Document:

SECURITIES
      PURCHASE AGREEMENT

    

    THIS SECURITIES
      PURCHASE AGREEMENT
      (this
“Agreement”),
      dated
      as of March 10, 2006, by and among WHERIFY
      WIRELESS, INC.,
      a
      Delaware corporation (the “Company”),
      and
      the Buyers listed on Schedule I attached hereto (individually, a
“Buyer”
or
      collectively “Buyers”).

     

    WITNESSETH

    

    WHEREAS,
      the
      Company and the Buyer are executing and delivering this Agreement in reliance
      upon an exemption from securities registration pursuant to Section 4(2) and/or
      Rule 506 of Regulation D (“Regulation
      D”)
      as
      promulgated by the U.S. Securities and Exchange Commission (the “SEC”)
      under
      the Securities Act of 1933, as amended (the “Securities
      Act”);

     

    WHEREAS,
      the
      parties desire that, upon the terms and subject to the conditions contained
      herein, the Company shall issue and sell to the Buyer, as provided herein,
      and
      the Buyer shall purchase up to Five Million Dollars ($5,000,000) of secured
      convertible debentures (the “Convertible
      Debentures”),
      which
      shall be convertible into shares of the Company’s common stock, par value $0.01
      (the “Common
      Stock”)
      (as
      converted, the “Conversion
      Shares”)
      of
      which Two Million Five Hundred Thousand Dollars ($2,500,000) shall be funded
      within five (5) business day following the date hereof (the “First
      Closing”)
      and
      Two Million Five Hundred Thousand Dollars ($2,500,000) shall be funded two
      (2)
      business days prior to the date the registration statement (the “Registration
      Statement”)
      is
      filed, pursuant to the Investor Registration Rights Agreement dated the date
      hereof, with the United States Securities and Exchange Commission (the
“SEC”)
      (the
“Second
      Closing”)
      (individually referred to as a “Closing”
      collectively referred to as the “Closings”),
      for a
      total purchase price of up to Five Million Dollars ($5,000,000), (the
“Purchase
      Price”)
      in the
      respective amounts set forth opposite each Buyer name on Schedule I (the
“Subscription
      Amount”);
      and

     

    WHEREAS,
      contemporaneously with the execution and delivery of this Agreement, the parties
      hereto are executing and delivering a Registration Rights Agreement (the
“Investor
      Registration Rights Agreement”)
      pursuant to which the Company has agreed to provide certain registration rights
      under the Securities Act and the rules and regulations promulgated there under,
      and applicable state securities laws; and

     

    WHEREAS,
      contemporaneously with the execution and delivery of this Agreement, the Company
      and the Buyers are executing and delivering a Security Agreement (the
“Security
      Agreement”)
      pursuant to which the Company agreed to provide the Buyers a security interest
      in Pledged Collateral (as this term is defined in the each Security Agreement)
      to secure the Company’s obligations under this Agreement, the Transaction
      Documents, or any other obligations of the Company to the Buyer;

     

    WHEREAS,
      contemporaneously with the execution and delivery of this Agreement, the parties
      hereto are executing and delivering a Pledge and Escrow Agreement (the
“Pledge
      and Escrow Agreement”)
      pursuant to which the Company has agreed to provide the Buyer a security
      interest in the Pledged Shares (as this term is defined in the Pledge and Escrow
      Agreement) to secure the Company’s obligations under this Agreement, the
      Transaction Documents, or any other obligations of the Company to the Buyer;
      and

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    WHEREAS,
      contemporaneously with the execution and delivery of this Agreement, the parties
      hereto are executing and delivering Irrevocable Transfer Agent Instructions
      (the
“Irrevocable
      Transfer Agent Instructions”)

     

    NOW,
      THEREFORE,
      in
      consideration of the mutual covenants and other agreements contained in this
      Agreement the Company and the Buyer hereby agree as follows:

     

    1.  PURCHASE
      AND SALE OF CONVERTIBLE DEBENTURES.

     

    (a)  Purchase
      of Convertible Debentures.
      Subject
      to the satisfaction (or waiver) of the terms and conditions of this Agreement,
      each Buyer agrees, severally and not jointly, to purchase at each Closing and
      the Company agrees to sell and issue to each Buyer, severally and not jointly,
      at each Closing, Convertible Debentures in amounts corresponding with the
      Subscription Amount set forth opposite each Buyer’s name on Schedule I hereto.
      Wherify Wireless, Inc.

     

    (b)  Closing
      Date.
      The
      First Closing of the purchase and sale of the Convertible Debentures shall
      take
      place at 10:00 a.m. Eastern Standard Time on the date hereof, subject to
      notification of satisfaction of the conditions to the First Closing set forth
      herein and in Sections 6 and 7 below (or such other date as is mutually agreed
      to by the Company and the Buyer) (the “First
      Closing Date”)
      and
      the Second Closing of the purchase and sale of the Convertible Debentures shall
      take place at 10:00 a.m. Eastern Standard Time two (2) business days prior
      to
      the date the Registration Statement is filed with the SEC, subject to
      notification of satisfaction of the conditions to the Second Closing set forth
      herein and in Sections 6 and 7 below (or such later date as is mutually agreed
      to by the Company and the Buyer) (the “Second
      Closing Date”)
      (collectively referred to a the “Closing
      Dates”).
      The
      Closing shall occur on the respective Closing Dates at the offices of Yorkville
      Advisors, LLC, 3700 Hudson Street, Suite 3700, Jersey City, New Jersey 07302
      (or
      such other place as is mutually agreed to by the Company and the Buyer).

     

    (c)  Form
      of Payment.
      Subject
      to the satisfaction of the terms and conditions of this Agreement, on the
      Closing Dates, (i) the Buyers shall deliver to the Company such aggregate
      proceeds for the Convertible Debentures to be issued and sold to such Buyer,
      minus the fees to be paid directly from the proceeds the Closings as set forth
      herein, and (ii) the Company shall deliver to each Buyer, Convertible
      Debentures which such Buyer is purchasing in amounts indicated opposite such
      Buyer’s name on Schedule I, duly executed on behalf of the Company.

     

    2.  BUYER’S
      REPRESENTATIONS AND WARRANTIES.

     

    Each
      Buyer represents and warrants, severally and not jointly, that:

     

    (a)  Investment
      Purpose.
      Each
      Buyer is acquiring the Convertible Debentures and, upon conversion of
      Convertible Debentures, the Buyer will acquire the Conversion Shares then
      issuable, for its own account for investment only and not with a view towards,
      or for resale in connection with, the public sale or distribution thereof,
      except pursuant to sales registered or exempted under the Securities Act;
      provided, however, that by making the representations herein, such Buyer
      reserves the right to dispose of the Conversion Shares at any time in accordance
      with or pursuant to an effective registration statement covering such Conversion
      Shares or an available exemption under the Securities Act.

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    (b)  Accredited
      Investor Status.
      Each
      Buyer is an “Accredited
      Investor”
as
      that
      term is defined in Rule 501(a)(3) of Regulation D.

     

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

     

    (d)  Information.
      Each
      Buyer and its advisors (and his or, its counsel), if any, have been furnished
      with all materials relating to the business, finances and operations of the
      Company and information he deemed material to making an informed investment
      decision regarding his purchase of the Convertible Debentures and the Conversion
      Shares, which have been requested by such Buyer. Each Buyer and its advisors,
      if
      any, have been afforded the opportunity to ask questions of the Company and
      its
      management. Neither such inquiries nor any other due diligence investigations
      conducted by such Buyer or its advisors, if any, or its representatives shall
      modify, amend or affect such Buyer’s right to rely on the Company’s
      representations and warranties contained in Section 3 below. Each Buyer
      understands that its investment in the Convertible Debentures and the Conversion
      Shares involves a high degree of risk. Each Buyer is in a position regarding
      the
      Company, which, based upon employment, family relationship or economic
      bargaining power, enabled and enables such Buyer to obtain information from
      the
      Company in order to evaluate the merits and risks of this investment. Each
      Buyer
      has sought such accounting, legal and tax advice, as it has considered necessary
      to make an informed investment decision with respect to its acquisition of
      the
      Convertible Debentures and the Conversion Shares.

     

    (e)  No
      Governmental Review.
      Each
      Buyer understands that no United States federal or state agency or any other
      government or governmental agency has passed on or made any recommendation
      or
      endorsement of the Convertible Debentures or the Conversion Shares, or the
      fairness or suitability of the investment in the Convertible Debentures or
      the
      Conversion Shares, nor have such authorities passed upon or endorsed the merits
      of the offering of the Convertible Debentures or the Conversion
      Shares.

     

    (f)  Transfer
      or Resale.
      Each
      Buyer understands that except as provided in the Investor Registration Rights
      Agreement: (i) the Convertible Debentures have not been and are not being
      registered under the Securities Act or any state securities laws, and may not
      be
      offered for sale, sold, assigned or transferred unless (A) subsequently
      registered thereunder, or (B) such Buyer shall have delivered to the Company
      an
      opinion of counsel, in a generally acceptable form, to the effect that such
      securities to be sold, assigned or transferred may be sold, assigned or
      transferred pursuant to an exemption from such registration requirements; (ii)
      any sale of such securities made in reliance on Rule 144 under the Securities
      Act (or a successor rule thereto) (“Rule 144”)
      may be
      made only in accordance with the terms of Rule 144 and further, if Rule 144
      is
      not applicable, any resale of 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 Securities Act) may require
      compliance with some other exemption under the Securities 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 Securities
      Act or any state securities laws or to comply with the terms and conditions
      of
      any exemption thereunder. The Company reserves the right to place stop transfer
      instructions against the shares and certificates for the Conversion
      Shares.

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    (g)  Legends.
      Each
      Buyer understands that the certificates or other instruments representing the
      Convertible Debentures and or the Conversion Shares shall bear a restrictive
      legend in substantially the following form (and a stop -transfer order may
      be
      placed against transfer of such stock certificates):

     

    THE
      SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
      SECURITIES HAVE BEEN ACQUIRED SOLELY FOR INVESTMENT PURPOSES AND NOT WITH A
      VIEW
      TOWARD RESALE AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED
      IN
      THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER
      THE
      SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, OR
      AN
      OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT
      REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS. 

     

    The
      legend set forth above shall be removed and the Company within two (2) business
      days shall issue a certificate without such legend to the holder of the
      Conversion Shares upon which it is stamped, if, unless otherwise required by
      state securities laws, (i) in connection with a sale transaction, provided
      the
      Conversion Shares are registered under the Securities Act or (ii) in connection
      with a sale transaction, after such holder provides the Company 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 a public
      sale, assignment or transfer of the Conversion Shares may be made without
      registration under the Securities Act. 

     

    (h)  Authorization,
      Enforcement.
      This
      Agreement has been duly and validly authorized, executed and delivered on behalf
      of such Buyer and is a valid and binding agreement of such Buyer enforceable
      in
      accordance with its terms, except as such enforceability may be limited by
      general principles of equity or applicable bankruptcy, insolvency,
      reorganization, moratorium, liquidation and other similar laws relating to,
      or
      affecting generally, the enforcement of applicable creditors’ rights and
      remedies.

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    (i)  Receipt
      of Documents.
      Each
      Buyer and his or its counsel has received and read in their entirety: (i) this
      Agreement and each representation, warranty and covenant set forth herein and
      the Transaction Documents (as defined herein); (ii) all due diligence and other
      information necessary to verify the accuracy and completeness of such
      representations, warranties and covenants; (iii) the Company’s Form 10-KSB for
      the fiscal year ended June 30, 2005; (iv) the Company’s Form 10-QSB for the
      fiscal quarter ended December 31, 2005 and (v) answers to all questions each
      Buyer submitted to the Company regarding an investment in the Company; and
      each
      Buyer has relied on the information contained therein and has not been furnished
      any other documents, literature, memorandum or prospectus.

     

    (j)  Due
      Formation of Corporate and Other Buyers.
      If the
      Buyer is a corporation, trust, partnership or other entity that is not an
      individual person, it has been formed and validly exists and has not been
      organized for the specific purpose of purchasing the Convertible Debentures
      and
      is not prohibited from doing so.

     

    (k)  No
      Legal Advice From the Company.
      Each
      Buyer acknowledges, that it had the opportunity to review this Agreement and
      the
      transactions contemplated by this Agreement with his or its own legal counsel
      and investment and tax advisors. Each Buyer is relying solely on such counsel
      and advisors and not on any statements or representations of the Company or
      any
      of its representatives or agents for legal, tax or investment advice with
      respect to this investment, the transactions contemplated by this Agreement
      or
      the securities laws of any jurisdiction. 

     

    3.  REPRESENTATIONS
      AND WARRANTIES OF THE COMPANY.

     

    The
      Company represents and warrants as of the date hereof to each of the Buyers
      that, except as set forth in the SEC Documents (as defined herein) or in the
      Disclosure Schedule attached hereto (the “Disclosure
      Schedule”):

     

    (a)  Organization
      and Qualification.
      The
      Company and its subsidiaries are corporations duly organized and validly
      existing in good standing under the laws of the jurisdiction in which they
      are
      incorporated, and have the requisite corporate power to own their properties
      and
      to carry on their business as now being conducted. Each of the Company and
      its
      subsidiaries is duly qualified as a foreign corporation to do business and
      is in
      good standing in every jurisdiction in which the nature of the business
      conducted by it makes such qualification necessary, except to the extent that
      the failure to be so qualified or be in good standing would not have a material
      adverse effect on the Company and its subsidiaries taken as a
      whole.

     

    (b)  Authorization,
      Enforcement, Compliance with Other Instruments.
      (i) The Company has the requisite corporate power and authority to enter
      into and perform this Agreement, the Security Agreement, the Investor
      Registration Rights Agreement, the Irrevocable Transfer Agent Agreement, the
      Pledge and Escrow Agreement, and any related agreements (collectively the
“Transaction
      Documents”)
      and to
      issue the Convertible Debentures and the Conversion Shares in accordance with
      the terms hereof and thereof, (ii) the execution and delivery of the Transaction
      Documents by the Company and the consummation by it of the transactions
      contemplated hereby and thereby, including, without limitation, the issuance
      of
      the Convertible Debentures the Conversion Shares and the reservation for
      issuance and the 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 is required by the Company, its Board
      of
      Directors or its stockholders, (iii) the Transaction Documents have been duly
      executed and delivered by the Company, (iv) the Transaction Documents constitute
      the valid and binding obligations of the Company enforceable against the Company
      in accordance with their terms, except as such enforceability may be limited
      by
      general principles of equity or applicable bankruptcy, insolvency,
      reorganization, moratorium, liquidation or similar laws relating to, or
      affecting generally, the enforcement of creditors’ rights and remedies. The
      authorized officer of the Company executing the Transaction Documents knows
      of
      no reason why the Company cannot file the registration statement as required
      under the Investor Registration Rights Agreement or perform any of the Company’s
      other obligations under such documents. 

