Document:

ex102.htm

    EXHIBIT
10.2

    SECURITIES
PURCHASE AGREEMENT

     

    

              SECURITIES PURCHASE AGREEMENT
(the "Agreement"),
is made and entered into as of November 15, 2009, by and among Pimi Agro
Cleantech, Inc., a Delaware corporation (the “Company”),
and the purchaser listed on Exhibit A attached hereto (the
“Purchaser”).

    

    WHEREAS, the Company and the
Purchaser are executing and delivering this Agreement in reliance upon the
exemption from securities Purchaser afforded by Section 4(2) of the Securities
Act of 1933, as amended (the "Securities
Act"), and Rule 506 of Regulation D ("Regulation D")
as promulgated by the United States Securities and Exchange Commission (the
"SEC")
under the Securities Act;

    

    WHEREAS, the Company desires
to issue and sell to the Purchasers, and the Purchasers desire to purchase from
the Company, up to ____ shares of common stock, par value $0.01 per share, of
the Company (the “Securities”),
on the terms and subject to the conditions set forth in this
Agreement.

    

    NOW, THEREFORE, IN
CONSIDERATION of the mutual covenants contained in this Agreement, and
for other good and valuable consideration the receipt and adequacy of which are
hereby acknowledged, the Company and Purchaser agree as follows:

    

    1.           Agreement
to Purchase and Sell Securities.  On the terms and
subject to the conditions contained in this Agreement, Purchaser agrees to
purchase, and the Company agrees to sell and issue to Purchaser, at Closing (as
defined below), that number of Securities set forth on the signature page
attached hereto.  The purchase price of each share shall be
$1.35.

    

    1.1           Option for Additional
Investment.  The Company grants Purchaser the right to make an
additional Investment of up to _____ shares of the Company's Common Stock at the
Purchase Price referenced in Section 1 (the “Additional Investment”) provided
Purchaser (i) informs the Company of its intention to make such an Additional
Investment, (ii) delivers to the Company a completed Subscriber Signature Page
for the additional Investment, and (iii) tenders the payment in connection with
the Additional Investment to the Company within ten (10) days of the Company’s
attainment of a trading symbol on the NASDAQ Bulletin Board which ever comes
first.

    

    2.           Closing.  The closing of
the purchase and sale of the Securities shall take place at the offices of the
Company at 10:00 a.m. Eastern time on November _, 2009, or at such other time
and place as the Company and Purchasers representing a majority of the Common
Stock to be purchased mutually agree upon (which time and place are referred to
in this Agreement as the “Closing”).  At
the Closing, the Company shall, against delivery of payment for the Purchased
Securities by wire transfer of immediately available funds in accordance with
the Company’s instructions, (a) authorize its transfer agent to issue to
Purchaser one or more stock certificates (the “Certificates”)
registered in the name of Purchaser (or in such nominee name(s) as designated by
such Purchaser), representing the appropriate number of Common Stock purchased
hereunder.  Closing documents may be delivered by facsimile with
original signature pages sent by overnight courier.  The date of the
Closing is referred to herein as the “Closing
Date.”

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    3.           Representations
and Warranties of The Company.  The Company
hereby represents and warrants to Purchaser, as of the Closing Date, as
follows:

    

    3.1           Organization and
Standing.  The Company is a corporation duly organized, validly
existing and in good standing under the laws of the state of Delaware, and has
full corporate power and authority to execute and deliver this Agreement and
perform its obligations hereunder.

    

    3.2           Public Company Status. The
Company’s common stock is not currently included for annotation on the Over the
Counter Bulletin Board (“OTCBB”), and there is no public trading market. To be
quoted on the OTCBB, a market maker must file an application on our behalf in
order to make a market for our common stock. The Company has engaged in
preliminary discussions with a FINRA Market Maker to file its application on
Form 211 with the FINRA, however, to date no filing has been made.

    

    3.3           Authority Relative to this Agreement;
No Conflict.  The execution, delivery and performance of this
Agreement by the Company have been duly and validly authorized by all necessary
corporate proceedings and no other authorization or approval is required to
permit consummation of the transactions contemplated hereby.  This
Agreement has been duly executed and delivered by the Company and constitutes
the legal, valid and binding obligation of the Company enforceable against the
Company in accordance with its terms.  Neither the execution and
delivery of this Agreement nor the consummation of the transactions contemplated
hereby will (a) violate or result in a breach of or default or acceleration
under (i) any provisions of the certificate of incorporation or by-laws (or
other governing instrument) of the Company, as currently in effect, or (ii) any
mortgage, indenture, contract, agreement, license, franchise, permit,
instrument, trust, power, judgment, decree, order, ruling or federal, state or
local statute or regulation to which the Company is presently a party or by
which it or its properties may be subject, (b) result in the creation or
imposition of any lien, claim, charge, restriction or encumbrance of any kind
whatsoever upon, or give to any other person any interest or right (including
any right of termination or cancellation) in or with respect to any properties,
assets, business, agreements or contracts of the Company, or (c) require any
consent, approval or waiver of, filing with, or notification to any person
(including, without limitation, any governmental or regulatory
authority).

    

    3.4           Title to the
Securities.  The Securities, when issued, sold and delivered by
the Company to Purchaser in accordance with the terms of this Agreement, will be
duly authorized, validly issued, fully paid and non-assessable, and will be free
and clear of all restrictions, claims, liens, charges and encumbrances
whatsoever, except as may exist under applicable federal and state securities
laws. Holders of Securities of Common Stock have no preemptive rights to
purchase any other Securities or securities of any class that may at any time be
sold or offered for sale by The Company.  There are no options,
warrants, rights or other commitments relating to the sale of the
Securities.

    

    
      
        
        

      

      
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    3.5           Offering of Common
Stock.  Neither The Company nor anyone acting on its behalf has
in the past or will hereafter take any action that would cause the issuance or
sale of the Securities to violate the registration requirements of the
Securities Act.

