securities pursuant to Section 2(b), the Company shall amend the applicable Registration Statement, or file a new Registration Statement (on the short form available therefor, if applicable),
or both, so as to cover at least the Required Registration Amount as of the trading day immediately preceding the date of the 
  

 4 

 filing of such amendment or new Registration Statement, in each case, as soon as practicable, but in any
event not later than five (5) Business Days after the necessity therefor arises. The Company shall use its best efforts to cause such amendment and/or new Registration Statement to become effective as soon as practicable following the filing
thereof. For purposes of the foregoing provision, the number of shares available under a Registration Statement shall be deemed “insufficient to cover all of the Registrable Securities” if at any time the number of shares of Common Stock
available for resale under the Registration Statement is less than the product determined by multiplying (i) the Required Registration Amount as of such time by (ii) 0.90. The calculation set forth in the foregoing sentence shall be made
without regard to any limitations on the conversion of the Preferred Shares or the exercise of the Warrants and such calculation shall assume that the Preferred Shares are then convertible into shares of Common Stock at the then prevailing
Conversion Rate (as defined in the Certificate of Designations) and that the Warrants are then exercisable for shares of Common Stock at the then prevailing Exercise Price (as defined in the Warrants). 
  
 f. Effect of Failure to File and Obtain and Maintain
Effectiveness of Registration Statement. If (i) the Initial Registration Statement is not filed with the SEC on or before the Initial Filing Deadline, (ii) any Additional Registration Statement is not filed with the SEC on or prior to
5 Business Days after the date of effectiveness of the Initial Registration Statement or the last filed Additional Registration Statement, as the case may be, (each of (i) and (ii) above, a “Filing Failure”),
(iii) one or more Registration Statements covering at least 50% of the Registrable Securities is not declared effective by the SEC on or before the 50% Effectiveness Deadline (a “50% Effectiveness Failure”), (iv) one or
more Registration Statements covering the Required Registration Amount of the Registrable Securities is not declared effective by the SEC on or before the 100% Effectiveness Failure deadline (a “100% Effectiveness Failure”), or
(v) on any day after the applicable Effective Date sales of any Registrable Securities required to be included on such Registration Statement cannot be made (other than during an Allowable Grace Period (as defined in Section 3(o)) pursuant
to such Registration Statement (including, without limitation, because of a failure to keep such Registration Statement effective, to disclose such information as is necessary for sales to be made pursuant to such Registration Statement or to
register a sufficient number of Shares of Common Stock) (a “Maintenance Failure”) then, as partial relief for the damages to any holder by reason of any such delay in or reduction of its ability to sell the underlying shares of
Common Stock (which remedy shall be exclusive of any other remedies available at law or in equity), the Company shall pay to each holder of Registrable Securities relating to such Registration Statement an amount in cash equal to: (A) one
percent (1.0%) of the aggregate Purchase Price (as such term is defined in the Securities Purchase Agreement) of such Investor’s Registrable Securities (the “Investor’s Purchase Price”) as to which the applicable
Filing Failure, 50% Effectiveness Failure, 100% Effectiveness Failure or Maintenance Failure applies on each of the following dates: (i) the day of a Filing Failure and on the thirtieth day (pro rated for periods totaling less than thirty days)
after a Filing Failure until such Filing Failure is cured, (ii) the day of an Effectiveness Failure and on the thirtieth day (pro rated for periods totaling less than thirty days) after an Effectiveness Failure until such Effectiveness Failure
is cured; and (iii) the initial day of a Maintenance Failure and on the thirtieth day (pro rated for periods totaling less than thirty days) after a Maintenance Failure until such Maintenance Failure is cured, (B) two percent
(2.0%) of such Investor’s Purchase Price in such Registration Statements on each of the following dates: (i) on the sixtieth day (prorated for 
  

 5 

 periods totaling less than thirty days) after a Filing Failure until such Filing Failure is cured;
(ii) on the sixtieth day (prorated for periods totaling less than thirty days) after an Effectiveness Failure until such Effectiveness Failure is cured; and (iii) on the sixtieth day (prorated for periods totaling less than thirty days) of
a Maintenance Failure until such Maintenance Failure is cured; and (C) three percent (3.0%) of such Investor’s Total Purchase Price in such Registration Statements on each of the following dates: (i) on the ninetieth day and on
every thirtieth day thereafter (pro rated for periods totaling less than thirty days) after a Filing Failure until such Filing Failure is cured, (ii) on the ninetieth day and in every thirtieth day thereafter (pro rated for periods totaling
less than thirty days) after an Effectiveness Failure until such Effectiveness Failure is cured; and (iii) on the ninetieth day and in every thirtieth day thereafter (pro rated for periods totaling less than thirty days) of a Maintenance
Failure until such Maintenance Failure is cured. The payments to which a holder shall be entitled pursuant to this Section 2(f) are referred to herein as “Registration Delay Payments.” Notwithstanding the foregoing, in no event
shall the aggregate of all Registration Delay Payments exceed 20% of the aggregate of all Investor’s Total Purchase Price. Registration Delay Payments shall be paid on the day of the Filing Failure, Effectiveness Failure and the initial day of
a Maintenance Failure, as applicable, and thereafter on the earlier of (I) the thirtieth day after the event or failure giving rise to the Registration Delay Payments has occurred and (II) the third Business Day after the event or failure
giving rise to the Registration Delay Payments is cured. In the event the Company fails to make Registration Delay Payments in a timely manner, such Registration Delay Payments shall bear interest at the rate of one and one-half percent
(1.5%) per month (prorated for partial months) until paid in full. 
  
