Document:

f8k032111ex10xx_medicalcare.htm

Exhibit 10.20

 

SECURITIES PURCHASE AGREEMENT

 

 

This SECURITIES PURCHASE AGREEMENT (the “Agreement”), dated as of June 1, 2011, by and between MEDICAL CARE TECHNOLOGIES INC., a Nevada corporation, with headquarters located at Room 815, No. 2 Building Beixiaojie, Dongzhimen Nei, Beijing, People's Republic of China 10009 (the “Company”), and ASHER ENTERPRISES, INC., a Delaware corporation, with its address at 1 Linden Place, Suite 207, Great Neck, NY 11021 (the “Buyer”).

 

WHEREAS:

   

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

  

B.Buyer desires to purchase and the Company desires to issue and sell, upon the terms and conditions set forth in this Agreement an 8% convertible note of the Company, in the form attached hereto as Exhibit A, in the aggregate principal amount of $32,500.00 (together with any note(s) issued in replacement thereof or as a dividend thereon or otherwise with respect thereto in accordance with the terms thereof, the “Note”), convertible into shares of common stock, $0.00001 par value per share, of the Company (the “Common Stock”), upon the terms and subject to the limitations and conditions set forth in such Note.

    

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

 

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

 

1. Purchase and Sale of Note.

            

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

 

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

 

  

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c.Closing Date. Subject to the satisfaction (or written waiver) of the conditions thereto set forth in Section 6 and Section 7 below, the date and time of the issuance and sale of the Note pursuant to this Agreement (the “Closing Date”) shall be 12:00 noon, Eastern Standard Time on June 6, 2011, or such other mutually agreed upon time. The closing of the transactions contemplated by this Agreement (the “Closing”) shall occur on the Closing Date at such location as may be agreed to by the parties.

 

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

 

a. Investment Purpose. As of the date hereof, the Buyer is purchasing the Note and the shares of Common Stock issuable upon conversion of or otherwise pursuant to the Note (including, without limitation, such additional shares of Common Stock, if any, as are issuable (i) on account of interest on the Note, (ii) as a result of the events described in Sections 1.3 and 1.4(g) of the Note or (iii) in payment of the Standard Liquidated Damages Amount (as defined in Section 2(f) below) pursuant to this Agreement, such shares of Common Stock being collectively referred to herein as the “Conversion Shares” and, collectively with the Note, the “Securities”) for its own account and not with a present view towards the public sale or distribution thereof, except pursuant to sales registered or exempted from registration under the 1933 Act; provided, however, that by making the representations herein, the Buyer does not agree to hold any of the Securities for any minimum or other specific term and reserves the right to dispose of the Securities at any time in accordance with or pursuant to a registration statement or an exemption under the 1933 Act.

 

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

 

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

 

d. Information. The Buyer and its advisors, if any, have been, and for so long as the Note remain outstanding will continue to be, furnished with all materials relating to the business, finances and operations of the Company and materials relating to the offer and sale of the Securities which have been requested by the Buyer or its advisors. The Buyer and its advisors, if any, have been, and for so long as the Note remain outstanding will continue to be, afforded the opportunity to ask questions of the Company. Notwithstanding the foregoing, the Company has not disclosed to the Buyer any material nonpublic information and will not disclose such information unless such information is disclosed to the public prior to or promptly following such disclosure to the Buyer. Neither such inquiries nor any other due diligence investigation conducted by Buyer or any of its advisors or representatives shall modify, amend or affect Buyer’s right to rely on the Company’s representations and warranties contained in Section 3 below. The Buyer understands that its investment in the Securities involves a significant degree of risk. The Buyer is not aware of any facts that may constitute a breach of any of the Company's representations and warranties made herein.

 

  

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

 

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

 

g. Legends. The Buyer understands that the Note and, until such time as the Conversion Shares have been registered under the 1933 Act may be sold pursuant to Rule 144 or Regulation S without any restriction as to the number of securities as of a particular date that can then be immediately sold, the Conversion Shares may bear a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of the certificates for such Securities):

 

  

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	 	“NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT.NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.”	 

 

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

 

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

 

i. Residency. The Buyer is a resident of the jurisdiction set forth immediately below the Buyer’s name on the signature pages hereto.

 

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

 

 

  

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

 

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

 

c. Capitalization. As of the date hereof, the authorized capital stock of the Company consists of: (i) 500,000,000 shares of Common Stock, $0.00001 per share, of which 188,241,479 shares are issued and outstanding; and (ii) 100,000,000 shares of Preferred Stock, $0.00001 per share, of which no shares are issued and outstanding; no shares are reserved for issuance pursuant to the Company’s stock option plans, no shares are reserved for issuance pursuant to securities (other than the Note and three (3) prior convertible promissory notes in favor of the Buyer: (a) prior convertible promissory note dated February 1, 2011 in the amount of $50,000.00 for which 38,162,695 shares of Common Stock are presently reserved; (b) prior convertible promissory note dated March 11, 2011 in the amount of $32,500.00 for which 9,832,098 shares of Common Stock are presently reserved and (c) prior convertible promissory note dated April 12, 2011 in the amount of $32,500.00 for which 21,922,921 shares of Common Stock are presently reserved) exercisable for, or convertible into or exchangeable for shares of Common Stock and 20,077,923 shares are reserved for issuance upon conversion of the Note

 

  

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(subject to adjustment pursuant to the Company’s covenant set forth in Section 4(g) below). All of such outstanding shares of capital stock are, or upon issuance will be, duly authorized, validly issued, fully paid and non-assessable. No shares of capital stock of the Company are subject to preemptive rights or any other similar rights of the shareholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company. As of the effective date of this Agreement, (i) there are no outstanding options, warrants, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for any shares of capital stock of the Company or any of its Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries, (ii) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Act and (iii) there are no anti- dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Note or the Conversion Shares. The Company has furnished to the Buyer true and correct copies of the Company’s Certificate of Incorporation as in effect on the date hereof (“Certificate of Incorporation”), the Company’s By-laws, as in effect on the date hereof (the “By-laws”), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect thereto. The Company shall provide the Buyer with a written update of this representation signed by the Company’s Chief Executive on behalf of the Company as of the Closing Date.

                       

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

 

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

 

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

 

  

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

 

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

 

  

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made in any such SEC Documents is, or has been, required to be amended or updated under applicable law (except for such statements as have been amended or updated in subsequent filings prior the date hereof). As of their respective dates, the financial statements of the Company included in the SEC Documents complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto. Such financial statements have been prepared in accordance with United States generally accepted accounting principles, consistently applied, during the periods involved and fairly present in all material respects the consolidated financial position of the Company and its consolidated Subsidiaries as of the dates thereof and the consolidated results of their operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments). Except as set forth in the financial statements of the Company included in the SEC Documents, the Company has no liabilities, contingent or otherwise, other than (i) liabilities incurred in the ordinary course of business subsequent to March 31, 2011, and (ii) obligations under contracts and commitments incurred in the ordinary course of business and not required under generally accepted accounting principles to be reflected in such financial statements, which, individually or in the aggregate, are not material to the financial condition or operating results of the Company. The Company is subject to the reporting requirements of the 1934 Act.

 

h. Absence of Certain Changes. Since March 31, 2011, there has been no material adverse change and no material adverse development in the assets, liabilities, business, properties, operations, financial condition, results of operations, prospects or 1934 Act reporting status of the Company or any of its Subsidiaries.

 

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

 

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

 

  

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

 

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

 

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

 

n. Disclosure. All information relating to or concerning the Company or any of its Subsidiaries set forth in this Agreement and provided to the Buyer pursuant to Section 2(d) hereof and otherwise in connection with the transactions contemplated hereby is true and correct in all material respects and the Company has not omitted to state any material fact necessary in order to make the statements made herein or therein, in light of the circumstances under which they were made, not misleading. No event or circumstance has occurred or exists with respect to the Company or any of its Subsidiaries or its or their business, properties, prospects, operations or financial conditions, which, under applicable law, rule or regulation, requires public disclosure or announcement by the Company but which has not been so publicly announced or disclosed (assuming for this purpose that the Company’s reports filed under the 1934 Act are being incorporated into an effective registration statement filed by the Company under the 1933 Act).

 

  

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

 

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

 

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

 

r. Permits; Compliance. The Company and each of its Subsidiaries is in possession of all franchises, grants, authorizations, licenses, permits, easements, variances, exemptions, consents, certificates, approvals and orders necessary to own, lease and operate its properties and to carry on its business as it is now being conducted (collectively, the “Company Permits”), and there is no action pending or, to the knowledge of the Company, threatened regarding suspension or cancellation of any of the Company Permits. Neither the Company nor any of its Subsidiaries is in conflict with, or in default or violation of, any of the Company Permits, except for any such conflicts, defaults or violations which, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect. Since March 31, 2011, neither the Company nor any of its Subsidiaries has received any notification with respect to possible conflicts, defaults or violations of applicable laws, except for notices relating to possible conflicts, defaults or violations, which conflicts, defaults or violations would not have a Material Adverse Effect.

 

  

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s. Environmental Matters.

 

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

 

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

 

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

 

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

               

  

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u. Insurance. The Company and each of its Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as management of the Company believes to be prudent and customary in the businesses in which the Company and its Subsidiaries are engaged. Neither the Company nor any such Subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not have a Material Adverse Effect. Upon written request the Company will provide to the Buyer true and correct copies of all policies relating to directors’ and officers’ liability coverage, errors and omissions coverage, and commercial general liability coverage.

 

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

 

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

 

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

 

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

 

z. Breach of Representations and Warranties by the Company. If the Company breaches any of the representations or warranties set forth in this Section 3, and in addition to any other remedies available to the Buyer pursuant to this Agreement, it will be considered an Event of default under Section 3.4 of the Note. 

 

  

12

  

 

4. COVENANTS.

 

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

 

b. Form D; Blue Sky Laws. The Company agrees to file a Form D with respect to the Securities as required under Regulation D and to provide a copy thereof to the Buyer promptly after such filing. The Company shall, on or before the Closing Date, take such action as the Company shall reasonably determine is necessary to qualify the Securities for sale to the Buyer at the applicable closing pursuant to this Agreement under applicable securities or “blue sky” laws of the states of the United States (or to obtain an exemption from such qualification), and shall provide evidence of any such action so taken to the Buyer on or prior to the Closing Date.

 

c. Use of Proceeds. The Company shall use the proceeds for general working capital purposes

 

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

 

  

13

  

 

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

 

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

 

g. [INTENTIONALLY DELETED]

 

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

              

  

14

  

 

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

 

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

 

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

 

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

 

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

 

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

 

  

15

  

 

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

 

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

 

a. The Buyer shall have executed this Agreement and delivered the same to the Company.

 

b. The Buyer shall have delivered the Purchase Price in accordance with Section 1(b) above.

 

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

 

  

16

  

 

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

 

7. Conditions to The Buyer’s Obligation to Purchase. The obligation of the Buyer hereunder to purchase the Note at the Closing is subject to the satisfaction, at or before the Closing Date of each of the following conditions, provided that these conditions are for the Buyer’s sole benefit and may be waived by the Buyer at any time in its sole discretion:

 

a. The Company shall have executed this Agreement and delivered the same to the Buyer.

 

b. The Company shall have delivered to the Buyer the duly executed Note (in such denominations as the Buyer shall request) in accordance with Section 1(b) above.

 

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

 

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

 

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

 

f. No event shall have occurred which could reasonably be expected to have a Material Adverse Effect on the Company including but not limited to a change in the 1934 Act reporting status of the Company or the failure of the Company to be timely in its 1934 Act reporting obligations. 

 

  

17

  

 

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

 

h. The Buyer shall have received an officer’s certificate described in Section 3(c) above, dated as of the Closing Date.

 

8. Governing Law; Miscellaneous.

 

a. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York without regard to principles of conflicts of laws. Any action brought by either party against the other concerning the transactions contemplated by this Agreement shall be brought only in the state courts of New York or in the federal courts located in the state and county of Nassau. The parties to this Agreement hereby irrevocably waive any objection to jurisdiction and venue of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens. The Company and Buyer waive trial by jury. The prevailing party shall be entitled to recover from the other party its reasonable attorney's fees and costs. In the event that any provision of this Agreement or any other agreement delivered in connection herewith is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of any agreement. Each party hereby irrevocably waives personal service of process and consents to process being served in any suit, action or proceeding in connection with this Agreement or any other Transaction Document by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law.

 

b. Counterparts; Signatures by Facsimile. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which shall constitute one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party. This Agreement, once executed by a party, may be delivered to the other party hereto by facsimile transmission of a copy of this Agreement bearing the signature of the party so delivering this Agreement.

 

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

 

d. Severability. In the event that any provision of this Agreement is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any provision hereof which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision hereof.

 

  

18

  

 

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

 

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

 

If to the Company, to:

MEDICAL CARE TECHNOLOGIES INC.

Room 815, No. 2 Building Beixiaojie, Dongzhimen Nei

Beijing, People's Republic of China 10009

Attn: NING C. WU, President

facsimile: [enter fax number]

 

With a copy by fax only to (which copy shall not constitute notice):

[enter name of law firm]

Attn: [attorney name]

[enter address line 1]

[enter city, state, zip]

facsimile: [enter fax number]

 

If to the Buyer:

ASHER ENTERPRISES, INC.

1 Linden Pl., Suite 207

Great Neck, NY. 11021

Attn: Curt Kramer, President

facsimile: 516-498-9894

 

  

19

  

 

With a copy by fax only to (which copy shall not constitute notice):

Naidich Wurman Birnbaum & Maday LLP

80 Cuttermill Road, Suite 410

Great Neck, NY 11021

Attn: Bernard S. Feldman, Esq.

facsimile: 516-466-3555

 

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

                 

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

 

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

 

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

 

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

 

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

 

  

20

  

 

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

 

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

 

 

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

 

	
MEDICAL CARE TECHNOLOGIES INC.

	 
	 	 	 
	
By: 

	/s/ 	 
	 	NING C. WU	 
	 	President	 
	 	 	 

 

 

	
ASHER ENTERPRISES, INC.

	 
	 	 	 
	
By: 

	/s/ 	 
	Name:	Curt Kramer	 
	Title:	 President	 
	 	 	 

 

1 Linden Pl., Suite 207

Great Neck, NY. 11021

 

 

AGGREGATE SUBSCRIPTION AMOUNT:

 

	Aggregate Principal Amount of Note:	 	$	32,500.00	 
	 	 	 	 	 
	Aggregate Purchase Price:	 	$	32,500.00	 

 

 

 

21VENDUM BATTERIES, INC.

 

INVESTMENT AGREEMENT

 

THE SECURITIES OFFERED HEREBY HAVE NOT
BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE OR OTHER SECURITIES AUTHORITIES. THEY MAY NOT BE SOLD
OR TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
FEDERAL AND STATE SECURITIES LAWS.

 

THIS INVESTMENT AGREEMENT DOES NOT CONSTITUTE
AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO PURCHASE, ANY OF THE SECURITIES DESCRIBED HEREIN BY OR TO ANY PERSON IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR
STATE SECURITIES AUTHORITIES, NOR HAVE SUCH AUTHORITIES CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

 

AN INVESTMENT IN THESE SECURITIES INVOLVES
A HIGH DEGREE OF RISK. THE INVESTOR MUST RELY ON ITS OWN ANALYSIS OF THE INVESTMENT AND ASSESSMENT OF THE RISKS INVOLVED.

 

SEE ADDITIONAL LEGENDS AT SECTION
9.10.

 

 

THIS INVESTMENT AGREEMENT
(this ”Agreement“ or “Investment Agreement”) is made as of the 3rd day of June, 2011,
by and between Vendum Batteries, Inc., a corporation duly organized and existing under the laws of the State of Nevada (the "Company"),
and Centurion Private Equity, LLC, a Georgia Limited Liability Company ("Investor").

 

RECITALS:

 

WHEREAS, the parties
desire that, upon the terms and subject to the conditions contained herein, the Company shall issue to the Investor, and the Investor
shall purchase from the Company, from time to time as provided herein, shares of the Company's Common Stock, as part of an offering
of Common Stock by the Company to Investor, for a maximum aggregate offering amount of up to Five Million Dollars ($5,000,000.00)
(the "Maximum Offering Amount"); and

 

WHEREAS, the solicitation
of this Investment Agreement and, if accepted by the Company, the offer and sale of the Common Stock are being made in reliance
upon the provisions of Regulation D ("Regulation D") promulgated under the Act, Section 4(2) of the Act, and/or upon
such other exemption from the registration requirements of the Act as may be available with respect to any or all of the purchases
of Common Stock to be made hereunder.

    	1

    	 

    

TERMS:

 

NOW, THEREFORE,
the parties hereto agree as follows:

 

1. Certain Definitions. As used
in this Agreement (including the recitals above), the following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):

 

“9.9% Limitation”
shall have the meaning set forth in Section 2.3.1(f).

 

“Accredited Investor”
shall have the meaning set forth in Section 3.1.

 

“Act” shall
mean the Securities Act of 1933, as amended.

 

“Additional Registration
Statement” shall have the meaning set forth in the Registration Rights Agreement.

 

“Advance Put Notice”
shall have the meaning set forth in Section 2.3.1(a), the form of which is attached hereto as Exhibit A.

 

“Advance Put Notice
Date” shall have the meaning set forth in Section 2.3.1(a).

 

“Affiliate”
shall have the meaning as set forth Section 6.5.

 

“Aggregate Issued
Shares” equals the aggregate number of shares of Common Stock issued to Investor pursuant to the terms of this Agreement
or the Registration Rights Agreement as of a given date, including Put Shares.

 

“Agreement”
shall mean this Investment Agreement.

 

“Approved Primary
Market” shall mean any of the following: the OTC QB, the OTC QX, the NASDAQ Capital Market, the NASDAQ Global Market the
NASDAQ Global Select Market, the NYSE Amex, or the New York Stock Exchange.

 

“Authorized Law Firm”
shall mean an independent law firm representing the Company which, as of the date in question, has either (a) at least 20 attorneys
as partners or employees of the firm or (b) has (and has represented to the Investor in writing that it has) a liability insurance
policy covering any liability the Investor may incur for misstatements or omissions in the Prospectus or otherwise related to the
attorney’s issuance of the Put Opinions and Registration Opinions, having no exclusion for such coverage, and having policy
limits equal to at least X% of the sum of (x) total Put Dollar Amount of Put Shares that have been purchased by the Investor in
all Puts through the date in question, plus (y) the Maximum Put Dollar Amount for the uncompleted Put for which the Put Opinion
and Registration Opinion in question are being issued (the sum of “x” and “y” immediately above being referred
to as the “Covered Put Amount”), where “X%” equals 100% when the Covered Put Amount at the time of issuance
of the opinion of counsel in question equals $2,000,000 or less and equals 150% when the Covered Put Amount at the time of issuance
of the opinion of counsel in question exceeds $2,000,000 (an “Authorized Legal Liability Policy”).

