Document:

AMENDMENT

TO THE $275000 PROMISSORY NOTE DATED
May 7, 2012

 

The parties agree that the $275,000 Promissory Note
by and between Nyxio Technologies Corp. and JMJ Financial is hereby amended and supplemented as follows:

 

Borrower agrees to pay to Lender a Closing Fee
equal to 3% of the amount of each payment of Consideration by the Lender under the Note and a Due Diligence Fee also equal to 5%
of the amount of each payment of Consideration by the Lender under the Note (combined, the Closing Fee and the One Diligence Fee
equal 8% of the amount of each payment of Consideration by the Lender under the Note). The Closing Fee and the Due Diligence Fee
shall each be added to the Principal Sum of the Note as of the date of the payment of Consideration by the Lender and shall be
included in the Principal Sum for all purposes under the Note, including, without limitation, when calculating the amount of the
Interest charge.

 

ALL OTHER TERMS AND CONDITIONS OF THE $275,000 PROMISSORY
NOTE REMAIN IN FULL FORCE AND EFFECT.

 

Please indicate acceptance and approval of this amendment
dated April 24, 2013 by signing below:

 

	/s/
    Giorgio Johnson	/s/ JMJ Financial
	Giorgio Johnson	JMJ Financial
	Nyxio Technologies	Its Principal
	Chief Executive OfficerNEITHER
THE ISSUANCE AND SALE
OF THE SECURITIES REPRESENTED BY
THIS CERTIFICATE NOR THE
SECURITIES INTO WHICH
THESE SECURITIES ARE CONVERTIBLE HAVE
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, OR
(B) AN OPINION OF COUNSEL
(WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE
144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED
IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT
OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY
THE SECURITIES.

 

	Principal
    Amount: $37,500.00	Issue
    Date: January 31, 2013
	Purchase
    Price: $37,500.00	

 

CONVERTIBLE
PROMISSORY NOTE

 

FOR
VALUE RECEIVED, NYXIO TECHNOLOGIES CORPORATION,
a Nevada corporation (hereinafter
called the "Borrower"),
hereby promises to
pay to the
order of ASHER ENTERPRISES, INC., a
Delaware corporation, or registered assigns (the "Holder") the sum of $37,500.00 together
with any interest as set forth
herein, on November 1, 2013 (the "Maturity Date"), and to pay interest on the unpaid principal balance hereof
at the rate of eight percent (8%) (the "Interest Rate") per annum from the date hereof (the "Issue Date")
until the same becomes due and payable, whether at maturity or upon acceleration or by prepayment or otherwise. This
Note may not be prepaid in whole or in part except as otherwise explicitly set
forth herein. Any amount of principal or interest
on this Note which is not paid when due shall bear interest at the rate of twenty
two percent (22%) per annum from the due
date thereof until the same is paid ("Default
Interest"). Interest shall commence accruing on the
date that the Note is fully paid
and shall be computed on the basis of a 365-day
year and the actual number of days elapsed. All payments due hereunder (to the extent
not converted into common stock, $0.001 par value per
share (the "Common Stock") in accordance
with the terms hereof) shall be made in lawful money of the United
States of America. All payments shall be made at
such address as the Holder shall
hereafter give to the Borrower by written notice made in accordance with the provisions
of this Note. Whenever any amount expressed to
be due by the terms of this Note
is due on any day which is not
a business day, the same shall instead be due on the next succeeding day which
is a business day and, in the case of any interest
payment date which is not the date on which this Note is paid in full, the extension
of the due date thereof shall not be taken into account for purposes of
determining the amount of interest due
on such date. As used in this Note, the term
"business day" shall mean any day other than a Saturday, Sunday or a day
on which commercial banks in the city of New York, New York are authorized or
required by law or executive order to
remain closed. Each capitalized term used herein, and not otherwise defined, shall have the
meaning ascribed thereto in that certain Securities Purchase Agreement dated the date
hereof, pursuant to which this Note was originally issued (the "Purchase Agreement").

    	1

    	 

    

 

This
Note is free
from all taxes,
liens, claims and
encumbrances with respect to
the issue thereof and
shall not be
subject to preemptive rights or other similar rights
of shareholders of the Borrower and will not impose
personal liability upon the holder
thereof.

 

The
following terms shall
apply to this
Note:

 

ARTICLE
I. CONVERSION RIGHTS

 

1.1
Conversion  Right. The Holder
shall have the
right from time
to time, and
at any time during the period
beginning on the date which is one hundred eighty (180) days following
the date of this Note and ending
on the later of: (i) the Maturity Date
and (ii) the date of payment of the Default
Amount (as defined in Article III) pursuant
to Section 1.6(a) or Article III, each in respect of
the remaining outstanding principal amount
of this Note to convert
all or any part of the outstanding
and unpaid principal amount of this Note into fully paid and non assessable shares
of Common Stock, as such Common Stock exists on the
Issue Date, or any shares of capital
stock or other securities of the Borrower
into which such Common Stock
shall hereafter be changed or reclassified at the conversion price (the "Conversion
Price") determined as provided herein (a "Conversion"); provided, however, that in no event shall
the Holder be entitled to convert any
portion of this Note in excess
of that portion of this Note upon
conversion of which the sum of (1) the number of shares of Common
Stock beneficially owned by the Holder and its
affiliates (other than shares
of Common Stock which may be deemed
beneficially owned through the ownership of the unconverted portion of the Notes or the unexercised or unconverted portion of
any other security of the Borrower subject to
a limitation on conversion or exercise analogous to the limitations contained herein) and (2) the number of shares of Common Stock
issuable upon the conversion of the
portion of this Note with respect to which the determination of this proviso is being
made, would result in beneficial ownership by the Holder
and its affiliates of
more than 9.99% of the outstanding
shares of Common Stock. For purposes of the proviso to the
immediately preceding sentence, beneficial
ownership shall be determined in accordance with Section 13(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"),
and Regulations 13D-G thereunder, except as otherwise provided in clause
(1) of such proviso, provided, further,
however, that the limitations on conversion may be waived by the Holder
upon, at the election of the Holder, not less than 61 days' prior notice
to the Borrower, and the provisions of the conversion limitation shall continue
to apply until
such 61st day (or such
later date, as determined by the Holder,
as may be specified in such notice of waiver). The number of shares of
Common Stock to be issued upon each conversion
of this Note shall be determined
by dividing the Conversion Amount (as defined
below) by the applicable Conversion Price then in
effect on the date specified in the
notice of conversion, in the form attached
hereto as Exhibit A (the "Notice of Conversion"),
delivered to the Borrower by the Holder in
accordance with Section 1.4 below; provided that the Notice of Conversion is
submitted by facsimile or e-mail
(or by other means resulting in, or reasonably expected to
result in, notice) to the Borrower before 6:00p.m., New
York, New York time on such conversion date (the "Conversion
Date"). The term "Conversion Amount" means, with respect to
any conversion of this Note, the sum
of (1) the principal amount of this Note to
be converted in such conversion plus (2)
at the Holder's option, accrued and
unpaid interest, if any, on
such principal amount at the interest
rates provided in this Note to the Conversion Date, plus (3) at the Holder's
option, Default Interest, if any, on the amounts referred
to in the immediately preceding clauses (1)
and/or (2) plus (4) at the Holder's
option, any amounts owed to the Holder pursuant to Sections 1.3 and
1.4(g) hereof.

    	2

    	 

    

 

1.2
Conversion Price.

 

(a)
Calculation of Conversion Price. The conversion
price (the "Conversion Price") shall equal the Variable Conversion
Price (as defined herein)
(subject to equitable adjustments for
stock splits, stock dividends or rights
offerings by the Borrower relating to the
Borrower's securities or the securities
of any subsidiary of the Borrower, combinations,
recapitalization, reclassifications, extraordinary distributions and similar events).
The "Variable Conversion Price" shall mean
55% multiplied by the Market Price (as defined herein) (representing a discount
rate of 45%). "Market Price" means the
average of the lowest three (3) Trading
Prices (as defined below)
for the Common Stock during the ten (10) Trading Day period ending
on the latest complete Trading Day prior to the Conversion Date. "Trading
Price" means, for any security as of any date, the closing bid price on
the Over-the-Counter Bulletin Board, or applicable trading market (the "OTCBB")
as reported by a reliable reporting service ("Reporting
Service") designated by the Holder (i.e. Bloomberg) or, if the
OTCBB is not the principal trading market for such security, the closing bid price of such
security on the principal securities exchange
or trading market where such security is listed or traded
or, if no closing bid price of such security is available in
any of the foregoing manners, the average of the closing
bid prices of any
market makers for such security that are listed in the
"pink sheets" by the National Quotation Bureau,
Inc. If the Trading Price cannot be calculated for such security on such
date in the manner provided above, the Trading Price shall be the
fair market value as mutually determined by
the Borrower and the holders of
a majority in interest of the Notes being
converted for which the calculation of the Trading Price is
required in order to determine
the Conversion Price of such Notes. "Trading Day" shall mean any day on which the Common Stock is tradable for any
period on the OTCBB, or on the principal securities exchange or other securities
market on which the Common Stock is then being
traded.

 

(b)
Conversion Price During Major Announcements.
Notwithstanding anything contained in Section
1.2(a) to the
contrary, in the
event the Borrower
(i) makes a
public announcement that it intends
to consolidate or merge with any other corporation (other than a merger in
which the Borrower is the surviving or continuing corporation and
its capital stock is unchanged) or sell or transfer all or substantially all
of the assets of the Borrower or (ii) any person, group or entity (including the
Borrower) publicly announces a tender
offer to purchase 50% or more of the Borrower's Common Stock (or any other takeover
scheme) (the date of the announcement referred to in clause (i) or (ii) is
hereinafter referred to as the "Announcement Date"), then the Conversion Price shall, effective upon the Announcement
Date and continuing through the Adjusted
Conversion Price Termination Date (as defined below), be equal to the lower of (x) the
Conversion Price which would have been applicable for a
Conversion occurring on the Announcement Date and
(y) the Conversion Price that would otherwise be in effect. From and after
the Adjusted Conversion Price Termination Date, the Conversion Price shall be determined
as set forth in this Section 1.2(a). For
purposes hereof, "Adjusted Conversion Price Termination Date" shall mean, with respect to any proposed transaction or
tender offer (or takeover scheme) for which a
public announcement as contemplated by this Section 1.2(b) has been made, the
date upon which the Borrower (in the case of clause (i) above) or the person, group
or entity (in the case of clause (ii) above) consummates or publicly announces the
termination  or abandonment of the proposed
transaction or tender offer (or takeover scheme) which caused this Section 1.2(b)
to become operative.

    	3

    	 

    

 

1.3
Authorized Shares. The Borrower covenants that during the
period the conversion right
exists, the Borrower will reserve
from its authorized and unissued Common Stock
a sufficient number of
shares, free from
preemptive rights, to provide for
the issuance of Common Stock upon the full conversion of this Note issued pursuant
to the Purchase Agreement. The Borrower is required at all times to have authorized and reserved
five times the number of shares that is
actually issuable upon full conversion
of the Note (based on
the Conversion Price of the Notes in effect from time
to time)(the "Reserved Amount"). The Reserved Amount shall be
increased from time to time in
accordance with the Borrower's obligations pursuant to
Section 4(g) of the Purchase Agreement. The Borrower represents that upon issuance,
such shares will be duly and validly issued, fully paid and non-assessable.
In addition, if the Borrower shall issue any securities or make any
change to its capital structure which would change the number
of shares of Common Stock into which the Notes shall be convertible at the then
current Conversion Price, the Borrower shall at the same
time make proper provision so that
thereafter there shall be a sufficient number
of shares of Common Stock
authorized and reserved, free from preemptive rights, for conversion of the
outstanding Notes. The Borrower (i) acknowledges that it has irrevocably instructed its
transfer agent to issue certificates for the Common Stock issuable upon
conversion of this Note, and (ii) agrees
that its issuance of this Note
shall constitute full authority to its officers
and agents who are charged with the duty of executing stock
certificates to execute and issue
the necessary certificates for shares
of Common Stock in accordance with the terms
and conditions of this Note.

 

If,
at any time
the Borrower does
not maintain the
Reserved Amount it will
be considered an Event of Default
under Section 3.2 of the Note.

 

1.4
Method of Conversion.

 

(a)
Mechanics of Conversion.  Subject
to Section 1.1,
this Note may be converted
by the Holder
in whole or
in part at
any time from
time to time after
the Issue Date, by (A) submitting to the Borrower a
Notice of Conversion (by facsimile,
e-mail or other reasonable means of communication
dispatched on the Conversion Date prior to
6:00 p.m., New York, New York time)
and (B) subject to Section 1.4(b), surrendering this Note
at the principal office of the Borrower.

 

(b)
Surrender of Note Upon
Conversion. Notwithstanding anything
to the contrary set
forth herein, upon
conversion of this Note
in accordance with the terms
hereof, the Holder shall not be required to physically surrender this Note
to the Borrower unless the entire unpaid
principal amount of this Note is so converted. The Holder and the Borrower shall maintain
records showing the principal amount so
converted and the dates of such conversions
or shall use such other method, reasonably satisfactory
to the Holder and the
Borrower, so as not to require physical
surrender of this Note upon each such
conversion. In the event of any dispute or discrepancy, such
records of the Borrower shall, prima facie, be controlling and determinative
in the absence of manifest error. Notwithstanding the foregoing, if any portion of
this Note is converted as aforesaid, the Holder may not transfer this Note unless the
Holder first physically surrenders this Note to the Borrower,
whereupon the Borrower will forthwith
issue and deliver upon the order of the Holder a
new Note of like tenor, registered as the
Holder (upon payment by the Holder of any applicable transfer taxes) may request,
representing in the aggregate the remaining unpaid principal amount of this Note. The Holder
and any assignee, by acceptance of this Note, acknowledge and agree that,
by reason of the provisions of this
paragraph, following conversion of a portion
of this Note, the unpaid and unconverted
principal amount of this Note represented by this Note may be less than
the amount stated on the face hereof.