 3. Related Obligations. 
  
 At such time as the
Company is obligated to file a Registration Statement with the SEC pursuant to Section 2(a), 2(d) or 2(e), the Company will use its reasonable best efforts to effect the registration of the Registrable Securities in accordance with the intended
method of disposition thereof and, pursuant thereto, the Company shall have the following obligations: 
  
 a. The Company shall promptly prepare and file with the SEC a Registration Statement with respect to the Registrable Securities and use
its reasonable best efforts to cause such Registration Statement relating to the Registrable Securities to become effective as soon as practicable after such filing (but in no event later than the Effectiveness Deadline). The Company shall keep each
Registration Statement effective pursuant to Rule 415 at all times until the earlier of (i) the date as of which all of the Investors (other than any Investors who are “affiliates” of the Company as such term is used in Rule 144(k)
promulgated under the Securities Act) may sell all of the Registrable Securities covered by such Registration Statement without restriction pursuant to Rule 144(k) (or any successor thereto) promulgated under the 1933 Act or (ii) the date on
which the Investors shall have sold all of the Registrable Securities covered by such Registration Statement (the “Registration Period”). The Company shall ensure that each Registration Statement (including any amendments or
supplements thereto and prospectuses contained therein) shall not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein, or necessary to make the statements therein (in the case of
prospectuses, in the light of the circumstances in which they were made) not misleading. The Company shall submit to the SEC, within two (2) Business Days after the later of the date that (i) the Company learns that no review of a
particular 
  

 6 

 Registration Statement will be made by the staff of the SEC or that the staff has no further comments on
a particular Registration Statement, as the case may be, and (ii) the approval of Legal Counsel pursuant to Section 3(c) (which approval is immediately sought), a request for acceleration of effectiveness of such Registration Statement to
a time and date not later than 48 hours after the submission of such request; provided however, the Company may delay the submission of the request for acceleration (or delay the effectiveness of such Registration Statement) for up to thirty
(30) days if the Company has material non-public information concerning the Company if the disclosure of such information at the time is not, in the good faith judgment of the Board of Directors of the Company relying upon the opinion of
counsel, in the best interests of the Company; provided, further however, that the Company shall promptly notify the Investors in writing of the existence of material non-public information giving rise to a delay in effectiveness (provided that the
Company shall not disclose the content of such material non-public information to the Investors); and provided further that any delay by the Company in accordance with this sentence shall not affect the entitlement of a holder to any Registration
Delay Payment determined in accordance with Section 2(f). 
  
 b. Subject to Section 3(o) of this Agreement, the Company shall prepare and file with the SEC such amendments (including post-effective amendments) and supplements to a Registration Statement and the prospectus
used in connection with such Registration Statement, which prospectus is to be filed pursuant to Rule 424 promulgated under the 1933 Act, as may be necessary to keep such Registration Statement effective at all times during the Registration Period,
and, during such period, comply with the provisions of the 1933 Act with respect to the disposition of all Registrable Securities of the Company covered by such Registration Statement until such time as all of such Registrable Securities shall have
been disposed of in accordance with the intended methods of disposition by the seller or sellers thereof as set forth in such Registration Statement. In the case of amendments and supplements to a Registration Statement which are required to be
filed pursuant to this Agreement (including pursuant to this Section 3(b)) by reason of the Company filing a report on Form 10-Q, Form 10-K or any analogous report under the Securities Exchange Act of 1934, as amended (the “1934
Act”), the Company shall have incorporated such report by reference into such Registration Statement, if applicable, or shall file such amendments or supplements with the SEC on the same day on which the 1934 Act report is filed which
created the requirement for the Company to amend or supplement such Registration Statement. 
  
 c. The Company shall (A) permit Legal Counsel to review and comment upon (i) a Registration Statement at least five
(5) Business Days prior to its filing with the SEC and (ii) all amendments and supplements to all Registration Statements (except for Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and any similar
or successor reports) within a reasonable number of days prior to their filing with the SEC, and (B) not file any Registration Statement or amendment or supplement thereto in a form to which Legal Counsel reasonably objects. The Company shall
not submit a request for acceleration of the effectiveness of a Registration Statement or any amendment or supplement thereto without the prior approval of Legal Counsel, which consent shall not be unreasonably withheld. The Company shall furnish to
Legal Counsel, without charge, (i) copies of any correspondence from the SEC or the staff of the SEC to the Company or its representatives relating to any Registration Statement, (ii) promptly after the same is prepared and filed with the
SEC, one copy of any Registration Statement and any amendment(s) thereto, including 
  

 7 

 financial statements and schedules, all documents incorporated therein by reference, if requested by an
Investor, and all exhibits and (iii) upon the effectiveness of any Registration Statement, one copy of the prospectus included in such Registration Statement and all amendments and supplements thereto. The Company shall reasonably cooperate
with Legal Counsel in performing the Company’s obligations pursuant to this Section 3. 
  
 d. The Company shall furnish to each Investor whose Registrable Securities are included in any Registration Statement, without charge,
(i) promptly after the same is prepared and filed with the SEC, at least one copy of any Registration Statement and any amendment(s) thereto, including financial statements and schedules, all documents incorporated therein by reference, if
requested by an Investor, all exhibits and each preliminary prospectus, (ii) upon the effectiveness of any Registration Statement, ten (10) copies of the prospectus included in such Registration Statement and all amendments and supplements
thereto (or such other number of copies as such Investor may reasonably request) and (iii) such other documents, including copies of any preliminary or final prospectus, as such Investor may reasonably request from time to time in order to
facilitate the disposition of the Registrable Securities owned by such Investor. 
  
 e. Subject to Section 3(o) of this Agreement, and excluding any Registrable Securities held by Investors electing to exclude their
Registrable Securities from the Registration Statement under Section 4(b), the Company shall use its reasonable best efforts to (i) register and qualify, unless an exemption from registration and qualification applies, the resale by
Investors of the Registrable Securities covered by a Registration Statement under such other securities or “blue sky” laws of all applicable jurisdictions in the United States, (ii) prepare and file in those jurisdictions, such
amendments (including post-effective amendments) and supplements to such registrations and qualifications as may be necessary to maintain the effectiveness thereof during the Registration Period, (iii) take such other actions as may be
necessary to maintain such registrations and qualifications in effect at all times during the Registration Period, and (iv) take all other actions reasonably necessary or advisable to qualify the Registrable Securities for sale in such
jurisdictions; provided, however, that the Company shall not be required in connection therewith or as a condition thereto to (x) qualify to do business in any jurisdiction where it would not otherwise be required to qualify but for this
Section 3(e), (y) subject itself to general taxation in any such jurisdiction, or (z) file a general consent to service of process in any such jurisdiction. The Company shall promptly notify Legal Counsel and each Investor who holds
Registrable Securities of the receipt by the Company of any notification with respect to the suspension of the registration or qualification of any of the Registrable Securities for sale under the securities or “blue sky” laws of any
jurisdiction in the United States or its receipt of actual notice of the initiation or threatening of any proceeding for such purpose. 
  
 f. The Company shall notify Legal Counsel and each Investor in writing of the happening of any event, as promptly as practicable after
becoming aware of such event, as a result of which the prospectus included in a Registration Statement, as then in effect, includes an untrue statement of a material fact or omission to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading (provided that in no event shall such notice contain any material, nonpublic information), and, subject to Section 3(o),
promptly prepare a supplement 
  