    	2

    	 

    

“Authorized Auditor”
shall mean an independent accounting firm representing the Company which, as of the date in question, (a) has at least 20 independent
accountants as partners or employees of the firm and (b) has (and has represented to the Investor in writing that it has) a liability
insurance policy covering any liability the Investor may incur for misstatements or omissions in the Prospectus or otherwise related
to the accountant’s or the accounting firm’s issuance of Bring Down Cold Comfort Letters, having no exclusions for
such coverage, and having policy limits equal to at least 300% of the sum of (x) the total Put Dollar Amount of Put Shares that
have been purchased by the Investor in all Puts through the date in question, plus (y) the Maximum Put Dollar Amount for the uncompleted
Put for which the Bring Down Cold Comfort Letter in question is being issued, provided that such aggregate policy limits shall
not be required to exceed the Maximum Offering Amount plus $2,000,000 (an “Authorized Auditor Liability Policy”).

 

“Automatic Termination”
shall have the meaning set forth in Section 2.3.2.

 

“Bring Down Cold
Comfort Letters” shall have the meaning set forth in Section 2.3.7(b).

 

“Business Day”
shall mean shall mean any day other than a Saturday, Sunday or a day on which commercial banks in the City of New York, New York
are authorized or required by law or executive order to remain closed.

 

“Calendar Month”
shall mean the period of time beginning on the numeric day in question in a Calendar Month and for Calendar Months thereafter,
beginning on the earlier of (i) the same numeric day of the next Calendar Month or (ii) the last day of the next Calendar Month.
Each Calendar Month shall end on the day immediately preceding the beginning of the next succeeding Calendar Month.

 

“Cap Amount”
shall have the meaning set forth in Section 2.3.13.

 

“Capitalization Schedule”
shall have the meaning set forth in Section 2.4.

 

“Change in Control”
shall have the meaning set forth within the definition of Major Transaction, below.

 

“Closing” shall
mean one of (i) the Investment Commitment Closing and (ii) each closing of a purchase and sale of Common Stock pursuant to Section
2.

 

"Closing Bid Price"
means, for any security as of any date, the last closing bid price for such security during Normal Trading on the OTC QB, or, if
the OTC QB, is not the principal securities exchange or trading market for such security, the last closing bid price during Normal
Trading of such security on the principal securities exchange or trading market where such security is listed or traded as reported
by such principal securities exchange or trading market, or if the foregoing do not apply, the last closing bid price during Normal
Trading of such security in the over-the-counter market on the electronic bulletin board for such security, or, if no closing bid
price is reported for such security, the average of the bid prices of any market makers for such security as reported in the OTC
Pink market. If the Closing Bid Price cannot be calculated for such security on such date on any of the foregoing bases,
the Closing Bid Price of such security on such date shall be the fair market value as mutually determined by the Company and the
Investor in this Offering. If the Company and the Investor in this Offering are unable to agree upon the fair market value of the
Common Stock, then such dispute shall be resolved by an investment banking firm mutually acceptable to the Company and the Investor
in this offering and any fees and costs associated therewith shall be paid by the Company.

    	3

    	 

    

 

 “Commission Documents”
shall mean (1) all reports, schedules, registrations, forms, statements, information and other documents filed with or furnished
to the SEC by the Company pursuant to the reporting requirements of the Exchange Act, including all material filed or furnished
pursuant to Section 13(a) or 15(d) of the Exchange Act, which have been filed or furnished by the Company since
December 31, 2009, including, without limitation, the Annual Report on Form 10-K filed by the Company for the year ended
December 31, 2010 (the “2010 Form 10-K”), the Company’s Quarterly Report on Form 10-Q for
its fiscal quarters ended March 31, 2010, June 30, 2010 and September 30, 2010, and such reports which hereafter shall be
filed with or furnished to the SEC by the Company, including, without limitation, the Current Report, (2) the Registration
Statement, as the same may be amended from time to time, the Prospectus and each Prospectus Supplement and (3) all information
contained in such filings and all documents and disclosures that have been and heretofore shall be incorporated by reference therein.

 

“Commitment Closing
Date” means the date of the Investment Commitment Closing.

 

“Commitment Shares” shall have the
meaning set forth in Section 9.10(i).

 

“Commitment Period”
shall mean the period from the date of this Agreement to the Termination Date.

 

“Common Shares”
shall mean the shares of Common Stock of the Company.

 

“Common Stock”
shall mean the common stock of the Company, $0.001 par value.

 

“Company” shall
have the meaning set forth in the opening paragraph hereof.

 

“Company Designated
Maximum Put Dollar Amount” shall have the meaning set forth in Section 2.3.1(a).

 

“Company Designated
Minimum Put Share Price” shall have the meaning set forth in Section 2.3.1(a).

 

“Company Termination”
shall have the meaning set forth in Section 2.3.12.

 

“Conditions to Investment
Commitment Closing” shall have the meaning as set forth in Section 2.2.2.

 

“Current Report”
shall have the meaning ascribed to it in Section 6.10 hereof.

 

“Delisting Event”
shall mean any time during the term of this Investment Agreement, that the Company’s Common Stock is not listed for and actively
trading on an Approved Primary Market or is suspended or delisted with respect to the trading of the shares of Common Stock on
such market or exchange.

 

“Disclosure Documents”
shall have the meaning as set forth in Section 3.2.4.

    	4

    	 

    

“Due Diligence Review”
shall have the meaning as set forth in Section 2.4.

 

“Effective Date”
shall have the meaning set forth in Section 2.3.1.

 

“Equity Securities”
shall have the meaning set forth in Section 6.6.1.

 

“Evaluation Day”
shall have the meaning set forth in Section 2.3.1(b).

 

“Exchange Act”
shall mean the Securities Exchange Act of 1934, as amended.

 

“Excluded Day”
shall have the meaning set forth in Section 2.3.1(b).

 

“Excluded Block Trades”
shall have the meaning set forth in Section 2.3.1(b).

 

“Extended Put Period”
shall mean the period of time between the Advance Put Notice Date until the Pricing Period End Date.

 

“Fee Shares”
shall have the meaning set forth in Section 9.10(i).

 

“FINRA” shall
mean the Financial Industry Regulatory Authority.

 

“Indemnified Liabilities”
shall have the meaning set forth in Section 8.

 

“Indemnitees”
shall have the meaning set forth in Section 8.

 

“Indemnitor”
shall have the meaning set forth in Section 8.

 

“Individual Put Limit”
shall have the meaning set forth in Section 2.3.1(b).

 

“Ineffective Period”
shall mean any period of time after the Effective Date during the term hereof that the Registration Statement or any Supplemental
Registration Statement (each as defined herein) becomes ineffective or unavailable for use for the sale or resale, as applicable,
of any or all of the Registrable Securities (as defined herein) for any reason (or in the event the prospectus under either of
the above is not current and deliverable).

 

“Intended Put Share
Amount” shall have the meaning set forth in Section 2.3.1(a).

 

“Investment Commitment
Closing” shall have the meaning set forth in Section 2.2.1.

 

“Investment Agreement”
shall mean this Investment Agreement.

 

“Investment Commitment
Opinion of Counsel” shall mean an opinion from Company’s independent counsel, substantially in the form attached as
Exhibit B, or such other form as agreed upon by the parties, as to the Investment Commitment Closing.

 

“Investment Date”
shall mean the date of the Investment Commitment Closing.

    	5

    	 

    

“Investor”
shall have the meaning set forth in the preamble hereto.

 

“Knowledge” means the actual Knowledge
of the Company’s Chief Executive Officer or Chief Financial Officer.

 

“Legend” shall
have the meaning set forth in Section 9.10(ii).

 

“Legend Removal Condition”
shall have the meaning set forth in Section 9.10(ii).

 

“Liquidity Date”
shall have the meaning set forth in Section 2.3.5(t).

 

“Major Transaction"
shall mean and shall be deemed to have occurred at such time upon any of the following events:

 

(i) a consolidation, merger
or other business combination or event or transaction following which the holders of Common Stock of the Company immediately preceding
such consolidation, merger, combination or event either (i) no longer hold a majority of the shares of Common Stock of the Company
or (ii) no longer have the ability to elect the board of directors of the Company (a “Change of Control”);

 

(ii) the sale or transfer
of a material portion of the Company's material assets not in the ordinary course of business;

 

(iii) the purchase of assets
by the Company not in the ordinary course of business; or

 

(iv) a purchase, tender
or exchange offer for a majority of the outstanding shares of Common Stock.

 

“Market Price”
shall equal the average of the three lowest daily VWAPS for the Common Stock on the Principal Market for all Trading Days (regardless
of whether or not such days are Evaluation Days) during the Pricing Period for the applicable Put.

 

“Material Adverse
Change” means a change or changes in facts or circumstances which, taken together existing facts, circumstances or events,
would constitute a Material Adverse Effect.

    	6

    	 

    

“Material
Adverse Effect” means (i) any condition, occurrence, state of facts or event having, or insofar as reasonably can be
foreseen would likely have, any material adverse effect on the legality, validity or enforceability of the Transaction Documents
or the transactions contemplated thereby, (ii) any condition, occurrence, state of facts or event having, or insofar as reasonably
can be foreseen would likely have, any effect on the business, operations, properties or condition (financial or otherwise) of
the Company that is material and adverse to the Company and its Subsidiaries, taken as a whole, and/or (iii) any condition,
occurrence, state of facts or event that would, or insofar as reasonably can be foreseen would likely, prohibit or otherwise materially
interfere with or delay the ability of the Company to perform any of its material obligations under any of the Transaction Documents
to which it is a party; provided , however , that none of the following, individually or in the aggregate, shall
be taken into account in determining whether a Material Adverse Effect has occurred or insofar as reasonably can be foreseen would
likely occur: (a) changes in conditions in the U.S. or global capital, credit or financial markets generally, including changes
in the availability of capital or currency exchange rates, provided such changes shall not have affected the Company in a materially
disproportionate manner as compared to other similarly situated companies; (b) changes generally affecting the industries
in which the Company is engaged, provided such changes shall not have affected the Company in a materially disproportionate manner
as compared to other similarly situated companies; (c) any effect of the announcement of, or the consummation of the transactions
contemplated by, this Agreement and the other Transaction Documents on the Company’s relationships, contractual or otherwise,
with customers, suppliers, vendors, bank lenders, strategic venture partners or employees; and (d) the receipt of any notice
that the Common Stock may be ineligible to continue listing or quotation on the Trading Market, other than a final and non-appealable
notice that the listing or quotation of the Common Stock on the Trading Market shall be terminated on a date certain.

 

“Material Facts”
shall have the meaning set forth in Section 2.3.7(a).

 

“Maximum Put Dollar
Amount” shall mean the lesser of (i) the Company Designated Maximum Put Dollar Amount, if any, specified by the Company in
a Put Notice, and (ii) $250,000.

 

“Maximum Offering
Amount” shall have the meaning set forth in the recitals hereto.

 

“Nasdaq 20% Rule”
shall have the meaning set forth in Section 2.3.13.

 

“NASDAQ Market”
shall mean NASDAQ Capital Market, the NASDAQ Global Select Market or the NASDAQ Global Market.

 

“Normal Trading”
shall mean trading that occurs between 9:30 AM and 4:00 PM, New York City Time, on any Trading Day, and shall expressly exclude
“after hours” trading.

 

“Numeric Day”
shall mean the numerical day of the month of the Investment Date or the last day of the Calendar Month in question, whichever is
less.

 

“Offering”
shall mean the Company’s offering of Common Stock issued under this Investment Agreement.

    	7

    	 

    

“Officer’s
Certificate” shall have the meaning set forth in Section 2.2.2(e).

 

“Opinion of Counsel”
shall mean, as applicable, the Investment Commitment Opinion of Counsel, the Put Opinion of Counsel and the Registration Opinion.

 

“Payment Due Date”
shall have the meaning set forth in Section 2.3.9.

 

“Pricing Period”
shall mean, unless otherwise shortened under the terms of this Agreement, the period beginning on the Trading Day immediately following
the Put Date and ending on and including the date which is 15 Trading Days after such Put Date.

 

“Pricing Period End
Date” shall mean the last Trading Day of any Pricing Period.

 

“Principal Market”
shall mean the single Approved Primary Market on which the Common Stock is then listed or traded in the United States, provided
that if the Company’s Common Stock is simultaneously trading on more than one Approved Primary Market, then the Principal
Market shall be deemed to be the first market or exchange on which the Common Stock is traded to appear, in order, on the following
list: (1) the New York Stock Exchange, (2) the NASDAQ Global Select Market, (3) the NASDAQ Global Market, (4) the NASDAQ Capital
Market, (5) the NYSE Amex, (6) OTC QX, or (7) the OTC QB.

“Proceeding”
shall have the meaning as set forth Section 5.1.

 

“Prospectus”
shall have the meaning set forth in the Registration Rights Agreement.

 

“Prospectus Supplement” means any
prospectus supplement to the Prospectus filed with the SEC from time to time pursuant to Rule 424(b) under the Securities
Act, including the documents incorporated by reference therein.

 

“Purchase”
shall have the meaning set forth in Section 2.3.8.

 

“Put” shall
have the meaning set forth in Section 2.3.1(d).

 

“Put Closing”
shall have the meaning set forth in Section 2.3.11.

 

“Put Closing Date”
shall have the meaning set forth in Section 2.3.11.

 

“Put Conditions”
shall have the meaning set forth in Section 2.3.5.

 

“Put Date”
shall mean the date that is specified by the Company in any Put Notice for which the Company intends to exercise a Put under Section
2.3.1, unless the Put Date is postponed pursuant to the terms hereof, in which case the “Put Date” is such postponed
date.

 

“Put Dollar Amount”
shall be determined by multiplying the Put Share Amount by the respective Put Share Prices with respect to such Put Shares, subject
to the limitations herein.

 

“Put Interruption
Date” shall have the meaning set forth in Section 2.3.4.

    	8

    	 

    

“Put Interruption
Event” shall have the meaning set forth in Section 2.3.4.

 

“Put Interruption
Notice” shall have the meaning set forth in Section 2.3.4.

 

“Put Notice”
shall have the meaning set forth in Section 2.3.1(d), the form of which is attached hereto as Exhibit C.

 

“Put Opinion of Counsel”
shall mean an opinion from Company’s independent counsel (which shall be an Authorized Law Firm when so required hereunder),
in the form attached as Exhibit D, or such other form as agreed upon by the parties, as to any Put Closing.

 

“Put Share Amount”
shall have the meaning as set forth Section 2.3.1(b).

 

“Put Share Price”
shall have the meaning set forth in Section 2.3.1(c).

 

“Put Shares”
shall mean shares of Common Stock that are purchased by the Investor pursuant to a Put.

 

“Registrable Securities”
shall have the meaning as set forth in the Registration Rights Agreement.

 

“Registration Opinion”
shall have the meaning set forth in Section 2.3.7(a), the form of which is attached hereto as Exhibit E.

 

“Registration Opinion
Deadline” shall have the meaning set forth in Section 2.3.7(a).

 

“Registration Rights
Agreement” shall mean that certain registration rights agreement entered into by the Company and Investor on even date herewith,
in the form attached hereto as Exhibit F, or such other form as agreed upon by the parties.

 

“Registration Statement”
shall have the meaning as set forth in the Registration Rights Agreement.

 

“Regulation D”
shall have the meaning set forth in the recitals hereto.

 

“Reporting Issuer”
shall have the meaning set forth in Section 6.2.

 

“Required Put Documents”
shall have the meaning set forth in Section 2.3.6.

 

“Resolutions”
shall have the meaning set forth in Section 2.3.5(u).

 

“Schedule of Exceptions”
shall have the meaning set forth in Section 5, and is attached hereto as Exhibit G.

 

“SEC” shall
mean the United States Securities and Exchange Commission or any successor entity.

    	9

    	 

    

“Secretary’s
Certificate” shall have the meaning set forth in Section 2.2.2(a).

 

“Section 13(d) Outstanding
Share Amount” shall have the meaning set forth in Section 2.3.1(f).

 

“Securities”
shall mean the Common Stock of the Company issuable pursuant to this Investment Agreement, including but not limited to the Commitment
Shares, the Fee Shares and the Put Shares.

 

“Securities Act”
shall mean the Securities Act of 1933, as amended.

 

 “Short Sales”
shall mean “short sales” as defined in Rule 200 promulgated under Regulation SHO under the Exchange Act. 

 

“SOX ” shall mean the Sarbanes-Oxley
Act of 2002 and the rules and regulations of the SEC thereunder.

 

“Stockholder 20%
Approval” shall have the meaning set forth in Section 2.3.13.

 

“Subsidiary” shall mean any corporation
or other entity of which at least a majority of the securities or other ownership interest having ordinary voting power (absolutely
or contingently) for the election of directors or other persons performing similar functions are at the time owned directly or
indirectly by the Company and/or any of its other Subsidiaries.

 

“Term” shall
mean the term of this Agreement, which shall be a period of time beginning on the date of this Agreement and ending on the Termination
Date.

 

“Termination Date”
shall mean the earlier of (i) the date that is thirty six (36) Calendar Months after the date of this Agreement, (ii) the Put Closing
Date on which the sum of the aggregate Put Share Prices for all Put Shares equal the Maximum Offering Amount, (iii) the date that
the Company has delivered a Termination Notice to the Investor, and (iv) the date of an Automatic Termination.

 

“Termination Notice”
shall have the meaning as set forth in Section 2.3.12.

 

“Third Party Reports”
shall have the meaning set forth in Section 3.2.4.

 

“Trading Day”
shall mean any day on which the Principal Market is open for trading including any day on which the Principal Market is open for
trading for a period of time less than the customary time.

 

“Transaction Documents”
means, collectively, this Agreement and the exhibits hereto, the Registration Rights Agreement and each of the other agreements,
documents, certificates and instruments entered into or furnished by the parties hereto in connection with the transactions contemplated
hereby and thereby, including, without limitation, the Disclosure Documents.

    	10

    	 

    

“Trading Market”
means whichever Approved Primary Market is at the time the principal trading exchange or market for the Common Stock.

 

“Trading Volume”
shall mean the volume of shares of the Company’s Common Stock that trade between 9:30 AM and 4:00 PM, New York City Time,
on any Trading Day, and shall expressly exclude any shares trading during “after hours” trading.