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    (c)  Capitalization.
      The
      authorized capital stock of the Company consists of 100,000,000 shares of Common
      Stock and 10,000,000 shares of Preferred Stock, par value $0.01 (“Preferred
      Stock”)
      of
      which 55,247,133 shares of Common Stock and zero shares of Preferred Stock
      are
      issued and outstanding. All of such outstanding shares have been validly issued
      and are fully paid and nonassessable. No shares of Common Stock are subject
      to
      preemptive rights or any other similar rights or any liens or encumbrances
      suffered or permitted by the Company. As of the date of this Agreement, except
      for non material differences from the SEC Documents, (i) there are no
      outstanding options, warrants, scrip, rights to subscribe to, calls or
      commitments of any character whatsoever relating to, or securities or rights
      convertible into, any shares of capital stock of the Company or any of its
      subsidiaries, or contracts, commitments, understandings or arrangements by
      which
      the Company or any of its subsidiaries is or may become bound to issue
      additional shares of capital stock of the Company or any of its subsidiaries
      or
      options, warrants, scrip, rights to subscribe to, calls or commitments of any
      character whatsoever relating to, or securities or rights convertible into,
      any
      shares of capital stock of the Company or any of its subsidiaries, (ii) there
      are no outstanding debt securities and (iii) there are no agreements or
      arrangements under which the Company or any of its subsidiaries is obligated
      to
      register the sale of any of their securities under the Securities Act (except
      pursuant to the Registration Rights Agreement) and (iv) there are no outstanding
      registration statements and there are no outstanding comment letters from the
      SEC or any other regulatory agency. There are no securities or instruments
      containing anti-dilution or similar provisions that will be triggered by the
      issuance of the Convertible Debentures as described in this Agreement. The
      Company has furnished to the Buyer true and correct copies of the Company’s
      Articles of Incorporation, as amended and as in effect on the date hereof (the
      “Articles
      of Incorporation”),
      and
      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
      and
      the material rights of the holders thereof in respect thereto other than stock
      options issued to employees and consultants. 

     

    (d)  Issuance
      of Securities.
      The
      Convertible Debentures are duly authorized and, upon issuance in accordance
      with
      the terms hereof, shall be duly issued, fully paid and nonassessable, are free
      from all taxes, liens and charges with respect to the issue thereof. The
      Conversion Shares issuable upon conversion of the Convertible Debentures have
      been duly authorized and reserved for issuance. Upon conversion or exercise
      in
      accordance with the Convertible Debentures the Conversion Shares will be duly
      issued, fully paid and nonassessable.

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    (e)  No
      Conflicts.
      The
      execution, delivery and performance of the Transaction Documents by the Company
      and the consummation by the Company of the transactions contemplated hereby
      will
      not (i) result in a violation of the Articles of Incorporation, any certificate
      of designations of any outstanding series of preferred stock of the Company
      or
      the By-laws or (ii) conflict with or constitute a default (or an event which
      with notice or lapse of time or both would become a default) under, or give
      to
      others any rights of termination, amendment, acceleration or cancellation of,
      any agreement, indenture or instrument to which the Company or any of its
      subsidiaries is a party, or result in a violation of any law, rule, regulation,
      order, judgment or decree (including federal and state securities laws and
      regulations and the rules and regulations of The National Association of
      Securities Dealers Inc.’s OTC Bulletin Board on which the Common Stock is
      quoted) 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. Neither the Company nor its subsidiaries is in violation of any term
      of or in default under its Articles of Incorporation or By-laws or their
      organizational charter or by-laws, respectively, or, except as previously
      disclosed in writing to the Investor, any material contract, agreement,
      mortgage, indebtedness, indenture, instrument, judgment, decree or order or
      any
      statute, rule or regulation applicable to the Company or its subsidiaries.
      The
      business of the Company and its subsidiaries is not being conducted, and shall
      not be conducted in violation of any material law, ordinance, or regulation
      of
      any governmental entity. Except as specifically contemplated by this Agreement
      and as required under the Securities 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 or governmental agency
      in
      order for it to execute, deliver or perform any of its obligations under or
      contemplated by this Agreement or the Registration Rights Agreement in
      accordance with the terms hereof or thereof. All consents, authorizations,
      orders, filings and registrations which the Company is required to obtain
      pursuant to the preceding sentence have been obtained or effected on or prior
      to
      the date hereof. The Company and its subsidiaries are unaware of any facts
      or
      circumstance, which might give rise to any of the foregoing.

     

    (f)  SEC
      Documents: Financial Statements.
      Since
      January 1, 2003, the Company has filed all reports, schedules, forms, statements
      and other documents required to be filed by it with the SEC under the Securities
      Exchange Act of 1934, as amended (the “Exchange
      Act”)
      or the
      Securities Act of 1933, as amended (all of the foregoing filed prior to the
      date
      hereof or amended after the date hereof and all exhibits included therein and
      financial statements and schedules thereto and documents incorporated by
      reference therein, being hereinafter referred to as the “SEC
      Documents”).
      The
      Company has delivered to the Buyers or their representatives, or made available
      through the SEC’s website at http://www.sec.gov, true and complete copies of the
      SEC Documents. As of their respective dates, the financial statements of the
      Company disclosed in the SEC Documents (the “Financial
      Statements”)
      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
      generally accepted accounting principles, consistently applied, during the
      periods involved (except (i) as may be otherwise indicated in such Financial
      Statements or the notes thereto, or (ii) in the case of unaudited interim
      statements, to the extent they may exclude footnotes or may be condensed or
      summary statements) and, fairly present in all material respects the financial
      position of the Company as of the dates thereof and the results of its
      operations and cash flows for the periods then ended (subject, in the case
      of
      unaudited statements, to normal year-end audit adjustments). No other
      information provided by or on behalf of the Company to the Buyer which is not
      included in the SEC Documents, including, without limitation, information
      referred to in this Agreement, contains any untrue statement of a material
      fact
      or omits to state any material fact necessary in order to make the statements
      therein, in the light of the circumstances under which they were made, not
      misleading.

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    (g)  10(b)-5.
      The SEC
      Documents do not include any untrue statements of material fact, nor do they
      omit to state any material fact required to be stated therein necessary to
      make
      the statements made, in light of the circumstances under which they were made,
      not misleading.

     

    (h)  Absence
      of Litigation.
      To the
      knowledge of the Company, there is no action, suit, proceeding, inquiry or
      investigation before or by any court, public board, government agency,
      self-regulatory organization or body pending against or affecting the Company,
      the Common Stock or any of the Company’s subsidiaries, wherein an unfavorable
      decision, ruling or finding would (i) have a material adverse effect on the
      transactions contemplated hereby (ii) adversely affect the validity or
      enforceability of, or the authority or ability of the Company to perform its
      obligations under, this Agreement or any of the documents contemplated herein,
      or (iii) have a material adverse effect on the business, operations, properties,
      financial condition or results of operations of the Company and its subsidiaries
      taken as a whole.

     

    (i)  Acknowledgment
      Regarding Buyer’s Purchase of the Convertible Debentures.
      The
      Company acknowledges and agrees that the Buyer is acting solely in the capacity
      of an arm’s length purchaser 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 advice given by the Buyer or any of their respective
      representatives or agents in connection with this Agreement and the transactions
      contemplated hereby is merely incidental to such Buyer’s purchase of the
      Convertible Debentures or the Conversion Shares. 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 by the Company and its
      representatives.

     

    (j)  No
      General Solicitation.
      Neither
      the Company, nor any of its affiliates, nor any person acting on its or their
      behalf, has engaged in any form of general solicitation or general advertising
      (within the meaning of Regulation D under the Securities Act) in connection
      with
      the offer or sale of the Convertible Debentures or the Conversion
      Shares.

     

    (k)  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 of any security
      or
      solicited any offers to buy any security, under circumstances that would require
      registration of the Convertible Debentures or the Conversion Shares under the
      Securities Act or cause this offering of the Convertible Debentures or the
      Conversion Shares to be integrated with prior offerings by the Company for
      purposes of the Securities Act.

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    (l)  Employee
      Relations.
      Neither
      the Company nor any of its subsidiaries is involved in any labor dispute nor,
      to
      the knowledge of the Company or any of its subsidiaries, is any such dispute
      threatened. None of the Company’s or its subsidiaries’ employees is a member of
      a union and the Company and its subsidiaries believe that their relations with
      their employees are good.

     

    (m)  Intellectual
      Property Rights.
      The
      Company and its subsidiaries own or possess adequate rights or licenses to
      use
      all trademarks, trade names, service marks, service mark registrations, service
      names, patents, patent rights, copyrights, inventions, licenses, approvals,
      governmental authorizations, trade secrets and rights necessary to conduct
      their
      respective businesses as now conducted. The Company and its subsidiaries do
      not
      have any knowledge of any infringement by the Company or its subsidiaries of
      trademark, trade name rights, patents, patent rights, copyrights, inventions,
      licenses, service names, service marks, service mark registrations, trade secret
      or other similar rights of others, and, to the knowledge of the Company there
      is
      no claim, action or proceeding being made or brought against, or to the
      Company’s knowledge, being threatened against, the Company or its subsidiaries
      regarding trademark, trade name, patents, patent rights, invention, copyright,
      license, service names, service marks, service mark registrations, trade secret
      or other infringement; and the Company and its subsidiaries are unaware of
      any
      facts or circumstances which might give rise to any of the
      foregoing.

     

    (n)  Environmental
      Laws.
      The
      Company and its subsidiaries are (i) in compliance with any and all applicable
      foreign, federal, state and local laws and regulations relating to the
      protection of human health and safety, the environment or hazardous or toxic
      substances or wastes, pollutants or contaminants (“Environmental
      Laws”),
      (ii)
      have received all permits, licenses or other approvals required of them under
      applicable Environmental Laws to conduct their respective businesses and (iii)
      are in compliance with all terms and conditions of any such permit, license
      or
      approval.

     

    (o)  Title.
      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 are not material and do not interfere with the use
      made
      and proposed to be made of such property and buildings by the Company and its
      subsidiaries.

     

    (p)  Insurance.
      The
      Company and each of its subsidiaries are insured by insurers of recognized
      financial responsibility against such losses and risks and in such amounts
      as
      management of the Company believes to be prudent and customary in the businesses
      in which the Company and its subsidiaries are engaged. Neither the Company
      nor
      any such subsidiary has been refused any insurance coverage sought or applied
      for and neither the Company nor any such subsidiary has any reason to believe
      that it will not be able to renew its existing insurance coverage as and when
      such coverage expires or to obtain similar coverage from similar insurers as
      may
      be necessary to continue its business at a cost that would not materially and
      adversely affect the condition, financial or otherwise, or the earnings,
      business or operations of the Company and its subsidiaries, taken as a
      whole.

     

    (q)  Regulatory
      Permits.
      The
      Company and its subsidiaries possess all material certificates, authorizations
      and permits issued by the appropriate federal, state or foreign regulatory
      authorities necessary to conduct their respective businesses, and neither the
      Company nor any such subsidiary has received any notice of proceedings relating
      to the revocation or modification of any such certificate, authorization or
      permit.

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

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

     

    (s)  No
      Material Adverse Breaches, 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 on the business, properties, operations,
      financial condition, results of operations or prospects of the Company or its
      subsidiaries. Neither the Company nor any of its subsidiaries is in breach
      of
      any contract or agreement which breach, in the judgment of the Company’s
      officers, has or is expected to have a material adverse effect on the business,
      properties, operations, financial condition, results of operations or prospects
      of the Company or its subsidiaries.

     

    (t)  Tax
      Status.
      The
      Company and each of its subsidiaries 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. To the best of the Company’s knowledge, 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.

     

    (u)  Certain
      Transactions.
      Except
      for arm’s length transactions pursuant to which the Company makes payments in
      the ordinary course of business upon terms no less favorable than the Company
      could obtain from third parties and other than the grant of stock options
      disclosed in the SEC Documents, none of the officers, directors, or employees
      of
      the Company is presently a party to any transaction with the Company (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.

     

    (v)  Fees
      and Rights of First Refusal.
      The
      Company is not obligated to offer the securities offered hereunder on a right
      of
      first refusal basis or otherwise to any third parties including, but not limited
      to, current or former shareholders of the Company, underwriters, brokers, agents
      or other third parties.

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    4.  COVENANTS.

     

    (a)  Best
      Efforts.
      Each
      party shall use its best efforts to timely satisfy each of the conditions to
      be
      satisfied by it as provided in Sections 6 and 7 of this Agreement.

     

    (b)  Form
      D.
      The
      Company agrees to file a Form D with respect to the Conversion Shares as
      required under Regulation D and to provide a copy thereof to each Buyer promptly
      after such filing.

     

    (c)  Reporting
      Status.
      Until
      the earlier of (i) the date as of which the Buyer may sell all of the Conversion
      Shares without restriction pursuant to Rule 144(k) promulgated under the
      Securities Act (or successor thereto), or (ii) the date on which (A) the Buyer
      shall have sold all the Conversion Shares and (B) none of the Convertible
      Debentures are outstanding (the “Registration
      Period”),
      the
      Company shall file in a timely manner all reports required to be filed with
      the
      SEC pursuant to the Exchange Act and the regulations of the SEC thereunder,
      and
      the Company shall not terminate its status as an issuer required to file reports
      under the Exchange Act even if the Exchange Act or the rules and regulations
      thereunder would otherwise permit such termination.

     

    (d)  Use
      of
      Proceeds.
      The
      Company will use the proceeds from the sale of the Convertible Debentures for
      general corporate and working capital purposes.

     

    (e)  Reservation
      of Shares.
      The
      Company shall take all action reasonably necessary to at all times have
      authorized, and reserved for the purpose of issuance, such number of shares
      of
      Common Stock as shall be necessary to effect the issuance of the Conversion
      Shares. If at any time the Company does not have available such shares of Common
      Stock as shall from time to time be sufficient to effect the conversion of
      all
      of the Conversion Shares, the Company shall call and hold a special meeting
      of
      the shareholders within thirty (30) days of such occurrence, for the sole
      purpose of increasing the number of shares authorized. The Company’s management
      shall recommend to the shareholders to vote in favor of increasing the number
      of
      shares of Common Stock authorized. Management shall also vote all of its shares
      in favor of increasing the number of authorized shares of Common
      Stock.

     

    (f)  Listings
      or Quotation.
      The
      Company shall promptly secure the listing or quotation of the Conversion Shares
      upon each national securities exchange, automated quotation system or The
      National Association of Securities Dealers Inc.’s Over-The-Counter Bulletin
      Board (“OTCBB”)
      or
      other market, if any, upon which shares of Common Stock are then listed or
      quoted (subject to official notice of issuance) and shall use its best efforts
      to 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 under the
      terms
      of this Agreement. The Company shall maintain the Common Stock’s authorization
      for quotation on the OTCBB.

     

    (g)  Fees
      and Expenses.
      

     

    (i)  Each
      of
      the Company and the Buyer shall pay all costs and expenses incurred by such
      party in connection with the negotiation, investigation, preparation, execution
      and delivery of the Transaction Documents. The Company shall pay Yorkville
      Advisors, LLC a fee equal to eight percent (8%) of the Purchase Price which
      shall be paid pro rata directly from the proceeds of the each Closing.