    

    3.6           Consents. The company is not
required to obtain any consent, authorization or order of, or make any filing or
registration with, any court, governmental agency or any regulatory or
self-regulatory agency or any other person in order for it to execute, deliver
or perform any of its obligations under or contemplated by this Agreement, in
each case in accordance with the terms hereof or thereof.  All
consents, authorizations, orders, filings and registrations which the Company is
required to obtain pursuant to the preceding sentence have been obtained or
effected on or prior to the Closing, and the Company is unaware of any facts or
circumstances which might prevent the Company from obtaining or effecting any of
the registration, application or filings pursuant to the preceding
sentence.

    

    3.7           Acknowledgment Regarding Purchaser's
Purchase of Securities.  The Company acknowledges and agrees
that the Purchaser is acting solely in the capacity of arm's length purchaser
with respect to this Agreement and the transactions contemplated hereby and
thereby and that the Purchaser is not (i) an officer or director of the Company,
(ii) an "affiliate" of the Company or any of its subsidiaries (as defined in
Rule 144) or (iii) to the knowledge of the Company, a "beneficial owner" of more
than 10% of the shares of Common Stock (as defined for purposes of Rule 13d-3 of
the Securities Exchange Act of 1934, as amended (the "1934
Act")).  The Company further acknowledges that the Purchaser is
not acting as a financial advisor or fiduciary of the Company or any of its
subsidiaries (or in any similar capacity) with respect to this Agreement and the
transactions contemplated hereby and thereby, and any advice given by the
Purchaser or any of its representatives or agents in connection with this
Agreement and the transactions contemplated hereby and thereby is merely
incidental to the Purchaser's purchase of the Securities.  The Company
further represents to the Purchaser that the Company's decision to enter into
this Agreement has been based solely on the independent evaluation by the
Company and its representatives.

    

    3.8           No General Solicitation; Placement
Agent.  Neither the Company, nor any of its subsidiaries or
affiliates, nor any person acting on its or their behalf, has engaged in any
form of general solicitation or general advertising (within the meaning of
Regulation D) in connection with the offer or sale of the Securities. The
Company shall pay, and hold the Purchaser harmless against, any liability, loss
or expense (including, without limitation, reasonable attorney's fees and
out-of-pocket expenses) arising in connection with any such claim. The Company
has not engaged any placement agent or other agent in connection with the sale
of the Securities.

    

    3.9           Absence of
Litigation.  There is no action, suit, proceeding, inquiry or
investigation before or by any court, public board, government agency,
self-regulatory organization or body pending or, to the knowledge of the
Company, threatened against or affecting the Company or any of its subsidiaries,
the Common Stock or any of the Company's subsidiaries or any of the Company's or
its subsidiaries' officers or directors in their capacities as
such.

     

    
      
        
        

      

      
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    4.  Representations
and Warranties of Purchaser.  Purchaser hereby
represents and warranties to Seller as follows:

    

    4.1           Accredited Investor
Status.  The Purchaser, if an individual, is an "accredited
investor" as that term is defined in Rule 501(a) of Regulation D.

    

    4.2           Organization; Authority. The
Purchaser, if an entity, is an entity duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization with the
requisite power and authority to enter into and perform under this Agreement.
The execution, delivery and performance of this Agreement by such Purchaser have
been duly authorized and executed by all necessary action by such Purchaser.
This Agreement, when delivered in accordance with the terms hereof, will
constitute the valid and legally binding obligation of such Purchaser,
enforceable against it in accordance with its terms, except (a) as limited by
general equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors’ rights generally, (b) as limited by laws relating to
the availability of specific performance, injunctive relief or other equitable
remedies and (c) insofar as indemnification and contribution provisions may be
limited by applicable law

    

    4.3           No Public Sale or
Distribution.  The Purchaser is acquiring the Securities for
its own account and not with a view towards, or for resale in connection with,
the public sale or distribution thereof, except pursuant to sales registered or
exempted under the 1933 Act; provided, however, that by
making the representations herein, the Purchaser does not agree to hold any of
the Securities for any minimum or other specific term and reserves the right to
dispose of the Securities at any time in accordance with or pursuant to a
registration statement or an exemption under the Securities Act.  The
Purchaser is acquiring the Securities hereunder in the ordinary course of its
business. The Purchaser does not presently have any agreement or understanding,
directly or indirectly, with any person or entity to distribute any of the
Securities.

    

    4.4           Transfer or
Resale.  The Purchaser understands that: (i) the Securities
have not been and are not being registered under the Securities Act or any state
securities laws, and may not be offered for sale, sold, assigned or transferred
unless (A) subsequently registered thereunder, (B) the Purchaser shall have
delivered to the Company an opinion of counsel, in a generally acceptable form,
to the effect that such Securities to be sold, assigned or transferred may be
sold, assigned or transferred pursuant to an exemption from such registration,
or (C) the Purchaser provides the Company with reasonable assurance that such
Securities can be sold, assigned or transferred pursuant to Rule 144 or Rule
144A promulgated under the Securities Act, as amended, (or a successor rule
thereto) (collectively, "Rule
144"); (ii) any sale of the Securities made in reliance on Rule 144 may
be made only in accordance with the terms of Rule 144 and further, if Rule 144
is not applicable, any resale of the Securities under circumstances in which the
seller may be deemed to be an underwriter (as that term is defined in the
Securities Act) may require compliance with some other exemption under the
Securities Act or the rules and regulations of the SEC thereunder; and (iii)
neither the Company nor any other person is under any obligation to register the
Securities under the Securities Act or any state securities laws or to comply
with the terms and conditions of any exemption thereunder. The Securities may be
pledged in connection with a bona fide margin account or other loan or financing
arrangement secured by the Securities and such pledge of Securities shall not be
deemed to be a transfer, sale or assignment of the Securities hereunder, and no
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.

    

    
      
        
        

      

      
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    4.5           Authority Relative to this Agreement.
The Purchaser further represents and warrants to, and covenants with, the
Company that (i) the Purchaser has full right, power, authority and capacity to
enter into this Agreement and to consummate the transactions contemplated hereby
and has taken all necessary action to authorize the execution, delivery and
performance of this Agreement, and (ii) this Agreement constitutes a valid and
binding obligation of the Purchaser enforceable against the Purchaser in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors’ and contracting parties’ rights generally and except as
enforceability may be subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law)
and except as the indemnification agreements of the Purchasers herein may be
legally unenforceable.