 

“Transfer Agent”
shall have the meaning set forth in Section 6.9.

 

“Trigger Price”
shall have the meaning set forth in Section 2.3.1(b).

 

“Unlegended Share
Certificates” shall mean a certificate or certificates (or electronically delivered shares, as appropriate) (in denominations
as instructed by Investor) representing the shares of Common Stock to which the Investor is then entitled to receive, registered
in the name of Investor or its nominee (as instructed by Investor) and not containing a restrictive legend or stop transfer order,
including but not limited to the Put Shares for the applicable Put, and the Commitment Shares and the Fee Shares when a Legend
Removal Condition has been met.

 

“Volume Limitations” shall
have the meaning set forth in Section 2.3.1(b).

 

“VWAP” shall
mean the volume weighted average price of the Company’s common stock on the Principal Market, as reported by Bloomberg, Inc.,
that trade between 9:30 AM and 4:00 PM, New York City Time, on any Trading Day, as reported by Bloomberg, Inc. and shall expressly
exclude any shares trading during “after hours” trading and shall also expressly exclude all Excluded Block Trades.

 

 

2.Purchase and Sale of Common Stock.

 

2.1 Offer to Subscribe.

 

Subject to the terms and
conditions herein and the satisfaction of the conditions to closing set forth in Sections 2.2 and 2.3 below and the other terms
and conditions set forth in this Agreement, Investor hereby agrees to purchase such amounts of Common Stock as the Company may,
in its sole and absolute discretion, from time to time elect to issue and sell to Investor according to one or more Puts pursuant
to Section 2.3 below.

 

2.2 Investment Commitment.

 

2.2.1 Investment Commitment
Closing. The closing of this Agreement (the “Investment Commitment Closing") shall be deemed to occur when this
Agreement has been duly executed and delivered by both the Company and the Investor, and the other Conditions to Investment Commitment
Closing set forth in Section 2.2.2 below have been met.

 

2.2.2 Conditions to Investment Commitment
Closing. As a prerequisite to the Investment Commitment Closing, all of the following (the “Conditions to Investment
Commitment Closing”) shall have been satisfied within five (5) Business Days of the Company’s execution and delivery
of this Agreement:

    	11

    	 

    

 

(a)the
following documents shall have been delivered to the Investor: (i) the Registration Rights Agreement (duly executed by the Company
and Investor), and (ii) a Secretary's Certificate, in the form of Exhibit H hereto (“Secretary’s Certificate”),
(A) attaching the Resolutions of the Company's board of directors authorizing this transaction and certifying that they remain
in full force and effect without any amendment or supplement thereto as of the Commitment Closing Date, (B) attaching a certified
copy of the Company's Certificate of Incorporation evidencing the incorporation and good standing of the Company in its state of
incorporation, issued by the secretary of state of the state of incorporation within the ten (10) Business Days prior to the Commitment
Closing Date, and (C) attaching a true and complete copy of the Bylaws of the Company
and certifying that they remain in full force and effect;

 

(b)this
Investment Agreement, duly executed by the Company, shall have been received by the Investor;

 

(c)the
Company’s Common Stock shall be listed for trading and actually trading on an Approved Primary Market;

 

(d)other
than continuing losses described in the Disclosure Documents (provided for in Section 3.2.4), up through the Investment Commitment
Closing there have been no Material Adverse Changes in the Company’s business prospects or financial condition since
the date of the last balance sheet included in the Disclosure Documents, including but not limited to incurring material liabilities;

 

(e)the
representations and warranties of the Company in this Agreement shall be true and correct in all material respects and the Conditions
to Investment Commitment Closing set forth in this Section 2.2.2 shall have been satisfied on the date of such Investment Commitment
Closing and all of the conditions and limitations set forth in this Agreement for the applicable Closing has been satisfied; and
the Company shall deliver an Officer’s Certificate in the form of Exhibit I hereto (“Officer’s Certificate”),
signed by an officer of the Company, to such effect to the Investor; and

 

(f)
    The Company shall have issued to the Investor, or shall have caused its transfer agent to issue
to the investor, certificates representing the Commitment Shares and the Fee Shares, respectively, in the name of the Investor
or its designee (in which case such designee name shall have been provided to the Company prior to the Commitment Closing
Date), in consideration for the Investor’s execution and delivery of this Agreement. Such certificate shall be delivered
to the Investor by overnight courier at its address set forth in Section 9.12 hereof. For the avoidance of doubt, all of the Commitment
Shares and Fee Shares shall be fully earned upon receipt regardless of whether or not the Registration Statement is filed or declared
effective, regardless of whether or not an Automatic Termination occurs and regardless of whether or not any Puts are issued by
the Company or settled hereunder. 

    	12

    	 

    

 

2.3 Puts of Common Shares to the
Investor.

 

2.3.1 Procedure to Exercise
a Put. Subject to the Individual Put Limit, the Maximum Offering Amount and the Cap Amount (if applicable), and subject to
the satisfaction of the Put Conditions and the other conditions and limitations set forth in this Agreement, at any time beginning
on the date on which the Registration Statement is declared effective by the SEC (the “Effective Date”), the Company
may, in its sole and absolute discretion, elect to exercise one or more Puts according to the following procedure, provided that
each subsequent Put Date after the first Put Date shall be no sooner than five (5) Business Days following the preceding Pricing
Period End Date and provided further that the Company may not deliver a Put Notice and no Put shall occur if the VWAP for the five
(5) Trading Days immediately preceding the proposed Put Date is less than the Trigger Price:

 

(a) Delivery of Advance Put Notice.At
least five (5) Business Days but not more than ten (10) Business Days prior to any intended Put Date, the Company shall deliver
advance written notice (the “Advance Put Notice,” the form of which is attached hereto as Exhibit A, the date
of such Advance Put Notice being the “Advance Put Notice Date”) to Investor stating the Put Date for which the Company
shall, subject to the limitations and restrictions contained herein, exercise a Put and stating the number of shares of Common
Stock (subject to the Individual Put Limit and the Maximum Put Dollar Amount) which the Company intends to sell to the Investor
for the Put (the “Intended Put Share Amount”).

 

The Company may, at its
option, designate in any Advance Put Notice (i) a maximum dollar amount of Common Stock, not to exceed the Maximum Put Dollar Amount,
which it shall sell to Investor during the Put (the “Company Designated Maximum Put Dollar Amount”) and/or (ii) a minimum
purchase price per Put Share at which the Investor may purchase shares of Common Stock pursuant to such Put Notice (a "Company
Designated Minimum Put Share Price"). The Company Designated Minimum Put Share Price, if applicable, shall be no greater than
the lesser of (i) 80% of the Closing Bid Price of the Company’s common stock on the Trading Day immediately preceding the
Advance Put Notice Date, or (ii) the Closing Bid Price of the Company’s common stock on the Trading Day immediately preceding
the Advance Put Notice Date minus $0.0125 and shall be no less than the lesser of (i) 70% of the Closing Bid Price of the Company’s
common stock on the Trading Day immediately preceding the Advance Put Notice Date, or (ii) the Closing Bid Price of the Company’s
common stock on the Trading Day immediately preceding the Advance Put Notice Date minus $0.0125. The Company may decrease (but
not increase) the Company Designated Minimum Put Share Price for a Put at any time by giving the Investor written notice of such
decrease not later than 12:00 Noon, New York City time, on the Trading Day immediately preceding the Trading Day that such decrease
is to take effect. A decrease in the Company Designated Minimum Put Share Price shall have no retroactive effect on the determination
of Trigger Prices and Excluded Days for days preceding the Trading Day that such decrease takes effect, provided that the Put Share
Price for all shares in a Put shall be calculated using the lowest Company Designated Minimum Put Share Price, as decreased.

 

    	13

    	 

    

 

(b) Put Share Amount.
The “Put Share Amount” is the number of shares of Common Stock that the Investor shall be obligated to purchase in
a given Put, and shall equal the lesser of (i) the Intended Put Share Amount, and (ii) the Individual Put Limit. The “Individual
Put Limit” shall equal the lesser of (A) 1,500,000 shares, (B) 17.5% of the sum of the aggregate daily reported Trading Volumes
in the outstanding Common Stock on the Company’s Principal Market for all Evaluation Days (as defined below) in the Pricing
Period, excluding any block trades that exceed 50,000 shares of Common Stock (“Excluded Block Trades”), (C) the number
of Put Shares which, when multiplied by their respective Put Share Prices, equals the Maximum Put Dollar Amount, and (D) the 9.9%
Limitation (collectively referred to herein as the “Volume Limitations”). Company agrees not to trade Common Stock
or arrange for Common Stock to be traded for the purpose of artificially increasing the Volume Limitations.

 

For purposes of this Agreement:

 

"Trigger Price"
for any Pricing Period shall mean the greater of (i) the Company Designated Minimum Put Share Price, plus $0.01, or (ii) the Company
Designated Minimum Put Share Price divided by 0.96, provided that if the Company does not specify a Company Designated Minimum
Put Share Price, the “Trigger Price” shall equal $.01.

 

An “Excluded Day”
shall mean each Trading Day during a Pricing Period where the lowest intra-day trading price of the Common Stock is less than the
Trigger Price and each Trading Day defined in Section 2.3.4 as an “Excluded Day.”

 

An “Evaluation Day”
shall mean each Trading Day during a Pricing Period that is not an Excluded Day.

 

(c) Put Share Price. The purchase price
for the Put Shares (the “Put Share Price”) shall equal the lesser of (i) 96% of the Market Price for such Put or (ii)
the Market Price for such Put minus $0.01, but shall in no event be less than the Company Designated Minimum Put Share Price for
such Put, if applicable.

 

(d) Delivery of Put
Notice. After delivery of an Advance Put Notice, on the Put Date specified in the Advance Put Notice the Company shall deliver
written notice (the “Put Notice,” the form of which is attached hereto as Exhibit C) to Investor stating (i)
the Put Date, (ii) the Intended Put Share Amount as specified in the Advance Put Notice (such exercise a “Put”), (iii)
the Company Designated Maximum Put Dollar Amount (if applicable), and (iv) the Company Designated Minimum Put Share Price (if applicable).
In order to effect delivery of the Put Notice, the Company shall (i) send the Put Notice by facsimile on the Put Date so that such
notice is received by the Investor by 4:00 p.m., New York, NY time, and (ii) surrender such notice on the Put Date to a courier
for overnight delivery to the Investor (or two (2) day delivery in the case of an Investor residing outside of the U.S.).

 

(e) Delivery of Required
Put Documents. On or before the Put Date for such Put, the Company shall deliver the Required Put Documents (as defined in
Section 2.3.6 below) to the Investor (or to an agent of Investor, if Investor so directs). Unless otherwise specified by the Investor,
the Put Shares of Common Stock shall be delivered to the Investor in accordance with Section 2.3 by
crediting the Investor’s or its designees’ account at DTC through its Deposit/Withdrawal at Custodian (DWAC) system.

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(f) Limitation on Investor's
Obligation to Purchase Shares. Notwithstanding anything to the contrary in this Agreement, in no event shall the Investor be
required to purchase, and an Intended Put Share Amount may not include, an amount of Put Shares, which when added to the number
of shares of Common Stock of the Company then beneficially owned by the Investor as determined in accordance with Section 13(d)
of the Exchange Act, would exceed 9.9% of the number of shares of Common Stock outstanding (on a fully diluted basis, to the extent
that inclusion of unissued shares is mandated by Section 13(d) of the Exchange Act) on the Put Date for such Pricing Period (the
“Section 13(d) Outstanding Share Amount”). Each Put Notice shall include a representation of the Company as to the
Section 13(d) Outstanding Share Amount on the related Put Date. In the event that the Section 13(d) Outstanding Share Amount is
different on any date during a Pricing Period than on the Put Date associated with such Pricing Period, then the number of shares
of Common Stock outstanding on such date during such Pricing Period shall govern for purposes of determining whether the number
of shares beneficially owned by the Investor following the issuance of the subject Put Shares, would constitute in excess of 9.9%
of the Section 13(d) Outstanding Share Amount. The limitation set forth in this Section 2.3.1(f) is referred to as the “9.9%
Limitation.”

 

2.3.2 Termination of
Right to Put. The Company’s right to initiate subsequent Puts to the Investor shall terminate permanently (each, an “Automatic
Termination”) upon the occurrence of any of the following:

 

(a) if, at any time, either
the Company or any director or executive officer of the Company has engaged in a transaction or conduct related to the Company
that has resulted in (i) a Securities and Exchange Commission enforcement action, or (ii) a civil judgment or criminal conviction
for fraud or misrepresentation, or for any other offense that, if prosecuted criminally, would constitute a felony under applicable
law;

 

(b) on any date after a
cumulative time period or series of time periods, consisting only of Ineffective Periods, that continues for a period of ten (10)
consecutive Business Days or for more than an aggregate of thirty (30) Business Days in any 365-day period, provided that the Company’s
right to initiate Puts shall resume if, thereafter, the Registration Statement remains current and effective for twenty (20) consecutive
Trading Days so long as it was never ineffective for more than an aggregate of eighty (80) Trading Days;

 

(c) if at any time the
Company has filed for and/or is subject to any bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings
for relief under any bankruptcy law or any law for the relief of debtors instituted by or against the Company or any subsidiary
of the Company, and such action has not been dismissed within ninety (90) days of filing;

 

(d)  if any Person commences a proceeding
against the Company pursuant to or within the meaning of any Bankruptcy Law;

    	15

    	 

    

 

(e)  if the Company pursuant to or within
the meaning of any Bankruptcy Law; (A) commences a voluntary case, (B) consents to the entry of an order for relief against it
in an involuntary case, (C) consents to the appointment of a Custodian of it or for all or substantially all of its property, (D)
makes a general assignment for the benefit of its creditors or is generally unable to pay its debts as the same become due;

 

(f) a court of competent jurisdiction enters an
order or decree under any Bankruptcy Law that (A) is for relief against the Company in an involuntary case, (B) appoints a Custodian
of the Company or for all or substantially all of its property, or (C) orders the liquidation of the Company or any Subsidiary;

 

(g) upon the occurrence
of the Termination Date; 

 

(h) if no Registration
Statement has been declared effective by the date that is one (1) year after the date of this Agreement, the Automatic Termination
shall occur on the date that is one (1) year after the date of this Agreement.

 

 (i)  the suspension from trading
or failure of the Common Stock to be listed on an Approved Primary Market for a period of ten (10) consecutive Trading Days;

 

(j)  the delisting of the Company’s
Common Stock from the Principal Market, provided, however, that the Common Stock is not immediately thereafter trading on another
Approved Primary Market, provided that the Company’s right to initiate Puts shall resume if the Company’s Common Stock
thereafter trades for twenty (20) consecutive Trading Days on an Approved Primary Market;

 

(k)  the failure for any reason by the
Transfer Agent to issue Commitment Shares or Fee Shares to the Investor, without restrictive legends, pursuant to a valid legend
removal request, within ten (10) Trading Days after the applicable Required Delivery Date; or

 

(l)  the Company breaches any representation,
warranty, covenant or other term or condition under any Transaction Document if such breach could have a Material Adverse Effect
and except, in the case of a breach of a covenant which is reasonably curable, only if such breach continues for a period of at
least five (5) Business Days after notice thereof is provided to the Company by Investor, unless a specific cure period is specified
in this Section 2.3.2, in which case such specific cure period in this Section shall apply.

 

For purposes of clarification, notwithstanding
any Automatic Termination hereunder, the Investor shall retain all of the Commitment Shares and the Fee Shares in consideration
for this Agreement.

 

2.3.3 Maximum Offering
Amount. The Investor shall not be obligated to purchase any additional Put Shares once the aggregate Put Dollar Amount paid
by Investor equals the Maximum Offering Amount.

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2.3.4 Put Termination; Put Interruption.
If, by 4:00PM New York City time on the Put Date specified in an Advance Put Notice, the Company has not (i) delivered all of the
Required Put Documents to the Investor and (ii) delivered the executed Officer’s Put Certificate to the Investor confirming
that all Put Conditions for the Put have been met and all Required Put Documents for the Put have been delivered, the Put shall
be automatically terminated (an “Automatic Put Termination”). In the event of an Automatic Put Termination, the Company
may initiate a new Put anytime thereafter by delivering a new Advance Put Notice at least five (5) Trading Days before the new
Put Date specified therein. In the event of a Put Interruption Event (as defined below), in each case during any Pricing Period,
then (A) the Company shall notify the Investor in writing (a “Put Interruption Notice”) as soon as possible by facsimile
and overnight courier, but no later than the end of the Business Day in which the Company becomes aware of such facts, (B) the
Pricing Period shall be extended or shortened, as applicable, such that the Pricing Period End Date is the tenth (10th)
Trading Day after the date of such Put Interruption Notice from the Company, (the “Put Interruption Date”), (C) each
Trading Day from and including the Put Interruption Date through and including the Pricing Period End Date for the applicable Put
(as extended or shortened, if applicable), shall be considered to be an “Excluded Day,” as that term is used in this
Agreement, and (D) the Company Designated Minimum Put Share Price, if any, shall not apply to the affected Put. In the event that
a Put Interruption Event occurs after an Advance Put Notice Date, but before the applicable Put Date, that Put shall be deemed
to be terminated, and the Company may deliver an Advance Put Notice for a new Put anytime beginning on the following Trading Day,
if otherwise allowed under this Agreement. A “Put Interruption Event” shall mean any of the following: (i) an Automatic
Termination, (ii) the failure of one of the items specified in Section 2.3.5 below to be true and correct on any day during an
Extended Pricing Period, or (iii) the occurrence of one of the following events:

 

(a) the Company has announced
a subdivision or combination, including a reverse split, of its Common Stock or has subdivided or combined its Common Stock;

 

(b) the Company has paid
a dividend of its Common Stock or has made any other distribution of its Common Stock;

 

(c) the Company has made
a distribution of all or any portion of its assets or evidences of indebtedness to the holders of its Common Stock;

 

(d) a Major Transaction has
occurred; or

 

(e) the Company discovers
or is notified of the existence of Material Facts which are not covered by the Prospectus or any Ineffective Period or Delisting
Event occurs.