 8 

 or amendment to such Registration Statement to correct such untrue statement or omission and deliver ten
(10) copies of such supplement or amendment to Legal Counsel and each Investor (or such other number of copies as Legal Counsel or such Investor may reasonably request). The Company shall also promptly notify Legal Counsel and each Investor in
writing (i) when a prospectus or any prospectus supplement or post-effective amendment has been filed, and when a Registration Statement or any post-effective amendment has become effective (notification of such effectiveness shall be delivered
to Legal Counsel and each Investor by facsimile or e-mail on the same day of such effectiveness and by overnight mail), (ii) of any request by the SEC for amendments or supplements to a Registration Statement or related prospectus or related
information, and (iii) of the Company’s reasonable determination that a post-effective amendment to a Registration Statement would be appropriate (subject to Section 3(o) hereof). 
  
 g. Subject to Section 3(o) the Company shall use its
best efforts to prevent the issuance of any stop order or other suspension of effectiveness of a Registration Statement, or the suspension of the qualification of any of the Registrable Securities for sale in any jurisdiction and, if such an order
or suspension is issued, to obtain the withdrawal of such order or suspension at the earliest possible moment and to notify Legal Counsel and each Investor who holds Registrable Securities being sold of the issuance of such order and the resolution
thereof or its receipt of actual notice of the initiation or threat of any proceeding for such purpose. 
  
 h. The Company shall hold in confidence and not make any disclosure of information concerning an Investor provided to the Company unless
(i) disclosure of such information is necessary to comply with federal or state securities laws, (ii) the disclosure of such information is necessary to avoid or correct a misstatement or omission in any Registration Statement,
(iii) the release of such information is ordered pursuant to a subpoena or other final, non-appealable order from a court or governmental body of competent jurisdiction, or (iv) such information has been made generally available to the
public other than by disclosure in violation of this Agreement or any other agreement. The Company agrees that it shall, upon learning that disclosure of such information concerning an Investor is sought in or by a court or governmental body of
competent jurisdiction or through other means, give prompt written notice to such Investor and allow such Investor, at the Investor’s expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, such
information. 
  
 i. The Company shall use its
best efforts either to (i) cause all of the Registrable Securities covered by a Registration Statement to be listed on each securities exchange on which securities of the same class or series issued by the Company are then listed, if any, if
the listing of such Registrable Securities is then permitted under the rules of such exchange, or (ii) secure designation and quotation of all the Registrable Securities covered by a Registration Statement on the Nasdaq National Market, or
(iii) if, despite the Company’s best efforts to satisfy the preceding clause (i) or (ii) the Company is unsuccessful in satisfying the preceding clause (i) or (ii), to secure the inclusion for quotation on The Nasdaq Capital
Market for such Registrable Securities and, without limiting the generality of the foregoing, to use its best efforts to arrange for at least two market makers to register with the National Association of Securities Dealers, Inc.
(“NASD”) as such with respect to such Registrable Securities. The Company shall pay all fees and expenses in connection with satisfying its obligation under this Section 3(i). 
  

 9 

 j. The Company shall cooperate with the Investors who hold Registrable Securities being
offered and, to the extent applicable, facilitate the timely preparation and delivery of certificates (not bearing any restrictive legend) representing the Registrable Securities to be offered pursuant to a Registration Statement and enable such
certificates to be in such denominations or amounts, as the case may be, as the Investors may reasonably request and registered in such names as the Investors may request. 
  
 k. If requested by an Investor, the Company shall as soon as practicable after receipt of notice from such
Investor and subject to Section 3(o) hereof, (i) incorporate in a prospectus supplement or post-effective amendment such information as an Investor reasonably requests to be included therein relating to the sale and distribution of
Registrable Securities, including, without limitation, information with respect to the number of Registrable Securities being offered or sold, the purchase price being paid therefor and any other terms of the offering of the Registrable Securities
to be sold in such offering; (ii) make all required filings of such prospectus supplement or post-effective amendment after being notified of the matters to be incorporated in such prospectus supplement or post-effective amendment; and
(iii) supplement or make amendments to any Registration Statement if reasonably requested by an Investor holding any Registrable Securities. 
  
 l. The Company shall make generally available to its security holders as soon as practical, but not later than ninety (90) days after
the close of the period covered thereby, an earnings statement (in form complying with, and in the manner provided by, the provisions of Rule 158 under the 1933 Act) covering a twelve-month period beginning not later than the first day of the
Company’s fiscal quarter next following the effective date of the Registration Statement. 
  
 m. The Company shall otherwise use its best efforts to comply with all applicable rules and regulations of the SEC in connection with any
registration hereunder. 
  
 n. Within two
(2) Business Days after a Registration Statement which covers Registrable Securities is ordered effective by the SEC, the Company shall deliver, and shall cause legal counsel for the Company to deliver, to the transfer agent for such
Registrable Securities (with copies to the Investors whose Registrable Securities are included in such Registration Statement) confirmation that such Registration Statement has been declared effective by the SEC in the form attached hereto as
Exhibit A. 
  
 o. Notwithstanding anything to the
contrary herein, at any time after the Registration Statement has been declared effective by the SEC, the Company may delay the disclosure of material, non-public information concerning the Company the disclosure of which at the time is not, in the
good faith opinion of the Board of Directors of the Company, in the best interest of the Company and, in the opinion of counsel to the Company, otherwise required (a “Grace Period”); provided, that the Company shall promptly
(i) notify the Investors in writing of the existence of material, non-public information giving rise to a Grace Period (provided that in each notice the Company will not disclose the content of such 
  

 10 

 material, non-public information to the Investors) and the date on which the Grace Period will begin, and
(ii) notify the Investors in writing of the date on which the Grace Period ends; and, provided further, that no Grace Period shall exceed twenty (20) consecutive days and during any three hundred sixty five (365) day period such Grace
Periods shall not exceed an aggregate of sixty (60) days and the first day of any Grace Period must be at least two (2) trading days after the last day of any prior Grace Period (each, an “Allowable Grace Period”). For
purposes of determining the length of a Grace Period above, the Grace Period shall begin on and include the date the Investors receive the notice referred to in clause (i) and shall end on and include the later of the date the Investors receive
the notice referred to in clause (ii) and the date referred to in such notice. The provisions of Section 3(g) hereof shall not be applicable during the period of any Allowable Grace Period. Upon expiration of the Grace Period, the Company
shall again be bound by the first sentence of Section 3(f) with respect to the information giving rise thereto unless such material, non-public information is no longer applicable. Notwithstanding anything to the contrary, the Company shall
cause its transfer agent to deliver unlegended Shares of Common Stock to a transferee of an Investor in accordance with the terms of the Securities Purchase Agreement in connection with any sale of Registrable Securities with respect to which an
Investor has entered into a contract for sale, and delivered a copy of the prospectus included as part of the applicable Registration Statement, prior to the Investor’s receipt of the notice of a Grace Period and for which the Investor has not
yet settled. 
  
