Document:

Exhibit 10.11

     

    
      

      

    

     

    Exhibit
      10.11

    SECURITIES
      PURCHASE AGREEMENT

     

    

    This
      SECURITIES PURCHASE AGREEMENT (this “Agreement”),
      is
      entered into as of September 28, 2006, by and among ACROSS AMERICA REAL ESTATE
      CORP., a Colorado corporation (the “Company”),
      BOCO
      INVESTMENTS, LLC, a Colorado limited liability company (“BOCO”),
      GDBA
      INVESTMENTS, LLLP, a Colorado limited liability limited partnership
      (“GDBA”
and
      together with BOCO, the “Institutional
      Buyers”)
      and
      JOSEPH C. ZIMLICH (“Zimlich”
and
      together with the Institutional Buyers, collectively, the “Buyers”
and
      individually a “Buyer”).
      

     

    RECITALS

     

    A. BOCO,
      GDBA and Zimlich desire to purchase and the Company desires to issue and sell,
      upon the terms and conditions set forth in this Agreement an aggregate of
      517,000 shares of the Company’s Series A Convertible Preferred Stock with
      the rights and preferences as shown in Exhibit A
      (the
“Preferred
      Stock”).

     

    B. The
      Institutional Buyers initially desire to purchase from the Company and the
      Company initially desires to issue and sell senior subordinated notes, in the
      form attached hereto as Exhibit B,
      in the
      original aggregate principal amount of Seven Million Dollars ($7,000,000)
      (together with any note(s) issued in replacement thereof or as any of the same
      may be amended, restated or modified, the “Term
      Notes”).

     

    C. Subject
      to the terms and conditions set forth in this Agreement, the Institutional
      Buyers will make available to the Company until December 31, 2007, a Revolving
      Line of Credit in the maximum aggregate amount up to $7,000,000. 

     

    D. The
      Company and the Buyers 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”);

     

    NOW
      THEREFORE,
      in
      consideration of the mutual promises and covenants contained herein and for
      other valuable consideration, the receipt and sufficiency of which is hereby
      acknowledged, the Company and the Buyers hereby agree as follows:

     

    PURCHASE
      AND SALE OF PREFERRED STOCK AND TERM NOTES.

     

    a. Purchase
      of Preferred Stock.
      On the
      Closing Date, the Company shall issue and sell to the Buyers and each Buyer
      agrees to purchase from the Company the number of shares of Preferred Stock
      in
      exchange for the purchase price (the “Preferred
      Stock Purchase Price”)
      as set
      forth below:

     

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    
      	
              Name

            	
              Preferred
                Shares

            	
              Purchase
                Price

            
	
              BOCO

            	
              250,000

            	
              $3,000,000

            
	
              GDBA

            	
              250,000

            	
              $3,000,000

            
	
              Zimlich

            	
              17,000

            	
              $204,000

            

    

    

    b. Purchase
      of Term Notes .
      On the
      Closing Date, the Company shall issue and sell to the Institutional Buyers
      and
      each Institutional Buyer agrees to purchase from the Company such principal
      amount of the Term Notes in exchange for the purchase price (the “Term
      Notes Purchase Price”)
      as set
      forth below:

     

    
      	
              Name

            	
              Principal
                Amount

            	
              Purchase
                Price

            
	
              BOCO

            	
              $3,500,000

            	
              $3,500,000

            
	
              GDBA

            	
              $3,500,000

            	
              $3,500,000

            

    

    

     

    REVOLVING
      LOANS

     

    a. Revolving
      Loan Commitment.
      Subject
      to the terms and conditions of this Agreement, in reliance upon the
      representations and warranties of the Company set forth herein, the
      Institutional Buyers, severally (and not jointly), agree to make such Revolving
      Loans at such times as the Company may request until, but not including, the
      Revolving Loan Commitment Date; provided,
      however,
      that
      the aggregate principal balance of all Revolving Loans outstanding from time
      to
      time shall not exceed the Revolving Loan Commitment. Revolving Loans made by
      the
      Institutional Buyers may be repaid and, subject to the terms and conditions
      hereof, borrowed again up to, but not including the Revolving Loan Commitment
      Date unless the Revolving Loans are otherwise accelerated, terminated or
      extended as provided in this Agreement. 

     

    b. Revolving
      Loan Interest and Payments.
      The
      principal amount of the Revolving Loans outstanding from time to time shall
      bear
      interest at the Revolving Interest Rate. Accrued and unpaid interest on the
      unpaid principal balance of all Revolving Loans outstanding from time to time
      shall be due and payable quarterly, in arrears, on the last Business Day of
      each
      calendar quarter, beginning December 29, 2006 (each, a “Revolving
      Payment Due Date”),
      through and including the Revolving Payment Due Date immediately prior to the
      Revolving Loan Maturity Date. Any amount of principal or interest on the
      Revolving Loans that is not paid when due, whether at stated maturity, by
      acceleration or otherwise, shall bear interest payable on demand at the Default
      Interest Rate.

     

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    c. Revolving
      Loan Principal Payments.
      

     

    (i) Revolving
      Loan Mandatory Repayments.
      All
      Revolving Loans hereunder shall be repaid by the Company on the Revolving Loan
      Maturity Date, unless payable sooner pursuant to the provisions of this
      Agreement. In the event the aggregate outstanding principal balance of all
      Revolving Loans hereunder exceeds the Revolving Loan Commitment, the Company
      shall, without notice or demand of any kind, immediately make such repayments
      of
      the Revolving Loans or take such other actions as are satisfactory to the
      Institutional Buyers as shall be necessary to eliminate such
      excess.

     

    (ii) Optional
      Repayments.
      The
      Company may from time to time repay the Revolving Loans in whole or in part,
      without any prepayment penalty whatsoever.

     

               
      d. Use
      of
      Proceeds.
      The
      Company shall use the Revolving Loans for the purposes described in Section
      6(d).

     

    e. Revolving
      Note.
      The
      Revolving Loans payable to each Institutional Buyer shall be evidenced by a
      single Revolving Note in the form attached as Exhibit
      C,
      duly
      executed by the Company and payable to the applicable Institutional Buyer.
      At
      the time of the initial disbursement of a Revolving Loan and at each time any
      additional Revolving Loan shall be requested hereunder or repayment made in
      whole or in part thereon, a notation thereof shall be made on the books and
      records of the Company. The failure to record any such amounts or any error
      in
      recording such amounts shall not, however, limit or otherwise affect the
      obligations of the Company under the Revolving Note to repay the principal
      amount of the Revolving Loans, together with all interest accruing thereon.
      

     

    CLOSING
      AND ADVANCES OF REVOLVING LOANS 

     

    a. Closing.
      

     

    (i) Subject
      to the satisfaction (or written waiver) of the conditions thereto set forth
      in
      Section 8, the sale and purchase of the Term Notes, the Revolving Notes and
      the Preferred Stock (the “Closing”)
      shall
      take place at such date and time as is mutually agreed by the Company and the
      Buyers (such date, the “Closing
      Date”).
      The
      Closing shall occur at the offices of Davis Graham & Stubbs LLP, 1550
      Seventeenth Street, Suite 500, Denver, Colorado 80202, or at such other place
      as
      the Company and the Buyers may designate. 

     

    (ii) On
      the
      Closing Date, 

     

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    (a) against
      delivery by the Company of the Term Notes, the Revolving Notes and share
      certificates representing the shares of Preferred Stock, each Buyer shall pay
      the Preferred Stock Purchase Price and the Term Notes Purchase Price applicable
      to such Buyer (together, the “Purchase
      Price”)
      by
      wire transfer of immediately available funds to the Company, in accordance
      with
      the Company’s written wiring instructions; provided,
      however,
      that
      the Purchase Price payable to the Company by GDBA may be setoff against amounts
      to be paid at the Closing Date by the Company with respect to the repayment
      of
      the GDBA Agreement to Fund pursuant to Section 8(b)(vi); and 

     

    (b) the
      Company shall pay directly or reimburse the Buyers for all Buyer Expenses as
      provided in Section  6(e). 

     

    b. Advances.
      Each
      Institutional Buyer agrees, on the terms and conditions set forth herein, to
      make Advances to the Company of Revolving Loans from time to time on any
      Business Day from and after the date of this Agreement.

