Document:

Exhibit
4.1

     

    EXECUTION
COPY

    

    NOTE
AND WARRANT PURCHASE AGREEMENT

    

    Dated
as of February 25, 2010

    

    among

    

    JUMA
TECHNOLOGY CORP.

    

    and

    

    THE
PURCHASERS LISTED ON EXHIBIT A

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    TABLE
OF CONTENTS

    

    
      
        
          	 
      	
                  Page

                
	 
      	 
      
	
                  ARTICLE
      I   Purchase and Sale of the Notes and
    Warrants

                	 
      
	
                  Section
      1.1

                	
                  Purchase
      and Sale of Notes

                	
                  1

                
	
                  Section
      1.2

                	
                  Warrants

                	
                  1

                
	
                  Section
      1.3

                	
                  Conversion
      Shares

                	
                  1

                
	
                  Section
      1.4

                	
                  Purchase
      Price and Closing

                	
                  2

                
	 
      	 
      	 
      
	
                  ARTICLE
      II  Representations and Warranties

                	 
      
	
                  Section
      2.1

                	
                  Representations
      and Warranties of the Company

                	
                  2

                
	
                  Section
      2.2

                	
                  Representations
      and Warranties of the Purchasers

                	
                  12

                
	 
      	 
      
	
                  ARTICLE
      III  Covenants

                	 
      
	
                  Section
      3.1

                	
                  Securities
      Compliance

                	
                  14

                
	
                  Section
      3.2

                	
                  Registration
      and Listing

                	
                  15

                
	
                  Section
      3.3

                	
                  Inspection
      Rights

                	
                  15

                
	
                  Section
      3.4

                	
                  Compliance
      with Laws

                	
                  15

                
	
                  Section
      3.5

                	
                  Keeping
      of Records and Books of Account

                	
                  15

                
	
                  Section
      3.6

                	
                  Furnishing
      of Information

                	
                  16

                
	
                  Section
      3.7

                	
                  Reporting
      Requirements

                	
                  16

                
	
                  Section
      3.8

                	
                  Amendments

                	
                  16

                
	
                  Section
      3.9

                	
                  Other
      Agreements

                	
                  16

                
	
                  Section
      3.10

                	
                  Distributions

                	
                  16

                
	
                  Section
      3.11

                	
                  Use
      of Proceeds

                	
                  16

                
	
                  Section
      3.12

                	
                  Reservation
      of Shares

                	
                  17

                
	
                  Section
      3.13

                	
                  Transfer
      Agent Instructions

                	
                  17

                
	
                  Section
      3.14

                	
                  Disposition
      of Assets

                	
                  17

                
	
                  Section
      3.15

                	
                  Reporting
      Status

                	
                  17

                
	
                  Section
      3.16

                	
                  Disclosure
      of Transaction

                	
                  18

                
	
                  Section
      3.17

                	
                  Disclosure
      of Material Information

                	
                  18

                
	
                  Section
      3.18

                	
                  Pledge
      of Securities

                	
                  18

                
	
                  Section
      3.19

                	
                  Form
      S-1 Eligibility

                	
                  18

                
	
                  Section
      3.20

                	
                  DTC

                	
                  18

                
	
                  Section
      3.21

                	
                  Issuance
      of Variable Securities

                	
                  18

                
	
                  Section
      3.22

                	
                  Approval
      of Acquisitions.

                	
                  18

                
	
                  Section
      3.23

                	
                  Most
      Favored Nations

                	
                  19

                

        

      

    

    
      
         

      

      
        i

        
          

        

      

      
         

      

    

    

    
      
        
          	
                  ARTICLE
      IV  Conditions

                	 
      
	
                  Section
      4.1

                	
                  Conditions
      Precedent to the Obligation of the Company to Sell the
    Shares

                	
                  19

                
	
                  Section
      4.2

                	
                  Conditions
      Precedent to the Obligation of the Purchasers to Purchase the
      Shares

                	
                  19

                
	 
      	 
      
	
                  ARTICLE
      V  Stock Certificate Legend

                	 
      
	
                  Section
      5.1

                	
                  Legend

                	
                  21

                
	 
      	 
      
	
                  ARTICLE
      VI  Indemnification

                	 
      
	
                  Section
      6.1

                	
                  General
      Indemnity

                	
                  22

                
	
                  Section
      6.2

                	
                  Indemnification
      Procedure

                	
                  23

                
	 
      	 
      
	
                  ARTICLE
      VII  Registration Rights

                	 
      
	
                  Section
      7.1

                	
                  Piggyback
      Registration Rights

                	
                  24

                
	
                  Section
      7.2

                	
                  Assignment
      of Registration Rights

                	
                  24

                
	
                  Section
      7.3

                	
                  Underwriter
      Status

                	
                  25

                
	 
      
	
                  ARTICLE
      VIII  Miscellaneous

                
	
                  Section
      8.1

                	
                  Specific
      Enforcement

                	
                  25

                
	
                  Section
      8.2

                	
                  Entire
      Agreement; Amendment

                	
                  25

                
	
                  Section
      8.3

                	
                  Rescission
      and Withdrawal Right

                	
                  25

                
	
                  Section
      8.4

                	
                  Notices

                	
                  26

                
	
                  Section
      8.5

                	
                  Waivers

                	
                  26

                
	
                  Section
      8.6

                	
                  Headings

                	
                  26

                
	
                  Section
      8.7

                	
                  Successors
      and Assigns

                	
                  27

                
	
                  Section
      8.8

                	
                  No
      Third Party Beneficiaries

                	
                  27

                
	
                  Section
      8.9

                	
                  Governing
      Law; Consent to Jurisdiction

                	
                  27

                
	
                  Section
      8.10

                	
                  Survival

                	
                  27

                
	
                  Section
      8.11

                	
                  Counterparts

                	
                  27

                
	
                  Section
      8.12

                	
                  Publicity

                	
                  27

                
	
                  Section
      8.13

                	
                  Severability

                	
                  27

                
	
                  Section
      8.14

                	
                  Further
      Assurances

                	
                  27

                

        

      

    

    
      
         

      

      
        ii

        
          

        

      

      
         

      

    

    EXHIBITS

    

    
      
        	
                Exhibit
      A

              	
                List
      of Purchasers

              
	
                Exhibit
      B

              	
                Form
      of 10% Convertible Bridge Note

              
	
                Exhibit
      C

              	
                Series
      A Warrant

              
	
                Exhibit
      D

              	
                Irrevocable
      Transfer Agent Instructions

              
	
                Exhibit
      E

              	
                Opinion
      of Counsel

              

      

    

    
      
         

      

      
        iii

        
          

        

      

      
         

      

    

    NOTE
AND WARRANT PURCHASE AGREEMENT

    

    This NOTE
AND WARRANT PURCHASE AGREEMENT (this “Agreement”) is dated as of
February 25, 2010 by and among Juma Technology Corp., a Delaware corporation
(the “ Company ”), and
each of the Purchasers whose names are set forth on  Exhibit
A  hereto (individually, a “ Purchaser ” and collectively,
the “ Purchasers
”).

    

    NOW, THEREFORE, in
consideration of the covenants, promises and representations set forth herein,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties agree as follows:

    

    ARTICLE
I

    Purchase
and Sale of Note and Warrants

    

    Section
1.1          Purchase
and Sale of Note. Upon the following terms and conditions, (a) the Company and
one of its subsidiaries, Nectar Services Corp., a Delaware Corporation (“ Nectar ” and together with
the Company, the “
Issuers ”) shall jointly issue and sell to the Purchasers and each of the
Purchasers shall purchase from the Company, 10% convertible bridge notes in the
aggregate principal amount of five hundred thousand ($500,000.00) (the “ Note ”).  The Notes
provide for (i) optional conversion into shares of the Company’s common stock,
par value $0.0001 per share (the “ Common Stock ”) and (ii)
mandatory conversion upon the occurrence of a Qualified Financing (as defined in
the Note). The Note shall be substantially in the form attached hereto as  Exhibit B
..  The Company and the Purchasers are executing and delivering this
Agreement in accordance with and in reliance upon the exemption from securities
registration afforded by Rule 506 of Regulation D (“ Regulation D ”) as
promulgated by the United States Securities and Exchange Commission (the “ Commission ”) under the
Securities Act of 1933, as amended (the “ Securities Act ”) or Section
4(2) of the Securities Act.

    

    Section
1.2          Warrants.
Upon the following terms and conditions and for no additional consideration,
each of the Purchasers shall be issued Series A Warrants, in substantially the
form attached hereto as  Exhibit
C  (the “
Series A Warrants ” and/or the “ Warrants ”) to purchase up to
fifty percent (50%) of that number of shares of the Company’s Common Stock into
which the Note issued to the applicable Purchaser originally
converts.  Any shares of Common Stock issuable upon exercise of the
Warrants (and such shares when issued) are herein referred to as the “ Warrant Shares .” The
Warrants shall expire on May 21, 2014 and shall have an initial exercise price
equal to fifteen cents ($0.15) per share.

    

    Section
1.3          Conversion Shares.
The Company has authorized and will reserve and covenants to continue to
reserve, free of preemptive rights and other similar contractual rights of
stockholders, (i) such number of shares of Common Stock equal to one
hundred twenty percent (120%) of the number of shares of Common Stock as shall
from time to time be sufficient to effect an Optional Conversion (as
defined in the Notes) of all of the Notes, and (ii) as of the date hereof, such
number of shares of Common Stock equal to one hundred twenty percent (120%) of
the number of shares of Common Stock as shall from time to time be sufficient to
effect the exercise of the Warrants then outstanding. Any shares of Common Stock
issuable upon a conversion of the Note (and such shares when issued) are herein
referred to as the “ Conversion
Shares .” The Notes, the Warrants, the Conversion Shares and the Warrant
Shares are sometimes collectively referred to as the “ Securities
..”

    
      
         

      

      
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    Section
1.4          Purchase
Price and Closing. Subject to the terms and conditions hereof, the Issuers agree
to issue and sell to the Purchasers and, in consideration of and in express
reliance upon the representations, warranties, covenants, terms and conditions
of this Agreement, the Purchasers, severally but not jointly, agree to purchase
the Notes and the Warrants for an aggregate purchase price of five hundred
thousand ($500,000.00) (the “ Purchase Price ”). The
closing under this Agreement (the “ Closing ”) shall take place
on or about February 25, 2010 (the “ Closing Date
”).  The Closing under this Agreement shall take place at the offices
of Vision Opportunity Master Fund, Ltd., 20 West 55 th  Street, 5 th  Floor, New York,
New York 10019 at 10:00 a.m., New York time;  provided , that
all of the conditions set forth in  Article
IV  hereof and applicable to the Closing shall have been
fulfilled or waived in accordance herewith.  Subject to the terms and
conditions of this Agreement, at the Closing the Company shall deliver or cause
to be delivered to each Purchaser (x) its Notes for the principal amount set
forth opposite the name of such Purchaser on  Exhibit
A  hereto, (y) its Warrants to purchase such number of shares
of Common Stock as is set forth opposite the name of such Purchaser on  Exhibit
A  attached hereto and (z) any other documents required to
be delivered pursuant to  Article
IV  hereof. At the Closing, each Purchaser shall deliver the
applicable Purchase Price by wire transfer to the Company.

    

    ARTICLE
II

    Representations
and Warranties

    

    Section
2.1          Representations
and Warranties of the Company. Each of the Issuers hereby represents and
warrants to the Purchasers, as of the date hereof and as of the Closing Date
(except as set forth on the Schedule of Exceptions attached hereto with each
numbered Schedule corresponding to the section number herein), as follows
(unless otherwise specifically stated herein this  Section
2.1  to the contrary, all references to the Company shall be
deemed to refer collectively to the Issuers):

    

    (a)    Organization,
Good Standing and Power. The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware and has
the requisite corporate power to own, lease and operate its properties and
assets and to conduct its business as it is now being conducted. Nectar is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware and has the requisite corporate power to own,
lease and operate its properties and assets and to conduct its business as it is
now being conducted. Except as set forth in Schedule
2.1(g)  hereto, the Company does not have any Subsidiaries.
Except as set forth on  Schedule 2.1(a) ,
each of the Company and each such Subsidiary 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 or property owned by it makes such
qualification necessary except for any jurisdiction(s) (alone or in the
aggregate) in which the failure to be so qualified will not have a Material
Adverse Effect (as defined in  Section
2.1(c)  hereof) on the Company’s financial
condition.

    

    (b)  
 Authorization; Enforcement. The Company has the requisite corporate power
and authority to enter into and perform this Agreement, the Notes, the
Warrants and the Irrevocable Transfer Agent Instructions (as defined
in  Section
3.13 ) substantially in the form of  Exhibit D
 attached hereto (collectively, the “ Transaction Documents ”) and
to issue and sell the Securities in accordance with the terms hereof. The
execution, delivery and performance of the Transaction Documents by the Company
and the consummation by it of the transactions contemplated hereby and thereby
have been duly and validly authorized by all necessary corporate action, and
except as set forth on  Schedule 2.1(b) ,
no further consent or authorization of the Company or its board of directors or
stockholders is required. This Agreement has been duly executed and delivered by
the Company. The other Transaction Documents will have been duly executed and
delivered by the Company at the Closing. Each of the Transaction Documents
constitutes, or shall constitute when executed and delivered, a valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation,
conservatorship, receivership or similar laws relating to, or affecting
generally the enforcement of, creditor’s rights and remedies or by other
equitable principles of general application.

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    (c)    Capitalization.
The authorized capital stock of the Company and the shares thereof currently
issued and outstanding as of the date hereof are set forth on  Schedule
2.1(c)  hereto. All of the outstanding shares of capital stock
have been duly and validly authorized and issued in compliance with all
securities laws.  Except as set forth on  Schedule
2.1(c)  hereto, no shares of Common Stock are entitled to
preemptive rights or registration rights and there are no outstanding options,
warrants, scrip, rights to subscribe to, call or commitments of any character
whatsoever relating to, or securities or rights convertible into, any shares of
capital stock of the Company. There are no contracts, commitments,
understandings, or arrangements by which the Company is or may become bound to
issue additional shares of the capital stock of the Company or options,
securities or rights convertible into shares of capital stock of the Company.
Except as set forth on  Schedule
2.1(c)  hereto, the Company is not a party to any agreement
granting registration or anti-dilution rights to any person with respect to any
of its equity or debt securities. The Company is not a party to, and it has no
knowledge of, any agreement restricting the voting or transfer of any shares of
the capital stock of the Company. The offer and sale of all capital stock,
convertible securities, rights, warrants, or options of the Company issued prior
to the Closing complied with all applicable Federal and state securities laws,
and no stockholder has a right of rescission or claim for damages with respect
thereto. The Company has furnished or made available to the Purchasers true and
correct copies of the Company’s Certificate of Incorporation as in effect on the
date hereof (the “
Certificate ”) and the Company’s Bylaws as in effect on the date
hereof (the “ Bylaws ”).
For the purposes of this Agreement, “ Material Adverse Effect ”
means any material adverse effect on the business, operations, properties,
prospects, or financial condition of the Company and its Subsidiaries, taken as
a whole, and/or any condition, circumstance, or situation that would prohibit or
otherwise materially interfere with the ability of the Company to perform any of
its obligations under this Agreement.

    

    (d)    Issuance
of Securities. The Notes and the Warrants to be issued at the Closing have been
duly authorized by all necessary corporate action and when paid for or issued in
accordance with the terms hereof, the Notes and Warrants shall be validly issued
and outstanding, free and clear of all liens, encumbrances and rights of refusal
of any kind.  When the Conversion Shares and the Warrant Shares are
issued in accordance with the terms of this Agreement, the Notes and the
Warrants, such shares will be duly authorized by all necessary corporate action
and validly issued and outstanding, fully paid and nonassessable, free and clear
of all liens, encumbrances and rights of refusal of any kind and the holders
shall be entitled to all rights accorded to a holder of Common
Stock.

    

    (e)    No
Conflicts. The execution, delivery and performance of the Transaction Documents
by the Company, the performance by the Company of its obligations under the
Notes and/or the Warrants and the consummation by the Company of the
transactions contemplated herein and therein do not and will not (i) violate any
provision of the Company’s Certificate or Bylaws, (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, mortgage, deed of
trust, indenture, note, bond, license, lease agreement, instrument or obligation
to which the Company is a party or by which it or its properties or assets are
bound, except for conflicts or defaults, which singularly or in the aggregate do
not and will not have a Material Adverse Effect, (iii) create or impose a lien,
mortgage, security interest, charge or encumbrance of any nature on any property
of the Company under any agreement or any commitment to which the Company is a
party or by which the Company is bound or by which any of its respective
properties or assets are bound, except for liens, mortgages, security interests,
charges or encumbrances which singularly or in the aggregate do not and will not
have a Material Adverse Effect, or (iv) result in a violation of any federal,
state, local or foreign statute, rule, regulation, order, judgment or decree
(including Federal and state securities laws and regulations) applicable to the
Company or any of its Subsidiaries or by which any property or asset of the
Company or any of its Subsidiaries are bound or affected, except for
violations, which singularly or in the aggregate, do not and will not have a
Material Adverse Effect. The business of the Company and its Subsidiaries is not
being conducted in violation of any laws, ordinances or regulations of any
governmental entity, except for possible violations which singularly or in the
aggregate do not and will not have a Material Adverse Effect. The Company is not
required under Federal, state or local law, rule or regulation 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 the Transaction Documents, or issue and sell the Notes,
the Warrants, the Conversion Shares and the Warrant Shares in accordance with
the terms hereof or thereof (other than (x) any consent, authorization or order
that has been obtained as of the date hereof, (y) any filing or registration
that has been made as of the date hereof or (z) any filings which may be
required to be made by the Company with the Commission or state securities
administrators subsequent to the Closing, any registration statement which may
be filed pursuant hereto or any other Transaction Document);  provided , that
for purposes of the representation made in this sentence, the Company is
assuming and relying upon the accuracy of the relevant representations and
agreements of the Purchasers herein.

    
      
         

      

      
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    (f)    Commission
Documents, Financial Statements. The Company has timely filed all reports,
schedules, forms, statements and other documents required to be filed by it with
the Commission pursuant to the reporting requirements of the Securities Exchange
Act of 1934, as amended the (“
Exchange Act ”), including material filed pursuant to Section 13(a) or
15(d) of the Exchange Act (all of the foregoing including filings incorporated
by reference therein being referred to herein as the “ Commission Documents ”). The
Company has delivered or made available via EDGAR or another Internet web-site
to each of the Purchasers true and complete copies of the Commission Documents.
Except for any information provided to Robert Thomson, the Company has not
provided to the Purchasers any material non-public information or other
information which, according to applicable law, rule or regulation, was required
to have been disclosed publicly by the Company but which has not been so
disclosed, other than with respect to the transactions contemplated by this
Agreement. At the times of their respective filings, the Commission Documents
complied in all material respects with the requirements of the Exchange Act and
the rules and regulations of the Commission promulgated thereunder and other
federal, state and local laws, rules and regulations applicable to such
documents, and, as of their respective dates, none of the Commission Documents
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The financial statements of the Company included in the Commission
Documents comply as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the Commission or other
applicable rules and regulations with respect thereto. Such financial statements
have been prepared in accordance with U.S. generally accepted accounting
principles (“ GAAP ”)
applied on a consistent basis 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 not include
footnotes or may be condensed or summary statements), and fairly present in all
material respects the financial position of the Company and its Subsidiaries as
of the dates thereof and the results of operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments).

    

    (g)    Subsidiaries. Schedule 2.1(g) hereto sets
forth each Subsidiary of the Company, showing the jurisdiction of its
incorporation or organization and showing the percentage of each person’s
ownership. Each Subsidiary is a corporation duly incorporated, validly existing
and in good standing under the laws of its state of incorporation and has the
requisite corporate power to own, lease and operate its properties and assets
and to conduct its business as it is now being conducted. For the purposes of
this Agreement, “
Subsidiary ” shall mean any corporation or other entity of which at least
a majority of the securities or other ownership interest having ordinary voting
power (absolutely or contingently) for the election of directors or other
persons performing similar functions are at the time owned directly or
indirectly by the Company and/or any of its other Subsidiaries. All of the
outstanding shares of capital stock of each Subsidiary have been duly authorized
and validly issued, and are fully paid and nonassessable. There are no
outstanding preemptive, conversion or other rights, options, warrants or
agreements granted or issued by or binding upon any Subsidiary for the purchase
or acquisition of any shares of capital stock of any Subsidiary or any other
securities convertible into, exchangeable for or evidencing the rights to
subscribe for any shares of such capital stock. Neither the Company nor any
Subsidiary is subject to any obligation (contingent or otherwise) to repurchase
or otherwise acquire or retire any shares of the capital stock of any Subsidiary
or any convertible securities, rights, warrants or options of the type described
in the preceding sentence. Neither the Company nor any Subsidiary is party to,
nor has any knowledge of, any agreement restricting the voting or transfer of
any shares of the capital stock of any Subsidiary.

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    (h)    No
Material Adverse Change. Other than as disclosed in the Company’s Commission
Documents, since December 31, 2008 the Company has not experienced or suffered
any Material Adverse Effect.

    

    (i)    No
Undisclosed Liabilities. Except as set forth on Schedule 2.1(i), since
December 31, 2008 neither the Company nor any of its Subsidiaries has any
liabilities, obligations, claims or losses (whether liquidated or unliquidated,
secured or unsecured, absolute, accrued, contingent or otherwise) other than
those incurred in the ordinary course of the Company’s or its Subsidiaries’
respective businesses and which, individually or in the aggregate, do not or
would not have a Material Adverse Effect on the Company or its Subsidiaries, as
the case may be.

    

    (j)    Off
Balance Sheet Arrangements.  There is no transaction, arrangement, or
other relationship between the Company and an unconsolidated or other off
balance sheet entity that is required to be disclosed by the Company in its
Commission Documents and is not so disclosed or that otherwise would be
reasonably likely to have a Material Adverse Effect.

    

    (k)    No
Undisclosed Events or Circumstances. No event or circumstance has occurred or
exists with respect to the Company or its Subsidiaries or their respective
businesses, properties, prospects, operations or financial condition, which,
under applicable law, rule or regulation, requires public disclosure or
announcement by the Company but which has not been so publicly announced or
disclosed.

    

    (l)    Indebtedness. Schedule 2.1(l) hereto sets
forth as of the date hereof all outstanding secured and unsecured Indebtedness
of the Company or any Subsidiary, or for which the Company or any Subsidiary has
commitments. For the purposes of this Agreement, “ Indebtedness ” shall mean (a)
any liabilities for borrowed money or amounts owed, whether individually or in
aggregate, in excess of $100,000 (other than trade accounts payable incurred in
the ordinary course of business), (b) all guaranties, endorsements and other
contingent obligations in respect of Indebtedness of others, whether or not the
same are or should be reflected in the Company’s balance sheet (or the notes
thereto), except guaranties by endorsement of negotiable instruments for deposit
or collection or similar transactions in the ordinary course of business; and
(c) the present value of any lease payments in excess of $25,000 due under
leases required to be capitalized in accordance with GAAP. Except as set forth
on  Schedule
2.1(l) , neither the Company nor any Subsidiary is in default with
respect to any Indebtedness.