    	4

    	 

    

 

(c)
Payment of Taxes.
The Borrower shall
not be required
to pay any
tax which may be
payable in respect
of any transfer involved in the
issue and delivery of shares of Common
Stock or other securities or
property on conversion of this Note in a
name other than that of the
Holder (or in street name),
and the Borrower shall not be required to
issue or deliver any such shares
or other securities or property
unless and until the
person or persons (other than the
Holder or the custodian in whose street
name such shares are to be
held for the Holder's account) requesting the issuance thereof
shall have paid to the Borrower the
amount of any such tax or shall have established to the satisfaction of the Borrower
that such tax has been
paid.

 

(d)
Delivery of Common
Stock Upon Conversion. Upon
receipt by the Borrower from
the Holder of
a facsimile transmission or
e-mail (or other reasonable means
of communication) of a Notice of
Conversion meeting the requirements for
conversion as provided in this Section 1.4, the Borrower shall issue
and deliver or cause
to be issued and delivered to or upon the order of
the Holder certificates for
the Common Stock issuable upon such conversion within three (3) business days after such receipt (the "Deadline")
(and, solely in the case of conversion of the entire unpaid principal amount 
hereof, surrender of this Note) in accordance with the terms hereof
and the Purchase Agreement.

 

(e)
Obligation of Borrower
to Deliver Common Stock.
Upon receipt by the
Borrower of a
Notice of Conversion,
the Holder shall
be deemed to be the holder of record of the
Common Stock issuable  upon such conversion, the outstanding principal amount
and the amount of accrued and unpaid interest
on this Note shall be reduced to reflect such conversion, and, unless the Borrower
defaults on its obligations under this
Article I, all rights
with respect to the portion of this Note being so converted shall
forthwith terminate except the right to receive the
Common  Stock or other securities, cash or other assets, as herein provided,
on such conversion. If the Holder shall have
given a Notice of Conversion as provided herein, the Borrower's obligation to issue and
deliver the certificates for Common Stock
shall be absolute and unconditional, irrespective of
the absence of any action by the Holder to
enforce the same, any waiver or consent with respect to any provision thereof,
the recovery of any judgment against any person or any action to
enforce the same, any
failure or delay in the
enforcement of any other obligation of the Borrower to the holder
of record, or any setoff, counterclaim, recoupment, limitation or termination,
or any breach or alleged breach by the Holder of any obligation to the Borrower, and irrespective of
any other circumstance which might otherwise limit such obligation of
the Borrower to the Holder in
connection with such conversion. The Conversion Date specified
in the Notice of Conversion shall be the Conversion Date so long as the
Notice of Conversion is received by the
Borrower before 6:00p.m., New York, New
York time, on such date.

 

(f)
 Delivery of Common Stock by Electronic Transfer. In lieu of delivering physical
certificates representing the Common Stock issuable
upon conversion, provided the Borrower is participating in the Depository
Trust Company ("DTC") Fast Automated Securities Transfer ("FAST")
program,  upon request of
the Holder and its compliance with
the provisions  contained in
Section  1.1 and in this Section
1.4, the Borrower shall use its best efforts
to cause its transfer agent to electronically
transmit the Common Stock issuable upon conversion
to the Holder by crediting the account of Holder's Prime Broker with DTC through its
Deposit Withdrawal Agent Commission ("OWAC") system.

 

(g)
Failure to Deliver
Common Stock Prior to Deadline.
Without  in any way limiting
the Holder's right to pursue other remedies,
including  actual damages and/or equitable relief,
the parties agree that
if delivery of the Common Stock
issuable upon conversion of this Note is not delivered by the Deadline (other than
a failure due to the circumstances described
in Section 1.3 above, which failure shall be governed by
such Section) the Borrower shall pay to
the Holder $2,000 per day in cash, for each day beyond the Deadline that the Borrower
fails to deliver such Common
Stock. Such cash amount shall be
paid to Holder by the fifth day of the month following the month in which it has accrued
or, at the option of the
Holder (by written notice
to the Borrower by the
first day of the month following the month
in which it has accrued), shall be added to the principal amount of this
Note, in which event interest shall accrue
thereon in accordance with the terms
of this Note
and such additional principal amount shall be convertible into Common Stock
in accordance with the terms of this Note. The Borrower agrees that the right to convert
is a valuable right to the Holder. The damages resulting from a failure,
attempt to frustrate, interference with such conversion right are difficult
if not impossible to qualify. Accordingly the parties acknowledge that the liquidated
damages provision contained in this Section 1.4(g)
are justified.

1.5
 Concerning  the 
Shares.  The  shares 
of  Common  Stock 
issuable  upon conversion of
this Note may
not be sold or transferred unless
(i) such shares are sold pursuant to an effective registration statement under the
Act or (ii) the Borrower  or its transfer
agent shall have been furnished with an opinion
of counsel (which opinion shall be in form,
substance and scope customary for opinions of counsel
in comparable transactions)  to the
effect that the shares to  be sold or
transferred may be sold or transferred pursuant to an exemption from such registration or
(iii) such shares are
sold or transferred  pursuant to
Rule 144 under the Act (or a successor rule)
("Rule  144")  or (iv) such
shares are transferred to an "affiliate" (as defined in Rule 144) of the
Borrower  who agrees to sell or otherwise
transfer the shares only in accordance
with this Section 1.5 and who is
an Accredited Investor (as defined in the Purchase Agreement). Except as otherwise
provided in the Purchase Agreement (and subject to the removal provisions set forth below),
until such time as the shares of Common
Stock issuable upon conversion of this
Note have been registered  under the Act or
otherwise may be sold pursuant to Rule 144
without any restriction as to
the number of securities as of a particular
date that can then be immediately sold,
each certificate for shares of Common Stock
issuable upon conversion of this Note that has not been so included in an
effective  registration statement or that
has not been sold pursuant to an
effective registration statement or an exemption that permits removal of
the legend, shall bear a legend substantially in
the following form, as appropriate:

 

"NEITHER
 THE  ISSUANCE 
AND SALE  OF  THE 
SECURITIES REPRESENTED  BY  THIS
 CERTIFICATE  NOR 
THE  SECURITIES  INTO WHICH 
THESE  SECURITIES  ARE EXERCISABLE
 HAVE  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, OR (B) AN OPINION
OF  COUNSEL (WHICH COUNSEL SHALL BE SELECTED
BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT  REQUIRED
UNDER SAID  ACT OR  (II) 
UNLESS SOLD PURSUANT TO RULE 144
OR RULE  144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE

    	5

    	 

    

PLEDGED
 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
Borrower  shall issue
to the Holder a
new certificate  therefore 
free of any transfer legend
if (i) the Borrower or its transfer agent
shall have received an opinion of
counsel, in form, substance and  scope customary 
for opinions of counsel in comparable transactions, to the
effect that a public sale or transfer of such Common
Stock may be made without registration under the Act, which opinion
shall be accepted by the Company so that the sale or transfer is effected
or (ii) in the
case of the Common Stock issuable upon conversion of this Note, such security is registered for sale by
the Holder under an effective registration statement filed under the Act
or otherwise may  be sold pursuant
 to Rule

144
without any restriction
as to the
number of securities 
as of a
particular  date that
can then be immediately 
sold.  In the  event that 
the  Company  does not 
accept  the  opinion of counsel
provided  by the Buyer with respect to the transfer
of Securities pursuant to an exemption from
registration, such as
Rule 144 or
RegulationS, at the Deadline, it will
be considered an Event of Default pursuant
to Section 3.2 of the
Note.

 

1.6
Effect of Certain
Events.

 

(a)
Effect of Merger.
Consolidation,  Etc.  At
the option of
the Holder, the sale, 
conveyance  or  disposition 
of  all  or substantially all of
the assets  of the Borrower, the effectuation by the Borrower of
a transaction or series of related
transactions in which more than

50%
of the voting
power of the
Borrower  is disposed 
of, or the
consolidation, merger  or
other business  combination of the Borrower 
with or into any other Person (as defined below) or Persons when the Borrower
 is not the survivor shall either: (i)  be
deemed to be an Event of Default (as
defined in Article III) pursuant to which the Borrower shall  be required
to pay to the Holder upon the consummation 
of and as a condition to such transaction
an amount equal to the Default Amount (as defined in Article Ill) or
(ii) be treated pursuant to Section  1.6(b)
hereof. "Person"  shall mean any individual, 
corporation, limited liability company, partnership, association, trust or other
entity or organization.

 

(b)
Adjustment  Due to
Merger, Consolidation,  Etc. 
If, at any
time when this Note
is issued and
outstanding  and prior to
conversion of all of the Notes,
there shall be any merger, consolidation, exchange of shares, recapitalization, 
reorganization, or  other similar event,
as a result of
which shares of Common Stock of the Borrower shall be changed into the same or a different 
number of shares of another class or classes of stock or securities of the Borrower
or another entity, or in case
of any sale or conveyance of all
or substantially all of the assets of the Borrower other 
than in connection with a plan of complete liquidation of the Borrower, then the
Holder of this Note
shall thereafter have the
right to receive upon conversion
of this Note, upon the basis and
upon the terms and conditions specified herein
and in lieu of
the shares  of  Common Stock immediately
 theretofore issuable upon conversion, such stock, securities or assets
which the Holder would have
been entitled to receive in such transaction
had this Note been converted in full immediately
prior to such transaction (without  regard
to any limitations on conversion set forth herein), and in any such case
appropriate  provisions shall be made with respect 
to the  rights and interests of the Holder 
of this Note to the end that the provisions hereof (including, without limitation, provisions 
for adjustment of the Conversion Price and of the number of shares issuable upon conversion 
of the Note) shall thereafter be applicable, as nearly  as may 
be practicable in relation to any securities or assets  thereafter

    	6

    	 

    

deliverable
upon the conversion 
hereof.  The Borrower
shall not affect
any transaction  described in
this Section  1.6(b) 
unless (a) it first gives, to the
extent practicable, thirty (30) days prior written notice
(but in any event at least fifteen (15) days prior written notice)
of the record date of the special  meeting
of  shareholders  to approve, or if there
 is no  such record 
date, the consummation  of, such merger, consolidation, exchange of shares,
recapitalization, reorganization  or other similar event or sale
of assets (during which time the Holder shall be entitled 
to convert this Note) and (b) the resulting  successor or acquiring entity (if
not the Borrower) assumes by written instrument the  obligations of this Section 1.6(b).
 The  above provisions
shall similarly apply to successive consolidations,
mergers, sales, transfers or share exchanges.

 

(c)
Adjustment Due to
Distribution.  If the
Borrower shall declare
or make any distribution 
of its assets
(or rights to
acquire  its assets) to holders
of Common Stock as a dividend, stock repurchase,
by way of return of capital
or otherwise (including  any dividend or distribution to the Borrower's shareholders
 in cash or shares 
(or rights to acquire  shares) of capital stock of a subsidiary (i.e.,
a spin-oft)) (a "Distribution"), then the Holder 
of this Note shall be entitled, upon  any
conversion  of this Note  after the date
of  record  for determining shareholders
entitled to such Distribution,  to receive the
amount of such assets which would have been payable to the Holder 
with  respect to the shares of
Common Stock  issuable  upon such
conversion had such Holder been the holder of
such shares of Common Stock on the record date for the determination of shareholders
entitled to such Distribution.

 

(d)
Adjustment  Due to
Dilutive Issuance.  If,
at any time
when any Notes are
issued and outstanding, 
the Borrower issues or sells,
or in accordance with this
Section 1.6(d) hereof is deemed to have
issued or sold, any shares of Common Stock
for no consideration or for a consideration per  share (before 
deduction of reasonable  expenses or 
commissions or underwriting discounts or allowances 
in connection therewith) less than the Conversion Price in effect on the date
of such  issuance (or deemed  issuance)
of such shares  of Common Stock (a "Dilutive
Issuance"), then immediately upon the
Dilutive Issuance, the Conversion  Price
will be reduced to the amount  of the consideration
 per share
received by the Borrower in such Dilutive Issuance.

 

The
Borrower shall be
deemed to have
issued or sold
shares of Common Stock 
if  the  Borrower 
in  any manner issues  or grants
any  warrants,  rights or options (not
including employee stock option plans),
whether or not immediately  exercisable,
to subscribe for or to purchase Common  Stock
or other securities convertible into or
exchangeable  for Common Stock ("Convertible Securities") (such
warrants, rights and options to purchase
Common  Stock or Convertible Securities are hereinafter referred to as "Options")
and the price per share for which Common Stock is issuable upon the exercise
of such Options is less than the
Conversion Price then in effect, then the Conversion  Price shall be equal to 
such price per share.  For purposes of
the preceding sentence, the "price
 per share for
which Common Stock is issuable upon the exercise 
of such Options"  is determined 
by dividing (i) the  total amount, if any, received or receivable by the
Borrower as consideration for the issuance
or granting of all such Options, plus the
minimum aggregate amount of additional consideration, if any, payable to the
Borrower upon the exercise  of  all such
Options, plus, in the case of Convertible  Securities issuable 
upon the exercise of such  Options, the 
minimum aggregate amount of additional consideration  payable upon the
conversion or exchange thereof at the time such Convertible Securities first
become convertible or exchangeable, by (ii) the maximum total
number of shares of Common Stock issuable  upon the exercise of
all such Options (assuming full conversion of

    	7

    	 

    

Convertible
Securities,  if applicable). 
No  further  adjustment
to  the  Conversion
Price  will  be made
upon the actual 
issuance of such Common Stock  upon
the exercise of such Options or upon the conversion or exchange of Convertible Securities
issuable upon exercise of such Options.