     

    (i) Request
      for Advances.
      Each
      Advance shall be made after delivery by the Company to the Institutional Buyers
      of a Request for Advance, duly executed by the Company, delivered not later
      than
      11:00 a.m. (Denver, Colorado time) on the second Business Day prior to the
      date
      of the proposed Advance. The Request for Advance shall be in the form attached
      hereto as Exhibit
      D.
      The
      requested Advance shall be in an amount at least equal to the

    lesser
      of
      (A) $200,000, or (B) the undrawn amount of such Institutional Buyer’s Revolving
      Loan Commitment. 

     

    (ii) Funding
      of Advances.
      Not
      later than 2:00 p.m. (Denver, Colorado time) on the date of such Advance,
      subject to fulfillment of the applicable conditions set forth herein, the
      Institutional Buyers will make such Advance available to the Company by wire
      transfer of immediately available funds to an account specified in writing
      by
      the Company. All Advances shall be funded one-half by BOCO and one-half by
      GDBA.
      The Institutional Buyers obligation to fund each Advance shall be several and
      not joint. Nothing contained herein shall obligate either Institutional Buyer
      to
      fund more than one-half of any Advance, notwithstanding any failure by the
      other
      Institutional Buyer to fund its portion of the Advance. 

     

    BUYER’S
      REPRESENTATIONS AND WARRANTIES.
      Each
      Buyer, with respect to itself and not with respect to the other Buyer,
      represents and warrants to the Company that:

     

    a. Investment
      Purpose.
      As of
      the date hereof, the Buyer is purchasing the Term Notes and the Preferred Stock
      for its own account and not with a present view towards the public sale or
      distribution thereof; 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.

     

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    b. Accredited
      Investor Status.
      The
      Buyer is an “accredited investor” as that term is defined in Rule 501(a) of
      Regulation D promulgated under the 1933 Act.

     

    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 acknowledges that it has been afforded the opportunity to ask questions
      and receive answers concerning the Company and to obtain additional information
      that it has requested to verify the accuracy of the information contained
      herein. Neither the foregoing nor any 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 5 below. The Buyer understands that its investment in the
      Securities involves a significant degree of risk.

     

    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 or the Revolving Loans.

     

    f. Transfer
      or Resale.
      The
      Buyer understands that, except as provided in the Registration Rights Agreement,
      (i) the sale or resale of the Securities has not been and is not being
      registered under the 1933 Act or any applicable state securities laws, and
      the
      Securitiesmay
      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 an opinion of counsel reasonably acceptable to the
      Company and its counsel that the Securities to be sold or transferred may be
      sold or transferred pursuant to an exemption from such registration or
      (c) such Buyer provides the Company with reasonable assurance that such
      Securities can be sold, assigned or transferred pursuant to Rule 144
      promulgated under the 1933 Act (or any successor rule thereto) (“Rule
      144”);
      (ii) any sale of such Securities made in reliance on Rule 144 may be made
      only in accordance with the terms of Rule 144 and further, if Rule 144 is not
      applicable, any resale of 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. 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.

     

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    g. Legends.
      The
      certificates evidencing the Securities will 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):

     

    “THE
      SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED. THE SECURITIES MAY NOT BE SOLD, TRANSFERRED
      OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE
      SECURITIES UNDER SAID ACT, OR AN OPINION OF COUNSEL, IN FORM, SUBSTANCE AND
      SCOPE CUSTOMARY FOR OPINIONS OF COUNSEL IN COMPARABLE TRANSACTIONS, THAT
      REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR UNLESS SOLD PURSUANT TO RULE
      144
      UNDER SAID ACT.”

     

    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 resale under the 1933 Act, (b) such holder
      provides the Company with an opinion of counsel, which opinion shall be
      reasonably acceptable to the Company’s counsel, to the effect that the sale or
      transfer of such Security may be made without registration under the 1933 Act,
      or (c) such holder provides the Company with reasonable assurances that such
      Security has been or is being sold pursuant to Rule 144. 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.

     

    h. Authorization;
      Enforcement.
      The
      Agreements to which such Buyer is a party have been duly and validly authorized,
      executed and delivered on behalf of the Buyer, andeach
      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 such Buyer’s
      name on the signature pages hereto.

     

    REPRESENTATIONS
      AND WARRANTIES OF THE COMPANY.
      The
      Company represents and warrants to each Buyer that:

     

    a. Organization
      and Qualification.
      The
      Company and each of its Subsidiaries is duly organized, validly existing and
      in
      good standing under the laws of its jurisdiction of incorporation or
      organization, with full power and authority 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
      5(a)
      sets
      forth a list of all of the Subsidiaries of the Company, the jurisdiction in
      which each is incorporated or organized and the percentage of stock or ownership
      interests held by the Company in such Subsidiary. 

     

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    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 has not had and could not reasonably be expected to have a
      Material Adverse Effect. 

     

    b. Authorization;
      Enforcement.
      (i) The
      Company has all requisite corporate power and authority to enter into and
      perform the Agreements, 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 the Agreements, the Notes and the
      Preferred Stock by the Company and the consummation by it of the transactions
      contemplated hereby and thereby (including without limitation, the issuance
      of
      the Notes and the Preferred Stock and the issuance and reservation for issuance
      of the Conversion Shares) 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) the Agreements have 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 the Agreements and the other documents executed in connection herewith
      and bind the Company accordingly, and (iv) the Agreements constitute, and upon
      execution and delivery by the Company of the Notes and the Preferred Stock,
      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.
      Before
      giving effect to the transactions to be effected at the Closing, the authorized
      capital stock of the Company consists of (i) 50,000,000 shares of Common Stock,
      of which 16,036,625 shares are issued and outstanding, and 2,068,000 shares
      are
      reserved for issuance upon conversion of the Preferred Stock (subject to
      adjustment pursuant to the Company’s covenant set forth in Section 6(h)
      below); and (ii) 1,000,000 shares of undesignated preferred stock (517,000
      of
      which will be designated Series A Convertible Preferred Stock upon filing of
      the
      Amendment to the Articles of Incorporation), of which none are issued and
      outstanding. All of such outstanding shares of capital stock are, or upon
      issuance will be, duly authorized, validly issued, fully paid and nonassessable.
      

    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. Except as
      disclosed in Schedule 5(c),
      as of
      the effective date of this Agreement, (i) there are no outstanding options,
      preferred stock, 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 

     

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    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 Notes, the Preferred Stock, or the Conversion Shares. The
      Company has furnished to the Buyer true and correct copies of the Company’s
      Articles of Incorporation as in effect on the date hereof (“Articles
      of Incorporation”),
      the
      Company’s Bylaws, as in effect on the date hereof (the “Bylaws”),
      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.
      

     

    d. Issuance
      of Shares.
      The
      Conversion Shares are duly authorized and reserved for issuance and, upon
      conversion of the Preferred Stock in accordance with its 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
      Preferred Stock. The Company further acknowledges that its obligation to issue
      Conversion Shares upon conversion of Preferred Stock in accordance with this
      Agreement 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 the Agreements, the issuance of the
      Securities to be issued 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 Articles of
      Incorporation or Bylaws 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 contract,
      commitment, agreement, indenture or instrument to which the Company or any
      of
      its Subsidiaries is a party, or (iii) result in a 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 with respect to clause (ii)
      and
      (iii) only, for such

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    conflicts,
      defaults, terminations, amendments, accelerations, cancellations and violations
      as could not
      reasonably be expected, individually or in the aggregate, to have a Material
      Adverse Effect.
      Neither
      the Company nor any of its Subsidiaries is in violation of its Articles of
      Incorporation, Bylaws 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 could not
      reasonably be expected, individually or in the aggregate, to have a Material
      Adverse Effect. Except as set forth on Schedule
      5(f),
      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 the
      Agreements, to issue and sell the Notes and Preferred Stock or to issue the
      Conversion Shares upon conversion of the Preferred Stock. Except as set forth
      in
Schedule
      5(f),
      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.

     

    g. Trading.
      The
      Company’s Common Stock is traded on the Over-the-Counter Bulletin Board under
      the symbol AARD.OB (the “OTCBB”).
      The
      Company is not in violation of the quotation requirements of the OTCBB and
      does
      not reasonably anticipate that the Common Stock will be removed by the OTCBB
      in
      the foreseeable future. To the Company’s Knowledge, there are no facts or
      circumstances which might give rise to any of the foregoing. 