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    (ii)  The
      Company shall pay a structuring fee to Yorkville Advisors, LLC of Ten Thousand
      Dollars ($10,000) which shall be paid directly from the proceeds of the First
      Closing. 

     

    (iii)  The
      Company shall issue to the Buyer (a) a warrant to purchase One Million Two
      Hundred Fifty Thousand (1,250,000) shares of the Company’s Common Stock for
      a period of three (3) years at an exercise price of $2.00 per share and (b)
      a
      warrant to purchase One Million Two Hundred Fifty Thousand (1,250,000) shares
      of
      the Company’s Common Stock for a period of three (3) years at an exercise
      price of $2.25 per share (collectively, the “Warrants”).
      The
      shares of Common Stock issuable under the Warrants shall collectively be
      referred to as the “Warrant
      Shares”.
      

     

    (iv)  The
      Warrant Shares shall have “piggy-back” and demand registration rights.

     

    (h)  Corporate
      Existence.
      So long
      as any of the Convertible Debentures remain outstanding, the Company shall
      not
      directly or indirectly consummate any merger, reorganization, restructuring,
      reverse stock split consolidation, sale of all or substantially all of the
      Company’s assets or any similar transaction or related transactions (each such
      transaction, an “Organizational
      Change”)
      unless, prior to the consummation an Organizational Change, the Company obtains
      the written consent of each Buyer. In any such case, the Company will make
      appropriate provision with respect to such holders’ rights and interests to
      insure that the provisions of this Section 4(h) will thereafter be applicable
      to
      the Convertible Debentures.

     

    (i)  Transactions
      With Affiliates.
      So long
      as any Convertible Debentures are outstanding, the Company shall not, and shall
      cause each of its subsidiaries not to, enter into, amend, modify or supplement,
      or permit any subsidiary to enter into, amend, modify or supplement any
      agreement, transaction, commitment, or arrangement with any of its or any
      subsidiary’s officers, directors, person who were officers or directors at any
      time during the previous two (2) years, stockholders who beneficially own five
      percent (5%) or more of the Common Stock, or Affiliates (as defined below)
      or
      with any individual related by blood, marriage, or adoption to any such
      individual or with any entity in which any such entity or individual owns a
      five
      percent (5%) or more beneficial interest (each a “Related
      Party”),
      except for (a) customary employment arrangements and benefit programs on
      reasonable terms, (b) any investment in an Affiliate of the Company, (c) any
      agreement, transaction, commitment, or arrangement on an arms-length basis
      on
      terms no less favorable than terms which would have been obtainable from a
      person other than such Related Party, (d) any agreement, transaction,
      commitment, or arrangement which is approved by a majority of the disinterested
      directors of the Company; for purposes hereof, any director who is also an
      officer of the Company or any subsidiary of the Company shall not be a
      disinterested director with respect to any such agreement, transaction,
      commitment, or arrangement. “Affiliate”
for
      purposes hereof means, with respect to any person or entity, another person
      or
      entity that, directly or indirectly, (i) has a ten percent (10%) or more equity
      interest in that person or entity, (ii) has ten percent (10%) or more common
      ownership with that person or entity, (iii) controls that person or entity,
      or
      (iv) shares common control with that person or entity. “Control”
or
      “controls”
for
      purposes hereof means that a person or entity has the power, direct or indirect,
      to conduct or govern the policies of another person or entity.

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    (j)  Transfer
      Agent.
      The
      Company covenants and agrees that, in the event that the Company’s agency
      relationship with the transfer agent should be terminated for any reason prior
      to a date which is two (2) years after the Closing Date, the Company shall
      immediately appoint a new transfer agent and shall require that the new transfer
      agent execute and agree to be bound by the terms of the Irrevocable Transfer
      Agent Instructions (as defined herein).

     

    (k)  Neither
      the Buyer nor any of its affiliates have an open short position in the Common
      Stock of the Company, and the Buyer agrees 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 as long as any Convertible
      Debentures shall remain outstanding. 

     

    5.  TRANSFER
      AGENT INSTRUCTIONS.

     

    (a)  The
      Company shall issue the Irrevocable Transfer Agent Instructions to its transfer
      agent irrevocably appointing David Gonzalez, Esq. as the Company’s agent for
      purpose of having certificates issued, registered in the name of the Buyer
      or
      its respective nominee(s), for the Conversion Shares representing such amounts
      of Convertible Debentures as specified from time to time by the Buyer to the
      Company upon conversion of the Convertible Debentures, for interest owed
      pursuant to the Convertible Debenture, and for any and all Liquidated Damages
      (as this term is defined in the Investor Registration Rights Agreement). David
      Gonzalez, Esq. shall be paid a cash fee of Fifty Dollars ($50) for every
      occasion they act pursuant to the Irrevocable Transfer Agent Instructions.
      The
      Company shall not change its transfer agent without the express written consent
      of the Buyer, which may be withheld by the Buyer in its sole discretion. Prior
      to registration of the Conversion Shares under the Securities Act, all such
      certificates shall bear the restrictive legend specified in Section 2(g) of
      this
      Agreement. The Company warrants that no instruction other than the Irrevocable
      Transfer Agent Instructions referred to in this Section 5, and stop transfer
      instructions to give effect to Section 2(g) hereof (in the case of the
      Conversion Shares prior to registration of such shares under the Securities
      Act)
      will be given by the Company to its transfer agent and that the Conversion
      Shares shall otherwise be freely transferable on the books and records of the
      Company as and to the extent provided in this Agreement and the Investor
      Registration Rights Agreement. Nothing in this Section 5 shall affect in any
      way
      the Buyer’s obligations and agreement to comply with all applicable securities
      laws upon resale of Conversion Shares. If the Buyer provides the Company with
      an
      opinion of counsel, in form, scope and substance customary for opinions of
      counsel in comparable transactions to the effect that registration of a resale
      by the Buyer of any of the Conversion Shares is not required under the
      Securities Act, the Company shall within two (2) business days instruct its
      transfer agent to issue one or more certificates 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 transaction contemplated hereby.
      Accordingly, the Company acknowledges that the remedy at law for a breach of
      its
      obligations under this Section 5 will be inadequate and agrees, in the event
      of
      a breach or threatened breach by the Company of the provisions of this
      Section 5, that the Buyer shall be entitled, in addition to all other
      available remedies, to an injunction restraining any breach and requiring
      immediate issuance and transfer, without the necessity of showing economic
      loss
      and without any bond or other security being required.

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    6.  CONDITIONS
      TO THE COMPANY’S OBLIGATION TO SELL.

     

    The
      obligation of the Company hereunder to issue and sell the Convertible Debentures
      to the Buyer at the Closings is subject to the satisfaction, at or before the
      Closing Dates, of each of the following conditions, provided that these
      conditions are for the Company’s sole benefit and may be waived by the Company
      at any time in its sole discretion:

     

    (a)  Each
      Buyer shall have executed the Transaction Documents and delivered them to the
      Company.

     

    (b)  The
      Buyer
      shall have delivered to the Company the Purchase Price for Convertible
      Debentures in respective amounts as set forth next to each Buyers name as
      outlined on Schedule I attached hereto, minus any fees to be paid directly
      from
      the proceeds the Closings as set forth herein, by wire transfer of immediately
      available U.S. funds pursuant to the wire instructions provided by the
      Company.

     

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

     

    7.  CONDITIONS
      TO THE BUYER’S OBLIGATION TO PURCHASE.

     

    (a)  The
      obligation of the Buyer hereunder to purchase the Convertible Debentures at
      the
      First Closing is subject to the satisfaction, at or before the First Closing
      Date, of each of the following conditions:

     

    (i)  The
      Company shall have executed the Transaction Documents and delivered the same
      to
      the Buyer.

     

    (ii)  The
      Common Stock shall be authorized for quotation on the OTCBB, trading in the
      Common Stock shall not have been suspended for any reason. 

     

    (iii)  The
      representations and warranties of the Company shall be true and correct in
      all
      material respects (except to the extent that any of such representations and
      warranties is already qualified as to materiality in Section 3 above, in which
      case, such representations and warranties shall be true and correct without
      further qualification) as of the date when made and as of the First Closing
      Date
      as though made at that time (except for representations and warranties that
      speak as of a specific date) and the Company shall have performed, satisfied
      and
      complied in all 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 First Closing Date. If requested by the Buyer, the
      Buyer shall have received a certificate, executed by the President of the
      Company, dated as of the First Closing Date, to the foregoing effect and as
      to
      such other matters as may be reasonably requested by the Buyer including,
      without limitation an update as of the First Closing Date regarding the
      representation contained in Section 3(c) above.

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    (iv)  The
      Company shall have executed and delivered to the Buyer the Convertible
      Debentures in the respective amounts set forth opposite each Buyer name on
      Schedule I attached hereto.

     

    (v)  The
      Buyer
      shall have received an opinion of counsel from counsel to the Company in a
      form
      satisfactory to the Buyer.

     

    (vi)  The
      Company shall have provided to the Buyer a certificate of good standing from
      the
      secretary of state from the state in which the company is
      incorporated.

     

    (vii)  The
      Company shall have filed a form UCC-1 or such other forms as may be required
      to
      perfect the Buyer’s interest in the Pledged Property as detailed in the Security
      Agreement dated the date hereof and provided proof of such filing to the
      Buyer.

     

    (viii)  The
      Company shall have delivered the Pledged Shares as well as executed and
      medallion guaranteed stock powers as required pursuant to the Pledge and Escrow
      Agreement.

     

    (ix)  The
      Company shall have provided to the Buyer an acknowledgement, to the satisfaction
      of the Buyer, from the Company’s independent certified public accountants as to
      its ability to provide all consents required in order to file a registration
      statement in connection with this transaction.

     

    (x)  The
      Company shall have reserved out of its authorized and unissued Common Stock,
      solely for the purpose of effecting the conversion of the Convertible
      Debentures, shares of Common Stock to effect the conversion of all of the
      Conversion Shares then outstanding. 

     

    (xi)  The
      Irrevocable Transfer Agent Instructions, in form and substance satisfactory
      to
      the Buyer, shall have been delivered to and acknowledged in writing by the
      Company’s transfer agent.

     

    (b)  The
      obligation of the Buyer hereunder to accept the Convertible Debentures at the
      Second Closing is subject to the satisfaction, at or before the Second Closing
      Date, of each of the following conditions:

     

    (i)  The
      Common Stock shall be authorized for quotation on the OTCBB, trading in the
      Common Stock shall not have been suspended for any reason. 

     

    (ii)  The
      representations and warranties of the Company shall be true and correct in
      all
      material respects (except to the extent that any of such representations and
      warranties is already qualified as to materiality in Section 3 above, in which
      case, such representations and warranties shall be true and correct without
      further qualification) as of the date when made and as of the Second Closing
      Date as though made at that time (except for representations and warranties
      that
      speak as of a specific date) and the Company shall have performed, satisfied
      and
      complied in all 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 Second Closing Date

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    (iii)  The
      Company shall have executed and delivered to the Buyer the Convertible
      Debentures in the respective amounts set forth opposite each Buyer name on
      Schedule I attached hereto.

     

    (iv)  The
      Company shall certify that it will file the Registration Statement with the
      SEC
      in compliance with the rules and regulations promulgated by the SEC for filing
      thereof two (2) business days after the Second Closing. 

     

    (v)  The
      Company shall provide a certificate, executed by two officers of the Company
      that all conditions to the Second Closing have been satisfied.

     

    8.  INDEMNIFICATION.

     

    (a)  In
      consideration of the Buyer’s execution and delivery of this Agreement and
      acquiring the Convertible Debentures and the Conversion Shares hereunder, and
      in
      addition to all of the Company’s other obligations under this Agreement, the
      Company shall defend, protect, indemnify and hold harmless the Buyer, and all
      of
      its officers, directors, employees and agents (including, without
      limitation, those retained in connection with the transactions contemplated
      by
      this Agreement) (collectively, the “Buyer
      Indemnitees”)
      from
      and against any and all actions, causes of action, suits, claims, losses, costs,
      penalties, fees, liabilities and damages, and expenses in connection therewith
      (irrespective of whether any such Buyer Indemnitee is a party to the action
      for
      which indemnification hereunder is sought), and including reasonable attorneys’
fees and disbursements (the “Indemnified
      Liabilities”),
      incurred by the Buyer Indemnitees or any of them as a result of, or arising
      out
      of, or relating to (a) any misrepresentation or breach of any representation
      or
      warranty made by the Company in this Agreement, the Convertible Debentures
      or
      the Investor Registration Rights Agreement or any other certificate, instrument
      or document contemplated hereby or thereby, (b) any breach of any covenant,
      agreement or obligation of the Company contained in this Agreement, or the
      Investor Registration Rights Agreement or any other certificate, instrument
      or
      document contemplated hereby or thereby, or (c) any cause of action, suit or
      claim brought or made against such Indemnitee and arising out of or resulting
      from the execution, delivery, performance or enforcement of this Agreement
      or
      any other instrument, document or agreement executed pursuant hereto by any
      of
      the parties hereto, any transaction financed or to be financed in whole or
      in
      part, directly or indirectly, with the proceeds of the issuance of the
      Convertible Debentures or the status of the Buyer or holder of the Convertible
      Debentures the Conversion Shares, as a Buyer of Convertible Debentures in the
      Company. To the extent that the foregoing undertaking by the Company may be
      unenforceable for any reason, the Company shall make the maximum contribution
      to
      the payment and satisfaction of each of the Indemnified Liabilities, which
      is
      permissible under applicable law.

     

    (b)  In
      consideration of the Company’s execution and delivery of this Agreement, and in
      addition to all of the Buyer’s other obligations under this Agreement, the Buyer
      shall defend, protect, indemnify and hold harmless the Company and all of its
      officers, directors, employees and agents (including, without limitation, those
      retained in connection with the transactions contemplated by this Agreement)
      (collectively, the “Company
      Indemnitees”)
      from
      and against any and all Indemnified Liabilities incurred by the Indemnitees
      or
      any of them as a result of, or arising out of, or relating to (a) any
      misrepresentation or breach of any representation or warranty made by the Buyer
      in this Agreement, instrument or document contemplated hereby or thereby
      executed by the Buyer, (b) any breach of any covenant, agreement or obligation
      of the Buyer contained in this Agreement, the Investor Registration Rights
      Agreement or any other certificate, instrument or document contemplated hereby
      or thereby executed by the Buyer, or (c) any cause of action, suit or claim
      brought or made against such Company Indemnitee based on material
      misrepresentations or due to a material breach and arising out of or resulting
      from the execution, delivery, performance or enforcement of this Agreement,
      the
      Investor Registration Rights Agreement or any other instrument, document or
      agreement executed pursuant hereto by any of the parties hereto. To the extent
      that the foregoing undertaking by each Buyer may be unenforceable for any
      reason, each Buyer shall make the maximum contribution to the payment and
      satisfaction of each of the Indemnified Liabilities, which is permissible under
      applicable law.

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    9.  GOVERNING
      LAW: MISCELLANEOUS.

