Document:

Exhibit 10.4 Emalfarb First Amendment to Employment Agreement

    Exhibit
      10.4

    
      

    

    FIRST
      AMENDMENT

    TO

    EMPLOYMENT

    AGREEMENT

    

    THIS
      FIRST AMENDMENT (this “First
      Amendment”)
      is
      made and entered into by and between DYADIC INTERNATIONAL, INC., a Delaware
      corporation (the “Company”) and MARK A. EMALFARB (the “Executive”)
      as of
      the 16th
      day of
      March, 2006.

    

    RECITALS:

    

    A. The
      Company and the Executive are parties to that certain Employment Agreement
      dated
      April 1, 2001 (the “Employment
      Agreement”),
      which
      Employment Agreement was assumed by the Company on October 29, 2004 incident
      to
      a merger between the Company and Dyadic International (USA), Inc., a Florida
      corporation. Each capitalized term used but not expressly defined in this First
      Amendment shall have the meaning assigned that defined term in the Employment
      Agreement.

    

    B. The
      Company and the Executive wish to extend the Employment Period, which would
      otherwise expire on March 30, 2006, for and additional one (1) year, and to
      provide for the automatic renewal of the Employment Period for additional one
      (1) year terms unless either the Company or the Executive, in its or his
      discretion, elect not to extend the term of the Employment Period.

    

    AGREEMENT:

    

    NOW,
      THEREFORE, in consideration of the foregoing Recitals and other good and
      valuable consideration, the receipt and sufficiency of which are hereby mutually
      acknowledged, the Company and the Executive hereby amend the Employment
      Agreement as follows:

    

    1. Extension
      of Employment Period and Automatic Renewals.
      Section
      1 of the Employment Agreement, entitled “Employment
      Period,”
is
      hereby amended to read as follows:

    

    

    “1. Employment
      Period.
      The
      Company shall employ the Executive, and the Executive shall serve the Company,
      on the terms and conditions set forth in this Agreement for the period (the
      “Employment Period”) commencing April 1, 2001 (the “Commencement Date”) and
      ending March 30, 2007 (the “Initial Term”), which Employment Period shall be
      automatically extended for successive calendar years thereafter (each an
“Extension Term”) unless either party provides the other party with advance
      written notice of its or his intention not to extend not less than sixty (60)
      days prior to the expiration of the Initial Term or any Extension Term, as
      the
      case may be.”

    

    2. Effect
      of Amendment.
      Except
      as expressly amended by the provisions of this First Amendment, all of the
      terms
      and provisions of the Employment Agreement shall remain in full force and
      effect.

    

    IN
      WITNESS WHEREOF, the Company and the Executive have executed this First
      Amendment as of the day and year first above written.

    

    THE
      COMPANY:      THE
      EXECUTIVE:

    

    DYADIC
      INTERNATIONAL, INC., a

    Delaware
      corporation

    

    By:_/s/
      Wayne Moor      By:
      /s/
      Mark A, Emalfarb

    Wayne
      Moor,                         
      Mark A. Emalfarb

    Chief
      Financial OfficerExhibit 4.50

                                 PROMISSORY NOTE

FACE AMOUNT            $30,000
PRICE                  $25,000
INTEREST RATE          0% per month
NOTE NUMBER            October- 2005-101
ISSUANCE DATE          October 11, 2005
MATURITY DATE          April 11, 2006

     FOR VALUE RECEIVED, NeWave, Inc., a Utah corporation (the "Company"), (OTC
BB: NWAV) hereby promises to pay DUTCHESS PRIVATE EQUITIES FUND,  L.P. (the
"Holder")  within the Maturity  Date, or earlier, the Amount  of Thirty Thousand
Dollars  ($30,000)  U.S.,  in  such amounts, at such times and on such terms and
conditions  as  are  specified  herein  (this  "Note").

     Any  capitalized  terms  not  defined  in  this  Note  are  defined  in the
Investment  Agreement  for  the  Equity  Line  of Credit between Preston Capital
Partners,  LLC  (the  "Investor")  and the Company (the "Investment Agreement").