     

    h. SEC
      Documents; Financial Statements.
      The
      Company’s Common Stock is registered under Section 12(g) of the 1934 Act.
      Except as disclosed in Schedule
      5(h),
      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 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”).
      None
      of the SEC Documents contains any untrue statement of a material fact or omits
      any statement of material fact required in order to make the statements
      contained therein not misleading. As of their respective dates, the financial
      statements of the Company included in the SEC Documents (the “Financial
      Statements”)
      complied as to form in all material respects with applicable accounting
      requirements and the published rules and regulations of the SEC with respect
      thereto. The Financial Statements have been prepared in accordance with United
      States generally accepted accounting principles, consistently applied, during
      the periods involved (except (i) as may be otherwise indicated in such financial
      statements or the notes thereto, or (ii) in the case of unaudited interim
      statements, to the extent they may not include footnotes) 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).

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    i. No
      Undisclosed Liabilities.
      The
      Company does not have any Liabilities, except for (a) Liabilities reflected
      on
      the face of the liabilities section of the Company’s balance sheet at December
      31, 2005 as filed with the Company’s Form 10-KSB for the year ended December 31,
      2005, as amended (b) Liabilities under agreements, contracts, commitments,
      licenses or leases which have arisen since December 31, 2005 in the ordinary
      course of business, and (c) Liabilities set forth on Schedule
      5(i).

     

    j. Absence
      of Certain Changes.
      Except
      as set forth in Schedule
      5(j),
      since
      December 31, 2005, (i) each of the Company and its Subsidiaries has been
      operated in the ordinary course, and (ii) there has occurred no fact, event
      or
      circumstance that, individually or in the aggregate, has or could reasonably
      be
      expected to have a Material Adverse Effect.

     

    k. Absence
      of Litigation.
      Except
      as set forth on Schedule
      5(k),
      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. To the Knowledge of the Company
      and its Subsidiaries there are no facts or circumstances which might give rise
      to any of the foregoing.

     

    l. Intellectual
      Property.
      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, except
      as
      set forth in Schedule
      5(l)
      hereof
      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, except as set forth in Schedule
      5(l)
      hereof
      as presently contemplated to be operated in the future); 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
      to
      the Company’s Knowledge, there are no 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.

     

    m. 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 has or could reasonably be expected to have a Material Adverse Effect.
      Neither the Company nor any of its Subsidiaries is a party to any contract
      or
      agreement which has or could reasonably be expected to have a Material Adverse
      Effect.

     

    n. Tax
      Status.
      Except
      as set forth on Schedule
      5(n),
      the
      Company and each of its Subsidiaries has made or filed all Tax Returns that
      it
      was required to file. All such Tax Returns are correct and complete in all
      material respects. Except as set forth on Schedule
      5(n),
      all
      Taxes owned by the Company or any Subsidiary whether or not shown on any Tax
      Return have been paid in a timely fashion. Except as set forth on Schedule
      5(n),
      the
      Company currently

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    is
      not
      the beneficiary of any extension of time within which to file any Tax Return.
      There are no liens or encumbrances on any of the assets of the Company that
      arose in connection with any failure (or alleged failure) to pay any Tax. The
      Company has withheld and paid all Taxes required to have been withheld and
      paid
      in connection with amounts paid to or owed to any employee, independent
      contractor, creditor, stockholder, or other third party. There are no unpaid
      Taxes in any material amount claimed to be due by the taxing authority of any
      jurisdiction, and to the Company’s Knowledge, there is 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. Except as set forth on Schedule
      5(n),
      none of
      the Company’s tax returns is presently being audited by any taxing
      authority.

     

    o. Certain
      Transactions.
      Except
      as set forth on Schedule
      5(o),
      none of
      the officers, directors, or employees of the Company is presently a party to
      any
      transaction with the Company or any of its Subsidiaries (other than for services
      as employees, officers and directors), including any contract, agreement or
      other arrangement providing for the furnishing of services to or by, providing
      for rental of real or personal property to or from, or otherwise requiring
      payments to or from any officer, director or such employee or, to the Company’s
      Knowledge, 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.

     

    p. Disclosure.
      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. The Company has not disclosed to the Buyers
      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 Buyers. 

     

    q. Acknowledgment
      Regarding Buyer’s Purchase of Securities.
      The
      Company acknowledges and agrees that each 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 no Buyer is 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 any Buyer or any of their 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’s purchase
      of the Securities. The Company further represents to each 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.

     

    r. 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

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    securities
      (past, current or future) for purposes of any shareholder approval provisions
      applicable to the Company or its securities.

     

    s. No
      Brokers.
      Except
      as set forth in Schedule
      5(s),
      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.

     

    t. 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, could not
      reasonably be expected to have a Material Adverse Effect. Since January 1,
      2004, 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 could not reasonably be
      expected to have a Material Adverse Effect.

     

    u. Environmental
      Matters.

     

    (i) Except
      as
      set forth in Schedule
      5(u),
      there
      are, 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. 

     

    (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) Except
      as
      set forth in Schedule
      5(u),
      to the
      Company’s Knowledge 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.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    v. Title
      to Property.
      Schedule
      5(v)(i)
      sets
      forth a list of all real property owned by the Company or its Subsidiaries.
      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
      5(v).
      Any
      real property and facilities held under lease by the Company and its
      Subsidiaries are held by them under valid, subsisting and enforceable
      leases.

     

    w. Insurance.
      Attached hereto as Schedule
      5(w)
      is a
      list and brief description of all policies of fire, casualty, liability,
      property or other forms of insurance and all fidelity bonds held by or
      applicable to the Company or its Subsidiaries. Neither the Company nor any
      Subsidiary is in default in any material respect under any provision of any
      such
      policy and neither the Company nor any Subsidiary has received notice of
      cancellation of any such insurance. 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 is not materially in excess of current premiums. 

     

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

     

    y. Compliance
      With Law.
      The
      Company has complied with all applicable laws, statutes, rules, regulations
      or
      orders of any governmental authority and no proceeding or investigation is
      pending, or to the Knowledge of the Company, threatened, alleging any failure
      to
      so comply.

     

    z. Solvency.
      The
      Company (after giving effect to the transactions contemplated by this Agreement)
      is Solvent 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.

     

    aa. 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. 

     

    bb. Certain
      Registration Matters.
      Assuming the accuracy of the Buyer’s representations and warranties set forth in
      Section 2, no registration under the Securities Act or action on the part
      of the shareholders of the Company is required for the offer and sale of the
      Conversion Shares by the Company to the Buyer under the transaction documents.
      Except as

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    contemplated
      by the Registration Rights Agreement or as specified in Schedule
      5(bb),
      the
      Company has not granted or agreed to grant to any Person any rights (including
      “piggy-back” registration rights) to have any securities of the Company
      registered with the Commission or any other governmental authority that have
      not
      been satisfied.

     

    COVENANTS.

     

    a. Best
      Efforts.
      The
      Company and the Buyers shall each use their best efforts to satisfy timely
      each
      of the conditions described in Section 8 and 9 of this Agreement and to do
      all things necessary, proper and advisable in order to consummate and make
      effective the transactions contemplated by 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 each 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 Buyers at the 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 each Buyer on or prior to the Closing
      Date.

     

    c. Disclosure.
      The
      Company shall issue a press release describing the material terms of the
      transaction contemplated hereby as soon as practicable following the Closing
      Date but in no event more than two (2) business days after the Closing Date,
      which press release shall be subject to prior review by the Buyers. The Company
      agrees that such press release shall not disclose the name of the Buyer unless
      expressly consented to in writing by the Buyer or unless required by applicable
      law or regulation, and then only to the extent of such requirement. The Company
      has not disclosed to the Buyers 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 Buyers.

     

    d. Use
      of
      Proceeds.
      The
      Company shall use the net proceeds from the sale of the Term Notes and the
      Preferred Stock in the manner set forth in Schedule
      6(d)
      attached
      hereto and made a part hereof and shall not, directly or indirectly, use such
      proceeds for (i) any loan to or investment in any other corporation,
      partnership, enterprise or other person (except in connection with its currently
      existing or future direct or indirect Subsidiaries); or (ii) the redemption
      of
      any Common Stock. 