 

2.3.5 Conditions Precedent
to the Right of the Company to Deliver an Advance Put Notice or a Put Notice. The right of the Company to deliver an Advance
Put Notice or a Put Notice is subject to the satisfaction, on the date of delivery of such Advance Put Notice or Put Notice, of
each of the following conditions (the “Put Conditions”):

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(a)Investment
Commitment Closing. The Conditions to Investment Commitment Closing shall have been timely satisfied as required in this Agreement
and the Investment Commitment Closing shall have occurred;

 

(b)Time
Since Prior Put Notice. At least five Trading Days shall have passed from the most recent Pricing Period End Date until the
Put Date for the proposed Put;  

 

(c)Required
Put Documents. The Investor shall have received the Required Put Documents on or before the applicable Put Date;

 

(d)Listing.
The Company’s Common Stock shall be listed for trading on an Approved Primary Market and the Commitment Shares, the Fee Shares
and the Put Shares shall be so listed;

 

(e)       No
Suspension of Trading in or Delisting of Common Stock.  Trading in the Common Stock shall not have been suspended or delisted
by the SEC, the Trading Market or FINRA, the Company shall not have received any final and non-appealable notice that the listing
or quotation of the Common Stock on the Trading Market shall be terminated on a date certain, and, at any time prior to the applicable
Put Date and applicable Put Closing Date, trading in securities generally as reported on the Trading Market shall not have been
suspended or limited, nor shall a banking moratorium have been declared either by the United States or New York State authorities,
nor shall there have occurred any material outbreak or escalation of hostilities or other national or international calamity or
crisis of such magnitude in its effect on, or any Material Adverse Change in, any financial, credit or securities market;

 

(f)Registration
Effective; No Stop Order. (1) The Company shall have satisfied any and all obligations pursuant to the Registration
Rights Agreement, including, but not limited to, the filing of the Registration Statement with the SEC with respect to the resale
of such number of Registrable Securities as shall be required by the Registration Rights Agreement and the requirement that the
Registration Statement shall have been declared effective under the Securities Act by the SEC and shall remain current and effective
such that the Investor shall be permitted to utilize the Prospectus therein to resell (a) all of the
Commitment Shares that are registered thereunder or required to be registered thereunder, (b) all of the Fee Shares that are registered
thereunder or required to be registered thereunder, (c) all of the Shares issued pursuant to all prior Put Notices, and (d) all
of the Shares issuable pursuant to the applicable Put Notice, (2) there shall exist no Material Facts or material non-public
information that is not covered by the Prospectus (as supplemented or amended) and (3) the Company shall have satisfied and shall
be in compliance with any and all obligations pursuant to this Agreement and the Registration Rights Agreement.
The Registration Statement is not subject to an Ineffective Period as defined in the Registration Rights Agreement, the
Prospectus included therein is current and deliverable, and to the Company’s Knowledge there is no notice of any investigation
or inquiry concerning any stop order with respect to the Registration Statement;

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(g)No
Knowledge of Events Which Would Suspend Registration.  The Company shall have no Knowledge of any event that, in the
Company’s opinion, is more likely than not to have the effect of causing any Registration Statement to be suspended or otherwise
ineffective (which event is more likely than not to occur within the thirty Business Days following the date on which such Advance
Put Notice and Put Notice is deemed delivered);

 

(h)       No
Material Notices. None of the following events shall have occurred and be continuing: (a) receipt of any request by the SEC
or any other federal or state governmental authority for any additional information relating to the Registration Statement, the
Prospectus or any Prospectus Supplement, or for any amendment of or supplement to the Registration Statement, the Prospectus, or
any Prospectus Supplement; (b) 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 prohibiting or suspending the use of the Prospectus or any Prospectus Supplement,
or of the suspension of qualification or exemption from qualification of the securities for offering or sale in any jurisdiction,
or the initiation or contemplated initiation of any proceeding for such purpose; or (c) the occurrence of any event or the existence
of any condition or state of facts, which makes any statement of a material fact made in the Registration Statement, the Prospectus
or any Prospectus Supplement untrue or which requires the making of any additions to or changes to the statements then made in
the Registration Statement, the Prospectus or any Prospectus Supplement in order to state a material fact required by the Securities
Act to be stated therein or necessary in order to make the statements then made therein (in the case of the Prospectus or any Prospectus
Supplement, in light of the circumstances under which they were made) not misleading, or which requires an amendment to the Registration
Statement or a supplement to the Prospectus or any Prospectus Supplement to comply with the Securities Act or any other law (other
than the transactions contemplated by the applicable Put Notice and the settlement thereof). The Company shall have no Knowledge
of any event that could reasonably be expected to have the effect of causing the suspension of the effectiveness of the Registration
Statement or the prohibition or suspension of the use of the Prospectus or any Prospectus Supplement in connection with the resale
of the Registrable Securities by the Investor;

 

(i)Representations
and Warranties True and Correct.  The representations and warranties of the Company in Section 5 hereof are true and
correct as of the Put Date in all material respects as if made on such date, the Company has satisfied its obligations under Section
2.3 hereof and the conditions to Investor’s obligations set forth in this Section 2.3.5 are satisfied as of such Closing,
and the Company shall deliver a certificate, signed by an officer of the Company, to such effect to the Investor;

    	19

    	 

    

 

(j)Authorization
and Reservation of Shares. The Company shall have authorized by all necessary corporate action and reserved for issuance a
sufficient number of Common Shares for the purpose of enabling the Company to satisfy any obligation to issue Common Shares pursuant
to any Put;

 

(k)Cap
Amount Not Exceeded.  If the Aggregate Issued Shares after the Closing of the Put would exceed the Cap Amount, the Company
shall have obtained the Stockholder 20% Approval as specified in Section 2.3.13, if the Company’s Common Stock is listed
on a NASDAQ Market, and such approval is required by the rules of the NASDAQ;

 

(l)9.9%
Limitation Not Exceeded. The aggregate number of Put Shares to be issued in the Put, when combined with the number of
shares of Common Stock of the Company then beneficially owned by the Investor, would not cause the Investor to exceed the 9.9%
Limitation (as defined herein);

 

(m)Maximum Offering Amount
Not Exceeded. The aggregate number of Put Shares to be issued in the Put, when combined with all Put Share issued in
prior Puts, would not cause the Maximum Offering Amount to be exceeded;

 

(n) No
Adverse Law, Rule, Regulation, or Pending Proceeding. There is not then in effect any law, rule or regulation prohibiting or
restricting the transactions contemplated hereby, or requiring any consent or approval which shall not have been obtained, nor
is there any pending or threatened proceeding or investigation which may have the effect of prohibiting or adversely affecting
any of the transactions contemplated by this Agreement;

 

(o)No
Pending or Threatened Injunctions. No statute, rule, regulation, executive order, decree, ruling or injunction shall have been
enacted, entered, promulgated or adopted by any court or governmental authority of competent jurisdiction that prohibits the transactions
contemplated by this Agreement, and no actions, suits or proceedings shall be in progress, pending or threatened by any person
(other than the Investor or any affiliate of the Investor), that seek to enjoin or prohibit the transactions contemplated by this
Agreement. For purposes of this paragraph (i), no proceeding shall be deemed pending or threatened unless one of the parties has
received written or oral notification thereof prior to the applicable Put Closing Date;

 

(p)Put
Shares DTC Eligible.  The Put Shares delivered to the Investor are DTC eligible and can be immediately converted into
electronic form;

    	20

    	 

    

 

(q)No
Allegation of Section 5 Violation. There has been no assertion by the SEC that there has been a violation of Section 5 of the
Securities Act caused by the integration of the private sale of common stock to the Investor and the public offering pursuant to
the Registration Statement, and there have been no claims made by third parties against the Investor based on a such an alleged
Section 5 violation;

 

 (r)       Compliance
with Laws.  The Company shall have complied with all applicable federal, state and local governmental laws, rules, regulations
and ordinances in connection with the execution, delivery and performance of this Agreement and the other Transaction Documents
to which it is a party and the consummation of the transactions contemplated hereby and thereby, including, without limitation,
the Company shall have obtained all permits and qualifications required by any applicable state securities or “blue sky”
laws for the offer and sale of the Securities by the Company to the Investor and the subsequent resale of the Registrable Securities
by the Investor (or shall have the availability of exemptions therefrom);

  

(s)      No
Material Adverse Effect. No condition, occurrence, state of facts or event constituting a Material Adverse Effect shall have
occurred and be continuing;

 

(t)     
No Restrictive Legends. If requested by the Investor from and after the earlier of (x) the Effective Date, or (y) the
date that the Commitment Shares and the Fee Shares can be sold under Rule 144 without volume restrictions (the earlier of (x) and
(y) is referred to in this Agreement as the “Liquidity Date”), the Company shall have either (i) issued and delivered
(or caused to be issued and delivered) to the Investor certificates representing the Commitment Shares and the Fee Shares, that
are free from all restrictive and other legends or (ii) caused the Company’s transfer agent to credit the Investor’s
or its designee’s account at DTC through its Deposit/Withdrawal at Custodian (DWAC) system with a number of shares of Common
Stock equal to the number of Commitment Shares and Fee Shares represented by the certificate delivered by the Investor to the Company
in accordance with Section 9.10(iii) of this Agreement.

 

(u)Resolutions
Adopted. The Board of Directors of the Company shall have adopted resolutions (“Resolutions”) in the form attached
hereto as Exhibit J, which shall be in full force and effect without any amendment or supplement thereto as of the Put Date;

    	21

    	 

    

 

(v)No
Material Non-Public Information; No Ineffective Period. No Ineffective Period shall be in effect and there shall not exist
any Material Facts or material non-public information that are not included in the Prospectus. If the Company discovers
or is notified that the Investor is in possession of material non-public information or discovers or is notified of the existence
of Material Facts or material non-public information or any Ineffective Period occurs, the Company shall not initiate a Put until
the Prospectus is amended to include any existing Material Facts or material non-public information and the Company’s counsel
(who is a member of a Authorized Law Firm) provides in a Registration Opinion that no Material Facts or material non-public information
exists that is required to be included in the Prospectus in order for it to be current and effective and that is not included in
the Prospectus, and that no Ineffective Period is in effect.

 

(w)Compliance
With Covenants. The Company shall have complied in all material respects with all covenants under this Agreement.

 

(x)Reporting
Issuer; Disclosure Controls. The Company shall be a Reporting Issuer, shall be subject to the reporting requirements
of the Exchange Act, has a class of securities registered under Section 12 of the Exchange Act, and shall
be current on all periodic public filings required to be made with the SEC and shall have a class of securities registered under
Section 12 of the Exchange Act. The Company maintains disclosure controls and procedures required by Rule 13a-15 or Rule 15d-15
under the Exchange Act.

 

(y)No
Bankruptcy Proceedings. The Company shall not have filed for and/or be subject to any bankruptcy, insolvency, reorganization
or liquidation proceedings or other proceedings for relief under any bankruptcy law or any law for the relief of debtors instituted
by or against the Company or any subsidiary of the Company, or instituted involuntarily against the Company.

 

(z)At
Least Two Independent Board Members. The Company shall have at least two (2) independent (as “independent”
is defined under the New York Stock Exchange’s listing standards) members on its board of directors prior to initiating each
Put, and shall represent so to the Investor in writing.

 

(aa)The
Investment Commitment Opinion of Counsel (signed by the Company’s independent legal counsel) shall have been delivered to
the Investor before the initial filing of the Registration Statement with the SEC.

    	22

    	 

    

 

2.3.6 Documents Required
to be Delivered on the Put Date as Conditions to Closing of any Put. The Closing of any Put and Investor’s obligations
hereunder shall additionally be conditioned upon the delivery to the Investor of each of the following (the “Required Put
Documents”) on or within three (3) Business Days before the applicable Put Date (or such earlier time as may be specifically
required under the terms hereof):

 

(a) a number of Unlegended
Share Certificates equal to the Intended Put Share Amount, which shall be delivered by crediting the
Investor’s or its designees’ account at DTC through its Deposit/Withdrawal at Custodian (DWAC) system (unless
the Investor requests physical certificates, in which such certificates shall be in denominations of not more than 100,000 shares
per certificate);

 

(b) the following documents:
Put Opinion of Counsel (which shall be issued by an Authorized Law Firm when so required hereunder), Registration Opinion (which
shall be issued by an Authorized Law Firm when so required hereunder), Officer’s Certificate, the Officer’s Put Certificate
in the form of Exhibit K attached hereto, Secretary’s Certificate, Resolutions, Put Notice, a Bring Down Cold Comfort Letter
(which shall be issued by an Authorized Auditor when so required hereunder), and any report or disclosure required under Section
2.3.7 or Section 2.4 hereof, each dated as of the Put Date or a date within three Business Days prior to the Put Date;

 

(c) all documents, instruments
and other writings required to be delivered on or before the Put Date pursuant to any provision of this Agreement in order to implement
and effect the transactions contemplated herein.

 

2.3.7 Accountant’s
Letter and Registration Opinion.

 

(a) The Company shall have
caused to be delivered to the Investor, (i) whenever required by Section 2.3.7(b) or by Section 2.5.3, and (ii) on the date that
is three (3) Business Days prior to each Put Date (the “Registration Opinion Deadline”), an opinion of the Company's
independent counsel (which shall be an Authorized Law Firm when so required hereunder), in substantially the form of Exhibit
E (the “Registration Opinion”), addressed to the Investor stating, inter alia, that, after due inquiry, no facts
(“Material Facts”) have come to such counsel's attention that have caused it to believe that the Registration Statement
is subject to an Ineffective Period or to believe that the Registration Statement, any Supplemental Registration Statement (as
each may be amended, if applicable), and any related prospectuses, contain an untrue statement of material fact or omits a material
fact required to make the statements contained therein, in light of the circumstances under which they were made, not misleading.
If a Registration Opinion cannot be delivered by the Company's independent counsel to the Investor on the Registration Opinion
Deadline due to the existence of Material Facts or an Ineffective Period, the Company shall promptly notify the Investor and as
promptly as possible amend each of the Registration Statement and any Supplemental Registration Statements, as applicable, and
any related prospectus or cause such Ineffective Period to terminate, as the case may be, and deliver such Registration Opinion
and updated prospectus as soon as possible thereafter. If at any time after a Put Notice shall have been delivered to Investor
but before the related Pricing Period End Date, the Company acquires Knowledge of such Material Facts or any Ineffective Period
occurs, the Company shall promptly notify the Investor and shall deliver a Put Interruption Notice to the Investor pursuant to
Section 2.3.4 by facsimile and overnight courier by the end of that Business Day.

    	23

    	 

    

 

(b)(i) the Company shall
engage its independent auditors, as required by the Securities Act, which shall be an Authorized Auditor (as defined herein) and
shall be an independent registered public accounting firm within the meaning of SOXA as required by the rules of the Public
Company Accounting Oversight Board, to perform the procedures in accordance with the provisions of Statement on Auditing Standards
No. 72, as amended, as agreed to by the parties hereto, and reports thereon in the form of Exhibit L hereto (the “Bring Down
Cold Comfort Letters”) as shall have been reasonably requested by the Investor with respect to certain financial information
contained in the Registration Statement and shall have delivered to the Investor such a report addressed to the Investor, on the
date that is three (3) Business Days prior to each Put Date, except as otherwise limited herein.

 

(ii) in the event that
the Investor shall have requested delivery of a Bring Down Cold Comfort Letter pursuant to Section 2.4.3, the Company shall engage
its Authorized Auditor to perform certain agreed upon procedures and report thereon as shall have been reasonably requested by
the Investor with respect to certain financial information of the Company and the Company shall deliver to the Investor a copy
of such report addressed to the Investor. In the event that the report required by this Section 2.3.7(b) cannot be delivered by
the Company's Authorized Auditor, the Company shall, if necessary, promptly revise the Registration Statement and the Company shall
not deliver a Put Notice until such report is delivered.

 

2.3.8Limitation
on Company’s Obligation to Deliver Opinions of Counsel and Accountants’ Letters. Notwithstanding the above, after
the first Put, the Company shall not be required to include the 10b-5 paragraph in the Registration Opinion and shall not be required
to deliver a Bring Down Cold Comfort Letter (collectively, the “Professional Opinions”) to the Investor with respect
to each subsequent Put unless, at the time of the Put Notice for such subsequent Put, either (A) the sum of (i) the aggregate Purchase
Price of the Put Shares that have been sold by the Company since the last date that such Professional Opinions were delivered to
the Investor plus (ii) the Company Designated Maximum Put Dollar Amount for the then current Put Notice, exceeds $500,000 or (B)
six (6) months or more have passed since the last date that such Professional Opinions were delivered to the Investor.

 

2.3.9Special
Requirement for Counsel Providing Opinions of Counsel And Accounting Reports After $500,000 Has Been Put. Once the Investor
has purchased Put Shares having an aggregate Purchase Price of $500,000 (when aggregated with the maximum amount of Put Shares
that the Investor would be required to purchase under the then current Put)(the date of such occurrence, the “Qualification
Trigger Date”), then

 

(A) the Put Opinions and Registration
Opinions that are issued for the then current Put and any Put Opinions and Registration Opinions that are issued anytime thereafter
pursuant to this Agreement shall be issued by an attorney with an Authorized Law Firm, and

 

(B) any Bring Down Cold Comfort Letters
that are issued for the then current Put and any Bring Down Cold Comfort Letters that are issued anytime thereafter pursuant to
this Agreement shall be issued by an Authorized Auditor.

    	24

    	 

    

 

By not later than the Qualification
Trigger Date (and again promptly following each time that the Company changes its law firm or auditor, each time that the liability
policy coverage of either the Authorized Law Firm or Authorized Auditor materially changes and each time the Investor requests
a copy), the Company shall cause its Authorized Law Firm to provide a copy of the Authorized Legal Liability Policy to the Investor
and to cause its Authorized Auditor to provide the Investor with a copy of their Authorized Auditor Liability Policy.

 

2.3.10 Investor’s
Obligation and Right to Purchase Shares. Subject to the conditions set forth in this Agreement, following the Investor's receipt
of a validly delivered Put Notice, the Investor shall be required to purchase (each a “Purchase”) from the Company
a number of Put Shares equal to the Put Share Amount, in the manner described below.

 

2.3.11 Mechanics
of Put Closing. Each of the Company and the Investor shall deliver all documents, instruments and writings required to be delivered
by either of them pursuant to this Agreement at or prior to each Put Closing. Subject to such delivery and the satisfaction of
the conditions set forth in this Section 2, the closing of the purchase by the Investor of Put Shares shall occur by 5:00 PM, New
York City Time, on the date which is three (3) Business Days following the applicable Pricing Period End Date (the “Payment
Due Date”) at the offices of Investor. On each or before each Payment Due Date, the Investor shall deliver to the Company,
in the manner specified in Section 7 below, the Put Dollar Amount to be paid for such Put Shares, determined as aforesaid. The
closing (each a “Put Closing”) for each Put shall occur on the date that: (i) the Company has delivered to the Investor
all Required Put Documents, (ii) each of the Put Conditions have been satisfied and (iii) the Investor has delivered to
the Company such Put Dollar Amount (each a “Put Closing Date”).