    

    4.6           Knowledge and Access to
Information.  i)  Purchaser has made such
investigation into the financial condition, earnings, prospects and affairs of
the Company as Purchaser deems appropriate to make an informed decisions as to
whether to subscribe to the Securities and, except for the
specific representations and warranties contained in this Agreement, is not
relying on any representation or warranty by the Company or any other person in
entering into this Agreement, and ii)  Purchaser has been offered the
opportunity to ask questions of any officer of the Company or any other person
responsible for the management of the Company relating to the financial
condition, earnings, prospects and affairs of the Company.

    

    4.7           Restricted
Securities.  The Purchaser understands that the certificates or
other instruments representing the Securities, except as set forth below, shall
bear any legend as required by the "blue sky" laws of any state and a
restrictive legend in substantially the following form (and a stop-transfer
order may be placed against transfer of such stock certificates):

     

    THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS.  THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION
OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED
UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID
ACT.  NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING
ARRANGEMENT SECURED BY THE SECURITIES.

     

    The
legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of the Securities upon which it is
stamped, unless otherwise required by state securities laws, when (i) such
Securities are registered for resale under the Securities Act, (ii) in
connection with a sale, assignment or other transfer, such holder provides the
Company with an opinion of counsel, in a generally acceptable form, to the
effect that such sale, assignment or transfer of the Notes may be made without
registration under the applicable requirements of the Securities Act, or (iii)
such holder provides the Company with reasonable assurance that the Securities
can be sold, assigned or transferred pursuant to Rule 144 or Rule
144A.

     

    
      
        
        

      

      
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    4.8           No Conflicts.  The
execution, delivery and performance by the Purchaser of this Agreement and the
consummation by the Purchaser of the transactions contemplated hereby and
thereby will not (i) result in a violation of the organizational documents of
the Purchaser or (ii) conflict with, or constitute a default (or an event which
with notice or lapse of time or both would become a default) under, or give to
others any rights of termination, amendment, acceleration or cancellation of,
any agreement, indenture or instrument to which the Purchaser is a party, or
(iii) result in a violation of any law, rule, regulation, order,
judgment  or decree (including federal and state securities laws)
applicable to the Purchaser, except in the case of clauses (ii) and (iii) above,
for such conflicts, defaults, rights or violations which would not, individually
or in the aggregate, reasonably be expected to have a material adverse effect on
the ability of the Purchaser to perform its obligations hereunder.

     

    5.  Miscellaneous.

    

    5.1           Notices.  All
notices required or permitted hereunder shall be in writing and shall be deemed
effectively given:

     

    (i) upon
personal delivery to the party to be notified;

     

    (ii) when sent
by confirmed facsimile if sent during normal business hours of the recipient, if
not, then on the next business day;

     

    (iii) three (3)
business days after having been sent by registered or certified mail, return
receipt requested, postage prepaid; or

     

    (iv) one (1)
day after deposit with a nationally recognized overnight courier, specifying
next day delivery, with written verification of receipt.

     

    

    All communications shall be sent as
follows:

     

    
      	
              If
      to the Company, to:

               

              Youval
      Saly

              269
      South Beverly Drive, Suite 1091

              Beverly
      Hills, California 90212

               

              With
      a Copy, to:

               

              Sichenzia
      Ross Friedman Ference LLP

              61
      Broadway, 32nd
      Fl.

              New
      York, New York 10006

              Attn:
      Jonathan R. Shechter

              (t)
      212-930-9700

              (f)
      212-930-9725

            
	
               

              If
      to the Purchaser, to:

               

               

            

    

    5.2           Governing Law.  This
Agreement shall be governed by, and construed in accordance with, the laws of
the State of New York applicable to agreements made and to be performed
therein.

    

    5.3           Binding
Effect.  This Agreement and all of the provisions hereof shall
be binding upon and inure only to the benefit of the parties hereto and their
respective heirs, executors and personal representatives, and successors to the
business and assets of such parties.

    

    5.4           Additional
Acts.    Each of the parties hereto shall hereafter,
at the reasonable request of the other party hereto, execute and deliver such
further documents and agreements, and do such further acts and things as may be
necessary or expedient to carry out the provisions of this
Agreement.

    

    5.5           Entire Agreement;
Amendments.  This Agreement constitutes a complete statement of
all of the arrangements between the parties with respect to the transactions
contemplated by this Agreement, and supersedes all prior agreements and
understandings with respect to such transactions between them.  This
Agreement cannot be changed or terminated except by an instrument in writing
signed by the parties hereto.

    

    5.6           Brokers.  Each party
hereto represents and warrants to the other party that neither such party nor
any director, officer, partner, agent or employee of such party has employed any
broker or finder, or, directly or indirectly, incurred any liability for any
brokerage or finder's fees or commissions or similar payments in connection with
the transactions contemplated by this Agreement.

    

    5.7           Counterparts.  This
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.

    

    

    

     

    

    

    [Signature
page follows]

     

     

    
      
        
        

      

      
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    IN WITNESS WHEREOF, the undersigned
have executed this Agreement on the date first above written.

     

    
      
        	 	
                Pimi
      Agro Cleantech, Inc.

              	 
	 	 	 	 
	
                 

              	
                By:
      

              	 	 
	 	 	
                Youval
      Saly

                Chief
      Executive Officer

              	 
	 	 	 	 
	 	 	 	 

      

    

 

    

    

    

    
      
        
        

      

      
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    SIGNATURE
PAGE TO 

     

    SECURITIES
PURCHASE AGREEMENT 

     

    DATED
AS OF NOVEMBER ___, 2009 

     

    BY
AND AMONG 

     

    PIMI
AGRO CLEANTECH, INC.

     

    AND
THE PURCHASER NAMED THEREIN

     

    The
undersigned hereby executes and delivers to Pimi Agro Cleantech, Inc., the
Securities Purchase Agreement (the “Agreement”)
to which this signature page is attached, which Agreement and signature page,
together with all counterparts of such Agreement and signature pages of the
other Purchasers named in such Agreement, shall constitute one and the same
document in accordance with the terms of such Agreement.