     

    e. Expenses.
      At the
      Closing, the Company shall pay directly or reimburse the Buyers for all expenses
      incurred by the Buyers in connection with the negotiation, preparation,
      execution, delivery and performance of the Agreements, including, without
      limitation, attorneys’ and consultants’ fees and expenses, transfer agent fees,
      fees for stock quotation services, fees relating to any amendments or
      modifications of the Agreements or any consents or waivers required to be
      obtained by a Buyer in connection with this transaction (the “Buyer
      Expenses”).
      On or
      before the Closing Date, each Buyer shall submit to the Company a schedule
      of
      Buyer Expenses that have been incurred by such Buyer, which schedule shall
      specify the amounts to be paid by the Company directly on behalf of the Buyers
      and amounts to be paid

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    by
      the
      Company to the Buyers in reimbursement of amounts expended by the Buyers.
      Notwithstanding anything herein to the contrary, the Company’s obligation to pay
      or reimburse the Buyers’ Expenses shall not exceed $25,000 for each Buyer.

     

    f. 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.

     

    g. Affirmative
      Covenants of the Company.
      For so
      long as either of the Buyers holds Notes, Preferred Stock or Conversion Shares,
      the Company shall:

     

    (i) Timely
      file all reports required to be filed with the SEC pursuant to the 1934 Act,
      and
      the Company shall not terminate its status as an issuer required to file reports
      under the 1934 Act even if the 1934 Act or the rules and regulations thereunder
      would permit such termination; 

     

    (ii) Send
      to
      the Buyer 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, provided that,
      the
      Company shall not be required pursuant to this Section 6(g)(ii) to send reports
      to any Buyer if the only Securities then held by such Buyer are Conversion
      Shares; 

     

    (iii) Authorize
      and reserve for the purpose of issuance, a sufficient number of shares of Common
      Stock (the “Reserved
      Amount”)
      to
      provide for the full conversion of the Preferred Stock and issuance of the
      Conversion Shares in connection therewith (based on the conversion ratio of
      the
      Preferred Stock in effect from time to time). If at any time the number of
      shares of Common Stock authorized and reserved for issuance (“Authorized
      and Reserved Shares”)
      is
      below the Reserved Amount, the Company will promptly take all corporate action
      necessary to authorize and reserve a sufficient number of shares, including,
      without limitation, calling a special meeting of shareholders to authorize
      additional shares to meet the Company’s obligations under this
      Section 6(g)(iii). In order to ensure that the Company has authorized a
      sufficient amount of shares to meet the Reserved Amount at all times, the
      Company shall deliver to the Buyer at the end of every fiscal quarter a list
      detailing (1) the current amount of shares authorized by the Company and
      reserved for the Buyer; and (2) amount of shares issuable upon conversion of
      the
      Preferred Stock. 

     

    (iv) 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
      any Buyer owns any of the Securities, maintain, so long as any other shares
      of
      Common Stock shall be so listed, such listing of all Conversion Shares. The
      Company will obtain and, so long as any 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 Global Select Market, the Nasdaq
      Global Market, the Nasdaq Capital Market, the New York Stock Exchange, or the
      American Stock Exchange and will comply in all respects with the 

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    Company’s
      reporting, filing and other obligations under the bylaws or rules of the
      National Association of Securities Dealers and such exchanges, as applicable.
      The Company shall promptly provide to each 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. As long as
      the
      Company Stock is not listed for trading on a national securities or automated
      quotation system, the Company shall ensure that the Company’s Common Stock is
      listed on the OTCBB (or equivalent replacement) and shall use its commercially
      reasonable efforts to ensure that at least two market-makers are making a market
      in the Company’s Common Stock.

     

    (v) Maintain
      its corporate existence in good standing.

     

    h. Negative
      Covenants of the Company.
      For so
      long as (i) any of the Buyers holds Term Notes, Preferred Stock or Conversion
      Shares, or (ii) any Revolving Loans are outstanding, the Company, without the
      written consent of the Buyer or Buyers that hold such Notes, Preferred Stock
      or
      Conversion Shares, shall
      not:
      

     

    (i) authorize,
      issue or agree to authorize or issue any new class or series of Parity
      Securities or Senior Securities or securities or rights of any kind convertible
      into or exercisable or exchangeable for any such Parity Securities or Senior
      Securities, or offer, sell or issue any Parity Securities or Senior Securities
      or securities or rights of any kind convertible into or exercisable or
      exchangeable for any such Parity Securities or Senior Securities; 

     

    (ii) authorize,
      issue or agree to authorize or issue Common Stock at a discount to the Market
      Price of the Common Stock on the date of issuance (taking into account the
      value
      of any Preferred Stock or options to acquire Common Stock issued in connection
      therewith), provided,
      however,
      that
      this Section 6(h) shall not prohibit the Company from issuing up to 1,000,000
      shares of Common Stock and/or Options therefore issued to the Company’s
      officers, directors, employees, consultants or independent contractors pursuant
      to an equity incentive plan or another similar plan or agreement approved by
      the
      Board of Directors;

     

    (iii) authorize,
      issue or agree to authorize or issue convertible securities that are convertible
      into an indeterminate number of shares of Common Stock;

     

    (iv) purchase,
      repurchase or redeem shares of (i) Common Stock, (ii) securities or rights
      of
      any kind convertible into or exercisable or exchangeable for Common Stock or
      (iii) other securities of the Company, (except in the case of a termination
      of
      an employee, at which the Company may repurchase or redeem such shares of Common
      Stock at cost and pursuant to any agreement under which such shares of Common
      Stock were issued); 

     

    (v) declare
      or pay dividends or any other distribution on shares of Common Stock or any
      other capital stock of the Company except as contemplated with respect to the
      Preferred Stock; 

     

    (vi) amend
      the
      Articles of Incorporation or Bylaws of the Company or alter or change the
      rights, preferences or privileges of the Preferred Stock or any Parity
      Securities or Senior Securities in each case so as to affect adversely the
      rights, preferences or privileges of the Preferred Stock; 

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    (vii) merge
      or
      consolidate with any other entity, or sell, assign, license, lease or otherwise
      dispose of or voluntarily part with the control of (whether in one transaction
      or in a series of transactions all, or a significant portion, of its assets
      (whether now owned or later acquired)), or effect any transaction or series
      of
      transactions in which the holders of the Company’s voting interests prior to
      such transaction or series of transactions hold less than 50% of the voting
      interests of the Company following such transaction or series of transactions;
      

     

    (viii) increase
      or decrease the number of directors constituting the Company’s Board of
      Directors; 

     

    (ix) 
      incur
      Indebtedness for Borrowed Money in any single transaction in excess of
      $10,000,000 or which obligates the Company to make aggregate expenditures for
      all Indebtedness for Borrowed Money in excess of $50,000,000; 

     

    (x) enter
      into any non-ordinary course agreement, directly or indirectly, with officers,
      employees, stockholders, directors or affiliates of the Company, other than
      employment agreements, compensation arrangements, stock options or
      service-related transactions that are approved by a majority of the
      disinterested members of the Company’s Board of Directors;

     

    (xi) initiate
      the voluntary dissolution or winding up or reorganization of the Company; or
      

     

    (xii) change
      its fiscal year.

     

    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 such Buyer
      to the Company upon conversion of the Preferred Stock in accordance with the
      terms thereof (the “Irrevocable
      Transfer Agent Instructions”).
      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 4(g) of this Agreement. The Company warrants that no
      instruction other than the Irrevocable Transfer Agent Instructions referred
      to
      in this Section 7, and stop transfer instructions to give effect to
      Section 4(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 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. If a Buyer
      provides the Company with (i) an opinion of counsel reasonably acceptable to
      the
      Company and its 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 

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

    issue
      one
      or more certificates, free from restrictive legend, in such name and in such
      denominations as specified by such Buyer.

     

    CLOSING
      DATE CONDITIONS PRECEDENT

     

    a. Conditions
      to the Company’s Obligation to Sell.
      The
      obligation of the Company hereunder to issue and sell the Term Notes and
      Preferred Stock to each 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:

     

    (i) The
      applicable Buyer shall have executed the Agreements and delivered the same
      to
      the Company.

     

    (ii) The
      applicable Buyer shall have delivered its portion of the Purchase Price in
      accordance with Section 3(a) above.

     

    (iii) The
      representations and warranties of the applicable 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 applicable 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 applicable Buyer at or prior to the Closing Date.

     

    (iv) 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 is reasonably expected to restrain, prohibit or invalidate
      transactions contemplated by this Agreement.

     

    b. Conditions
      to the Buyers’ Obligation to Purchase.
      The
      obligations of each Buyer hereunder to purchase the Notes and Preferred Stock
      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 such
      Buyer’s sole benefit and may be waived by such Buyer at any time in its sole
      discretion:

     

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

     

    (ii) The
      Company shall have delivered to such Buyer a duly executed Term Note in the
      principal amount set forth in Section 3(a).