 

Additionally,
the Borrower shall 
be deemed  to
have  issued  or
sold  shares of  Common
Stock  if  the Borrower in any
manner issues or  sells  any Convertible
Securities, whether  or not immediately convertible 
(other  than where the same are  issuable
upon the exercise of Options), and the  price per share for which 
Common Stock  is issuable upon such conversion or exchange is less than the
Conversion Price  then  in effect, then
the  Conversion Price shall be equal to such price per share. For the purposes of
the preceding sentence, the "price  per 
share for which  Common Stock is
issuable upon such  conversion or exchange"
is determined by dividing (i)  the total amount, if any, received or receivable by
the Borrower as consideration for the issuance  or sale 
of  all such Convertible Securities, plus 
the minimum aggregate amount of additional consideration, if any,  payable
to  the Borrower upon the conversion or exchange
thereof  at the time such Convertible Securities
first become convertible or exchangeable, by (ii) the maximum total number
of shares of Common Stock issuable  upon
the conversion or exchange of all such Convertible Securities. No further adjustment to the Conversion Price will be made upon
the actual  issuance of such Common Stock upon conversion or
exchange of such Convertible Securities.

 

(e)
 Purchase  Rights. 
If,  at  any 
time  when  any 
Notes  are  issued 
and outstanding, the Borrower
issues  any convertible
securities or rights 
to purchase stock, warrants, securities
or other property (the "Purchase Rights") pro rata to the record holders of any class 
of Common  Stock, then the Holder of  this
 Note will be entitled to acquire, upon the terms applicable to such Purchase
Rights, the aggregate Purchase Rights which 
such Holder could  have acquired
if such Holder had  held the  number of
shares  of Common  Stock acquirable upon
complete conversion of this Note (without regard  to any 
limitations on conversion  contained
herein) immediately before the date on which a record 
is taken  for the grant, issuance
or sale of such Purchase Rights  or, if no such record is taken, 
the  date as of which the record  holders
of Common Stock are to be determined for the
grant, issue or sale of such Purchase Rights.

 

(f)
 Notice  of
Adjustments.  Upon the
occurrence of each adjustment
or readjustment of the 
Conversion Price  as
a result of the events described
in this Section 1.6, the Borrower, at its
expense, shall promptly compute such adjustment
or  readjustment and prepare and furnish
to the Holder a certificate setting forth such adjustment
or readjustment and showing in detail
the  facts  upon which such adjustment
or readjustment is based.  The Borrower
shall, upon  the  written request at any
time of the  Holder, furnish to such  Holder
a like  certificate setting  forth (i)
such adjustment or readjustment, (ii) the Conversion Price at the time in
effect and (iii) the number of shares
of Common Stock and the amount, if any,  of
other  securities or property which 
at the time would be received upon conversion of
the Note.

 

1.7
Trading Market  Limitations. 
Unless  permitted by
the applicable rules
and regulations of  the 
principal securities market 
on  which  the 
Common Stock is then listed or traded, in no event shall the Borrower issue
 upon conversion of or otherwise pursuant to
this Note and the other  Notes issued  pursuant
to the Purchase Agreement more than  the  maximum
number  of shares  of Common Stock that
 the Borrower can issue pursuant to any  rule
 of the principal  United States securities
market  on  which the Common Stock is then
 traded (the "Maximum Share Amount"), which shall be 9.99% of
the total shares outstanding on the Closing Date (as defined in
the Purchase Agreement), subject to
equitable adjustment from time to time

    	8

    	 

    

for
stock splits, stock
dividends, combinations,  capital
reorganizations and similar
events relating to the
Common  Stock occurring 
after the date
hereof. Once the Maximum Share
Amount has been issued, if the Borrower
fails to eliminate any prohibitions under applicable 
law or the rules or regulations of any stock exchange, interdealer 
quotation system or other self-regulatory organization with jurisdiction  over
the Borrower or any of its securities on
the Borrower's ability to issue  shares
 of Common Stock in excess of  the Maximum
Share Amount,  in  lieu of any further
right to convert this Note, this will
be considered an Event of Default under Section 3.3 of
the Note.

 

1.8
Status  as  Shareholder. 
Upon  submission  of 
a Notice  of 
Conversion  by a Holder, 
(i) the  shares 
covered  thereby (other than the shares,
if any,  which  cannot be issued because
their issuance would exceed such Holder's allocated portion of the Reserved
Amount or Maximum Share Amount) shall be deemed converted into shares of Common
Stock and (ii) the Holder's rights as a Holder 
of such  converted  portion of
this Note  shall cease and terminate,
excepting only the right to receive certificates  for 
such shares of Common Stock and to any remedies provided herein or otherwise
available at law or in
equity to such Holder because of a failure by
the Borrower to comply with the terms  of
this Note.  Notwithstanding the foregoing, if a Holder has not received
certificates for all shares of Common
Stock prior to the tenth (1Oth) business day after the expiration 
of the Deadline  with respect to
a conversion of any portion of this Note for any reason, then (unless
the Holder otherwise elects to retain its
status as a holder of Common Stock
by so notifying the Borrower) the Holder shall regain the rights
of a Holder of this Note with respect to such unconverted portions of this
Note and the Borrower shall, as
soon as practicable,  return such  unconverted
Note to the  Holder or, if the Note has  not
been surrendered, adjust its records to reflect that such portion of this Note has
not been converted. In all cases, the Holder shall retain all of its rights and remedies
 (including, without limitation, (i) the right to
receive Conversion Default Payments  pursuant
to Section  1.3 to the extent required
thereby for such Conversion  Default and
any subsequent Conversion Default and (ii) the right to have the Conversion  Price
with respect to subsequent conversions determined
 in accordance with Section 1.3) for the
Borrower's failure to convert this Note.

 

1.9
Prepayment.  Notwithstanding  anything
to the contrary
contained  in this
Note, at any time
during the period
beginning on the
Issue Date and ending on the date
which is thirty (30) days following the issue date,
the Borrower shall have the right, exercisable on not
less than three (3) Trading Days prior
written notice to the Holder of
the Note to prepay the
outstanding Note (principal and accrued interest), in full,
in accordance with this Section 1.9. Any notice of prepayment hereunder (an
"Optional Prepayment Notice") shall be delivered to the
Holder of the Note at its registered
addresses and shall state: (1) that the Borrower is exercising its
right to prepay the Note, and (2)
the date of prepayment  which shall 
be not more than three
(3) Trading Days from the date of the Optional Prepayment Notice. On the date fixed
for prepayment (the "Optional  Prepayment
Date"), the Borrower  shall make payment of the Optional 
Prepayment Amount (as defined below) to or upon 
the order of the Holder  as specified  by
the Holder in writing to the Borrower at least one
(1) business day
prior to the Optional Prepayment  Date. If the Borrower 
exercises its right to prepay the Note, the Borrower shall make payment to the
Holder of an amount in cash (the
"Optional  Prepayment Amount")
equal to 115%, multiplied by the sum
of: (w) the then outstanding principal amount of this
Note plus (x) accrued  and unpaid
interest on the unpaid principal amount of this Note
to the Optional Prepayment  Date plus
(y) Default Interest, if any, on the amounts referred to in clauses 
(w) and (x) plus (z) any amounts
owed to the Holder pursuant  to Sections 1.3 and 1.4(g) 
hereof. If the Borrower  delivers
an Optional Prepayment Notice and
fails to pay the Optional Prepayment
 Amount due to the
Holder

    	9

    	 

    

of
the Note within
two (2) business
days following the
Optional Prepayment  Date,
the Borrower shall forever
forfeit its right to prepay the Note
pursuant to this Section 1.9.

 

Notwithstanding
anything  to  the 
contrary  contained  in 
this  Note,  at 
any  time during the
period beginning  on
the date which is thirty-one 
(31) days following  the issue date and ending
on the date which is sixty (60)
days following the issue date, the Borrower shall
have the right, exercisable on not less than three (3) Trading
Days prior written notice to the
Holder of the Note to prepay the outstanding
Note (principal and accrued interest), in full, in accordance with this Section 1.9.
Any Optional Prepayment Notice shall be delivered to
the Holder of the Note at its registered 
addresses and shall state: (1) that the
Borrower is exercising  its right to prepay
the Note, and (2) the date of
prepayment which shall be not more
than three (3) Trading Days from the date
of the Optional Prepayment Notice. On the Optional
Prepayment Date, the Borrower shall make payment
of the Second Optional Prepayment Amount
(as defined below) to or upon the order
of the Holder as specified by the
Holder in writing to the Borrower at
least one (1) business day prior to the Optional 
Prepayment Date. If the Borrower exercises  its
right to prepay the Note, the Borrower 
shall make payment to the Holder  of
an amount  in cash (the "Second Optional
Prepayment Amount") equal to 120%, multiplied by the sum of: (w) the then outstanding
principal amount of this Note plus (x) accrued and 
unpaid interest  on the  unpaid principal
amount of this Note to the Optional Prepayment
Date plus (y) Default Interest, if any, on the amounts referred to 
in clauses (w) and (x) plus (z) any amounts 
owed to  the  Holder pursuant to
Sections 1.3 and 1.4(g) hereof.  If the Borrower delivers an Optional Prepayment Notice
and fails to pay the Second Optional Prepayment Amount due to
the Holder of the Note within two
(2) business  days following the Optional Prepayment Date, the 
Borrower  shall forever forfeit its right to prepay the Note pursuant to this
Section 1.9.

 

Notwithstanding
anything  to  the 
contrary  contained  in 
this  Note,  at 
any  time during the
period  beginning  on
the date which is sixty-one (61) days
following the issue date and ending on the date
which is ninety (90) days following  the
issue date, the Borrower shall have the
right, exercisable  on not less than three
(3) Trading  Days prior written  notice
to the Holder of the Note to prepay the outstanding
Note (principal and accrued interest), in full, 
in accordance with this Section  1.9. Any Optional Prepayment Notice 
shall be delivered to the Holder of the
Note at its registered addresses  and shall state: (1) that the Borrower is exercising
its right to prepay the Note, and (2) the
date of prepayment which shall be not more than
three (3) Trading Days from the date of the Optional Prepayment Notice. On
the Optional Prepayment Date, the Borrower shall make payment of the Third
Optional Prepayment Amount (as defined below) to
or upon the order of the Holder
as specified by the Holder in writing to
the Borrower at least one (1)
business day prior to the Optional Prepayment Date. If
the Borrower  exercises 
its right to prepay the Note, the Borrower shall make payment to
the Holder of an amount in
cash (the "Third Optional Prepayment Amount") equal to 125%, multiplied by the sum of: (w) the then outstanding
principal amount of this Note plus
(x) accrued and unpaid interest on the unpaid principal
amount of this Note to the
Optional Prepayment Date plus (y) Default Interest,  if any, on the
amounts  referred to  in clauses (w) and
 (x)  plus (z) any amounts owed
to the Holder pursuant to Sections 1.3
and 1.4(g) hereof. If the Borrower  delivers
 an Optional 
Prepayment Notice and fails to pay
the Third Optional Prepayment  Amount due to
the Holder of the Note within two (2) business  days following 
the Optional  Prepayment Date, the Borrower 
shall forever forfeit its right to prepay
the Note pursuant to this Section 1.9.

    	10

    	 

    

Notwithstanding
any to the
contrary stated elsewhere 
herein, at any
time during the period
beginning on the
date that is ninety-one (91)
day from the issue date and ending
one hundred twenty (120) days  following the 
issue date, the  Borrower shall have the 
right, exercisable on not less than three (3) Trading Days prior
written notice to the Holder of the Note
to prepay the outstanding 
Note (principal and accrued interest),
in full, in accordance with
this Section 1.9.  Any Optional Prepayment Notice shall be delivered to
the Holder of the Note at its registered
addresses  and shall state: (I) that
the Borrower is exercising its right
to prepay the Note, and (2) the date of
prepayment which shall be not more than
three (3) Trading Days from the date of
the Optional  Prepayment Notice. On the Optional Prepayment Date,
the Borrower shall make payment of
the Fourth Optional Prepayment Amount (as
defined below) to or upon the order
of the Holder as specified by
the Holder in writing to the
Borrower at least one (1) business day prior to the Optional
Prepayment Date.  If the Borrower exercises
its right to prepay the Note, the Borrower shall make payment to the
Holder of an amount in cash
(the "Fourth Optional Prepayment Amount") equal 
to  130%, multiplied by the sum  of:
(w)  the then outstanding principal amount of
this Note plus (x) accrued and unpaid 
interest on the unpaid principal amount of this Note to
the Optional Prepayment Date P.1.!!§. (y) Default Interest, if any, on
the amounts  referred  to in clauses (w)
and (x) plus (z) any amounts  owed to the
Holder pursuant to Sections 
1.3 and 1.4(g) hereof.  If the Borrower
delivers an Optional Prepayment Notice and
fails to pay the Fourth Optional Prepayment
Amount due to the Holder of
the Note within two (2) business days following  the 
Optional Prepayment Date, the Borrower shall forever forfeit its right
to prepay the Note pursuant to this Section 1.9.