     

    
    

     

    
      	 	Name
      of Purchaser:
      __________________________
      
              

              Signature:____________________________________

               

              By:_________________________________________

              

              Subscription
      Price: $ 1.35

              

              Title:________________________________________

              
 

              Address: ____________________________________

               

              Telephone: ___________________________________

              

              Fax: _________________________________________

               

              SS/Tax
      ID
Number______________________________

            

    

     

    

     

     

    
      
        
        

      

      
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    CONFIDENTIAL

     

    ACCREDITED
INVESTOR QUESTIONNAIRE

     

    
      	
              To:

            	
               

            

    

    

     

    For
purposes of assuring Pimi Agro Cleantech, Inc. (the “Company”) that you qualify
as an "accredited investor," as defined in Rule 501 of Regulation D under the
Securities Act of 1933, as amended (the "Securi­ties Act”), you represent
and warrant that you are an "accredited investor" by virtue of your responses to
the questions below.  In order to certify that you are an accredited
investor, respond affirmatively to at least one of the following questions
(check "yes" below the appropriate items(s)):

    

    A.
If you are a natural person, is your net worth (joint­ly with your spouse,
if any), in­­cluding homes, home furnishings and automobiles, in excess
of $1,000,000 (valu­ing your assets on the basis of their current fair
market value)?

     

    Yes_____        No_____

    

     

    B.
If you are a natural person, was your individual income for both 2007 and 2008
and your anticipated individual income for 2009 in excess of
$200,000?

     

    Yes_____        No_____

    

     

    C.
If you are a natural person, was your joint income with your spouse for both
2007 and 2008 and your anticipated individual income for 2009, in ex­cess of
$300,000?

     

    Yes_____        No_____

    

     

    D.
Are you a director or executive officer of the Company?

     

    Yes_____        No_____

    

     

    E.
If you are a corporation, a limited liability company, a par­tner­ship,
an organization described in Section 501(c)(3) of the Internal Revenue Code or a
Massa­chusetts or similar business trust not formed for the specific purpose
of acquiring the securities offered, are your total assets in ex­­cess
of $5,000,000?

     

    Yes_____        No_____

    

     

    F.
If you are a trust, (i) do you have total assets in excess of $5,000,000, (ii)
were you formed for a purpose other than the specific purpose of acquiring the
shares of common stock, and (iii) is your purchase of the shares of common stock
directed by a person having such knowledge and experience in financial and
business matters that he or she is capable of evaluating the merits and risks of
the proposed transaction.   (If your answer is "no" to any of
parts (i), (ii), or (iii) of this section (f), answer no below.)

     

    Yes_____        No_____

    

    
      
        
        

      

      
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    G.
Are you either a bank as defined in Section 3(a)(2) of the Securities Act, a
savings and loan association or other institution as defined in Section
3(a)(5)(A) of the Securities Act (acting either in its individual or fiduciary
capacity), a broker or dealer registered pursuant to Section 15 of the
Securities Exchange Act of 1934 (“broker/dealer”), affiliated with a
broker/dealer an insurance company as defined in Section 2(a)(13) of the
Securities Act, an investment company registered under the Investment Company
Act of 1940 (the “Investment Company Act”), a business development company as
defined in Section 2(a)(48) of the Investment Company Act, or a Small Business
Investment Company licensed by the U.S. Small Business Adminis­tration under
Section 301(c) or (d) of the Small Business Investment Act of 1958?

     

    Yes_____        No_____

    

     

    H.
If you are an employee benefit plan, within the mean­ing of the Employee
Retire­ment Income Security Act of 1974, as amended ("ERISA"), (i) are your
in­­vest­ment decisions made by a bank, savings and loan
association, insurance com­pany, or registered investment advisor acting as
a plan fiduciary or any other type of “plan fiduciary” as such term is defined
in Section 3(21) of ERISA, (ii) are your total plan assets in excess of
$5,000,000, or (iii) if a self-directed plan, are your investment decisions made
sole­ly by persons that are accredited investors?  (If your answer
is "yes" to any of parts (i), (ii), or (iii) above, answer yes
below.)

     

    Yes_____        No_____

    

     

    I.
If you are a plan established and main­tained by a state, its political
subdivisions, or any agency or instrumentality of a state or its political
subdivisions, for the benefit of its employees, do you have total assets in
excess of $5,000,000?

     

    Yes_____        No_____

    

     

    J.
Are you a private business development company as defined in Section 202(a)(22)
of the Investment Advisers Act of 1940?

     

     Yes_____        No_____

     

    

    
      
        
        

      

      
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    K.
If you are an entity, are all of the equity owners of the entity accredited
in­vestors, that is, can each equity owner answer "yes" to at least one of
the ques­tions in Sections (a) through (j) above?

     

    Yes_____        No_____

     

    If
this Section K is the only section that you have responded to in the
affirmative, you must identify each equity owner of the entity either below or
on a separate sheet if necessary, and each equity owner must also
separately  provide the Company with their own  fully
completed and executed Accredited Investor Questionnaire in order to demonstrate
that they are an accredited investor in their own capacity.

    

    Equity Owners:

    

    
 

    
 

    The
foregoing representation and warranty has been made by you with the
understanding that the Company is, and will be, relying upon the truth and
accuracy of the representation and warranty herein made by you in transferring
to you the shares of common stock without having regis­tered them under the
Securities Act or any applicable state securities laws, and you agree that such
representation and warranty shall survive your acquisition of the shares of
common stock.

     

    

     

    

     

    

     

    [balance
of page intentionally left blank]

     

    

     

    
      
        
        

      

      
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    IN
WITNESS WHEREOF, you have executed this Accredited Investor Questionnaire as of
the date set forth below, intending to be legally bound hereby.

     

     

     

    
      
        	
                Individuals sign
      below:

                 

                 

              	 	 	 	 
	 	 	 	 	 
	Signature of
      Subscriber         	 	 	Signature of Joint Subscriber, if
      any*	 
	
                 

              	 	 	
                 

              	 
	 	 	 	 	 
	Print
      Name of Subscriber       	 	 	Print
      Name of Joint Subscriber, if any*	 
	 	 	 	 	 
	
                *If
      investment is in joint names, both must sign.