     

    (iii) The
      Company shall have delivered to such Institutional Buyer a duly executed
      Revolving Note as required pursuant to Section 2(e). 

     

    (iv) The
      Company shall have delivered to such Buyer a certificate representing such
      number of shares of Preferred Stock as set forth in Section 3(a).

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

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

     

    (vi) The
      Company shall have delivered a signed letter from GDBA confirming that the
      GDBA
      Agreement to Fund will be terminated and all amounts payable to GDBA thereunder
      will be repaid on the Closing Date.

     

    (vii) 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 such Buyer including, but not limited to certificates
      with respect to the Company’s Articles of Incorporation, Bylaws and Board of
      Directors’ resolutions relating to the transactions contemplated
      hereby.

     

    (viii) 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 is reasonably expected to restrain, prohibit or invalidate the
      transactions contemplated by this Agreement.

     

    (ix) No
      event
      shall have occurred which has had or which could reasonably be expected to
      have
      a Material Adverse Effect on the Company.

     

    (x) The
      Common Shares shall have been authorized for quotation on the OTCBB, trading
      in
      the Common Stock on the OTCBB shall not have been suspended by the SEC or the
      OTCBB, and at least two market-makers shall be making a market in the Company’s
      Common Stock.

     

    (xi) The
      Buyers shall have received an opinion of David Wagner & Associates, P.C.,
      counsel for the Company, in the form of Exhibit
      E.

     

    (xii) The
      amendment to the Company’s Articles of Incorporation required to designate the
      number, preferences and rights of the Series A Preferred Stock, as set forth
      in
Exhibit
      A,
      shall
      have been accepted for filing with the Colorado Secretary of State.

     

    CONDITIONS
      PRECEDENT TO ADVANCES. The
      obligations of each Institutional Buyer hereunder to make Advances of Revolving
      Loans is subject to the satisfaction, at or before each Advance of each of
      the
      following conditions, provided that these conditions are for such Buyer’s sole
      benefit and may be waived by such Buyer at any time in its sole
      discretion:

     

    a. No
      Event
      of Default or any event which, with notice or lapse of time, or both, would
      constitute an Event of Default, shall have occurred and be
      continuing.

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

    b. No
      event
      shall have occurred which has had or which could reasonably be expected to
      have
      a Material Adverse Effect on the Company.

     

    c. 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 is reasonably expected to restrain, prohibit or invalidate the
      transactions contemplated by this Agreement.

     

    d. The
      representations and warranties of the Company shall be true and correct in
      all
      material respects as of the date of any Advance 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 or any of the other Agreements to be performed, satisfied or complied
      with by the Company at or prior to the date of such Advance.

     

    e. The
      Institutional Buyers shall have received a Request for Advance duly executed
      by
      the Company.

     

    SURVIVAL
      AND INDEMNIFICATION.

     

    a. Survival.
      The
      representations and warranties of the Company and the agreements and covenants
      set forth in Sections 5, 6, 7 and 10 shall survive the Closing notwithstanding
      any due diligence investigation conducted by or on behalf of the Buyers.

     

    b. Indemnification.
      The
      Company shall defend, protect, indemnify and hold harmless each Buyer and all
      of
      such Buyer’s partners, members, officers, directors, employees and direct or
      indirect investors and any of such Buyer’s agents 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 attorneys’ fees
      and disbursements (the “Indemnified
      Liabilities”),
      incurred by any Indemnitee as a result of, or arising out of, or relating to
      (a) any misrepresentation or breach of any representation or warranty made
      by the Company in the Agreements or any other certificate, instrument or
      document contemplated hereby or thereby, (b) any breach of any covenant,
      agreement or obligation of the Company contained in the Agreements or any other
      certificate, instrument or document contemplated hereby or thereby or
      (c) any cause of action, suit or claim brought or made against such
      Indemnitee by a third party (including for these purposes a derivative action
      brought on behalf of the Company) and arising out of or resulting from
      (i) the execution, delivery, performance or enforcement of the Agreements
      or any other certificate, instrument or document contemplated hereby or thereby,
      (ii) any transaction financed or to be financed in whole or in part,
      directly or indirectly, with the proceeds of the issuance of the Notes or
      Preferred Stock, or (iii) the status of such Buyer as an investor in the
      Company. To the extent that the foregoing undertaking by the Company may be
      unenforceable for any reason, the Company shall make the maximum contribution
      to
      the payment and satisfaction of each of the Indemnified 

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

    Liabilities
      which is permissible under applicable law. Except as otherwise set forth herein,
      the mechanics and procedures with respect to the rights and obligations under
      this Section 8(b) shall be the same as those set forth in Section 2.5 of
      the Registration Rights Agreement.  

     

    DEFINITIONS.

     

    “1934
      Act”
means
      the Securities and Exchange Act of 1934, as amended.

     

    “Advance”
shall
      mean an advance of funds by the Institutional Buyers to the Company as a Loan
      pursuant to a Request for Advance as provide in Section 3(b).

     

    “Agreements”
means
      this Agreement, the Registration Rights Agreement, the Shareholders Agreement,
      the Notes and any other agreements or instruments to be executed in connection
      with the transactions contemplated by this Agreement.

     

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    “Business
      Day”
means
      any day other than a Saturday, Sunday or a day on which commercial banks in
      the
      city of Denver, Colorado are authorized or required by law or executive order
      to
      remain closed.

     

    “Closing”
has
      the
      meaning set forth in Section 1(c).

     

    “Closing
      Date”
has
      the
      meaning set forth in Section 1(c).

     

    “Conversion
      Shares”
means
      the Common Stock issued upon conversion of the Preferred Stock.

     

    “Default
      Interest Rate”
means
      the higher of (i) the Revolving Interest Rate plus 800 basis points, or (ii)
      twenty-four percent (24%) per annum.

     

    “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.

     

    “Event
      of Default”
has
      the
      meaning provided in the Term Note and the Revolving Note.

     

    “GDBA
      Agreement to Fund”
means
      that certain Agreement to Fund dated November 26, 2004 by and between GDBA
      Investments, LLLP and the Company, as amended.

     

    “Indebtedness
      for Borrowed Money”
means
      all obligations of the Company and its Subsidiaries, on a consolidated basis,
      (a) to repay money borrowed, (b) to pay money evidenced by term loans, bonds,
      debentures, notes or other similar instruments, (c) to pay the deferred purchase
      price of property or services, (d) as lessee under capital leases, and (e)
      all
      obligations of another individual or entity of the type listed in (a through
      (d), payment of which is guaranteed by or secured by liens on the property
      of
      such individual or entity (with respect to liens, to the extent of the value
      of
      property pledged pursuant to such liens if less than the amount of such
      obligations), provided,
      that“Indebtedness
      for Borrowed Money” shall not include trade accounts payable incurred in the
      ordinary course of business.

     

    “Knowledge”
means
      a
      Person’s actual knowledge and such knowledge as would be obtained by such Person
      upon a reasonable inquiry. For the purposes of this agreement, the “Company’s
      Knowledge” or “Knowledge of the Company” means the knowledge of Ann L. Schmitt
      or James W. Creamer III. 

     

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

    “Liability”
means
      any liability or obligation, whether known or unknown, asserted or unasserted,
      absolute or contingent, accrued or unaccrued, liquidated or unliquidated and
      whether due or to become due, regardless of when asserted.

     

    “Market
      Price”
means
      the average closing bid price for the Company’s Common Stock on the OTCBB or any
      equivalent replacement exchange (or such other exchange on which the Company’s
      Common Stock is primarily listed or eligible for trading) for the previous
      ten
      trading days. 

     

    “Material
      Adverse Effect”
means
      (i) a material and adverse effect on the business, assets, liabilities, results
      of operations, assets, prospects, business or condition (financial or otherwise)
      of the Company and the Subsidiaries, taken as a whole, or (ii) an adverse
      impairment to the Company’s ability to perform under any of its obligations
      under the Agreements. 

     

    “Notes”
means
      the Term Notes and the Revolving Notes.

     

    “Parity
      Securities”
means
      all equity securities of the Company to which the Preferred Stock ranks on
      a
      parity with, whether with respect to dividends or upon liquidation, dissolution,
      winding up or otherwise. 

     

    “Person”
means
      a
      natural person or any corporation, limited liability company or other
      entity.

     

    “Registration
      Rights Agreement”
means
      the Registration Rights Agreement of even date herewith executed by and between
      the Company and the buyers.