 

Notwithstanding
any to the
contrary stated elsewhere 
herein, at any
time during the period beginning
on the date
that is one hundred twenty-one
 (121) day from the issue
date and ending one hundred fifty (150)
days following the issue
date, the Borrower shall have the right, exercisable on not less than three
(3) Trading Days prior written notice to the Holder of the Note to prepay the outstanding
Note (principal and accrued interest), in full,
in accordance with this Section 1.9. Any Optional Prepayment Notice shall be
delivered to the Holder of the Note at
its registered addresses and shall state:
(1) that the Borrower is exercising its right to
prepay the Note, and (2) the date of prepayment
which shall be not more than three (3)
Trading Days from the date
of the Optional Prepayment Notice.  On
the Optional Prepayment Date, the Borrower
shall make payment of the Fifth Optional
Prepayment Amount (as defined below) to or upon the order of the Holder as specified
by the Holder in writing to the Borrower at
least one (1) business day prior to the Optional 
Prepayment  Date.  If the Borrower
exercises  its right to
prepay the Note, the Borrower shall make
payment to the Holder of
an amount in cash (the "Fifth Optional Prepayment  Amount") equal
to  135%,  multiplied by the sum of: (w)
the then outstanding principal  amount  of
this Note plus (x) accrued  and unpaid interest 
on the unpaid principal amount of this Note
to the Optional Prepayment Date plus
(y) Default Interest, if any, on
the amounts referred to in clauses (w) and (x)
plus (z) any amounts owed
to the Holder pursuant to Sections 1.3
and 1.4(g) hereof. If the Borrower delivers an
Optional Prepayment Notice and fails to pay the
Fifth Optional Prepayment  Amount due to the Holder of
the Note within two (2) business days following the Optional  Prepayment 
Date, the Borrower shall forever forfeit its right to prepay the Note pursuant
to this Section 1.9.

 

Notwithstanding
any to the
contrary stated elsewhere 
herein,  at any
time during the period
beginning on the
date that is one
hundred fifty-one (151) day from the issue
date and ending one hundred eighty
(180) days following the issue date, the Borrower
shall have the right, exercisable
on not less than three (3) Trading
Days prior written notice to the Holder
of the Note to prepay the outstanding
 Note (principal and
accrued interest), in full, in accordance with this

    	11

    	 

    

Section
1.9.  Any Optional 
Prepayment  Notice shall
be delivered  to
the Holder of
the Note at
its registered  addresses and shall state: (1) that the Borrower is
exercising its right to prepay the Note, and (2) the date of
prepayment which shall be not more than
three (3) Trading  Days from the
date of the Optional 
Prepayment Notice. On the Optional  Prepayment Date, the Borrower shall make payment
of the Sixth Optional Prepayment  Amount (as defined below) to
or upon the order of the Holder as specified by the Holder in writing
to the Borrower at least one (1)
business day prior to the Optional Prepayment Date. If the Borrower exercises  its
right to prepay the Note, the Borrower shall make payment to
the Holder of an amount  in
cash (the "Sixth Optional Prepayment  Amount") equal 
to 140%, multiplied by the sum  of: (w) the then outstanding principal amount
 of this Note plus (x) accrued and  unpaid
interest on the  unpaid  principal amount
 of this Note to the Optional Prepayment
Date  plus (y) Default Interest, if any,
on the amounts referred to in clauses (w) and
(x) plus (z) any amounts  owed
to the Holder pursuant to Sections 1.3 and 1.4(g)
hereof. If the Borrower delivers an Optional Prepayment Notice
and fails to pay the Sixth Optional
Prepayment Amount due to the Holder of the Note within  two 
(2) business days  following the  Optional
Prepayment  Date, the Borrower shall  forever
forfeit its right to prepay the Note
pursuant to this Section 1.9.

 

After
the expiration  of
one hundred eighty
(180) following  the
date of the
Note, the Borrower shall
have no right
of prepayment.

 

ARTICLE
II.  CERTAIN COVENANTS

 

2.1
Distributions on  Capital 
Stock.  So  long 
as  the  Borrower 
shall  have  any obligation 
under this Note,
the Borrower  shall not without
the Holder's written consent (a) pay, declare  or set 
apart for such payment, any  dividend or other 
distribution (whether in cash, property or other
securities) on shares of capital stock
other than dividends on shares of Common Stock
solely in the form of additional shares
of Common Stock or (b) directly  or indirectly 
or through any subsidiary make any other payment  or distribution in respect
of its capital stock except for distributions pursuant to any shareholders' rights
plan which is approved by
a majority of the Borrower's disinterested directors.

 

2.2
Restriction  on Stock 
Repurchases.  So  long
as the Borrower 
shall  have any obligation
under this Note,
the Borrower  shall
not without the Holder's written consent redeem, repurchase or otherwise acquire
(whether for cash or in exchange
for property or other securities or otherwise) in any
one transaction or series of related transactions any
shares of capital stock of the Borrower
or any warrants, rights or options to purchase or acquire any such
shares.

 

2.3
Borrowings.  So  long 
as the Borrower 
shall  have  any 
obligation  under  this Note, 
the  Borrower  shall 
not,  without  the Holder's 
written consent,  create, incur,  assume
guarantee, endorse, contingently  agree to purchase or otherwise become liable upon
 the obligation of any person, firm,  partnership,
joint  venture or corporation, except by the endorsement of negotiable 
instruments for deposit or collection,  or suffer to exist any liability
for borrowed money, except  (a) borrowings in existence or
committed on the date hereof and of which the Borrower 
has informed Holder 
in writing prior to the
date hereof, (b) indebtedness to trade creditors or financial institutions incurred 
in the ordinary course of business or  (c) borrowings, the proceeds of which
shall be used to repay this Note.

    	12

    	 

    

2.4
Sale of Assets. 
So long as
the Borrower shall
have any obligation 
under this Note,  the 
Borrower  shall  not, 
without  the  Holder's 
written consent,  sell, lease or otherwise dispose of any significant portion
 of its assets outside the ordinary course
of business. Any consent to the disposition of any assets may
be conditioned on a specified use of the
proceeds of disposition.

 

2.5
Advances  and  Loans. 
So  long  as
the  Borrower  shall 
have  any  obligation under
this Note, the
Borrower shall not, without the Holder's
written consent, lend money, give credit or make advances to any person, firm, joint venture or corporation, 
including, without limitation, officers, directors, employees, subsidiaries and affiliates of the 
Borrower, except loans,  credits  or
 advances (a) in existence  or committed
 on the date hereof and which  the Borrower
has informed Holder in writing prior to the date  hereof, (b) 
made in the  ordinary course ofbusiness
or (c) not in excess of$100,000.

 

 

ARTICLE
III.  EVENTS OF
DEFAULT

 

If
any of the
following events of
default (each, an "Event
of Default") shall
occur:

 

3.1
Failure  to Pay
Principal  or Interest. 
The Borrower  fails
to pay the
principal hereof  or  interest
thereon  when  due on 
this Note,  whether at maturity,  upon
acceleration or otherwise.

 

3.2
Conversion  and the
Shares.  The Borrower 
fails to issue
shares  of Common Stock
to the Holder
(or announces or threatens in writing that
it will not honor  its
obligation to do so) upon exercise by
the Holder of the conversion rights of
the Holder in accordance with the
terms of this Note, fails to transfer
or cause its transfer agent to transfer (issue) (electronically or in certificated form) any certificate for shares of
Common Stock issued to the Holder upon conversion of  or 
otherwise pursuant  to this Note as and 
when required by this Note, the Borrower directs its transfer agent not to transfer
or delays, impairs, and/or hinders its transfer agent
in transferring (or issuing) (electronically
or in certificated form) any certificate for shares of Common Stock to
be issued to the Holder upon conversion
 of or
otherwise pursuant to this Note as and
when required by this Note, or fails to remove (or
directs its transfer agent not to remove or  impairs, delays, and/or hinders its
transfer agent from removing)  any restrictive legend (or to withdraw any stop transfer
instructions in respect thereof) on
any certificate for any shares of Common Stock issued
to the Holder upon conversion of
or otherwise pursuant to this Note as and when required by
this Note (or makes any written announcement, statement
or threat that it does not intend to honor the obligations described in this
paragraph) and any such failure shall continue uncured (or any written announcement,
statement  or  threat 
not to honor its obligations  shall not be
rescinded in writing) for three (3) business
days after the Holder shall have delivered a Notice of Conversion.  It
is an obligation of the Borrower
to remain current in its obligations
to its transfer agent. It shall
be an event of default of this Note,
if a conversion of this Note is delayed,
hindered or frustrated due to a balance
owed by the Borrower to its transfer agent.
If at the option of
the Holder, the Holder advances
 any funds to the Borrower's transfer agent in
order to process a conversion, such advanced funds shall
be paid by the Borrower to the Holder within forty
eight (48) hours of a demand from the Holder.

 

3.3
Breach of Covenants. 
The Borrower  breaches
any material  covenant
or other material term
or condition  contained 
in this Note
and any collateral documents including
but not

    	13

    	 

    

limited
to the Purchase
Agreement  and such
breach continues for
a period of
ten (1
0) days after written notice
thereof to the Borrower from the
Holder.

 

3.4
Breach of Representations
and Warranties.  Any
representation  or warranty
of the Borrower made
herein or in
any agreement, statement
or certificate  given
in writing pursuant hereto or in
connection  herewith (including, without limitation,
the Purchase Agreement), shall be false or
misleading  in any material respect
when made and
the breach of which has (or
with the passage of time will
have) a material adverse effect on the rights
of the Holder with respect to this Note or the Purchase Agreement.

 

3.5
Receiver  or Trustee. 
The Borrower  or
any subsidiary  of
the Borrower  shall make
an assignment  for
the benefit of creditors, or apply
for or consent to the appointment 
of a receiver or trustee for it
or for a substantial 
part of its property or business, or such a receiver or trustee shall otherwise
be appointed.

 

3.6
Judgments.  Any money
judgment,  writ or
similar  process shall
be entered or filed
against the Borrower
or any subsidiary
of the Borrower or any of its property
or other assets for more
than $50,000, and shall remain unvacated, unbonded or unstayed for a
period of twenty (20) days unless otherwise consented to by the
Holder, which consent will
not be unreasonably withheld.

 

3.7
Bankruptcy.  Bankruptcy,  insolvency,
reorganization  or  liquidation proceedings
or other proceedings, 
voluntary  or involuntary, 
for relief under
any bankruptcy law or any law for the relief of debtors 
shall be instituted  by or against  the
 Borrower or any subsidiary of
the Borrower.

 

3.8
Delisting of Common
Stock.  The Borrower
shall fail to
maintain the listing
of the Common  Stock 
on at least one of the OTCBB or an equivalent
 replacement  exchange, the Nasdaq National
Market, the Nasdaq SmaiiCap Market, the
New York Stock Exchange, or the American Stock Exchange.

 

3.9
Failure to Comply 
with the Exchange
Act.  The Borrower 
shall fail to
comply with  the  reporting 
requirements of the Exchange  Act;  and/or
 the  Borrower 
shall cease to  be subject to the reporting requirements 
of the Exchange Act.

 

3.10
 Liquidation.  Any
dissolution,  liquidation, or
winding  up of
Borrower or any substantial portion
of its business.

 

3.11
 Cessation of
Operations.  Any cessation of
operations  by Borrower 
or Borrower  admits  it
is otherwise  generally 
unable to pay its debts as such debts  become due, provided,
however, that any disclosure of the
Borrower's ability to continue as a "going concern" shall not
be an admission that the Borrower cannot pay
its debts as they become due.

 

3.12
 Maintenance  of
Assets.  The  failure 
by  Borrower  to 
maintain  any material intellectual
 property rights,
personal, real property
or other assets which are necessary
to conduct its business (whether now or in the future).

 

3.13
 Financial Statement Restatement. 
The  restatement  of 
any  financial statements filed
by the Borrower 
with the SEC
for any date or period from two
years prior to the

    	14

    	 

    

Issue
 Date  of 
this  Note  and 
until  this  Note 
is  no  longer 
outstanding,  if the  result 
of  such restatement  would, 
by  comparison  to 
the  unrestated  financial 
statement,  have constituted a material 
adverse  effect  on the rights of
the Holder with respect  to this  Note
or the Purchase Agreement.

 

3.14
Reverse Splits. The 
Borrower  effectuates  a 
reverse  split  of 
its

Common
Stock without twenty
(20) days prior
written notice to
the Holder.

 

3.15
 Replacement of
Transfer Agent. In
the event that
the Borrower proposes
to replace  its transfer 
agent,  the  Borrower 
fails to provide, prior to  the effective 
date  of such replacement, a fully executed Irrevocable Transfer 
Agent  Instructions in a form as  initially
delivered  pursuant to the  Purchase Agreement
(including but not limited to the provision to irrevocably reserve shares
of Common Stock in the Reserved
Amount) signed by the successor transfer agent
to Borrower and the Borrower.