     

    (a)  Governing
      Law.
      This
      Agreement shall be governed by and interpreted in accordance with the laws
      of
      the State of Delaware without regard to the principles of conflict of laws.
      The
      parties further agree that any action between them shall be heard in Hudson
      County, New Jersey, and expressly consent to the jurisdiction and venue of
      the
      Superior Court of New Jersey, sitting in Hudson County and the United States
      District Court for the District of New Jersey sitting in Newark, New Jersey
      for
      the adjudication of any civil action asserted pursuant to this
      Paragraph.

     

    (b)  Counterparts.
      This
      Agreement may be executed in two or more identical counterparts, all of which
      shall be considered one and the same agreement and shall become effective when
      counterparts have been signed by each party and delivered to the other party.
      In
      the event any signature page is delivered by facsimile transmission, the party
      using such means of delivery shall cause four (4) additional original executed
      signature pages to be physically delivered to the other party within five (5)
      days of the execution and delivery hereof.

     

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

     

    (d)  Severability.
      If any
      provision of this Agreement shall be invalid or unenforceable in any
      jurisdiction, such invalidity or unenforceability shall not affect the validity
      or enforceability of the remainder of this Agreement in that jurisdiction or
      the
      validity or enforceability of any provision of this Agreement in any other
      jurisdiction.

     

    (e)  Entire
      Agreement, Amendments.
      This
      Agreement supersedes all other prior oral or written agreements between the
      Buyer, the Company, their affiliates and persons acting on their behalf with
      respect to the matters discussed herein, and 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 any Buyer makes any representation,
      warranty, covenant or undertaking with respect to such matters. No provision
      of
      this Agreement may be waived or amended other than by an instrument in writing
      signed by the party to be charged with enforcement.

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    (f)  Notices.
      Any
      notices, consents, waivers, or other communications required or permitted to
      be
      given under the terms of this Agreement must be in writing and will be deemed
      to
      have been delivered (i) upon receipt, when delivered personally; (ii) upon
      confirmation of receipt, when sent by facsimile; (iii) three (3) days after
      being sent by U.S. certified mail, return receipt requested, or (iv) one (1)
      day
      after deposit with a nationally recognized overnight delivery service, in each
      case properly addressed to the party to receive the same. The addresses and
      facsimile numbers for such communications shall be:

     

    
      	
              If
                to the Company, to:

            	
              Wherify
                Wireless, Inc.

            
	 	
              2000
                Bridge Parkway, Suite 201

            
	 	
              Redwood
                Shores, CA 94065

            
	 	
              Attention: Chief
                Executive Officer

            
	 	
              Telephone: (650)
                551-5200

            
	 	
              Facsimile: (650)
                551-5225

            
	 	 
	
              With
                a copy to:

            	
              Allen
                Matkins Leck Gamble & Mallory LLP

            
	 	
              Three
                Embarcadero Center, 12th
                Floor

            
	 	
              San
                Francisco, CA 94111

            
	 	
              Attention: D.
                Stanley Rowland

            
	 	
              Telephone: (415)
                837-1515

            
	 	
              Facsimile: (415)
                837-1516

            
	 	 

    

    If
      to the
      Buyer, to its address and facsimile number on Schedule I, with copies to the
      Buyer’s counsel as set forth on Schedule I. Each party shall provide five (5)
      days’ prior written notice to the other party of any change in address or
      facsimile number.

     

    (g)  Successors
      and Assigns.
      This
      Agreement shall be binding upon and inure to the benefit of the parties and
      their respective successors and assigns. Neither the Company nor any Buyer
      shall
      assign this Agreement or any rights or obligations hereunder without the prior
      written consent of the other party hereto.

     

    (h)  No
      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.
      Unless
      this Agreement is terminated under Section 9(l), the representations and
      warranties of the Company and the Buyer contained in Sections 2 and 3, the
      agreements and covenants set forth in Sections 4, 5 and 9, and the
      indemnification provisions set forth in Section 8, shall survive the Closing
      for
      a period of two (2) years following the date on which the Convertible Debentures
      are converted in full. The Buyer shall be responsible only for its own
      representations, warranties, agreements and covenants hereunder.

     

    (j)  Publicity.
      The
      Company and the Buyer shall have the right to approve, before issuance any
      press
      release or any other public statement with respect to the transactions
      contemplated hereby made by any party; provided, however, that the Company
      shall
      be entitled, without the prior approval of the Buyer, to issue any press release
      or other public disclosure with respect to such transactions required under
      applicable securities or other laws or regulations (the Company shall use its
      best efforts to consult the Buyer in connection with any such press release
      or
      other public disclosure prior to its release and Buyer shall be provided with
      a
      copy thereof upon release thereof).

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

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

     

    (l)  Termination.
      In the
      event that the Closing shall not have occurred with respect to the Buyers on
      or
      before five (5) business days from the date hereof due to the Company’s or the
      Buyer’s failure to satisfy the conditions set forth in Sections 6 and 7 above
      (and the non-breaching party’s failure to waive such unsatisfied condition(s)),
      the non-breaching party shall have the option to terminate this Agreement with
      respect to such breaching party at the close of business on such date without
      liability of any party to any other party.

     

    (m)  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.

     

    

    [REMAINDER
      PAGE INTENTIONALLY LEFT BLANK]

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

    

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

     

    

    
      	 	
              COMPANY:

            
	 	
              WHERIFY
                WIRELESS, INC. 

            
	 	 
	 	
              By:
                /s/
                Timothy J. Neher

            
	 	
              Name: Timothy
                J. Neher

            
	 	
              Title: Chief
                Executive Officer

            
	 	 

    

     

     

     

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

    

     

    SCHEDULE
      I

     

    SCHEDULE
      OF BUYERS 

    
 

    
      	
              Name

            	 	
              Signature

            	 	
              Address/Facsimile
                

              Number
                of Buyer

            	 	
              Amount
                of Subscription

            
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	
              Cornell
                Capital Partners, LP

            	 	
              By: Yorkville
                Advisors, LLC

            	 	
              101
                Hudson Street - Suite 3700

            	 	
              $5,000,000

            
	 	 	
              Its: General
                Partner

            	 	
              Jersey
                City, NJ 07303

            	 	 
	 	 	 	 	
              Facsimile: (201)
                985-8266

            	 	 
	 	 	 	 	 	 	 
	 	 	
              By:   

            	 	 	 	 
	 	 	
              Name: Mark
                Angelo

            	 	 	 	 
	 	 	
              Its: Portfolio
                Manager

            	 	 	 	 
	 	 	 	 	 	 	 
	
              With
                a copy to: 

            	 	
              David
                Gonzalez, Esq.

            	 	
              101
                Hudson Street - Suite 3700

            	 	 
	 	 	 	 	
              Jersey
                City, NJ 07302

            	 	 
	 	 	 	 	
              Facsimile:
                (201) 985-8266

            	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    DISCLOSURE
      SCHEDULE

    
 

     

    
      
        
        

      

      
        2STANDBY
        EQUITY DISTRIBUTION AGREEMENT

       

      THIS
        AGREEMENT
        dated as
        of the 10th day of March 2006 (the “Agreement”)
        between CORNELL
        CAPITAL PARTNERS, LP,
        a
        Delaware limited partnership (the “Investor”),
        and
WHERIFY
        WIRELESS, INC.,
        a
        corporation organized and existing under the laws of the State of Delaware
        (the
“Company”).

       

      WHEREAS,
        the
        parties desire that, upon the terms and subject to the conditions contained
        herein, the Company shall issue and sell to the Investor, from time to time
        as
        provided herein, and the Investor shall purchase from the Company up to Forty
        Million Dollars ($40,000,000) of the Company’s common stock, no par value
        (the “Common
        Stock”);
        and

       

      WHEREAS,
        such
        investments will be made in reliance upon the provisions of Regulation D
        (“Regulation
        D”)
        of the
        Securities Act of 1933, as amended, and the regulations promulgated thereunder
        (the “Securities
        Act”),
        and
        or upon such other exemption from the registration requirements of the
        Securities Act as may be available with respect to any or all of the investments
        to be made hereunder.

       

      WHEREAS,
        the
        Company has engaged Newbridge Securities Corporation (the “Placement
        Agent”),
        to
        act as the Company’s exclusive placement agent in connection with the sale of
        the Company’s Common Stock to the Investor hereunder pursuant to the Placement
        Agent Agreement dated the date hereof by and among the Company, the Placement
        Agent and the Investor (the “Placement
        Agent Agreement”).

       

      NOW,
        THEREFORE,
        the
        parties hereto agree as follows:

       

      ARTICLE
        I.

      Certain
        Definitions

       

      Section
        1.1.       “Advance”
shall
        mean the portion of the Commitment Amount requested by the Company in the
        Advance Notice.

       

      Section
        1.2.       “Advance
        Date”
shall
        mean the first (1st)
        Trading
        Day after expiration of the applicable Pricing Period for each
        Advance.

       

      Section
        1.3.       “Advance
        Notice”
shall
        mean a written notice in the form of Exhibit
        A
        attached
        hereto to the Investor executed by an officer of the Company and setting
        forth
        the Advance amount that the Company requests from the Investor.

       

      Section
        1.4.       “Advance
        Notice Date”
shall
        mean each date the Company delivers (in accordance with Section 2.2(b) of
        this
        Agreement) to the Investor an Advance Notice requiring the Investor to advance
        funds to the Company, subject to the terms of this Agreement. No Advance
        Notice
        Date shall be less than five (5) Trading Days after the prior Advance Notice
        Date.

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      Section
        1.5.       “Bid
        Price”
shall
        mean, on any date, the closing bid price (as reported by Bloomberg L.P.)
        of the
        Common Stock on the Principal Market or if the Common Stock is not traded
        on a
        Principal Market, the closing price for the Common Stock, as furnished by
        the
        National Association of Securities Dealers, Inc.

       

      Section
        1.6.       “Closing”
shall
        mean one of the closings of a purchase and sale of Common Stock pursuant
        to
        Section 2.3.

       

      Section
        1.7.       “Commitment
        Amount”
shall
        mean the aggregate amount of up to Forty Million Dollars ($40,000,000)
        which the Investor has agreed to provide to the Company in order to purchase
        the
        Company’s Common Stock pursuant to the terms and conditions of this
        Agreement.

       

      Section
        1.8.       “Commitment
        Period”
shall
        mean the period commencing on the earlier to occur of (i) the Effective Date,
        or
        (ii) such earlier date as the Company and the Investor may mutually agree
        in
        writing, and expiring on the earliest to occur of (x) the date on which the
        Investor shall have made payment of Advances pursuant to this Agreement in
        the
        aggregate amount of the Commitment Amount, (y) the date this Agreement is
        terminated pursuant to Section 10.2 or (z) the date occurring twenty-four
        (24)
        months after the Effective Date.

       

      Section
        1.9.       “Common
        Stock”
shall
        mean the Company’s common stock, par value $0.01 per share.

       

      Section
        1.10.       “Condition
        Satisfaction Date”
shall
        have the meaning set forth in Section 7.2.

       

      Section
        1.11.       “Damages”
shall
        mean any loss, claim, damage, liability, costs and expenses (including, without
        limitation, reasonable attorney’s fees and disbursements and costs and expenses
        of expert witnesses and investigation).

       

      Section
        1.12.       “Effective
        Date”
shall
        mean the date on which the SEC first declares effective a Registration Statement
        registering the resale of the Registrable Securities as set forth in Section
        7.2(a). 

       

      Section
        1.13.       Intentionally
        Omitted.

       

      Section
        1.14.       “Exchange
        Act”
shall
        mean the Securities Exchange Act of 1934, as amended, and the rules and
        regulations promulgated thereunder.

       

      Section
        1.15.       “Material
        Adverse Effect”
shall
        mean any condition, circumstance, or situation that would prohibit or otherwise
        materially interfere with the ability of the Company to enter into and perform
        any of its obligations under this Agreement or the Registration Rights Agreement
        in any material respect.

       

      Section
        1.16.       “Market
        Price”
shall
        mean the lowest daily VWAP of the Common Stock during the Pricing
        Period.

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      Section
        1.17.       “Maximum
        Advance Amount”
shall
        be One Million Dollars ($1,000,000) per Advance Notice. 

       

      Section
        1.18.       “NASD”
shall
        mean the National Association of Securities Dealers, Inc.

       

      Section
        1.19.       “Person”
shall
        mean an individual, a corporation, a partnership, an association, a trust
        or
        other entity or organization, including a government or political subdivision
        or
        an agency or instrumentality thereof.

       

      Section
        1.20.       “Placement
        Agent”
shall
        mean Newbridge Securities Corporation, a registered broker-dealer.

       

      Section
        1.21.       “Pricing
        Period”
shall
        mean the five (5) consecutive Trading Days after the Advance Notice Date,
        subject to any reduction pursuant to Section 2.2(c).

       

      Section
        1.22.       “Principal
        Market”
shall
        mean the Nasdaq National Market, the Nasdaq Capital Market, the American
        Stock
        Exchange, the OTC Bulletin Board or the New York Stock Exchange, whichever
        is at
        the time the principal trading exchange or market for the Common
        Stock.

       

      Section
        1.23.       “Purchase
        Price”
shall
        be set at ninety three percent (93%) of the Market Price during the Pricing
        Period.

       

      Section
        1.24.       “Registrable
        Securities”
shall
        mean the shares of Common Stock to be issued hereunder (i)
        in
        respect of which the Registration Statement has not been declared effective
        by
        the SEC, (ii) which have not been sold under circumstances meeting all of
        the
        applicable conditions of Rule 144 (or any similar provision then in force)
        under
        the Securities Act (“Rule
        144”)
        or
        (iii) which have not been otherwise transferred to a holder who may trade
        such
        shares without restriction under the Securities Act, and the Company has
        delivered a new certificate or other evidence of ownership for such securities
        not bearing a restrictive legend.

       

      Section
        1.25.       “Registration
        Rights Agreement”
shall
        mean the Registration Rights Agreement dated the date hereof, regarding the
        filing of the Registration Statement for the resale of the Registrable
        Securities, entered into between the Company and the Investor.

       

      Section
        1.26.       “Registration
        Statement”
shall
        mean a registration statement on Form S-1 or SB-2 (if use of such form is
        then
        available to the Company pursuant to the rules of the SEC and, if not, on
        such
        other form promulgated by the SEC for which the Company then qualifies and
        which
        counsel for the Company shall deem appropriate, and which form shall be
        available for the resale of the Registrable Securities to be registered
        thereunder in accordance with the provisions of this Agreement and the
        Registration Rights Agreement, and in accordance with the intended method
        of
        distribution of such securities), for the registration of the resale by the
        Investor of the Registrable Securities under the Securities Act.

       

      Section
        1.27.       “Regulation
        D”
shall
        have the meaning set forth in the recitals of this Agreement.

       

      Section
        1.28.       “SEC”
shall
        mean the United States Securities and Exchange Commission.

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

      Section
        1.29.       “Securities
        Act”
shall
        have the meaning set forth in the recitals of this Agreement.