ARTICLE 1     METHOD OF PAYMENT

     Payments  made  by  the  Company  in  satisfaction  of  this  Note  (each a
"Payment,"  and  collectively,  the "Payments") shall be made from each Put from
the  Equity  Line  of  Credit  with  the  Investor  given  by the Company to the
Investor.     The Company shall make payments to the Holder in the amount of One
Hundred  percent (100%) of each Put Amount (the "Payment Amount") until the Face
Amount  is  paid  in  full on ALL outstanding Promissory Notes currently due and
payable by the Company ("Prior Notes"), minus any fees due.   First payment will
be  due  at the successful Closing of the first Put  ("Payment Date" or "Payment
Dates"),  and  all  subsequent payments will be made at the Closing of every Put
thereafter, until  this Note is paid in full.   Notwithstanding any provision to
the  contrary  in  this Note, the Company may pay in full to the Holder the Face
Amount, or any balance remaining thereof, in readily available funds at any time
and  from  time  to  time  without penalty.  Failure to do so will constitute an
Event  of  Default  under  this Agreement and the Holder may immediately seek to
take  actions  as  described  under  Article  4  of  this  Agreement.

     Payments  pursuant  to this Note shall be made directly from the Closing of
each  Put  ("Put  Closing")  and  shall be wired directly to the Holder from the
Investor  on  the  Closing  Date.

     The  Company  hereby  authorizes the Investor  to make Payments directly to
the Holder upon Closing of each Put.  The Agreement shall serve as authorization
for  disbursement  of any funds from the Equity Line until such time as the Face
Amount  is  received.

ARTICLE 2     COLLATERAL

The  Company  does  hereby  agree  to allow the Holder to use the 25 Put Notices
("Collateral")  from  Note  Numbers February 2005 101 and April 2005 101 ("Prior
Notes")  to  the  Investor  as  Collateral  for  this  Note.

<PAGE>

ARTICLE 3     UNPAID AMOUNTS

In  the  event  that  on the Maturity Date the Company has any remaining amounts
unpaid  on  this  Note  (the "Residual Amount"), shall cause an Event of Default
under  this  Agreement  and  the  Holder may immediately seek to take actions as
described  under  Article  4  of  this  Agreement.

ARTICLE 4     DEFAULTS AND REMEDIES

Section  4.1 Events of Default. An "Event of Default" or "Default" occurs if (a)
the Company does not make the Payment of the Face Amount of this Note within two
(2)  business  days  of the applicable Closing of a Put or the Maturity Date, as
applicable, upon redemption or otherwise, (b) the Company, pursuant to or within
the  meaning  of  any  Bankruptcy  Law (as hereinafter defined): (i) commences a
voluntary  case; (ii) consents to the entry of an order for relief against it in
an  involuntary  case;  (iii)  consents  to  the  appointment of a Custodian (as
hereinafter defined) of it or for all or substantially all of its property; (iv)
makes  a  general assignment for the benefit of its creditors; or (v) a court of
competent  jurisdiction enters an order or decree under any Bankruptcy Law that:
(A)  is  for  relief  against the Company in an involuntary case; (B) appoints a
Custodian of the Company or for all or substantially all of its property; or (C)
orders  the liquidation of the Company, and the order or decree remains unstayed
and  in  effect for sixty (60) calendar days; (c) the Company's $0.001 par value
common  stock  (the  "Common  Stock") is suspended or is no longer listed on any
recognized  exchange,  including  an electronic over-the-counter bulletin board,
for  in  excess  of  two  (2)  consecutive trading days; or (d) the registration
statement  for the underlying shares in the Investment Agreement does not remain
effective for any reason or (e) the Company fails to comply with the Articles of
this  Agreement  as  outlined. As used in this Article 4.1, the term "Bankruptcy
Law"  means  Title  11 of the United States Code or any similar federal or state
law for the relief of debtors. The term "Custodian" means any receiver, trustee,
assignee,  liquidator  or  similar  official  under  any  Bankruptcy  Law.

     In the Event of Default, the Holder may elect to secure a portion of the
Company's assets not to exceed 200% of the Face Amount of the Note, including,
but not limited to: accounts receivable, cash, marketable securities, equipment,
building, land or inventory.  The Holder may also elect to garnishee Revenue
from the Company in an amount that will repay the Holder on the schedules
outlined in this Agreement.

            For  EACH  Event  of  Default,  as  outlined  in this Agreement, the
Holder  can  exercise  its right to increase the Face Amount of the Debenture by
ten percent (10%) as an initial penalty and for each Event of Default under this
Agreement.  In addition, the Holder may elect to increase the Face Amount by two
and  one-half  percent  (2.5%)  per month paid as a penalty for liquated damages
("Liquidated  Damages").  The  Liquated Damages will be compounded daily.  It is
the  intention  and  acknowledgement of both parties that the Liquidated Damages
not  be  deemed  as  interest.