 4. Obligations of the Investors.

  
 a. At least five (5) Business Days prior
to the first anticipated filing date of a Registration Statement, the Company shall notify each Investor in writing of the information the Company requires from each such Investor if such Investor elects to have any of such Investor’s
Registrable Securities included in such Registration Statement. It shall be a condition precedent to the obligations of the Company to complete the registration pursuant to this Agreement with respect to the Registrable Securities of a particular
Investor that such Investor shall furnish to the Company such information regarding itself, the Registrable Securities held by it and the intended method of disposition of the Registrable Securities held by it, as shall be reasonably required to
effect and maintain the effectiveness of the registration of such Registrable Securities and shall execute such documents in connection with such registration as the Company may reasonably request. Each Investor shall promptly notify, as required by
applicable law, the Company of any material change with respect to such information previously provided to the Company by such Investor. 
  
 b. Each Investor, by such Investor’s acceptance of the Registrable Securities, agrees to cooperate with the Company as reasonably
requested by the Company in connection with the preparation and filing of any Registration Statement hereunder, unless such Investor has notified the Company in writing of such Investor’s election to exclude all of such Investor’s
Registrable Securities from such Registration Statement. 
  
 c. Each Investor agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 3(g) or the first sentence of 3(f), such Investor will immediately
discontinue disposition of Registrable Securities pursuant to any Registration Statement(s) covering such Registrable Securities until such Investor’s receipt 
  

 11 

 of the copies of the supplemented or amended prospectus contemplated by Section 3(g) or the first
sentence of 3(f) or receipt of notice that no supplement or amendment is required. Notwithstanding anything to the contrary, the Company shall cause its transfer agent to deliver unlegended Shares of Common Stock to a transferee of an Investor in
accordance with the terms of the Securities Purchase Agreement in connection with any sale of Registrable Securities with respect to which an Investor has entered into a contract for sale prior to the Investor’s receipt of a notice from the
Company of the happening of any event of the kind described in Section 3(g) or the first sentence of 3(f) and for which the Investor has not yet settled. 
  

d. Each Investor covenants and agrees that it will comply with the prospectus delivery requirements of the 1933 Act as applicable to it
in connection with sales of Registrable Securities pursuant to the Registration Statement. 
  
 5. Expenses of Registration. 
  
 All reasonable expenses, other than underwriting discounts and commissions, incurred in connection with registrations, filings or qualifications pursuant to Sections 2 and 3, including, without limitation, all registration, listing and
qualifications fees, printers and accounting fees, and fees and disbursements of counsel for the Company shall be paid by the Company. The Company shall also reimburse the Investors for the fees and disbursements of Legal Counsel in connection with
registration, filing or qualification pursuant to Sections 2 and 3 of this Agreement which amount shall be limited to $10,000. 
  
 6. Indemnification. 
  
 In the event any Registrable Securities are included in a Registration Statement under this Agreement: 
  
 a. To the fullest extent permitted by law, the Company will,
and hereby does, indemnify, hold harmless and defend each Investor, the directors, officers, members, partners, employees, agents, representatives of, and each Person, if any, who controls any Investor within the meaning of the 1933 Act or the 1934
Act (each, an “Indemnified Person”), against any losses, claims, damages, liabilities, judgments, fines, penalties, charges, costs, reasonable attorneys’ fees, amounts paid in settlement or expenses, joint or several,
(collectively, “Claims”) incurred in investigating, preparing or defending any action, claim, suit, inquiry, proceeding, investigation or appeal taken from the foregoing by or before any court or governmental, administrative or
other regulatory agency, body or the SEC, whether pending or threatened, whether or not an indemnified party is or may be a party thereto (“Indemnified Damages”), to which any of them may become subject insofar as such Claims (or
actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon: (i) any untrue statement or alleged untrue statement of a material fact in a Registration Statement or any post-effective amendment
thereto or in any filing made in connection with the qualification of the offering under the securities or other “blue sky” laws of any jurisdiction in which Registrable Securities are offered (“Blue Sky Filing”), or the
omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, (ii) any untrue statement or alleged untrue statement of a 
  

 12 

 material fact contained in any preliminary prospectus if used prior to the effective date of such
Registration Statement, or contained in the final prospectus (as amended or supplemented, if the Company files any amendment thereof or supplement thereto with the SEC) or the omission or alleged omission to state therein any material fact necessary
to make the statements made therein, in light of the circumstances under which the statements therein were made, not misleading, (iii) any violation or alleged violation by the Company of the 1933 Act, the 1934 Act, any other law, including,
without limitation, any state securities law, or any rule or regulation thereunder relating to the offer or sale of the Registrable Securities pursuant to a Registration Statement or (iv) any violation of this Agreement (the matters in the
foregoing clauses (i) through (iv) being, collectively, “Violations”). Subject to Section 6(c), the Company shall reimburse the Indemnified Persons, promptly as such expenses are incurred and are due and payable, for
any legal fees or other reasonable expenses incurred by them in connection with investigating or defending any such Claim. Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section 6(a):
(i) shall not apply to a Claim by an Indemnified Person arising out of or based upon a Violation which occurs in reliance upon and in conformity with information furnished in writing to the Company by such Indemnified Person for such
Indemnified Person expressly for use in connection with the preparation of the Registration Statement or any such amendment thereof or supplement thereto; (ii) shall not be available to the extent such Claim is based on a failure of the
Investor to deliver or to cause to be delivered the prospectus made available by the Company, including a corrected prospectus, if such prospectus or corrected prospectus was timely made available by the Company pursuant to Section 3(d); and
(iii) shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of the Company, which consent shall not be unreasonably withheld or delayed. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of the Indemnified Person and shall survive the transfer of the Registrable Securities by the Investors pursuant to Section 9. 
  