    

    (m)    Title
to Assets. Except as set forth on Schedule 2.1(m), each of the
Company and the Subsidiaries has good and marketable title to all of its real
and personal property, free and clear of any mortgages, pledges, charges, liens,
security interests or other encumbrances. Except as set forth on  Schedule 2.1(m) ,
all leases of the Company and each of its Subsidiaries are valid and subsisting
and in full force and effect.

    
      
         

      

      
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    (n)    Insurance.
The Company and the Subsidiaries are insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are prudent
and customary in the businesses and location in which the Company and the
Subsidiaries are engaged. Neither the Company nor any Subsidiary has any
knowledge that it will be unable to renew its existing insurance coverage for
the Company and the Subsidiaries as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business without a significant increase in cost.

    

    (o)    Actions
Pending. There is no action, suit, claim, investigation, arbitration, alternate
dispute resolution proceeding or any other proceeding pending or, to the
knowledge of the Company, threatened against the Company or any Subsidiary which
questions the validity of this Agreement or any of the other Transaction
Documents or the transactions contemplated hereby or thereby or any action taken
or to be taken pursuant hereto or thereto. There is no action, suit, claim,
investigation, arbitration, alternate dispute resolution proceeding or any other
proceeding pending or, to the knowledge of the Company, threatened, against or
involving the Company, any Subsidiary or any of their respective properties or
assets. There are no outstanding orders, judgments, injunctions, awards or
decrees of any court, arbitrator or governmental or regulatory body against the
Company or any Subsidiary or any officers or directors of the Company or
Subsidiary in their capacities as such.

    

    (p)    Compliance
with Law. The business of the Company and the Subsidiaries has been and is
presently being conducted in accordance with all applicable federal, state and
local governmental laws, rules, regulations and ordinances, except for such
noncompliance that, individually or in the aggregate, would not cause a Material
Adverse Effect. The Company and each of its Subsidiaries have all franchises,
permits, licenses, consents and other governmental or regulatory authorizations
and approvals necessary for the conduct of its business as now being conducted
by it unless the failure to possess such franchises, permits, licenses, consents
and other governmental or regulatory authorizations and approvals, individually
or in the aggregate, would not have a Material Adverse Effect.

    

    (q)    Taxes.
The Company and each of the Subsidiaries has accurately prepared and filed all
federal, state and other tax returns required by law to be filed by it, has paid
or made provisions for the payment of all taxes shown to be due and all
additional assessments, and adequate provisions have been and are reflected in
the financial statements of the Company and the Subsidiaries for all current
taxes and other charges to which the Company or any Subsidiary is subject and
which are not currently due and payable. None of the federal income tax returns
of the Company or any Subsidiary have been audited by the Internal Revenue
Service. The Company has no knowledge of any additional assessments, adjustments
or contingent tax liability (whether federal or state) of any nature whatsoever,
whether pending or threatened against the Company or any Subsidiary for any
period, nor of any basis for any such assessment, adjustment or
contingency.

    

    (r)    Certain
Fees. No brokers, finders or financial advisory fees or commissions will be
payable by the Company or any Subsidiary or any Purchaser with respect to the
transactions contemplated by this Agreement.

    

    (s)    Disclosure.
Neither this Agreement or the Schedules hereto nor any other documents,
certificates or instruments furnished to the Purchasers by or on behalf of the
Company or any Subsidiary in connection with the transactions contemplated by
this Agreement contain any untrue statement of a material fact or omit to state
a material fact necessary in order to make the statements made herein or
therein, in the light of the circumstances under which they were made herein or
therein, not misleading.

    
      
         

      

      
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    (t)    Operation
of Business. Except as set forth in Schedule 2.1(t), the Company
and each of the Subsidiaries owns or possesses all patents, trademarks, domain
names (whether or not registered) and any patentable improvements or
copyrightable derivative works thereof, websites and intellectual property
rights relating thereto, service marks, trade names, copyrights, licenses and
authorizations, and all rights with respect to the foregoing, which are
necessary for the conduct of its business as now conducted without any conflict
with the rights of others.

    

    (u)    Environmental
Compliance. The Company and each of its Subsidiaries have obtained all material
approvals, authorization, certificates, consents, licenses, orders and permits
or other similar authorizations of all governmental authorities, or from any
other person, that are required under any Environmental Laws. Except as set
forth on  Schedule
2.1(u) , the Commission Documents describe all material permits,
licenses and other authorizations issued under any Environmental Laws to the
Company or its Subsidiaries. “
Environmental Laws ” shall mean all applicable laws relating to the
protection of the environment including, without limitation, all requirements
pertaining to reporting, licensing, permitting, controlling, investigating or
remediating emissions, discharges, releases or threatened releases of hazardous
substances, chemical substances, pollutants, contaminants or toxic substances,
materials or wastes, whether solid, liquid or gaseous in nature, into the air,
surface water, groundwater or land, or relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
hazardous substances, chemical substances, pollutants, contaminants or toxic
substances, material or wastes, whether solid, liquid or gaseous in nature. The
Company has all necessary governmental approvals required under all
Environmental Laws and used in its business or in the business of any of its
Subsidiaries. The Company and each of its Subsidiaries are also in compliance
with all other limitations, restrictions, conditions, standards, requirements,
schedules and timetables required or imposed under all Environmental Laws.
Except for such instances as would not individually or in the aggregate have a
Material Adverse Effect, there are no past or present events, conditions,
circumstances, incidents, actions or omissions relating to or in any way
affecting the Company or its Subsidiaries that violate or may violate any
Environmental Law after the Closing Date or that may give rise to any
environmental liability, or otherwise form the basis of any claim, action,
demand, suit, proceeding, hearing, study or investigation (i) under any
Environmental Law, or (ii) based on or related to the manufacture, processing,
distribution, use, treatment, storage (including without limitation underground
storage tanks), disposal, transport or handling, or the emission, discharge,
release or threatened release of any hazardous substance.

    

    (v)    Books
and Record Internal Accounting Controls. The books and records of the Company
and its Subsidiaries accurately reflect in all material respects the information
relating to the business of the Company and the Subsidiaries, the location and
collection of their assets, and the nature of all transactions giving rise to
the obligations or accounts receivable of the Company or any Subsidiary. The
Company and each of its Subsidiaries maintain a system of internal accounting
controls sufficient, in the judgment of the Company, 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 GAAP and to
maintain asset accountability, (iii) access to assets is permitted only in
accordance with management’s general or specific authorization and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.

    

    (w)    Material
Agreements. Except for the Transaction Documents (with respect to clause (i)
only), as disclosed in the Commission Documents or as set forth on  Schedule
2.1(w)  hereto, or as would not be reasonably likely to have a
Material Adverse Effect, (i) the Company and each of its Subsidiaries have
performed all obligations required to be performed by them to date under any
written or oral contract, instrument, agreement, commitment, obligation, plan or
arrangement, filed or required to be filed with the Commission (the “ Material Agreements ”), (ii)
neither the Company nor any of its Subsidiaries has received any notice of
default under any Material Agreement and, (iii) to the best of the Company’s
knowledge, neither the Company nor any of its Subsidiaries is in default under
any Material Agreement now in effect.

    
      
         

      

      
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    (x)    Intellectual
Property.  The Company and its Subsidiaries own, or have rights to
use, all inventions, know-how, patents, patent applications, trademarks,
trademark applications, service marks, trade names, copyrights, licenses, trade
secrets and other similar rights that are necessary or material for use in
connection with their respective businesses now operated by them and presently
contemplated to be operated by them which the failure to so have would have or
reasonably be expected to result in a Material Adverse Effect (collectively, the
“ Intellectual Property
Rights ”).  None of the Company’s or any Subsidiary’s
Intellectual Property Rights have expired or terminated, or are expected to
expire or terminate, within three years from the date of this
Agreement.  None of the Company’s nor any Subsidiary has received
written notice that the Intellectual Property Rights used by the Company or any
Subsidiary violates or infringes upon the rights of any Person (as defined
below).  To the knowledge of the Company, the Company and its
Subsidiaries’ patents and other Intellectual Property Rights and the present
activities of the Company and its Subsidiaries do not infringe any patent,
copyright, trademark, trade name or other proprietary rights of any third party,
and there is no claim, action or proceeding being made or brought against, or to
the Company’s knowledge, being threatened against, the Company or any Subsidiary
regarding any of the Intellectual Property Rights.  The Company does
not have any knowledge of an infringement by another Person of any of the
Intellectual Property Rights by third parties and has no reason to believe that
any of its Intellectual Property Rights is unenforceable.  The Company
has taken commercially reasonable security measures to protect the secrecy,
confidentiality and value of all of their intellectual properties. “ Person ” means an individual
or a corporation, partnership, trust, incorporated or unincorporated
association, joint venture, limited liability company, joint stock company,
government (or an agency or political subdivision thereof) or other entity of
any kind.

    

    (y)    Transactions
with Affiliates. Except as set forth in the Commission Documents, there are no
loans, leases, agreements, contracts, royalty agreements, management contracts
or arrangements or other continuing transactions between (a) the Company or any
Subsidiary on the one hand, and (b) on the other hand, any officer, employee,
consultant or director of the Company or any of its Subsidiaries, or any person
owning any capital stock of the Company or any Subsidiary or any member of the
immediate family of such officer, employee, consultant, director or stockholder,
or any corporation or other entity controlled by such officer, employee,
consultant, director or stockholder, or a member of the immediate family of such
officer, employee, consultant, director or stockholder.

    

    (z)    Sarbanes-Oxley;
Disclosure Controls. The Company is in compliance in all material respects with
all of the provisions of the Sarbanes-Oxley Act of 2002 which are applicable to
it as of the Closing Date. The Company has established disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the
Company and designed such disclosure controls and procedures to ensure that
material information relating to the Company is made known to the certifying
officers by others within those entities, particularly during the period in
which the Company’s most recently filed periodic report under the Exchange Act
is being prepared. The Company’s certifying officers have evaluated the
effectiveness of the Company’s disclosure controls and procedures as of the end
of the most recent periodic reporting period under the Exchange Act (such date,
the “ Evaluation Date
”). The Company presented in its most recently filed periodic report under the
Exchange Act the conclusions of the certifying officers about the effectiveness
of the disclosure controls and procedures based on their evaluations as of the
Evaluation Date. Since the Evaluation Date, there have been no significant
changes in the Company’s internal controls over financial reporting (as such
term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) or, to the
Company’s knowledge, in other factors that could reasonably be expected to
materially affect the Company’s internal controls over financial
reporting

    
      
         

      

      
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    (aa) Securities
Act of 1933. Based in material part upon the representations herein of the
Purchasers, the Company has complied and will comply with all applicable federal
and state securities laws in connection with the offer, issuance and sale of the
Securities hereunder. Neither the Company nor anyone acting on its behalf,
directly or indirectly, has or will sell, offer to sell or solicit offers to buy
any of the Securities or similar securities to, or solicit offers with respect
thereto from, or enter into any preliminary conversations or negotiations
relating thereto with, any person, or has taken or will take any action so as to
bring the issuance and sale of any of the Securities under the registration
provisions of the Securities Act and applicable state securities laws, and
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 any of the Securities.

    

    (bb)
Governmental Approvals. Except for the filing of any notice prior or subsequent
to the Closing Date that may be required under applicable state and/or Federal
securities laws (which if required, shall be filed on a timely basis), including
the filing of a Form D and a registration statement or statements pursuant
to  Section
7.1  herein, no authorization, consent, approval, license,
exemption of, filing or registration with any court or governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign, is or
will be necessary for, or in connection with, the execution or delivery of the
Notes and the Warrants, or for the performance by the Company of its obligations
under the Transaction Documents.

    

    (cc) Employees.
Neither the Company nor any Subsidiary has any collective bargaining
arrangements or agreements covering any of its employees. Except as set forth
on  Schedule
2.1(cc) , neither the Company nor any Subsidiary has any employment
contract, agreement, regarding proprietary information, non-competition
agreement, non-solicitation agreement, confidentiality agreement, or any other
similar contract or restrictive covenant, relating to the right of any officer,
employee or consultant to be employed or engaged by the Company or such
Subsidiary. No officer, consultant or key employee of the Company or any
Subsidiary whose termination, either individually or in the aggregate, could
have a Material Adverse Effect, has terminated or, to the knowledge of the
Company, has any present intention of terminating his or her employment or
engagement with the Company or any Subsidiary.

    

    (dd) Absence
of Certain Developments. Except as set forth on Schedule 2.1(dd), since
December 31, 2008, neither the Company nor any Subsidiary has:

    

    (i)           issued
any stock, bonds or other corporate securities or any rights, options or
warrants with respect thereto;

    

    (ii)          borrowed
any amount or incurred or become subject to any liabilities (absolute or
contingent) except current liabilities incurred in the ordinary course of
business which are comparable in nature and amount to the current liabilities
incurred in the ordinary course of business during the comparable portion of its
prior fiscal year;

    

    (iii)         discharged
or satisfied any lien or encumbrance or paid any obligation or liability
(absolute or contingent), other than current liabilities paid in the ordinary
course of business;

    

    (iv)         declared
or made any payment or distribution of cash or other property to stockholders
with respect to its stock, or purchased or redeemed, or made any agreements so
to purchase or redeem, any shares of its capital stock;

    

    (v)      
   sold, assigned or transferred any other tangible assets, or
canceled any debts or claims, except in the ordinary course of
business;

    
      
         

      

      
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    (vi)         sold,
assigned or transferred any patent rights, trademarks, trade names, copyrights,
trade secrets or other intangible assets or intellectual property rights, or
disclosed any proprietary confidential information to any person except to
customers in the ordinary course of business;

     

    (vii)        suffered
any substantial losses or waived any rights of material value, whether or not in
the ordinary course of business, or suffered the loss of any material amount of
prospective business;

     

    (viii)       made
any changes in employee compensation except in the ordinary course of business
and consistent with past practices;

     

    (ix)         made
capital expenditures or commitments therefor that aggregate in excess of
$100,000;

     

    (x)     
    entered into any other transaction other than in the
ordinary course of business, or entered into any other material transaction,
whether or not in the ordinary course of business;

     

    (xi)         made
charitable contributions or pledges in excess of $25,000;

     

    (xii)        suffered
any material damage, destruction or casualty loss, whether or not covered by
insurance;

     

    (xiii)       experienced
any material problems with labor or management in connection with the terms and
conditions of their employment;

     

    (xiv)    
  effected any two or more events of the foregoing kind which in the
aggregate would be material to the Company or its Subsidiaries; or

     

    (xv)        entered
into an agreement, written or otherwise, to take any of the foregoing
actions.

    

    (ee)
Public Utility Holding Company Act and Investment Company Act Status. The
Company is not a “holding company” or a “public utility company” as such terms
are defined in the Public Utility Holding Company Act of 1935, as amended. The
Company is not, and as a result of and immediately upon the Closing will not be,
an “investment company” or a company “controlled” by an “investment company,”
within the meaning of the Investment Company Act of 1940, as
amended.

    

    (ff)
ERISA. No liability to the Pension Benefit Guaranty Corporation has been
incurred with respect to any Plan (as defined below) by the Company or any of
its Subsidiaries which is or would be materially adverse to the Company and its
Subsidiaries. The execution and delivery of this Agreement and the issuance and
sale of the Securities will not involve any transaction which is subject to the
prohibitions of Section 406 of ERISA or in connection with which a tax could be
imposed pursuant to Section 4975 of the Internal Revenue Code of 1986, as
amended (the “ Code
”);  provided  that
if any of the Purchasers, or any person or entity that owns a beneficial
interest in any of the Purchasers, is an “employee pension benefit plan” (within
the meaning of Section 3(2) of ERISA) with respect to which the Company is a
“party in interest” (within the meaning of Section 3(14) of ERISA), the
requirements of Sections 407(d)(5) and 408(e) of ERISA, if applicable, are met.
As used in this  Section 2.1(ff) ,
the term “ Plan ” shall
mean an “employee pension benefit plan” (as defined in Section 3 of ERISA) which
is or has been established or maintained, or to which contributions are or have
been made, by the Company or any Subsidiary or by any trade or business, whether
or not incorporated, which, together with the Company or any Subsidiary, is
under common control, as described in Section 414(b) or (c) of the
Code.

    
      
         

      

      
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    (gg)
Dilutive Effect. The Company understands and acknowledges that its obligation to
(i) issue Conversion Shares upon an Optional Conversion of the Notes in
accordance with this Agreement and the Note, and (ii) its obligations to issue
the Warrant Shares upon the exercise of the Warrants in accordance with this
Agreement and the Warrants, is, in each case, absolute and unconditional
regardless of the dilutive effect that such issuance may have on the ownership
interest of other stockholders of the Company.

    

    (hh) 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 cause the offering of the Securities pursuant to this
Agreement to be integrated with prior offerings by the Company for purposes of
the Securities Act which would prevent the Company from selling the Securities
pursuant to Rule 506 under the Securities Act, or any applicable
exchange-related stockholder approval provisions, nor will the Company or any of
its affiliates or Subsidiaries take any action or steps that would cause the
offering of the Securities to be integrated with other offerings.

    

    (ii) Listing
and Maintenance Requirements.  Except as set forth in the Commission
Documents, the Company has not, in the two (2) years preceding the date hereof,
received notice (written or oral) from any Trading Market on which the Common
Stock is or has been listed or quoted to the effect that the Company is not in
compliance with the listing or maintenance requirements of such Trading
Market.  Except as set forth in the Commission Documents, the Company
is, and has no reason to believe that it will not in the foreseeable future
continue to be, in compliance with all such listing and maintenance
requirements. “ Trading
Market ” means the OTC Bulletin Board or any other Eligible Market, or
any other national securities exchange, market or trading or quotation facility
on which the Common Stock is then listed or quoted. “ Eligible Market ” means any
of the New York Stock Exchange, the American Stock Exchange, the NASDAQ Global
Select Market, the NASDAQ Global Market, the NASDAQ Capital Market or the
Over-the-Counter Bulletin Board.

    

    (jj) Independent
Nature of Purchasers. The Company acknowledges that the obligations of each
Purchaser under the Transaction Documents are several and not joint with the
obligations of any other Purchaser, and no Purchaser shall be responsible in any
way for the performance of the obligations of any other Purchaser under the
Transaction Documents. The Company acknowledges that the decision of each
Purchaser to purchase securities pursuant to this Agreement has been made by
such Purchaser independently of any other purchase and independently of any
information, materials, statements or opinions as to the business, affairs,
operations, assets, properties, liabilities, results of operations, condition
(financial or otherwise) or prospects of the Company or of its Subsidiaries
which may have made or given by any other Purchaser or by any agent or employee
of any other Purchaser, and no Purchaser or any of its agents or employees shall
have any liability to any Purchaser (or any other person) relating to or arising
from any such information, materials, statements or opinions. The Company
acknowledges that nothing contained herein, or in any Transaction Document, and
no action taken by any Purchaser pursuant hereto or thereto, shall be deemed to
constitute the Purchasers as a partnership, an association, a joint venture or
any other kind of entity, or create a presumption that the Purchasers are in any
way acting in concert or as a group with respect to such obligations or the
transactions contemplated by the Transaction Documents. The Company acknowledges
that each Purchaser shall be entitled to independently protect and enforce its
rights, including without limitation, the rights arising out of this Agreement
or out of the other Transaction Documents, and it shall not be necessary for any
other Purchaser to be joined as an additional party in any proceeding for such
purpose. The Company acknowledges that for reasons of administrative convenience
only, the Transaction Documents have been prepared by counsel for one of the
Purchasers and such counsel does not represent all of the Purchasers but only
such Purchaser and the other Purchasers have retained their own individual
counsel with respect to the transactions contemplated hereby. The Company
acknowledges that it has elected to provide all Purchasers with the same terms
and Transaction Documents for the convenience of the Company and not because it
was required or requested to do so by the Purchasers.

     

    
      
         

      

      
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    (kk)  Questionable
Payments. Neither the Company nor any of its Subsidiaries, nor, to the Company’s
knowledge, any directors, officers, employees, agents or other Persons acting on
behalf of the Company or any of its Subsidiaries has, in the course of its
actions for, or on behalf of, the Company: (a) directly or indirectly, used any
corporate funds for unlawful contributions, gifts, entertainment or other
unlawful expenses relating to foreign or domestic political activity; (b) made
any direct or indirect unlawful payments to any foreign or domestic governmental
officials or employees or to any foreign or domestic political parties or
campaigns from corporate funds; (c) violated in any material respect any
provision of the Foreign Corrupt Practices Act of 1977, as amended; or (d) made
any other unlawful bribe, rebate, payoff, influence payment, kickback or other
unlawful payment to any foreign or domestic government official or
employee.

    

    (ll)
Application of Takeover Protections. The Company and its board of directors have
taken all necessary action, if any, in order to render inapplicable any control
share acquisition, business combination, poison pill (including any distribution
under a rights agreement) or other similar anti-takeover provision under the
Company’s charter documents or the laws of its state of incorporation that is or
could reasonably be expected to become applicable to any of the Purchasers as a
result of the Purchasers and the Company fulfilling their obligations or
exercising their rights under the Transaction Documents, including, without
limitation, the Company’s issuance of the Securities and the Purchasers’
ownership of the Securities.

    

    (mm) Transfer
Agent. The name, address, telephone number, fax number, contact person and email
address of the Company’s current transfer agent is set forth on  Schedule
2.1(mm)  hereto.

    

    Section
2.2      Representations and Warranties of
the Purchasers. Each Purchaser hereby makes the following representations and
warranties to the Company (with respect solely to itself and not with respect to
any other Purchaser), as of the date hereof, and as of the Closing
Date:

    

    (a)   Organization
and Standing of the Purchasers. If such Purchaser is an entity, such Purchaser
is a corporation, partnership or limited liability company duly incorporated or
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization.

    

    (b)   Authorization
and Power. Such Purchaser has the requisite power and authority to enter into
and perform this Agreement and to purchase the Notes and Warrants being sold to
it hereunder. The execution, delivery and performance of this Agreement by such
Purchaser and the consummation by it of the transactions contemplated hereby and
thereby have been duly authorized by all necessary corporate or partnership
action, and no further consent or authorization of such Purchaser or its board
of directors, stockholders or partners, as the case may be, is required. This
Agreement has been duly authorized, executed and delivered by such Purchaser and
constitutes, or shall constitute when executed and delivered, a valid and
binding obligation of the Purchaser enforceable against the Purchaser in
accordance with the terms thereof, except as such enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation,
conservatorship, receivership or similar laws relating to, or affecting
generally the enforcement of, creditor’s rights and remedies or by other
equitable principles of general application.