     In  the  event of a Default , the Holder shall also have the right, but not
the  obligation,  to 1) switch the Residual Amount to a three-year ("Convertible
Maturity  Date"),  10%  interest  bearing  convertible  debenture  at  the terms
described  in  Article  4.2  (the  "Convertible  Debenture").  At such  time  of
Default,  the  Convertible  Debenture  shall  be  considered  closed
("Convertible

<PAGE>

Closing  Date").  If  the  Holder  chooses  to  convert the Residual Amount to a
Convertible  Debenture,  the  Company shall have twenty (20) business days after
notice  of  the  same  (the  "Notice  of  Convertible  Debenture")  to  file  a
registration  statement  covering  an  amount  of  shares  equal  to 300% of the
Residual  Amount.  Such registration statement shall be declared effective under
the Securities Act of 1933, as amended (the "Securities Act"), by the Securities
and  Exchange  Commission (the "Commission") within 40 business days of the date
the Company files such Registration Statement. In the event the Company does not
file  such  registration  statement  within  twenty  (20)  business  days of the
Holder's  request,  or  such  registration  statement  is  not  declared  by the
Commission  to  be  effective  under  the  Securities Act within the time period
described  above  , the Residual Amount shall increase by $1,000 per day. In the
event  the  Company  is  given  the  option for accelerated effectiveness of the
registration  statement,  it  agrees  that  it  shall  cause  such  registration
statement  to  be  declared  effective as soon as reasonably practicable. In the
event  that the Company is given the option for accelerated effectiveness of the
registration  statement, but chooses not to cause such registration statement to
be  declared  effective  on  such  accelerated  basis, the Residual Amount shall
increase  by  $1,000  per  day  commencing on the earliest date as of which such
registration  statement  would  have been declared to be effective if subject to
accelerated  effectiveness;  or  2)  the  Holder may increase the Payment Amount
described  under  Article 1 to fulfill the repayment of the Residual Amount. The
Company  shall provide full cooperation to the Holder in directing funds owed to
the  Holder  on  any Put to the Investor. The Company agrees to diligently carry
out  the  terms  outlined  in  the Investment Agreement for delivery of any such
shares.  In the event the Company is not diligently fulfilling its obligation to
direct  funds  owed  to  the  Holder  from  Puts  to the Investor, as reasonably
determined  by  the  Holder,  the  Holder  may, after giving the Company two (2)
business  days'  advance notice to cure the same, elect to increase the Residual
Amount  of  the  Note  by  2.5%  each  day,  compounded  daily.

Article 4.2  Conversion Privilege

(a)     The  Holder  shall  have  the right to convert the Convertible Debenture
into  shares  of Common Stock at any time following the Convertible Closing Date
which  is  before  the  close of business on the Convertible Maturity Date.  The
number of shares of Common Stock issuable upon the conversion of the Convertible
Debenture  shall be determined pursuant to Article 4.3, but the number of shares
issuable  shall  be rounded up or down, as the case may be, to the nearest whole
share.

(b)     The Convertible Debenture may be converted, whether in whole or in part,
at any time and from time to time.

(c)     In  the  event  all  or  any  portion  of  the  Convertible  Debenture
remains  outstanding  on  the  Convertible  Maturity  Date  (the  "Debenture
Residual  Amount"),  the  unconverted portion of such Convertible Debenture will
automatically  be  converted  into  shares  of  Common Stock on such date in the
manner  set  forth  in  Article  4.3.

Article 4.3 Conversion Procedure.

The Residual Amount may be converted, in whole or in part any time and from time
to time, following the Convertible Closing Date.  Such conversion shall be
effectuated by surrendering to

<PAGE>

the  Company,  or  its  attorney,  the  Convertible  Debenture  to  be
converted  together  with  a  facsimile  or  original  of  the  signed notice of
conversion  (the  "Notice  of  Conversion").   The  date  on which the Notice of
Conversion  is  effective  ("Conversion Date") shall be deemed to be the date on
which  the  Holder  has  delivered to the Company a facsimile or original of the
signed  Notice  of Conversion, as long as  the original Convertible Debenture(s)
to  be  converted  are  received  by  the  Company within five (5) business days
thereafter.  At  such  time  that  the  original  Convertible Debenture has been
received  by  the  Company,  the  Holder  can elect  whether a reissuance of the
Convertible  Debenture  is  warranted,  or  whether  the  Company can retain the
Convertible  Debenture  as  to  a  continual  conversion  by  the  Holder.
Notwithstanding  the  above,  any Notice of Conversion received by 4:00 P.M. EST
shall  be deemed to have been received the following business day (receipt being
via  a  confirmation  of  the  time  such facsimile to the Company is received).