       

      Section
        1.30.       “SEC
        Documents”
shall
        mean Annual Reports on Form 10-KSB, Quarterly Reports on Form 10-QSB, Current
        Reports on Form 8-K and Proxy Statements of the Company as supplemented to
        the
        date hereof, filed by the Company for a period of at least twelve (12) months
        immediately preceding the date hereof or the Advance Date, as the case may
        be,
        until such time as the Company no longer has an obligation to maintain the
        effectiveness of a Registration Statement as set forth in the Registration
        Rights Agreement.

       

      Section
        1.31.       “Trading
        Day”
shall
        mean any day during which the New York Stock Exchange shall be open for
        business.

       

      Section
        1.32.       “VWAP”
shall
        mean the volume weighted average price of the Company’s Common Stock as quoted
        by Bloomberg, LP.

       

      ARTICLE
        II.

      Advances

       

      Section
        2.1.       Advances.

       

      Subject
        to the terms and conditions of this Agreement (including, without limitation,
        the provisions of Article VII hereof), the Company, at its sole and exclusive
        option, may issue and sell to the Investor, and the Investor shall purchase
        from
        the Company, shares of the Company’s Common Stock by the delivery, in the
        Company’s sole discretion, of Advance Notices. The number of shares of Common
        Stock that the Investor shall purchase pursuant to each Advance shall be
        determined by dividing the amount of the Advance by the Purchase Price. No
        fractional shares shall be issued. Fractional shares shall be rounded to
        the
        next higher whole number of shares. The aggregate maximum amount of all Advances
        that the Investor shall be obligated to make under this Agreement shall not
        exceed the Commitment Amount.

       

      Section
        2.2.       Mechanics.

       

      (a)       Advance
        Notice.
        At any
        time during the Commitment Period, the Company may require the Investor to
        purchase shares of Common Stock by delivering an Advance Notice to the Investor,
        subject to the conditions set forth in Section 7.2; provided, however, the
        amount for each Advance as designated by the Company in the applicable Advance
        Notice shall not be more than the Maximum Advance Amount and the aggregate
        amount of the Advances pursuant to this Agreement shall not exceed the
        Commitment Amount. The Company acknowledges that the Investor may sell shares
        of
        the Company’s Common Stock corresponding with a particular Advance Notice after
        the Advance Notice is received by the Investor. There shall be a minimum
        of five
        (5) Trading Days between each Advance Notice Date.

       

      (b)       Date
        of Delivery of Advance Notice.
        An
        Advance Notice shall be deemed delivered on (i) the Trading Day it is received
        by facsimile or otherwise by the Investor if such notice is received prior
        to
        5:00 pm Eastern Time, or (ii) the immediately succeeding Trading Day if it
        is
        received by facsimile or otherwise after 5:00 pm Eastern Time on a Trading
        Day
        or at any time on a day which is not a Trading Day. No Advance Notice may
        be
        deemed delivered on a day that is not a Trading Day. 

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

       

      (c)       Minimum
        Acceptable Price.       The
        lowest Market Price of the Common Stock (before taking into account any discount
        used to calculate the Purchase Price) for any particular Advance (the
“Minimum
        Acceptable Price”)
        shall,
        in connection with each Advance Notice delivered by the Company, be equal
        to
        ninety-five percent (95%) of the Bid Price on the Trading Day immediately
        preceding the Advance Notice Date for such Advance Notice. Subject to the
        next
        sentence, upon the issuance by the Company of an Advance Notice along with
        a
        Minimum Acceptable Price, (i) the Company shall automatically reduce the
        amount
        of the Advance set forth in such Advance Notice by twenty percent (20%) for
        each
        Trading Day during the Pricing Period that the VWAP of the Common Stock is
        below
        the Minimum Acceptable Price (each such day, an “Excluded
        Day”),
        and
        (ii) each Excluded Day shall be excluded from the Pricing Period for purposes
        of
        determining the Market Price. The number of shares of Common Stock to be
        delivered to the Investor at the Closing (in accordance with Section 2.3
        of this
        Agreement) shall correspond with the Advance Notice amount as reduced pursuant
        to clause (i) above, except that the Company shall be obligated to sell,
        and the
        Investor shall be obligated to purchase any shares of Common Stock corresponding
        to such Advance Notice that have been sold by the Investor and such shares
        shall
        be priced at the greater
        of
        the
        Purchase Price or the applicable Minimum Acceptable Price. The Company, and
        only
        the Company, may waive the Minimum Acceptable Price with respect to any
        particular Advance Notice by providing the Investor with written notice of
        waiver on or prior to the Advance Notice Date. 

       

      
        Section
          2.3.       Closings.
          On each
          Advance Date (i) the Company shall deliver to the Investor such number
          of shares
          of the Common Stock registered in the name of the Investor as shall equal
          (x)
          the amount of the Advance specified in such Advance Notice divided by (y)
          the
          Purchase Price and (ii) upon receipt of such shares, the Investor shall
          deliver
          to the Company the amount of the Advance specified in the Advance Notice
          by wire
          transfer of immediately available funds. In addition, on or prior to the
          Advance
          Date, each of the Company and the Investor shall deliver to the other all
          documents, instruments and writings required to be delivered by either
          of them
          pursuant to this Agreement in order to implement and effect the transactions
          contemplated herein. To the extent the Company has not paid the fees, expenses,
          and disbursements of the Investor in accordance with Section 12.4, the
          amount of
          such fees, expenses, and disbursements may be deducted by the Investor
          (and
          shall be paid to the relevant party) directly out of the proceeds of the
          Advance
          with no reduction in the amount of shares of the Company’s Common Stock to be
          delivered on such Advance Date. 

         

        (a)    Company’s
          Obligations Upon Closing.

         

        (i)       The
          Company shall deliver to the Investor the shares of Common Stock applicable
          to
          the Advance in accordance with Section 2.3. The certificates evidencing
          such
          shares shall be free of restrictive legends;

         

      

      (ii)       the
        Company’s Registration Statement with respect to the resale of the shares of
        Common Stock delivered in connection with the Advance shall have been declared
        effective by the SEC;

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

      (iii)       the
        Company shall have obtained all material permits and qualifications required
        by
        any applicable state for the offer and sale of the Registrable Securities,
        or
        shall have the availability of exemptions therefrom. The sale and issuance
        of
        the Registrable Securities shall be legally permitted by all laws and
        regulations to which the Company is subject; 

       

      (iv)       the
        Company shall have filed with the SEC in a timely manner all reports, notices
        and other documents required of a “reporting company” under the Exchange Act and
        applicable Commission regulations;

       

      (v)       the
        fees as set forth in Section 12.4 below shall have been paid or can be withheld
        as provided in Section 2.3; and

       

      (vi)       The
        Company’s transfer agent shall be DWAC eligible.

       

      (b)       Investor’s
        Obligations Upon Closing.              Upon
        receipt of the shares referenced in Section 2.3(a)(i) above and provided
        the
        Company is in compliance with its obligations in Section 2.3, the Investor
        shall
        deliver to the Company the amount of the Advance specified in the Advance
        Notice
        by wire transfer of immediately available funds. 

       

      Section
        2.4.       Lock
        Up Period.
        On the
        date hereof, the Company shall obtain from Timothy J. Neher and Douglas Hajjar
        a
        lock-up agreement, in the form annexed hereto as Schedule 2.4.

       

      Section
        2.5.       Hardship.
        In the
        event the Investor sells shares of the Company’s Common Stock after receipt of
        an Advance Notice and the Company fails to perform its obligations as mandated
        in Section 2.3, and specifically the Company fails to deliver to the Investor
        on
        the Advance Date the shares of Common Stock corresponding to the applicable
        Advance pursuant to Section 2.3(a)(i), the Company acknowledges that the
        Investor shall suffer financial hardship and therefore shall be liable for
        any
        and all losses, commissions, fees, or financial hardship caused to the
        Investor.

       

      ARTICLE
        III.

      Representations
        and Warranties of Investor

       

      Investor
        hereby represents and warrants to, and agrees with, the Company that the
        following are true and correct as of the date hereof and as of each Advance
        Date:

       

      Section
        3.1.       Organization
        and Authorization.
        The
        Investor is duly incorporated or organized and validly existing in the
        jurisdiction of its incorporation or organization and has all requisite power
        and authority to purchase and hold the securities issuable hereunder. The
        decision to invest and the execution and delivery of this Agreement by such
        Investor, the performance by such Investor of its obligations hereunder and
        the
        consummation by such Investor of the transactions contemplated hereby have
        been
        duly authorized and requires no other proceedings on the part of the Investor.
        The undersigned has the right, power and authority to execute and deliver
        this
        Agreement and all other instruments (including, without limitations, the
        Registration Rights Agreement), on behalf of the Investor. This Agreement
        has
        been duly executed and delivered by the Investor and, assuming the execution
        and
        delivery hereof and acceptance thereof by the Company, will constitute the
        legal, valid and binding obligations of the Investor, enforceable against
        the
        Investor in accordance with its terms.

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

       

      Section
        3.2.       Evaluation
        of Risks.
        The
        Investor has such knowledge and experience in financial, tax and business
        matters as to be capable of evaluating the merits and risks of, and bearing
        the
        economic risks entailed by, an investment in the Company and of protecting
        its
        interests in connection with this transaction. It recognizes that its investment
        in the Company involves a high degree of risk. The Investor has the financial
        ability to bear the economic risk of the investment and has no need for
        liquidity with respect to the Investor's investment in the Company.

       

      Section
        3.3.       No
        Legal Advice From the Company.
        The
        Investor acknowledges that it had the opportunity to review this Agreement
        and
        the transactions contemplated by this Agreement with his or its own legal
        counsel and investment and tax advisors. The Investor is relying solely on
        such
        counsel and advisors and not on any statements or representations of the
        Company
        or any of its representatives or agents for legal, tax or investment advice
        with
        respect to this investment, the transactions contemplated by this Agreement
        or
        the securities laws of any jurisdiction.

       

      Section
        3.4.       Investment
        Purpose.
        The
        securities are being purchased by the Investor for its own account, and for
        investment purposes. The Investor agrees not to assign or in any way transfer
        the Investor’s rights to the securities or any interest therein and acknowledges
        that the Company will not recognize any purported assignment or transfer
        except
        in accordance with applicable Federal and state securities laws. No other
        person
        has or will have a direct or indirect beneficial interest in the securities.
        The
        Investor agrees not to sell, hypothecate or otherwise transfer the Investor’s
        securities unless the securities are registered under Federal and applicable
        state securities laws or unless, in the opinion of counsel satisfactory to
        the
        Company, an exemption from such laws is available.

       

      Section
        3.5.       Accredited
        Investor.
        The
        Investor is an “Accredited
        Investor”
as
        that
        term is defined in Rule 501(a)(3) of Regulation D of the Securities
        Act.

       

      Section
        3.6.       Information.
        The
        Investor and its advisors (and its counsel), if any, have been furnished
        with
        all materials relating to the business, finances and operations of the Company
        and information it deemed material to making an informed investment decision.
        The Investor and its advisors, if any, have been afforded the opportunity
        to ask
        questions of the Company and its management. Neither such inquiries nor any
        other due diligence investigations conducted by such Investor or its advisors,
        if any, or its representatives shall modify, amend or affect the Investor’s
        right to rely on the Company’s representations and warranties contained in this
        Agreement. The Investor understands that its investment involves a high degree
        of risk. The Investor is in a position regarding the Company, which, based
        upon
        employment, family relationship or economic bargaining power, enabled and
        enables such Investor to obtain information from the Company in order to
        evaluate the merits and risks of this investment. The Investor has sought
        such
        accounting, legal and tax advice, as it has considered necessary to make
        an
        informed investment decision with respect to this transaction.

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

       

      Section
        3.7.       Receipt
        of Documents.
        The
        Investor and its counsel have received and read in their entirety: (i) this
        Agreement and the Exhibits annexed hereto; (ii) all due diligence and other
        information necessary to verify the accuracy and completeness of such
        representations, warranties and covenants; (iii) the Company’s Form 10-KSB for
        the year ended June 30, 2005 and Form 10-QSB for the period ended September
        30,
        2005; and (iv) answers to all questions the Investor submitted to the
        Company regarding an investment in the Company; and the Investor has relied
        on
        the information contained therein and has not been furnished any other
        documents, literature, memorandum or prospectus. 

       

      Section
        3.8.       Registration
        Rights Agreement.
        The
        parties have entered into the Registration Rights Agreement dated the date
        hereof.

       

      Section
        3.9.       No
        General Solicitation.
        Neither
        the Company, nor any of its affiliates, nor any person acting on its or their
        behalf, has engaged in any form of general solicitation or general advertising
        (within the meaning of Regulation D under the Securities Act) in connection
        with
        the offer or sale of the shares of Common Stock offered hereby.

       

      Section
        3.10.       Not
        an
        Affiliate.
        The
        Investor is not an officer, director or a person that directly, or indirectly
        through one or more intermediaries, controls or is controlled by, or is under
        common control with the Company or any “Affiliate”
of
        the
        Company (as that term is defined in Rule 405 of the Securities Act).

       

      Section
        3.11.       Trading
        Activities.
        The
        Investor’s trading activities with respect to the Company’s Common Stock shall
        be in compliance with all applicable federal and state securities laws, rules
        and regulations and the rules and regulations of the Principal Market on
        which
        the Company’s Common Stock is listed or traded. Neither
        the Investor nor its affiliates has an open short position in the Common
        Stock
        of the Company, the Investor agrees 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 provided
        that the
        Company acknowledges and agrees that upon receipt of an Advance Notice the
        Investor has the right to sell the shares to be issued to the Investor pursuant
        to the Advance Notice
        during
        the applicable Pricing Period. 

       

      ARTICLE
        IV.

      Representations
        and Warranties of the Company

      

      Except
        as
        stated below, on the disclosure schedules attached hereto or in the SEC
        Documents (as defined herein), the Company hereby represents and warrants
        to,
        and covenants with, the Investor that the following are true and correct
        as of
        the date hereof:

       

      Section
        4.1.       Organization
        and Qualification.
        The
        Company is duly incorporated or organized and validly existing in the
        jurisdiction of its incorporation or organization and has all requisite
        corporate power to own its properties and to carry on its business as now
        being
        conducted. Each of the Company and its subsidiaries is duly qualified as
        a
        foreign corporation to do business and is in good standing in every jurisdiction
        in which the nature of the business conducted by it makes such qualification
        necessary, except to the extent that the failure to be so qualified or be
        in
        good standing would not have a Material Adverse Effect on the Company and
        its
        subsidiaries taken as a whole.