 

3.16
 Cross-Default.  Notwithstanding
 anything to
the contrary contained 
in this Note or
the other  related
or companion  documents, 
a breach or default  by
the Borrower of any covenant or
other term or condition contained in any of
the Other Agreements, after the passage of all applicable notice and cure or
grace periods, shall, at the option
of the Holder, be considered a default under this
Note and the Other Agreements, in which
event the Holder shall be entitled (but
in no event required) to apply all rights and remedies
of the Holder under the
terms of this Note and the  Other Agreements 
by  reason of  a default under said
Other Agreement or hereunder. "Other Agreements" means, collectively,  all
agreements and  instruments  between, among
or by: (1) the Borrower, and, or
for the benefit of, (2) the Holder
and any affiliate of the Holder, including,
without limitation, promissory notes; provided, however, the term "Other Agreements"
 shall  not include the
related or companion  documents to this Note. Each
of the loan  transactions  will
be cross-defaulted with each other loan  transaction and with all other existing
and future debt of Borrower to the Holder.

 

Upon
the occurrence  and
during the continuation
of any Event
of Default specified 
in Section 3.1 (solely 
with  respect  to failure to pay
the principal hereof or interest thereon when  due
at the Maturity Date), the Note shall
become immediately due and payable and the
Borrower shall pay to the Holder, in full satisfaction of its obligations 
hereunder, an amount  equal  to
the Default Sum (as defined herein). UPON THE OCCURRENCE AND DURING THE CONTINUATION
OF ANY  EVENT OF  DEFAULT SPECIFIED IN
 SECTION 3.2, THE NOTE  SHALL BECOME IMMEDIATELY
DUE AND PAYABLE AND THE
BORROWER  SHALL PAY TO THE 
HOLDER, IN  FULL SATISFACTION OF  ITS
OBLIGATIONS HEREUNDER, AN AMOUNT EQUAL TO: (Y) THE DEFAULT  SUM (AS DEFINED HEREIN);
 MULTIPLIED BY (Z) TWO (2). Upon the occurrence
 and during the continuation of any Event
of Default specified in Sections 3.1 (solely with respect 
to failure to pay the principal hereof or interest thereon when due on
this Note upon a Trading Market Prepayment Event
pursuant to Section 1.7 or upon acceleration), 3.3, 3.4, 3.6, 3.8, 3.9, 3.11,
 3.12,  3.13, 3.14, and/or 3. 
15 exercisable through the delivery
of written  notice to the Borrower by such
Holders (the "Default Notice"), and upon the occurrence of
an Event of Default specified the remaining sections of Articles III (other
than failure to pay the
principal hereof or interest thereon
at the Maturity Date
specified in Section 3,1 hereof), the Note
shall become immediately due and payable and the Borrower shall pay to the
Holder,  in full satisfaction 
of its obligations hereunder, an amount
equal to the greater

    	15

    	 

    

of
(i) 150%  times 
the sum of
(w) the then
outstanding  principal  amount of
this  Note plus (x) accrued and
unpaid interest on the unpaid principal amount
of this Note to the date of payment (the
"Mandatory Prepayment Date") plus (y) Default Interest, if any, on the amounts referred
to in clauses (w) and/or (x) plus (z)
any amounts owed to the Holder pursuant to Sections 1.3
and

1.4(g)
hereof (the then
outstanding  principal amount
of this Note
to the date
of payment 
plus the

amounts
referred to in
clauses (x), (y)
and (z) shall
collectively  be known
as the "Default 
Sum") or (ii) the
"parity  value"  of the
Default Sum to  be prepaid, where parity
value  means (a) the highest number of shares
of Common Stock issuable upon conversion of or
otherwise pursuant to such Default Sum in
accordance with Article I, treating the Trading Day immediately preceding the Mandatory
Prepayment Date  as the "Conversion Date" 
for purposes of  determining the lowest applicable 
Conversion Price, unless the Default  Event arises as a result of a breach in
respect  of a specific Conversion Date in which 
case such Conversion Date shall be the Conversion Date), multiplied by (b) the highest Closing
Price for the Common Stock during the period
beginning on the date of first occurrence
of the Event of Default and ending
one day prior to the Mandatory Prepayment Date (the "Default Amount")
and all  other amounts payable hereunder  shall
 immediately become due and payable, all without 
demand, presentment  or notice,  all
of which hereby  are expressly  waived,
 together with  all costs, 
including,  without limitation, legal
fees and expenses, of collection, and the
Holder shall be entitled to exercise all other
rights and remedies available at law
or in equity.

 

If
the Borrower  fails
to pay the
Default  Amount within
five (5) business
days of written 
notice that such amount is due and payable,
then the Holder shall have
the right at any time, so long as the Borrower
remains in default (and so long
and to the extent that there are
sufficient authorized shares), to require the Borrower,
upon written notice, to immediately 
issue, in lieu of the Default Amount, the number of shares of Common Stock of
the Borrower equal to the Default Amount divided by
the Conversion Price then in effect.

 

ARTICLE
 IV. MISCELLANEOUS

 

4.1
Failure  or  Indulgence 
Not  Waiver.  No
failure  or  delay 
on  the  part
of  the Holder  in
the  exercise of  any power, right
or privilege hereunder shall operate  as  a
waiver thereof, nor shall any single or
partial exercise  of any such power,  right
or privilege preclude other or  further exercise thereof or of any other right, 
power  or privileges.  All rights
and remedies  existing hereunder are  cumulative
to,  and not exclusive of, any rights or  remedies
otherwise available.

 

4.2
Notices. All  notices, 
demands,  requests,  consents, 
approvals,  and  other communications
 required  or 
permitted  hereunder  shall 
be  in  writing 
and,  unless otherwise specified herein, shall be
(i) personally served, (ii) deposited
 in the mail, registered or certified,
return receipt requested, postage prepaid, (iii) delivered by reputable air courier
service with charges prepaid, or (iv)  transmitted
by hand  delivery, telegram, or facsimile,  addressed
 as set forth below or to
such other address as such party shall have specified most
recently by written notice. Any notice or other communication required or permitted 
to be given hereunder shall be deemed effective (a) upon hand 
delivery or delivery by facsimile, with accurate 
confirmation generated by the transmitting facsimile machine, at the address or number designated below (if delivered on
a business day during normal business hours
where such notice is to be received), or the first business day following 
such delivery (if delivered 
other than on a business day during normal 
business  hours where such notice is to
be received) or (b) on the second
business day following the date  of mailing 
by express  courier service, fully prepaid, addressed to such

    	16

    	 

    

address,
or upon actual 
receipt of such
mailing,  whichever shall first
occur.  The addresses 
for such communications  shall
be:

 

If
to the Borrower,
to:

 

NYXIO
TECHNOLOGIES CORPORATION

2156
NE Broadway

Portland,
OR 97232

Attn:
GIORGIO JOHNSON,  President/ChiefExecutive
Officer facsimile:

With
a copy by
fax only to
(which copy shall
not constitute notice): [enter
name of law
firm]

Attn:
[attorney name]

[enter
address line I]
[enter city, state,
zip] facsimile: [enter
fax number]

 

If
to the Holder:

 

ASHER
ENTERPRISES, INC.

1
Linden Pl., Suite
207

Great
Neck, NY. 11021

Attn:
Curt Kramer, President facsimile:
516-498-9894

With
a copy by
fax only to
(which copy shall
not constitute notice): Naidich
Wurman Birnbaum &
Maday, LLP

80
Cuttermill Road, Suite
410

Great
Neck, NY 11021

Attn:
Bernard S. Feldman,
Esq. facsimile: 516-466-3555

 

4.3
Amendments.  This Note
and any provision 
hereof may only
be amended  by an 
instrument  in writing 
signed  by the Borrower and the Holder. The term "Note" and all reference
thereto, as used throughout this instrument, shall mean this instrument (and
the other Notes issued pursuant
to the Purchase Agreement) as originally
executed, or if later amended or supplemented, then as so amended or supplemented.

 

4.4 Assignability.  This  Note  shall  be  binding  upon  the  Borrower  and  its
successors  and assigns,  and shall  inure to be the  benefit of
the Holder and its successors and assigns. Each transferee of
this Note must be an "accredited investor" (as defined in Rule
50l(a) of the 1933  Act).  Notwithstanding
anything in this Note to the contrary, this Note  may  be
pledged as  collateral in  connection
with a bona fide margin account  or  other
lending arrangement.

    	17

    	 

    

4.5
Cost  of  Collection.
If  default  is 
made  in  the 
payment  of  this 
Note,  the Borrower shall pay
the Holder hereof costs of collection,
including reasonable attorneys' fees.

 

4.6
Governing  Law.  This
Note shall be
governed by and
construed  in accordance with
the laws of
the State of
New York without regard to
principles of conflicts of laws. Any action brought by either party against
the other concerning the transactions contemplated by this Note shall be brought only
in the state courts of New York or in the federal
courts located in the state and county of Nassau. 
The parties to this Note hereby irrevocably waive
any objection to jurisdiction and venue of any action instituted 
hereunder and shall not assert any
defense based on lack of jurisdiction or venue or
based upon forum non conveniens.
The Borrower and Holder waive trial by jury.
The prevailing party shall be entitled to recover from the other party its reasonable
attorney's fees and costs. In the event that any provision of this Note or any other
agreement delivered  in connection herewith
is invalid or unenforceable under any applicable statute or
rule of law, then such provision
shall be deemed inoperative to the extent that
it may conflict therewith and shall  be
deemed modified to conform with  such statute 
or rule of law. Any such provision
which may prove invalid or unenforceable  under
any law shall
not affect the validity  or enforceability of any 
other provision of any  agreement. Each party hereby irrevocably waives
personal service of process and consents to process being served in
any suit, action or proceeding in connection with this Agreement
or any other Transaction Document by mailing a copy thereof via registered
 or certified  mail
or overnight delivery (with evidence of delivery) to such party at the address  in
effect for 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 other manner permitted by law.

 

4.7
Certain Amounts.  Whenever
pursuant to this
Note the Borrower 
is required to pay
an amount  in
excess of the outstanding principal
amount  (or the portion thereof required to be
paid at that
time) plus accrued and unpaid interest plus
Default Interest on such interest, the Borrower 
and the Holder agree that the actual damages  to the Holder from the receipt
of cash payment on this Note  may be difficult
to determine and the  amount to  be so paid
 by the Borrower  represents 
stipulated  damages and not a penalty and is intended to compensate the Holder
in part for loss of the opportunity to
convert this Note and to earn a return from
the sale of shares of Common Stock acquired upon conversion of this
Note at a price in excess of the price paid for such
shares pursuant to this Note.  The Borrower
and the Holder hereby agree that such amount of stipulated damages is
not plainly disproportionate to the  possible 
loss to the Holder  from the receipt of a cash payment without the opportunity
to convert this Note  into shares of Common Stock.

 

4.8
Purchase  Agreement.  By
its acceptance  of
this Note, each
party agrees to
be bound by the
applicable terms of
the Purchase Agreement.

 

4.9
Notice of Corporate
Events.  Except as
otherwise  provided  below,
the Holder of this
Note shall have
no rights as a Holder
of Common Stock unless and only to the
extent that it converts this Note  into Common Stock. The Borrower 
shall  provide  the Holder with
prior notification  of any meeting 
of the Borrower's shareholders (and
copies of proxy materials and other information sent to shareholders). 
In the event of any taking by the Borrower of a record of its shareholders
for  the purpose of determining shareholders who are 
entitled to  receive payment of any dividend
 or other distribution, any right to
subscribe for, purchase or otherwise acquire (including by way of merger, consolidation,
 reclassification or recapitalization) any share

    	18

    	 

    

of
any class or
any other securities
or property, or
to receive any
other right, or
for the purpose
of determining  shareholders who are
entitled to vote in connection  with
any proposed sale, lease or conveyance of
all or substantially  all
of the assets of the Borrower or any proposed liquidation, dissolution or winding 
up of the Borrower, the Borrower shall mail a notice to the Holder, at least twenty (20) days prior to the record date
specified  therein (or thirty (30) days prior
to the consummation of the transaction 
or event, whichever is earlier),  of
the date on which any such record is
to be taken for the purpose of such dividend, distribution, right or other event, and a brief statement 
regarding the amount and character of such dividend, distribution, right or
other event to the
extent known at such time. 
The Borrower shall make a public announcement of any event requiring 
notification to the Holder hereunder substantially simultaneously  with 
the notification to the Holder in accordance with the
terms of this Section
4.9.

 

4.10
 Remedies.  The 
Borrower  acknowledges  that 
a  breach  by 
it  of  its obligations 
hereunder  will  cause 
irreparable  harm  to 
the Holder,  by vitiating  the intent
and purpose of the transaction 
contemplated hereby. Accordingly, the Borrower acknowledges that the remedy at law for a breach of its obligations under
this Note will be inadequate
and agrees, in the event of a breach
or threatened breach by the Borrower of the provisions of this Note, that the Holder
shall be entitled,  in
addition to all other available remedies at
law or in equity, and
in addition to the penalties assessable
herein, to an injunction or injunctions restraining, preventing or
curing any breach of this
Note and to enforce specifically the terms
and provisions thereof, without the necessity of showing economic loss and
without any bond or other security being required.

 

IN
WITNESS  WHEREOF, 
Borrower has caused this
Note to be
signed in its
name by its duly authorized officer this
January 31, 2013.

 

NYXIO
TECHNOLOGIES CORPORATION

 

By:
/s/ Giorgio Johnson

Giorgio Johnson

President/Chief
Executive  Officer

    	19

    	 

    

EXHIBIT
A

 

 

NOTICE
OF CONVERSION

 

The
undersigned hereby elects to
convert$  principal amount of
the Note (defined 
below) into that
number of shares
of Common  Stock to be issued
pursuant to the conversion  of the
Note ("Common Stock") as set forth below, of NYXIO TECHNOLOGIES CORPORATION, a
Nevada corporation (the "Borrower")
according to the conditions of the convertible
note of the Borrower
dated as of January 31,
2013 (the "Note"),  as of the
date written below. No fee will
be charged to the Holder for any conversion,  except
for transfer taxes, if any.