              	 	 	 	 

      

                                                                      

    

     

    

    Date:
_____________________

    

    Corporations,
limited liability companies, trusts, partnerships, retirement plans or
retirement accounts and other entities sign below:

    

    

    ___________________________________________

     (Print
Name of Entity)

    

    

    By:_________________________________________

     (Signature)

    

    

    
 

     (Print
Name and Title of Signatory)

    

    

    Date:
___________________

    

    

    

    
      
        
        

      

      
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    EXHIBIT
A

     

    

     

    Schedule
of Purchasers

     

    

     

    

     

    Name: _____________________

     

     

    Total
investment: __________

     

     

    Price per
share: US$ 1.35

     

     

    Number of shares of
commons stock US$ 0.01 each: _____

    
13ex1010.htm

    Exhibit 10.10

     

    SECURITIES PURCHASE
AGREEMENT

     

    THIS AGREEMENT dated as of the
24th day
of September 2009 (the “Agreement”) between
TANGIERS INVESTORS, LP,
a limited partnership (the “Investor”), and ADVENTURE ENERGY, INC., a
corporation organized and existing under the laws of the State of Florida (the
“Company”).

     

    WHEREAS, the parties desire
that, upon the terms and subject to the conditions contained herein, the Company
shall issue and sell to the Investor, as provided herein, and the Investor shall
purchase from the Company up to Three Million Dollars ($3,000,000) of the
Company’s common stock, par value $0.001 per share (the “Common Stock”);
and

    

    

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

      

    NOW, THEREFORE, the parties hereto
agree as follows:

     

    ARTICLE
I.

    Certain
Definitions

     

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

     

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

     

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

     

    Section 1.4.“Advance
Notice Date” shall mean
each date the Company delivers (in accordance with Section 2.2(b) of this
Agreement) to the Investor an Advance Notice requiring the Investor to advance
funds to the Company, subject to the terms of this Agreement. No Advance Notice
Date shall be less than ten (10) Trading Days after the prior Advance Notice
Date.

     

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

     

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

     

    Section 1.7.“Commitment
Amount” shall mean the
aggregate amount of up to Three Million Dollars ($3,000,000) which the Investor
has agreed to provide to the Company in order to purchase the Company’s Common
Stock pursuant to the terms and conditions of this
Agreement.

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    Section 1.8.“Commitment
Period” shall mean the
period commencing on the Effective Date, and expiring on the earliest to occur
of (x) the date on which the Investor shall have made payment of Advances
pursuant to this Agreement in the aggregate amount of the Commitment Amount, (y)
the date this Agreement is terminated pursuant to Section 10.2 or (z) the date
occurring twenty-four (24) months after the Effective Date or thirty six (36)
months after the Effective Date if twenty-four (24) months after the Effective
Date the Company files either an amendment to the then effective registration
statement or a new registration statement is declared
effective.

     

    Section 1.9.“Common
Stock” shall mean the
Company’s common stock, par value $0.001per share.

     

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

     

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

     

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

     

    Section 1.13.“Exchange
Act” shall mean the
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.

     

    Section 1.14.“Material
Adverse Effect” shall mean
any condition, circumstance, or situation that would prohibit or otherwise
materially interfere with the ability of the Company to enter into and perform
any of its obligations under this Agreement or the Registration Rights Agreement
in any material respect.

     

    Section 1.15.“Market
Price” shall mean the
lowest daily volume weighted average price of the Common Stock during the
Pricing Period.

     

    Section
1.16. “Maximum Advance
Amount”  The maximum dollar amount of each Advance will be
equal to the average daily trading volume in dollar amount during the ten (10)
trading days preceding the Advance Date. No Advance will be made in an amount
lower than the Minimum Advance Amount (defined below) or higher than two-hundred
fifty thousand dollars ($100,000).

    

    Section
1.17.                                     “Minimum Advance
Amount” shall be Two Thousand Five Hundred Dollars ($2,500) per Advance
Notice.

     

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

     

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

     

    Section 1.20.“Pricing
Period” shall mean the
five (5) consecutive Trading Days after the Advance Notice Date subject to the
terms and conditions provided herein.

     

    Section 1.21.“Principal
Market” shall mean the
Nasdaq Global Select Market, the Nasdaq Global Market, the Nasdaq Capital
Market, the American Stock Exchange, the OTC Bulletin Board or the New York
Stock Exchange, whichever is at the time the principal trading exchange or
market for the Common Stock.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    Section 1.22.“Purchase
Price” shall be set at
ninety percent (90%) of the Market Price during the Pricing
Period.

     

    Section 1.23.“Registrable
Securities” shall mean the
shares of Common Stock to be issued hereunder (i) in respect of which the
Registration Statement has not been declared effective by the SEC, (ii) which
have not been sold under circumstances meeting all of the applicable conditions
of Rule 144 (or any similar provision then in force) under the Securities Act
(“Rule
144”) or (iii) which have
not been otherwise transferred to a holder who may trade such shares without
restriction under the Securities Act, and the Company has delivered a new
certificate or other evidence of ownership for such securities not bearing a
restrictive legend.

     

    Section 1.24.“Registration
Rights Agreement” shall
mean the Registration Rights Agreement dated the date hereof, regarding the
filing of the Registration Statement for the resale of the Registrable
Securities, entered into between the Company and the
Investor.

     

    Section 1.25.“Registration
Statement” shall mean a
registration statement on Form S-1 (if use of such form is then available to the
Company pursuant to the rules of the SEC and, if not, on such other form
promulgated by the SEC for which the Company then qualifies and which counsel
for the Company shall deem appropriate, and which form shall be available for
the resale of the Registrable Securities to be registered thereunder in
accordance with the provisions of this Agreement and the Registration Rights
Agreement, and in accordance with the intended method of distribution of such
securities), for the registration of the resale by the Investor of the
Registrable Securities under the Securities Act.

     

    Section 1.26.“Regulation
D” shall have the meaning
set forth in the recitals of this Agreement.

     

    Section 1.27.“SEC” shall mean the United States
Securities and Exchange Commission.

     

    Section 1.28.“Securities
Act” shall have the
meaning set forth in the recitals of this Agreement.