     

    “Request
      for Advance”
means
      a
      written request by the Company to the Institutional Buyers for an Advance of
      funds as a Loan hereunder, which written request will be in the form of
Exhibit
      D.

    “Revolving
      Interest Rate”
means
      a
      rate per annum equal to the greatest of:

     

    (i) the
      ninety day average for U.S. Treasury Notes with a 10-year maturity as determined
      on the last Business Day of each calendar quarter, using the constant maturity
      calculation, plus
      650
      basis points; 

     

    (ii) eleven
      percent (11%); or

     

    (iii) the
      highest effective interest rate accruing on any outstanding Indebtedness for
      Borrowed Money of the Company at any time during the applicable calendar
      quarter.

     

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

    “Revolving
      Loans”
means
      all Advances of funds by the Institutional Buyers to the Company pursuant to
      the
      Revolving Loan Commitment, which Loans will be evidenced by the Revolving
      Notes.

     

    “Revolving
      Loan Commitment”
means
      (a) with respect to BOCO, Three Million Five Hundred Thousand Dollars
      ($3,500,000), and (b) with respect to GDBA, Three Million Five Hundred Thousand
      Dollars ($3,500,000).

     

    “Revolving
      Loan Commitment Date”
means
      December 31, 2007.

     

    “Revolving
      Loan Maturity Date”
means
      September 28, 2009.

     

    “Revolving
      Note”
shall
      mean the revolving note in the form attached as Exhibit C.

     

    “Revolving
      Payment Due Date”
has
      the
      meaning set forth in Section 2(b).

     

    “SEC
      Documents”
has
      the
      meaning set forth in Section 5(h).

     

    “Securities”
means
      the Term Notes, the Preferred Stock and the Conversion Shares.

     

    “Senior
      Securities”
means
      all equity securities of the Company to which the Preferred Stock ranks junior,
      whether with respect to dividends or upon liquidation, dissolution, winding
      up
      or otherwise.

     

    “Shareholders
      Agreement”
means
      the Shareholders Agreement of even date herewith executed by and between the
      Buyers.

     

    “Solvent”
means
      that the Company’s 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.

     

    “Subsidiaries”
means
      any corporation or other organization, whether incorporated or unincorporated,
      in which the Company owns, directly or indirectly, any ownership
      interest.

     

    “Tax”
or
      “Taxes”
means
      any federal, state, local or foreign income, alternative or add-on minimum,
      gross income, gross receipts, windfall profits, severance, property, production,
      sales, use, transfer, gains, license, excise, employment, payroll, withholding
      or minimum tax, transfer, goods and services, or any other tax, custom, duty,
      governmental fee or other like assessment or charge of any kind whatsoever,
      together with any interest or any penalty, addition to tax or additional amount
      imposed by any governmental body.

     

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

     

    “Tax
      Return”
means
      any return, report or similar statement required to be filed with respect to
      any
      Taxes (including attached schedules), including, without limitation, any
      information return, claim for refund, amended return and declaration of
      estimated Tax.

     

    GOVERNING
      LAW; MISCELLANEOUS.

     

    a. Governing
      Law.
      This
      Agreement shall be enforced, governed by and construed in accordance with the
      laws of the State of Colorado applicable to agreements made and to be performed
      entirely within such state, without regard to the principles of conflict of
      laws. The parties hereto hereby submit to the exclusive jurisdiction of federal
      or state courts located in Denver, Colorado with respect to any dispute arising
      under this Agreement, the agreements entered into in connection herewith or
      the
      transactions contemplated hereby or thereby. Both parties irrevocably waive
      the
      defense of an inconvenient forum to the maintenance of such suit or proceeding.
      Both parties further agree that service of process upon a party mailed to the
      notice address set forth in Section 11(f) (or such other address specified
      in
      writing) by registered first class mail shall be deemed in every respect
      effective service of process upon the party in any such suit or proceeding.
      Nothing herein shall affect either party’s right to serve process in any other
      manner permitted by law. Both parties agree that a final non-appealable judgment
      in any such suit or proceeding shall be conclusive and may be enforced in other
      jurisdictions by suit on such judgment or in any other lawful manner. The party
      which does not prevail in any dispute arising under this agreement shall be
      responsible for all fees and expenses, including reasonable attorneys’ fees,
      incurred by the prevailing party in connection with such dispute.

     

    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.

     

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

     

    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 party to be charged with
      enforcement.

     

    f. Notices.
      Any
      notices required or permitted to be given under the terms of this Agreement
      shall be sent by certified or registered mail (return receipt requested) or
      delivered personally or by courier (including a recognized overnight delivery
      service) or by facsimile and shall be effective five days after being placed
      in
      the mail, if mailed by regular United States mail, or upon receipt, if delivered
      personally or by courier (including a recognized overnight delivery service)
      or
      by facsimile, in each case addressed to a party. The addresses for such
      communications shall be:

     

    
      
        	 	
                If
                  to the Company:

                 

              
	 	
                Across
                  America Real Estate Corp.

              
	 	
                1660
                  Seventeenth Street, Suite 450

              
	 	
                Denver,
                  Colorado 80202

              
	 	
                Attention:
                  Chief Executive Officer

              
	 	
                Telephone:
                  (303) 893-1003

              
	 	
                Facsimile:
                  (303) 893-1005

              

      

       

      
        	 	
                With
                  a copy to:

              
	 	 
	 	
                David
                  Wagner & Associates, P.C.

              
	 	
                8400
                  East Prentice Ave. 

              
	 	
                Penthouse
                  Suite

              
	 	
                Greenwood
                  Village, Colorado 80111

              
	 	
                Attention:
                  David J. Wagner, Esq.

              
	 	
                Telephone:
                  (303) 793-0304 

              
	 	
                Facsimile:
                  (303) 409-7650

              

      

       

      
        
          
          

        

        
          26

          
            

          

        

        
          
          

        

      

       

    

    
      
        	 	
                If
                  to a Buyer: 

                 

              
	 	
                BOCO
                  Investments, LLC

              
	 	
                103
                  West Mountain Ave. 

              
	 	
                Fort
                  Collins, Colorado 80524

              
	 	
                Facsimile:
                  (970) 482-6139

              
	 	
                Attention:
                  Chief Executive Officer

              
	 	 

      

       

      
        	 	 With
                a copy to:
                 

              
	 	
                Davis
                  Graham & Stubbs LLP

              
	 	
                1550
                  17th
                  Street, Suite 500

              
	 	
                Denver,
                  Colorado 80202

              
	 	
                Attention:
                  Ronald R. Levine II and Brian J. Boonstra

              
	 	
                Telephone:
                  (303) 892-9400

              
	 	
                Facsimile:
                  (303) 892-7400

              

      

      

      
        	 	
                GDBA
                  Investments, LLLP

              
	 	
                1440
                  Blake Street, Suite 310

              
	 	
                Denver,
                  CO 80202

              
	 	
                Facsimile:
                  (720) 932-9397

              
	 	
                Attention:
                  Chief Executive Officer

              

      

       

      
        	 	 With
                a copy to
                 

              
	 	
                Davis
                  & Ceriani P.C.

              
	 	
                Suite
                  400, Market Center

              
	 	
                1350
                  Seventeenth Street

              
	 	
                Denver,
                  CO 80202

              
	 	
                Facsimile:
                  (303) 534-4618

              
	 	
                Attention:
                  Patrick J. Kanouff

              

      

      

      
        	 	
                Joseph
                  C. Zimlich

              
	 	
                103
                  West Mountain Ave.

              
	 	
                Fort
                  Collins, Colorado 80524

              
	 	
                Facsimile:
                  (970) 482-6139

              

      

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

     

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

     

    g. Successors
      and Assigns.
      This
      Agreement shall be binding upon and inure to the benefit of the parties and
      their successors and assigns. Neither the Company nor any 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 4(f), any Buyer may assign its rights hereunder to any person that
      purchases Securities in a private transaction from a 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. 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.

     

    j. 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.

     

     

    
      
        
          

        

        
        

      

      
        28

        
          

        

      

      
        
        

        
        

      

    

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

     

    

     

    ACROSS
      AMERICA REAL ESTATE CORP.