 

Box
Checked as to
applicable  instructions:

 

[
]  The Borrower 
shall electronically  transmit the
Common  Stock  issuable 
pursuant to this Notice
of Conversion to
the account of the undersigned or
its nominee with DTC through  its Deposit Withdrawal Agent Commission system ("DWAC
Transfer").

 

Name
ofDTC Prime Broker: Account
Number:

 

[
 ]  The 
undersigned  hereby  requests 
that  the  Borrower 
issue  a  certificate 
or certificates  for the 
number  of shares of Common Stock
set forth below (which numbers are based  on
the Holder's calculation  attached hereto)
in the  name(s) specified 
immediately  below or, if additional
space is necessary, on an attachment hereto:

 

ASHER
ENTERPRISES, INC.

1
Linden Pl., Suite
207

Great
Neck, NY. 11021

Attention:
Certificate Delivery

(516)
498-9890

 

Date
of Conversion:

Applicable
Conversion  Price: $

Number
of Shares of
Common  Stock to
be Issued

Pursuant
to Conversion  of
the Notes: Amount of
Principal Balance Due
remaining

Under
the Note after
this conversion: 

 

ASHER
ENTERPRISES, INC.

By:

Name:
Curt Kramer

Title:
 President

Date:
  

1
Linden Pl., Suite
207

Great
Neck, NY. 11021

    	20

    	 

    

SECURITIES
 PURCHASE AGREEMENT

 

This
 SECURITIES  PURCHASE 
AGREEMENT  (the  "Agreement"),
 dated  as 
of January 31, 2013,
by and between
NYXIO TECHNOLOGIES CORPORATION, a
Nevada corporation,  with headquarters  located
at  2156 NE Broadway,  Portland, 
OR 97232 (the "Company"), and ASHER ENTERPRISES, INC., a
Delaware corporation, with its address at I Linden
Place, Suite 207, Great
Neck, NY 11021 (the "Buyer").

 

WHEREAS:

 

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

 

B.
 Buyer  desires 
to purchase  and
the Company  desires 
to issue and
sell,  upon the terms
and conditions set
forth in this Agreement
an 8% convertible note of the Company, in the form attached hereto as
Exhibit A, in the aggregate 
principal amount  of $37,500.00
(together with any note(s) issued in replacement
thereof or as a dividend thereon
or otherwise with respect thereto in accordance with
the terms thereof, the "Note"), convertible into shares  of common
stock, $0.001  par value per share,
of the Company (the "Common Stock"), upon the terms and subject
to the limitations and conditions set forth in such Note.

 

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

 

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

 

1.
Purchase and Sale
ofNote.

 

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

 

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

    	21

    	 

    

 

 

c.
 Closing Date. 
Subject to the
satisfaction  (or written
waiver) of the conditions 
thereto set forth 
in Section 6 and
Section 7 below, the date and
time of the issuance and sale of the Note pursuant to 
this Agreement  (the "Closing
Date") shall be 12:00  noon, Eastern Standard Time on or about
February 1, 2013, or such other mutually agreed upon time. The closing of the
transactions contemplated by this Agreement  (the "Closing") shall occur
on the Closing Date at such location as may be agreed to
by the parties.

 

2.
Buyer's  Representations  and 
Warranties. The  Buyer represents
 and warrants to
the Company that:

 

a.
Investment  Purpose. As 
of  the  date 
hereof,  the  Buyer 
is purchasing the Note
and the shares of Common Stock
issuable upon conversion of or otherwise pursuant to the Note (including, without
limitation, such additional shares of Common Stock, if any, as are issuable (i) on
account of interest on the Note, (ii) as a result of the events described in Sections 1.3 and 1.4(g) of
the Note or (iii) in payment of
the Standard Liquidated Damages Amount (as defined in Section 2(f) below) pursuant
to this Agreement, such shares of Common Stock being collectively referred to herein
as the "Conversion Shares" and, collectively with the Note, the
"Securities") for its own
account and not with a
present view towards the public
sale or distribution thereof, except pursuant to sales registered or exempted  from
registration under the

1933
 Act;  provided, 
however,  that  by
making  the  representations 
herein,  the  Buyer 
does  not

agree
to hold any
of the Securities
for any minimum
or other specific
term and reserves
the right to dispose of
the Securities at any time in accordance
with or pursuant
to a registration statement or an exemption under
the 1933 Act.

 

b.
 Accredited  Investor
Status.  The Buyer
is an "accredited 
investor" as that term
is defined in
Rule 50 I (a) of Regulation D (an
"Accredited  Investor").

 

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

 

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

    	22

    	 

    

 

 

Section
 3  below. 
The  Buyer  understands 
that  its  investment 
in  the  Securities 
involves  a significant degree
of risk. The
Buyer is not aware of
any facts that may constitute a breach
of any of the Company's representations
and warranties made herein.

 

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

 

f.
 Transfer or
Re-sale.  The Buyer
understands  that (i)
the sale or
re- sale  of  the 
Securities  has not been and  is
not being registered under  the  1933 Act
or any applicable state securities laws,
and the Securities may not be transferred unless (a) the Securities are sold pursuant to an effective registration 
statement under the 1933 Act, (b) the Buyer 
shall have delivered to the Company,  at
the cost of the Buyer, an opinion of counsel
that shall be in form, substance 
and scope customary  for opinions of counsel in comparable transactions 
to the effect that the Securities to be sold or transferred  may be sold 
or transferred pursuant to an exemption 
from such registration, which opinion  shall be accepted by
the  Company, (c) the Securities
are sold or transferred to an
"affiliate" (as defined in Rule 144 promulgated under
the

1933
 Act  (or 
a  successor  rule) 
("Rule  144"))  of 
the  Buyer  who 
agrees  to  sell 
or  otherwise

transfer
 the  Securities 
only  in  accordance 
with  this  Section 
2(f)  and  who 
is  an  Accredited Investor,
(d) the Securities  are sold
pursuant to Rule 144,
or (e) the Securities are sold pursuant to
RegulationS under the 1933 Act (or a successor 
rule) ("RegulationS"), and the Buyer shall have delivered 
to the Company,  at the cost of
the Buyer, an opinion of counsel that shall
be in form, substance  and scope  customary
 for opinions 
of counsel  in corporate  transactions,
which opinion shall be accepted by the Company;  (ii) any
sale of such Securities  made in reliance on Rule 144 may be
made only in accordance with the terms of
said Rule and further, if said
Rule is not applicable, any re-sale  of such  Securities
under circumstances in which  the seller  (or
the person through whom the sale is made)
may be deemed  to be an
underwriter (as that term is defined in
the 1933 Act) may require compliance with some other exemption 
under the 1933 Act or the rules and regulations
 of the SEC thereunder; and (iii)
neither the Company nor any other person 
is  under  any obligation 
to register such Securities under the 1933 Act  or 
any state securities laws or to comply with
the terms and conditions  of any
exemption thereunder (in each case). Notwithstanding the foregoing or anything else
contained herein  to the  contrary, the
Securities may be pledged  as collateral in connection 
with a bona fide margin account
 or other lending
arrangement.

 

g.
 Legends.  The
Buyer understands that
the Note and,
until such time as
the Conversion Shares 
have been registered under the
1933 Act may be sold pursuant
to Rule

144
or RegulationS without
any restriction as
to the number
of securities  as
of a particular
date

that
 can  then 
be  immediately  sold, 
the  Conversion  Shares 
may  bear  a 
restrictive  legend  in substantially
 the following 
form (and a stop-transfer order may be placed against transfer of the certificates
for such Securities):

 

"NEITHER
THE  ISSUANCE  AND
SALE  OF  THE 
SECURITIES REPRESENTEDBY THIS
CERTIFICATENOR THE SECURITIESINTO WHICH THESE SECURITIES
ARE EXERCISABLE   HAVE    BEEN
REGISTERED    UNDER THE

    	23

    	 

    

 

 

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 STATEMENTFOR THE SECURITIESUNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR (B) AN OPINION
OF COUNSEL  (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN 
A GENERALLY  ACCEPTABLE FORM, THAT  REGISTRATION
IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT 
TO RULE 144 OR RULE

144A
 UNDER  SAID 
ACT.  NOTWITHSTANDING THE FOREGOING,  THE
 SECURITIES  MAY 
BE  PLEDGED  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 any Security  upon which it is stamped,
if, unless otherwise required by applicable  state
securities laws, (a) such  Security  is
registered for  sale under  an effective
registration statement filed  under the 1933
Act or otherwise may be sold pursuant
to Rule 144 or Regulation S without any restriction
 as to the number of securities as of a
particular date that can then be immediately sold,
or (b) such holder provides the Company with
an opinion of counsel, in form, substance  and
scope customary  for opinions  of counsel
in comparable transactions, to the effect
that a public sale or transfer of such Security
may be made without registration under the 1933 Act, which opinion
shall be accepted by the Company so that the sale or transfer is effected. The
Buyer agrees to sell all Securities, including those represented by a certificate(s)
 from which the legend has been removed,
in compliance with applicable prospectus delivery requirements, if any. In the event that the Company does not
accept the opinion of counsel provided by the Buyer with respect to the transfer of Securities pursuant to
an exemption from registration, such as Rule 144 or Regulation S, at the Deadline,
it will be considered an Event of Default pursuant to Section 3.2 of the Note.

 

h.
 Authorization; Enforcement.  This 
Agreement  has  been 
duly  and validly  authorized. 
This  Agreement  has 
been duly  executed 
and  delivered  on 
behalf  of the Buyer,
and this Agreement  constitutes a valid and
binding agreement of the Buyer enforceable in accordance with
its terms.

i.
Residency.  The  Buyer 
is a resident 
of  the  jurisdiction 
set forth

immediately
below the Buyer's
name on the
signature  pages hereto.

 

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

    	24

    	 

    

 

 

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

 

b.
 Authorization;  Enforcement. 
(i)  The  Company 
has  all  requisite corporate 
power  and  authority 
to  enter  into 
and  perform this  Agreement, the
 Note and  to consummate the transactions
contemplated hereby and thereby and to issue the Securities, in accordance with the terms
hereof and thereof, (ii) the execution and delivery of this Agreement, the
Note by the Company  and the consummation
by it of the transactions contemplated
hereby and thereby (including without limitation,  the issuance of the Note and 
the issuance and reservation for issuance of
the Conversion Shares issuable upon conversion or exercise thereof) have
been duly authorized by the Company's Board
of Directors and no further consent or
authorization of the Company, its Board of Directors,
or its shareholders is required,
(iii) this Agreement has been duly  executed
and delivered  by the  Company by its authorized
representative,  and such authorized  representative
is the true and official representative  with
authority to sign this Agreement and the
other documents executed in connection herewith and bind the Company 
accordingly, and (iv) this Agreement  constitutes, and 
upon execution and delivery by the Company of the Note, each
of such instruments will constitute,
a legal, valid and binding obligation
of the Company enforceable against the Company in accordance  with its terms.

c.
 Capitalization.  As
of the date
hereof, the authorized 
capital stock of the
Company  consists  of:
(i) 121,212,122 shares of Common
Stock, $0.001 par value per share, of which 65,440,690 shares are issued and outstanding;
and (ii) 100 shares of Class B Convertible Preferred Stock,  $0.01 
par value  per share,  of which
no shares are  issued and outstanding; no shares
are reserved for issuance pursuant
to the Company's stock option plans, no shares
are reserved for
issuance pursuant to securities (other than the Note and three
(3) prior convertible promissory
notes in favor ofthe Buyer: (a) prior convertible promissory note in favor of the Buyer dated June 6, 2012 in
the amount of $63,000.00,the principal
of which is now reduced to $48,300.00; (b) prior
convertible promissory note in favor
of the Buyer  dated
July

10,2012
in the amount
of $37,500.00  and
(c) prior convertible 
promissory  note dated
November

13,
2012 in the
amount  of $40,000.000 
for which an
aggregate  total of
67,800,000  shares are presently
reserved)  exercisable  for,
or convertible into or exchangeable
for shares of Common Stock and
the aggregate  total of 67,800,000 shares
are reserved for issuance upon conversion
of

    	25

    	 

    

 

 

the
Note and the
prior convertible  promissory 
note referenced  above. 
All of such
outstanding shares of capital stock
are, or upon
issuance will be, duly authorized, validly issued, fully
paid and non-assessable.  No shares
of capital stock of the Company are subject to
preemptive rights or any other similar rights
of the shareholders of the
Company or any liens or encumbrances imposed through the actions or failure
to act of the Company. As
of the effective date of this Agreement, (i)
there are no outstanding options, warrants, scrip, rights to subscribe for,
puts, calls, rights of first refusal,
agreements, understandings, claims or other commitments
or rights of any character whatsoever relating
to, or securities or rights convertible
into or exchangeable for any shares 
of capital stock of the Company or any of its
Subsidiaries,  or arrangements by which the
Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or
any of its Subsidiaries, (ii) there are no agreements  or arrangements under which
the Company or any of its Subsidiaries is obligated
to register the sale of any of its
or their  securities under the 1933 Act
and (iii) there are no anti-dilution or
price adjustment provisions contained in any security issued by
the Company (or in any agreement
providing rights to security holders) that will be triggered by
the issuance of the Note or
the Conversion Shares. The Company has furnished to the Buyer true and 
correct copies of the Company's Certificate of Incorporation as in effect on
the date hereof ("Certificate of Incorporation"), the Company's By-laws, as in effect on
the date hereof (the "By-laws"), and the terms of all securities convertible
 into or exercisable for Common
Stock of the Company and the material rights of the
holders thereof in respect thereto. The
Company  shall provide the Buyer
with a written update of this representation  signed by the
Company's Chief Executive on behalf of the
Company as of the Closing Date.