 

2.3.12 Limitation on Short Sales.
The Investor and its affiliates shall not engage in short sales of the Company's Common Stock; provided, however, that the Investor
may enter into any short exempt sale or any short sale or other hedging or similar arrangement it deems appropriate with respect
to Put Shares after it receives a Put Notice with respect to such Put Shares so long as such sales or arrangements do not involve
more than the number of such Put Shares specified in the Put Notice.

 

2.3.13 Cap Amount.
If the Company becomes listed on a NASDAQ Market, then, unless the Company has obtained the necessary approval (“Stockholder
20% Approval”) of its shareholders as required under the Nasdaq 20% Rule or unless otherwise permitted by Nasdaq, in no event
shall the Aggregate Issued Shares exceed the maximum number of shares of Common Stock (the “Cap Amount”) that the Company
can, without stockholder approval, so issue pursuant to Nasdaq Rule 5635 (or any other applicable Nasdaq Rules or any successor
rule) (the “Nasdaq 20% Rule”).

 

2.3.14 Investment Agreement
Termination. The Company may terminate (a “Company Termination”) its right to initiate future Puts by providing
written notice (“Termination Notice”) to the Investor, by facsimile and overnight courier, at any time other than during
an Extended Put Period, provided that such termination shall have no effect on the parties’ other rights and obligations
under this Agreement and the Registration Rights Agreement. Notwithstanding the above, any Put Interruption Notice occurring during
an Extended Put Period is governed by Section 2.3.4.

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2.3.15 Return of Excess Common Shares.
In the event that the number of Put Shares purchased by the Investor in any Put pursuant to its obligations hereunder is less
than the Intended Put Share Amount, the Investor shall promptly return to the Company any shares of Common Stock in the Investor’s
possession that are not being purchased by the Investor, unless the parties mutually agree for the Investor to retain such excess
Common Shares to apply to the next Put.

 

2.4 Due Diligence Review. The
Company shall make available for inspection and review by the Investor (the “Due Diligence Review”), advisors to and
representatives of the Investor (who may or may not be affiliated with the Investor and who are reasonably acceptable to the Company),
any underwriter participating in any disposition of Common Stock on behalf of the Investor pursuant to the Registration Statement,
any Supplemental Registration Statement, or amendments or supplements thereto or any blue sky, FINRA or other filing, all
financial and other records, all filings with the SEC, and all other corporate documents and properties of the Company as may be
reasonably necessary for the purpose of such review, and cause the Company's officers, directors and employees to supply all such
information reasonably requested by the Investor or any such representative, advisor or underwriter in connection with such Registration
Statement (including, without limitation, in response to all questions and other inquiries reasonably made or submitted by any
of them), prior to and from time to time after the filing and effectiveness of the Registration Statement for the sole purpose
of enabling the Investor and such representatives, advisors and underwriters and their respective accountants and attorneys to
conduct initial and ongoing due diligence with respect to the Company and the accuracy of the Registration Statement. Upon request
by the Investor, the Company shall provide, or cause its Authorized Law Firm and Authorized Auditor to provide, a copy of their
respective liability insurance policies. Prior to filing the initial Registration Statement, the Company shall provide to the Investor
(i) a schedule setting forth all of the Indebtedness of the Company as of the date of the schedule (“Schedule of Indebtedness”)
and (ii) a schedule setting forth the fully diluted capitalization of the Company as of the date of the schedule (the “Capitalization
Schedule”), along with a signed certification from an authorized officer of the Company certifying that each such schedule
is true and correct as of the date thereof.

    	26

    	 

    

 2.4.1Treatment of Nonpublic Information.
Notwithstanding anything herein to the contrary, the Company will immediately notify the Investor or its advisors or representatives
of the existence of any event or circumstance (without any obligation to disclose the specific event or circumstance) of which
it becomes aware after the Registration Statement is declared effective, constituting material 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 and shall, a soon as possible but in any event within three (3) Trading Days, file with
the SEC an amendment to the Registration Statement or, if permitted by law, a supplement to the then-current Prospectus or Prospectus
Supplement, responsive to such alleged untrue statement or omission and provide the Investor, as promptly as practicable, with
copies of the Registration Statement and related Prospectus or Prospectus Supplement, as so amended or modified. The Company shall
not disclose nonpublic information to the Investor or to its advisors or representatives unless prior to disclosure of such information
the Company identifies such information as being nonpublic information and provides the Investor and such advisors and representatives
with the opportunity to accept or refuse to accept such nonpublic information for review. The Company may, as a condition to disclosing
any nonpublic information to the Investor hereunder, may require the Investor and its advisors and representatives to enter into
a confidentiality agreement (including an agreement with such advisors and representatives prohibiting them from trading in Common
Stock during such period of time as they are in possession of nonpublic information) in form reasonably satisfactory to the Company
and the Investor (“Confidentiality Agreement”). The Company shall ensure that any information disclosed by the Company
to the Investor in connection with the Agreement shall cease to be material non-public information on or prior to the Liquidity
Date and that if any material non-public information arises in the future, the Prospectus shall be promptly amended or supplemented
to cover such information in accordance with the terms of the Registration Rights Agreement.

 

 

2.4.2 Disclosure of
Misstatements and Omissions. The Investor's advisors or representatives shall make complete disclosure to the Investor's
counsel of all events or circumstances constituting nonpublic information discovered by such advisors or representatives in the
course of their due diligence upon which such advisors or representatives form the opinion that the Registration Statement contains
an untrue statement of a material fact or omits a material fact required to be stated in the Registration Statement or necessary
to make the statements contained therein, in the light of the circumstances in which they were made, not misleading. Upon receipt
of such disclosure, the Investor's counsel shall consult with the Company's independent counsel in order to address the concern
raised as to the existence of a material misstatement or omission and to discuss appropriate disclosure with respect thereto; provided,
however, that such consultation shall not constitute the advice of the Company's independent counsel to the Investor as to the
accuracy of the Registration Statement and related Prospectus.

    	27

    	 

    

 

2.4.3 Procedure if Material
Facts are Reasonably Believed to be Untrue or are Omitted. In the event after such consultation the Investor or the Investor's
counsel reasonably believes that the Registration Statement contains an untrue statement of a 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, and the Company, after a request from the Investor, has failed to promptly
provide reasonable information indicating that that the Registration Statement is in fact complete, accurate and current, then

 

(a) the Company shall promptly
file with the SEC an amendment to the Registration Statement or, if permitted by law, a supplement to the then-current Prospectus
or Prospectus Supplement, responsive to such alleged untrue statement or omission and provide the Investor, as promptly as practicable,
with copies of the Registration Statement and related Prospectus or Prospectus Supplement, as so amended or modified, or

 

(b) if the Company disputes
the existence of any such material misstatement or omission, (i) the Company's independent counsel (who is a member of an Authorized
Law Firm) shall provide the Investor's counsel with a Registration Opinion, at the Company’s expense, and (ii) in the event
the dispute relates to the adequacy of financial disclosure and the Investor shall reasonably request, the Company shall promptly
cause its Authorized Auditor to provide to the Company a Bring Down Cold Comfort Letter outlining the performance of such "agreed
upon procedures" as shall be reasonably requested by the Investor and the Company shall promptly provide the Investor with
a copy of such letter.

 

3.Representations, Warranties and
Covenants of Investor. Investor hereby represents and warrants to and agrees with the Company as follows:

 

3.1 Accredited Investor. Investor
is an accredited investor (“Accredited Investor”), as defined in Rule 501 of Regulation D.

 

3.2 Investment Experience; Access
to Information; Independent Investigation.

 

3.2.1 Access to Information.
Investor or Investor’s professional advisor has been granted the opportunity to ask questions of and receive answers from
representatives of the Company, its officers, directors, employees and agents concerning the terms and conditions of this Offering,
the Company and its business and prospects, and to obtain any additional information which Investor or Investor’s professional
advisor deems necessary to verify the accuracy and completeness of the information received.

 

3.2.2 Reliance on Own
Advisors. Investor has relied completely on the advice of, or has consulted with, Investor’s own personal tax, investment,
legal or other advisors and has not relied on the Company or any of its affiliates, officers, directors, attorneys, accountants
or any affiliates of any thereof and each other person, if any, who controls any of the foregoing, within the meaning of Section
15 of the Act for any tax or legal advice (other than reliance on information in the Disclosure Documents as defined in Section
3.2.4 below and on the Opinion of Counsel). The foregoing, however, does not limit or modify Investor’s right to rely upon
covenants, representations and warranties of the Company in this Agreement.

    	28

    	 

    

 

3.2.3  Capability to
Evaluate. Investor has such Knowledge and experience in financial and business matters so as to enable such Investor to utilize
the information made available to it in connection with the Offering in order to evaluate the merits and risks of the prospective
investment, which are substantial, including without limitation those set forth in the Disclosure Documents (as defined in Section
3.2.4 below).

 

3.2.4 Disclosure Documents.
Investor, in making Investor’s investment decision to subscribe for the Investment Agreement hereunder, represents that (a)
Investor has received and had an opportunity to review (i) the Company’s Annual Report on Form 10-K for the year ended December
31, 2010, and (ii) the Company’s quarterly report on Form 10-Q for the quarters ended March 31, 2010, June 30, 2010 and September
30, 2010; (b) Investor has read, reviewed, and relied solely on the documents described in (a) above, the Company’s representations
and warranties and other information in this Agreement, including the exhibits, documents prepared by the Company which have been
specifically provided to Investor in connection with this Offering (the documents described in this Section 3.2.4 (a) and (b) are
collectively referred to as the “Disclosure Documents”), and an independent investigation made by Investor and Investor’s
representatives, if any; (c) Investor has, prior to the date of this Agreement, been given an opportunity to review material contracts
and documents of the Company which have been filed as exhibits to the Company’s filings under the Act and the Exchange Act
and has had an opportunity to ask questions of and receive answers from the Company’s officers and directors; and (d) is
not relying on any oral representation of the Company or any other person, nor any written representation or assurance from the
Company other than those contained in the Disclosure Documents or incorporated herein or therein. The foregoing, however, does
not limit or modify Investor’s right to rely upon covenants, representations and warranties of the Company in Sections 5
and 6 of this Agreement. Investor acknowledges and agrees that the Company has no responsibility for, does not ratify, and is under
no responsibility whatsoever to comment upon or correct any reports, analyses or other comments made about the Company by any third
parties, including, but not limited to, analysts’ research reports or comments (collectively, “Third Party Reports”),
and Investor has not relied upon any Third Party Reports in making the decision to invest.

 

3.2.5 Investment Experience;
Fend for Self. Investor has substantial experience in investing in securities and it has made investments in securities other
than those of the Company. Investor acknowledges that Investor is able to fend for Investor’s self in the transaction contemplated
by this Agreement, that Investor has the ability to bear the economic risk of Investor’s investment pursuant to this Agreement
and that Investor is an "Accredited Investor" by virtue of the fact that Investor meets the investor qualification standards
set forth in Section 3.1 above. Investor has not been organized for the purpose of investing in securities of the Company, although
such investment is consistent with Investor’s purposes.

 

3.3 Exempt Offering Under Regulation
D.

 

3.3.1 No General Solicitation.
The Investment Agreement was not offered to Investor through, and Investor is not aware of, any form of general solicitation or
general advertising, including, without limitation, (i) any advertisement, article, notice or other communication published in
any newspaper, magazine or similar media or broadcast over television or radio, and (ii) any seminar or meeting whose attendees
have been invited by any general solicitation or general advertising.

    	29

    	 

    

 

3.3.2 Restricted Securities.
Investor understands that the Investment Agreement is, the Common Stock issued at each Put Closing will be characterized as "restricted
securities" under the federal securities laws inasmuch as they are being acquired from the Company in a transaction exempt
from the registration requirements of the federal securities laws and that under such laws and applicable regulations such securities
may not be transferred or resold without registration under the Act or pursuant to an exemption therefrom. In this connection,
Investor represents that Investor is familiar with Rule 144 under the Act, as presently in effect, and understands the resale limitations
imposed thereby and by the Act.

 

3.3.3 Disposition.
Investor further agrees not to sell, transfer, assign, or pledge the Securities (except for any bona fide pledge arrangement to
the extent that such pledge does not require registration under the Act or unless an exemption from such registration is available
and provided further that if such pledge is realized upon, any transfer to the pledgee shall comply with the requirements set forth
herein), or to otherwise dispose of all or any portion of the Securities unless and until:

 

(a)There is then in effect a registration
statement under the Act and any applicable state securities laws covering such proposed disposition and such disposition is made
in accordance with such registration statement and in compliance with applicable prospectus delivery requirements; or

 

(b)(i) Investor shall have notified
the Company of the proposed disposition and shall have furnished the Company with a statement of the circumstances surrounding
the proposed disposition to the extent relevant for determination of the availability of an exemption from registration, and (ii)
if reasonably requested by the Company, Investor shall have furnished the Company with an opinion of counsel, reasonably satisfactory
to the Company, that such disposition will not require registration of the Securities under the Act or state securities laws. It
is agreed that the Company will not require the Investor to provide opinions of counsel for transactions made pursuant to Rule
144 provided that Investor and Investor’s broker, if necessary, provide the Company with the necessary representations and
documents for counsel to the Company to issue an opinion with respect to such transaction.

 

The Investor is entering
into this Agreement for its own account and the Investor has no present arrangement or intention to sell the security represented
by this Agreement to or through any person or entity, has no present arrangement (whether or not legally binding) to sell the Common
Stock to or through any person or entity and has no present intention to sell such Common Stock to or through any person or entity;
provided, however, that by making the representations herein, the Investor does not agree to hold the Common Stock for any minimum
or other specific term and reserves the right to dispose of the Common Stock at any time in accordance with federal and state securities
laws applicable to such disposition.

 

3.4 Due Authorization.

 

3.4.1  Authority.
The person executing this Investment Agreement, if executing this Agreement in a representative or fiduciary capacity, has full
power and authority to execute and deliver this Agreement and each other document included herein for which a signature is required
in such capacity and on behalf of the subscribing individual, partnership, trust, estate, corporation or other entity for whom
or which Investor is executing this Agreement. Investor has reached the age of majority (if an individual) according to the laws
of the state in which he or she resides.

    	30

    	 

    

 

3.4.2 Due Organization; Due Authorization.
Investor is duly and validly organized, validly existing and in good standing as a limited liability company under the laws of
Georgia with full power and authority to purchase the Securities to be purchased by Investor and to execute and deliver this Agreement.

 

3.5No Registration As A Dealer. The
Investor is not and will not be required to be registered as a "dealer" under the 1934 Act, either as a result of its
execution and performance of its obligations under this Agreement or otherwise.

 

4.Acknowledgments. 

 

4.1 Risks of Investment. The
Investor recognizes that an investment in the Company involves substantial risks, including the potential loss of Investor's entire
investment herein. Investor recognizes that the Disclosure Documents, this Agreement and the exhibits hereto do not purport to
contain all the information, which would be contained in a registration statement under the Act;

 

4.2 No Government Approval.
The Investor and the Company each acknowledge that no federal or state agency has passed upon the Securities, recommended or endorsed
the Offering, or made any finding or determination as to the fairness of this transaction;

 

4.3 No Registration, Restrictions
on Transfer. The Investor acknowledges that, as of the date of this Agreement, the Securities and any component thereof have
not been registered under the Act or any applicable state securities laws by reason of exemptions from the registration requirements
of the Act and such laws, and may not be sold, pledged (except for any limited pledge in connection with a margin account of Investor
to the extent that such pledge does not require registration under the Act or unless an exemption from such registration is available
and provided further that if such pledge is realized upon, any transfer to the pledgee shall comply with the requirements set forth
herein), assigned or otherwise disposed of in the absence of an effective registration of the Securities and any component thereof
under the Act or unless an exemption from such registration is available;

 

4.4 Restrictions on Transfer.
The Investor acknowledges that it may not attempt to sell, transfer, assign, pledge or otherwise dispose of all or any portion
of the Securities or any component thereof in the absence of either an effective registration statement or an exemption from the
registration requirements of the Act and applicable state securities laws;

 

4.5 No Assurances of Registration.
There can be no assurance that any registration statement will become effective at the scheduled time, or ever, or remain effective
when required, and Investor acknowledges that it may be required to bear the economic risk of Investor's investment for an indefinite
period of time;

 

4.6 Exempt Transaction. Investor
understands that the Securities are being offered and sold in reliance on specific exemptions from the registration requirements
of federal and state law and that the representations, warranties, agreements, acknowledgments and understandings set forth herein
are being relied upon by the Company in determining the applicability of such exemptions and the suitability of Investor to acquire
such Securities.

    	31

    	 

    

4.7 Legends. The
Company agrees and acknowledges that the certificates representing the Put Shares shall not bear a legend restricting the sale
or transfer thereof.

 

4.8Investor’s
Resources. The Company agrees and acknowledges that the Investor has not represented, and does not represent, that it now has
or at any time in the future will have assets at any given time equal to the Maximum Offering Amount available for investment pursuant
to this Agreement, but only covenants to make payment of the applicable Put Share Price for each Put when due under the terms of
this Agreement.

 

5.Representations, Warranties and
Covenants of the Company. The Company hereby makes the following representations and warranties to Investor (which shall be
true at the signing of this Agreement, and as of any such later date as specified hereunder) and agrees with Investor that, except
as set forth in the “Schedule of Exceptions” attached hereto as Exhibit G:

 

5.1 Organization, Good
Standing, and Qualification. The Company is a corporation duly organized, validly existing and in good standing under the laws
of the State of Nevada, USA and has all requisite corporate power and authority to carry on its business as now conducted and as
proposed to be conducted. The Company is duly qualified to transact business and is in good standing in each jurisdiction in which
the failure to so qualify would, in the Company’s opinion, have a material adverse effect on the business or properties of
the Company and its subsidiaries taken as a whole. The Company, to its Knowledge, is not the subject of any pending, threatened
or, to its Knowledge, contemplated investigation or administrative or legal proceeding (a “Proceeding”) by the Internal
Revenue Service, the taxing authorities of any state or local jurisdiction, or the Securities and Exchange Commission, the FINRA,
the Nasdaq Stock Market, Inc. or any state securities commission, or any other governmental entity, which have not been disclosed
in the Disclosure Documents. None of the disclosed Proceedings, if any, will, in the Company’s opinion, have a material adverse
effect upon the Company. Each of the Company’s subsidiaries, if any, the jurisdiction of incorporation or organization
of each, and the percentage of the Company’s ownership of each is as set forth in Schedule 5.1 annexed hereto.