    
      
         

      

      
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    (c)   No
Conflicts. The execution, delivery and performance of this Agreement and the
consummation by such Purchaser of the transactions contemplated hereby or
relating hereto do not and will not (i) result in a violation of such
Purchaser’s charter documents or bylaws or other organizational documents 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 or obligation to which such Purchaser is a party or by
which its properties or assets are bound, or result in a violation of any law,
rule, or regulation, or any order, judgment or decree of any court or
governmental agency applicable to such Purchaser or its properties (except for
such conflicts, defaults and violations as would not, individually or in the
aggregate, have a material adverse effect on such Purchaser). Such Purchaser 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 this Agreement or to
purchase the Notes or acquire the Warrants in accordance with the terms
hereof; 
provided  that for purposes of the representation made in this
sentence, such Purchaser is assuming and relying upon the accuracy of the
relevant representations and agreements of the Company herein.

    

    (d)   Acquisition
for Investment. Such Purchaser is acquiring the Securities solely for its own
account for the purpose of investment and not with a view to or for sale in
connection with distribution. Each Purchaser does not have a present intention
to sell the Securities, nor a present arrangement (whether or not legally
binding) or intention to effect any distribution of the Securities to or through
any person or entity;  provided, however
, that by making the representations herein and subject to Section
2.2(h)  below, such Purchaser does not agree to hold the
Securities for any minimum or other specific term and reserves the right to
dispose of the Securities at any time in accordance with Federal and state
securities laws applicable to such disposition. Such Purchaser acknowledges that
it is able to bear the financial risks associated with an investment in the
Securities and that it has been given full access to such records of the Company
and the Subsidiaries and to the officers of the Company and the Subsidiaries and
received such information as it has deemed necessary or appropriate to conduct
its due diligence investigation and has sufficient knowledge and experience in
investing in companies similar to the Company in terms of the Company’s stage of
development so as to be able to evaluate the risks and merits of its investment
in the Company.

    

    (e)   Status
of Purchasers. Such Purchaser is an “accredited investor” as defined in
Regulation D promulgated under the Securities Act. Such Purchaser is not
required to be registered as a broker-dealer under Section 15 of the Exchange
Act and such Purchaser is not a broker-dealer.

    

    (f)   Opportunities
for Additional Information. Such Purchaser acknowledges that such Purchaser has
had the opportunity to ask questions of and receive answers from, or obtain
additional information from, the executive officers of the Company concerning
the financial and other affairs of the Company, and to the extent deemed
necessary in light of such Purchaser’s personal knowledge of the Company’s
affairs, such Purchaser has asked such questions and received answers to the
full satisfaction of such Purchaser, and such Purchaser desires to invest in the
Company.

    

    (g)   No
General Solicitation. Such Purchaser acknowledges that the Securities were not
offered to such Purchaser by means of any form of general or public solicitation
or general advertising, or publicly disseminated advertisements or sales
literature, including (i) any advertisement, article, notice or other
communication published in any newspaper, magazine, or similar media, or
broadcast over television or radio, or (ii) any seminar or meeting to which such
Purchaser was invited by any of the foregoing means of
communications.

     

    
      
         

      

      
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    (h)   Rule
144. Such Purchaser understands that the Securities must be held indefinitely
unless such Securities are registered under the Securities Act or an exemption
from registration is available. Such Purchaser acknowledges that such Purchaser
is familiar with Rule 144 of the rules and regulations of the Commission, as
amended, promulgated pursuant to the Securities Act (“ Rule 144 ”), and that such
Purchaser has been advised that Rule 144 permits resales only under certain
circumstances. Such Purchaser understands that to the extent that Rule 144 is
not available, such Purchaser will be unable to sell any Securities without
either registration under the Securities Act or the existence of another
exemption from such registration requirement.

    

    (i)   General.
Such Purchaser understands that the Securities are being offered and sold in
reliance on a transactional exemption from the registration requirement of
Federal and state securities laws and the Company is relying upon the truth and
accuracy of the representations, warranties, agreements, acknowledgments and
understandings of such Purchaser set forth herein in order to determine the
applicability of such exemptions and the suitability of such Purchaser to
acquire the Securities.

    

    (j)   Independent
Investment. Except as may be disclosed in any filings with the Commission by it
under Section 13 and/or Section 16 of the Exchange Act, such Purchaser has not
agreed to act with any other Purchaser for the purpose of acquiring, holding,
voting or disposing of the Securities purchased hereunder for purposes of
Section 13(d) under the Exchange Act, and such Purchaser is acting independently
with respect to its investment in the Securities.

    

    (k)   Short
Sales. Purchaser has not, during the last thirty (30) days prior to the date
hereof, directly or indirectly, nor has any party acting on behalf of or
pursuant to any understanding with such Purchaser, effected or agreed to effect
any short sale, whether or not against the box, established any “put equivalent
position” (as defined in Rule 16(a)-1(h) under the Exchange Act) with respect to
any security of the Company, granted any other right (including, without
limitation, any put or call option) with respect to any security of the Company
or with respect to any security that includes, relates to, or derives any
significant part of its value from any security of the Company or otherwise
sought to hedge its positioning of the Company’s securities.  Such
Purchaser shall not, and shall cause any affiliates not to, engage, directly or
indirectly, in any short sale transactions in the securities of the Company
during the period from the date hereof until such time as one (1) year from the
date of effectiveness of the Registration Statement (as defined in  Section 7.1
). Such Purchaser understands and acknowledges, severally and not jointly
with any other Purchaser, that the Commission currently takes the position that
covering a short position established prior to effectiveness of a resale
registration statement with shares included in such registration statement would
be a violation of Section 5 of the Securities Act, as set forth in Item 65,
Section 5 under Section A, of the Manual of Publicly Available Telephone
Interpretations, dated July 1997, compiled by the Office of Chief Counsel,
Division of Corporation Finance

    

    ARTICLE
III

    Covenants

    

    The
Company covenants with each of the Purchasers as follows, which covenants are
for the benefit of each Purchaser and its permitted assignees (as defined
herein):

    

    Section
3.1      Securities Compliance. The Company
shall notify the Commission in accordance with their rules and regulations, of
the transactions contemplated by any of the Transaction Documents, including
filing a Form D with respect to the Notes, Warrants, the Conversion Shares and
the Warrant Shares as required under Regulation D and applicable “blue sky”
laws, and shall take all other necessary action and proceedings as may be
required and permitted by applicable law, rule and regulation, for the legal and
valid issuance of the Notes, the Warrants, the Conversion Shares and the Warrant
Shares to the Purchasers or subsequent holders.

     

    
      
         

      

      
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    Section
3.2      Registration and Listing. The
Company shall (a) comply in all respects with its reporting and filing
obligations under the Exchange Act, (b) comply with all requirements related to
any registration statement filed pursuant to this Agreement, and (c) not take
any action or file any document (whether or not permitted by the Securities Act
or the rules promulgated thereunder) to terminate or suspend such registration
or to terminate or suspend its reporting and filing obligations under the
Exchange Act or Securities Act, except as permitted herein. The Company will
take all action necessary to continue the listing or trading of its Common Stock
on the OTC Bulletin Board or other exchange or market on which the Common Stock
is trading or may be traded in the future. Subject to the terms of the
Transaction Documents, the Company further covenants that it will take such
further action as the Purchasers may reasonably request, all to the extent
required from time to time to enable the Purchasers to sell the Securities
without registration under the Securities Act within the limitation of the
exemptions provided by Rule 144 promulgated under the Securities Act. Upon the
request of the Purchasers, the Company shall deliver to the Purchasers a written
certification of a duly authorized officer as to whether it has complied with
such requirements.

     

    Section
3.3      Inspection Rights. In the event that the
Purchaser no longer has a representative on the Company’s board of directors,
the Company shall permit, during normal business hours and upon reasonable
request and reasonable notice, each Purchaser or any employees, agents or
representatives thereof, so long as any Notes remain outstanding, for purposes
reasonably related to such Purchaser’s interests as a convertible debtholder, to
examine and make reasonable copies of and extracts from the records and books of
account of, and visit and inspect the properties, assets, operations and
business of the Company and any Subsidiary, and to discuss the affairs, finances
and accounts of the Company and any Subsidiary with any of its officers,
consultants, directors, and key employees.  As a condition to such
inspection, Purchasers shall keep such information confidential;  provided  that
such information may be disclosed (i) to the extent required by applicable law,
regulation or legal process, subpoena, civil investigative demand or other
similar process, (ii) to the extent reasonably necessary in connection with the
enforcement of rights under this Agreement, (iii) to any governmental, judicial
or regulatory authority requiring or requesting such information, and (iv) to
its directors, officers, employees, agents, managers and general partners,
consultants, accountants, financial advisers, legal counsel and other
professional advisers.

     

    Section
3.4      Compliance with Laws. The Company
shall comply, and cause each Subsidiary, whether such Subsidiary is in existence
as of the date of this agreement or formed or acquired subsequent to the date of
this agreement, to comply, with all applicable laws, rules, regulations and
orders, noncompliance with which could have a Material Adverse
Effect.

    

    Section
3.5      Keeping of Records and Books of
Account. The Company shall keep and cause each Subsidiary to keep adequate
records and books of account, in which complete entries will be made in
accordance with GAAP consistently applied, reflecting all financial transactions
of the Company and its Subsidiaries, and in which, for each fiscal year, all
proper reserves for depreciation, depletion, obsolescence, amortization, taxes,
bad debts and other purposes in connection with its business shall be
made.

     

    
      
         

      

      
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     Section
3.6      Furnishing of Information. Until
all of the Securities are eligible for sale without limitations concerning
the availability of current public information under Rule 144 promulgated under
the Securities Act, the Company covenants to timely file (or obtain extensions
in respect thereof and file within the applicable grace period) all reports
required to be filed by the Company after the date hereof pursuant to the
Exchange Act. Until all of the Securities are eligible for sale without
limitations concerning the availability of current public information under Rule
144 promulgated under the Securities Act, if the Company is not required to file
reports pursuant to such laws, it will prepare and furnish to the Purchasers and
make publicly available in accordance with Rule 144(c) such information as is
required for the Purchasers to sell the Securities under Rule 144. The Company
further covenants that it will take such further action as any holder of
Securities may reasonably request, all to the extent required from time to time
to enable such Person to sell the Securities without registration under the
Securities Act within the limitation of the exemptions provided by Rule
144.

    

    Section
3.7      Reporting Requirements. If the
Commission ceases making periodic reports filed under the Exchange Act available
via the Internet, then at a Purchaser’s request the Company shall furnish the
following to such Purchaser so long as such Purchaser shall be obligated
hereunder to purchase the Notes or shall beneficially own any
Securities:

    

    (a)   quarterly
reports filed with the Commission on Form 10-Q as soon as practical after the
document is filed with the Commission, and in any event within five (5) days
after the document is filed with the Commission;

    

    (b)   annual
reports filed with the Commission on Form 10-K as soon as practical after the
document is filed with the Commission, and in any event within five (5) days
after the document is filed with the Commission; and

    

    (c)   copies
of all notices and information, including without limitation notices and proxy
statements in connection with any meetings, that are provided to holders of
shares of Common Stock, contemporaneously with the delivery of such notices or
information to such holders of Common Stock.

    

    Section
3.8      Amendments. The Company shall not
amend or waive any provision of the Certificate or Bylaws of the Company in any
way that would materially and adversely affect the rights of the holders of the
Notes and/or Warrants. No consideration shall be offered or paid to any holders
of the Notes or the Warrants to amend or consent to a waiver or modification of
any provision of any of the Transaction Documents unless the same consideration
also is offered to all of the parties to the Transaction Documents, holders of
Notes or Warrants, as the case may be.  The Company has not, directly
or indirectly, made any agreements with any Purchasers relating to the terms or
conditions of the transactions contemplated by the Transaction Documents except
as set forth in the Transaction Documents.  Without limiting the
foregoing, the Company confirms that, except as set forth in this Agreement, no
Purchaser has made any commitment or promise or has any other obligation to
provide any financing to the Company or otherwise.

    

    Section
3.9      Other Agreements. The Company
shall not enter into any agreement in which the terms of such agreement would
materially restrict or impair the right or ability to perform of the Company or
any Subsidiary under any Transaction Document.

    

    Section
3.10    Distributions. So long as any
Notes remain outstanding, the Company agrees that it shall not (i) declare
or pay any dividends or make any distributions to any holder(s) of Common Stock
or (ii) purchase or otherwise acquire for value, directly or indirectly, any
Common Stock or other equity security of the Company.

    

    Section
3.11    Use of Proceeds. The net proceeds from the
sale of the Notes and Warrants hereunder shall be used by the Company
for general corporate purposes, and not to redeem any Common Stock or
securities convertible, exercisable or exchangeable into Common Stock, to
settle any outstanding litigation or to cause any increase in management’s
compensation, direct or otherwise, in a manner other than in the ordinary course
of business.  An estimated allocation of the net proceeds from the
sale of the Securities hereunder is set forth on  Schedule
3.11  hereto.

     

    
      
         

      

      
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    Section
3.12    Reservation of Shares. So long as any of the
Notes or Warrants remain outstanding, the Company shall take all action
necessary to at all times have authorized, and reserved for the purpose of
issuance, no less than one hundred twenty percent (120%) of the aggregate number
of shares of Common Stock needed to provide for the issuance of the Conversion
Shares and the Warrant Shares.

    

    Section 3.13   
Transfer Agent Instructions. The Company shall issue irrevocable instructions to
its transfer agent, and any subsequent transfer agent, to issue certificates,
registered in the name of each Purchaser or its respective nominee(s), for the
Conversion Shares and the Warrant Shares in such amounts as specified from time
to time by each Purchaser to the Company upon an Optional Conversion of the
Notes or exercise of the Warrants in the form of  Exhibit
D  attached hereto (the “ Irrevocable Transfer Agent
Instructions ”). Prior to registration of the Conversion Shares and the
Warrant Shares under the Securities Act, all such certificates shall bear the
restrictive legend specified in  Section
5.1  of this Agreement. The Company warrants that no
instruction other than the Irrevocable Transfer Agent Instructions referred to
in this  Section
3.13 will be given by the Company to its transfer agent and that the
Conversion Shares and Warrant Shares shall otherwise be freely transferable on
the books and records of the Company as and to the extent provided in this
Agreement. If a Purchaser provides the Company with an opinion of counsel, in a
generally acceptable form, to the effect that a public sale, assignment or
transfer of the Conversion Shares and Warrant Shares may be made without
registration under the Securities Act or the Purchaser provides the Company with
reasonable assurances that such Conversion Shares and Warrant Shares can be sold
pursuant to Rule 144 without any restriction as to the number of securities
acquired as of a particular date that can then be immediately sold, the Company
shall permit the transfer, and, in the case of the Conversion Shares and the
Warrant Shares, promptly instruct its transfer agent to issue one or more
certificates in such name and in such denominations as specified by such
Purchaser and without any restrictive legend. The Company acknowledges that a
breach by it of its obligations under this  Section
3.13  will cause irreparable harm to the Purchasers 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
3.13  will be inadequate and agrees, in the event of a breach
or threatened breach by the Company of the provisions of this  Section 3.13 ,
that the Purchasers shall be entitled, in addition to all other available
remedies, to an order and/or injunction restraining any breach and requiring
immediate issuance and transfer, without the necessity of showing economic loss
and without any bond or other security being required.

    

    Section 3.14   
Disposition of Assets. So long as any Notes remain outstanding, neither the
Company nor any Subsidiary shall sell, transfer or otherwise dispose of any of
its properties, assets and rights including, without limitation, its software
and intellectual property, to any person except for (A) sales to customers in
the ordinary course of business; (B) sales of assets not in excess of 25% of the
Company’s total assets as shown on its balance sheet; or (C) with the prior
written consent of the holders of a majority of the holders of the Notes and
Warrants then outstanding.

    

    Section 3.15   
Reporting Status. So long as a Purchaser
beneficially owns any of the Securities, the Company shall timely file all
reports required to be filed with the Commission pursuant to the Exchange Act,
and the Company shall not cease filing reports under the Exchange Act even if
the Exchange Act or the rules and regulations thereunder would permit such
termination.

     

    
      
         

      

      
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    Section 3.16   
Disclosure of Transaction. The Company shall issue a press release describing
the material terms of the transactions contemplated hereby (the “ Press Release ”) as soon as
practicable after the Closing but in no event later than four (4) business days
after the Closing has been consummated. The Company shall also file with the
Commission a Current Report on Form 8-K (the “ Form 8-K ”) describing the
material terms of the transactions contemplated hereby (and attaching as
exhibits thereto this Agreement, the form of Note, the form of Warrant and the
Press Release) as soon as practicable following the Closing Date but in no event
more than four (4) Trading Days following the Closing Date, which Press Release
and Form 8-K shall be subject to prior review and comment by counsel for the
Purchasers. “ Trading
Day ” means any day during which the OTC Bulletin Board (or other
quotation venue or principal exchange on which the Common Stock is traded) shall
be open for trading.

    

    Section 3.17   
Disclosure of Material Information. Except for any information disclosed to
Robert Thomson, the Company represents, covenants and agrees that neither it nor
any other person acting on its behalf has provided or will provide any Purchaser
or its agents or counsel with any information that the Company believes
constitutes material non-public information (other than with respect to the
transactions contemplated by this Agreement), unless prior thereto such
Purchaser shall have executed a written agreement regarding the confidentiality
and use of such information. The Company understands and confirms that each
Purchaser shall be relying on the foregoing representations in effecting
transactions in securities of the Company.

    

    Section 3.18   
Pledge of Securities. The Company acknowledges and agrees that the Securities
may be pledged by a Purchaser in connection with a  bona
fide  margin agreement or other loan or financing arrangement
that is secured by the Securities. The pledge of Securities shall not be deemed
to be a transfer, sale or assignment of the Securities hereunder, and no
Purchaser effecting a pledge of Securities shall be required to provide the
Company with any notice thereof or otherwise make any delivery to the Company
pursuant to this Agreement or any other Transaction Document;  provided  that
a Purchaser and its pledgee shall be required to comply with the provisions
of  Article
V  hereof in order to effect a sale, transfer or assignment of
Securities to such pledgee. At the Purchasers’ expense, the Company hereby
agrees to execute and deliver such documentation as a pledgee of the Securities
may reasonably request in connection with a pledge of the Securities to such
pledgee by a Purchaser.

    

    Section 3.19   
Form S-1 Eligibility. The Company currently meets the “registrant eligibility”
and transaction requirements set forth in the general instructions to Form S-1
applicable to “resale” registrations on Form S-1 and the Company shall file all
reports required to be filed by the Company with the Commission in a timely
manner.

    

    Section 3.20   
DTC. Not later than the effective date of the Registration Statement, the
Company shall cause its Common Stock to be eligible for transfer with its
transfer agent pursuant to the Depository Trust Company Automated Securities
Transfer Program.

    

    Section 3.21   
Issuance of Variable Securities. The Company shall not
issue any Options or Convertible Securities (each as defined in the Note) with
an exercise price or a conversion price or a number of underlying shares that
floats or resets or otherwise varies or is subject to adjustment based (directly
or indirectly) on market prices of the Common Stock.

    

    Section 3.22   
Approval of Acquisitions.  So long as any Notes remain outstanding,
the Company shall not effect, or agree to effect, an acquisition or buy out of
or with any entity (including without limitation the acquisition of a
substantial portion of the outstanding securities or assets of another entity
other than in the ordinary course of business), or a consolidation or merger of
the Company with or into any other corporation or corporations (or other entity
or entities), or a sale of all or substantially all of the assets of the
Company, or the effectuation by the Company of a transaction or series of
related transactions in which more than 50% of the voting shares of the Company
is disposed of or conveyed, without providing the holders of the Notes with ten
(10) days’ notice of such transaction.

     

    
      
         

      

      
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    Section 3.23   
Most Favored Nations. If the Company has, on or prior to the date of this
Agreement, entered into, or shall in the future enter into, any agreement with
any purchaser or holder of capital stock of the Company, by providing such
purchaser or holder with any terms that are more favorable than the rights made
available to the Purchasers pursuant any terms set out in the Transaction
Documents in issue as of the date hereof, the Company shall promptly notify the
Purchasers of such terms in writing and Purchasers shall have the right to elect
in writing within thirty (30) days of the receipt of such notice to elect to
have such terms apply to such Transaction Documents.  This provision
shall only apply to an equity or convertible debt investment by one or more
investors in excess of $3.0 million and shall terminate upon the earlier to
occur of (A) one (1) year from the date of this Agreement or (B) at any time
Purchasers own in the aggregate less than four (4%) percent of the Company’s
outstanding common stock on a fully diluted basis.

     

    ARTICLE
IV

    Conditions

    

    Section
4.1      Conditions Precedent to the
Obligation of the Company to Sell the Securities. The obligation hereunder of
the Company to issue and sell the Securities to the Purchasers at the Closing is
subject to the satisfaction or waiver, at or before the Closing, of each of the
conditions set forth below. These conditions are for the Company’s sole benefit
and may be waived by the Company at any time in its sole
discretion.

    

    (a)   Accuracy
of Each Purchaser’s Representations and Warranties. The representations and
warranties of each Purchaser shall be true and correct in all material respects
as of the date when made and as of the Closing Date as though made at that time,
except for representations and warranties that are expressly made as of a
particular date, which shall be true and correct in all material respects as of
such date.

    

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

    

    (c)   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 which prohibits the
consummation of any of the transactions contemplated by this
Agreement.

    

    (d)   Delivery
of Purchase Price. The Purchase Price for the Securities to be issued at
the Closing has been delivered to the Company.

    

    (e)   Surrender
of Existing Notes. The Exiting Notes have been surrendered to the Company for
cancellation.

    

    (f)   Delivery
of Transaction Documents. The Transaction Documents have been duly executed and
delivered by the Purchasers to the Company (as of the Closing).

    

    Section
4.2      Conditions Precedent to the
Obligation of the Purchasers to Purchase the Securities. The obligation
hereunder of each Purchaser to acquire and pay for the Securities is subject to
the satisfaction or waiver, at or before the Closing, of each of the conditions
set forth below. These conditions are for each Purchaser’s sole benefit and may
be waived by such Purchaser at any time in its sole discretion.

     

    
      
         

      

      
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    (a)   Accuracy
of the Company’s and Nectar’s Representations and Warranties. Each of the
representations and warranties of the Company and Nectar in this Agreement shall
be true and correct in all respects as of the date when made and as of the
Closing Date, except for representations and warranties that are expressly made
as of a particular date, which shall be true and correct in all respects as of
such date.