     

    Section 1.29.“SEC
Documents” shall mean
Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on
Form 8-K and Proxy Statements of the Company as supplemented to the date hereof,
filed by the Company for a period of at least twelve (12) months immediately
preceding the date hereof or the Advance Date, as the case may be, until such
time as the Company no longer has an obligation to maintain the effectiveness of
a Registration Statement as set forth in the Registration Rights
Agreement.

     

    Section 1.30.“Trading
Day” shall mean any day
during which the New York Stock Exchange shall be open for
business.

     

    Section 1.31.“VWAP” shall mean the volume weighted
average price of the Company’s Common Stock as quoted by Bloomberg,
LP.

    

    

    
      
        
        

      

      
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    ARTICLE
II.

    

    Advances

     

    Section 2.1.Advances.

     

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

     

    Section 2.2.Mechanics.

     

    (a)Advance
Notice. At any time during
the Commitment Period, the Company may require the Investor to purchase shares
of Common Stock by delivering an Advance Notice to the Investor, subject to the
conditions set forth in Section 7.2; provided, however, the amount for each
Advance as designated by the Company in the applicable Advance Notice shall not
be less than the Minimum Advance Amount, nor more than the Maximum Advance
Amount and the aggregate amount of the Advances pursuant to this Agreement shall
not exceed the Commitment Amount. The Company acknowledges that the Investor may
sell shares of the Company’s Common Stock corresponding with a particular
Advance Notice after the Advance Notice is received by the Investor. There shall
be a minimum of ten (10) Trading Days between each Advance Notice
Date.

     

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

     

    Section 2.3.Closings. On each Advance Date (i) the Company
shall deliver to the Investor such number of shares of the Common Stock
registered in the name of the Investor as shall equal (x) the amount of the
Advance specified in such Advance Notice pursuant to Section 2.1 herein, divided
by (y) the Purchase Price and (ii) upon receipt of such shares, the Investor
shall deliver to the Company the amount of the Advance specified in the Advance
Notice by wire transfer of immediately available funds. In addition, on or prior
to the Advance Date, each of the Company and the Investor shall deliver to the
other all documents, instruments and writings required to be delivered by either
of them pursuant to this Agreement in order to implement and effect the
transactions contemplated herein. To the extent the Company has not paid the
fees, expenses, and disbursements in accordance with Section 12.4, the amount of
such fees, expenses, and disbursements may be deducted by the Investor (and
shall be paid to the relevant party) directly out of the proceeds of the Advance
with no reduction in the amount of shares of the Company’s Common Stock to be
delivered on such Advance Date.

     

    
      	 
      	
              (a)

            	
              Company’s Obligations Upon
      Closing.

            

    

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    On each Advance Date:

    

    (i) The Company shall deliver
to the Investor via DWAC transfer the shares of Common Stock applicable to the
Advance in accordance with Section 2.3. The certificates evidencing such shares
shall be free of restrictive legends, provided such shares are registered
pursuant to an effective registration statement.

    

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

     

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

     

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

     

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

     

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

     

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

     

     

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

    

    

    ARTICLE
III.

    Representations
and Warranties of Investor

     

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

     

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

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

     

    Section 3.2.Evaluation
of Risks. The Investor has
such knowledge and experience in financial, tax and business matters as to be
capable of evaluating the merits and risks of, and bearing the economic risks
entailed by, an investment in the Company and of protecting its interests in
connection with this transaction. It recognizes that its investment in the
Company involves a high degree of risk.

     

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

     

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

     

    Section 3.5.Accredited
Investor. The Investor is
and shall be on each Advance Date, an “Accredited
Investor” as that term is
defined in Rule 501(a)(3) of Regulation D of the Securities
Act.

     

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

     

    Section 3.7.Receipt of
Documents. The Investor
and its counsel have received and read in their entirety: (i) this Agreement and
the Exhibits annexed hereto; (ii) all due diligence and other information
necessary to verify the accuracy and completeness of such representations,
warranties and covenants; (iii) the Company’s most recent periodic filings filed
with the SEC; and (iv) answers to all questions the Investor submitted to
the Company regarding an investment in the Company; and the Investor has relied
on the information contained therein and has not been furnished any other
documents, literature, memorandum or prospectus.

     

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

     

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

     

    
      
        
        

      

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

     

    Section
3.11. Trading Activities.
The Investor’s trading activities with respect to the Company’s Common Stock
shall be in compliance with all applicable federal and state securities laws,
rules and regulations and the rules and regulations of the Principal Market on
which the Company’s Common Stock is listed or traded. Neither the Investor nor
its affiliates has an open short position in the Common Stock of the Company,
the Investor agrees that it shall not, and that it will cause its affiliates not
to, engage in any short sales of or hedging transactions with respect to the
Common Stock, provided
that the Company acknowledges and agrees that upon receipt of an Advance Notice
the Investor has the right to sell the shares to be issued to the Investor
pursuant to the Advance Notice during the applicable Pricing
Period. 

    

    Section
3.12     Reliance on
Exemptions.  The Investor  understands that the
Common Stock is being offered and sold to it in reliance on specific exemptions
from the registration requirements of United States federal and state securities
laws and that the Company is relying in part upon the truth and accuracy of, and
such Investor’ compliance with, the representations, warranties, agreements,
acknowledgements and understandings of such Investor set forth here in order to
determine the availability of such exemptions and the eligibility of such
Investor to acquire the Common Stock.

    

    Section
3.13                                No Governmental
Review.  The Investor understands that no United States,
federal or state agency or any other government or governmental agency has
passed on or made any recommendation or endorsement of the Common Stock issuable
pursuant to this Agreement or the fairness or suitability of the investment in
the Common Stock nor have such authorities passed upon or endorsed the merits of
the offering of the Common Stock.

    

     

    ARTICLE
IV.