 

5.2 Corporate Condition. The
Company's condition is, in all material respects, as described in the Disclosure Documents (as further set forth in any subsequently
filed Disclosure Documents, if applicable), except for changes in the ordinary course of business and normal year-end adjustments
that are not, in the aggregate, materially adverse to the Company. There have been no Material Adverse Changes to the Company’s
business, financial condition, or prospects from the dates of such Disclosure Documents through the date of the Investment Commitment
Closing. The financial statements as contained in the 10-K and 10-Q have been prepared in accordance with generally accepted accounting
principles, consistently applied (except as otherwise permitted by Regulation S-X of the Exchange Act, or Generally Accepted Accounting
Principles, as applicable), subject, in the case of unaudited interim financial statements, to customary year end adjustments and
the absence of certain footnotes, and fairly present the financial condition of the Company as of the dates of the balance sheets
included therein and the consolidated results of its operations and cash flows for the periods then ended. Without limiting the
foregoing, there are no material liabilities, contingent or actual, that are not disclosed in the Disclosure Documents (other than
liabilities incurred by the Company in the ordinary course of its business, consistent with its past practice, after the period
covered by the Disclosure Documents). The Company has paid all material taxes that are due, except for taxes that it reasonably
disputes. There is no material claim, litigation, or administrative proceeding pending or, to the best of the Company’s Knowledge,
threatened against the Company, except as disclosed in the Disclosure Documents. This Agreement and the Disclosure Documents do
not contain any untrue statement of a material fact and do not omit to state any material fact required to be stated therein or
herein necessary to make the statements contained therein or herein not misleading in the light of the circumstances under which
they were made. No event or circumstance exists relating to the Company which, under applicable law, requires public disclosure
but which has not been so publicly announced or disclosed.

    	32

    	 

    

 

5.3 Commission Documents,
Financial Statements. 

 

(a) 
The Company has timely filed (giving effect to permissible extensions in accordance with Rule 12b-25 under the Exchange
Act) all Commission Documents. The Company has delivered or made available to the Investor via EDGAR or otherwise true and
complete copies of the Commission Documents filed with or furnished to the SEC prior to the Commitment Closing
Date (including, without limitation, the 2010 Form 10-K). No Subsidiary of the Company is required to file or furnish any
report, schedule, registration, form, statement, information or other document with the SEC. As of its filing date, each Commission
Document filed with or furnished to the SEC prior to the Commitment Closing Date (including,
without limitation, the 2010 Form 10-K) complied in all material respects with the requirements of the Securities Act or the
Exchange Act, as applicable, and other federal, state and local laws, rules and regulations applicable to it, and, as of its
filing date (or, if amended or superseded by a filing prior to the Commitment Closing Date,
on the date of such amended or superseded filing), such Commission Document did not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading. The Registration Statement, on the date it is filed with the SEC,
on the date it is declared effective by the SEC, on each Put Date and on each Put Closing Date, shall comply in all material respects
with the requirements of the Securities Act (including, without limitation, Rule 415 under the Securities Act) and shall not
contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in
order to make the statements therein not misleading, except that this representation and warranty shall not apply to statements
in or omissions from the Registration Statement made in reliance upon and in conformity with information relating to the Investor
furnished to the Company in writing by or on behalf of the Investor expressly for use therein (which to the Company’s
Knowledge are not false or misleading). The Prospectus and each Prospectus Supplement required to be filed pursuant to this Agreement
or the Registration Rights Agreement, when taken together, on its date, on each Put Date and on each Put Closing Date, shall comply
in all material respects with the requirements of the Securities Act (including, without limitation, Rule 424(b) under
the Securities Act) and shall not contain any untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made,
not misleading, except that this representation and warranty shall not apply to statements in or omissions from the Prospectus
or any Prospectus Supplement made in reliance upon and in conformity with information relating to the Investor furnished to the
Company in writing by or on behalf of the Investor expressly for use therein (which to the Company’s Knowledge are not false
or misleading). Each Commission Document (other than the Registration Statement, the Prospectus or any Prospectus Supplement) to
be filed with or furnished to the SEC after the Commitment Closing Date and incorporated by reference in the Registration Statement,
the Prospectus or any Prospectus Supplement required to be filed pursuant to this Agreement or the Registration Rights Agreement
(including, without limitation, the Current Report), when such document is filed with or furnished to the SEC and, if applicable,
when such document becomes effective, as the case may be, shall comply in all material respects with the requirements of the Securities
Act or the Exchange Act, as applicable, and other federal, state and local laws, rules and regulations applicable to it, and
shall not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The Company
has delivered or made available to the Investor via EDGAR or otherwise true and complete copies of all comment letters and substantive
correspondence received by the Company from the SEC relating to the Commission Documents filed with or furnished to the SEC as
of the Commitment Closing Date, together with all written responses of the Company thereto. There are no outstanding or unresolved
comments or undertakings in such comment letters received by the Company from the SEC. The SEC has not issued any stop order or
other order suspending the effectiveness of any registration statement filed by the Company under the Securities Act or the Exchange
Act. 

    	33

    	 

    

 

(b)       
The financial statements, together with the related notes and schedules, of the Company included in the Commission Documents comply
as to form in all material respects with all applicable accounting requirements and the published rules and regulations of
the SEC and all other applicable rules and regulations with respect thereto as may be subject to any applicable out of period
adjustments disclosed in the Commission Documents. Such financial statements, together with the related notes and schedules, have
been prepared in accordance with GAAP applied on a consistent basis during the periods involved (except (i) as may be otherwise
indicated in such financial statements or the notes thereto or (ii) in the case of unaudited interim statements, to the extent
they may not include footnotes or may be condensed or summary statements and are subject to customary year-end audit adjustments),
and fairly present in all material respects the financial condition of the Company and its consolidated Subsidiaries as of the
dates thereof and the results of operations and cash flows for the periods then ended (subject, in the case of unaudited statements,
to normal year-end audit adjustments).

 

(c)The Company has timely
filed with the SEC and made available to the Investor via EDGAR or otherwise all certifications and statements required by (x) Rule 13a-14
or Rule 15d-14 under the Exchange Act or (y) 18 U.S.C. Section 1350 (Section 906 of the Sarbanes-Oxley Act
of 2002 (“ SOXA ”)) with respect to all relevant Commission Documents.  The Company is in compliance in
all material respects with the provisions of SOXA applicable to it as of the date hereof.  The Company maintains disclosure
controls and procedures required by Rule 13a-15 or Rule 15d-15 under the Exchange Act. As used in this Section 5.3(c),
the term “file” shall be broadly construed to include any manner in which a document or information is furnished, supplied
or otherwise made available to the SEC.

 

(d)Silberstein Ungar,
PLLC (the “Accounting Firm”), who shall express their opinion on the audited financial statements and related schedules
to be included or incorporated by reference in the Registration Statement and the Prospectus are, with respect to the Company,
independent public accountants as required by the Securities Act and is an independent registered public accounting firm within
the meaning of SOXA as required by the rules of the Public Company Accounting Oversight Board.

 

5.4 Authorization. All corporate
action on the part of the Company by its officers, directors and stockholders necessary for the authorization, execution and delivery
of this Agreement and all of the Transaction Documents, the performance of all obligations of the Company hereunder and the authorization,
issuance and delivery of the Common Stock being sold hereunder have been taken, and this Agreement and the Registration Rights
Agreement constitute valid and legally binding obligations of the Company, enforceable in accordance with their terms, except insofar
as the enforceability may be limited by applicable bankruptcy, insolvency, reorganization, or other similar laws affecting creditors’
rights generally or by principles governing the availability of equitable remedies. The Company has obtained all consents and approvals
required for it to execute, deliver and perform each agreement referenced in the previous sentence.
The Board of Directors of the Company shall have adopted resolutions granting the above authorizations (the "Resolutions")
and, as a condition to each Put, such Resolutions shall not have been amended or rescinded prior to such Put Date.

    	34

    	 

    

 

5.5 Valid Issuance of Common Stock.
The Commitment Shares, the Fee Shares and Put Shares, when issued, sold and delivered in accordance with the terms hereof, for
the consideration expressed herein, will be validly issued, fully paid and nonassessable, will be issued free of any preemptive
rights and, based in part upon the representations of Investor in this Agreement, will be issued in compliance with all applicable
U.S. federal and state securities laws.

 

5.6.       
Securities Act. The Company has complied and shall comply with all applicable federal and state securities laws in connection
with the offer, issuance and sale of the Securities hereunder, including, without limitation, the applicable requirements of the
Securities Act. Without limiting the generality of the foregoing, the Company satisfies, and the Registration Statement upon filing
with the SEC and at the time it is declared effective by the SEC shall satisfy, all of the requirements of the Securities Act to
register the resale of the Registrable Securities by the Investor in accordance with the Registration Rights Agreement on a delayed
or continuous basis under Rule 415 under the Securities Act at then-prevailing market prices, and not fixed prices.

 

5.7 Compliance with Other Instruments.
The Company is not in violation or default of any provisions of its Certificate of Incorporation or Bylaws, each as amended and
in effect on and as of the date of the Agreement, or of any material provision of any material instrument or material contract
to which it is a party or by which it is bound or of any provision of any federal or state judgment, writ, decree, order, statute,
rule or governmental regulation applicable to the Company, which would, in the Company’s opinion, have a material adverse
effect on the Company's business or prospects, or on the performance of its obligations under this Agreement or the Registration
Rights Agreement. The execution, delivery and performance of this Agreement and the other agreements entered into in conjunction
with the Offering and the consummation of the transactions contemplated hereby and thereby will not (a) result in any such violation
or be in conflict with or constitute, with or without the passage of time and giving of notice, either a default under any such
provision, instrument or contract or an event which results in the creation of any lien, charge or encumbrance upon any assets
of the Company, which would, in the Company’s opinion, have a material adverse effect on the Company’s business or
prospects, or on the performance of its obligations under this Agreement, the Registration Rights Agreement, or (b) violate the
Company’s Certificate of Incorporation or By-Laws or (c) violate any statute, rule or governmental regulation applicable
to the Company which violation would, in the Company’s opinion, have a material adverse effect on the Company's business
or prospects.

 

5.8 Reporting Company. The Company
is not subject to the reporting requirements of the Exchange Act, has a class of securities registered under Section 12 of the
Exchange Act, and has filed all reports required by the Exchange Act since the date the Company first became subject to such reporting
obligations. The Company undertakes to furnish Investor with copies of such reports as may be reasonably requested by Investor
prior to consummation of this Offering and thereafter, to make such reports available, for the full term of this Agreement, including
any extensions thereof, and for as long as Investor holds the Securities. The Common Stock is duly listed or approved for quotation
on the OTC QB. The Company is not in violation of the listing requirements of the OTC QB, and does not reasonably anticipate that
the Common Stock will be delisted by the OTC QB for the foreseeable future.

    	35

    	 

    

 

5.9.       
Listing and Maintenance Requirements. The Company’s Common Stock is not registered pursuant to Section 12(b) or
12(g) of the Exchange Act, and the Company has taken no action designed to, or which to its Knowledge is likely to have the
effect of, terminating the registration of the Common Stock under the Exchange Act, nor has the Company received any notification
that the SEC is contemplating terminating such registration. The Company has not, in the 12 months preceding the Commitment Closing
Date, received notice from any Trading Market on which the Common Stock is or has been listed or quoted to the effect that the
Company is not in compliance with the listing or maintenance requirements of such Trading Market. The Company currently is, and
has no reason to believe that it will not in the foreseeable future continue to be, in compliance with all such listing and maintenance
requirements.

 

5.10.       
Indebtedness; Solvency.  The Company’s Annual Report on Form 10-K for the year ended December 31, 2010 sets forth,
as of December 31, 2010, all outstanding secured and unsecured Indebtedness of the Company or any Subsidiary, or for which the
Company or any Subsidiary has commitments through such date.  For the purposes of this Agreement, “Indebtedness ”
shall mean (a) any liabilities for borrowed money (other than trade accounts payable incurred in the ordinary course of business),
(b) all guaranties, endorsements, indemnities and other contingent obligations in respect of Indebtedness of others, whether
or not the same are or should be reflected in the Company’s balance sheet (or the notes thereto), except guaranties by endorsement
of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business; and (c) the
present value of any lease payments due under leases required to be capitalized in accordance with GAAP.  There is no existing
or continuing default or event of default in respect of any Indebtedness of the Company or any of its Subsidiaries. The Company
has not taken any steps, and does not currently expect to take any steps, to seek protection pursuant to Title 11 of the United
States Code or any similar federal or state bankruptcy law or law for the relief of debtors, nor does the Company have any Knowledge
that its creditors intend to initiate involuntary bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings
for relief under Title 11 of the United States Code or any other federal or state bankruptcy law or any law for the relief of debtors.

 

5.11 No Antidilution
Triggered. There are no securities or instruments containing anti-dilution or similar provisions that will be triggered by
the issuance of the Securities.

5.12 Intellectual Property.
The Company has valid, unrestricted and exclusive ownership of or rights to use the patents, trademarks, trademark registrations,
trade names, copyrights, know-how, technology and other intellectual property necessary to the conduct of its business. The
Commission Documents list all patents, trademarks, trademark registrations, trade names and copyrights of the Company. The
Company has granted such licenses or has assigned or otherwise transferred a portion of (or all of) such valid, unrestricted and
exclusive patents, trademarks, trademark registrations, trade names, copyrights, know-how, technology and other intellectual property
necessary to the conduct of its business. The Company has been granted licenses, know-how, technology and/or other intellectual
property necessary to the conduct of its business. To the best of the Company’s Knowledge after due inquiry, the Company
is not infringing on the intellectual property rights of any third party, nor is any third party infringing on the Company’s
intellectual property rights. There are no restrictions in any agreements, licenses, franchises, or other instruments that preclude
the Company from engaging in its business as presently conducted. The Company is preparing to file additional patent applications
that it feels will better protect its intellectual property.

    	36

    	 

    

5.13 Not
a “Shell” Company. The Company is not an issuer identified in, or subject to, Rule 144(i)
or Rule 405 of the Act (a “Shell Company”), and has not been a Shell Company since
the Company filed Form 10 information May 4, 2010 indicating that it was no longer a Shell Company.

 

5.14 No Rights of Participation.
No person or entity, including, but not limited to, current or former stockholders of the Company, underwriters, brokers, agents
or other third parties, has any right of first refusal, preemptive right, right of participation, or any similar right to participate
in the financing contemplated by this Agreement which has not been waived.

 

5.15 No Advance Regulatory Approval.
The Company acknowledges that this Investment Agreement, the transaction contemplated hereby and the Registration Statement contemplated
hereby have not been approved by the SEC, or any other regulatory body and there is no guarantee that this Investment Agreement,
the transaction contemplated hereby and the Registration Statement contemplated hereby will ever be approved by the SEC or any
other regulatory body. The Company is relying on its own analysis and is not relying on any representation by Investor that either
this Investment Agreement, the transaction contemplated hereby or the Registration Statement contemplated hereby has been or will
be approved by the SEC or other appropriate regulatory body.

 

5.16 Underwriter’s Fees and
Rights of First Refusal. The Company is not obligated to pay any compensation or other fees, costs or related expenditures
in cash or securities to any underwriter, broker, agent or other representative in connection with this Offering.

5.17 Availability of Suitable Form
for Registration. The Company is currently eligible and agrees to maintain its eligibility to register the resale of its Common
Stock on a registration statement on a suitable form under the Act.

 

5.18 No Integrated Offering.
Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf, has directly or indirectly made any
offers or sales of any of the Company’s securities or solicited any offers to buy any security under circumstances that would
prevent the parties hereto from consummating the transactions contemplated hereby pursuant to an exemption from registration under
Regulation D of the Act or would require the issuance of any other securities to be integrated with this Offering under the Rules
of the SEC. The Company has not engaged in any form of general solicitation or advertising in connection with the offering of the
Common Stock.

 

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

    	37

    	 

    

 

5.20 Absence of Certain
Company Control Person Actions Or Events. For purposes hereof, “Company Control Person” means each director, executive
officer,. To the Company’s Knowledge, during the past ten (10) years:

 

(i) No petition under
the federal bankruptcy laws or any state insolvency law was filed by or against, and no receiver, fiscal agent or similar officer
was appointed by a court for the business or property of such Company Control Person, or any partnership in which he was a general
partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive
officer at or within two years before the time of such filing;

 

(ii)
No Company Control Person was convicted in a criminal proceeding or is a named subject of a pending criminal proceeding (excluding
traffic violations and other minor offenses), or has not been convicted of, found guilty of, or have pled guilty nolo contendere
of a crime or felony, entered into a pre trial diversion for or otherwise been charged for any action, misdemeanor or felony, involving
fraud, dishonesty, breach of trust, contract or money laundering, or which may be considered to be a crime concerning moral turpitude,
including but not limited to any disciplinary action by any branch of the United State military, regulatory bodies, including but
not limited to any professional licensing authority [or has been the Defendant in a civil action for fraud or material breach of
a financing agreement];

 

(iii) No Company Control
Person has been the subject of any order, judgment or decree, that was not subsequently reversed, suspended or vacated, of any
court of competent jurisdiction, permanently or temporarily enjoining him from, or otherwise limiting, the following activities:

 

(A) acting, as an investment
advisor, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company,
bank, savings and loan association or insurance company, as a futures commission merchant, introducing broker, commodity trading
advisor, commodity pool operator, floor broker, any other Person regulated by the Commodity Futures Trading Commission (“CFTC”)
or engaging in or continuing any conduct or practice in connection with such activity;

 

(B) engaging in any type of
business practice; or

 

(C) engaging in any activity
in connection with the purchase or sale of any security or commodity or in connection with any violation of federal or state securities
laws or federal commodities laws;

    	38

    	 

    

(iv) No Company Control
Person has been the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any federal or
state authority barring, suspending or otherwise limiting for more than 60 days the right of such Company Control Person to engage
in any activity described in paragraph (iii) of this item, or to be associated with Persons engaged in any such activity; or

 

(v) No Company Control
Person was found by a court of competent jurisdiction in a civil action or by the CFTC or SEC to have violated any federal or state
securities law, and the judgment in such civil action or finding by the CFTC or SEC has not been subsequently reversed, suspended,
or vacated.

 

5.21Representations
Correct. The foregoing representations, warranties and agreements are true, correct and complete in all material respects,
and shall survive any Put Closing and the issuance of the shares of Common Stock thereby.