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

       

      Section
        4.2.       Authorization,
        Enforcement, Compliance with Other Instruments.
        (i) The
        Company has the requisite corporate power and authority to enter into and
        perform this Agreement, the Registration Rights Agreement, the Placement
        Agent
        Agreement and any related agreements, in accordance with the terms hereof
        and
        thereof, (ii) the execution and delivery of this Agreement, the Registration
        Rights Agreement, the Placement Agent Agreement and any related agreements
        by
        the Company and the consummation by it of the transactions contemplated hereby
        and thereby, have been duly authorized by the Company’s Board of Directors and
        no further consent or authorization is required by the Company, its Board
        of
        Directors or its stockholders, (iii) this Agreement, the Registration
        Rights Agreement, the Placement Agent Agreement and any related agreements
        have
        been duly executed and delivered by the Company, (iv) this Agreement, the
        Registration Rights Agreement, the Placement Agent Agreement and assuming
        the
        execution and delivery thereof and acceptance by the Investor and any related
        agreements constitute the valid and binding obligations of the Company
        enforceable against the Company in accordance with their terms, except as
        such
        enforceability may be limited by general principles of equity or applicable
        bankruptcy, insolvency, reorganization, moratorium, liquidation or similar
        laws
        relating to, or affecting generally, the enforcement of creditors’ rights and
        remedies.

       

      Section
        4.3.       Capitalization.
        As of
        the date hereof, the authorized capital stock of the Company consists of
        100,000,000 shares of Common Stock and 10,000,000 shares of Preferred Stock,
        (“Preferred
        Stock”),
        of
        which 55,247,133 shares of Common Stock and no shares of Preferred Stock
        are
        issued and outstanding. All of such outstanding shares have been validly
        issued
        and are fully paid and nonassessable. Except as disclosed in the SEC Documents,
        no shares of Common Stock are subject to preemptive rights or any other similar
        rights or any liens or encumbrances suffered or permitted by the Company.
        Except
        as disclosed in the SEC Documents, as of the date hereof, (i) there are no
        outstanding options, warrants, scrip, rights to subscribe to, calls or
        commitments of any character whatsoever relating to, or securities or rights
        convertible into, any shares of capital stock of the Company or any of its
        subsidiaries, or contracts, commitments, understandings or arrangements by
        which
        the Company or any of its subsidiaries is or may become bound to issue
        additional shares of capital stock of the Company or any of its subsidiaries
        or
        options, warrants, scrip, rights to subscribe to, calls or commitments of
        any
        character whatsoever relating to, or securities or rights convertible into,
        any
        shares of capital stock of the Company or any of its subsidiaries, (ii) there
        are no outstanding debt securities (iii) there
        are no outstanding registration statements other than on Form S-8 and (iv)
        there
        are no agreements or arrangements under which the Company or any of its
        subsidiaries is obligated to register the sale of any of their securities
        under
        the Securities Act (except pursuant to the Registration Rights Agreement).
        There
        are no securities or instruments containing anti-dilution or similar provisions
        that will be triggered by this Agreement or any related agreement or the
        consummation of the transactions described herein or therein. The Company
        has
        furnished to the Investor true and correct copies of the Company’s Certificate
        of Incorporation, as amended and as in effect on the date hereof (the
“Certificate
        of Incorporation”),
        and
        the Company’s 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
        and
        the material rights of the holders thereof in respect thereto.

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

       

      Section
        4.4.       No
        Conflict.
        The
        execution, delivery and performance of this Agreement by the Company and
        the
        consummation by the Company of the transactions contemplated hereby will
        not (i)
        result in a violation of the Certificate of Incorporation, any certificate
        of
        designations of any outstanding series of preferred stock of the Company
        or
        By-laws or (ii) conflict with or constitute a default (or an event which
        with
        notice or lapse of time or both would become a default) under, or give to
        others
        any rights of termination, amendment, acceleration or cancellation of, any
        agreement, indenture or instrument to which the Company or any of its
        subsidiaries is a party, or result in a violation of any law, rule, regulation,
        order, judgment or decree (including federal and state securities laws and
        regulations and the rules and regulations of the Principal Market on which
        the
        Common Stock is quoted) applicable to the Company or any of its subsidiaries
        or
        by which any material property or asset of the Company or any of its
        subsidiaries is bound or affected and which would cause a Material Adverse
        Effect. Except as disclosed in the SEC Documents, neither the Company nor
        its
        subsidiaries is in violation of any term of or in default under its Articles
        of
        Incorporation or By-laws or their organizational charter or by-laws,
        respectively, or any material contract, agreement, mortgage, indebtedness,
        indenture, instrument, judgment, decree or order or any statute, rule or
        regulation applicable to the Company or its subsidiaries. The business of
        the
        Company and its subsidiaries is not being conducted in violation of any material
        law, ordinance, regulation of any governmental entity. Except as specifically
        contemplated by this Agreement and as required under the Securities 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 or governmental agency in order for it to execute, deliver or perform
        any
        of its obligations under or contemplated by this Agreement or the Registration
        Rights Agreement in accordance with the terms hereof or thereof. All consents,
        authorizations, orders, filings and registrations which the Company is required
        to obtain pursuant to the preceding sentence have been obtained or effected
        on
        or prior to the date hereof. The Company and its subsidiaries are unaware
        of any
        fact or circumstance which might give rise to any of the foregoing.

       

      Section
        4.5.       SEC
        Documents; Financial Statements.
        The
        Company has filed all reports, schedules, forms, statements and other documents
        required to be filed by it with the SEC under the Exchange Act since January
        1,
        2003. The Company has delivered to the Investor or its representatives, or
        made
        available through the SEC’s website at http://www.sec.gov, true and complete
        copies of the SEC Documents. As of their respective dates, the financial
        statements of the Company disclosed in the SEC Documents (the “Financial
        Statements”)
        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
        generally accepted accounting principles, consistently applied, during the
        periods involved (except (i) as may be otherwise indicated in such financial
        statements or the notes thereto, or (ii) in the case of unaudited interim
        statements, to the extent they may exclude footnotes or may be condensed
        or
        summary statements) and, fairly present in all material respects the financial
        position of the Company as of the dates thereof and the results of its
        operations and cash flows for the periods then ended (subject, in the case
        of
        unaudited statements, to normal year-end audit adjustments). No other
        information provided by or on behalf of the Company to the Investor which
        is not
        included in the SEC Documents contains any untrue statement of a material
        fact
        or omits to state any material fact necessary in order to make the statements
        therein, in the light of the circumstances under which they were made, not
        misleading.

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

      Section
        4.6.       10b-5.
        The SEC
        Documents do not include any untrue statements of material fact, nor do they
        omit to state any material fact required to be stated therein necessary to
        make
        the statements made, in light of the circumstances under which they were
        made,
        not misleading.

       

      Section
        4.7.       No
        Default.
        Except
        as disclosed in the SEC Documents, the Company is not in default in the
        performance or observance of any material obligation, agreement, covenant
        or
        condition contained in any indenture, mortgage, deed of trust or other material
        instrument or agreement to which it is a party or by which it is or its property
        is bound and neither the execution, nor the delivery by the Company, nor
        the
        performance by the Company of its obligations under this Agreement or any
        of the
        exhibits or attachments hereto will conflict with or result in the breach
        or
        violation of any of the terms or provisions of, or constitute a default or
        result in the creation or imposition of any lien or charge on any assets
        or
        properties of the Company under its Certificate of Incorporation, By-Laws,
        any
        material indenture, mortgage, deed of trust or other material agreement
        applicable to the Company or instrument to which the Company is a party or
        by
        which it is bound, or any statute, or any decree, judgment, order, rules
        or
        regulation of any court or governmental agency or body having jurisdiction
        over
        the Company or its properties, in each case which default, lien or charge
        is
        likely to cause a Material Adverse Effect on the Company’s business or financial
        condition.

       

      Section
        4.8.       Absence
        of Events of Default.
        Except
        for matters described in the SEC Documents and/or this Agreement, no Event
        of
        Default, as defined in the respective agreement to which the Company is a
        party,
        and no event which, with the giving of notice or the passage of time or both,
        would become an Event of Default (as so defined), has occurred and is
        continuing, which would have a Material Adverse Effect on the Company’s
        business, properties, prospects, financial condition or results of
        operations.

       

      Section
        4.9.       Intellectual
        Property Rights.
        The
        Company and its subsidiaries own or possess adequate rights or licenses to
        use
        all material trademarks, trade names, service marks, service mark registrations,
        service names, patents, patent rights, copyrights, inventions, licenses,
        approvals, governmental authorizations, trade secrets and rights necessary
        to
        conduct their respective businesses as now conducted. The Company and its
        subsidiaries do not have any knowledge of any infringement by the Company
        or its
        subsidiaries of trademark, trade name rights, patents, patent rights,
        copyrights, inventions, licenses, service names, service marks, service mark
        registrations, trade secret or other similar rights of others, and, to the
        knowledge of the Company, there is no claim, action or proceeding being made
        or
        brought against, or to the Company’s knowledge, being threatened against, the
        Company or its subsidiaries regarding trademark, trade name, patents, patent
        rights, invention, copyright, license, service names, service marks, service
        mark registrations, trade secret or other infringement; and the Company and
        its
        subsidiaries are unaware of any facts or circumstances which might give rise
        to
        any of the foregoing. 

       

      Section
        4.10.       Employee
        Relations.
        Neither
        the Company nor any of its subsidiaries is involved in any labor dispute
        nor, to
        the knowledge of the Company or any of its subsidiaries, is any such dispute
        threatened. None of the Company’s or its subsidiaries’ employees is a member of
        a union and the Company and its subsidiaries believe that their relations
        with
        their employees are good.

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

       

      Section
        4.11.       Environmental
        Laws.
        The
        Company and its subsidiaries are (i) in compliance with any and all applicable
        material foreign, federal, state and local laws and regulations relating
        to the
        protection of human health and safety, the environment or hazardous or toxic
        substances or wastes, pollutants or contaminants (“Environmental
        Laws”),
        (ii)
        have received all permits, licenses or other approvals required of them under
        applicable Environmental Laws to conduct their respective businesses and
        (iii)
        are in compliance with all terms and conditions of any such permit, license
        or
        approval.

       

      Section
        4.12.       Title.
        Except
        as set forth in the SEC Documents, the Company has good and marketable title
        to
        its properties and material assets owned by it, free and clear of any pledge,
        lien, security interest, encumbrance, claim or equitable interest other than
        such as are not material to the business of the Company. 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 are
        not
        material and do not interfere with the use made and proposed to be made of
        such
        property and buildings by the Company and its subsidiaries.

       

      Section
        4.13.       Insurance.
        The
        Company and each of its subsidiaries are insured by insurers of recognized
        financial responsibility against such losses and risks and in such amounts
        as
        management of the Company believes to be prudent and customary in the businesses
        in which the Company and its subsidiaries are engaged. Neither the Company
        nor
        any such subsidiary has been refused any insurance coverage sought or applied
        for and neither the Company nor any such subsidiary has any reason to believe
        that it will not be able to renew its existing insurance coverage as and
        when
        such coverage expires or to obtain similar coverage from similar insurers
        as may
        be necessary to continue its business at a cost that would not materially
        and
        adversely affect the condition, financial or otherwise, or the earnings,
        business or operations of the Company and its subsidiaries, taken as a
        whole.

       

      Section
        4.14.       Regulatory
        Permits.
        The
        Company and its subsidiaries possess all material certificates, authorizations
        and permits issued by the appropriate federal, state or foreign regulatory
        authorities necessary to conduct their respective businesses, and neither
        the
        Company nor any such subsidiary has received any notice of proceedings relating
        to the revocation or modification of any such certificate, authorization
        or
        permit.

       

      Section
        4.15.       Internal
        Accounting Controls.
        Except
        as disclosed in the SEC Documents, the Company and each of its subsidiaries
        maintain a system of internal accounting controls sufficient to provide
        reasonable assurance that (i) transactions are executed in accordance with
        management’s general or specific authorizations, (ii) transactions are recorded
        as necessary to permit preparation of financial statements in conformity
        with
        generally accepted accounting principles and to maintain asset 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.

       

      Section
        4.16.       No
        Material Adverse Breaches, etc.
        Except
        as set forth in the SEC Documents, 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 on the business, properties, operations, financial condition, results
        of
        operations or prospects of the Company or its subsidiaries. Except as set
        forth
        in the SEC Documents, neither the Company nor any of its subsidiaries is
        in
        breach of any contract or agreement which breach, in the judgment of the
        Company’s officers, has or is expected to have a Material Adverse Effect on the
        business, properties, operations, financial condition, results of operations
        or
        prospects of the Company or its subsidiaries.

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

       

      Section
        4.17.       Absence
        of Litigation.
        Except
        as set forth in the SEC Documents, there is no action, suit, proceeding,
        inquiry
        or investigation before or by any court, public board, government agency,
        self-regulatory organization or body pending against or affecting the Company,
        the Common Stock or any of the Company’s subsidiaries, wherein an unfavorable
        decision, ruling or finding would (i) have a Material Adverse Effect on the
        transactions contemplated hereby (ii) adversely affect the validity or
        enforceability of, or the authority or ability of the Company to perform
        its
        obligations under, this Agreement or any of the documents contemplated herein,
        or (iii) except as expressly disclosed in the SEC Documents, have a Material
        Adverse Effect on the business, operations, properties, financial condition
        or
        results of operation of the Company and its subsidiaries taken as a
        whole.

       

      Section
        4.18.       Subsidiaries.
        Except
        as disclosed in the SEC Documents, the Company does not presently own or
        control, directly or indirectly, any interest in any other corporation,
        partnership, association or other business entity.

       

      Section
        4.19.       Tax
        Status.
        Except
        as disclosed in the SEC Documents, the Company and each of its subsidiaries
        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. To the best of
        the
        Company’s knowledge, 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.

       

      Section
        4.20.       Certain
        Transactions.
        Except
        as set forth in the SEC Documents none of the officers, directors, or employees
        of the Company is presently a party to any transaction with the Company (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.

       

      Section
        4.21.       Fees
        and Rights of First Refusal.
        The
        Company is not obligated to offer the securities offered hereunder on a right
        of
        first refusal basis or otherwise to any third parties including, but not
        limited
        to, current or former shareholders of the Company, underwriters, brokers,
        agents
        or other third parties.

       

      Section
        4.22.       Use
        of
        Proceeds.
        The
        Company shall use the net proceeds from this offering for general corporate
        purposes, including, without limitation, the payment of loans incurred by
        the
        Company. However, in no event shall the Company use the net proceeds from
        this
        offering for the payment (or loan to any such person for the payment) of
        any
        judgment, or other liability, incurred by any executive officer, officer,
        director or employee of the Company, except for any liability owed to such
        person for services rendered, or if any judgment or other liability is incurred
        by such person originating from services rendered to the Company, or the
        Company
        has indemnified such person from liability.

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

       

      Section
        4.23.       Further
        Representation and Warranties of the Company.
        For so
        long as any securities issuable hereunder held by the Investor remain
        outstanding, the Company acknowledges, represents, warrants and agrees that
        it
        will maintain the listing of its Common Stock on the Principal
        Market.

       

      Section
        4.24.       Dilution.
        The
        Company is aware and acknowledges that issuance of shares of the Company’s
        Common Stock could cause dilution to existing shareholders and could
        significantly increase the outstanding number of shares of Common Stock.
        

       

      ARTICLE
        V.

      Indemnification

      

      The
        Investor and the Company represent to the other the following with respect
        to
        itself:

       

      Section
        5.1.       Indemnification.