    

    

    
      /s/_Ann
        L. Schmitt

      Name:
        Ann
        L. Schmitt

    

    Title:
      Chief Executive Officer

    

    

    BUYERS:

    

    BOCO
      INVESTMENTS, LLC

    

    

    
      /s/
        Joseph C. Zimlich     

    

    Name:
      Joseph C. Zimlich

    Title:
      CEO

    RESIDENCE:
      Colorado

    

    

    

    GDBA
      INVESTMENTS, LLLP

    

    

    
      /s/
        G.
        Brent Backman     

    

    Name:
      G.
      Brent Backman

    Title:
      Manager

    RESIDENCE:
      Colorado

    

    

    

    JOSEPH
      C. ZIMLICH

    

    /s/
      Joseph C. Zimlich

    

    RESIDENCE:
      Colorado

    

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

    EXHIBIT
      A

    

    SERIES
      A
      CONVERTIBLE PREFERRED STOCK

    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

    

    EXHIBIT
      B

    

    FORM
      OF
      TERM NOTE

    

    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

    

    EXHIBIT
      C 

    

    FORM
      OF
      REVOLVING NOTE

    

    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

    

    EXHIBIT
      D

    

    FORM
      OF
      REQUEST FOR ADVANCE

    

    

    
      
        
        

      

      
        33

        
          

        

      

      
        
        

      

    

    EXHIBIT
      E

    

    FORM
      OF
      LEGAL OPINION

    

    

    

    
      
        
        

      

      
        34Exhibit 10.12

    
      

      

    

    Exhibit
      10.12

     

    THE
      SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THE SECURITIES MAY NOT BE SOLD,
      OFFERED FOR SALE OR OTHERWISE TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN
      EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER SAID ACT, OR AN
      OPINION OF COUNSEL IN FORM, SUBSTANCE AND SCOPE CUSTOMARY FOR OPINIONS OF
      COUNSEL IN COMPARABLE TRANSACTIONS THAT REGISTRATION IS NOT REQUIRED UNDER
      SAID
      ACT.

    

    

    SENIOR
      SUBORDINATED NOTE

    

    Denver,
      Colorado

    September
      28, 2006 $3,500,000

    

    FOR
      VALUE
      RECEIVED, ACROSS AMERICA REAL ESTATE CORP., a Colorado corporation (the
      "Company"),
      hereby promises to pay to the order of GDBA INVESTMENTS, LLLP, a Colorado
      limited liability limited partnership or registered assigns (the "Holder")
      the
      sum of Three Million Five Hundred Thousand Dollars ($3,500,000) (the
“Principal”),
      on
      September 28, 2009 (the "Maturity
      Date"),
      on
      the terms and conditions set forth herein and in the Securities Purchase
      Agreement dated September 28, 2006 (the “Purchase
      Agreement”).

    

    Each
      capitalized term used herein, and not otherwise defined, shall have the meaning
      ascribed thereto in the Purchase Agreement.

    

    All
      payments due under this Senior Subordinated Note (the “Note”)
      shall
      be made in lawful money of the United States of America. 

    

    1. Interest;
      Payments 

    

    (a) Interest
      Rate.
      Subject
      to Section 1(b) and 1(c), this Note shall bear interest on the unpaid Principal
      balance hereof at the rate (the “Interest
      Rate”)
      per
      annum equal to the greatest of: 

    

    (i) the
      ninety day average for U.S. Treasury Notes with a 10-year maturity as determined
      on the last Business Day of each calendar quarter, using the constant maturity
      calculation, plus
      650
      basis points;

    

    (ii) eleven
      percent (11%); or 

    

    (iii) the
      highest effective interest rate accruing on any outstanding Indebtedness for
      Borrowed Money of the Company at any time during the applicable calendar
      quarter.

     

     

    
      
        
        

      

      
        -
          1-

        
          

        

      

      
        
        

      

    

     

    (b) Default
      Interest.
      If an
      Event of Default has occurred and is continuing, interest shall accrue on the
      unpaid Principal balance of this Note at a rate (the “Default
      Interest Rate”)
      equal
      to the higher of (i) the Interest Rate plus 800 basis points, or (ii)
      twenty-four percent (24%) per annum. 

    

    (c) Applicable
      Law.
      Notwithstanding any provision of this Note, the Purchase Agreement or any other
      agreement to the contrary, the Company shall not be required to pay, and the
      Holder shall not be permitted to receive, any compensation that constitutes
      interest under Applicable Law in excess of the maximum amount of interest
      permitted by Applicable Law.

    

    (d) Interest.
      Interest shall commence accruing on the date hereof, shall be computed on the
      basis of a 365-day year and the actual number of days elapsed and shall be
      payable quarterly on the last Business Day of each calendar quarter, beginning
      December 29, 2006. The applicable Interest Rate for each calendar quarter shall
      be determined as provided in Section 1(a) on the last Business Day of each
      calendar quarter. 

    

    (e) Payments.
      All
      payments shall be made at such address as the Holder shall hereafter give to
      the
      Company by written notice made in accordance with the provisions of this Note.
      Whenever any amount expressed to be due by the terms of this Note is due on
      any
      day which is not a Business Day, the same shall instead be due on the next
      succeeding day which is a Business Day and, in the case of any interest payment
      date which is not the date on which this Note is paid in full, the extension
      of
      the due date thereof shall not be taken into account for purposes of determining
      the amount of interest due on such date. The Principal amount of this Note,
      together with any unpaid interest thereon, shall be due and payable on the
      Maturity Date. 

    

    (f) Prepayment.
      The
      unpaid Principal balance of this Note, together with all accrued and unpaid
      interest, may at the Company’s option be prepaid in whole or in part, at any
      time or from time to time upon ten (10) days’ prior written notice to the Holder
      stating the Principal amount to be prepaid and the date on which such prepayment
      shall be made. Any prepayments hereunder shall be applied first, to all interest
      accrued but unpaid at such prepayment date and second, to outstanding Principal
      amounts. 

    

    2. Subordination.
      The
      payment of principal and interest on this Note is hereby subordinated to the
      Senior Debt and Holder will not ask, demand, sue for, take or receive from
      the
      Company, by setoff or in any other manner, the whole or any part any amount
      payable with respect to this Note (whether such amounts represent principal
      or
      interest, or obligations which are due or not due, direct or indirect, absolute
      or contingent), including, without limitation, the taking of any negotiable
      instruments evidencing such debt, nor any security for any of the Note, unless
      and until all Senior Debt, whether now existing or hereafter arising, shall
      have
      been fully and indefeasibly paid in full in cash and satisfied and all financing
      arrangements between the Company and all holders of the Senior Debt have been
      terminated; provided,
      however,
      that
      Holder may receive from the Company scheduled payments of principal and interest
      with respect to this Note on an unaccelerated basis so long as no Senior Default
      has 

     

     

    
      
        
        

      

      
        -
          2-

        
          

        

      

      
        
        

      

    

     

    occurred
      and is continuing or would result therefrom. If a Senior Default has occurred
      and is continuing or would result from any scheduled payment of principal or
      interest by the Company with respect to this Note, then, until the Senior
      Default which has occurred or which would result from such payment has been
      cured, no payment of principal or interest shall be deemed due or otherwise
      payable under this Note. 

    

    3. Events
      of Default.
      Each of
      the following events shall be deemed an “Event
      of Default”:

    

    (a) The
      Company fails to pay the Principal hereof or interest thereon when due on this
      Note, whether at maturity, upon acceleration or otherwise;

    

    (b) Bankruptcy,
      insolvency, reorganization or liquidation proceedings or other proceedings
      for
      relief under any bankruptcy law or any law or the relief of debtors shall be
      instituted by or against the Company or any subsidiary of the Company, unless
      such proceeding shall be stayed within thirty (30) days; 

    

    (c) The
      Company or any subsidiary of the Company shall make an assignment for the
      benefit of creditors, or apply for or consent to the appointment of a receiver
      or trustee for it or for a substantial part of its property or business, or
      such
      a receiver or trustee shall otherwise be

    appointed;

    

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

    

    (e) Any
      material failure by the Company to perform or observe any of its covenants
      contained in the Purchase Agreement where such failure continues for a period
      in
      excess of five (5) days after written notice from the Holder or actual knowledge
      of the Company of such failure;

    

    (f) If
      a
      final judgment, writ or similar process is entered or filed against the Company
      or any subsidiary of the Company or any of its property or other assets in
      an
      amount in excess of $50,000, which is not, within twenty (20) days after the
      entry thereof, discharged or the execution thereof stayed pending appeal, or
      within twenty (20) days after the expiration of such stay, such judgment is
      not
      discharged; 