    Representations
and Warranties of the Company

     

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

     

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

     

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

     

    
      
        
        

      

      
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    Section 4.3.Capitalization. The authorized capital stock of the
Company consists of 150,000,000 shares of Common Stock and 5,000,000 shares of
Preferred Stock, $0.001 par value per share (“Preferred
Stock”), of which
18,200,000 shares of Common Stock and 1,300,000 shares of Preferred Stock are
issued and outstanding. All of such outstanding shares have been validly issued
and are fully paid and nonassessable. Except as disclosed in the SEC Documents,
no shares of Common Stock are subject to preemptive rights or any other similar
rights or any liens or encumbrances suffered or permitted by the Company. Except
as disclosed in the SEC Documents, as of the date hereof, (i) there are no
outstanding options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into, any shares of capital stock of the Company or any of its
subsidiaries, or contracts, commitments, understandings or arrangements by which
the Company or any of its subsidiaries is or may become bound to issue
additional shares of capital stock of the Company or any of its subsidiaries or
options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into, any
shares of capital stock of the Company or any of its subsidiaries, (ii) there
are no outstanding debt securities (iii) there are no outstanding
registration statements other than on Form S-8 and (iv) there are no agreements
or arrangements under which the Company or any of its subsidiaries is obligated
to register the sale of any of their securities under the Securities Act (except
pursuant to the Registration Rights Agreement). Except as disclosed in the SEC
Documents, there are no securities or instruments containing anti-dilution or
similar provisions that will be triggered by this Agreement or any related
agreement or the consummation of the transactions described herein or therein.
The Company has furnished to the Investor true and correct copies of the
Company’s Certificate of Incorporation, as amended and as in effect on the date
hereof (the “Certificate
of Incorporation”), and
the Company’s By-laws, as in effect on the date hereof (the “By-laws”), and the terms of all securities
convertible into or exercisable for Common Stock and the material rights of the
holders thereof in respect thereto.

     

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

     

    
      
        
        

      

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

    

    Section 4.6.10b-5. The SEC Documents do not include any
untrue statements of material fact, nor do they omit to state any material fact
required to be stated therein necessary to make the statements made, in light of
the circumstances under which they were made, not
misleading.

     

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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

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

     

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

     

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

     

    Section 4.15.Internal
Accounting Controls. The
Company and each of its subsidiaries maintain a system of internal accounting
controls sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management’s general or specific authorizations,
(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain asset accountability, (iii) access to assets is permitted only in
accordance with management’s general or specific authorization and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences. Schedule 4.15 discloses the deficiencies that have been noted in
the SEC Documents.

     

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

     

    
      
        
        

      

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

     

    Section 4.18.Subsidiaries. Except for its two subsidiaries known
as E 2 Investments, LLC and SLMI Options, LLC, the Company does not presently
own or control, directly or indirectly, any interest in any other corporation,
partnership, association or other business entity.

     

    Section 4.19.Tax
Status. Except as
disclosed in the SEC Documents, the Company and each of its subsidiaries has
made or filed all federal and state income and all other tax returns, reports
and declarations required by any jurisdiction to which it is subject and (unless
and only to the extent that the Company and each of its subsidiaries has set
aside on its books provisions reasonably adequate for the payment of all unpaid
and unreported taxes) has paid all taxes and other governmental assessments and
charges that are material in amount, shown or determined to be due on such
returns, reports and declarations, except those being contested in good faith
and has set aside on its books provision reasonably adequate for the payment of
all taxes for periods subsequent to the periods to which such returns, reports
or declarations apply. There are no unpaid taxes in any material amount claimed
to be due by the taxing authority of any jurisdiction, and the officers of the
Company know of no basis for any such claim.

     

    Section 4.20.Certain
Transactions. Except as
set forth in the SEC Documents none of the officers, directors, or employees of
the Company is presently a party to any transaction with the Company (other than
for services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to the
knowledge of the Company, any corporation, partnership, trust or other entity in
which any officer, director, or any such employee has a substantial interest or
is an officer, director, trustee or partner.

     

    Section 4.21.Fees and
Rights of First Refusal.  The Company has received
any necessary waivers from any right of first refusal held by any third party,
and therefore currently is not restricted by any right of first refusal that
would require it to offer the securities offered hereunder on a right of first
refusal basis or otherwise to any third parties including, but not limited to,
current or former shareholders of the Company, underwriters, brokers, agents or
other third parties.

     

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

     

    
      
        
        

      

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

      

    Section 4.25.Opinion of
Counsel. The Company will
obtain, subject to applicable securities laws, for the Investor, at the
Company’s expense, any and all opinions of counsel which may be reasonably
required in order to sell the securities issuable hereunder without
restriction.

     

    Section 4.26.Dilution.  The Company is aware and
acknowledges that issuance of shares of the Company’s Common Stock could cause
dilution to existing shareholders and could significantly increase the
outstanding number of shares of Common Stock.

     

    

    ARTICLE
V.

    Indemnification

     

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

     

    Section 5.1.Indemnification.

     

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

     

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

     

    
      
        
        

      

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

     

    

    ARTICLE
VI.

    Covenants
of the Company

     

    Section 6.1.RESERVED.

     

    Section 6.2.Listing of
Common Stock. During the
term of the Commitment Period, the Company shall maintain the Common Stock’s
authorization for quotation on the Principal Market.

     

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

    

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

     

    Section 6.5.Corporate
Existence. During the
Commitment period, the Company will take all steps necessary to preserve and
continue the corporate existence of the Company.

     

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

     

    
      
        
        

      

      
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    Section
6.7. Restriction on Sale of
Capital Stock. During the Commitment Period, the Company shall not,
without the prior written consent of the Investor, (i) issue or sell any Common
Stock or Preferred Stock without consideration or for a consideration per share
less than the Bid Price of the Common Stock determined immediately prior to its
issuance, or (ii) issue or sell any Preferred Stock warrant, option,
right, contract, call, or other security or instrument granting the holder
thereof the right to acquire Common Stock without consideration or for a
consideration per share less than the Bid Price of the Common Stock determined
immediately prior to its issuance. Notwithstanding the foregoing this Section
shall not apply in respect of an Exempt Issuance or an underwritten public
offering of Common Stock.  For purposes of this Agreement “Exempt Issuance”
means the issuance of (a) shares of Common Stock or options to employees,
officers, directors or consultants of the Company pursuant to any stock or
option plan duly adopted for such purpose, by a majority of the non-employee
members of the Board of Directors or a majority of the members of a committee of
non-employee directors established for such purpose, (b) securities upon the
exercise or exchange of or conversion of any Securities issued hereunder and/or
other securities exercisable or exchangeable for or convertible into shares of
Common Stock issued and outstanding on the date of this Agreement, provided that
such securities have not been amended since the date of this Agreement to
increase the number of such securities or to decrease the exercise, exchange or
conversion price of such securities, and (c) securities issued pursuant to
acquisitions or strategic transactions approved by a majority of the
disinterested directors of the Company, provided that any such issuance shall
only be to a Person which is, itself or through its subsidiaries, an operating
company in a business synergistic with the business of the Company and in which
the Company receives benefits in addition to the investment of funds, but shall
not include a transaction in which the Company is issuing securities primarily
for the purpose of raising capital or to an entity whose primary business is
investing in securities.