       

      (a)       In
        consideration of the Investor’s execution and delivery of this Agreement, and in
        addition to all of the Company’s other obligations under this Agreement, the
        Company shall defend, protect, indemnify and hold harmless the Investor,
        and all
        of its officers, directors, partners, employees and agents (including, without
        limitation, those retained in connection with the transactions contemplated
        by
        this Agreement) (collectively, the “Investor
        Indemnitees”)
        from
        and against any and all actions, causes of action, suits, claims, losses,
        costs,
        penalties, fees, liabilities and damages, and expenses in connection therewith
        (irrespective of whether any such Investor Indemnitee is a party to the action
        for which indemnification hereunder is sought), and including reasonable
        attorneys’ fees and disbursements (the “Indemnified
        Liabilities”),
        incurred by the Investor Indemnitees or any of them as a result of, or arising
        out of, or relating to (a) any misrepresentation or breach of any representation
        or warranty made by the Company in this Agreement or the Registration Rights
        Agreement or any other certificate, instrument or document contemplated hereby
        or thereby, (b) any breach of any covenant, agreement or obligation of the
        Company contained in this Agreement or the Registration Rights Agreement
        or any
        other certificate, instrument or document contemplated hereby or thereby,
        or (c)
        any cause of action, suit or claim brought or made against such Investor
        Indemnitee not arising out of any action or inaction of an Investor Indemnitee,
        and arising out of or resulting from the execution, delivery, performance
        or
        enforcement of this Agreement or any other instrument, document or agreement
        executed pursuant hereto by any of the Investor Indemnitees. To the extent
        that
        the foregoing undertaking by the Company may be unenforceable for any reason,
        the Company shall make the maximum contribution to the payment and satisfaction
        of each of the Indemnified Liabilities, which is permissible under applicable
        law.

      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

       

      (b)       In
        consideration of the Company’s execution and delivery of this Agreement, and in
        addition to all of the Investor’s other obligations under this Agreement, the
        Investor shall defend, protect, indemnify and hold harmless the Company and
        all
        of its officers, directors, shareholders, employees and agents (including,
        without limitation, those retained in connection with the transactions
        contemplated by this Agreement) (collectively, the “Company
        Indemnitees”)
        from
        and against any and all Indemnified Liabilities incurred by the Company
        Indemnitees or any of them as a result of, or arising out of, or relating
        to (a)
        any misrepresentation or breach of any representation or warranty made by
        the
        Investor in this Agreement, the Registration Rights Agreement, or any instrument
        or document contemplated hereby or thereby executed by the Investor, (b)
        any
        breach of any covenant, agreement or obligation of the Investor(s) contained
        in
        this Agreement, the Registration Rights Agreement or any other certificate,
        instrument or document contemplated hereby or thereby executed by the Investor,
        or (c) any cause of action, suit or claim brought or made against such Company
        Indemnitee based on misrepresentations or due to a breach by the Investor
        and
        arising out of or resulting from the execution, delivery, performance or
        enforcement of this Agreement or any other instrument, document or agreement
        executed pursuant hereto by any of the Company Indemnitees. To the extent
        that
        the foregoing undertaking by the Investor may be unenforceable for any reason,
        the Investor shall make the maximum contribution to the payment and satisfaction
        of each of the Indemnified Liabilities, which is permissible under applicable
        law.

       

      (c)       The
        obligations of the parties to indemnify or make contribution under this Section
        5.1 shall survive termination.

       

      ARTICLE
        VI.

      Covenants
        of the Company

      

      Section
        6.1.       Registration
        Rights.
        The
        Company shall cause the Registration Rights Agreement to remain in full force
        and effect and the Company shall comply in all material respects with the
        terms
        thereof.

       

      Section
        6.2.       Listing
        of Common Stock.
        The
        Company shall maintain the Common Stock’s authorization for quotation on the
        Principal Market. 

       

      Section
        6.3.       Exchange
        Act Registration.
        The
        Company will cause its Common Stock to continue to be registered under Section
        12(g) of the Exchange Act, will file in a timely manner all reports and other
        documents required of it as a reporting company under the Exchange Act and
        will
        not take any action or file any document (whether or not permitted by Exchange
        Act or the rules thereunder) to terminate or suspend such registration or
        to
        terminate or suspend its reporting and filing obligations under said Exchange
        Act.

       

      Section
        6.4.       Transfer
        Agent Instructions.
        Upon
        effectiveness of the Registration Statement the Company shall deliver
        instructions to its transfer agent to issue shares of Common Stock to the
        Investor free of restrictive legends on or before each Advance
        Date.

       

      Section
        6.5.       Corporate
        Existence.
        The
        Company will take all steps necessary to preserve and continue the corporate
        existence of the Company.

       

      Section
        6.6.       Notice
        of Certain Events Affecting Registration; Suspension of Right to Make an
        Advance.
        The
        Company will immediately notify the Investor upon its becoming aware of the
        occurrence of any of the following events in respect of a registration statement
        or related prospectus relating to an offering of Registrable Securities:
        (i)
        receipt of any request for additional information by the SEC or any other
        Federal or state governmental authority during the period of effectiveness
        of
        the Registration Statement for amendments or supplements to the registration
        statement or related prospectus; (ii) the issuance by the SEC or any other
        Federal or state governmental authority of any stop order suspending the
        effectiveness of the Registration Statement or the initiation of any proceedings
        for that purpose; (iii) receipt of any notification with respect to the
        suspension of the qualification or exemption from qualification of any of
        the
        Registrable Securities for sale in any jurisdiction or the initiation or
        threatening of any proceeding for such purpose; (iv) the happening of any
        event
        that makes any statement made in the Registration Statement or related
        prospectus of any document incorporated or deemed to be incorporated therein
        by
        reference untrue in any material respect or that requires the making of any
        changes in the Registration Statement, related prospectus or documents so
        that,
        in the case of the Registration Statement, it will not contain any untrue
        statement of a material fact or omit to state any material fact required
        to be
        stated therein or necessary to make the statements therein not misleading,
        and
        that in the case of the related prospectus, it will not contain any untrue
        statement of a material fact or omit to state any material fact required
        to be
        stated therein or necessary to make the statements therein, in the light
        of the
        circumstances under which they were made, not misleading; and (v) the Company’s
        reasonable determination that a post-effective amendment to the Registration
        Statement would be appropriate; and the Company will promptly make available
        to
        the Investor any such supplement or amendment to the related prospectus.
        The
        Company shall not deliver to the Investor any Advance Notice during the
        continuation of any of the foregoing events.

      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

      

       

      Section
        6.7.       Reserved.
        

       

      Section
        6.8.       Consolidation;
        Merger.
        The
        Company shall not, at any time after the date hereof, effect any merger or
        consolidation of the Company with or into, or a transfer of all or substantially
        all the assets of the Company to another entity (a “Consolidation
        Event”)
        unless
        the resulting successor or acquiring entity (if not the Company) assumes
        by
        written instrument the obligation to deliver to the Investor such shares
        of
        stock and/or securities as the Investor is entitled to receive pursuant to
        this
        Agreement.

       

      Section
        6.9.       Issuance
        of the Company’s Common Stock.
        The sale
        of the shares of Common Stock shall be made in accordance with the provisions
        and requirements of Regulation D and any applicable state securities
        law.

       

      Section
        6.10.       Review
        of Public Disclosures.
        All SEC
        filings (including, without limitation, all filings required under the Exchange
        Act, which include Forms 10-Q and 10-QSB, 10-K and 10K-SB, 8-K, etc) and
        other
        public disclosures made by the Company, including, without limitation, all
        press
        releases, investor relations materials, and scripts of analysts meetings
        and
        calls, shall be reviewed and approved for release by the Company’s attorneys
        and, if containing financial information, the Company’s independent certified
        public accountants. 

       

      Section
        6.11.       Market
        Activities.       The
        Company will not, directly or indirectly, take any action designed to cause
        or
        result in, or that constitutes or might reasonably be expected to constitute,
        the stabilization or manipulation of the price of any security of the Company
        to
        facilitate the sale or resale of the Common Stock.

      
        
          
          

        

        
          16

          
            

          

        

        
          
          

        

      

       

      ARTICLE
        VII.

      Conditions
        for Advance and Conditions to Closing

      

      Section
        7.1.       Conditions
        Precedent to the Obligations of the Company.
        The
        obligation hereunder of the Company to issue and sell the shares of Common
        Stock
        to the Investor incident to each Closing is subject to the satisfaction,
        or
        waiver by the Company, at or before each such Closing, of each of the conditions
        set forth below.

       

      (a)       Accuracy
        of the Investor’s Representations and Warranties.
        The
        representations and warranties of the Investor shall be true and correct
        in all
        material respects.

       

      (b)       Performance
        by the Investor.
        The
        Investor shall have performed, satisfied and complied in all respects with
        all
        covenants, agreements and conditions required by this Agreement and the
        Registration Rights Agreement to be performed, satisfied or complied with
        by the
        Investor at or prior to such Closing.

       

      Section
        7.2.       Conditions
        Precedent to the Right of the Company to Deliver an Advance
        Notice.
        The
        right of the Company to deliver an Advance Notice is subject to the fulfillment
        by the Company, on such Advance Notice Date (a “Condition
        Satisfaction Date”),
        of
        each of the following conditions:

       

      (a)       Registration
        of the Common Stock with the SEC.
        The
        Company shall have filed with the SEC a Registration Statement with respect
        to
        the resale of the Registrable Securities in accordance with the terms of
        the
        Registration Rights Agreement. As set forth in the Registration Rights
        Agreement, the Registration Statement shall have previously become effective
        and
        shall remain effective on each Condition Satisfaction Date and (i) neither
        the
        Company nor the Investor shall have received notice that the SEC has issued
        or
        intends to issue a stop order with respect to the Registration Statement
        or that
        the SEC otherwise has suspended or withdrawn the effectiveness of the
        Registration Statement, either temporarily or permanently, or intends or
        has
        threatened to do so (unless the SEC’s concerns have been addressed and the
        Investor is reasonably satisfied that the SEC no longer is considering or
        intends to take such action), and (ii) no other suspension of the use or
        withdrawal of the effectiveness of the Registration Statement or related
        prospectus shall exist. The Registration Statement must have been declared
        effective by the SEC prior to the first Advance Notice Date.

       

      (b)       Authority.
        The
        Company shall have obtained all permits and qualifications required by any
        applicable state in accordance with the Registration Rights Agreement for
        the
        offer and sale of the shares of Common Stock, or shall have the availability
        of
        exemptions therefrom. The sale and issuance of the shares of Common Stock
        shall
        be legally permitted by all laws and regulations to which the Company is
        subject.

       

      (c)       Fundamental
        Changes.
        There
        shall not exist any fundamental changes to the information set forth in the
        Registration Statement which would require the Company to file a post-effective
        amendment to the Registration Statement. 

       

      (d)       Performance
        by the Company.
        The
        Company shall have performed, satisfied and complied in all material respects
        with all covenants, agreements and conditions required by this Agreement
        and the
        Registration Rights Agreement to be performed, satisfied or complied with
        by the
        Company at or prior to each Condition Satisfaction Date.

      
        
          
          

        

        
          17

          
            

          

        

        
          
          

        

      

       

      (e)       No
        Injunction.
        No
        statute, rule, regulation, executive order, decree, ruling or injunction
        shall
        have been enacted, entered, promulgated or endorsed by any court or governmental
        authority of competent jurisdiction that prohibits or directly and adversely
        affects any of the transactions contemplated by this Agreement, and no
        proceeding shall have been commenced that may have the effect of prohibiting
        or
        adversely affecting any of the transactions contemplated by this
        Agreement.

       

      (f)       No
        Suspension of Trading in or Delisting of Common Stock.
        The
        trading of the Common Stock is not suspended by the SEC or the Principal
        Market
        (if the Common Stock is traded on a Principal Market). The issuance of shares
        of
        Common Stock with respect to the applicable Closing, if any, shall not violate
        the shareholder approval requirements of the Principal Market (if the Common
        Stock is traded on a Principal Market). The Company shall not have received
        any
        notice threatening the continued listing of the Common Stock on the Principal
        Market (if the Common Stock is traded on a Principal Market).

       

      (g)       Maximum
        Advance Amount.
        The
        amount of an Advance requested by the Company shall not exceed the Maximum
        Advance Amount. In addition, in no event shall the number of shares issuable
        to
        the Investor pursuant to an Advance cause the aggregate number of shares
        of
        Common Stock beneficially owned by the Investor and its affiliates to exceed
        nine and 9/10 percent (9.9%) of the then outstanding Common Stock of the
        Company. For the purposes of this section beneficial ownership shall be
        calculated in accordance with Section 13(d) of the Exchange Act.

       

      (h)       No
        Knowledge.
        The
        Company has no knowledge of any event which would be more likely than not
        to
        have the effect of causing such Registration Statement to be suspended or
        otherwise ineffective.

       

      (i)       Executed
        Advance Notice.
        The
        Investor shall have received the Advance Notice executed by an officer of
        the
        Company and the representations contained in such Advance Notice shall be
        true
        and correct as of each Condition Satisfaction Date.

       

      (j)       Opinion
        of Counsel.
        Investor shall have received an opinion letter from counsel to the Company
        on
        the date hereof.

       

      (k)       Opinion
        of Counsel.
        The
        Company will have obtained for the Investor, at the Company’s expense, any and
        all opinions of counsel which may be reasonably required in order to sell
        the
        securities issuable hereunder without restriction.

      
        
          
          

        

        
          18

          
            

          

        

        
          
          

        

      

       

      ARTICLE
        VIII.

      Non-Disclosure
        of Non-Public Information

      

      Section
        8.1.       Non-Disclosure
        of Non-Public Information.

       

      (a)       The
        Company covenants and agrees that it shall refrain from disclosing, and shall
        cause its officers, directors, employees and agents to refrain from disclosing,
        any material non-public information to the Investor without also disseminating
        such information to the public, unless prior to disclosure of such information
        the Company identifies such information as being material non-public information
        and provides the Investor with the opportunity to accept or refuse to accept
        such material non-public information for review.

       

      (b)       Nothing
        herein shall require the Company to disclose non-public information to the
        Investor or its advisors or representatives, and the Company represents that
        it
        does not disseminate non-public information to any investors who purchase
        stock
        in the Company in a public offering, to money managers or to securities
        analysts, provided, however, that notwithstanding anything herein to the
        contrary, the Company will, as hereinabove provided, immediately notify the
        advisors and representatives of the Investor and, if any, underwriters, of
        any
        event or the existence of any circumstance (without any obligation to disclose
        the specific event or circumstance) of which it becomes aware, constituting
        non-public information (whether or not requested of the Company specifically
        or
        generally during the course of due diligence by such persons or entities),
        which, if not disclosed in the prospectus included in the Registration Statement
        would cause such prospectus to include a material misstatement or to omit
        a
        material fact required to be stated therein in order to make the statements,
        therein, in light of the circumstances in which they were made, not misleading.
        Nothing contained in this Section 8.2 shall be construed to mean that such
        persons or entities other than the Investor (without the written consent
        of the
        Investor prior to disclosure of such information) may not obtain non-public
        information in the course of conducting due diligence in accordance with
        the
        terms of this Agreement and nothing herein shall prevent any such persons
        or
        entities from notifying the Company of their opinion that based on such due
        diligence by such persons or entities, that the Registration Statement contains
        an untrue statement of material fact or omits a material fact required to
        be
        stated in the Registration Statement or necessary to make the statements
        contained therein, in light of the circumstances in which they were made,
        not
        misleading.