(a)  Common  Stock  to  be  Issued.  Upon  the  conversion  of  any  Convertible
Debentures,  and  upon  receipt by the Company or its attorney of a facsimile or
original of the Holder's signed Notice of Conversion, the Company shall instruct
its  transfer  agent  to issue stock certificates without restrictive legends or
stop  transfer  instructions,  if  at  that time the aforementioned registration
statement  described  in Article 4.1 has been declared effective (or with proper
restrictive  legends  if the registration statement has not as yet been declared
effective), in such denominations to be specified at conversion representing the
number  of  shares of Common Stock issuable upon such conversion, as applicable.
In  the event that the Debenture is aged one year and deemed sellable under Rule
144, the Company shall, upon a Notice of Conversion, instruct the transfer agent
to issue free trading certificates without restrictive legends, subject to other
applicable  securities  laws.  The  Company  is responsible to provide all costs
associated  with  the  issuance  of the shares, including but not limited to the
opinion  letter,  FedEx  of the certificates and any other costs that arise. The
Company  shall  act  as  registrar  and  shall  maintain  an  appropriate ledger
containing the necessary information with respect to each Convertible Debenture.
The  Company  warrants that no instructions, other than these instructions, have
been  given  or  will  be  given to the transfer agent and that the Common Stock
shall  otherwise  be freely resold, except as may be set forth herein or subject
to  applicable  law.

(b) Conversion Rate. Holder is entitled to convert the Debenture Residual Amount
, plus accrued interest, anytime following the Convertible Maturity Date, at the
lesser  of  (i)  75%  of  the average of the lowest closing bid price during the
fifteen (15) trading days immediately preceding the Convertible Maturity Date or
(ii)  75%  of  the lowest bid price for the twenty (20) trading days immediately
preceding  the  Convertible  Maturity  Date  ("Fixed  Conversion  Price").  No
fractional  shares  or  scrip representing fractions of shares will be issued on
conversion,  but  the  number of shares issuable shall be rounded up or down, as
the  case  may  be,  to  the  nearest  whole  share.

(c)  Nothing contained in the Convertible Debenture shall be deemed to establish
or  require  the  payment  of  interest to the Holder at a rate in excess of the
maximum  rate permitted by governing law. In the event that the rate of interest
required  to  be  paid  exceeds the maximum rate permitted by governing law, the
rate  of  interest required to be paid thereunder shall be automatically reduced
to  the  maximum rate permitted under the governing law and such excess shall be
returned  with  reasonable  promptness  by  the  Holder  to  the  Company.

<PAGE>

(d)  It  shall be the Company's responsibility to take all necessary actions and
to  bear  all such costs to issue the Common Stock as provided herein, including
the  responsibility  and  cost for delivery of an opinion letter to the transfer
agent, if so required. Holder shall be treated as a shareholder of record on the
date Common Stock is issued to the Holder. If the Holder shall designate another
person  as  the entity in the name of which the stock certificates issuable upon
conversion  of  the Convertible Debenture are to be issued prior to the issuance
of  such  certificates,  the  Holder  shall provide to the Company evidence that
either  no tax shall be due and payable as a result of such transfer or that the
applicable tax has been paid by the Holder or such person. Upon surrender of any
Convertible Debentures that are to be converted in part, the Company shall issue
to the Holder a new Convertible Debenture equal to the unconverted amount, if so
requested  in  writing  by  the  Holder.

(e) Within five (5) business days after receipt of the documentation referred to
above in Article 4.2, the Company shall deliver a certificate, for the number of
shares  of  Common  Stock issuable upon the conversion. In the event the Company
does  not  make delivery of the Common Stock as instructed by Holder within five
(5)  business  days  after  the  Conversion Date, then in such event the Company
shall  pay  to  the  Holder  one percent (1%) in cash of the dollar value of the
Debenture Residual Amount remaining after said conversion, compounded daily, per
each  day  after the fifth (5th) business day following the Conversion Date that
the  Common  Stock  is  not  delivered  to  the  Purchaser.