 b. In connection with any Registration Statement in which an
Investor is participating, each such Investor agrees to severally and not jointly indemnify, hold harmless and defend, to the same extent and in the same manner as is set forth in Section 6(a), the Company, each of its directors, each of its
officers who signs the Registration Statement and each Person, if any, who controls the Company within the meaning of the 1933 Act or the 1934 Act (each, an “Indemnified Party”), against any Claim or Indemnified Damages to which any
of them may become subject, under the 1933 Act, the 1934 Act or otherwise, insofar as such Claim or Indemnified Damages arise out of or are based upon any Violation, in each case to the extent, and only to the extent, that such Violation occurs in
reliance upon and in conformity with written information furnished to the Company by such Investor expressly for use in connection with such Registration Statement; and, subject to Section 6(c), such Investor will reimburse any legal or other
expenses reasonably incurred by an Indemnified Party in connection with investigating or defending any such Claim; provided, however, that the indemnity agreement contained in this Section 6(b) and the agreement with respect to contribution
contained in Section 7 shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of such Investor, which consent shall not be unreasonably withheld or delayed; provided, further,
however, that the Investor shall be liable under this Section 6(b) for only that amount of a Claim or Indemnified Damages as does not exceed the net proceeds to such Investor as a result of the sale of Registrable 
  

 13 

 Securities pursuant to such Registration Statement. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of such Indemnified Party and shall survive the transfer of the Registrable Securities by the Investors pursuant to Section 9. Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6(b) with respect to any preliminary prospectus shall not inure to the benefit of any Indemnified Party if the untrue statement or omission of material fact contained in the preliminary
prospectus was corrected on a timely basis in the prospectus, as then amended or supplemented. 
  
 c. Promptly after receipt by an Indemnified Person or Indemnified Party under this Section 6 of notice of the commencement of any
action or proceeding (including any governmental action or proceeding) involving a Claim, such Indemnified Person or Indemnified Party shall, if a Claim in respect thereof is to be made against any indemnifying party under this Section 6,
deliver to the indemnifying party a written notice of the commencement thereof, and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume control of the defense thereof with counsel mutually satisfactory to the indemnifying party and the Indemnified Person or the Indemnified Party, as the case may be; provided, however, that an Indemnified Person or
Indemnified Party shall have the right to retain its own counsel with the fees and expenses of not more than one counsel for all such Indemnified Person or Indemnified Party to be paid by the indemnifying party, if, in the reasonable opinion of
counsel retained by the indemnifying party, the representation by such counsel of the Indemnified Person or Indemnified Party and the indemnifying party would be inappropriate due to actual or potential differing interests between such Indemnified
Person or Indemnified Party and any other party represented by such counsel in such proceeding; provided further, that the indemnifying party shall not be responsible for the reasonable fees and expenses of more than one (1) separate legal
counsel for such Indemnified Person or Indemnified Party. In the case of an Indemnified Person, legal counsel referred to in the immediately preceding sentence shall be selected by the Investors holding at least a majority in interest of the
Registrable Securities included in the Registration Statement to which the Claim relates. The Indemnified Party or Indemnified Person shall cooperate reasonably with the indemnifying party in connection with any negotiation or defense of any such
action or Claim by the indemnifying party and shall furnish to the indemnifying party all information reasonably available to the Indemnified Party or Indemnified Person which relates to such action or Claim. The indemnifying party shall keep the
Indemnified Party or Indemnified Person fully apprised at all times as to the status of the defense or any settlement negotiations with respect thereto. No indemnifying party shall be liable for any settlement of any action, claim or proceeding
effected without its prior written consent, provided, however, that the indemnifying party shall not unreasonably withhold, delay or condition its consent. No indemnifying party shall, without the prior written consent of the Indemnified Party or
Indemnified Person, consent to entry of any judgment or enter into any settlement or other compromise which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party or Indemnified Person of
a release from all liability in respect to such Claim or litigation. Following indemnification as provided for hereunder, the indemnifying party shall be subrogated to all rights of the Indemnified Party or Indemnified Person with respect to all
third parties, firms or corporations relating to the matter for which indemnification has been made. The failure to deliver written notice to the 
  

 14 

 indemnifying party within a reasonable time of the commencement of any such action shall not relieve such
indemnifying party of any liability to the Indemnified Person or Indemnified Party under this Section 6, except to the extent that the indemnifying party is prejudiced in its ability to defend such action. 
  
 d. No Person involved in the sale of Registrable Securities
who is guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) in connection with such sale shall be entitled to indemnification from any Person involved in such sale of Registrable Securities who is
not guilty of fraudulent misrepresentation. 
  
 e. The indemnification required by this Section 6 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or Indemnified Damages are incurred.

  
 f. The indemnity agreements contained herein
shall be in addition to (i) any cause of action or similar right of the Indemnified Party or Indemnified Person against the indemnifying party or others, and (ii) any liabilities the indemnifying party may be subject to pursuant to the
law. 
  
 7. Contribution. 
  
 To the extent any indemnification by an indemnifying party is prohibited or
limited by law, the indemnifying party agrees to make the maximum contribution with respect to any amounts for which it would otherwise be liable under Section 6 to the fullest extent permitted by law; provided, however, that: (i) no
contribution shall be made under circumstances where the maker would not have been liable for indemnification under the fault standards set forth in Section 6 of this Agreement, (ii) no Person involved in the sale of Registrable Securities
which Person is guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) in connection with such sale shall be entitled to contribution from any Person involved in such sale of Registrable Securities who was
not guilty of fraudulent misrepresentation; and (iii) contribution by any seller of Registrable Securities shall be limited in amount to the net amount of proceeds received by such seller from the sale of such Registrable Securities pursuant to
such Registration Statement. 
  
 8. Reports Under the 1934
Act. 
  
 With a view to making available to the Investors the
benefits of Rule 144 promulgated under the 1933 Act or any other similar rule or regulation of the SEC that may at any time permit the Investors to sell securities of the Company to the public without registration (“Rule 144”), the
Company agrees to: 
  
 a. make and keep public
information available, as those terms are understood and defined in Rule 144; 
  
 b. file with the SEC in a timely manner all reports and other documents required of the Company under the 1933 Act and the 1934 Act so long as the Company remains subject to such requirements (it being understood that
nothing herein shall limit the Company’s obligations under Section 4(c) of the Securities Purchase Agreement) and the filing of such reports and other documents is required for the applicable provisions of Rule 144; and 
  

 15 

 c. furnish to each Investor so long as such Investor owns Registrable Securities,
promptly upon request, (i) a written statement by the Company, if true, that it has complied with the reporting requirements of Rule 144, the 1933 Act and the 1934 Act, (ii) a copy of the most recent annual or quarterly report of the
Company and such other reports and documents so filed by the Company, and (iii) such other information as may be reasonably requested to permit the Investors to sell such securities pursuant to Rule 144 without registration. 
  