    

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

    

    (c)   No
Suspension, Etc. Trading in the Company’s Common Stock shall not have been
suspended by the Commission or the OTC Bulletin Board (except for any suspension
of trading of limited duration agreed to by the Company, which suspension shall
be terminated prior to the Closing), and, at any time prior to the Closing Date,
trading in securities generally as reported by Bloomberg Financial Markets
(“ Bloomberg ”) shall
not have been suspended or limited, or minimum prices shall not have been
established on securities whose trades are reported by Bloomberg, or on the New
York Stock Exchange, nor shall a banking moratorium have been declared either by
the United States or New York State authorities, nor shall there have occurred
any material outbreak or escalation of hostilities or other national or
international calamity or crisis of such magnitude in its effect on, or any
material adverse change in any financial market which, in each case, in the
judgment of such Purchaser, makes it impracticable or inadvisable to purchase
the Securities to be issued as of the Closing.

    

    (d)   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 which prohibits the
consummation of any of the transactions contemplated by this
Agreement.

    

    (e)   No
Proceedings or Litigation. No action, suit or proceeding before any arbitrator
or any governmental authority shall have been commenced, and no investigation by
any governmental authority shall have been threatened, against the Company or
any Subsidiary, or any of the officers, directors or affiliates of the Company
or any Subsidiary seeking to restrain, prevent or change the transactions
contemplated by this Agreement, or seeking damages in connection with such
transactions.

    

    (f)   Opinion
of Counsel, Etc. At the Closing, the Purchasers shall have received an opinion
of counsel to the Company, dated the date of the Closing, in substantially the
form of  Exhibit
E  hereto, and such other certificates and documents as the
Purchasers or its counsel shall reasonably require incident to the
Closing.

    

    (g)   Intentionally
omitted.

    

    (h)   Notes
and Warrants. The Company and Nectar, as applicable, shall have executed and
delivered to the Purchasers the certificates (in such denominations as such
Purchaser shall request) for the Notes and Warrants being acquired by such
Purchaser at the Closing (in such denominations as such Purchaser shall
request).

    

    (i)   
Resolutions. The board of directors of the Company and Nectar shall have adopted
resolutions consistent with  Section
2.1(b)  hereof in a form reasonably acceptable to such
Purchaser (the “
Resolutions ”).

     

    
      
         

      

      
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    (j)   Reservation
of Shares. So long as any of the Notes or Warrants remain outstanding, the
Company shall take all action necessary to at all times have authorized, and
reserved for the purpose of issuance, no less than (i) such number of shares of
Common Stock equal to one hundred twenty percent (120%) of the number of shares
of Common Stock as shall from time to time be sufficient to effect an Optional
Conversion of all of the Notes and (ii) as of the date hereof, such number of
shares of Common Stock equal to one hundred twenty percent (120%) of the number
of shares of Common Stock as shall from time to time be sufficient to effect the
exercise of the Warrants then outstanding.

    

    (k)   Transfer
Agent Instructions. As of the Closing Date, the Irrevocable Transfer Agent
Instructions, in the form of  Exhibit D
 attached hereto, shall have been delivered to and acknowledged in writing
by the Company’s transfer agent.

    

    (l)   Intentionally
omitted.

    

    (m)   Good
Standing Certificates.  The Company and Nectar shall have delivered to
the Purchasers good standing certificates showing it and any subsidiary are
validly existing and in good standing under the laws of the state of their
incorporation and as a foreign corporation in each jurisdiction in which the
nature of the business conducted or property owned by such entity makes such
qualification necessary, except where the failure to be so qualified or in good
standing, as the case may be, would not result in a direct and/or indirect
Material Adverse Effect.

    

    (n)   Secretary’s
Certificate. The Company and Nectar shall have delivered to such Purchaser a
secretary’s certificate, dated as of the Closing Date, as to (i) the
Resolutions, (ii) the Certificate, (iii) the Bylaws, and (iv) the authority and
incumbency of the officers of the Company executing the Transaction Documents,
the Securities and any other documents required to be executed or delivered in
connection therewith.

    

    (o)   Officer’s
Certificate. The Company and Nectar shall have delivered to the Purchasers a
certificate of an executive officer of the Company, dated as of the Closing
Date, confirming the accuracy of the Company’s representations, warranties and
covenants as of the Closing Date and confirming the compliance by the Company
with the conditions precedent set forth in this  Section
4.2  as of the Closing Date.

    

    (p)   Material
Adverse Effect. No Material Adverse Effect shall have occurred at or before the
Closing Date.

    

    ARTICLE
V

    Stock
Certificate Legend

    

    Section
5.1      Legend. Each certificate
representing the Notes and the Warrants, and, if appropriate, securities issued
upon conversion or exercise thereof, shall be stamped or otherwise imprinted
with a legend substantially in the following form (in addition to any legend
required by applicable state securities or “blue sky” laws):

    

    THE
SECURITIES REPRESENTED BY THIS CERTIFICATE (THE “SECURITIES”) HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ SECURITIES ACT
”), OR APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD, TRANSFERRED, OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR RECEIPT BY THE
COMPANY OF A WRITTEN OPINION OF COUNSEL IN FORM, SUBSTANCE AND SCOPE REASONABLY
SATISFACTORY TO THE COMPANY THAT SUCH SECURITIES MAY BE SOLD,
TRANSFERRED,  OR OTHERWISE DISPOSED OF, UNDER AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT AND SUCH STATE SECURITIES
LAWS.

     

    
      
         

      

      
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    The
Company agrees to reissue certificates representing any of the Conversion Shares
and the Warrant Shares, without the legend set forth above if at such time,
prior to making any transfer of any such securities, such holder thereof shall
give written notice to the Company describing the manner and terms of such
transfer and removal as the Company may reasonably request. Such proposed
transfer and removal will not be effected until: (a) either (i) the Company has
received an opinion of counsel reasonably satisfactory to the Company, to the
effect that the registration of the Conversion Shares or the Warrant Shares
under the Securities Act is not required in connection with such proposed
transfer, (ii) a registration statement under the Securities Act covering such
proposed disposition has been filed by the Company with the Commission and has
become effective under the Securities Act, (iii) the Company has received other
evidence reasonably satisfactory to the Company that such registration and
qualification under the Securities Act and state securities laws are not
required, or (iv) the holder provides the Company with reasonable assurances
that such security can be sold pursuant to Rule 144 under the Securities Act;
and (b) either (i) the Company has received an opinion of counsel reasonably
satisfactory to the Company, to the effect that registration or qualification
under the securities or “blue sky” laws of any state is not required in
connection with such proposed disposition, or (ii) compliance with applicable
state securities or “blue sky” laws has been effected or a valid exemption
exists with respect thereto. The Company will respond to any such notice from a
holder within five (5) business days. In the case of any proposed transfer under
this  Section
5.1 , the Company will use reasonable efforts to comply with any such
applicable state securities or “blue sky” laws, but shall in no event be
required, (x) to qualify to do business in any state where it is not then
qualified, (y) to take any action that would subject it to tax or to the general
service of process in any state where it is not then subject, or (z) to comply
with state securities or “blue sky” laws of any state for which registration by
coordination is unavailable to the Company. The restrictions on transfer
contained in this  Section
5.1  shall be in addition to, and not by way of limitation of,
any other restrictions on transfer contained in any other section of this
Agreement. Whenever a certificate representing the Conversion Shares or the
Warrant Shares is required to be issued to a Purchaser without a legend, in lieu
of delivering physical certificates representing the Conversion Shares or the
Warrant Shares (provided that a registration statement under the Securities Act
providing for the resale of the Warrant Shares and the Conversion Shares is then
in effect), the Company shall cause its transfer agent to electronically
transmit the Conversion Shares or the Warrant Shares to a Purchaser by crediting
the account of such Purchaser or such Purchaser’s Prime Broker with the
Depository Trust Company (“
DTC ”) through its Deposit Withdrawal Agent Commission (“ DWAC ”) system (to the extent
not inconsistent with any provisions of this Agreement).

    

    ARTICLE
VI

    Indemnification

    

    Section
6.1      General Indemnity. The Company
agrees to indemnify and hold harmless the Purchasers (and their respective
directors, officers, managers, partners, members, shareholders, affiliates,
agents, attorneys, successors and assigns) from and against any and all losses,
liabilities, deficiencies, costs, damages and expenses (including, without
limitation, reasonable attorneys’ fees, charges and disbursements) incurred by
the Purchasers as a result of any inaccuracy in or breach of the
representations, warranties or covenants made by the Company
herein.

     

    
      
         

      

      
        22

        
          

        

      

      
         

      

    

    

    Section
6.2      Indemnification Procedure. Any
party entitled to indemnification under this Article VI (an “ indemnified party ”) will
give written notice to the indemnifying party of any matters giving rise to a
claim for indemnification;  provided  that
the failure of any party entitled to indemnification hereunder to give notice as
provided herein shall not relieve the indemnifying party of its obligations
under this  Article
VI  except to the extent that the indemnifying party is
actually prejudiced by such failure to give notice. In case any action,
proceeding or claim is brought against an indemnified party in respect of which
indemnification is sought hereunder, the indemnifying party shall be entitled to
participate in and, unless in the reasonable judgment of the indemnified party a
conflict of interest between it and the indemnifying party may exist with
respect of such action, proceeding or claim, to assume the defense thereof with
counsel reasonably satisfactory to the indemnified party. In the event that the
indemnifying party advises an indemnified party that it will contest such a
claim for indemnification hereunder, or fails, within thirty (30) days of
receipt of any indemnification notice to notify, in writing, such person of its
election to defend, settle or compromise, at its sole cost and expense, any
action, proceeding or claim (or discontinues its defense at any time after it
commences such defense), then the indemnified party may, at its option, defend,
settle or otherwise compromise or pay such action or claim. In any event, unless
and until the indemnifying party elects in writing to assume and does so assume
the defense of any such claim, proceeding or action, the indemnified party’s
costs and expenses arising out of the defense, settlement or compromise of any
such action, claim or proceeding shall be losses subject to indemnification
hereunder. The indemnified party shall cooperate fully with the indemnifying
party in connection with any negotiation or defense of any such action or claim
by the indemnifying party and shall furnish to the indemnifying party all
information reasonably available to the indemnified party which relates to such
action or claim. The indemnifying party shall keep the indemnified party fully
apprised at all times as to the status of the defense or any settlement
negotiations with respect thereto. If the indemnifying party elects to defend
any such action or claim, then the indemnified party shall be entitled to
participate in such defense with counsel of its choice at its sole cost and
expense. The indemnifying party shall not be liable for any settlement of any
action, claim or proceeding effected without its prior written consent.
Notwithstanding anything in this  Article
VI  to the contrary, the indemnifying party shall not, without
the indemnified party’s prior written consent, settle or compromise any claim or
consent to entry of any judgment in respect thereof which imposes any future
obligation on the indemnified party or which does not include, as an
unconditional term thereof, the giving by the claimant or the plaintiff to the
indemnified party of a release from all liability in respect of such claim. The
indemnification required by this  Article
VI  shall be made by periodic payments of the amount thereof
during the course of investigation or defense, as and when bills are received or
expense, loss, damage or liability is incurred, so long as the indemnified party
irrevocably agrees to refund such moneys if it is ultimately determined by a
court of competent jurisdiction that such party was not entitled to
indemnification. The indemnity agreements contained herein shall be in addition
to (a) any cause of action or similar rights of the indemnified party against
the indemnifying party or others, and (b) any liabilities the indemnifying party
may be subject to pursuant to the law.

     

    
      
         

      

      
        23

        
          

        

      

      
         

      

    

    

    ARTICLE
VII

    Registration
Rights

    

    Section
7.1      Piggyback Registration
Rights.  If at any time the Company shall determine to prepare and
file with the Commission a registration statement (a “ Registration Statement ”)
relating to an offering for its own account or the account of others under the
Securities Act of any of its equity securities, other than on Form S-4 or Form
S-8 (each as promulgated under the Securities Act) or their then equivalents
relating to equity securities to be issued solely in connection with any
acquisition of any entity or business or equity securities issuable in
connection with stock option or other employee benefit plans, the Company shall
send to each holder of the Notes and Warrants written notice of such
determination and, if within thirty (30) days after receipt of such notice, or
within such shorter period of time as may be specified by the Company in such
written notice as may be necessary for the Company to comply with its
obligations with respect to the timing of the filing of such Registration
Statement, any such holder shall so request in writing (which request shall
specify the Conversion Shares and the Warrant Shares intended to be disposed of
by the Purchasers, if any), the Company will cause the registration under the
Securities Act of all Conversion Shares and the Warrant Shares which the Company
has been so requested to register by the holder, to the extent required to
permit the disposition of the Conversion Shares and the Warrant Shares so to be
registered;
provided  that if at any time after giving written notice of
its intention to register any securities and prior to the effective date of the
Registration Statement filed in connection with such registration, the Company
shall determine for any reason not to register or to delay registration of such
securities, the Company may, at its election, give written notice of such
determination to such holder and, thereupon, (i) in the case of a determination
not to register, shall be relieved of its obligation to register any Conversion
Shares and Warrant Shares in connection with such registration (but not from its
obligation to pay fees and expenses in accordance with  Section
8.1  hereof), and (ii) in the case of a determination to delay
registering, shall be permitted to delay registering any Conversion Shares and
Warrant Shares being registered pursuant to this  Section
7.1  for the same period as the delay in registering such other
securities. The Company shall include in such Registration Statement all or any
part of such Conversion Shares and Warrant Shares such holder requests to be
registered;  provided, however
, that the Company shall not be required to register any Conversion Shares and
Warrant Shares pursuant to this  Section
7.1  that are eligible for resale without limitations
concerning the availability of current public information pursuant to Rule 144
of the Securities Act. In the case of an underwritten public offering, if the
managing underwriter(s) or underwriter(s) should reasonably object to the
inclusion of the Conversion Shares and Warrant Shares in such Registration
Statement, then if the Company after consultation with the managing underwriter
should reasonably determine that the inclusion of such Conversion Shares and
Warrant Shares would materially adversely affect the offering contemplated in
such Registration Statement, and based on such determination recommends
inclusion in such Registration Statement of fewer or none of the Conversion
Shares and Warrant Shares of the holders, then (x) the number of Conversion
Shares and Warrant Shares of the holders included in such Registration Statement
shall be reduced pro-rata among such holders   (based upon the number
of Conversion Shares and Warrant Shares requested to be included in the
registration), if the Company after consultation with the underwriter(s)
recommends the inclusion of fewer Conversion Shares and Warrant Shares, or (y)
none of the Conversion Shares and Warrant Shares of the Holders shall be
included in such Registration Statement, if the Company after consultation with
the underwriter(s) recommends the inclusion of none of such Conversion Shares
and Warrant Shares;  provided, however
, that if securities are being offered for the account of other persons or
entities as well as the Company, such reduction shall not represent a greater
fraction of the number of Conversion Shares and Warrant Shares intended to be
offered by the holders than the fraction of similar reductions imposed on such
other persons or entities (other than the Company).

    

    Section
7.2      Assignment of Registration Rights.
The rights of each Purchaser hereunder, including the right to have the Company
register for resale Conversion Shares and Warrant Shares in accordance with the
terms of this Agreement, shall be automatically assignable by each Purchaser to
any Person who acquires all or a portion   of the Conversion
Shares and the Warrant Shares if: (i) the Purchaser agrees in writing with the
transferee or assignee to assign such rights, and a copy of such agreement is
furnished to the Company within a reasonable time after such assignment, (ii)
the Company is, within a reasonable time after such transfer or assignment,
furnished with written notice of (A) the name and address of such transferee or
assignee, and (B) the securities with respect to which such registration rights
are being transferred or assigned, (iii) following such transfer or assignment
the further disposition of such securities by the transferee or assignees is
restricted under the Securities Act and applicable state securities laws unless
such securities are registered in a Registration Statement pursuant to  Section 7.1  
(in which case the Company shall be obligated to amend such Registration
Statement to reflect such transfer or assignment) or are otherwise exempt from
registration, (iv) at or before the time the Company receives the written notice
contemplated by clause (ii) of this  Section 7.2 , the
transferee or assignee agrees in writing with the Company to be bound by all of
the provisions of this Agreement, and (v) such transfer shall have been made in
accordance with the applicable requirements of this Agreement. In addition, each
Purchaser shall have the right to assign its rights hereunder to any other
person with the prior written consent of the Company, which consent shall not
unreasonably be withheld.  The rights to assignment shall apply to the
Purchasers (and to subsequent) successors and assigns.

     

    
      
         

      

      
        24

        
          

        

      

      
         

      

    

    

    Section
7.3      Underwriter Status. Subject to
compliance with applicable law, the Company may not deem any Purchaser to be an
“underwriter” within the meaning of the Securities Act within any Registration
Statement nor file any such Registration Statement without the prior written
consent of such Purchaser.

    

    ARTICLE VIII

    Miscellaneous

    

    Section
8.1      Specific Enforcement. The Company
and the Purchasers acknowledge and agree that irreparable damage would occur in
the event that any of the provisions of this Agreement or the other Transaction
Documents were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent or cure breaches of the provisions of
this Agreement and to enforce specifically the terms and provisions hereof or
thereof, this being in addition to any other remedy to which any of them may be
entitled by law or equity.

    

    Section
8.2      Entire Agreement; Amendment. This
Agreement and the Transaction Documents contains the entire understanding and
agreement of the parties with respect to the matters covered hereby and, except
as specifically set forth herein or in the Transaction Documents, neither the
Company nor any of the Purchasers makes any representations, warranty, covenant
or undertaking with respect to such matters and they supersede all prior
understandings and agreements with respect to said subject matter, all of which
are merged herein. No provision of this Agreement may be waived or amended other
than by a written instrument signed by the Company and the holders of at least a
majority of the Notes then outstanding, and no provision hereof may be waived
other than by an a written instrument signed by the party against whom
enforcement of any such amendment or waiver is sought. No such amendment shall
be effective to the extent that it applies to less than all of the holders of
the Notes then outstanding. No consideration shall be offered or paid to any
person to amend or consent to a waiver or modification of any provision of any
of the Transaction Documents unless the same consideration is also offered to
all of the parties to the Transaction Documents or holders of the Notes, as the
case may be.

    

    Section
8.3      Rescission and Withdrawal
Right.  Notwithstanding anything to the contrary contained in (and
without limiting any similar provisions of) the Transaction Documents, whenever
any Purchaser exercises a material right, election, demand or option under a
Transaction Document and the Company does not timely perform its related
obligations within the periods therein provided, then such Purchaser may rescind
or withdraw, in its sole discretion from time to time upon written notice to the
Company, any relevant notice, demand or election in whole or in part without
prejudice to its future actions and rights.

    
      
         

      

      
        25

        
          

        

      

      
         

      

    

     

    Section
8.4      Notices. Any notice, demand,
request, waiver or other communication required or permitted to be given
hereunder shall be in writing and shall be effective (a) upon hand delivery or
facsimile at the address or number designated below (if delivered on a business
day during normal business hours where such notice is to be received), or the
first business day following such delivery (if delivered other than on a
business day during normal business hours where such notice is to be received)
or (b) on the second business day following the date of mailing by express
courier service, fully prepaid, addressed to such address, or upon actual
receipt of such mailing, whichever shall first occur. The addresses for such
communications shall be:

    

    
      
        
          
            
              
                	
                        If
      to the Company:

                      	
                        Juma
      Technology Corp.

                        154
      Toledo Street

                        Farmingdale,
      New York 11735

                        Attention:
      Chief Executive Officer

                        Tel.
      No.: (631) 300-1000

                        Fax
      No.: (631) 270-1105

                         

                      
	
                        with
      copies to:

                      	
                        Gersten
      Savage LLP

                        600
      Lexington Avenue, 9th Floor

                        New
      York, New York 10022

                        Attention:
      Jay Kaplowitz, Esq.

                        Tel.
      No.: (212) 752-9700

                        Fax
      No.: (212) 980-5192

                         

                      
	
                        If
      to any Purchaser:

                      	
                        At
      the address of such Purchaser set forth on Exhibit A to this
      Agreement, with copies to Purchaser’s counsel (which copies shall not
      constitute notice to such purchaser) as set forth on  Exhibit
      A  or as specified in writing by such
      Purchaser.

                         

                      
	
                         with
      copies to:

                      	
                        Sadis
      & Goldberg LLP

                        551
      Fifth Avenue, 21st
      Floor

                        New
      York, New York 10176

                        Attention:
      Paul Fasciano, Esq.

                        Tel.
      No.: (212) 573-8025

                        Fax
      No.: (212)
573-8026

                      

              

            

          

        

      

    

    

    Any party
hereto may from time to time change its address for notices by giving at least
ten (10) days written notice of such changed address to the other parties
hereto.

    

    Section
8.5      Waivers. No waiver by either party
of any default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of
any other provisions, condition or requirement hereof, nor shall any delay or
omission of any party to exercise any right hereunder in any manner impair the
exercise of any such right accruing to it thereafter.

    

    Section
8.6      Headings. The article, section and
subsection headings in this Agreement are for convenience only and shall not
constitute a part of this Agreement for any other purpose and shall not be
deemed to limit or affect any of the provisions hereof.

    
      
         

      

      
        26

        
          

        

      

      
         

      

    

    Section
8.7          Successors
and Assigns. This Agreement shall be binding upon and inure to the benefit of
the parties and their successors and assigns.

    

    Section
8.8         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 (except as
otherwise provided in  Article VI
).

    

    Section
8.9         Governing Law;
Consent to Jurisdiction. The parties acknowledge and agree that any claim,
controversy, dispute or action relating in any way to this agreement or the
subject matter of this agreement shall be governed solely by the laws of the
State of New York, without regard to any conflict of laws
doctrines.  The parties irrevocably consent to being served with legal
process issued from the state and federal courts located in New York and
irrevocably consent to the exclusive personal jurisdiction of the federal and
state courts situated in the State of New York.  The parties
irrevocably waive any objections to the personal jurisdiction of these
courts.  Said courts shall have sole and exclusive jurisdiction over
any and all claims, controversies, disputes and actions which in any way relate
to this agreement or the subject matter of this agreement.  The
parties also irrevocably waive any objections that these courts constitute an
oppressive, unfair, or inconvenient forum and agree not to seek to change venue
on these grounds or any other grounds. The parties hereby agree that the
prevailing party in any suit, action or proceeding arising out of or relating to
this Agreement, shall be entitled to reimbursement for reasonable legal fees
from the non-prevailing party. The parties hereby waive all rights to a trial by
jury. Nothing in this  Section 8.9  
shall affect or limit any right to serve process in any other manner permitted
by law.

    

    Section
8.10       Survival. The
representations and warranties of the Company and the Purchasers shall survive
the execution and delivery hereof and the Closing hereunder.