The  Company  acknowledges  that  its failure to deliver the Common Stock within
five (5) business days after the Conversion Date will cause the Holder to suffer
damages  in  an  amount  that  will  be difficult to ascertain. Accordingly, the
parties  agree  that  it  is appropriate to include in this Note a provision for
liquidated damages The parties acknowledge and agree that the liquidated damages
provision set forth in this section represents the parties' good faith effort to
quantify  such  damages  and,  as  such,  agree that the form and amount of such
liquidated damages are reasonable and will not constitute a penalty. The payment
of  liquidated  damages  shall  not  relieve the Company from its obligations to
deliver  the  Common  Stock pursuant to the terms of this Convertible Debenture.

(f)  The  Company  shall  at  all  times  reserve  (or  make alternative written
arrangements  for  reservation or contribution of shares) and have available all
Common  Stock  necessary to meet conversion of the Convertible Debentures by the
Holder  of  the entire amount of Convertible Debentures then outstanding. If, at
any time the Holder submits a Notice of Conversion and the Company does not have
sufficient authorized but unissued shares of Common Stock (or alternative shares
of  Common Stock as may be contributed by stockholders of the Company) available
to  effect,  in  full, a conversion of the Convertible Debentures (a "Conversion
Default,"  the  date of such default being referred to herein as the "Conversion
Default  Date"),  the  Company  shall  issue  to the Holder all of the shares of
Common  Stock  which  are  available,  and  the  Notice  of Conversion as to any
Convertible  Debentures  requested  to  be  converted  but  not  converted  (the
"Unconverted  Convertible Debentures"), may be deemed null and void upon written
notice  sent  by  the Holder to the Company. The Company shall provide notice of
such  Conversion  Default  ("Notice  of  Conversion  Default") to the Holder, by
facsimile  within  three  (3)  business  days of such default (with the original
delivered  by  overnight  mail  or  two  day courier), and the Holder shall give
notice  to  the  Company  by  facsimile  within  five  (5)

<PAGE>
business  days of receipt of the original Notice of Conversion Default (with the
original  delivered  by  overnight  mail  or two day courier) of its election to
either  nullify  or  confirm  the  Notice  of  Conversion.

     The  Company  agrees  to  pay  the Holder payments for a Conversion Default
("Conversion  Default  Payments")  in  the  amount  of  (N/365),  multiplied  by
..24,  multiplied  by  the  initial issuance price of the outstanding or tendered
but  not  converted  Convertible  Debentures  held  by the Holder, where N = the
number  of  days  from  the  Conversion  Default  Date  to  the  date  (the
"Authorization  Date") that the Company authorizes a sufficient number of shares
of  Common  Stock  to effect conversion of all remaining Convertible Debentures.
The  Company  shall  send  notice  ("Authorization  Notice")  to the Holder that
additional shares of Common Stock have been authorized, the Authorization  Date,
and  the  amount  of  Holder's accrued Conversion Default Payments.  The accrued
Conversion  Default  shall  be  paid in cash or shall be convertible into Common
Stock  at  the  conversion  rate  set  forth  in  the  first  sentence  of  this
paragraph,  upon  written  notice  sent  by  the  Holder  to  the Company, which
Conversion  Default  shall  be  payable as follows:  (i) in the event the Holder
elects  to  take such payment in cash, cash payments shall be made to the Holder
by  the  fifth  (5th)  day of the following calendar month, or (ii) in the event
Holder elects to take such payment in stock, the Holder may convert such payment
amount into Common Stock at  the conversion rate set forth in the first sentence
of  this  paragraph  at any time after the fifth (5th) day of the calendar month
following  the  month  in which the Authorization Notice was received, until the
expiration  of  the  mandatory  three  (3)  year  conversion  period.

The  Company  acknowledges  that  its failure to maintain a sufficient number of
authorized but unissued shares of Common Stock to effect in full a conversion of
the Convertible Debentures will  cause  the  Holder  to  suffer  damages  in  an
amount  that  will  be  difficult  to  ascertain. Accordingly, the parties agree
that  it  is appropriate to include in this Agreement a provision for liquidated
damages.  The  parties  acknowledge  and  agree  that  the  liquidated  damages
provision set forth in this section represents the parties' good faith effort to
quantify  such  damages  and,  as  such,  agree that the form and amount of such
liquidated  damages  are  reasonable  and  will  not  constitute a penalty.  The
payment of liquidated damages shall not relieve the Company from its obligations
to deliver the Common Stock pursuant to the terms of this Convertible Debenture.