 9. Assignment of Registration Rights. 
  
 The rights under this Agreement shall be automatically assignable by the
Investors to any transferee of all or any portion of such Investor’s Registrable Securities if: (i) the Investor agrees in writing with the transferee or assignee to assign such rights, and a copy of such agreement is furnished to the
Company within a reasonable time after such assignment; (ii) the Company is, within a reasonable time after such transfer or assignment, furnished with written notice of (a) the name and address of such transferee or assignee, and
(b) the securities with respect to which such registration rights are being transferred or assigned; (iii) immediately following such transfer or assignment the further disposition of such securities by the transferee or assignee is
restricted under the 1933 Act and applicable state securities laws; (iv) at or before the time the Company receives the written notice contemplated by clause (ii) of this sentence the transferee or assignee agrees in writing with the
Company to be bound by all of the provisions contained herein; (v) such transfer shall have been made in accordance with the applicable requirements of the Securities Purchase Agreement; and (vi) such transfer shall have been conducted in
accordance with all applicable federal and state securities laws. 
  
 10. Amendment of Registration Rights. 
  
 Provisions of this Agreement may be amended and the observance thereof may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the Required
Holders. Any amendment or waiver effected in accordance with this Section 10 shall be binding upon each Investor and the Company. No such amendment shall be effective to the extent that it applies to less than all of the holders of the
Registrable Securities. No consideration shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision of any of this Agreement unless the same consideration also is offered to all of the parties to this
Agreement. 
  
 11. Miscellaneous. 
  
 a. A Person is deemed to be a holder of Registrable
Securities whenever such Person owns or is deemed to own of record such Registrable Securities. If the Company receives conflicting instructions, notices or elections from two or more Persons with respect to the same Registrable Securities, the
Company shall act upon the basis of instructions, notice or election received from the record owner of such Registrable Securities. 
  

 16 

 b. Any notices, consents, waivers or other communications required or permitted to be
given under the terms of this Agreement must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is
mechanically or electronically generated and kept on file by the sending party); or (iii) one Business Day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same.
The addresses and facsimile numbers for such communications shall be: 
  

			
	 If to the Company:

	
	 Universal Food & Beverage Company

	 3830 Commerce Drive

	 St. Charles, Illinois 60174

	 Telephone:
	  	(630) 584-8670
	 Facsimile:
	  	(630) 584-8674
	 Attention:
	  	Chief Executive Officer
	
	 With a copy (for informational purposes only) to:

	
	 Holland & Knight, LLP

	 131 S. Dearborn, Ste. 3000

	 Chicago, Illinois 60603

	 Telephone:
	  	(312) 263-3600
	 Facsimile:
	  	(312) 578-6666
	 Attention:
	  	Carl Neumann, Esq.
	
	 If to the Transfer Agent:

	
	 Interwest Transfer Co., Inc.

	 1981 East 4800 South, Suite 100

	 Salt Lake City, UT 84117

	 Telephone:
	  	(801) 272-9294
	 Facsimile:
	  	(801) 277-3147
	 Attention:
	  	Melina Orth
	
	 If to Legal Counsel:

	
	 Schulte Roth & Zabel LLP

	 919 Third Avenue

	 New York, New York 10022

	 Telephone:
	  	(212) 756-2000
	 Facsimile:
	  	(212) 593-5955
	 Attention:
	  	Eleazer N. Klein, Esq.

  

 17 

 If to a Buyer, to its address and facsimile number set forth on the Schedule of Buyers attached hereto, with copies to
such Buyer’s representatives as set forth on the Schedule of Buyers, or to such other address and/or facsimile number and/or to the attention of such other Person as the recipient party has specified by written notice given to each other party
five (5) days prior to the effectiveness of such change. Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically generated by the
sender’s facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (C) provided by a courier or overnight courier service shall be rebuttable evidence of personal
service, receipt by facsimile or receipt from a nationally recognized overnight delivery service in accordance with clause (i), (ii) or (iii) above, respectively. 
  
 c. Failure of any party to exercise any right or remedy under this Agreement or otherwise, or delay by a
party in exercising such right or remedy, shall not operate as a waiver thereof. 
  
 d. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal
laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than
the State of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in The City of New York, Borough of Manhattan, for the adjudication of any dispute hereunder or in connection herewith
or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such
suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit,
action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any manner permitted by law. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the
validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of any provision of this Agreement in any other jurisdiction. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND
AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY. 
  
 e. This Agreement, the other Transaction Documents (as defined in the Securities Purchase Agreement) and the
instruments referenced herein and therein constitute the entire agreement among the parties hereto with respect to the subject matter hereof and thereof. There are no restrictions, promises, warranties or undertakings, other than those set forth or
referred to herein and therein. This Agreement, the other Transaction Documents and the instruments referenced herein and therein supersede all prior agreements and understandings among the parties hereto with respect to the subject matter hereof
and thereof. 
  

 18 

 f. Subject to the requirements of Section 9, this Agreement shall inure to the
benefit of and be binding upon the permitted successors and assigns of each of the parties hereto. 
  
 g. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

  
 h. This Agreement may be executed in
identical counterparts, each of which shall be deemed an original but all of which shall constitute one and the same agreement. 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. 
  
 i. 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 any 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.

  
 j. All consents and other determinations
required to be made by the Investors pursuant to this Agreement shall be made, unless otherwise specified in this Agreement, by the Required Holders. 
  
 k. 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, determined as if all of the Preferred Shares held by Investors then outstanding have been converted into Registrable Securities and all Warrants then outstanding have been exercised for
Registrable Securities without regard to any limitations on conversion of the Preferred Shares or on exercises of the Warrants. 
  
 l. This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and, except as
set forth in Section 6 hereof, is not for the benefit of, nor may any provision hereof be enforced by, any other Person. 
  
 m. The obligations of each Investor hereunder are several and not joint with the obligations of any other Investor, and no provision of
this Agreement is intended to confer any obligations on any Investor vis-à-vis any other Investor. Nothing contained herein, and no action taken by any Investor pursuant hereto, shall be deemed to constitute the Investors as a partnership, an
association, a joint venture or any other kind of entity, or create a presumption that the Investors are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated herein. 
  