 

5.22 Tax Status. Since the exchange
in May 4, 2010 and to the Company’s knowledge prior to that date, the Company 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 (unless and only to the
extent that the Company has set aside on its books provisions reasonably adequate for the payment of all unpaid and unreported
taxes) and has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to
be due on such returns, reports and declarations, except those being contested in good faith and has set aside on its books 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.

 

5.23Material Agreements. 
Except as set forth in the Commission Documents, neither the Company nor any Subsidiary of the Company is a party to any written
or oral contract, instrument, agreement commitment, obligation, plan or arrangement, a copy of which would be required to be filed
with the SEC as an exhibit to an annual report on Form 10-K (collectively, “ Material Agreements ”). 
Except as set forth in the Commission Documents, the Company and each of its Subsidiaries have performed in all material respects
all the obligations required to be performed by them under the Material Agreements, have received no notice of default or an event
of default by the Company or any of its Subsidiaries thereunder and are not aware of any basis for the assertion thereof, and neither
the Company or any of its Subsidiaries nor, to the Knowledge of the Company, any other contracting party thereto are in default
under any Material Agreement now in effect, the result of which would have a Material Adverse Effect.  Except as set forth
in the Commission Documents, each of the Material Agreements is in full force and effect, and constitutes a legal, valid and binding
obligation enforceable in accordance with its terms against the Company and/or any of its Subsidiaries and, to the Knowledge of
the Company, each other contracting party thereto, except as such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation, conservatorship, receivership or similar laws relating to, or affecting generally the
enforcement of, creditor’s rights and remedies or by other equitable principles of general application.

    	39

    	 

    

 

5.24Transactions With Affiliates.
Except as set forth in the Disclosure 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.

 

 5.25 Application of Takeover Protections.
The Company has not adopted and will not adopt any “poison pill” provision that will be applicable to Investor as a
result of transactions contemplated by this Agreement.

 

5.26   Investment
Company Act Status.  The Company is not, and as a result of the consummation of the transactions contemplated by the Transaction
Documents and the application of the proceeds from the sale of the Shares as set forth in the Prospectus and any Prospectus Supplement
shall not be, an “investment company” or a company “controlled” by an “investment company,”
within the meaning of the Investment Company Act of 1940, as amended.

 

5.27   Taxes. 
Since the exchange in May 2010, the Company and each of its Subsidiaries (i) has filed all necessary federal, state and foreign
income and franchise tax returns or has duly requested extensions thereof, except for those the failure of which to file would
not have a Material Adverse Effect, (ii) has paid all federal, state, local and foreign taxes due and payable for which it
is liable, except to the extent that any such taxes are being contested in good faith and by appropriate proceedings, except for
such taxes the failure of which to pay would not have a Material Adverse Effect, and (iii) does not have any tax deficiency
or claims outstanding or assessed or, to the Company’s Knowledge, proposed against it which would have a Material Adverse
Effect. 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 and its Subsidiaries know of no basis for any such claim. The Company is not operated in such a manner
as to qualify as a passive foreign investment company, as defined in Section 1297 of the U.S. Internal Revenue Code of 1986,
as amended.

 

5.28   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 of similar size 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 be unable
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 have a Material Adverse Effect.

    	40

    	 

    

 

5.29   U.S.
Real Property Holding Corporation. Neither the Company nor any of its Subsidiaries is, or has ever been, and so long as any
of the Securities are held by the Investor, shall become a U.S. real property holding corporation within the meaning of Section 897
of the Code.

 

5.30Acknowledgment
Regarding Investor's Purchase of Shares. The Company acknowledges and agrees that the Investor is acting solely in the capacity
of an arm's length purchaser with respect to the Transaction Documents and the transactions contemplated hereby and thereby. The
Company further acknowledges that the Investor is not acting as a financial advisor or fiduciary of the Company (or in any similar
capacity) with respect to the Transaction Documents and the transactions contemplated hereby and thereby and any advice given by
the Investor or any of its respective representatives or agents in connection with the Transaction Documents and the transactions
contemplated hereby and thereby is merely incidental to the Investor's purchase of the Securities, and is not being relied on by
the Company. The Company further represents to the Investor that the Company's decision to enter into the Transaction Documents
has been based solely on the independent evaluation by the Company and its representatives.

 

5.31Lock-Up. The
Company shall cause its executive officers and directors, , to refrain from selling Common Stock during each Pricing Period, and
the Company shall use best efforts to cause other insiders or Affiliates to refrain from selling any Stock during each Pricing
Period.

 

5.32Other Agreements. The Company
has not, directly or indirectly, made any agreements with the Investor under a subscription in the form of this Agreement for the
purchase of Common Stock, relating to the terms or conditions of the transactions contemplated hereby or thereby except as expressly
set forth herein, respectively, or in exhibits hereto or thereto.

 

5.33Major Transactions. As of
the date of this Agreement, there are no other Major Transactions currently pending or contemplated by the Company that would have
a material adverse effect on the Company.

 

5.34Financings. As of the date
of this Agreement, there are no other financings currently pending by the Company.

 

5.35 Acknowledgment
of Limitations on Put Amounts. The Company understands and acknowledges that the amounts available under this Investment Agreement
are limited, among other things, based upon the liquidity of the Company’s Common Stock traded on its Principal Market.

    	41

    	 

    

 

5.36 Dilution. The number of shares
of Common Stock issuable as Put Shares may increase substantially in certain circumstances, including, but not necessarily limited
to, the circumstance wherein the trading price of the Common Stock declines during the period between the Effective Date and the
end of the Commitment Period. The Company’s executive officers and directors fully understand the nature of the transactions
contemplated by this Agreement and recognize that they have a potential dilutive effect. The board of directors of the Company
has concluded, in its good faith business judgment, that such issuance
is in the best interests of the Company. The Company specifically acknowledges that, whenever the Company elects to initiate a
Put, its obligation to issue the Put Shares is binding upon the Company and enforceable regardless of the dilution such issuance
may have on the ownership interests of other shareholders of the Company. The Company acknowledges that the Investor may sell shares
of Common Stock during any Pricing Period, and may enter into a short exempt sale or any short sale or other hedging or
similar arrangement in accordance with Section 2.3.10 during any Pricing
Period, and that such sales, short sales or hedging arrangements may serve to lower the Purchase Price thereby having a potential
dilutive effect on the Company’s Common Stock. 

 

5.37No Brokers. 
No brokers, finders or financial advisory fees or commissions shall be payable by the Company or any Subsidiary (or any of their
respective Affiliates) with respect to the transactions contemplated by the Transaction Documents.

 

5.38 All material representations
in the Company’s public filings from May 4, 2010 to the date of this Investment Agreement up through the date of the Investment
Agreement and up through the date of each Put Notice, if such representation is made in conjunction with a Put were true and correct
when made.

 

5.39 No Material Non-Public Information.
The Company has not furnished to the Investor any information concerning the Company that will constitute material nonpublic information
on or after the Liquidity Date.

 

6.Additional Covenants of
the Company.

 

6.1 Independent Auditors. The
Company shall, until at least the Termination Date, maintain as its independent auditors an accounting firm authorized to practice
before the SEC.

 

6.2 Corporate Existence and Taxes;
Change in Corporate Entity. The Company shall, until at least the Termination Date, maintain its corporate existence in good
standing and, once it becomes a “Reporting Issuer” (defined as a Company which files periodic reports under the Exchange
Act), remain a Reporting Issuer and shall pay all its taxes when due except for taxes which the Company disputes. Notwithstanding
the terms of Section 9.2 below, the Company may, at any time after the date hereof, enter into any merger, consolidation or corporate
reorganization of the Company with or into, or transfer all or substantially all of the assets of the Company to, another entity
only if the resulting successor or acquiring entity in such transaction, if not the Company (the “Surviving Entity”),
(i) has Common Stock listed for trading on a Nasdaq Market or on another national stock exchange and is a Reporting Issuer, (ii)
assumes by written instrument the Company's obligations with respect to this Investment Agreement, the Registration Rights
Agreement, the Transfer Agent Instructions and the other agreements referred to herein, including but not limited to the obligations
to deliver to the Investor shares of Common Stock and/or securities that Investor is entitled to receive pursuant to this Investment
Agreement.

    	42

    	 

    

 

6.3 Registration Rights.
The Company will enter into a registration rights agreement covering the resale of the Common Shares substantially in the form
of the Registration Rights Agreement attached as Exhibit F. During the period from the Effective
Date through the Termination Date, the Company shall use its best efforts to maintain the continuous effectiveness of the Registration
Statement under the Securities Act. 

  

6.4.  Blue Sky. 
The Company shall take such action, if any, as is necessary in order to obtain an exemption for or to qualify the Securities for
sale to the Investor pursuant to the Transaction Documents and for the subsequent resale of Securities by the Investor into the
Principal Market and such other jurisdictions within the United States as Investor reasonably requests in writing, in each case,
under applicable state securities or “blue sky” laws and shall provide evidence of any such action so taken to the
Investor from time to time following the Commitment Closing Date.

 

6.5 Asset Transfers. The Company
shall not (i) transfer, sell, convey or otherwise dispose of any of its material assets to any subsidiary except for a cash or
cash equivalent consideration and for a proper business purpose or (ii) transfer, sell, convey or otherwise dispose of any of its
material assets to any Affiliate, as defined below, during the Term of this Agreement. For purposes hereof, “Affiliate”
shall mean any officer of the Company, director of the Company or owner of twenty percent (20%) or more of the Common Stock or
other securities of the Company.

 

6.6 Capital Raising Limitations.
Notwithstanding anything to the contrary herein, if the Company issues any Variable Equity Securities (as defined below) anytime
after the date hereof having a value in excess of $250,000, the Company shall not be entitled to deliver a Put Notice to the Investor
and the Investor shall not be required to purchase any Put Shares so long as any portion of such Variable Equity Securities (as
defined below) remain outstanding.  For purposes hereof, the following shall be collectively referred to herein as, the
“Equity Securities”: (i) Common Stock or any other equity securities, (ii) any debt or equity securities which are
convertible into, exercisable or exchangeable for, or carry the right to receive additional shares of Common Stock or other equity
securities, or (iii) any securities of the Company pursuant to an equity line structure or format similar in nature to this Offering.
For purposes hereof, the following shall be collectively referred to herein as, the “Variable Equity Securities”: any
debt or Equity Securities which are convertible into, exercisable or exchangeable for, or carry the right to receive additional
shares of Common Stock either (i) at any conversion, exercise or exchange rate or other price that is based upon and/or varies
with the trading prices of or quotations for Common Stock at any time after the initial issuance of such debt or equity security,
or (ii) with a fixed conversion, exercise or exchange price that is subject to being reset at some future date at any time after
the initial issuance of such debt or equity security or upon the occurrence of specified contingent events directly or indirectly
related to the business of the Company or the market for the Common Stock.

 

6.7 Opinion of Counsel.
Investor shall, prior to filing the Registration Statement, receive an opinion letter from the Company’s legal counsel, in
the form of the Investment Commitment Opinion of Counsel attached as Exhibit B, or in such form as agreed upon by the parties,
and shall, concurrent with each Put Date, receive an opinion letter from the Company’s legal counsel, in the form of the
Put Opinion of Counsel attached as Exhibit D or in such form as agreed upon by the parties.

    	43

    	 

    

 

6.8 Listing. Subject
to the remainder of this Section 6.8, the Company shall ensure that its shares of Common Stock (including all Commitment Shares,
the Fee Shares and Put Shares) are listed and available for trading on the OTC QB. Thereafter, the Company shall (i) use its best
efforts to continue the listing and trading of its Common Stock on an Approved Primary Market; and (ii) comply in all material
respects with the Company’s reporting, filing and other obligations under the By-Laws or rules of FINRA and such exchanges,
as applicable.

 

6.9 The Company’s
Instructions to Transfer Agent. The Company will instruct the Transfer Agent of the Common Stock (the “Transfer Agent”),
by delivering irrevocable instructions to issue certificates, registered in the name of each Investor or its nominee, for the Commitment
Shares, the Fee Shares and for the Put Shares in such amounts as specified from time to time by the Company upon any exercise by
the Company of a Put. Such certificates shall not bear a Legend unless issuance with a Legend is permitted by the terms of this
Agreement and Legend removal is not permitted by Section 9.10(ii) hereof and the Company shall cause the Transfer Agent to issue
such certificates without a Legend, and the Irrevocable Instructions to Transfer Agent shall so indicate. Nothing in this Section
shall affect in any way Investor’s obligations and agreement set forth in Sections 3.3.2 or 3.3.3 hereof to resell the Securities
pursuant to an effective registration statement and to deliver a prospectus in connection with such sale or in compliance with
an exemption from the registration requirements of applicable securities laws. If (a) an Investor provides the Company with an
opinion of counsel, which opinion of counsel shall be in form, substance and scope reasonably acceptable to counsel for the Company,
to the effect that the Securities to be sold or transferred may be sold or transferred pursuant to an exemption from registration
or (b) an Investor transfers Securities, pursuant to Rule 144, to a transferee which is an accredited investor, the Company shall
permit the transfer. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm
to an Investor by vitiating the intent and purpose of the transaction contemplated hereby. Accordingly, the Company acknowledges
that the remedy at law for a breach of its obligations under this Section 6.9 will be inadequate and agrees, in the event of a
breach or threatened breach by the Company of the provisions of this Section 6.9, that an Investor shall be entitled, in addition
to all other available remedies, to an injunction restraining any breach and requiring immediate issuance and transfer, without
the necessity of showing economic loss and without any bond or other security being required.

 

6.10 Initial
Public Announcements and Required Filings. The Company shall, at or before 8:30 a.m.,
New York City time, on the first Trading Day after the Commitment Closing Date, issue a press release (the “Press Release”)
reasonably acceptable to the Investor disclosing the execution of this Agreement and the Registration Rights Agreement by the Company
and the Investor and the issuance of the Commitment Shares and the Fee Shares to the Investor, and briefly describing the transactions
contemplated thereby. Any Press Release or other public announcement relating to this financing shall be submitted to the
Investor for review at least two (2) Business Days prior to the planned release. Neither party shall disclose the other party’s
name in any press release or other public announcement without the other party’s prior written approval. The Company shall
obtain the Investor’s written approval of the Press Release prior to issuance by the Company.

    	44

    	 

    

 

At or before 8:30 a.m.,
New York City time, on the fourth Trading Day following the Commitment Closing Date, the Company shall file a Current Report on
Form 8-K describing all the material terms of the transactions contemplated by the Transaction Documents in the form required
by the Exchange Act and attaching copies of each of this Agreement, the Registration Rights Agreement and the Press Release as
exhibits thereto (including all exhibits thereto, the “Current Report”). The Company shall provide the Investor
a reasonable opportunity to comment on a draft of such Current Report and has given due consideration to such comments. From and
after the Liquidity Date, the Company shall have disclosed all material, nonpublic information delivered to the Investor (or the
Investor’s representatives or agents) by the Company or any of its Subsidiaries, or any of their respective officers, directors,
employees, agents or representatives (if any) in connection with the transactions contemplated by the Transaction Documents. The
Investor covenants that until such time as the transactions contemplated by this Agreement are publicly disclosed by the Company
as described in this Section 6.10, the Investor will maintain the confidentiality of all disclosures made to it in connection
with the transactions contemplated by the Transaction Documents (including the existence and terms of the transactions), except
that the Investor may disclose the terms of such transactions to its financial, accounting, legal and other advisors. Not later
than 15 calendar days following the Commitment Closing Date, the Company shall file a Form D with respect to the Securities
in accordance with Regulation D and shall provide a copy thereof to the Investor promptly after such filing. The Company shall
prepare and file with the SEC the Registration Statement (including the prospectus therein) covering only the resale by the Investor
of the Registrable Securities in accordance with the Securities Act and the Registration Rights Agreement.

 

6.11 Change in
Law or Policy. In the event of a change in law, or policy of the SEC, as evidenced by a No-Action letter or other written statements
of the SEC or FINRA which causes the Investor or the Company to be unable to perform its obligations hereunder, this Agreement
shall be automatically terminated, provided that notwithstanding any termination under this Section 6.11, the Investor shall retain
full ownership of the Commitment Shares and the Fee Shares as partial consideration for its commitment hereunder.

 

6.12 Notice of Certain Litigation. Promptly following
the commencement thereof, the Company shall provide the Investor written notice and a description in reasonable detail of any litigation
or proceeding to which the Company or any subsidiary of the Company is a party; in which the amount involved is $250,000 or more
and which is not covered by insurance or in which injunctive or similar relief is sought.

 

6.13    
Broker/Dealer.  The Investor shall use one or more broker-dealers to effectuate all sales, if any, of Securities that
it may purchase or otherwise acquire from the Company pursuant to the Transaction Documents, as applicable, which (or whom) shall
be unaffiliated with the Investor and not then currently engaged or used by the Company (collectively, the “Broker-Dealer”).
The Investor shall be solely responsible for all fees and commissions of the Broker-Dealer, which shall not exceed customary brokerage
fees and commissions.

    	45

    	 

    

7.Subscription
and Wiring Instructions; Irrevocability.

 

(a)Wire
transfer of Subscription Funds. Investor shall deliver Put Dollar Amounts (as payment towards any Put Share Price) by wire
transfer, to the Company pursuant to a wire instruction letter to be provided by the Company, and signed by the Company.

 

(b)Irrevocable
Subscription. Investor hereby acknowledges and agrees, subject to the provisions of any applicable laws providing for
the refund of subscription amounts submitted by Investor, that this Agreement is irrevocable and that Investor is not entitled
to cancel, terminate or revoke this Agreement or any other agreements executed by such Investor and delivered pursuant hereto,
and that this Agreement and such other agreements shall survive the death or disability of such Investor and shall be binding upon
and inure to the benefit of the parties and their heirs, executors, administrators, successors, legal representatives and assigns.

 

8.Indemnification.

 

In consideration of the
Investor’s execution and delivery of the Investment Agreement, the Registration Rights Agreement and acquiring the Securities
thereunder and in addition to all of the Company’s other obligations under the Transaction Documents, the Company shall defend,
protect, indemnify and hold harmless Investor and all of its stockholders, officers, directors, employees and direct or indirect
investors and any of the foregoing person’s agents, members, partners or other representatives (including, without limitation,
those retained in connection with the transactions contemplated by this Agreement) (collectively, the “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 Indemnitee is a party to the action for which indemnification
hereunder is sought), and including reasonable attorney’s fees and disbursements (the “Indemnified Liabilities”),
incurred by any Indemnitee as a result of, or arising out of, or relating to (a) any material misrepresentation or omission, or
breach of any representation or warranty made by the Company in the Prospectus, Transaction Documents or any other certificate,
instrument or documents contemplated hereby or thereby, (b) any material breach of any covenant, agreement or obligation of the
Company contained in the Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby,
or (c) any cause of action, suit or claim, derivative or otherwise, by any stockholder of the Company based on a breach or alleged
breach by the Company or any of its officers or directors of their fiduciary or other obligations to the stockholders of the Company.