 

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

 

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

 

f.
 No  Conflicts. 
The  execution,  delivery 
and  performance  of 
this Agreement, the Note
by the Company
and the consummation  by
the Company of the transactions
contemplated hereby and thereby (including, without limitation,
the issuance and reservation for issuance 
of the Conversion Shares) will  not (i) conflict with or result in 
a violation  of  any provision of
the Certificate  of Incorporation 
or By-laws, or (ii) violate or conflict
with, or result in a breach of
any provision of, or constitute
a default (or an event which
with notice or lapse of time or both could become a default) under, or give
to  others any  rights of 
termination, amendment, acceleration or cancellation of,
any agreement, indenture, patent, patent
license or instrument to which the Company 
or  any of its Subsidiaries is a  party,
 or (iii) result in a

    	26

    	 

    

 

 

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

 

g.
 SEC Documents; 
Financial  Statements.  The
Company  has timely filed
all reports, schedules,
forms, statements and
other documents required to be filed by it with the SEC pursuant to the reporting
requirements  of the  Securities 
Exchange Act of 1934,  as amended (the "1934 
Act") (all of the foregoing filed prior to the date hereof 
and all exhibits included therein and financial statements  and schedules 
thereto and documents (other  than exhibits to such 
documents)  incorporated by reference therein, 
being hereinafter  referred  to herein
as the "SEC Documents"). Upon written
request the Company will deliver to the
Buyer true  and complete copies of  the
SEC Documents, except for  such exhibits and incorporated documents. As
of their respective dates, the SEC
Documents complied  in all material respects with
the requirements  of the 1934 Act
and the rules and regulations of the SEC promulgated thereunder
applicable to the SEC Documents, and none of the SEC Documents, at the time they were
filed with the SEC, contained any untrue statement of a material fact
or omitted to state a material fact required
to be stated therein or necessary in order
to make the statements therein, in light
of the circumstances under which they were made, not misleading.  None of the statements

    	27

    	 

    

 

 

made
in any such 
SEC Documents  is, or
has been, required
to  be amended 
or updated  under applicable 
law  (except  for 
such statements as have been amended  or updated in
subsequent filings prior the date  hereof). As of 
their respective dates, the financial statements of  the Company included in
the SEC Documents complied as to form in all
 material respects with applicable  accounting
requirements and the published rules  and regulations of 
the SEC with respect thereto. Such financial statements have been prepared
in accordance with United States generally
accepted accounting  principles,
consistently  applied, during the
periods involved and fairly present  in
all material  respects the consolidated
financial  position of the Company and
its consolidated Subsidiaries  as of the dates thereof and the consolidated results
of their operations and cash flows for the
periods then ended (subject, in the case of unaudited statements,
to normal year-end audit adjustments). Except as set forth in the financial
statements of the Company included in the SEC
Documents, the Company has no liabilities,
 contingent or otherwise, other than (i)
liabilities  incurred in the
ordinary course of business subsequent to September
30, 2012, and (ii) obligations under contracts
and commitments  incurred in the ordinary
course of business and not required under generally accepted accounting principles
to be reflected  in such financial statements,
which, individually  or in the aggregate,
are not material to the financial
condition  or operating results of the Company. The Company 
is subject to the reporting requirements  of the

1934
Act.

 

h.
 Absence of
Certain Changes.  Since
September 30, 2012,
there has been no
material  adverse  change
and no material adverse development in the assets, liabilities, business, properties,
operations, financial condition, results of operations,
prospects or 1934 Act reporting status
of the Company or any of its Subsidiaries.

 

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

 

j.
 Patents,  Copyrights, 
etc.  The  Company 
and  each  of 
its Subsidiaries  owns  or 
possesses  the  requisite licenses
 or  rights 
to  use all  patents, 
patent applications, patent rights, inventions, know-how, trade secrets, trademarks, trademark applications, service marks,
service names, trade names and copyrights
("Intellectual  Property") necessary
to enable it to conduct its business
as now operated (and, as presently contemplated to be operated in the future); there
is no claim or action
by any person pertaining to, or proceeding pending, or to the Company's knowledge threatened, which challenges the right
of the Company or of a Subsidiary with respect to any Intellectual Property 
necessary to enable it to conduct its business as now operated (and, as
presently contemplated  to be operated in the future); to
the best of the  Company's knowledge,
 the Company's or 
its Subsidiaries' current and intended
products, services and processes do not
infringe on any Intellectual Property or
other rights held

    	28

    	 

    

 

 

by
any person; and
the Company is
unaware of any
facts or circumstances 
which might give
rise to  any of the foregoing. The  Company
and  each of its Subsidiaries have  taken
reasonable security measures to protect the secrecy, confidentiality and
value of their Intellectual Property.

 

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

 

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

 

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

 

n.
 Disclosure.  All
information relating to
or concerning the
Company or any of
its Subsidiaries  set 
forth  in this  Agreement and provided
to the Buyer pursuant to Section 2(d) hereof and
otherwise in connection  with the
transactions contemplated hereby is true and correct in all material respects
and the Company has not omitted to state any material fact necessary in order  to
 make  the statements made 
herein  or therein, in light of the circumstances 
under which they were made, not misleading.  No event or circumstance has occurred
or exists with respect to the Company or any of its
Subsidiaries or its or their business,

    	29

    	 

    

 

 

properties,
prospects, operations or
financial conditions, which,
under applicable law,
rule or regulation, requires public
disclosure or announcement 
by the Company 
but which has not been so publicly announced or disclosed (assuming for
this purpose that the Company's reports filed under
the 1934 Act are being incorporated into an
effective registration  statement filed by the Company under the 1933 Act).

 

o.
 Acknowledgment  Regarding 
Buyer'  Purchase  of
Securities.  The Company acknowledges
 and agrees
that the Buyer
is acting solely
in the capacity of arm's length purchasers
with  respect to  this Agreement and the
transactions contemplated hereby.  The Company
further acknowledges that the Buyer is not acting as a financial advisor
or fiduciary of the Company (or
in any similar capacity) with respect to
this Agreement and the transactions contemplated hereby  and any statement made by
 the  Buyer 
or any of its respective representatives  or
agents in connection  with
this Agreement and the transactions  contemplated
hereby is not advice or a recommendation and is
merely incidental to the Buyer'  purchase
of the Securities. The Company further represents to
the Buyer that the Company's decision to enter into this Agreement 
has been based solely on the
independent evaluation of the Company and its representatives.

 

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

 

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

 

r.
 Permits; Compliance. 
The Company and
each of its
Subsidiaries is in possession of
all franchises, grants,
authorizations,  licenses, permits, easements, variances, exemptions, consents,
certificates, approvals and orders necessary to own, lease and operate its properties
and to carry on its business as it is now being
conducted (collectively, the "Company Permits"), and  there 
is no action  pending  or, to 
the knowledge of the Company, threatened regarding suspension or cancellation  of
any of the Company Permits. Neither the Company nor any of 
its Subsidiaries is in conflict  with, or in default or violation of, any of
the Company Permits, except for any such  conflicts, defaults or violations which,
 individually or  in the aggregate, would
not  reasonably be  expected 
to have a Material Adverse Effect. Since September 30, 2012, neither the Company 
nor any  of  its Subsidiaries has
received  any notification with
respect to possible conflicts, defaults or violations of applicable laws, except
for notices relating to possible conflicts,
defaults or violations, which conflicts,
defaults or violations would not have a Material
Adverse Effect.

 

s.
Environmental  Matters.

    	30

    	 

    

 

 

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

 

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

 

(iii)
 There are
no underground  storage 
tanks on or
under any real property
owned, leased or
used by the Company or any of
its Subsidiaries that are not in
compliance with applicable law.

 

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

 

u.
 Insurance.  The
Company  and each
of its Subsidiaries 
are insured by  insurers 
of  recognized  financial 
responsibility against  such  losses
 and risks  and 
in such amounts as management of
the Company believes to be prudent and
customary in the businesses in which the
Company and  its Subsidiaries  are engaged.
Neither the Company nor any such Subsidiary has any reason  to believe that it will
not be able to renew  its existing insurance

    	31

    	 

    

 

 

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. Upon written request the
Company will provide to the Buyer true
and correct copies of all
policies relating to directors' and officers' liability coverage, errors and
omissions coverage, and commercial general liability coverage.

 

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

 

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

 

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

 

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

 

z.
Breach of Representations
and Warranties  by
the Company.  If
the

Company
 breaches  any 
of the  representations 
or warranties  set
forth  in this 
Section  3, and
in

    	32

    	 

    

 

 

addition
to any  other 
remedies  available  to
the  Buyer  pursuant 
to this  Agreement, 
it will  be considered
an Event of
default under Section 3.4 of the
Note.

 

4.
COVENANTS.

 

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

 

b.
 Form  D: 
Blue  Sky  Laws. 
Unless  the  Company 
believes  it  is exempt
from such filing,
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
the Buyer promptly  after such filing.  The
Company shall, on or before the Closing Date, take such action as the Company shall
reasonably determine is necessary to qualify the Securities for sale
to the Buyer at
the applicable closing pursuant to this Agreement under applicable securities
or "blue sky" laws of the states
of the United States (or to obtain an exemption from
such qualification), and shall provide
evidence of any such action so taken to
the Buyer on or prior to the Closing Date.

 

c.
working capital purposes.

Use
of Proceeds.  The
Company shall use
the proceeds for
general

 

d.
 Right of
First Refusal.  Unless 
it shall  have
first delivered  to
the Buyer, at least
seventy  two (72) hours prior to
the closing  of such
Future Offering (as defined herein), 
written  notice describing the  proposed
 Future Offering, including the  terms
and conditions thereof  and proposed  definitive
documentation to be entered into in connection therewith, and providing the Buyer an
option during the seventy two (72) hour
period following delivery of such notice to purchase
 the securities  being
offered in the Future Offering on
the same terms as contemplated  by such Future Offering (the
limitations referred to in this sentence and the preceding sentence are collectively
referred to as the "Right  of First Refusal") (and subject to the
exceptions described below), the Company
will not conduct any equity
financing (including debt with an equity component) ("Future Offerings") during
the period beginning on the
Closing Date and ending twelve (12) months following 
the Closing  Date. In the event the
terms and conditions of a proposed Future
Offering are amended in any
respect after delivery of the notice to
the Buyer concerning the proposed  Future
Offering, the Company shall deliver a new notice to
the Buyer  describing the
amended terms  and conditions of
the proposed Future Offering and the Buyer thereafter shall have an option during
the seventy two (72) hour period following
delivery of  such new notice to purchase its pro rata share of the 
securities being offered on the same terms as contemplated by such
proposed Future Offering, as amended. The foregoing sentence shall apply  to
successive amendments to the terms and conditions  of any proposed 
Future  Offering. The Right  of
First  Refusal shall  not apply to any
transaction involving (i)  issuances of  securities
in a  firm commitment underwritten public offering (excluding
a continuous offering pursuant to Rule 415 under the 1933 Act) or
(ii) issuances of securities as consideration for a
merger,  consolidation  or
purchase of assets, or in connection with any
strategic partnership  or joint venture (the primary purpose of which 
is not to raise equity capital), or in connection 
with the disposition  or acquisition 
of a  business, product or license by
the Company. The Right of First Refusal also shall not apply  to 
the issuance of securities upon exercise 
or conversion of the Company's options,  warrants 
or other convertible

    	33

    	 

    

 

 

securities
outstanding  as of
the date hereof
or to the
grant of additional 
options  or warrants,
or the issuance of
additional  securities,  under
any Company stock option or restricted
stock plan approved by the shareholders of the Company. 
The Right of First Refusal shall
apply only to like transactions (i.e. convertible 
debentures) that are less than $100,000.00 
in the aggregate.

 

e.
 Expenses.  At
the Closing, the
Company shall reimburse
Buyer for expenses  incurred 
by them  in
connection  with the negotiation,
preparation, execution, delivery and  performance of this Agreement and 
the other agreements  to be executed in connection herewith 
("Documents"), including, without  limitation, reasonable attorneys'
and consultants' fees and expenses, transfer agent fees, fees for stock
quotation services, fees relating
to any amendments or modifications of the Documents or
any consents or waivers of provisions
in the Documents, fees for the  preparation
 of opinions  of counsel, escrow fees,
 and costs of restructuring the transactions 
contemplated by the Documents. When possible, the Company must pay these fees directly, otherwise
the Company must make
immediate payment for reimbursement to
the Buyer for all fees and expenses  immediately upon written notice 
by the Buyer or the submission of
an invoice by the Buyer. The
Company's obligation with respect to this transaction is
to reimburse Buyer' expenses shall be $2,500.