    

    Section
8.11       Counterparts. This
Agreement may be executed in any number of counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall
constitute one and the same Agreement, and shall become effective when
counterparts have been signed by each party and delivered to the other parties
hereto, it being understood that all parties need not sign the same counterpart.
In the event that any signature is delivered by facsimile or electronic mail
transmission, such signature shall create a valid binding obligation of the
party executing (or on whose behalf such signature is executed) the same with
the same force and effect as if such facsimile signature were the original
thereof.

    

    Section
8.12        Publicity. The Company
agrees that it will not disclose, and will not include in any public
announcement, the name of the Purchasers without the consent of the Purchasers
unless and until such disclosure is required by law or applicable regulation,
and then only to the extent of such requirement.

    

    Section
8.13       Severability. The
provisions of this Agreement and the Transaction Documents are severable and, in
the event that any court of competent jurisdiction shall determine that any one
or more of the provisions or part of the provisions contained in this Agreement
or the Transaction Documents shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision or part of a provision of
this Agreement or the Transaction Documents and such provision shall be reformed
and construed as if such invalid or illegal or unenforceable provision, or part
of such provision, had never been contained herein, so that such provisions
would be valid, legal and enforceable to the maximum extent
possible.

    

    Section
8.14       Further Assurances. From
and after the date of this Agreement, upon the request of any Purchaser or the
Company, each of the Company and the Purchasers shall execute and deliver such
instrument, documents and other writings as may be reasonably necessary or
desirable to confirm and carry out and to effectuate fully the intent and
purposes of this Agreement, the Notes, the Conversion Shares, the Warrants, the
Warrant Shares and any other Transaction Documents.

    

    [remainder of page intentionally left
blank]

    
      
         

      

      
        27

        
          

        

      

      
         

      

    

    

    IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officer as of the date first above
written.

    

    
      
        	
                JUMA
      TECHNOLOGY CORP.

              
	 
      	 
      
	
                By:

              	
                  

              
	 
      	
                Name:

              
	 
      	
                Title:

              
	 
      	 
      
	
                NECTAR
      SERVICES CORP.

              
	 
      	 
      
	
                By:

              	
                  

              
	 
      	
                Name:

              
	 
      	
                Title:

              
	 
      	 
      
	
                VISION OPPORTUNITY MASTER FUND,
      LTD.

              
	 
      	 
      
	
                By:

              	
                  

              
	 
      	
                Name:

              
	 
      	
                Title:

              

      

    

     

    
      
         

      

      
        28

        
          

        

      

      
         

      

    

    

    EXHIBIT
A

    to
the

    NOTE
AND WARRANT STOCK PURCHASE AGREEMENT FOR

    JUMA
TECHNOLOGY CORP.

    

    
      
        	
                Names
      and Addresses of the Purchasers

              	 
      	
                Purchase
      Price

              	 
      	
                Notes
      & Warrants Purchased

              
	 
      	 
      	 
      	 
      	 
      
	
                Vision
      Opportunity Master Fund, Ltd.

                c/o
      Vision Capital Advisors, LLC

                20
      West 55th
      Street

                New
      York, NY 10019

                Attn:
      Robert Thomson

              	 
      	
                $500,000.00

              	 
      	
                $500,000.00
      principal amount of Note

                 

                Series
      A Warrants: 1,666,667

                 

              

      

    

    

    Exhibit A
to Note and Warrant Purchase Agreement

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    EXHIBIT
B

    to
the

    NOTE
AND WARRANT STOCK PURCHASE AGREEMENT FOR

    JUMA
TECHNOLOGY CORP.

    

    FORM
OF NOTE

    

    Exhibit B
to Note and Warrant Purchase Agreement

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    EXHIBIT
C

    to
the

    NOTE
AND WARRANT STOCK PURCHASE AGREEMENT FOR

    JUMA
TECHNOLOGY CORP.

    

    FORM
OF SERIES A WARRANT

    

    Exhibit C
to Note and Warrant Purchase Agreement

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    EXHIBIT
D

    to
the

    NOTE
AND WARRANT PURCHASE AGREEMENT FOR

    JUMA
TECHNOLOGY CORP.

    

    FORM
OF IRREVOCABLE TRANSFER AGENT INSTRUCTIONS

    

    [NAME AND ADDRESS OF TRANSFER
AGENT]

    Attn:
____________________________

    

    Re:  Juma Technology
Corp.

    

    Ladies
and Gentlemen:

    

    Reference
is made to that certain Note and Warrant Purchase Agreement (the “Purchase Agreement”), dated as
of February __, 2010, by and among Juma Technology Corp., a Delaware corporation
(the “ Company ”), and
the purchasers named therein (collectively, the “ Purchasers ”) pursuant to
which the Company is issuing to the Purchasers 10% Convertible Bridge Notes (the
“ Notes ”) and warrants
(the “ Warrants ”) to
purchase shares of the Company’s common stock, par value $0.0001 per share (the
“ Common Stock ”). This
letter shall serve as our irrevocable authorization and direction to you
provided that you are the transfer agent of the Company at such time) to issue
shares of Common Stock upon a conversion of the Notes (the “ Conversion Shares ”) and
exercise of the Warrants (the “
Warrant Shares ”) to or upon the order of a Purchaser from time to time
upon (i) surrender to you of a properly completed and duly executed Conversion
Notice or Exercise Notice, as the case may be, in the form attached hereto as
Exhibit I and Exhibit II, respectively, (ii) in the case of the conversion of
Notes, a copy of the Note or, in the case of Warrants being exercised, a copy of
the Warrants (with the original Warrants delivered to the Company) being
exercised (or, in each case, an indemnification undertaking with respect to such
share certificates or the warrants in the case of their loss, theft or
destruction), and (iii) delivery of a treasury order or other appropriate order
duly executed by a duly authorized officer of the Company. So long as you have
previously received (x) written confirmation from counsel to the Company that a
registration statement covering resales of the Conversion Shares or Warrant
Shares, as applicable, has been declared effective by the Securities and
Exchange Commission (the “
SEC ”) under the Securities Act of 1933, as amended (the “ 1933 Act ”), and no
subsequent notice by the Company or its counsel of the suspension or termination
of its effectiveness and (y) a copy of such registration statement, and if the
Purchaser represents in writing that the Conversion Shares or the Warrant
Shares, as the case may be, were sold pursuant to the Registration Statement,
then certificates representing the Conversion Shares and the Warrant Shares, as
the case may be, shall not bear any legend restricting transfer of the
Conversion Shares and the Warrant Shares, as the case may be, thereby and should
not be subject to any stop-transfer restriction. Provided, however, that if you
have not previously received those items and representations listed above, then
the certificates for the Conversion Shares and the Warrant Shares shall bear the
following legend:

    

    “THE
SECURITIES REPRESENTED BY THIS CERTIFICATE (THE “SECURITIES”) HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ SECURITIES ACT
”), OR APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD, TRANSFERRED, OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR RECEIPT BY THE
COMPANY OF A WRITTEN OPINION OF COUNSEL IN FORM, SUBSTANCE AND SCOPE REASONABLY
SATISFACTORY TO THE COMPANY THAT SUCH SECURITIES MAY BE SOLD,
TRANSFERRED,  OR OTHERWISE DISPOSED OF, UNDER AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT AND SUCH STATE SECURITIES
LAWS.”

    

    Exhibit D
to Note and Warrant Purchase Agreement

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    and,
provided further, that the Company may from time to time notify you to place
stop-transfer restrictions on the certificates for the Conversion Shares and the
Warrant Shares in the event a registration statement covering the Conversion
Shares and the Warrant Shares is subject to amendment for events then
current.

    

    A form of
written confirmation from counsel to the Company that a registration statement
covering resales of the Conversion Shares and the Warrant Shares has been
declared effective by the SEC under the 1933 Act is attached hereto as Exhibit
III.

    

    Please be
advised that the Purchasers are relying upon this letter as an inducement to
enter into the Purchase Agreement and, accordingly, each Purchaser is a third
party beneficiary to these instructions.

    

    Please
execute this letter in the space indicated to acknowledge your agreement to act
in accordance with these instructions. Should you have any questions concerning
this matter, please contact me at ___________.

    

    
      
        	
                Very
      truly yours,

              
	 
      
	
                JUMA
      TECHNOLOGY CORP.

              
	 
      
	
                By:  

              	
                  

              
	 
      	
                Name:

              
	 
      	
                Title:

              

      

    

    

    
      
        	
                ACKNOWLEDGED
      AND AGREED:

              
	 
      
	
                [TRANSFER
      AGENT]

              
	 
      
	
                By:  

              	
                  

              
	 
      	
                Name:

              
	 
      	
                Title:

              
	 
      	
                Date:

              

      

    

    

    Exhibit D
to Note and Warrant Purchase Agreement

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    EXHIBIT
I

    CONVERSION
NOTICE

    JUMA
TECHNOLOGY CORP.

    

    (To be
Executed by the Registered Holder in order to Convert the Note)

    

    In
accordance with and pursuant to the Note, the undersigned hereby elects to
convert the Note into such number of shares of Common stock, of Juma Technology
Corp., a Delaware corporation (the “ Company ”), indicated
below:

     

    Date of
Conversion:
________________________________________________________________________

     

    Applicable
Conversion Price:
_________________________________________________________________

     

    Number of
shares of Common Stock beneficially owned or deemed beneficially owned by the
Holder on the date 

    of
Conversion_____________________________________________________________________________

     

    
      
        	
                Dated:  

              	 
      	 
      	
                Signature:

              	 
      
	 
      	 
      	 
      
	 
      	
                Address:

              	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      

      

    

    

    Exhibit D
to Note and Warrant Purchase Agreement

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    EXHIBIT
II

    

    FORM
OF EXERCISE NOTICE

    JUMA
TECHNOLOGY CORP.

    

    The
undersigned_______________, pursuant to the provisions of the within Warrant,
hereby elects to purchase ______ shares of Common Stock of Juma Technology Corp.
covered by the within Warrant.

    

    
      
        
          	
                  Dated:

                	 
      	 
      	
                  Signature:

                	 
      
	 
      	 
      	 
      
	 
      	
                  Address:

                	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      

        

      

    

    

    Number of
shares of Common Stock beneficially owned or deemed beneficially owned by the
Holder on the date of Exercise: _____________________

    

    ASSIGNMENT

    

    FOR VALUE
RECEIVED, ______________________ hereby sells, assigns and transfers unto
_____________________ the within Warrant and all rights evidenced thereby and
does irrevocably constitute and appoint __________________________, attorney, to
transfer the said Warrant on the books of the within named
corporation.

    

    
      
        	
                Dated:

              	 
      	 
      	
                Signature:

              	 
      
	 
      	 
      	 
      
	 
      	
                Address:

              	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      

      

    

    

    PARTIAL
ASSIGNMENT

    

    FOR VALUE
RECEIVED, ______________________ hereby sells, assigns and transfers unto
_____________________ the right to purchase ___________________ shares of
Warrant Stock evidenced by the within Warrant together with all rights therein,
and does irrevocably constitute and appoint __________________________,
attorney, to transfer that part of the said Warrant on the books of the within
named corporation.

    

    
      
        	
                Dated:

              	 
      	 
      	
                Signature:

              	 
      
	 
      	 
      	 
      
	 
      	
                Address:

              	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      

      

    

    

    Exhibit D
to Note and Warrant Purchase Agreement

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    FOR
USE BY THE ISSUER ONLY:

    

    This
Warrant No. W-__________ canceled (or transferred or exchanged) this _______ day
of ______________, _______, shares of Common Stock issued therefor in the name
of __________________________, Warrant No. W-_________ issued for ______________
shares of Common Stock in the name of ______________________.

    

    Exhibit D
to Note and Warrant Purchase Agreement

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    EXHIBIT
III

    

    FORM
OF NOTICE OF EFFECTIVENESS

    OF
REGISTRATION STATEMENT

    

    [NAME AND ADDRESS OF TRANSFER
AGENT]

    Attn:
____________________________

    

    Re:  Juma Technology
Corp.

    

    Ladies
and Gentlemen:

    

    We are
special counsel to Juma Technology Corp., a Delaware corporation (the “Company”), and have
represented the Company in connection with that certain Note and Warrant
Purchase Agreement (the “
Purchase Agreement ”), dated as of February __, 2010, by and among the
Company, Nectar Services Corp. and the purchasers named therein (collectively,
the “ Purchasers ”)
pursuant to which the Company issued to the Purchasers 10% convertible bridge
notes (the “ Notes ”)
and warrants (the “
Warrants ”) to purchase shares of the Company’s common stock, par value
$0.0001 per share (the “ Common
Stock ”). Pursuant to the Purchase Agreement, the Company agreed, among
other things, in certain circumstances, to register the shares of Common Stock
issuable upon conversion of the Notes, and the shares of Common Stock issuable
upon exercise of the Warrants (the “ Registrable Securities ”),
under the Securities Act of 1933, as amended (the “ 1933 Act ”). In connection
with the Company’s obligations under the Purchase Agreement, on
________________, 200_, the Company filed a Registration Statement on Form S-1
(File No. 333-________) (the “
Registration Statement ”) with the Securities and Exchange Commission
(the “ SEC ”) relating
to the resale of the Registrable Securities which names each of the present
Purchasers as a selling stockholder thereunder.

    

    In
connection with the foregoing, we advise you that a member of the SEC’s staff
has advised us by telephone that the SEC has entered an order declaring the
Registration Statement effective under the 1933 Act at [ ENTER TIME OF EFFECTIVENESS ]
on [ ENTER DATE OF
EFFECTIVENESS ] and we have no knowledge, after telephonic inquiry of a
member of the SEC’s staff, that any stop order suspending its effectiveness has
been issued or that any proceedings for that purpose are pending before, or
threatened by, the SEC and accordingly, the Registrable Securities are available
for resale under the 1933 Act pursuant to the Registration
Statement.

    

    
      
        	
                Very
      truly yours,

              
	 
      
	
                [COMPANY
      COUNSEL]

              
	 
      
	
                By:   

              	 
      

      

    

    

    cc: [LIST
NAMES OF PURCHASERS]

    

    Exhibit D
to Note and Warrant Purchase Agreement

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    EXHIBIT
E

    to
the

    NOTE
AND WARRANT PURCHASE AGREEMENT FOR

    JUMA
TECHNOLOGY CORP.

    

    FORM
OF OPINION OF COUNSEL

    

    1. The
Company is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware and has the requisite corporate
power to own, lease and operate its properties and assets, and to carry on its
business as presently conducted. The Company 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 or property owned by it makes such
qualification necessary, which the failure to so qualify could have a Material
Adverse Effect on the Company.

    

    2.  Each
of the Subsidiaries of the Company (the “Subsidiaries”) set forth
on Schedule 2.1(g) of
the Note Purchase Agreement is a corporation or limited liability company, as
applicable, duly incorporated or organized and in good standing under the laws
of its state of incorporation or organization.

    

    3.  The
Issuers have the requisite corporate power and authority to enter into and
perform its obligations under the Transaction Documents and, as applicable, to
issue the Notes, the Common Stock issuable upon conversion of the Notes, the
Warrants, and the Common Stock issuable upon exercise of the Warrants. The
execution, delivery and performance of each of the Transaction Documents by the
Issuers, as applicable, and the consummation by it of the transactions
contemplated thereby have been duly and validly authorized by all necessary
corporate action and no further consent or authorization of any Issuer or its
board of directors or stockholders is required. Each of the Transaction
Documents have been duly executed and delivered, and the Notes and the Warrants
have been duly executed, issued and delivered by the Issuers party thereto and
each of the Transaction Documents constitutes a legal, valid and binding
obligation of the Issuers enforceable against it in accordance with its
respective terms. The Common Stock issuable upon conversion of the Notes and
exercise of the Warrants are not subject to any preemptive rights under the
Certificate of Incorporation or the Bylaws.  Nevertheless, we do not
opine as to whether Nectar Services has the authority to issue the common stock
under the Note or cause the conversion of the Note into common
stock.

    

    4. The
Notes and the Warrants have been duly authorized and, when delivered against
payment in full as provided in the Note Purchase Agreement, will be validly
issued, fully paid and nonassessable. The shares of Common Stock issuable upon
conversion of the Notes and the exercise of the Warrants, have been duly
authorized and reserved for issuance, and, based on the facts and circumstance
as they exist on the date of this opinion and the qualifications contained
herein, when delivered upon conversion, exercise or payment in full as provided
in the Notes and the Warrants, will be validly issued, fully paid and
nonassessable.

    

    Exhibit E
to Note and Warrant Purchase Agreement

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    5. The
execution, delivery and performance of and compliance with the terms of the
Transaction Documents and the issuance of Notes, the Common Stock issuable upon
conversion of the Notes, the Warrants, and the Common Stock issuable upon the
exercise of the Warrants, do not (i) violate any provision of the Certificate of
Incorporation or By-Laws of such Issuer, as applicable, (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 material agreement, mortgage,
deed of trust, indenture, note, bond, license, lease agreement, instrument or
obligation to which such Issuer is a party, and which agreement, mortgage, deed
of trust, indenture, note, bond, license, lease agreement, instrument or
obligation has been disclosed in the Commission Documents, (iii) to our
knowledge, create or impose a lien, charge or encumbrance on any property of
such Issuer under any agreement or any commitment to which such Issuer is a
party or by which such Issuer is bound or by which any of its respective
properties or assets are bound and, in each case, which agreement or commitment
has been disclosed in the Commission Documents, or (iv) result in a violation of
any federal, state, or local statute, rule, regulation (including federal and
state securities laws and regulations) or any order, judgment, injunction or
decree known to us applicable to such Issuer or by which any property or asset
of such Issuer is bound or affected, except, in all of the foregoing cases
(other than (i)) for such conflicts, default, terminations, amendments,
acceleration, cancellations and violations as would not, individually or in the
aggregate, have a Material Adverse Effect.

    

    6. Based
on the representations of Purchaser contained in the Note Purchase Agreement and
subject to compliance with the filing requirements under the applicable “blue
sky” laws and Regulation D promulgated under the Securities Act of 1933, as
amended, no consent, approval or authorization of or designation, declaration or
filing with any governmental authority on the part of the Company is required
under federal, state or local law, rule or regulation in connection with the
valid execution and delivery of the Transaction Documents, or the offer, sale or
issuance of the Notes, the Warrants or the Common Stock issuable upon conversion
of the Notes and exercise of the Warrants or the consummation of the
transactions contemplated by the Note Purchase Agreement other than as may be
required under the Registration Statement.

    

    7. To our
knowledge, there is no action, suit, claim, or proceeding pending or threatened
against any Issuer which questions the validity of the Transaction Documents or
the transactions contemplated thereby or any action taken or to be taken
pursuant thereto. To our knowledge, there is no action, suit, claim, or
proceeding pending or threatened against such Issuer or any of its properties or
assets and which, if adversely determined, is reasonably likely to result in a
Material Adverse Effect. To our knowledge, there are no outstanding orders,
judgments, injunctions, awards or decrees of any court, arbitrator or
governmental or regulatory body against such Issuer or any officers or directors
of any Issuer in their capacities as such.

     

    8. Based
upon the representations of the Purchaser, the offer, issuance and sale of the
Notes and the Warrants and, based on the facts and circumstances as they exist
on the date of this opinion, the offer, issuance and sale of the shares of
Common Stock issuable upon conversion of the Notes and the Common Stock issuable
upon exercise of the Warrants pursuant to the Note Purchase Agreement, the
Notes, and the Warrants, as applicable, are exempt from the registration
requirements of the Securities Act.

    

    9. No
Issuer is, and as a result of and immediately upon the Closing no Issuer will
be, an “investment company” or a company “controlled” by an “investment
company,” within the meaning of the Investment Company Act of 1940, as
amended.

    

    
      
        	
                Very
      truly yours,

              
	 
      
	
                [COMPANY
      COUNSEL]

              
	 
      
	
                By:   

              	 
      

      

    

    

    Exhibit E
to Note and Warrant Purchase AgreementExhibit
4.2

    

    EXECUTION
COPY

    

    THIS
NOTE AND THE SECURITIES ISSUABLE UPON CONVERSION HEREOF HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ ACT ”), OR APPLICABLE STATE
SECURITIES LAWS, AND MAY NOT BE SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF IN
THE ABSENCE OF SUCH REGISTRATION OR RECEIPT BY THE COMPANY OF A WRITTEN OPINION
OF COUNSEL IN FORM, SUBSTANCE AND SCOPE REASONABLY SATISFACTORY TO THE COMPANY
THAT THIS NOTE AND THE SECURITIES ISSUABLE UPON CONVERSION HEREOF MAY BE SOLD,
TRANSFERRED,  OR OTHERWISE DISPOSED OF, UNDER AN EXEMPTION FROM
REGISTRATION UNDER THE ACT AND SUCH STATE SECURITIES LAWS.

    

    JUMA
TECHNOLOGY CORP.

    

    10%
Convertible Bridge Note

    

    Date:
February 25, 2010

    

    $500,000.00

    

    For value
received, JUMA TECHNOLOGY CORP., a Delaware corporation (the “Company”), and NECTAR SERVICES
CORP., a Delaware corporation (“ Nectar ”, and together with
the Company, the “
Makers ”), hereby promise to pay to the order of Vision Opportunity
Master Fund, Ltd. (together with its successors, representatives, and permitted
assigns, the “ Holder
”), in accordance with the terms hereinafter provided, the principal amount of
five hundred thousand ($500,000.00) dollars, together with interest
thereon.  The Makers are issuing this 10% convertible bridge note (the
“ Note ”) to the Holder
pursuant to the Purchase Agreement (as defined in  Section
1.1  hereof).

     

    All
payments under or pursuant to this Note shall be made in United States Dollars
in immediately available funds to the Holder at the address of the Holder as set
forth in the Purchase Agreement or at such other place as the Holder may
designate from time to time in writing to the Makers or by wire transfer of
funds to the Holder’s account, instructions for which are attached hereto
as  Exhibit A
.. The outstanding principal balance and all accrued Interest (as defined
herein) of this Note shall be due and payable on May 21, 2010 (the “ Maturity Date ”) or at such
earlier time as provided herein.

     

    ARTICLE
I

     

    Section
1.1       Purchase Agreement.  This
Note has been executed and delivered pursuant to the Note and Warrant Purchase
Agreement dated as of February 25, 2010 (the “ Purchase Agreement ”) by and
among the Makers and the purchasers listed therein.  Capitalized terms
used and not otherwise defined herein shall have the meanings set forth for such
terms in the Purchase Agreement.