 

To the extent that the
foregoing undertaking by the Company may be unenforceable for any reason, the Company shall make the maximum contribution to the
payment and satisfaction of each of the Indemnified Liabilities which it would be required to make if such foregoing undertaking
was enforceable which is permissible under applicable law.

    	46

    	 

    

 

Promptly after receipt
by an Indemnified Party of notice of the commencement of any action pursuant to which indemnification may be sought, such Indemnified
Party will, if a claim in respect thereof is to be made against the other party (hereinafter “Indemnitor”) under this
Section 8, deliver to the Indemnitor a written notice of the commencement thereof and the Indemnitor shall have the right to participate
in and to assume the defense thereof with counsel reasonably selected by the Indemnitor. The failure to deliver written notice
to the Indemnitor within a reasonable time of the commencement of any such action, to the extent that such failure is materially
prejudicial to the Indemnitor’s ability to defend such action, shall relieve the Indemnitor of liability to the Indemnified
Party under this Section 8, but the omission to so deliver written notice to the Indemnitor will not relieve it of any liability
that it may have to any Indemnified Party other than under this Section 8 to the extent it is prejudicial.

 

9. Miscellaneous.

 

9.1 Representations and Warranties
Survive the Closing; Severability. Investor’s and the Company’s representations and warranties shall survive
the Investment Date and any Put Closing contemplated by this Agreement notwithstanding any due diligence investigation made by
or on behalf of the party seeking to rely thereon. In the event that any provision of this Agreement becomes or is declared by
a court of competent jurisdiction to be illegal, unenforceable or void, or is altered by a term required by the Securities Exchange
Commission to be included in the Registration Statement, this Agreement shall continue in full force and effect without said provision;
provided that if the removal of such provision materially changes the economic benefit of this Agreement to the Investor, this
Agreement shall terminate.

 

9.2 Successors and Assigns.
The Transaction Documents, including this Investment Agreement, shall not be assignable by the Investor. The Transaction Documents,
including this Investment Agreement, shall not be assignable by the Company except in conjunction with a transaction permitted
under the terms of Section 6.2 above.

 

9.3 Execution in
Counterparts Permitted. This Agreement may be executed in one or more counterparts, each of which shall be deemed an
original, all of which together shall constitute one (1) and the same agreement and shall become effective when counterparts have
been signed by each party and delivered to the other parties. This Agreement, once executed by a party, may be delivered to the
other parties hereto by facsimile transmission or an e-mailed “PDF” of a copy of this Agreement bearing the signature
of the party so delivering this Agreement.

 

9.4 Titles and Subtitles;
Gender. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing
or interpreting this Agreement. The use in this Agreement of a masculine, feminine or neuter pronoun shall be deemed to include
a reference to the others.

 

9.5 Written Notices,
Etc. Any notice, demand or request required or permitted to be given by the Company or Investor pursuant to the terms
of this Agreement shall be in writing and shall be deemed given when delivered personally, or by facsimile or upon receipt if by
overnight or two (2) day courier, addressed to the parties at the addresses and/or facsimile telephone number of the parties
set forth at the end of this Agreement or such other address as a party may request by notifying the other in writing; provided,
however, that in order for any notice to be effective as to the Investor such notice shall be delivered and sent, as specified
herein, to all the addresses and facsimile telephone numbers of the Investor set forth at the end of this Agreement or such
other address and/or facsimile telephone number as Investor may request in writing.

    	47

    	 

    

 

9.6 Expenses. Except as set
forth in the Registration Rights Agreement, each of the Company and Investor shall pay all costs and expenses that it respectively
incurs, with respect to the negotiation, execution, delivery and performance of this Agreement.

 

9.7 Entire Agreement;
Written Amendments Required. This Agreement, including the Exhibits attached hereto, the Common Stock certificates,
the Registration Rights Agreement, and the other documents delivered pursuant hereto constitute the full and entire understanding
and agreement between the parties with regard to the subjects hereof and thereof, and no party shall be liable or bound to any
other party in any manner by any warranties, representations or covenants, whether oral, written, or otherwise except as specifically
set forth herein or therein. Except as expressly provided herein, neither this Agreement nor any term hereof may be amended, waived,
discharged or terminated other than by a written instrument signed by the party against whom enforcement of any such amendment,
waiver, discharge or termination is sought. The Disclosure Documents and all exhibits to this Agreement
are hereby incorporated by reference in, and made a part of, this Agreement as if set forth in full herein. 

 

9.8Headings. 
The article, section and subsection headings in this Agreement are for convenience only and shall not constitute a part of this
Agreement for any other purpose and shall not be deemed to limit or affect any of the provisions hereof. Unless the context clearly
indicates otherwise, each pronoun herein shall be deemed to include the masculine, feminine, neuter, singular and plural forms
thereof. The terms “including,” “includes,” “include” and words of like import shall be construed
broadly as if followed by the words “without limitation.”  The terms “herein,” “hereunder,”
“hereof” and words of like import refer to this entire Agreement instead of just the provision in which they are found.
 

 

9.9Reporting 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 the Principal Market on any given Trading Day for the purposes of this Agreement shall be the Bloomberg L.P. The
written mutual consent of the Investor and the Company shall be required to employ any other reporting entity.

    	48

    	 

    

 

9.10Fees and Expenses.

 

(i)  Commitment
Shares and Fee Shares. Not later than three (3) Business Days after the date of the execution and delivery of this Agreement,
in consideration for the Investor’s execution and delivery of this Agreement, the Company shall issue to the Investor a number
of shares of restricted Common Stock (the “Commitment Shares”) having a value equal to $150,000 (which represents 3%
of the Maximum Offering Amount) and a number of shares of restricted Common Stock (the “Fee Shares”) having a value
equal to $20,000.00, in each case based upon a deemed valuation per share equal to 96% of the VWAP of the Company’s Common
Stock for the 5 trading days immediately preceding the date of this Agreement. The certificate(s) representing the Commitment Shares
and Fee Shares shall be delivered to the Investor by overnight courier at its address set forth in Section 9.12 hereof. For the
avoidance of doubt, all of the Commitment Shares and Fee Shares shall be fully earned as of the Commitment Closing Date regardless
of whether or not any Registration Statement is filed or declared effective and regardless of whether any Puts are issued by the
Company or settled hereunder. Upon issuance, the Commitment Shares and the Fee Shares shall constitute “restricted securities”
as such term is defined in Rule 144(a)(3) under the Securities Act and, subject to the provisions of subsection (iv) of this Section
9.10, the certificate(s) representing the Commitment Shares and Fee Shares shall bear the restrictive legend set forth below in
subsection (iii) of this Section 9.10. The Commitment Shares and Fee Shares shall constitute Registrable Securities and shall be
included in the Registration Statement in accordance with the terms of the Registration Rights Agreement. If at any time after
the date that is fourteen (14) calendar months from the date of this Agreement, any outstanding Commitment Shares and Fee Shares
cannot be sold under Rule 144 without volume restrictions or pursuant to a current and effective Registration Statement for a period
of 10 Trading Days during any 20 Trading Day period, the Investor may require the Company to redeem the Commitment Shares, in cash,
for an amount equal to the pro rata portion of the Commitment Fee represented by such Commitment Shares and may require the Company
to redeem the Fee Shares, in cash, for an amount equal to the pro rata portion of the Legal/Due Diligence Fee represented by such
Fee Shares.

 

(ii) Legends. The
certificate representing the Commitment Shares and the certificate representing the Fees Shares, except as set forth below, shall
each bear a restrictive legend (“Legend”) in substantially the following form (and a stop-transfer order may be placed
against transfer of such stock certificate):

 

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 TO THE HOLDER (IF REQUESTED BY THE COMPANY),
IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE
TO BE SOLD PURSUANT TO RULE 144 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.

 

    	49

    	 

    

 

Notwithstanding the foregoing
and for the avoidance of doubt, all Shares to be issued in respect of any Put Notice delivered to the Investor pursuant to this
Agreement shall be issued to the Investor in accordance with Section 2.3 by crediting the Investor’s or its designees’
account at DTC through its Deposit/Withdrawal at Custodian (DWAC) system, and all such Shares shall be freely tradable and transferable
and without restriction on resale (and no stop-transfer order shall be placed against transfer thereof), assuming such transferor
is not and has not been an affiliate of the Company and the Company shall not take any action or give instructions to any transfer
agent of the Company otherwise.

 

(iii)
 Removal of Legend. If either (a) the Registration Statement is Effective, or (b) such holder provides the
Company with an opinion of counsel, in form, substance and scope reasonably acceptable to counsel for the Company (the reasonable
cost of which shall be borne by the Investor), to the effect that a public sale or transfer of such Security may be made without
registration under the Act, or (c) such holder provides the Company with reasonable assurances (which assurances shall be adequate
to the Company or the Company’s counsel) that such Security can be sold pursuant to Rule 144 (each, a “Legend Removal
Condition”), then the Company shall, no later than two Trading Days following the delivery by
the Investor to the Company or the Company’s transfer agent (with notice to the Company) of a legended certificate representing
the Commitment Shares and a legended certificate representing the Fee Shares (each endorsed or with stock powers attached, signatures
guaranteed, and otherwise in form necessary to affect the reissuance and/or transfer, if applicable), as directed by the Investor,
either: (A) issue and deliver (or cause to be issued and delivered) to the Investor a certificate(s) representing such Commitment
Shares and Fee Shares that is free from all restrictive and other legends or (B) cause the Company’s transfer agent to credit
the investor’s or its designee’s account at DTC through its Deposit/Withdrawal at Custodian (DWAC) system with a number
of shares of Common Stock equal to the number of Commitment Shares and Fee Shares represented by the certificate(s) so delivered
by the Investor (the date by which such certificate is required to be delivered to the investor or such credit is so required to
be made to the account of the Investor or its designee at DTC pursuant to the foregoing is referred to herein as the “Required
Delivery Date”). 

 

9.11Specific Enforcement,
Governing Law, Consent to Jurisdiction, Waiver of Jury Trial.

 

(i) The Company and the
Investor acknowledge and agree that irreparable damage would occur in the event that any of the provisions of this Agreement were
not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that either party shall
be entitled to an injunction or injunctions to prevent or cure breaches of the provisions of this Agreement by the other party
and to enforce specifically the terms and provisions hereof (without the necessity of showing economic loss and without any bond
or other security being required), this being in addition to any other remedy to which either party may be entitled by law or equity.

    	50

    	 

    

 

(ii) Governing
Law and Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation of this Agreement
and the other Transaction Documents shall be governed by and construed and enforced in accordance with the internal laws of the
State of Georgia without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning
the interpretations, enforcement and defense of the transactions contemplated by this Agreement and any other Transaction Documents
(whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, employees or agents) shall
be commenced exclusively in the state and federal courts sitting in the City of Atlanta, Georgia.  Each party hereby irrevocably
submits to the exclusive jurisdiction of the state and federal courts sitting in the City of Atlanta, Georgia for the adjudication
of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with
respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any
suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit,
action or proceeding is improper or is an inconvenient venue for such proceeding. If either party shall commence an action or proceeding
to enforce any provisions of the Transaction Documents, then the prevailing party in such action or proceeding shall be reimbursed
by the other party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation
and prosecution of such action or proceeding. THE PARTIES HEREBY WAIVE ALL RIGHTS TO, AND AGREES NOT TO REQUEST, A TRIAL BY
JURY FOR ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
HEREBY OR BY ANY OF THE TRANSACTION DOCUMENTS. 

 

 

9.12Notices. 
Any notice, demand, request, waiver or other communication required or permitted to be given hereunder shall be in writing and
shall be effective (a) upon hand delivery or facsimile (with facsimile machine confirmation of delivery received) at the address
or number designated below (if delivered on a Business Day during normal business hours where such notice is to be received), or
the first Business Day following such delivery (if delivered other than on a Business Day during normal business hours where such
notice is to be received) or (b) on the second Business Day following the date of mailing by express courier service, fully prepaid,
addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The address for such communications
shall be:

 

If to the Company:

 

Vendum Batteries Inc.

Attn: Fraser Cottington, CEO & President

400 Thames Valley Park Drive

Reading, RG6 1PT

United Kingdom

Phone: 44 11 8380 0895

Fax: _______________

Email: f.cottington@vendumbatteries.com

    	51

    	 

    

 

 

With a copy (which shall not constitute notice)
to:

 

Gracin & Marlow, LLP

405 Lexington Avenue, 26th
Floor

New York, New York 10174

Telephone Number: (212) 907-6457

Fax: (212) 208-4657

lmarlow@gracinmarlow.com

 

If to the Investor:  

Attn: Eric S. Swartz

1120 Sanctuary Parkway, Suite 325

Alpharetta, GA 30009

Telephone Number: (770) 640-8130 Fax:  (770) 777-5844

 

With a copy (which shall not constitute notice)
to:

 

Attn: P. Bradford Hathorn, Esq.

1120 Sanctuary Parkway, Suite 325

Alpharetta, GA 30009

Telephone Number: (770) 640-8130 Fax:  (770) 777-5844

  Email: BradHathorn@RoswellCapitalPartners.com

 

Either party hereto may from time to time change its address for
notices by giving at least 10 days advance written notice of such changed address to the other party hereto.

 

9.13Construction.
The parties agree that each of them and their respective counsel has reviewed and had an opportunity to revise the Transaction
Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting
party shall not be employed in the interpretation of the Transaction Documents. In addition, each and every reference to share
prices and shares of Common Stock in any Transaction Document shall be subject to adjustment for any stock splits, stock combinations,
stock dividends, recapitalizations and other similar transactions that occur on or after the date of this Agreement

 

The undersigned hereby
subscribes for the Maximum Offering Amount and acknowledges that this Agreement and the subscription represented hereby shall not
be effective unless accepted by the Company as indicated below.

 

[intentionally
left blank]

    	52

    	 

    

IN WITNESS WHEREOF, the
undersigned Investor does represent and certify under penalty of perjury that the foregoing statements are true and correct and
that Investor by the following signature(s) executed this Agreement.

 

Dated this 3rd day of June,
2011.

 

 

CENTURION PRIVATE EQUITY, LLC

 

 

By: /s/ Eric S. Swartz

Eric S. Swartz, Manager

 

 

SECURITY DELIVERY INSTRUCTIONS:

Centurion Private Equity, LLC

c/o Eric S. Swartz

1120 Sanctuary Parkway, Suite 325

Alpharetta, GA 30009

Telephone: (770) 640-8130

Fax: 770-777-5844

 

THIS AGREEMENT IS ACCEPTED BY THE COMPANY IN
THE AMOUNT OF THE MAXIMUM OFFERING AMOUNT ON THE 3rd DAY OF JUNE, 2011.

 

		VENDUM BATTERIES, INC.
		By:	/s/
    Fraser Cottington
			Fraser Cottington, CEO & President

 

    	53

    	 

    

Exhibit List to the

INVESTMENT AGREEMENT

 

	Exhibit	A	Advance Put Notice
	Exhibit	B	Investment Commitment Opinion of Counsel
	Exhibit	C	Put Notice
	Exhibit	D	Put Opinion of Counsel
	Exhibit	E	Registration Opinion of Counsel
	Exhibit	F	Registration Rights Agreement
	Exhibit	G	Schedule of Exceptions
	Exhibit	H	Secretary’s Certificate
	Exhibit	I	Officer’s Certificate
	Exhibit	J	Resolutions
	Exhibit	K	Officer’s Put Certificate
	Exhibit	L	Form of Bring Down Cold Comfort Letter
	Schedule 5.1	List of Subsidiaries and ownership.

 

    	54

    	 

    

ADVANCE PUT NOTICE

 

VENDUM BATTERIES, INC. (the "Company")
hereby intends, subject to the Individual Put Limit (as defined in the Investment Agreement), to elect to exercise a Put to sell
the number of shares of Common Stock of the Company specified below, to Centurion Private Equity, LLC, as of the Intended Put Date
written below, all pursuant to that certain Investment Agreement (the “Investment Agreement”) by and between the Company
and Centurion Private Equity, LLC dated on or about June 3, 2011.

 

 

		Date of Advance Put Notice:	 	
	 	 	 
	 	Intended Put Date: 	 	 	 
	 	 	 
	 	Intended Put Share Amount: 	 
	 	 	 
		Company Designation Maximum Put Dollar Amount (Optional):
	 	
	 	 
		Company Designation Minimum Put Share Price (Optional):
	 	 
			

 

  

			VENDUM BATTERIES, INC.
			By:
			Fraser Cottington, CEO & President
		Address:	
        Vendum Batteries Inc.

        Attn: Fraser Cottington, CEO & President

        400 Thames Valley Park Drive

        Reading, RG6 1PT

        United Kingdom

        Phone: 44 11 8380 0895

        Fax:

        Email: f.cottington@vendumbatteries.com

 

EXHIBIT A 

    	55

    	 

    

PUT NOTICE

 

VENDUM BATTERIES, INC., (the "Company")
hereby elects to exercise a Put to sell shares of common stock ("Common Stock") of the Company to Centurion Private Equity,
LLC (the “Investor”), as of the Put Date, at the Put Share Price and for the number of Put Shares written below, all
pursuant to that certain Investment Agreement (the “Investment Agreement”) by and between the Company and Centurion
Private Equity, LLC dated on or about June 3, 2011.

 

		Put Date:	
	 	 	 
		Intended Put Share Amount (from Advance Put Notice):
			Common Shares
	 	 	 
		Company Designation Maximum Put Dollar Amount (Optional):
	 	
	 	 
		Company Designation Minimum Put Share Price (Optional):
	 	 
			

 

 

Note: Capitalized terms shall have the meanings
ascribed to them in this Investment Agreement.

 

			VENDUM BATTERIES, INC.
			By:
			Fraser Cottington, CEO & President
		Address:	
        Vendum Batteries Inc.

        Attn: Fraser Cottington, CEO & President

        400 Thames Valley Park Drive

        Reading, RG6 1PT

        United Kingdom

        Phone: 44 11 8380 0895

        Fax:

        Email: f.cottington@vendumbatteries.com

 

EXHIBIT C

    	56

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