       

      ARTICLE
        IX.

      Choice
        of Law/Jurisdiction

      

      Section
        9.1.       Governing
        Law.
        This
        Agreement shall be governed by and interpreted in accordance with the laws
        of
        the State of Delaware without regard to the principles of conflict of laws.
        The
        parties further agree that any action between them shall be heard in Hudson
        County, New Jersey, and expressly consent to the jurisdiction and venue of
        the
        Superior Court of New Jersey, sitting in Hudson County, New Jersey and the
        United States District Court of New Jersey, sitting in Newark, New Jersey,
        for
        the adjudication of any civil action asserted pursuant to this
        paragraph.

       

      ARTICLE
        X.

      Assignment;
        Termination

      

      Section
        10.1.       Assignment.
        Neither
        this Agreement nor any rights of the Company hereunder may be assigned to
        any
        other Person. 

      
        
          
          

        

        
          19

          
            

          

        

        
          
          

        

      

       

      Section
        10.2.       Termination.
        

       

      (a)       The
        obligations of the Investor to make Advances under Article II hereof shall
        terminate twenty-four (24) months after the Effective Date.

       

      (b)       The
        obligation of the Investor to make an Advance to the Company pursuant to
        this
        Agreement shall terminate permanently (including with respect to an Advance
        Date
        that has not yet occurred) in the event that (i) there shall occur any stop
        order or suspension of the effectiveness of the Registration Statement for
        an
        aggregate of fifty (50) Trading Days, other than due to the acts of the
        Investor, during the Commitment Period, or (ii) the Company shall at any
        time
        fail materially to comply with the requirements of Article VI and such failure
        is not cured within thirty (30) days after receipt of written notice from
        the
        Investor, provided,
        however,
        that
        this termination provision shall not apply to any period commencing upon
        the
        filing of a post-effective amendment to such Registration Statement and ending
        upon the date on which such post effective amendment is declared effective
        by
        the SEC.

       

      (c)       The
        Company may terminate this Agreement upon thirty (30) days written notice
        to the
        Investor provided that the Company has delivered to the Investor all shares
        of
        Common Stock required to be issued to the Investor with respect to all Advance
        Notices issued by the Company.

       

      ARTICLE
        XI.

      Notices

       

      Section
        11.1.       Notices.
        Any
        notices, consents, waivers, or other communications required or permitted
        to be
        given under the terms of this Agreement must be in writing and will be deemed
        to
        have been delivered (i) upon receipt, when delivered personally; (ii) upon
        receipt, when sent by facsimile, provided a copy is mailed by U.S. certified
        mail, return receipt requested; (iii) three (3) days after being sent by
        U.S.
        certified mail, return receipt requested, or (iv) one (1) day after deposit
        with
        a nationally recognized overnight delivery service, in each case properly
        addressed to the party to receive the same. The addresses and facsimile numbers
        for such communications shall be:

       

      
        	
                If
                  to the Company, to:

              	
                Wherify
                  Wireless, Inc.

              
	 	
                2000
                  Bridge Parkway, Suite 201

              
	 	
                Redwood
                  Shores, CA 94065

              
	 	
                Attention: Chief
                  Executive Officer

              
	 	
                Telephone: (650)
                  551-5200

              
	 	
                Facsimile: (650)
                  551-5225

              
	 	 
	 	 
	
                With
                  a copy to:

              	
                Allen
                  Matkins Leck Gamble & Mallory LLP

              
	 	
                Three
                  Embarcadero Center, 12th
                  Floor

              
	 	
                San
                  Francisco, CA 94111

              
	 	
                Attention: D.
                  Stanley Rowland

              
	 	
                Telephone: (415)
                  837-1515

              
	 	
                Facsimile: (415)
                  837-1516

              

      

       

       

      
        
          
          

        

        
          20

          
            

          

        

        
          
          

        

      

       

      
        	
                If
                  to the Investor(s):

              	
                Cornell
                  Capital Partners, LP

              
	 	
                101
                  Hudson Street -Suite 3700

              
	 	
                Jersey
                  City, NJ 07302

              
	 	
                Attention: Mark
                  Angelo

              
	 	
                Portfolio
                  Manager

              
	 	
                Telephone: (201)
                  985-8300 

              
	 	
                Facsimile: (201)
                  985-8266 

              
	 	 
	
                With
                  a Copy to:

              	
                David
                  Gonzalez, Esq.

              
	 	
                101
                  Hudson Street - Suite 3700

              
	 	
                Jersey
                  City, NJ 07302

              
	 	
                Telephone: (201)
                  985-8300

              
	 	
                Facsimile: (201)
                  985-8266

              
	 	 

      

      

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

       

      ARTICLE
        XII.

      Miscellaneous

       

      Section
        12.1.       Counterparts.
        This
        Agreement may be executed in two or more identical counterparts, all of which
        shall be considered one and the same agreement and shall become effective
        when
        counterparts have been signed by each party and delivered to the other party.
        In
        the event any signature page is delivered by facsimile transmission, the
        party
        using such means of delivery shall cause four (4) additional original executed
        signature pages to be physically delivered to the other party within five
        (5)
        days of the execution and delivery hereof, though failure to deliver such
        copies
        shall not affect the validity of this Agreement.

       

      Section
        12.2.       Entire
        Agreement; Amendments.
        This
        Agreement supersedes all other prior oral or written agreements between the
        Investor, the Company, their affiliates and persons acting on their behalf
        with
        respect to the matters discussed herein, and 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 Investor makes any
        representation, warranty, covenant or undertaking with respect to such matters.
        No provision of this Agreement may be waived or amended other than by an
        instrument in writing signed by the party to be charged with
        enforcement.

       

      Section
        12.3.       Reporting
        Entity for the Common Stock.
        The
        reporting entity relied upon for the determination of the trading price or
        trading volume of the Common Stock on any given Trading Day for the purposes
        of
        this Agreement shall be Bloomberg, L.P. or any successor thereto. The written
        mutual consent of the Investor and the Company shall be required to employ
        any
        other reporting entity.

      
        
          
          

        

        
          21

          
            

          

        

        
          
          

        

      

       

      Section
        12.4.       Fees
        and Expenses.
        The
        Company hereby agrees to pay the following fees:

       

      (a)       Structuring
        Fees.
        Each of
        the parties shall pay its own fees and expenses (including the fees of any
        attorneys, accountants, appraisers or others engaged by such party) in
        connection with this Agreement and the transactions contemplated hereby,
        except
        that (i) the Company shall pay a structuring fee of Seven Thousand Five Hundred
        Dollars ($7,500) to Yorkville Advisors, LLC, of which $2,500 has previously
        been paid and $5,000 shall be paid on the date hereof, and (ii) On each Advance
        Date, the Company shall pay Yorkville Advisors, LLC a structuring fee of
        Five
        Hundred Dollars ($500) directly out the gross proceeds of each
        Advance.

       

      (b)       Due
        Diligence Fee.
        Company
        shall pay the Investor a non-refundable due diligence fee of $5,000 upon
        submission of the due diligence documents to the Investor.

       

      (c)       Commitment
        Fees.

       

      (i)       Upon
        the execution of this Agreement the Company shall issue to the Investor
276,595
        shares
        of Common Stock (an amount worth Three Hundred Ninety Thousand
        Dollars ($390,000)) (the “Investor’s
        Shares”).
        The
        Investor agrees not to sell more than 102,739 of the Investor’s Shares in any
        thirty (30) day period during the one hundred twenty (120) days following
        the
        effective date of the Registration Statement. 

       

      (ii)       Fully
        Earned.
        The
        Investor’s Shares shall be deemed fully earned as of the date hereof.

       

      (iii)       Registration
        Rights.
        The
        Investor’s Shares will have “piggy-back” registration rights.

       

      Section
        12.5.       Brokerage.
        Each of
        the parties hereto represents that it has had no dealings in connection with
        this transaction with any finder or broker who will demand payment of any
        fee or
        commission from the other party. The Company on the one hand, and the Investor,
        on the other hand, agree to indemnify the other against and hold the other
        harmless from any and all liabilities to any person claiming brokerage
        commissions or finder’s fees on account of services purported to have been
        rendered on behalf of the indemnifying party in connection with this Agreement
        or the transactions contemplated hereby.

       

      Section
        12.6.       Confidentiality.
        If for
        any reason the transactions contemplated by this Agreement are not consummated,
        each of the parties hereto shall keep confidential any information obtained
        from
        any other party (except information publicly available or in such party’s domain
        prior to the date hereof, and except as required by court order) and shall
        promptly return to the other parties all schedules, documents, instruments,
        work
        papers or other written information without retaining copies thereof, previously
        furnished by it as a result of this Agreement or in connection
        herein.

       

      [REMAINDER
        OF PAGE INTENTIONALLY LEFT BLANK]

      
        
          
          

        

        
          22

          
            

          

        

        
          
          

        

      

      

      IN
        WITNESS WHEREOF,
        the
        parties hereto have caused this Standby Equity Distribution Agreement to
        be
        executed by the undersigned, thereunto duly authorized, as of the date first
        set
        forth above.

       

      
        	 	
                COMPANY:

              
	 	
                Wherify
                  Wireless, Inc.

              
	 	 
	 	
                By:
                  /s/
                  Timothy J. Neher   

              
	 	
                Name: Timothy
                  J. Neher

              
	 	
                Title: Chief
                  Executive Officer

              
	 	 
	 	 
	 	
                INVESTOR:

              
	 	
                Cornell
                  Capital Partners, LP

              
	 	 
	 	
                By: Yorkville
                  Advisors, LLC

              
	 	
                Its: General
                  Partner

              
	 	 
	 	
                By:
                  /s/
                  Mark Angelo

              
	 	
                Name: Mark
                  Angelo

              
	 	
                Title: Portfolio
                  Manager

              

      

       

      
 

      
        
          
          

        

        
          23

          
            

          

        

        
          
          

        

      

       

      EXHIBIT
        A

      

      ADVANCE
        NOTICE

      WHERIFY
        WIRELESS, INC.

      

      The
        undersigned, _______________________ hereby certifies, with respect to the
        sale
        of shares of Common Stock of WHERIFY
        WIRELESS, INC.
        (the
“Company”)
        issuable in connection with this Advance Notice, delivered pursuant to the
        Standby Equity Distribution Agreement (the “Agreement”),
        as
        follows: 

       

      1.       The
        undersigned is the duly elected ______________ of the Company.

       

      2.       There
        are no fundamental changes to the information set forth in the Registration
        Statement which would require the Company to file a post effective amendment
        to
        the Registration Statement. 

       

      3.
               The Company has performed in all
        material respects all covenants and agreements to be performed by the Company
        and has complied in all material respects with all obligations and conditions
        contained in the Agreement on or prior to the Advance Notice Date, and shall
        continue to perform in all material respects all covenants and agreements
        to be
        performed by the Company through the applicable Advance Date. All conditions
        to
        the delivery of this Advance Notice are satisfied as of the date
        hereof.

       

      4.       The
        undersigned hereby represents, warrants and covenants that it has made all
        filings (“SEC
        Filings”)
        required to be made by it pursuant to applicable securities laws (including,
        without limitation, all filings required under the Securities Exchange Act
        of
        1934, which include Forms 10-Q or 10-QSB, 10-K or 10-KSB, 8-K, etc.). All
        SEC
        Filings and other public disclosures made by the Company, including, without
        limitation, all press releases, analysts meetings and calls, etc. (collectively,
        the “Public
        Disclosures”),
        have
        been reviewed and approved for release by the Company’s attorneys and, if
        containing financial information, the Company’s independent certified public
        accountants. None of the Company’s Public Disclosures contain any untrue
        statement of a material fact or omit to state any material fact required
        to be
        stated therein or necessary to make the statements therein, in the light
        of the
        circumstances under which they were made, not misleading.

       

      5.       The
        Advance requested is _____________________.

       

      The
        undersigned has executed this Certificate this ____ day of
        _________________

      
 

    

    
      
        
          	
                  WHERIFY
                    WIRELESS, INC.

                
	
                  By:

                	_______________________________
	
                  Name:

                	 
	
                  Title:

                	 

        

        

           

          
            
              	If Returning This
                      Advance Notice
                      via Facsimile Please Send To: (201) 946-0851
                      
	 	 
	If by Mail, via Federal Express
                      To: 	Cornell Capital Partners, LP
	
                    	101 Hudson Street, Suite 3700,
                      Jersey City,
                      NJ 07302

            

          

             

                        

          
            
              
              

            

            
              
              

              
                

              

            

            
              
              

            

          

        

      

      SCHEDULE
        2.4

       

       

      WHERIFY
        WIRELESS, INC.

       

      The
        undersigned hereby agrees that for a period commencing on March 10, 2006
        and
        expiring on the termination of the Standby Equity Distribution Agreement
        dated
        March 10, 2005 between the Wherify Wireless, Inc. (the “Company”)
        and
        Cornell Capital Partners, LP (the “Investor”)
        (the
“Lock-up
        Period”),
        he,
        she or it will not, directly or indirectly, without the prior written consent
        of
        the Investor, except pursuant to a valid 10b5-1 trading plan, issue, offer,
        agree or offer to sell, sell, grant an option for the purchase or sale of,
        transfer, pledge, assign, hypothecate, distribute or otherwise encumber or
        dispose of any securities of the Company, including common stock or options,
        rights, warrants or other securities underlying, convertible into, exchangeable
        or exercisable for or evidencing any right to purchase or subscribe for any
        common stock (whether or not beneficially owned by the undersigned), or any
        beneficial interest therein (collectively, the “Securities”)
        except
        in accordance with the volume limitations set forth in Rule 144(e) of the
        General Rules and Regulations under the Securities Act of 1933, as
        amended.

       

      In
        order
        to enable the aforesaid covenants to be enforced, the undersigned hereby
        consents to the placing of legends and/or stop-transfer orders with the transfer
        agent of the Company’s securities with respect to any of the Securities
        registered in the name of the undersigned or beneficially owned by the
        undersigned, and the undersigned hereby confirms the undersigned’s investment in
        the Company.

       

      Dated:
        _______________, 2006

       

       

      
        	 	 	 
	
              	
                Signature

              
	 	 
	 	
              
	 	________________________________________
	 	Name: 	___________________________________
	 	Address:_______________________________________
	 	City, State,
                Zip
                Code:______________________________
	 	 
	 	 
	 	________________________________________
	 	Print
                Social Security Number or
                Taxpayer I.D. Number

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00099-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00099-of-00352.parquet"}]]