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    Section
1.2       Interest.  Beginning on
the issuance date of this Note (the “Issuance Date”), the
outstanding principal balance of this Note shall bear interest (“ Interest ”), at a rate per
annum equal to ten percent (10%), so long as any principal amount evidenced by
this Note remains outstanding. Interest shall be payable in cash, on the
Maturity Date.  Interest shall be computed on the basis of a 360-day
year of twelve (12) 30-day months and shall accrue commencing on the Issuance
Date.  Furthermore, upon the occurrence of an Event of Default (as
defined in  Section
2.1  hereof), then to the extent permitted by law, the Makers
will pay Interest in cash to the Holder, payable on demand, on the outstanding
principal balance of this Note from the date of the Event of Default through the
date of payment at a new rate of the lesser of twelve percent (12%) and the
maximum applicable legal rate per annum (the “ Default Rate ”).

     

    Section
1.3       Ranking and Covenants.

     

    (a)           Other
than such indebtedness existing as of the Issuance Date, the Makers will not,
and will not permit any Subsidiary to, directly or indirectly, enter into,
create, incur, assume or suffer to exist any indebtedness of any kind, that is
senior in any respect to the Makers’ obligations under the Notes, and the Makers
will not, and will not permit any Subsidiary to, directly or indirectly, incur
any Lien on or with respect to any of its property or assets now owned or
hereafter acquired or any interest therein or any income or profits therefrom,
except for indebtedness with respect to capital leases incurred in the ordinary
course of business.

     

    (b)           So
long as any Notes are outstanding, none of the Makers nor any Subsidiary shall,
directly or indirectly, (i) redeem, purchase or otherwise acquire any of the
Company’s capital stock or set aside any monies for such a redemption, purchase
or other acquisition or (ii) issue any Options or Convertible Securities with an
exercise price or a conversion price or a number of underlying shares that
floats or resets or otherwise varies or is subject to adjustment based (directly
or indirectly) on market prices of the Common Stock.

     

    Section
1.4       Payment on Non-Business
Days.  Whenever any payment to be made shall be due on a Saturday,
Sunday or a public holiday under the laws of the State of New York, such payment
may be due on the next succeeding business day and such next succeeding day
shall be included in the calculation of the amount of accrued Interest payable
on such date.

     

    Section
1.5       Transfer.  This Note may
be transferred or sold, subject to the provisions of Section 4.8 of this Note, or
pledged, hypothecated or otherwise granted as security by the
Holder.

     

    Section
1.6       Replacement.  Upon
receipt of a duly executed and notarized written statement from the Holder with
respect to the loss, theft or destruction of this Note (or any replacement
hereof) and a standard indemnity reasonably satisfactory to the Makers, or, in
the case of a mutilation of this Note, upon surrender and cancellation of such
Note, the Makers shall issue a new Note, of like tenor and amount, in lieu of
such lost, stolen, destroyed or mutilated Note.

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    ARTICLE
II

     

    EVENTS OF
DEFAULT;  REMEDIES

     

    Section
2.1       Events of Default.  The
occurrence of any of the following events shall be an “Event of Default ” under this
Note:

     

    (a)           the
Makers shall fail to make any principal or Interest payments due under this Note
on the date such payments are due and such default is not fully cured within ten
(10) business days after the occurrence thereof; or

     

    (b)           Intentionally
Omitted; or

     

    (c)           the
suspension from listing, without subsequent listing on any one of, or the
failure of the Common Stock to be listed or quoted on at least one of the OTC
Bulletin Board, the American Stock Exchange, the NASDAQ Global Market, the
NASDAQ Capital Market or The New York Stock Exchange, Inc. for a period of ten
(10) consecutive Trading Days; or

     

    (d)           the
Company’s notice to the Holder, including by way of public announcement, at any
time, of its inability to comply (including for any of the reasons described
in  Section
3.8(a)  hereof) or its intention not to comply with proper
requests for conversion of this Note into shares of Common Stock;
or

     

    (e)           either
(i) the Makers shall fail to timely deliver the shares of Common Stock upon an
Optional Conversion of the Note, or (ii) the Makers shall fail to make the
payment of any fees and/or liquidated damages under this Note or the Purchase
Agreement, which failure is not remedied within ten (10) business days after the
occurrence thereof; or

     

    (f)
           Intentionally
Omitted; or

     

    (g)           default
shall be made in the performance or observance of (i) any covenant, condition or
agreement contained in this Note and such default is not fully cured within ten
(10) business days after the Holder delivers written notice to the Makers of the
occurrence thereof or (ii) any covenant, condition or agreement contained in the
Purchase Agreement, the Other Notes, the Warrants or any other Transaction
Document which is not covered by any other provisions of this  Section 2.1 and
such default is not fully cured within ten (10) business days after the Holder
delivers written notice to the Makers of the occurrence
thereof;  or

     

    (h)           any
material representation or warranty made by either of the Makers herein or in
the Purchase Agreement, the Other Notes, the Warrants or any other Transaction
Document shall prove to have been false or incorrect or breached in a material
respect on the date as of which made and the Holder delivers written notice to
the Makers of the occurrence thereof; or

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    (i)
           either of the
Makers shall after the Issuance Date (A) default in any payment of any amount or
amounts of principal of or interest on any indebtedness (other than the
indebtedness hereunder) the aggregate principal amount of which indebtedness is
in excess of $100,000
  or (B) default in the observance or performance of any other
agreement or condition relating to any indebtedness or contained in any
instrument or agreement evidencing, securing or relating thereto, or any other
event shall occur or condition exist, the effect of which default or other event
or condition is to cause, or to permit the holder or holders or beneficiary or
beneficiaries of such indebtedness to cause with the giving of notice if
required, such indebtedness to become due prior to its stated maturity;
or

     

    (j)
           either of the
Makers shall (i) apply for or consent to the appointment of, or the taking of
possession by, a receiver, custodian, trustee or liquidator of itself or of all
or a substantial part of its property or assets, (ii) make a general assignment
for the benefit of its creditors, (iii) commence a voluntary case under the
United States Bankruptcy Code (as now or hereafter in effect) or under the
comparable laws of any jurisdiction (foreign or domestic), (iv) file a petition
seeking to take advantage of any bankruptcy, insolvency, moratorium,
reorganization or other similar law affecting the enforcement of creditors’
rights generally, (v) acquiesce in writing to any petition filed against it in
an involuntary case under United States Bankruptcy Code (as now or hereafter in
effect) or under the comparable laws of any jurisdiction (foreign or domestic),
or (vi) issue a notice of bankruptcy or winding down of its operations or issue
a press release regarding same; or

     

    (k)           a
proceeding or case shall be commenced in respect of either of the Makers,
without its application or consent, in any court of competent jurisdiction,
seeking (i) the liquidation, reorganization, moratorium, dissolution, winding
up, or composition or readjustment of its debts, (ii) the appointment of a
trustee, receiver, custodian, liquidator or the like of it or of all or any
substantial part of its assets in connection with its liquidation or dissolution
or (iii) similar relief in respect of it under any law providing for the relief
of debtors, and such proceeding or case described in clause (i), (ii) or (iii)
shall continue undismissed, or unstayed and in effect, for a period of thirty
(30) days or any order for relief shall be entered in an involuntary case under
United States Bankruptcy Code (as now or hereafter in effect) or under the
comparable laws of any jurisdiction (foreign or domestic) against either of the
Makers or action under the laws of any jurisdiction (foreign or domestic)
analogous to any of the foregoing shall be taken with respect to either of the
Makers and shall continue undismissed, or unstayed and in effect for a period of
thirty (30) days; or

     

    (l)
           the failure of
the Company to instruct its transfer agent to remove any legends from shares of
Common Stock eligible to be sold under Rule 144 of the Securities Act and issue
such unlegended certificates to the Holder within five (5) business days of the
Holder’s request so long as the Holder has provided reasonable assurances to the
Company, and based thereon the Company has determined, that such shares of
Common Stock can be sold pursuant to Rule 144; or

     

    (m)          the
failure of either of the Makers to pay any other amounts due to the Holder
herein or any other Transaction Document within ten (10) business days of the
date such payments are due and such default is not fully cured within ten (10)
business days after the Holder delivers written notice to the Maker of the
occurrence thereof; or

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    (n)           the
occurrence of an event of default under any other Transaction
Document.

     

    Section
2.2       Remedies Upon An Event of
Default.  If an Event of Default shall have occurred and shall be
continuing, the Holder of this Note may at any time at its option, (a) declare
the entire unpaid principal balance of this Note, together with all Interest
accrued hereon, due and payable, and thereupon, the same shall be accelerated
and so due and payable, without presentment, demand, protest, or notice, all of
which are hereby expressly unconditionally and irrevocably waived by the
Makers;  provided,
however , that upon the occurrence of an Event of Default described
in  Sections
2.1(j)  or  (k) , the
outstanding principal balance and accrued Interest hereunder shall be
automatically due and payable, (b) demand that the principal amount of this Note
then outstanding shall be converted into shares of Common Stock at a Conversion
Price per share calculated pursuant to  Section
3.1  hereof assuming that the date that the Event of Default
occurs is the Optional Conversion Date (as defined in Section
3.1  hereof), or (c) exercise or otherwise enforce any one or
more of the Holder’s rights, powers, privileges, remedies and interests under
this Note, the Purchase Agreement or applicable law.  No course of
delay on the part of the Holder shall operate as a waiver thereof or otherwise
prejudice the right of the Holder.  No remedy conferred hereby shall
be exclusive of any other remedy referred to herein or now or hereafter
available at law, in equity, by statute or otherwise.

     

    ARTICLE
III

    

    CONVERSION;
ANTIDILUTION; PREPAYMENT; COVENANTS

     

    Section
3.1        (a) Optional
Conversion.  At any time and from time to time on or after the
Issuance Date, this Note shall be convertible (in whole or in part), at the
option of the Holder (an “
Optional Conversion ”), into such number of fully paid and non-assessable
shares of Common Stock as is determined by dividing (x) that portion of the
outstanding principal balance under this Note as of such date that the Holder
elects to convert by (y) the Conversion Price (as defined in  Section
3.2(a)  hereof) then in effect  (the “ Optional Conversion Rate ”)
on the date on which the Holder faxes a notice of conversion (the “ Optional Conversion Notice
”), duly executed, to the Company (facsimile number (631) 270-1105, Attn.: Chief
Executive Officer) (an “
Optional Conversion Date ”);  provided, however
, that the Conversion Price shall be subject to adjustment as described in  Section
3.6  of this Note.  The Holder shall deliver this
Note to the Company at the address designated in the Purchase Agreement as soon
as practicable after such time that this Note is fully
converted.  With respect to partial conversions of this Note, the
Company shall keep and attach hereto written records of the amount of this Note
converted as of each Conversion Date.

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    (b)           Mandatory
Conversion. Effective as of the closing (the “Mandatory Conversion Date”) of a
Qualified Financing (as defined below), any and all outstanding principal and
accrued Interest represented by this Note shall automatically (without further
act or deed of the Holder or the Company) convert (the “ Mandatory Conversion ”) into
the type of securities of the Company issued by the Company in the Qualified
Financing (the “ Qualified
Financing Stock ”) by dividing (x) the outstanding principal balance
under this Note as of the Mandatory Conversion Date by (y) a conversion price
which shall be equal to the lesser of (i) the price per share at which the
Company sells a share of Qualified Financing Stock in the Qualified Financing or
(ii) the Conversion Price (as defined in  Section 3.2(a)
).  A “ Qualified
Financing ” shall occur when both (1) a sale by the Company of shares of
equity of the Company to one or more purchasers generates not less than gross
proceeds to the Company of $5,000,000 closing within one hundred twenty (120)
days of the Issuance Date, and (2) the investors in such Qualified Financing are
issued either convertible preferred stock or fixed price convertible notes of
the Company. The Company shall cause notice of the Mandatory Conversion (the
“ Mandatory   Conversion Notice ”) to be
mailed to the Holder, at such Holder’s address, at least ten (10) days prior to
the Mandatory Conversion Date.  On or before the Mandatory Conversion
Date, the Holder shall surrender this Note at the place designated in such
notice, together with a statement of the name or names (with address) in which
the certificate or certificates for shares of Qualified Financing Stock which
shall be issuable on such conversion shall be issued. Notwithstanding the
foregoing provisions of this  Section 3.1(b) ,
the Holder may convert any portion of this Note pursuant to  Section
3.1(a)  on or prior to the date immediately preceding the date
of such Mandatory Conversion.

     

    Section
3.2       Conversion Price.

     

    (a)           The
term “Conversion Price”
shall mean $0.15, subject to adjustment under Section 3.6
hereof.

     

    (b)           The
term “Conversion Shares”
shall mean such shares of Common Stock issuable upon an Optional Conversion of
this Note. The term “
Conversion Securities ” shall mean such securities of the Company
issuable upon a Mandatory Conversion of this Note in connection with the
occurrence of a Qualified Financing.

     

    (c)           Notwithstanding
any of the foregoing to the contrary, if during any period (a “Black-out Period ”), the
Holder is unable to trade any Common Stock issued or issuable upon an Optional
Conversion of this Note immediately due to the postponement of filing or delay
or suspension of effectiveness of the Registration Statement or because the
Company has otherwise informed such Holder that an existing prospectus cannot be
used at that time in the sale or transfer of such Common Stock, such Holder
shall have the option but not the obligation on any Optional Conversion Date
within ten (10) Trading Days following the expiration of the Black-out Period of
using the Conversion Price applicable on such Optional Conversion Date or any
Conversion Price selected by the Holder that would have been applicable had such
Optional Conversion Date been at any earlier time during the Black-out Period or
within the ten (10) Trading Days thereafter.  In no event shall the
Black-out Period have any effect on the Maturity Date of this
Note.

    
      
         

      

      
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    Section
3.3       Mechanics of
Conversion.

     

    (a)           Not
later than three (3) Trading Days after any Optional Conversion Date or the
Mandatory Conversion Date, as the case may be (the “ Delivery Date ”), the Company
or its designated transfer agent, as applicable, shall issue and deliver to (i)
the Depository Trust Company (“
DTC ”) account on the Holder’s behalf via the Deposit Withdrawal Agent
Commission System (“
DWAC ”) as specified in the Optional Conversion Notice, registered in the
name of the Holder or its designee, for the number of shares of Common Stock to
which the Holder shall be entitled, or (ii) to the Holder, the Conversion
Securities as specified in the Mandatory Conversion
Notice.  Notwithstanding the foregoing, in the alternative, not later
than the Delivery Date, the Company shall deliver to the Holder by express
courier a certificate or certificates which shall be free of restrictive legends
and trading restrictions (other than those required by  Section
5.1  of the Purchase Agreement and/or the related documentation
of the Qualified Financing, as the case may be) representing the number of
Conversion Shares or Conversion Securities, as the case may be, being acquired
upon the conversion of this Note.  If in the case of any Optional
Conversion such DWAC transfer or certificate or certificates are not delivered
to or as directed by the applicable Holder by the Delivery Date, the Holder
shall be entitled by written notice to the Company at any time on or before its
receipt of such certificate or certificates thereafter, to rescind such Optional
Conversion, in which event the Company shall immediately return this Note
tendered for Optional Conversion, whereupon the Company and the Holder shall
each be restored to their respective positions immediately prior to the delivery
of such notice of revocation, except that any amounts described in  Sections
3.3(b)  and  (c)  shall
be payable through the date notice of rescission is given to the
Maker.

     

    (b)           The
Company understands that a delay in the delivery of the Conversion Shares or the
Conversion Securities beyond the Delivery Date could result in economic loss to
the Holder.  If the Company fails to deliver to the Holder such shares
via DWAC or a certificate or certificates, as applicable, pursuant to this  Section
3.3(b)  by the Delivery Date, the Makers shall pay to such
Holder, in cash, an amount per Trading Day for each Trading Day until such
shares are delivered via DWAC or certificates are delivered, as the case may be,
together with interest on such amount at a rate of 10% per annum, accruing until
such amount and any accrued interest thereon is paid in full, equal to the
greater of (A) (i) 1% of the aggregate principal amount of the Notes requested
or required to be converted for the first five (5) Trading Days after the
Delivery Date and (ii) 2% of the aggregate principal amount of the Notes
requested or required to be converted for each Trading Day thereafter and (B)
$5,000 per day (which amount shall be paid as liquidated damages and not as a
penalty).  Nothing herein shall limit a Holder’s right to pursue
actual damages for the Company’s failure to deliver certificates representing
the Conversion Shares or the Conversion Securities (as the case may be) within
the period specified herein and such Holder shall have the right to pursue all
remedies available to it at law or in equity (including, without limitation, a
decree of specific performance and/or injunctive
relief).  Notwithstanding anything to the contrary contained herein,
the Holder shall be entitled to withdraw an Optional Conversion Notice, and upon
such withdrawal the Makers shall only be obligated to pay the liquidated damages
accrued in accordance with this  Section
3.3(b)  through the date the Optional Conversion Notice is
withdrawn.

    
      
         

      

      
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    (c)          In
addition to any other rights available to the Holder, if the Company fails to
cause its transfer agent to transmit to the Holder a certificate or certificates
representing the shares of Common Stock issuable upon an Optional Conversion of
this Note on or before the Delivery Date, and if after such date the Holder is
required by its broker to purchase (in an open market transaction or otherwise)
shares of Common Stock to deliver in satisfaction of a sale by the Holder of the
shares of Common Stock issuable upon an Optional Conversion of this Note which
the Holder anticipated receiving upon such exercise (a “ Buy-In ” ), then the Makers
shall (1) pay in cash to the Holder the amount by which (x) the Holder’s total
purchase price (including brokerage commissions, if any) for the shares of
Common Stock so purchased exceeds (y) the amount obtained by multiplying (A) the
number of shares of Common Stock issuable upon an Optional Conversion of this
Note that the Company was required to deliver to the Holder in connection with
the Optional Conversion at issue times (B) the price at which the sell order
giving rise to such purchase obligation was executed, and (2) at the option of
the Holder, either reinstate the portion of the Note and equivalent number of
shares of Common Stock for which such Optional Conversion was not honored or
deliver to the Holder the number of shares of Common Stock that would have been
issued had the Company timely complied with the Optional Conversion and delivery
obligations hereunder.  For example, if the Holder purchases Common
Stock having a total purchase price of $11,000 to cover a Buy-In with respect to
an attempted Optional Conversion of shares of Common Stock with an aggregate
sale price giving rise to such purchase obligation of $10,000, under clause (1)
of the immediately preceding sentence the Makers shall be required to pay the
Holder $1,000. The Holder shall provide the Makers written notice indicating the
amounts payable to the Holder in respect of the Buy-In, together with applicable
confirmations and other evidence reasonably requested by the
Makers.  Nothing herein shall limit a Holder’s right to pursue any
other remedies available to it hereunder, at law or in equity including, without
limitation, a decree of specific performance and/or injunctive relief with
respect to the Company’s failure to timely deliver certificates representing
shares of Common Stock upon conversion of this Note as required pursuant to the
terms hereof.

     

    Section
3.4       Ownership Cap and Certain
Conversion Restrictions. Notwithstanding anything to the contrary set forth
in  Section
3  of this Note, at no time may the Holder convert all or a
portion of this Note if the number of shares of Common Stock to be issued
pursuant to such conversion would exceed, when aggregated with all other shares
of Common Stock owned by the Holder and its affiliates at such time, the number
of shares of Common Stock which would result in the Holder and its affiliates
beneficially owning (as determined in accordance with Section 13(d) of the
Exchange Act and the rules thereunder) more than 4.99% of all of the Common
Stock outstanding at such time;  provided ,  however , that
upon the Holder of this Note providing the Company with sixty-one (61) days
notice (pursuant to  Section
4.1  hereof) (the “ Waiver Notice ”) that such
Holder would like to waive this  Section
3.4  with regard to any or all shares of Common Stock issuable
upon conversion of this Note, this  Section
3.4  will be of no force or effect with regard to all or a
portion of the Note referenced in the Waiver Notice;  provided ,  further , that
during the sixty-one (61) day period prior to the Maturity Date of this Note the
Holder may waive this  Section
3.4  upon providing the Waiver Notice at any time during such
sixty-one (61) day period; and
provided ,  further , that
any Waiver Notice during the sixty-one (61) day period prior to the Maturity
Date will not be effective until the Maturity Date.

     

    Section
3.5       Intentionally Omitted.

     

    Section
3.6       Adjustment of Conversion
Price.

     

    (a)          The
Conversion Price shall be subject to adjustment from time to time as
follows:

     

    (i)       Adjustments
for Stock Splits and Combinations.  If the Company shall at any time
or from time to time after the Issuance Date, effect a stock split of the
outstanding Common Stock, the applicable Conversion Price in effect immediately
prior to the stock split shall be proportionately decreased.  If the
Company shall at any time or from time to time after the Issuance Date, combine
the outstanding shares of Common Stock, the applicable Conversion Price in
effect immediately prior to the combination shall be proportionately
increased.  Any adjustments under this  Section
3.6(a)(i)  shall be effective at the close of business on the
date the stock split or combination occurs.

    
      
         

      

      
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    (ii)
         Adjustments for Certain
Dividends and Distributions.  If the Company shall at any time or from
time to time after the Issuance Date, make or issue or set a record date for the
determination of holders of Common Stock entitled to receive a dividend or other
distribution payable in shares of Common Stock, then, and in each event, the
applicable Conversion Price in effect immediately prior to such event shall be
decreased as of the time of such issuance or, in the event such record date
shall have been fixed, as of the close of business on such record date, by
multiplying, the applicable Conversion Price then in effect by a
fraction:

     

    (1)           the
numerator of which shall be the total number of shares of Common Stock issued
and outstanding immediately prior to the time of such issuance or the close of
business on such record date; and

     

    (2)           the
denominator of which shall be the total number of shares of Common Stock issued
and outstanding immediately prior to the time of such issuance or the close of
business on such record date plus the number of shares of Common Stock issuable
in payment of such dividend or distribution.

     

    (iii)         Adjustment
for Other Dividends and Distributions.  If the Company shall at any
time or from time to time after the Issuance Date, make or issue or set a record
date for the determination of holders of Common Stock entitled to receive a
dividend or other distribution payable in other than shares of Common Stock,
then, and in each event, an appropriate revision to the applicable Conversion
Price shall be made and provision shall be made (by adjustments of the
Conversion Price or otherwise) so that the holders of this Note shall receive
upon conversions thereof, in addition to the number of shares of Common Stock
receivable thereon, the number of securities of the Company which they would
have received had this Note been converted into Common Stock on the date of such
event and had thereafter, during the period from the date of such event to and
including the Conversion Date, retained such securities (together with any
distributions payable thereon during such period), giving application to all
adjustments called for during such period under this  Section
3.6(a)(iii)  with respect to the rights of the holders of this
Note and the Other Notes;  provided, however
, that if such record date shall have been fixed and such dividend is not fully
paid or if such distribution is not fully made on the date fixed therefor, the
Conversion Price shall be adjusted to the Conversion Price in effect immediately
prior to such adjustment until the time of actual payment of such dividends or
distributions.