(g) If, by the fifth (5th) business day after the Conversion Date of any portion
of  the  Convertible  Debentures  to  be  converted  (the  "Delivery Date"), the
transfer  agent fails for any reason to deliver the Common Stock upon conversion
by  the  Holder  and  after such Delivery Date, the Holder purchases, in an open
market  transaction or otherwise, shares of Common Stock (the "Covering Shares")
solely  in  order  to make delivery in satisfaction of a sale of Common Stock by
the  Holder  (the "Sold Shares"), which delivery such Holder anticipated to make
using  the Common Stock issuable upon conversion (a "Buy-In"), the Company shall
pay  to  the  Holder, in addition to any other amounts due to Holder pursuant to
this  Convertible  Debenture,  and  not  in  lieu thereof, the Buy-In Adjustment
Amount (as defined below). The "Buy In Adjustment Amount" is the amount equal to
the  excess,  if  any,  of  (x)  the  Holder's  total  purchase price (including
brokerage commissions, if any) for the Covering Shares over (y) the net proceeds
(after  brokerage  commissions,  if any) received by the Holder from the sale of
the  Sold  Shares.  The  Company  shall  pay the Buy-In Adjustment Amount to the
Holder  in  immediately available funds within five (5) business days of written
demand  by  the  Holder.  By  way  of  illustration and not in limitation of the
foregoing,  if  the  Holder  purchases  shares  of  Common  Stock having a total

<PAGE>
purchase  price  (including  brokerage commissions) of $11,000 to cover a Buy-In
with  respect to shares of Common Stock it sold for net proceeds of $10,000, the
Buy-In Adjustment Amount which the Company will be required to pay to the Holder
will  be  $1,000.

(h)  The  Company  shall defend, protect, indemnify and hold harmless the Holder
and all of its shareholders, officers, directors, employees, counsel, and direct
or  indirect  investors  and  any  of  the  foregoing  person's  agents or other
representatives  (including,  without  limitation,  those retained in connection
with  the  transactions  contemplated  by  this  Agreement)  (collectively,  the
"Article  4.3(h)  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 Article
4.3(h)  Indemnitee  is a party to the action for which indemnification hereunder
is  sought),  and  including  reasonable  attorneys' fees and disbursements (the
"Article  4.3(h)  Indemnified  Liabilities"),  incurred  by  any  Article 4.3(h)
Indemnitee  as  a  result  of,  or  arising  out  of,  or  relating  to  (i) 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,  (ii)  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,  (iii) any cause of action, suit, or claim brought or made against such
Article  4.3(h) Indemnitee by a third party and arising out of or resulting from
the  execution,  delivery,  performance,  or  enforcement  of  the  Transaction
Documents  or any other certificate, instrument, or document contemplated hereby
or thereby, (iv) any transaction financed or to be financed in whole or in part,
directly  or  indirectly,  with the proceeds of the issuance of the Common Stock
underlying  the  Convertible  Debenture ("Securities"), or (v) the status of the
Holder or holder of the Securities as an investor in the Company, except insofar
as  any  such  misrepresentation, breach or any untrue statement, alleged untrue
statement,  omission,  or  alleged  omission  is  made  in  reliance upon and in
conformity  with  written  information furnished to the Company by the Holder or
the  Investor which is specifically intended by the Holder or the Investor to be
relied  upon  by  the  Company, including for use in the preparation of any such
registration  statement,  preliminary  prospectus, or prospectus, or is based on
illegal trading of the Common Stock by the Holder or the Investor. 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 that is permissible under
applicable  law.  The indemnity provisions contained herein shall be in addition
to  any  cause  of  action  or  similar  rights  the  Holder  may  have, and any
liabilities  the  Holder  may  be  subject  to.

ARTICLE 5     REGISTRATION

     The  Company agrees not to file any registration statement (including those
on Form S-8) without  the  prior  written  approval  of  the  Holder.    In  the
event  the  Company  does  file  a  registration  statement  without the express
written  consent  of the Holder, it shall be deemed an Event of Default, and the
Holder  may  elect to take actions under Article 4.  The Company must also issue
the Holder an equal number of Shares included in the Registration Statement as a
additional  penalty  for  liquidated  damages.