     

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

     

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

     

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

     

    Section 6.11.Market
Activities.The Company will not, directly or
indirectly, (i) take any action designed to cause or result in, or that
constitutes or might reasonably be expected to constitute, the stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of the Common Stock or (ii) sell, bid for or purchase the Common
Stock, or pay anyone any compensation for soliciting purchases of the Common
Stock.

     

     

    
      
        
        

      

      
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    ARTICLE
VII.

    Conditions
Precedent

     

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

     

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

     

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

        

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

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

     

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

     

    ARTICLE
VIII.

    Due
Diligence Review; Non-Disclosure of Non-Public Information

     

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

     

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

     

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

     

    

    
      
        
        

      

      
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    ARTICLE
IX.

    Choice
of Law/Jurisdiction

     

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

     

    ARTICLE
X.

    Assignment;
Termination

     

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

     

    Section 10.2.Termination.

     

    (a)The obligations of the Investor to make
Advances under Article II hereof shall terminate twenty-four (24) months after
the Effective Date or thirty six (36) months after the Effective Date if
twenty-four (24) months after the Effective Date the Company filed either an
amendment to the then effective registration statement or a new registration
statement was declared effective. The Company’s obligations under this Agreement
shall terminate on the date that the Investor is no longer obligated to make
Advances.

     

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

     

    ARTICLE
XI.

    Notices

     

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

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    

    
      	
              If
      to the Company, to:

            	 
      
	 
      	 
      
	 
      	
              336th
      Street South,

              Suite
      600,

              St
      Petersburg, FL 33701

            
	 
      	
              Attn:
      Wayne Anderson

            	 
      
	 
      	
              Phone:
      727-824-2800

            	 
      
	 
      	
              Facsimile:
      815-846-0755

            	 
      
	 
      	 
      	 
      
	 
      	 
      
	 
      	 
      	 
      
	 
      	
              Tangiers
      Investors, LP

            	 
      
	
              If
      to the Investor(s):

            	
              Michael
      Sobeck

            
	 
      	
              402
      West Broadway

              Suite
      400

            
	 
      	
              San
      Diego, California 92101

            
	 
      	 
      	 
      
	 
      	
              Telephone:  

            	
              619-615-4255

            
	 
      	
              Facsimile:  

            	
              619-566-2011

            

    

    

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

     

    ARTICLE
XII.

    Miscellaneous

     

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

     

    Section 12.2.Entire
Agreement; Amendments.
This Agreement supersedes all other prior oral or written agreements between the
Investor, the Company, their affiliates and persons acting on their behalf with
respect to the matters discussed herein, and this Agreement and the instruments
referenced herein contain the entire understanding of the parties with respect
to the matters covered herein and therein and, except as specifically set forth
herein or therein, neither the Company nor the Investor makes any
representation, warranty, covenant or undertaking with respect to such matters.
No provision of this Agreement may be waived or amended other than by an
instrument in writing signed by the party to be charged with
enforcement.

     

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

     

    Section 12.4.Commitment
Fee. The Company hereby
agrees to pay the following fees:

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

    
 

    
      	
              (a)  

            	
              Upon
      the execution of this Agreement the Company shall issue to the Investor
      shares of Common Stock in an amount equal to One Hundred Fifty Thousand
      Dollars ($150,000) divided by the lowest VWAP of the Company’s Common
      Stock during the ten (10) business days immediately following the date
      hereof, as quoted by Bloomberg, LP (the “Investor’s
      Shares”).

            

    

    

     

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

     

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

    

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

     

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

     

    [SIGNATURE
PAGE TO FOLLOW]

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

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

     

    
      	
              COMPANY:

            
	
              ADVENTURE
      ENERGY, INC.

            
	 
      	 
      
	 
      	 
      
	 
      	
              /s/ Wayne
      Anderson

            
	
              Name:

            	
               Wayne
      Anderson

            
	
              Title:

            	
              President

            
	 
      	 
      
	 
      	 
      
	
               

               

               

               

              INVESTOR:

            
	
              TANGIERS
      INVESTORS, LP

            
	 
      	 
      
	 
      	 
      
	 
      	
              /s/ Michael
      Sobeck

            
	
              By:

            	
              Tangiers
      Capital, LLC

            
	
              Its:

            	
              General
      Partner

            
	 
      	 
      
	 
      	 
      

    

    

    

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
A

     

    ADVANCE
NOTICE

     

    ADVENTURE
ENERGY, INC.

     

    The undersigned,
_______________________ hereby certifies, with respect to the sale of shares of
Common Stock of ADVENTURE ENERGY,
INC. (the “Company”) issuable in connection with this
Advance Notice, delivered pursuant to the Securities Purchase Agreement (the
“Agreement”), as follows:

     

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

     

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

     

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

     

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

     

    5.The Advance requested is
_____________________.

     

    The
undersigned has executed this Certificate this ____ day of
_________________.

     

    
      	
              ADVENTURE
      ENERGY, INC.

            
	 
      	 
      
	
              By:

            	 
      
	
              Name:

            	 
      
	
              Title:

            	 
      

    

    

    If
Returning This Advance Notice via Facsimile Please Send To:

    

    
      	
              If
      by Mail, via Federal Express To:

            	
              Tangiers
      Investors, LP

            
	 
      	
              402
      West Broadway Suite 400, Suite 400, San Diego, CA
  92101

            

    

     

     

     

     

    21

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