     

    (iv)         Adjustments
for Reclassification, Exchange or Substitution.  If the Common Stock
issuable upon conversion of this Note at any time or from time to time after the
Issuance Date shall be changed to the same or different number of shares of any
class or classes of stock, whether by reclassification, exchange, substitution
or otherwise (other than by way of a stock split or combination of shares or
stock dividends provided for in  Sections 3.6(a)(i)
,  (ii)  and  (iii) , or a
reorganization, merger, consolidation, or sale of assets provided for in  Section 3.6(a)(v)
), then, and in each event, an appropriate revision to the Conversion Price
shall be made and provisions shall be made (by adjustments of the Conversion
Price or otherwise) so that the Holder shall have the right thereafter to
convert this Note into the kind and amount of shares of stock and other
securities receivable upon reclassification, exchange, substitution or other
change, by holders of the number of shares of Common Stock into which such Note
might have been converted immediately prior to such reclassification, exchange,
substitution or other change, all subject to further adjustment as provided
herein.

    
      
         

      

      
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    (v)          Adjustments
for Reorganization, Merger, Consolidation or Sales of Assets.  If at
any time or from time to time after the Issuance Date there shall be a capital
reorganization of the Company (other than by way of a stock split or combination
of shares or stock dividends or distributions provided for in  Section 3.6(a)(i)
,  (ii)  and  (iii) , or a
reclassification, exchange or substitution of shares provided for in  Section 3.6(a)(iv)
), or a merger or consolidation of the Company with or into another corporation
where the holders of outstanding voting securities of the Company prior to such
merger or consolidation do not own over fifty percent (50%) of the outstanding
voting securities of the merged or consolidated entity, immediately after such
merger or consolidation, or the sale of all or substantially all of the
Company’s properties or assets to any other person (an “ Organic Change ”), then as a
part of such Organic Change, (A) if the surviving entity in any such Organic
Change is a public company that is registered pursuant to the Securities
Exchange Act of 1934, as amended (the “ Exchange Act ”), and its
common stock is listed or quoted on a national exchange or the OTC Bulletin
Board, an appropriate revision to the Conversion Price shall be made and
provision shall be made (by adjustments of the Conversion Price) so that the
Holder shall have the right thereafter to convert such Note into the kind and
amount of shares of stock and other securities or property of the Company or any
successor corporation as it would have received as a result of such Organic
Change if it had converted this Note into Common Stock immediately prior to such
Organic Change, and (B) if the surviving entity in any such Organic Change is
not a public company that is registered pursuant to the Exchange Act, or its
common stock is not listed or quoted on a national exchange or the OTC Bulletin
Board, the Holder shall have the right to demand prepayment pursuant to  Section
3.7(b)  hereof.  In any such case, appropriate
adjustment shall be made in the application of the provisions of this  Section
3.6(a)(v)  with respect to the rights of the Holder after the
Organic Change to the end that the provisions of this  Section
3.6(a)(v)  (including any adjustment in the applicable
Conversion Price then in effect and the number of shares of stock or other
securities deliverable upon conversion of this Note) shall be applied after that
event in as nearly an equivalent manner as may be practicable.

     

    (vi)      Adjustments
for Issuance of Additional Shares of Common Stock.

    

    (1)           In
the event the Company shall, at any time within one (1) year following the
Issuance Date (the “ Full
Ratchet Period ”), issue or sell any additional shares of common stock
(otherwise than as provided  in the foregoing subsections (i) through
(v) of this  Section
3.6(a)  or pursuant to Common Stock Equivalents (hereafter
defined) granted or issued prior to the Issuance Date) (“ Additional Shares of Common
Stock ”), at a price per share less than the Conversion Price then in
effect or without consideration (the “ New Conversion Price ”), then
the Conversion Price upon each such issuance shall be reduced to an amount equal
to such New Conversion Price.

    
      
         

      

      
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      (2)           The
provisions of paragraph (1) of this Section 3.6(a)(vi) shall not
apply to any issuance of Additional Shares of Common Stock for which an
adjustment is provided under  Section
3.6(a)(vii) .  No adjustment of the number of shares of Common
Stock for which this Note shall be convertible shall be made under paragraph (1)
of this  Section
3.6(a)(vi)  upon the issuance of any Additional Shares of
Common Stock which are issued pursuant to the exercise of any Common Stock
Equivalents, if any such adjustment shall previously have been made upon the
issuance of such Common Stock Equivalents pursuant to  Section
3.6(a)(vii) .

      

      (vii)    Issuance
of Common Stock Equivalents.  In the event the Company shall at any
time within the Full Ratchet Period issue any securities convertible into or
exchangeable for, directly or indirectly, Common Stock (“ Convertible Securities ”),
other than the Notes, or any rights or warrants or options to purchase any such
Common Stock or Convertible Securities, shall be issued or sold (collectively,
the “ Common Stock
Equivalents ”) and the aggregate price per share for which Additional
Shares of Common Stock may be issuable thereafter pursuant to such Common Stock
Equivalent, plus the consideration received by the Company for issuance of such
Common Stock  Equivalent divided by the number of shares of Common
Stock issuable pursuant to such Common Stock Equivalent (the “ Aggregate Per Common Share
Price ”) shall be less than the applicable Conversion Price then in
effect, or if, after any such issuance of Common Stock Equivalents, the price
per share for which Additional Shares of Common Stock may be issuable thereafter
is amended or adjusted, and such price as so amended shall make the Aggregate
Per Common Share Price be less than the applicable Conversion Price in effect at
the time of such amendment or adjustment, then the applicable Conversion Price
upon each such issuance or amendment shall be adjusted as provided in the first
sentence of subsection (vi) of this  Section 3.6(a) on
the basis that (1) the maximum number of Additional Shares of Common Stock
issuable pursuant to all such Common Stock Equivalents shall be deemed to have
been issued (whether or not such Common Stock Equivalents are actually then
exercisable, convertible or exchangeable in whole or in part) as of the earlier
of (A) the date on which the Company shall enter into a firm contract for the
issuance of such Common Stock Equivalent, or (B) the date of actual issuance of
such Common Stock Equivalent.  No adjustment of the applicable
Conversion Price shall be made under this subsection (vii) upon the issuance of
any Convertible Security which is issued pursuant to the exercise of any
warrants or other subscription or purchase rights therefor, if any adjustment
shall previously have been made to the exercise price of such warrants or other
subscription or purchase rights therefor, then in effect upon the issuance of
such warrants or other subscription or purchase rights therefor pursuant to this
subsection (vii).  No adjustment shall be made to the Conversion Price
upon the issuance of Common Stock pursuant to the exercise, conversion or
exchange of any Convertible Security or Common Stock Equivalent where an
adjustment to the Conversion Price was made as a result of the issuance or
purchase of any Convertible Security or Common Stock
Equivalent.

      
        
           

        

        
          11

          
            

          

        

        
           

        

      

      

      (viii)       Subsequent
Common Stock and Common Stock Equivalents Issues.  In the event the
Company, shall, at any time after the Full Ratchet Period, issue or sell any
Additional Shares of Common Stock or Common Stock Equivalents (otherwise than as
provided in the foregoing subsections of this  Section 4 ), at a
price per share less than the Conversion Price, or without consideration, the
Conversion Price then in effect upon each such issuance shall be adjusted to
that price (rounded to the nearest cent) determined by multiplying the
Conversion Price by a fraction: (1) the numerator of which shall be equal to
the  sum  of
(A) the number of shares of Common Stock outstanding immediately prior to the
issuance of such Additional Shares of Common Stock  plus  (B)
the number of shares of Common Stock (rounded to the nearest whole share) which
the aggregate consideration for the total number of such Additional Shares of
Common Stock so issued would purchase at a price per share equal to the then
Conversion Price; and (2) the denominator of which shall be equal to the number
of shares of Common Stock outstanding immediately after the issuance of such
Additional Shares of Common Stock.  No adjustment of the number of
shares of Common Stock shall be made upon the issuance of any Additional Shares
of Common Stock which are issued pursuant to the exercise of any warrants or
other subscription or purchase rights or pursuant to the exercise of any
conversion or exchange rights in any Common Stock Equivalents if any such
adjustment shall previously have been made upon the issuance of such warrants or
other rights or upon the issuance of such Common Stock Equivalents (or upon the
issuance of any warrant or other rights therefore).

      

      (ix)         Consideration
for Stock.  In case any shares of Common Stock or any Common Stock
Equivalents shall be issued or sold:

      

      (1)           in
connection with any merger or consolidation in which the Company is the
surviving corporation (other than any consolidation or merger in which the
previously outstanding shares of Common Stock of the Company shall be changed to
or exchanged for the stock or other securities of another corporation), the
amount of consideration therefor shall be, deemed to be the fair market value,
as determined reasonably and in good faith by the board of directors of the
Company (the “ Board ”),
of such portion of the assets and business of the nonsurviving corporation as
the Board may determine to be attributable to such shares of Common Stock,
Convertible Securities, rights or warrants or options, as the case may be;
or

       

      (2)           in
the event of any consolidation or merger of the Company in which the Company is
not the surviving corporation or in which the previously outstanding shares of
Common Stock of the Company shall be changed into or exchanged for the stock or
other securities of another corporation, or in the event of any sale of all or
substantially all of the assets of the Company for stock or other securities of
any corporation, the Company shall be deemed to have issued a number of shares
of its Common Stock for stock or securities or other property of the other
corporation computed on the basis of the actual exchange ratio on which the
transaction was predicated, and for a consideration equal to the fair market
value on the date of such transaction of all such stock or securities or other
property of the other corporation.  If any such calculation results in
adjustment of the applicable Conversion Price, or the number of shares of Common
Stock issuable upon conversion of the Notes, the determination of the applicable
Conversion Price or the number of shares of Common Stock issuable upon
conversion of the Notes immediately prior to such merger, consolidation or sale,
shall be made after giving effect to such adjustment of the number of shares of
Common Stock issuable upon conversion of the Notes.  In the event
Common Stock is issued with other shares or securities or other assets of the
Company for consideration which covers both, the consideration computed as
provided in this  Section
3.6(viii)  shall be allocated among such securities and assets
as determined in good faith by the Board.

      
        
           

        

        
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      (x)           Adjustment
for the Failure of a Qualified Financing.  If the Company does not
close a Qualified Financing within one hundred twenty (120) days from the
Issuance Date, the Conversion Price of this Note shall be automatically reduced
to the lesser of (i) the Conversion Price then in effect and (ii)
$0.15.

      

      (b)           Record
Date.  In case the Company shall take record of the holders of its
Common Stock for the purpose of entitling them to subscribe for or purchase
Common Stock or Convertible Securities, then the date of the issue or sale of
the shares of Common Stock shall be deemed to be such record date.

       

      (c)           Certain
Issues Excepted.  Anything herein to the contrary notwithstanding, the
Company shall not be required to make any adjustment to the Conversion Price in
connection with (i) securities issued (other than for cash) in connection with a
merger, acquisition, or consolidation that do not exceed 25% of the outstanding
Common Stock of the Company as of the date of the Purchase Agreement (such
percentage subject to adjustment in a manner consistent with the adjustments to
the Conversion Price contemplated in  Section
3  hereof) and such issuances are determined in the light of
the whole transaction to which they are a part to be in the best interests of
the Company, (ii) securities issued pursuant to the conversion or exercise of
convertible or exercisable securities issued or outstanding on or prior to the
date of the Purchase Agreement or issued pursuant to the Purchase Agreement (so
long as the conversion or exercise price in such securities are not amended to
lower such price and/or adversely affect the Holders), (iii) Common Stock issued
or the issuance or grants of options to purchase Common Stock pursuant to the
Company’s stock option plans and employee stock purchase plans that either (x)
exist on the date of the Purchase Agreement, or (y) do not exceed fifteen
percent (15%) of the outstanding Common Stock of the Company as of the date of
the Purchase Agreement (such percentage subject to adjustment in a manner
consistent with the adjustments to the Conversion Price contemplated in  Section
3  hereof), (iv) securities issued in connection with  bona fide
strategic license agreements or other partnering agreements so long as such
issuances are not for the purpose of raising capital which are approved by a
majority of its independent directors and such issuances are determined in the
light of the whole transaction to which they are a part to be in the best
interests of the Company, and (v) a Qualified Financing.

      

      (d)           No
Impairment.  The Company shall not, by amendment of its Certificate of
Incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the Company, but will at all times in good
faith, assist in the carrying out of all the provisions of this  Section
3.6  and in the taking of all such action as may be necessary
or appropriate in order to protect the conversion rights of the Holder against
impairment.  In the event a Holder shall elect to convert any Notes as
provided herein, the Company cannot refuse conversion based on any claim that
such Holder or any one associated or affiliated with such Holder has been
engaged in any violation of law, violation of an agreement to which such Holder
is a party or for any reason whatsoever, unless, an injunction from a court, or
notice, restraining and or adjoining conversion of all or of said Notes shall
have issued and the Company posts a surety bond for the benefit of such Holder
in an amount equal to one hundred percent (100%) of the amount of the Notes the
Holder has elected to convert, which bond shall remain in effect until the
completion of arbitration/litigation of the dispute and the proceeds of which
shall be payable to such Holder (as liquidated damages) in the event it obtains
judgment.

      
        
           

        

        
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      (e)           Certificates
as to Adjustments.  Upon occurrence of each adjustment or readjustment
of the Conversion Price or number of shares of Common Stock issuable upon
conversion of this Note pursuant to this  Section 3.6 , the
Company at its expense shall promptly compute such adjustment or readjustment in
accordance with the terms hereof and furnish to the Holder a certificate setting
forth such adjustment and readjustment, showing in detail the facts upon which
such adjustment or readjustment is based.  The Company shall, upon
written request of the Holder, at any time, furnish or cause to be furnished to
the Holder a like certificate setting forth such adjustments and readjustments,
the applicable Conversion Price in effect at the time, and the number of shares
of Common Stock and the amount, if any, of other securities or property which at
the time would be received upon the conversion of this
Note.  Notwithstanding the foregoing, the Company shall not be
obligated to deliver a certificate unless such certificate would reflect an
increase or decrease of at least one percent (1%) of such adjusted
amount.

       

      (f)         
  Issue Taxes.  The Makers shall pay any and all issue and
other taxes, excluding federal, state or local income taxes, that may be payable
in respect of any issue or delivery of securities on conversion of this Note
pursuant thereto; provided,
however , that the Makers shall not be obligated to pay any transfer
taxes resulting from any transfer requested by the Holder in connection with any
such conversion.

       

      (g)           Fractional
Shares.  No fractional shares of Common Stock shall be issued upon
conversion of this Note.  In lieu of any fractional shares to which
the Holder would otherwise be entitled, the Maker shall pay cash equal to the
product of the fraction that would evidence such fractional shares multiplied by
the average of the Closing Bid Prices of the Common Stock for the five (5)
consecutive Trading Days immediately preceding the Conversion
Date.   The term “ Closing Bid Price ” shall
mean, on any particular date (i) the last closing bid price per share of the
Common Stock on such date on the OTC Bulletin Board or another registered
national stock exchange on which the Common Stock is then listed, or if there is
no such price on such date, then the last closing bid price on such exchange or
quotation system on the date nearest preceding such date, or (ii) if the Common
Stock is not listed then on the OTC Bulletin Board or any registered national
stock exchange, the last trading price for a share of Common Stock in the
over-the-counter market, as reported by the OTC Bulletin Board or in the
National Quotation Bureau Incorporated or similar organization or agency
succeeding to its functions of reporting prices) at the close of business on
such date, or (iii) if the Common Stock is not then reported by the OTC Bulletin
Board or the National Quotation Bureau Incorporated (or similar organization or
agency succeeding to its functions of reporting prices), then the average of the
“Pink Sheet” quotes for the relevant conversion period, as determined in good
faith by the Holder and reasonably acceptable to the Company, or (iv) if the
Common Stock is not then publicly traded the fair market value of a share of
Common Stock as determined by the Holder and reasonably acceptable to the
Company.

       

      (h)           Reservation
of Common Stock.  The Company shall at all times when this Note shall
be outstanding, reserve and keep available out of its authorized but unissued
Common Stock, one hundred twenty percent (120%) of such number of shares of
Common Stock as shall from time to time be sufficient to effect a full Optional
Conversion of this Note.  The Company shall, from time to time in
accordance with Delaware law, increase the authorized number of shares of Common
Stock if at any time the unissued number of authorized shares shall not be
sufficient to satisfy the Company’s obligations under this  Section 3.6(h)
..

      
        
           

        

        
          14

          
            

          

        

        
           

        

      

      

      (i)
           Regulatory
Compliance.  If any shares of Common Stock to be reserved for the
purpose of an Optional Conversion of this Note require registration or listing
with or approval of any governmental authority, stock exchange or other
regulatory body under any federal or state law or regulation or otherwise before
such shares may be validly issued or delivered upon conversion, the Company
shall, at its sole cost and expense, in good faith and as expeditiously as
possible, endeavor to secure such registration, listing or approval, as the case
may be.

      

      Section
3.7       Prepayment.

       

      (a)           Prepayment
Upon an Event of Default.  Notwithstanding anything to the contrary
contained herein, upon the occurrence of an Event of Default described in  Sections
2.1(b)-(i) ,  (l) ,  (m)  and  (n)  hereof,
the Holder shall have the right, at the Holder’s option, to require the Makers
to prepay in cash all or a portion of this Note at a price equal to one hundred
percent (100%) of the aggregate principal amount of this Note plus all accrued
and unpaid Interest applicable at the time of such request.  Nothing
in this  Section
3.7(a)  shall limit the Holder’s rights under  Section
2.2  hereof.

       

      (b)           Prepayment
Option Upon Major Transaction.  In addition to all other rights of the
Holder contained herein, simultaneous with the occurrence of a Major Transaction
(as defined below), the Holder shall have the right, at the Holder’s option, to
require the Makers to prepay in cash all or a portion of this Note at a price
equal to one hundred twenty percent (120%) of the aggregate principal amount of
this Note plus all accrued and unpaid Interest (the “ Major Transaction Prepayment
Price ”).

       

      (c)           Prepayment
Option Upon Triggering Event.  In addition to all other rights of the
Holder contained herein, after a Triggering Event (as defined below), the Holder
shall have the right, at the Holder’s option, to require the Makers to prepay
all or a portion of this Note in cash at a price equal to one hundred twenty
percent (120%) of the aggregate principal amount of this Note plus all accrued
and unpaid Interest (the “
Triggering Event Prepayment Price ,” and, collectively with the Major
Transaction Prepayment Price, the “ Prepayment Price
”).

       

      (d)           Optional
Prepayment by Company.  In addition to all other rights of the Company
contained herein, at any time after six (6) months from the Issuance Date, the
Company shall have the right, solely at the Company’s option, to prepay in cash
(the “ Optional
Prepayment ”) at a price equal to one hundred ten percent (110%) of the
aggregate principal amount of this Note plus all accrued and unpaid Interest, if
any, thereon to the date of such Optional Prepayment (the “ Optional Company Prepayment
Price ”) by providing written notice of at least thirty (30) calendar
days prior to the consummation of the Optional Prepayment via facsimile and
overnight courier (“ Notice of
Optional Prepayment ”) to the Holder of this Note and the Other Holders.
The Company may pay, upon an Optional Prepayment, all accrued and unpaid
Interest, if any, by issuing the Holders additional Notes with a principal
amount equal to the Interest then due and payable (a “ PIK Note ”). The Company
shall deliver the applicable Optional Company Prepayment Price to the Holder,
within five (5) business days after the date specified in the Notice of Optional
Prepayment for the Optional Prepayment.  If the Company shall fail to
prepay the Notes (other than pursuant to a dispute as to the arithmetic
calculation of the Optional Company Prepayment Price), in addition to any remedy
such Holder of the Notes may have under this Note and the Purchase Agreement,
the Optional Company Prepayment Price payable in respect of such Notes not
prepaid shall bear interest at the Default Rate until paid in
full.  Notwithstanding the foregoing in this  Section 3.7(d) ,
the Holder may convert any portion of this Note pursuant to  Section
3.1(a)  on or prior to the date immediate preceding the date of
such Optional Prepayment.

      
        
           

        

        
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      (e)           “Major
Transaction.”  A “Major Transaction” shall be
deemed to have occurred at such time as any of the following events have
occurred:

       

      (i)           the
consolidation, merger or other business combination of the Company with or into
another Person (as defined in  Section
4.13  hereof) (other than (A) pursuant to a migratory merger
effected solely for the purpose of changing the jurisdiction of incorporation of
the Company or (B) a consolidation, merger or other business combination in
which holders of the Company’s voting power immediately prior to the transaction
continue after the transaction to hold, directly or indirectly, the voting power
of the surviving entity or entities necessary to elect a majority of the members
of the board of directors (or their equivalent if other than a corporation) of
such entity or entities); or

       

      (ii)          the
sale or transfer of more than fifty percent (50%) of the Company’s assets (based
on the fair market value as determined in good faith by the Board) other than
inventory in the ordinary course of business in one or a related series of
transactions; or

       

      (iii)        closing
of a purchase, tender or exchange offer made to the holders of more than fifty
percent (50%) of the outstanding shares of Common Stock in which more than fifty
percent (50%) of the outstanding shares of Common Stock were tendered and
accepted; or

       

      (iv)        a
change in more than fifty percent (50%) of the current members of the Company’s
Board of Directors as of the Issuance Date, except for such changes approved by
the Holder of this Note.

       

      (f)          “Triggering
Event.”  A “Triggering Event” shall be
deemed to have occurred at such time as any of the following
events:

       

      (i)           Intentionally
Omitted;

       

      (ii)          the
suspension from listing, without subsequent listing on any one of, or the
failure of the Common Stock to be listed on at least one of the OTC Bulletin
Board, the American Stock Exchange, the NASDAQ Global Market, the NASDAQ Capital
Market or The New York Stock Exchange, Inc., for a period of ten (10)
consecutive Trading Days;

       

      (iii)         the
Company’s notice to the Holder or any Other Holders, including by way of public
announcement, at any time, of its inability to comply (including for any of the
reasons described in  Section
3.8(a)  hereof) or its intention not to comply with proper
requests for conversion of any Notes into shares of Common Stock;
or

      
        
           

        

        
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      (iv)         the
Company’s failure to comply with an Optional Conversion Notice tendered in
accordance with the provisions of this Note within five (5) Trading Days after
the receipt by the Company of the Optional Conversion Notice; or

       

      (v)  
       the Company deregisters its shares of
Common Stock and as a result such shares of Common Stock are no longer publicly
traded; or

       

      (vi)       
 the Company consummates a “going private” transaction and as a result the
Common Stock is no longer registered under Sections 12(b) or 12(g) of the
Exchange Act; or

       

      (vii)       either
of the Makers breach any representation, warranty, covenant or other term or
condition of the Purchase Agreement, this Note or any other agreement, document,
certificate or other instrument delivered in connection with the transactions
contemplated thereby or hereby, except to the extent that such breach would not
have a Material Adverse Effect (as defined in the Purchase Agreement) and
except, in the case of a breach of a covenant which is curable, only if such
breach continues for a period of a least twenty (20) business days.