<PAGE>
<PAGE>
ARTICLE 6     MERGERS

     The  Company  shall  not  consolidate  or  merge  into,  or transfer all or
substantially  all  of  its assets to, any person, unless such person assumes in
writing  the  obligations  of  the Company under this Note and immediately after
such transaction no Event of Default exists. Any reference herein to the Company
shall  refer  to such surviving or transferee corporation and the obligations of
the  Company shall terminate upon such written assumption. Failure to do so will
constitute  an  Event  of  Default  under  this  Agreement  and  the  Holder may
immediately seek to take actions as described under Article 4 of this Agreement.

ARTICLE 7     ADDITIONAL FINANCING

     The Company will not enter into any additional financing agreements without
prior expressed written consent from the Holder, which shall not be unreasonably
withheld. In the Event the Company does enter into another financing arrangement
without  written  consent  it  will  constitute  an  Event of Default under this
Agreement and the Holder may immediately seek to take actions as described under
Article  4  of  this  Agreement.

ARTICLE 8     NOTICE

     Any  notices,  consents,  waivers  or  other  communications  required  or
permitted  to  be given under the terms of this Note 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  a  confirmation  of
transmission is mechanically or electronically generated and kept on file by the
sending  party); or (iii) one (1) 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:
Michael Hill, Chief Executive Officer
NeWave, Inc.
30 South La Patera #7
Goleta, Ca 93117
Telephone: (805) 964-9202
Facsimile:  (805) 964-9232

If to the Holder:
Dutchess Private Equities Fund, II, LP Douglas Leighton
50 Commonwealth Ave, Suite 2
Boston, MA  02116
(617) 301-4700

     Each party shall provide five (5) business days prior notice to the other
party of any change in address, phone number or facsimile number.

<PAGE>

ARTICLE 9     TIME

     Where  this  Note  authorizes  or  requires  the  payment  of  money or the
performance of a condition or obligation on a Saturday or Sunday or a holiday in
which  the United States Stock Markets ("US Markets") are closed ("Holiday"), or
authorizes or requires the payment of money or the performance of a condition or
obligation  within,  before  or  after  a period of time computed from a certain
date,  and such period of time ends on a Saturday or a Sunday or a Holiday, such
payment  may be made or condition or obligation performed on the next succeeding
business  day,  and  if the period ends at a specified hour, such payment may be
made  or condition performed, at or before the same hour of such next succeeding
business  day,  with  the  same  force  and  effect  as  if made or performed in
accordance  with  the  terms of this Note.  A "business day" shall mean a day on
which  the  US  Markets  are  open  for  a  full  day  or  half  day of trading.

ARTICLE 10     NO ASSIGNMENT

This Note shall not be assigned.

ARTICLE 11     RULES OF CONSTRUCTION.

     In  this Note, unless the context otherwise requires, words in the singular
number  include the plural, and in the plural include the singular, and words of
the  masculine gender include the feminine and the neuter, and when the tense so
indicates,  words  of the neuter gender may refer to any gender. The numbers and
titles  of  sections  contained  in  the  Note  are  inserted for convenience of
reference  only,  and  they  neither form a part of this Note nor are they to be
used  in  the  construction  or interpretation hereof. Wherever, in this Note, a
determination of the Company is required or allowed, such determination shall be
made  by  a majority of the Board of Directors of the Company and, if it is made
in  good  faith,  it  shall  be  conclusive and binding upon the Company and the
Holder.

ARTICLE 12     GOVERNING LAW

     The  validity,  terms,  performance  and  enforcement of this Note shall be
governed  and construed by the provisions hereof and in accordance with the laws
of  the  Commonwealth  of  Massachusetts  applicable  to  agreements  that  are
negotiated,  executed,  delivered  and  performed  solely in the Commonwealth of
Massachusetts.

ARTICLE 13     LITIGATION

The parties to this agreement will submit all disputes arising under this
agreement to arbitration in Boston, Massachusetts before  a single arbitrator of
the American Arbitration Association
("AAA").  The  arbitrator  shall  be selected by application of the rules of the
AAA, or by mutual agreement of the parties, except that such arbitrator shall be
an  attorney  admitted to practice law in  the  Commonwealth  of  Massachusetts.
No  party  to  this  agreement  will  challenge  the  jurisdiction  or  venue
provisions  as  provided  in  this  section.