 * * * * * * 
  

 19 

 IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to this
Registration Rights Agreement to be duly executed as of the date first written above. 
  

			
	COMPANY:
	
	UNIVERSAL FOOD & BEVERAGE COMPANY
		
	By:	 	 /s/ Duane N. Martin

	Name:	 	Duane N. Martin
	Title:	 	Chief Executive Officer
	
	[BUYER’S SIGNATURE PAGES]

 EXHIBIT A 
  

FORM OF NOTICE OF EFFECTIVENESS 
 OF REGISTRATION STATEMENT 
  
 Interwest Transfer Co., Inc.

 1981 East 4800 South, Suite 100 
 Salt Lake City, UT 84117

 Attention: Melina Orth 
  
 Re: Universal Food & Beverage Company 
  
 Ladies and Gentlemen: 
  
 [We are][I am] counsel to Universal Food & Beverage Company, a Nevada corporation (the “Company”), and have represented the
Company in connection with that certain Securities Purchase Agreement (the “Securities Purchase Agreement”) entered into by and among the Company and the buyers named therein (collectively, the “Holders”) pursuant
to which the Company issued to the Holders preferred shares (the “Preferred Shares”) convertible into the Company’s common stock, $0.01 par value (the ”Common Stock”), and warrants exercisable for shares
of Common Stock (the “Warrants”). Pursuant to the Securities Purchase Agreement, the Company also has entered into a Registration Rights Agreement with the Holders (the “Registration Rights Agreement”) pursuant to
which the Company agreed, among other things, to register the Registrable Securities (as defined in the Registration Rights Agreement), including the shares of Common Stock issuable upon conversion of the Preferred Shares, the shares of Common Stock
issuable as dividends on the Preferred Shares, and the shares of Common Stock issuable upon exercise of the Warrants, under the Securities Act of 1933, as amended (the “1933 Act”). In connection with the Company’s obligations
under the Registration Rights Agreement, on                          , 2006, the Company filed a
Registration Statement on Form [S-1] (File No. 333-                ) (the “Registration Statement”) with the Securities and Exchange
Commission (the “SEC”) relating to the Registrable Securities which names each of the Holders as a selling shareholder thereunder. 
  
 In connection with the foregoing, [we][I] advise you that a member of the SEC’s staff has advised [us][me] by telephone that the SEC has entered an
order declaring the Registration Statement effective under the 1933 Act at [ENTER TIME OF EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and [we][I] have no knowledge, after telephonic inquiry of a member of the
SEC’s staff, that any stop order suspending its effectiveness has been issued or that any proceedings for that purpose are pending before, or threatened by, the SEC and the Registrable Securities are available for resale under the 1933 Act
pursuant to the Registration Statement. 
  
 This letter shall
serve as our standing opinion to you that the shares of Common Stock are freely transferable by the Holders pursuant to the Registration Statement. You need not require further letters from us to effect any future legend-free issuance or reissuance
of 
  

 2 

 shares of Common Stock to the Holders as contemplated by the Company’s Irrevocable Transfer Agent Instructions dated
February 16, 2006. 
  

			
	Very truly yours,
	
	 [ISSUER’S COUNSEL]

		
	 By:
	 	  

  
 CC: [LIST NAMES OF
HOLDERS] 
  

 3 

 EXHIBIT B 
  

SELLING SHAREHOLDERS 
  
 The shares of Common Stock being offered by the selling shareholders are issuable upon conversion of the convertible preferred shares and upon exercise of
the warrants. For additional information regarding the issuance of those convertible preferred shares and warrants, see “Private Placement of Convertible Preferred Shares and Warrants” above. We are registering the shares of Common Stock
in order to permit the selling shareholders to offer the shares for resale from time to time. Except for the ownership of the convertible Preferred Shares and Warrants issued pursuant to the Securities Purchase Agreement to our knowledge, the
selling shareholders have not had any material relationship with us within the past three years. 
  
 The table below lists the selling shareholders and other information regarding the beneficial ownership of the shares of Common Stock by each of the
selling shareholders. The second column lists the number of shares of Common Stock beneficially owned by each selling shareholder, based on its ownership of the convertible preferred shares and warrants, as of
                    , 200    , assuming conversion of all convertible preferred shares and exercise of the warrants
held by the selling shareholders on that date, without regard to any limitations on conversions or exercise. 
  
 The third column lists the shares of Common Stock being offered by this prospectus by the selling shareholders. 
  
 In accordance with the terms of registration rights agreements with the
selling shareholders, this prospectus generally covers the resale of [at least the sum of (i) 125% of the number of shares of Common Stock issuable upon conversion of the convertible preferred shares (and the interest accrued and payable
thereunder) as of the trading day immediately preceding the date the registration statement is initially filed with the SEC and (ii)125% the number of shares of Common Stock issuable upon exercise of the related warrants as of the trading day
immediately preceding the date the registration statement is initially filed with the SEC and (iii) 100% of the number of dividend shares issuable pursuant to the terms of the Certificate of Designations as of the trading day immediately prior
to the date the registration statement is initially filed with the SEC]. [Revise as appropriate for interim Registration Statements] Because the conversion price of the convertible preferred shares and the exercise price of the warrants may
be adjusted, the number of shares that will actually be issued may be more or less than the number of shares being offered by this prospectus. The fourth column assumes the sale of all of the shares offered by the selling shareholders pursuant to
this prospectus. 
  
 Under the terms of the certificate of
designations and the warrants, a selling shareholder may not convert the certificate of designations or exercise the warrants to the extent such conversion or exercise would cause such selling shareholder, together with its affiliates, to
beneficially own a number of shares of Common Stock which would exceed 4.99% of our then outstanding shares of Common Stock following such conversion or exercise (subject to increase not to exceed 9.99% in accordance with the terms of the
Certificate of Designations and the Warrants), excluding for purposes of such determination shares of Common Stock issuable upon conversion of the convertible preferred shares which have not been converted and upon exercise 

 of the warrants which have not been exercised. The number of shares in the second column does not reflect this
limitation. The selling shareholders may sell all, some or none of their shares in this offering. See “Plan of Distribution.” 
  