    

    (g) 
      Any
      default with respect to any other Indebtedness for Borrowed Money or liabilities
      of the Company or any of its subsidiaries in any amount in excess of (i) $50,000
      individually or in the aggregate with respect to Indebtedness for Borrowed
      Money, (ii) $50,000 individually with respect to liabilities and (iii) $100,000
      in the aggregate with respect to liabilities and Indebtedness for Borrowed
      Money, provided,
      that
      such event shall only constitute an “Event of Default” where the effect of such
      default is to permit the holder thereof to accelerate the maturity of such
      Indebtedness for Borrowed Money or liabilities, as the case may be, but only
      if
      (x) the holder elects to exercise such a right to accelerate the maturity of
      such Indebtedness for Borrowed Money or liabilities, as the case may

     

     

    
      
        
        

      

      
        -
          3-

        
          

        

      

      
        
        

      

    

     

     

    be,
      and
      (y) where such default continues for a period of fifteen (15) days after written
      notice from the Holder or actual knowledge of the Company of such a default,
      and
provided,
      further,
      that a
      default with respect to liabilities shall not constitute an “Event of Default”
where the Company in good faith objects to the amount or obligation to pay
      the
      applicable liability and makes appropriate reserves for such liability, if
      necessary, in accordance with GAAP.             

    

    (h) Any
      liquidation, dissolution or winding up of the Company and its subsidiaries
      or
      its business; 

    

    (i) If
      the
      Company reports a net loss, as determined in accordance with U.S. generally
      accepted accounting principles, in excess of (i) $1,000,000 for any calendar
      quarter after the date hereof, or (ii) $2,500,000 for any three consecutive
      calendar quarters after the date hereof; 

    

    (k) Any
      event, circumstance or conditions exists which could reasonably be expected
      to
      result in a Material Adverse Effect on the Company and its Subsidiaries,
provided that
      the
      Holder shall provide thirty (30) days written notice to the Company if it
      intends to declare an Event of Default under this paragraph 3(k) and provide
      the
      Company with an opportunity to present evidence satisfactory to the Holder
      in
      its sole discretion that such event, circumstance or condition has been
      remedied; or 

    

    (l) The
      Company shall fail to maintain the listing of the Common Stock on at least
      one
      of the OTCBB or any equivalent replacement exchange, the Nasdaq Global Select
      Market, the Nasdaq Global Market, the Nasdaq Capital Market, the New York Stock
      Exchange or the American Stock Exchange

    

    4. Consequences
      of Event of Default

    

    (a) If
      there
      shall occur, after the fulfillment of any applicable notice and cure provisions
      (if any), any Event of Default specified in sections (a), (b) or (c) of Section
      3 hereof, the unpaid Principal balance of this Note and all accrued interest
      thereon shall be immediately due and payable, without presentment, demand,
      protest or notice of any kind, all of which are expressly waived. 

    

    (b) If
      there
      shall occur, after the fulfillment of any applicable notice and cure provisions
      (if any), any Event of Default other than those listed in Section 4(a) above,
      the Holder may, at its option, by written notice to the Company, declare the
      entire Principal balance of his Note and all accrued interest thereon due and
      payable, and the same shall thereupon become immediately due and payable without
      presentment, demand, protest or (except as required hereby) notice of any kind,
      all of which are expressly waived. 

    

    (c) If
      an
      Event of Default shall occur, the Company shall pay the Holder hereof all costs
      of collection, including reasonable attorneys' fees.

     

    
      
        
        

      

      
        -
          4-

        
          

        

      

      
        
        

      

    

    
 

    5. Definitions

    

    “Applicable
      Law”
means
      that law in effect from time to time and applicable to this Note which lawfully
      permits the contracting, charging, taking, reserving and/or collection of the
      highest permissible lawful, non-usurious rate of interest or amount of interest
      on or in connection with this Note.

    

    “Business
      Day”
means
      any day other than a Saturday, Sunday or a day on which commercial banks in
      the
      city of Denver, Colorado are authorized or required by law or executive order
      to
      remain closed. 

    

    “Senior
      Debt”
means
      all indebtedness, obligations and other liabilities of the Company to Vectra
      Bank Colorado, national association, pursuant to that certain First Amendment
      to
      Credit Agreement dated August 3, 2006, as amended.

    

    “Senior
      Default”
means
      any “Default,” “Event of Default” or any condition or event that (with or
      without notice, lapse of time, or both) would permit Holders of Senior Debt
      to
      accelerate the maturity of such Senior Debt if that condition or event were
      not
      cured or removed within any applicable grace or cure period set forth
      therein.

    

    6. Miscellaneous
      

    

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

    

    (b) 
      Any
      notice herein required or permitted to be given shall be in writing and may
      be
      personally served or delivered by courier or sent by United States mail and
      shall be deemed to have been given upon receipt if personally served (which
      shall include telephone line facsimile transmission) or sent by courier or
      three
      (3) days after being deposited in the United States mail, certified, with
      postage pre-paid and properly addressed, if sent by mail. For the purposes
      hereof, the addresses of the parties for receipt of notice hereunder are:

    

    If
      to
      the Company:

    

    Across
      America Real Estate Corp.

    1660
      Seventeenth Street, Suite 450

    Denver,
      Colorado 80202

    Attention:
      Chief Executive Officer

    Telephone:
      (303) 893-1003

    Facsimile:
      (303) 893-1005

     

    
      
        
        

      

      
        -
          5-

        
          

        

      

      
        
        

      

    

     

    With
      a
      copy to:

    

    David
      Wagner & Associates, P.C.

    8400
      East
      Prentice Ave. 

    Penthouse
      Suite

    Greenwood
      Village, Colorado 80111

    Attention:
      David J. Wagner, Esq.

    Telephone:
      (303) 793-0304 

    Facsimile:
      (303) 409-7650

    

    If
      to
      the Holder:

    

    GDBA
      Investments, LLLP

    1440
      Blake Street, Suite 310

    Denver,
      CO 80202

    Facsimile:
      (720) 932-9397

    Attention:
      Chief Executive Officer

    

    With
      a
      copy to

    

    Davis
      & Ceriani P.C.

    Suite
      400, Market Center

    1350
      Seventeenth Street

    Denver,
      CO 80202

    Facsimile:
      (303) 534-4618

    Attention:
      Patrick J. Kanouff 

     

    (c) This
      Note
      and any provision hereof may only be amended by an instrument in writing signed
      by the Company and the Holder. The term "Note" and all reference thereto, as
      used throughout this instrument, shall mean this instrument as originally
      executed, or if later amended or supplemented, then as so amended or
      supplemented. 

    

    (d) This
      Note
      shall be binding upon the Company and its successors and assigns, and shall
      inure to be the benefit of the Holder and its successors and assigns.
      Notwithstanding anything in this Note to the contrary, this Note may be pledged
      as collateral in connection with a bona fide margin account or other lending
      arrangement. 

    

    (e) This
      Note
      shall be enforced, governed by and construed in accordance with the laws of
      the
      State of Colorado applicable to agreements made and to be performed entirely
      within such state, without regard to the principles of conflict of laws. The
      parties hereto hereby submit to the exclusive jurisdiction of federal or state
      courts located in Denver, Colorado with respect to any dispute arising under
      this Note. Both parties irrevocably waive the defense of an inconvenient forum
      to the maintenance of such suit or proceeding. Both parties further agree that
      service of process upon a party mailed to the notice address set forth in this
      Note by registered first class mail shall be deemed in every respect effective
      service of process upon the party in any such suit or proceeding. Nothing herein
      shall affect either party’s right to serve process in any other manner permitted
      by law. Both parties agree that a final non-appealable judgment in any such
      suit
      or proceeding shall be conclusive and may be enforced in other jurisdictions
      by
      suit on such judgment or in any other lawful manner. 

    

    

    
      
        
        

        
        

      

      
        -
          6-

        
          

        

      

      
        
        

        
        

      

    

    IN
      WITNESS WHEREOF, Company has caused this Note to be signed in its name by its
      duly authorized officer this 28th day of September, 2006.

    

     

     

    
      	 	 	 
	 	 
	 
 	 
 	 ACROSS
              AMERICA REAL ESTATE CORP.
 
	 	By:  	/s/ Ann
              L. Schmitt
	 	
              

              Name: Ann L. Schmitt
	 	Title:
              Chief Executive Officer

     

    -
      7-

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00110-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00110-of-00352.parquet"}]]