       

      (g)           Intentionally
Omitted.

      

      (h)           Mechanics
of Prepayment at Option of Holder Upon Major Transaction.  No sooner
than fifteen (15) days nor later than ten (10) days prior to the consummation of
a Major Transaction, but in  no event prior to the public announcement
of such Major Transaction, the Makers shall deliver written notice thereof via
facsimile and overnight courier (“ Notice of Major Transaction
”) to the Holder of this Note and the Other Holders.  At any time
after receipt of a Notice of Major Transaction (or, in the event a Notice of
Major Transaction is not delivered at least ten (10) days prior to a Major
Transaction, at any time during the ten (10) day period prior to a Major
Transaction), the Holder of this Note and the Other Holders of the Other Notes
then outstanding may require the Makers to prepay, effective immediately prior
to the consummation of such Major Transaction, all or any portion of this Note
then outstanding by delivering written notice thereof via facsimile and
overnight courier (“ Notice of
Prepayment at Option of Holder Upon Major Transaction ”) to the Makers,
which Notice of Prepayment at Option of Holder Upon Major Transaction shall
indicate (i) the principal amount of this Note that the Holder is electing to
have prepaid and (ii) the applicable Major Transaction Prepayment Price, as
calculated pursuant to  Section
3.7(b)  above.

       

      (i)           Mechanics
of Prepayment at Option of Holder Upon Triggering Event.  Within three
(3) business days after the occurrence of a Triggering Event, the Makers shall
deliver written notice thereof via facsimile and overnight courier (“ Notice of Triggering Event ”)
to the Holder and the Other Holders.  At any time after the earlier of
the Holder’s receipt of a Notice of Triggering Event and the Holder becoming
aware of a Triggering Event, the Holder  of this Note and the Other
Holders of the Other Notes then outstanding may require the Makers to prepay all
or any portion of this Note then outstanding by delivering written notice
thereof via facsimile and overnight courier (“ Notice of Prepayment at Option of
Holder Upon Triggering Event ”) to the Makers, which Notice of Prepayment
at Option of Holder Upon Triggering Event shall indicate (i) the amount of the
Note that the Holder is electing to have prepaid and (ii) the applicable
Triggering Event Prepayment Price, as calculated pursuant to  Section
3.7(c)  above.  The Holder shall only be permitted to
require the Makers to prepay this Note pursuant to  Section
3.7  hereof for the greater of a period of ten (10) days after
receipt by the Holder of a Notice of Triggering Event or for so long as such
Triggering Event is continuing.

      
        
           

        

        
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      (j)           Payment
of Prepayment Price.  Upon the Makers’ receipt of a Notice(s) of
Prepayment at Option of Holder Upon Triggering Event or a Notice(s) of
Prepayment at Option of Holder Upon Major Transaction from the Holder or the
Other Holders, the Makers shall notify the Holder or such Other Holders, as the
case may be, by facsimile of the Makers’ receipt of such Notice(s) of Prepayment
at Option of Holder Upon Triggering Event or Notice(s) of Prepayment at Option
of Holder Upon Major Transaction within two (2) business days of the Makers’
receipt of the same and the Holder and each Other Holder which has sent such a
notice shall promptly thereafter submit to the Makers this Note (or certificates
representing a portion of this Note if the Holder elects not to have all of the
outstanding principal and accrued Interest hereunder prepaid)  or the
Other Notes (or certificates representing a portion of the Other Notes if the
Other Holders elect not to have all of the outstanding principal and accrued
Interest thereunder prepaid) which the Holder or Other Holders, as the case may
be, have elected to have prepaid.  The Makers shall deliver the
applicable Triggering Event Prepayment Price to the Holder, within five (5)
business days after the Makers’ receipt of this Note or the certificates related
thereto, as the case may be, and, in the case of a prepayment pursuant to  Section 3.7(h) ,
the Makers shall deliver the applicable Major Transaction Prepayment Price
immediately prior to the consummation of the Major Transaction;  provided  that
the Holder’s original Note or the Other Holders’ original Other Notes, or the
certificates related thereto, shall have been so delivered to the Makers;  provided
further  that if the Makers are unable to prepay all of the
Notes to be prepaid, the Makers shall prepay an amount to the Holder and each
Other Holder of this Note and the Other Notes being prepaid equal to such
holder’s
pro-rata  amount of all Notes being prepaid.  If the
Makers shall fail to prepay all of the Notes submitted for prepayment (other
than pursuant to a dispute as to the arithmetic calculation of the Prepayment
Price), in addition to any remedy such holder of the Notes may have under this
Note and the Purchase Agreement, the applicable Prepayment Price payable in
respect of such Notes not prepaid shall bear interest at the Default Rate until
paid in full.  Until the Makers pay such unpaid applicable Prepayment
Price in full to a holder of the Notes submitted for prepayment, such holder
shall have the option (the “
Void Optional Prepayment Option ”) to, in lieu of prepayment, require the
Makers to promptly return to such holder(s) all of the Notes that were submitted
for prepayment by such holder(s) under this  Section
3.7  and for which the applicable Prepayment Price has not been
paid, by sending written notice thereof to the Makers via facsimile (the “ Void Optional Prepayment
Notice ”).  Upon the Makers’ receipt of such Void Optional
Prepayment Notice(s) and prior to payment of the full applicable Prepayment
Price to such holder, (i) the Notice(s) of Prepayment at Option of Holder Upon
Triggering Event or the Notice(s) of Prepayment at Option of Holder Upon Major
Transaction, as the case may be, shall be null and void  ab
initio  with respect to those Notes submitted for prepayment
and for which the applicable Prepayment Price has not been paid, (ii) the Makers
shall immediately return any such Notes submitted to the Makers by each holder
for prepayment under this  Section 3.7(j) and
for which the applicable Prepayment Price has not been paid and (iii) the
Conversion Price of such returned Notes shall be adjusted to the lesser of (A)
the Conversion Price as in effect on the date on which the applicable Void
Optional Prepayment Notice(s) is delivered to the Makers and (B) the lowest
Closing Bid Price during the period beginning on the date on which the Notice(s)
of Prepayment of Option of Holder Upon Major Transaction or the Notice(s) of
Prepayment at Option of Holder Upon Triggering Event, as the case may be, is
delivered to the Makers and ending on the date on which the Void Optional
Prepayment Notice(s) is delivered to the Makers;  provided  that
no adjustment shall be made if such adjustment would result in an increase of
the Conversion Price then in effect.  A holder’s delivery of a Void
Optional Prepayment Notice and exercise of its rights following such notice
shall not effect the Makers’ obligations to make any payments which have accrued
prior to the date of such notice.  Payments provided for in this  Section
3.7  shall have priority to payments to other stockholders in
connection with a Major Transaction.

      
        
           

        

        
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      Section
3.8       Inability to Fully
Convert.

       

      (a)           Holder’s
Option if Maker Cannot Fully Convert.  If, upon the Company’s receipt
of an Optional Conversion Notice, the Company cannot issue registered shares of
Common Stock, for any reason, including, without limitation, because the Company
(x) does not have a sufficient number of shares of Common Stock authorized and
available, (y) is otherwise prohibited by applicable law or by the rules or
regulations of any stock exchange, interdealer quotation system or other
self-regulatory organization with jurisdiction over the Company or any of its
securities from issuing all of the Common Stock which is to be issued to the
Holder pursuant to a Conversion Notice or (z) fails to have a sufficient number
of registered shares of Common Stock, then the Company shall issue as many
shares of registered Common Stock, as it is able to issue in accordance with the
Holder’s Optional Conversion Notice and, with respect to the unconverted portion
of this Note, the Holder, solely at Holder’s option, can elect to:

       

      (i)           require
the Makers to prepay that portion of this Note for which the Company is unable
to issue Common Stock in accordance with the Holder’s Optional Conversion Notice
(the “ Mandatory
Prepayment ”) at a price per share equal to the Triggering Event
Prepayment Price as of such Conversion Date (the “ Mandatory Prepayment Price
”);

       

      (ii)          require
the Company to issue restricted shares of Common Stock, if it is permissible for
the Company to do so, in accordance with the Holder’s Optional Conversion
Notice;

       

      (iii)         void
its Optional Conversion Notice and retain or have returned, as the case may be,
this Note (or the portion thereof) that was to be converted pursuant to the
Optional Conversion Notice (provided that the Holder’s voiding its Optional
Conversion Notice shall not effect the Makers’ obligations to make any payments
which have accrued prior to the date of such notice); or

       

      (iv)        exercise
its Buy-In rights pursuant to and in accordance with the terms and provisions
of Section
3.3(c)  of this Note.

       

       (b)         Mechanics
of Fulfilling Holder’s Election.  Upon receipt of a facsimile copy of
an Optional Conversion Notice from the Holder which cannot be fully satisfied as
described in  Section
3.8(a)  above, the Company shall within two (2) Trading Days
send via facsimile to the Holder a notice of the Company’s inability to fully
satisfy the Optional Conversion Notice (the “ Inability to Fully Convert
Notice ”).  Such Inability to Fully Convert Notice shall
indicate (i) the reason why the Company is unable to fully satisfy the Holder’s
Optional Conversion Notice, (ii) the amount of this Note which cannot be
converted and (iii) the applicable Mandatory Prepayment Price.  The
Holder shall notify the Makers of its election pursuant to  Section
3.8(a)  above by delivering written notice via facsimile to the
Makers (“ Notice in Response to
Inability to Convert ”).

      
        
           

        

        
          19

          
            

          

        

        
           

        

      

      

      (c)           Payment
of Prepayment Price.  If the Holder shall elect to have its Note
prepaid pursuant to Section
3.8(a)(i)  above, the Makers shall pay the Mandatory Prepayment
Price to the Holder within thirty (30) days of the Makers’ receipt of the
Holder’s Notice in Response to Inability to Convert,  provided  that
prior to the Makers’ receipt of the Holder’s Notice in Response to Inability to
Convert the Company has not delivered a notice to the Holder stating, to the
satisfaction of the Holder, that the event or condition resulting in the
Mandatory Prepayment has been cured and all Conversion Shares issuable to the
Holder can and will be delivered to the Holder in accordance with the terms of
this Note.  If the Makers shall fail to pay the applicable Mandatory
Prepayment Price to the Holder on the date that is three (3) business days
following the Makers’ receipt of the Holder’s Notice in Response to Inability to
Convert (other than pursuant to a dispute as to the determination of the
arithmetic calculation of the Prepayment Price), in addition to any remedy the
Holder may have under this Note and the Purchase Agreement, such unpaid amount
shall bear interest at the rate of two percent (2%) per month (prorated for
partial months) until paid in full.  Until the full Mandatory
Prepayment Price is paid in full to the Holder, the Holder may (i) void the
Mandatory Prepayment with respect to that portion of the Note for which the full
Mandatory Prepayment Price has not been paid, (ii) receive back such Note, and
(iii) require that the Conversion Price of such returned Note be adjusted to the
lesser of (A) the Conversion Price as in effect on the date on which the Holder
voided the Mandatory Prepayment and (B) the lowest Closing Bid Price during the
period beginning on the Optional Conversion Date and ending on the date the
Holder voided the Mandatory Prepayment.

       

      (d)           Pro-rata
Conversion and Prepayment.  In the event the Company receives an
Optional Conversion Notice from the Holder and the Other Holders on the same day
and the Company can convert and prepay some, but not all, of this Note pursuant
to this  Section
3.8 , the Company shall convert and prepay from the Holder and each Other
Holder electing to have its Other Notes converted and prepaid at such time an
amount equal to the Holder or such Other Holder’s  pro-rata amount
of all the Notes and the Other Notes being converted and prepaid at such
time.

       

      Section
3.9       No Rights as
Stockholder.  Nothing contained in this Note shall be construed as
conferring upon the Holder, prior to the conversion of this Note, the right to
vote or to receive dividends or to consent or to receive notice as a stockholder
in respect of any meeting of stockholders for the election of directors of the
Company or of any other matter, or any other rights as a stockholder of the
Company.

      
        
           

        

        
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      ARTICLE
IV

       

      MISCELLANEOUS

       

      Section
4.1       Notices.  Any notice,
demand, request, waiver or other communication required or permitted to be given
hereunder shall be in writing and shall be effective (a) upon hand delivery or
facsimile at the address or number designated in the Purchase Agreement (if
delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received) or (b) on the second business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur.  The
Makers will give written notice to the Holder at least ten (10) days prior to
the date on which the Company takes a record (x) with respect to any dividend or
distribution upon the Common Stock, (y) with respect to any pro rata
subscription offer to holders of Common Stock or (z) for determining rights to
vote with respect to any Organic Change, dissolution, liquidation or winding-up
but in no event shall such notice be provided to the Holder prior to such
information being made known to the public.  The Makers will also give
written notice to the Holder at least ten (10) days prior to the date on which
any Organic Change, dissolution, liquidation or winding-up will take place but
in no event shall such notice be provided to the Holder prior to such
information being made known to the public. The Makers shall promptly notify the
Holder of any notices sent or received, or any actions taken with respect to the
Other Notes.

       

      Section
4.2       Governing Law; Consent to
Jurisdiction. The parties acknowledge and agree that any claim, controversy,
dispute or action relating in any way to this agreement or the subject matter of
this agreement shall be governed solely by the laws of the State of New York,
without regard to any conflict of laws doctrines.  The parties
irrevocably consent to being served with legal process issued from the state and
federal courts located in New York and irrevocably consent to the exclusive
personal jurisdiction of the federal and state courts situated in the State of
New York.  The parties irrevocably waive any objections to the
personal jurisdiction of these courts.  Said courts shall have sole
and exclusive jurisdiction over any and all claims, controversies, disputes and
actions which in any way relate to this agreement or the subject matter of this
agreement.  The parties also irrevocably waive any objections that
these courts constitute an oppressive, unfair, or inconvenient forum and agree
not to seek to change venue on these grounds or any other grounds. Nothing in
this  Section
4.2  shall affect or limit any right to serve process in any
other manner permitted by law.

       

      Section
4.3       Headings.  Article and
section headings in this Note are included herein for purposes of convenience of
reference only and shall not constitute a part of this Note for any other
purpose.

      
        
           

        

        
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      Section
4.4       Remedies, Characterizations, Other
Obligations, Breaches and Injunctive Relief.  The remedies provided in
this Note shall be cumulative and in addition to all other remedies available
under this Note, at law or in equity (including, without limitation, a decree of
specific performance and/or other injunctive relief), no remedy contained herein
shall be deemed a waiver of compliance with the provisions giving rise to such
remedy and nothing herein shall limit a Holder’s right to pursue actual damages
for any failure by the Makers to comply with the terms of this
Note.  Amounts set forth or provided for herein with respect to
payments, conversion and the like (and the computation thereof) shall be the
amounts to be received by the Holder hereof and shall not, except as expressly
provided herein, be subject to any other obligation of the Makers (or the
performance thereof). Each of the Makers acknowledges that a breach by it of its
obligations hereunder will cause irreparable and material harm to the Holder and
that the remedy at law for any such breach may be inadequate. Therefore each
Maker agrees that, in the event of any such breach or threatened breach, the
Holder shall be entitled, in addition to all other available rights and
remedies, at law or in equity, to seek and obtain such equitable relief,
including but not limited to an injunction restraining any such breach or
threatened breach, without the necessity of showing economic loss and without
any bond or other security being required.

       

      Section
4.5       Enforcement
Expenses.  The Makers agree to pay all costs and expenses of the
Holder incurred as a result of enforcement of this Note, including, without
limitation, reasonable attorneys’ fees and expenses.

       

      Section
4.6       Binding Effect.  The
obligations of the Makers and the Holder set forth herein shall be binding upon
the successors and assigns of each such party, whether or not such successors or
assigns are permitted by the terms hereof.

       

      Section
4.7       Amendments.  This Note
may not be modified or amended in any manner except in writing executed by the
Makers and the Holder.

       

      Section
4.8       Compliance with Securities
Laws.  The Holder of this Note acknowledges that this Note is being
acquired solely for the Holder’s own account and not as a nominee for any other
party, and for investment, and that the Holder shall not offer, sell or
otherwise dispose of this Note.  This Note and any Note issued in
substitution or replacement therefor shall be stamped or imprinted with a legend
in substantially the following form:

       

      “THIS
NOTE AND THE SECURITIES ISSUABLE UPON CONVERSION HEREOF HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ ACT ”), OR APPLICABLE STATE
SECURITIES LAWS, AND MAY NOT BE SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF IN
THE ABSENCE OF SUCH REGISTRATION OR RECEIPT BY THE COMPANY OF A WRITTEN OPINION
OF COUNSEL IN FORM, SUBSTANCE AND SCOPE REASONABLY SATISFACTORY TO THE COMPANY
THAT THIS NOTE AND THE SECURITIES ISSUABLE UPON CONVERSION HEREOF MAY BE SOLD,
TRANSFERRED,  OR OTHERWISE DISPOSED OF, UNDER AN EXEMPTION FROM
REGISTRATION UNDER THE ACT AND SUCH STATE SECURITIES LAWS.”

      

      Section
4.9       Accredited Investor
Status.  In no event may the Holder convert this Note in whole or in
part unless the Holder is an “accredited investor” as defined in Regulation D
under the Act.

      
        
           

        

        
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      Section
4.10       Parties in
Interest.  This Note shall be binding upon, inure to the benefit of
and be enforceable by the Makers, the Holder and their respective successors and
permitted assigns.

       

      Section
4.11       Failure or Indulgence Not
Waiver.  No failure or delay on the part of the Holder in the exercise
of any power, right or privilege hereunder shall operate as a waiver thereof,
nor shall any single or partial exercise of any such power, right or privilege
preclude other or further exercise thereof or of any other right, power or
privilege, nor shall any waiver by the Holder of any such right or rights on any
one occasion be deemed a waiver of the same right or rights on any future
occasion.

       

      Section
4.12       Makers’ Waivers.

       

      (a)           Except
as otherwise specifically provided herein, the Makers and all others that may
become liable for all or any part of the obligations evidenced by this Note,
hereby waive presentment, demand, notice of nonpayment, protest and all other
demands’ and notices in connection with the delivery, acceptance, performance
and enforcement of this Note, and do hereby consent to any number of renewals of
extensions of the time or payment hereof and agree that any such renewals or
extensions may be made without notice to any such persons and without affecting
their liability herein and do further consent to the release of any person
liable hereon, all without affecting the liability of the other persons, firms
or Makers liable for the payment of this Note, AND DO HEREBY WAIVE TRIAL BY
JURY.

       

      (b)           THE
MAKERS ACKNOWLEDGE THAT THE TRANSACTION OF WHICH THIS NOTE IS A PART IS A
COMMERCIAL TRANSACTION, AND TO THE EXTENT ALLOWED BY APPLICABLE LAW, HEREBY
WAIVES ITS RIGHT TO NOTICE AND HEARING WITH RESPECT TO ANY PREJUDGMENT REMEDY
WHICH THE HOLDER OR ITS SUCCESSORS OR ASSIGNS MAY DESIRE TO USE.

       

      Section
4.13       Definitions.  For the
purposes hereof, the following terms shall have the following
meanings:

      

      “Convertible Securities” means
any convertible securities, warrants, options or other rights to subscribe for
or to purchase or exchange for, shares of Common Stock or Common Stock
Equivalents.

      

      “Options” shall mean any
rights, warrants or options to subscribe for or purchase Common Stock or
Convertible Securities of the Company.

      

      “Person” means an individual or
a corporation, partnership, trust, incorporated or unincorporated association,
joint venture, limited liability company, joint stock company, government (or an
agency or political subdivision thereof) or other entity of any
kind.

      
        
           

        

        
          23

          
            

          

        

        
           

        

      

      

      “Trading Day” means (a) a day
on which the Common Stock is traded on the OTC Bulletin Board, or (b) if the
Common Stock is not traded on the OTC Bulletin Board, a day on which the Common
Stock is quoted in the over-the-counter market as reported by the National
Quotation Bureau Incorporated (or any similar organization or agency succeeding
its functions of reporting prices);  provided, however
, that in the event that the Common Stock is not listed or quoted as set forth
in (a) or (b) hereof, then Trading Day shall mean any day except Saturday,
Sunday and any day which shall be a legal holiday or a day on which banking
institutions in the State of New York are authorized or required by law or other
government action to close.

      

      [remainder of page intentionally left
blank]

      
        
           

        

        
          24

          
            

          

        

        
           

        

      

      

      IN
WITNESS WHEREOF, the Makers have caused this Note to be duly executed as of the
Issuance Date set out above.

      

      
        
          
            
              	
                      JUMA
      TECHNOLOGY CORP.

                    
	 
      	 
      
	
                      By:

                    	 
      
	 
      	
                      Name:

                    
	 
      	
                      Title:

                    
	 
      	 
      
	
                      NECTAR
      SERVICES CORP.

                    
	 
      	 
      
	
                      By:

                    	 
      
	 
      	
                      Name:

                    
	 
      	
                      Title:

                    

            

          

        

      

      
        
           

        

        
          25

          
            

          

        

        
           

        

      

      

      EXHIBIT
A

      

      WIRE
INSTRUCTIONS

       

      
        	
                Payee: 

              	
                  

              

      

      

      
        	
                Bank: 

              	
                  

              

      

      

      
        	
                Address: 

              	
                  

              

      

      

      
        	 
      	
                  

              

      

      

      
        	
                Bank No.: 

              	
                  

              

      

      

      
        	
                Account No.:  

              	
                  

              

      

      

      
        	
                Account Name: 

              	
                  

              

      

      
        
           

        

        
          26

          
            

          

        

        
           

        

      

      

      FORM
OF

       

      NOTICE OF
OPTIONAL CONVERSION INTO SHARES OF COMMON STOCK

       

      (To be
Executed by the Registered Holder in

      order to
Convert the Note into Shares of Common Stock)

      

      The
undersigned hereby irrevocably elects to convert $ ________________ of the
principal amount of the above Note No. ___ into shares of Common Stock of JUMA
TECHNOLOGY CORP. (the “
Company ”) according to the conditions hereof, as of the date written
below.

       

      
        	
                Date of Conversion 

              	
                  

              

      

       

      
        	
                Applicable Conversion Price 

              	
                  

              

      

      

      Number of
shares of Common Stock beneficially owned or deemed beneficially owned by the
Holder on the Date of Conversion: _________________________

       

      
        	
                Signature  

              	 
      

      

      

      [Name]

       

      
        	
                Address:  

              	
                  

              
	 
      	 
      
	 
      	
                  

              

      

      
        
           

        

        
          27

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