ARTICLE 14     RESERVED

<PAGE>

ARTICLE 15     RESERVED

ARTICLE 16     INDEMNIFICATION

     In  consideration  of the Holder's execution and delivery of this Agreement
and  the  acquisition  and  funding  by  the Holder of the Note hereunder and in
addition  to  all  of  the  Company's  other  obligations  under  the  documents
contemplated  hereby,  the  Company  shall  defend,  protect, indemnify and hold
harmless the Holder and all of its shareholders, officers, directors, employees,
counsel,  and  direct  or  indirect  investors and any of the foregoing person's
agents  or  other representatives (including, without limitation, those retained
in  connection  with  the  transactions  contemplated  by  this  Agreement)
(collectively,  the  "Indemnities") 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  (i)  any misrepresentation or breach of any
representation  or  warranty  made  by  the  Company  in  the Note, or any other
certificate,  instrument  or  document  contemplated  hereby or thereby (ii) any
breach  of any covenant, agreement or obligation of the Company contained in the
Note  or  any  other  certificate, instrument or document contemplated hereby or
thereby,  except  insofar  as  any  such misrepresentation, breach or any untrue
statement,  alleged  untrue  statement,  omission or alleged omission is made in
reliance  upon  and  in  conformity  with  written  information furnished to the
Company  by,  or  on behalf of, the Holder or is based on illegal trading of the
Common  Stock by the Holder. 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  that  is permissible under applicable law. The indemnity provisions
contained  herein  shall be in addition to any cause of action or similar rights
the  Holder  may  have,  and  any  liabilities  the  Holder  may  be subject to.

ARTICLE 17      HOLDER SHARES

     The Company shall issue eight thousand (8,000) shares of unregistered,
restricted Common Stock to the Holder as an incentive for the investment
("Shares").  The Shares shall be issued and delivered immediately to the Holder
and shall carry piggyback registration rights.  In the event the Shares are not
registered in the next registration statement, the Company shall pay to the
Holder, as a penalty, ten thousand (10,000) additional shares of common stock
for each time a registration statement is filed and the Shares are not included.
The Holder retains the right to waive such penalty, in the event Holder chooses
to do so.

ARTICLE 18       USE OF PROCEEDS

This shall not to be used to pay down long-term debt to any financial
institution

ARTICLE 19       SENIOR OBLIGATION

<PAGE>

     The  Company  shall  cause  this  Note  and  all  other  existing Notes and
Debentures with the Holder ("Holder's Debt") to be senior in right of payment to
all  other  Indebtedness  of  the  Company.

ARTICLE 20        RESERVED

ARTICLE 21  PRIOR NOTES WITH HOLDER

     At such time as this Note is paid off in full, the Company agrees to resume
and maintain the schedule of Payments for Prior Notes as outlined in Article 1
("Method of Payment") of THIS
Note (October 1005 101)

WHILE THERE IS AN OUTSTANDING BALANCE ON THIS NOTE AND ALL PRIOR NOTES WITH THE
HOLDER, THE TERMS AND CONDITIONS DEFINED IN THE ARTICLES HEREIN SHALL SUPERCEDE
ALL OTHER AGREEMENTS AND REPRESENTATIONS, WHETHER WRITTEN AND ORAL, BETWEEN THE
   HOLDER AND THE COMPANY SPECIFICALLY WITH RESPECT TO ARTICLE 1 ("METHOD OF
   PAYMENT") DEFINED IN PRIOR NOTES AND THE COMPANY SHALL INSTEAD COMPLY WITH
 ARTICLE 21 DEFINED ABOVE WITH RESPECT TO ALL FUTURE PAYMENTS. THE HOLDER SHALL
 HAVE THE RIGHT TO DIRECT PAYMENTS TOWARD THIS NOTE OR ANY OTHER NOTE WHILE ANY
                             NOTES ARE OUTSTANDING.

Any  misrepresentations  shall  be  considered  a  breach  of  contract and will
constitute  an  Event  of  Default  under  this  Agreement  and  the  Holder may
immediately seek to take actions as described under Article 4 of this Agreement.
                                      *****

IN WITNESS WHEREOF, the Company has duly executed this Note as of the date first
written above.

                                  NEWAVE, INC.

By:
Name:     Michael Hill
Title:     Chief Executive Officer

                      DUTCHESS PRIVATE EQUITIES FUND, L.P.
                    BY ITS GENERAL PARTNER DUTCHESS CAPITAL
                                MANAGEMENT, LLC

By:__________________________________
Name:  Douglas H. Leighton
Title: A Managing Member

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