 

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

 

g.
[INTENTIONALLY DELETED]

 

h.
 Listing.  The 
Company  shall  promptly 
secure  the  listing 
of  the Conversion Shares
upon each national
securities exchange or
automated quotation system, if any, upon which shares of
Common Stock are then listed (subject
to official notice of
issuance) and, so long as the Buyer
owns any of the Securities, shall maintain, so long as
any other shares of Common  Stock
shall be so  listed, such  listing of all
Conversion Shares  from time  to time issuable
upon conversion of the Note. The Company will obtain and, so long
as the Buyer owns any of the Securities,
 maintain the listing and trading of its Common Stock on the OTCBB or any equivalent
 replacement exchange, the Nasdaq  National
 Market  ("Nasdaq"), the Nasdaq
SmallCap  Market ("Nasdaq SmallCap"), 
the New York  Stock  Exchange ("NYSE"),
or the American  Stock  Exchange ("AMEX")
and will comply in all  respects  with
the Company's reporting, filing and  other obligations 
under  the  bylaws 
or rules of the Financial Industry Regulatory Authority ("FINRA") and  such
exchanges, as applicable.  The  Company
shall promptly provide to the
Buyer copies of any notices it receives from the
OTCBB and any other exchanges or quotation systems on 
which  the Common Stock is then listed regarding 
the continued eligibility of the Common Stock for listing on such exchanges
and quotation systems.

    	34

    	 

    

 

 

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

 

j.
 No  Integration. 
The  Company shall 
not  make  any 
offers  or sales of
any security  (other 
than the Securities)
under  circumstances that would
require registration of the Securities being offered or sold hereunder under the 1933 Act or cause the offering of the Securities
to be integrated with any other  offering of securities by the
Company for the purpose of any stockholder
approval provision applicable to the Company or its
securities.

 

k.
 Breach  of Covenants. 
If  the  Company 
breaches  any  of 
the covenants set forth 
in this Section
4, and in
addition  to any other remedies available
to the Buyer pursuant  to  this
Agreement, it will be considered an event of default
under  Section 3.4 of the Note.

 

l.
 Failure  to 
Comply  with  the 
1934  Act.  So 
long  as  the 
Buyer beneficially owns  the 
Note,  the  Company
shall  comply with  the reporting
requirements of the

1934
 Act;  and 
the  Company shall 
continue to  be
subject  to  the 
reporting requirements of 
the

1934
Act.

 

m.
 Trading Activities. 
Neither  the Buyer 
nor its affiliates
has an open short
position  in the
common stock of the Company and the
Buyer agree that it shall not,
and that it will cause its affiliates
not to, engage in
any short sales of or hedging transactions
with respect to the common stock of the Company.

 

5.
Transfer  Agent  Instructions.The
 Company  shall 
issue  irrevocable instructions to
 its transfer
agent  to  issue 
certificates, registered in
the  name of the  Buyer or 
its nominee,  for the
Conversion Shares in such amounts as specified from time to time 
by the Buyer to the  Company upon
conversion of the Note  in accordance with the terms 
thereof (the "Irrevocable Transfer Agent Instructions"). In the event that 
the  Borrower proposes to 
replace its transfer agent,  the  Borrower
shall  provide,  prior to the
effective date  of such 
replacement, a fully executed Irrevocable Transfer Agent Instructions in
a form as initially delivered pursuant to the Purchase
Agreement (including but not limited to the provision to irrevocably
reserve  shares of Common Stock in the
Reserved Amount) signed by the successor transfer agent to Borrower and the
Borrower. Prior to registration of the Conversion
Shares under the 1933 Act or the date on which the
Conversion Shares may be sold pursuant to Rule 144 without any restriction as
to the number  of Securities as of a  particular
date  that can then be immediately sold, all such certificates shall bear the restrictive
legend  specified in Section 2(g)  of this
Agreement.  The Company warrants that: (i) no
instruction other  than the Irrevocable Transfer Agent 
Instructions referred to in this Section
 5, and stop transfer instructions to give effect to Section 2(f) hereof 
(in the case of the Conversion Shares, prior
to registration of the Conversion Shares 
under the 1933

    	35

    	 

    

 

 

Act
or the date
on which the
Conversion  Shares may
be sold pursuant
to Rule 144
without any restriction  as
to the number
of Securities as of
a particular date that can then  be
immediately sold), will be given by
the Company to its transfer agent
and that the Securities shall otherwise be freely transferable on the books and records of the Company as and to the extent
provided in this Agreement and  the
Note;  (ii)  it will 
not direct its transfer agent not
to transfer or delay, impair, and/or hinder its
transfer agent in transferring (or issuing)(electronically or in certificated form) any certificate 
for Conversion Shares to be issued to the Buyer upon conversion of or otherwise
pursuant to the Note as and
when required by the Note and this Agreement;
and (iii) it will not fail to remove (or directs its
transfer agent not to remove or impairs, delays, and/or hinders its transfer
agent from removing) any restrictive
legend (or to withdraw any stop transfer instructions in respect thereof) on
any certificate for any Conversion Shares
issued to the Buyer upon conversion of or otherwise pursuant
to the Note as and when required
by the Note and this Agreement. Nothing in this Section shall affect in any way  the
 Buyer's obligations and agreement set forth in Section 2(g) hereof to comply with
all applicable prospectus delivery requirements, 
if any, upon re-sale of the Securities.  If the Buyer provides the Company,
at the cost of the Buyer, with
(i) an opinion of counsel in
form, substance and scope  customary for opinions in comparable 
transactions, to the effect that a
public sale or transfer of such Securities
may be made without registration under the 1933 Act and such sale
or transfer is effected or (ii) the
Buyer provides reasonable  assurances
 that the
Securities can be sold pursuant to Rule 144,
the Company shall permit the transfer, and, in the case of the Conversion Shares, promptly instruct
its transfer agent to issue one or more
certificates, free from restrictive legend, in such name and
in such denominations as specified by the Buyer. 
The Company acknowledges that a breach by it of its obligations hereunder will
cause irreparable harm to the Buyer, by vitiating the intent and purpose of the transactions
contemplated hereby. Accordingly, the Company acknowledges that the remedy at
law for a breach of
its obligations under this Section
5 may be inadequate and agrees, in the event of a breach
or threatened  breach by the  Company
of the provisions of this Section, that the Buyer shall be entitled, in addition to
all other available remedies, to an injunction restraining any breach and requiring
immediate transfer, without the necessity of showing economic loss and without any
bond or other security being required.

 

6.
 Conditions  to
the Company's Obligation 
to Sell.  The obligation 
of the Company  hereunder 
to  issue  and 
sell  the  Note 
to the Buyer at the Closing is subject
to the satisfaction, at or before the Closing Date of each of the following conditions
thereto, provided that these conditions
 are for the Company's sole benefit and may
be waived by the Company at any time in its sole discretion:

 

a.
same to the
Company.

The
Buyer shall have
executed  this Agreement 
and delivered  the

 

b.
with Section 1(b)
above.

The
Buyer shall  have
delivered  the Purchase 
Price in accordance

 

c.
 The representations 
and warranties  of
the Buyer shall
be true and correct
in all material 
respects  as of
the date when made and as of the
Closing Date as though made at that
time (except for representations
and warranties that speak as of a specific
date), and the Buyer  shall have performed,  satisfied
 and  complied in 
all material respects with the

    	36

    	 

    

 

 

covenants,
agreements  and conditions 
required  by this
Agreement  to be
performed,  satisfied  or complied
with by the Buyer at or prior to the Closing
Date.

 

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

 

7.
 Conditions  to
The Buyer's  Obligation 
to Purchase.  The
obligation  of the Buyer
hereunder to purchase
the Note 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 Buyer's sole benefit and
may be waived by the Buyer at any time in
its sole discretion:

 

a.
the same to
the Buyer.

The
 Company  shall 
have executed  this 
Agreement  and  delivered

 

b.
The Company shall
have delivered  to
the Buyer the
duly executed

Note
(in such denominations 
as the Buyer
shall request) in
accordance with Section
1(b) above.

 

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

 

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

 

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

 

f.
 No event
shall have occurred 
which could  reasonably 
be expected to have
a Material  Adverse 
Effect on the
Company including but not limited to
a change in the

1934
Act reporting status
of the Company 
or the failure
of the Company 
to be timely
in its 1934

Act
reporting obligations.

    	37

    	 

    

 

 

 

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

 

h.
The Buyer shall
have received an
officer's  certificate  described
in

Section
3(c) above, dated
as of the
Closing Date.

 

 

 

8.
Governing Law; Miscellaneous.

 

a.
 Governing  Law. 
This  Agreement  shall 
be  governed  by 
and construed in accordance 
with the laws
of the State of New York without
regard to principles of conflicts of laws.
Any action brought by either  party against the 
other  concerning the transactions contemplated by this
Agreement shall be brought only in the
state courts of New York or in the federal  courts
 located  in the
state  and county of Nassau. The
parties to this Agreement hereby irrevocably waive any objection to jurisdiction and venue 
of any action instituted hereunder and shall not assert
any defense based on lack of jurisdiction
or venue or based uponforum  non
conveniens. The Company and Buyer waive trial
by jury. The prevailing party shall be entitled to recover from
the other party its reasonable
attorney's fees and costs. 
In the event that any provision
of this Agreement or any other agreement
delivered in connection herewith  is invalid or unenforceable under any 
applicable  statute  or rule of law,
then  such provision shall be deemed  inoperative
to the extent that it
may conflict therewith and shall be deemed modified to conform with such
statute or rule of
law. Any such provision which may prove invalid
or unenforceable under any law shall not affect the
validity or enforceability of any other provision of any agreement.  Each party
hereby irrevocably  waives  personal service
of process and consents to process being served
in any suit, action or proceeding  in
connection with this Agreement or any other
Transaction  Document by mailing
a copy thereof via registered or certified mail or overnight delivery (with
evidence of delivery) to such party at the
address in effect for 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 other
manner permitted by law.

 

b.
 Counterparts.  This
Agreement may be
executed  in one or
more counterparts,  each of
which shall be
deemed an original
but all of which shall constitute
one and the same agreement and shall  become  effective
when  counterparts  have 
been signed  by each party and delivered
to the other party.

 

 

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

 

d.
 Severability.  In
the event that
any provision  of
this Agreement is invalid
or unenforceable  under
any applicable statute
or rule of
law, then such provision shall be deemed inoperative to the extent that it may
conflict therewith and shall be deemed modified
to conform with such statute or rule of law.  Any provision hereof 
which may prove invalid or

    	38

    	 

    

 

 

unenforceable
 under any
law shall not
affect the validity
or enforceability of
any other provision hereof.

 

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

 

f.
 Notices.  All
notices, demands,  requests, 
consents,  approvals,  and other
communications required or
permitted  hereunder  shall
be in writing 
and, unless otherwise specified herein, shall be
(i) personally served, (ii) deposited  in the mail, registered or certified,
return receipt requested,  postage prepaid, (iii) delivered 
by reputable air courier service with charges prepaid,  or (iv) transmitted
by hand delivery, telegram,  or facsimile,
addressed as set forth below or to such other address  as such party shall
have specified most recently by written notice. Any notice or
other communication required or permitted to be given hereunder 
shall be deemed  effective (a)  upon
hand delivery or delivery by facsimile, with accurate confirmation generated by the
transmitting facsimile machine, at the address
or number designated  below (if delivered
on a business day during normal
business hours where such notice
is to be received), or the first
business  day following such delivery  (if
delivered other than on a business
day during normal business hours where such notice is to be received) or (b)
on the second business day following the date of  mailing by express courier service,
fully  prepaid, addressed to such address, or upon actual receipt of such mailing,
whichever shall first occur.  The addresses  for
such communications shall
be:

 

If
to the Company,
to:

NYXIO
TECHNOLOGIES CORPORATION

2156
NE Broadway

Portland,
 OR 97232

Attn:
GIORGIO  JOHNSON,  President/ChiefExecutive
Officer facsimile: [enter fax
number]

 

With
a copy by
fax only to
(which copy shall
not constitute  notice): [enter
name of law
firm]

Attn:
[attorney name] [enter address
line 1] [enter city,
state, zip]

facsimile:
[enter fax number]

 

Ifto
the Buyer:

ASHER
ENTERPRISES, INC.

1
Linden Pl., Suite
207

Great
Neck, NY. 11021

Attn:
Curt Kramer, President facsimile: 
516-498-9894

    	39

    	 

    

 

 

 

With
a copy by
fax only to
(which copy shall
not constitute notice): Naidich
Wurman Birnbaum &
Maday LLP

80
Cuttermill  Road, Suite
410

Great
Neck, NY 11021

Attn:
Bernard S. Feldman,
Esq. facsimile: 516-466-3555

 

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

 

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

 

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

 

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

 

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

 

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

    	40

    	 

    

 

 

 

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

 

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

 

IN
WITNESS  WHEREOF,  the 
undersigned  Buyer  and
the Company  have 
caused  this

Agreement
to be duly
executed as of
the date first
above written.

 

	NYXIO
    TECHNOLOGIES CORPORATION	
	 	
	By:
    /s/ Giorgio Johnson	
	GIORGIO
    JOHNSON President/Chief Executive
    Officer	
	 	
	ASHER
    ENTERPRISES, INC.	
	 	
	By:
    /s/ Curt Kramer	
	Name:
                                                          Curt Kramer

        Title:
         President

        1
        Linden Pl., Suite
        207

        Great
        Neck, NY. 11021
 	
		
	AGGREGATE
    SUBSCRIPTION AMOUNT:	
	Aggregate
    Principal Amount of
    Note:	$37,500.00
	Aggregate
    Purchase Price	$37,500.00

 

 

3134(4)
 1-31-13 giorgionyxio.com

    	41

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