 2 

							
	 Name of Selling Stockholder

	  	Number of Shares of
Common Stock Owned
Prior to Offering

	 	Maximum Number of Shares
of Common Stock to be Sold
Pursuant to this Prospectus

	 	Number of Shares of
Common Stock Owned
After Offering

	[Buyers]	  	 	 	 	 	 

 PLAN OF DISTRIBUTION 
  
 We are registering the shares of Common Stock issuable upon conversion of the convertible preferred shares and upon exercise
of the warrants to permit the resale of these shares of Common Stock by the holders of the convertible preferred shares and warrants from time to time after the date of this prospectus. We will not receive any of the proceeds from the sale by the
selling shareholders of the shares of Common Stock. We will bear all fees and expenses incident to our obligation to register the shares of Common Stock. 
  
 The selling shareholders may sell all or a portion of the shares of Common Stock beneficially owned by them and offered hereby from time to time directly
or through one or more underwriters, broker-dealers or agents. If the shares of Common Stock are sold through underwriters or broker-dealers, the selling shareholders will be responsible for underwriting discounts or commissions or agent’s
commissions. The shares of Common Stock may be sold in one or more transactions at fixed prices, at prevailing market prices at the time of the sale, at varying prices determined at the time of sale, or at negotiated prices. These sales may be
effected in transactions, which may involve crosses or block transactions, 
  

	 	•	 	on any national securities exchange or quotation service on which the securities may be listed or quoted at the time of sale; 

  

	 	•	 	in the over-the-counter market; 

  

	 	•	 	in transactions otherwise than on these exchanges or systems or in the over-the-counter market; 

  

	 	•	 	through the writing of options, whether such options are listed on an options exchange or otherwise; 

  

	 	•	 	ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; 

  

	 	•	 	block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;

  

	 	•	 	purchases by a broker-dealer as principal and resale by the broker-dealer for its account; 

  

	 	•	 	an exchange distribution in accordance with the rules of the applicable exchange; 

  

	 	•	 	privately negotiated transactions; 

  

	 	•	 	short sales; 

  

	 	•	 	sales pursuant to Rule 144; 

	 	•	 	broker-dealers may agree with the selling securityholders to sell a specified number of such shares at a stipulated price per share; 

  

	 	•	 	a combination of any such methods of sale; and 

  

	 	•	 	any other method permitted pursuant to applicable law. 

  
 If the selling shareholders effect such transactions by selling shares of Common Stock to or through underwriters, broker-dealers or agents, such
underwriters, broker-dealers or agents may receive commissions in the form of discounts, concessions or commissions from the selling shareholders or commissions from purchasers of the shares of Common Stock for whom they may act as agent or to whom
they may sell as principal (which discounts, concessions or commissions as to particular underwriters, broker-dealers or agents may be in excess of those customary in the types of transactions involved). In connection with sales of the shares of
Common Stock or otherwise, the selling shareholders may enter into hedging transactions with broker-dealers, which may in turn engage in short sales of the shares of Common Stock in the course of hedging in positions they assume. The selling
shareholders may also sell shares of Common Stock short and deliver shares of Common Stock covered by this prospectus to close out short positions and to return borrowed shares in connection with such short sales. The selling shareholders may also
loan or pledge shares of Common Stock to broker-dealers that in turn may sell such shares. 
  
 The selling shareholders may pledge or grant a security interest in some or all of the convertible preferred shares or warrants or shares of Common Stock owned by them and, if they default in the performance of their
secured obligations, the pledgees or secured parties may offer and sell the shares of Common Stock from time to time pursuant to this prospectus or any amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities
Act of 1933, as amended, amending, if necessary, the list of selling shareholders to include the pledgee, transferee or other successors in interest as selling shareholders under this prospectus. The selling shareholders also may transfer and donate
the shares of Common Stock in other circumstances in which case the transferees, donees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus. 
  
 The selling shareholders and any broker-dealer participating in the
distribution of the shares of Common Stock may be deemed to be “underwriters” within the meaning of the Securities Act, and any commission paid, or any discounts or concessions allowed to, any such broker-dealer may be deemed to be
underwriting commissions or discounts under the Securities Act. At the time a particular offering of the shares of Common Stock is made, a prospectus supplement, if required, will be distributed which will set forth the aggregate amount of shares of
Common Stock being offered and the terms of the offering, including the name or names of any broker-dealers or agents, any discounts, commissions and other terms constituting compensation from the selling shareholders and any discounts, commissions
or concessions allowed or reallowed or paid to broker-dealers. 
  
 Under the securities laws of some states, the shares of Common Stock may be sold in such states only through registered or licensed brokers or dealers. In addition, in some states the shares of Common Stock may not be sold unless such
shares have been registered or qualified for sale in such state or an exemption from registration or qualification is available and is complied with. 
  

 2 

 There can be no assurance that any selling shareholder will sell any or all of the shares of Common Stock
registered pursuant to the shelf registration statement, of which this prospectus forms a part. 
  
 The selling shareholders and any other person participating in such distribution will be subject to applicable provisions of the Securities Exchange Act
of 1934, as amended, and the rules and regulations thereunder, including, without limitation, Regulation M of the Exchange Act, which may limit the timing of purchases and sales of any of the shares of Common Stock by the selling shareholders and
any other participating person. Regulation M may also restrict the ability of any person engaged in the distribution of the shares of Common Stock to engage in market-making activities with respect to the shares of Common Stock. All of the foregoing
may affect the marketability of the shares of Common Stock and the ability of any person or entity to engage in market-making activities with respect to the shares of Common Stock. 
  
 We will pay all expenses of the registration of the shares of Common Stock pursuant to the registration rights agreement,
estimated to be $[    ] in total, including, without limitation, Securities and Exchange Commission filing fees and expenses of compliance with state securities or “blue sky” laws; provided, however, that a selling
shareholder will pay all underwriting discounts and selling commissions, if any. We will indemnify the selling shareholders against liabilities, including some liabilities under the Securities Act, in accordance with the registration rights
agreements, or the selling shareholders will be entitled to contribution. We may be indemnified by the selling shareholders against civil liabilities, including liabilities under the Securities Act, that may arise from any written information
furnished to us by the selling shareholder specifically for use in this prospectus, in accordance with the related registration rights agreements, or we may be entitled to contribution. 
  
 Once sold under the shelf registration statement, of which this prospectus forms a part, the shares of Common Stock will be
freely tradable in the hands of persons other than our affiliates. 
  

 3

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