Document:

Exhibit
      4.1

    

    SECURITIES
      PURCHASE AGREEMENT

    

    THIS SECURITIES
      PURCHASE AGREEMENT
      (this
“Agreement”),
      dated
      as of July 10, 2006, by and among SAVI
      CORP.,
      a Nevada
      corporation (the “Company”),
      and
      the Buyers listed on Schedule I attached hereto (individually, a
“Buyer”
or
      collectively “Buyers”).

     

    WITNESSETH

    

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

     

    WHEREAS,
      the
      parties desire that, upon the terms and subject to the conditions contained
      herein, the Company shall issue and sell to the Buyer(s), as provided herein,
      and the Buyer(s) shall purchase up to Two Million Nine Hundred Seventy Thousand
      Dollars ($2,970,000) of secured convertible debentures (the “Convertible
      Debentures”),
      which
      shall be convertible into shares of the Company’s common stock, par value $0.001
      (the “Common
      Stock”)
      (as
      converted, the “Conversion
      Shares”),
      of
      which One Million Six Hundred Seventy Thousand Dollars ($1,670,000) shall be
      funded within two (2) business days following the date hereof (the “First
      Closing”),
      Eight
      Hundred Thousand Dollars ($800,000) shall be funded two (2) business days prior
      to the date the registration statement (the “Registration
      Statement”)
      is
      filed, pursuant to the Investor Registration Rights Agreement dated the date
      hereof, with the United States Securities and Exchange Commission (the
“SEC”)
      (the
“Second
      Closing”)
      and
      Five Hundred Thousand Dollars ($500,000) shall be funded two (2) business days
      prior to the date the Registration Statement is declared effective by the SEC
      (the “Third
      Closing”)
      (individually referred to as a “Closing”
      collectively referred to as the “Closings”),
      for a
      total purchase price of up to Two Million Nine Hundred Seventy Thousand Dollars
      ($2,970,000), (the “Purchase
      Price”)
      in the
      respective amounts set forth opposite each Buyer(s) name on Schedule I (the
      “Subscription
      Amount”);
      

     

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

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

    1.  PURCHASE
      AND SALE OF CONVERTIBLE DEBENTURES.

     

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

     

    (b)  Closing
      Date.
      The
      First Closing of the purchase and sale of the Convertible Debentures shall
      take
      place at 10:00 a.m. Eastern Standard Time within two (2) business days following
      the date hereof, subject to notification of satisfaction of the conditions
      to
      the First Closing set forth herein and in Sections 6 and 7 below (or such later
      date as is mutually agreed to by the Company and the Buyer(s)) (the
“First
      Closing Date”),
      the
      Second Closing of the purchase and sale of the Convertible Debentures shall
      take
      place at 10:00 a.m. Eastern Standard Time two (2) business days prior to the
      date the Registration Statement is filed with the SEC, subject to notification
      of satisfaction of the conditions to the Second Closing set forth herein and
      in
      Sections 6 and 7 below (or such later date as is mutually agreed to by the
      Company and the Buyer(s)) (the “Second
      Closing Date”)
      and
      the Third Closing of the purchase and sale of the Convertible Debentures shall
      take place at 10:00 a.m. Eastern Standard Time two (2) business days prior
      to
      the date the Registration Statement is declared effective by the SEC, subject
      to
      notification of satisfaction of the conditions to the Third Closing set forth
      herein and in Sections 6 and 7 below (or such later date as is mutually agreed
      to by the Company and the Buyer(s)) (the “Third
      Closing Date”)
      (collectively referred to a the “Closing
      Dates”).
      The
      Closing shall occur on the respective Closing Dates at the offices of Yorkville
      Advisors, LLC, 101 Hudson Street, Suite 3700, Jersey City, New Jersey 07302
      (or
      such other place as is mutually agreed to by the Company and the Buyer(s)).
      

     

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

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    2.  BUYER’S
      REPRESENTATIONS AND WARRANTIES.

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    (f)  Transfer
      or Resale.
      Each
      Buyer understands that except as provided in the Investor Registration Rights
      Agreement: (i) the Convertible Debentures have not been and are not being
      registered under the Securities Act or any state securities laws, and may not
      be
      offered for sale, sold, assigned or transferred unless (A) subsequently
      registered thereunder, or (B) such Buyer shall have delivered to the Company
      an
      opinion of counsel, in a generally acceptable form, to the effect that such
      securities to be sold, assigned or transferred may be sold, assigned or
      transferred pursuant to an exemption from such registration requirements; (ii)
      any sale of such securities made in reliance on Rule 144 under the Securities
      Act (or a successor rule thereto) (“Rule 144”)
      may be
      made only in accordance with the terms of Rule 144 and further, if Rule 144
      is
      not applicable, any resale of such securities under circumstances in which
      the
      seller (or the person through whom the sale is made) may be deemed to be an
      underwriter (as that term is defined in the Securities Act) may require
      compliance with some other exemption under the Securities Act or the rules
      and
      regulations of the SEC thereunder; and (iii) neither the Company nor any other
      person is under any obligation to register such securities under the Securities
      Act or any state securities laws or to comply with the terms and conditions
      of
      any exemption thereunder. The Company reserves the right to place stop transfer
      instructions against the shares and certificates for the Conversion
      Shares.

     

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

     

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

     

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

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

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

     

    (i)  Receipt
      of Documents.
      Each
      Buyer and his or its counsel has received and read in their entirety: (i) this
      Agreement and each representation, warranty and covenant set forth herein and
      the Transaction Documents (as defined herein); (ii) all due diligence and other
      information necessary to verify the accuracy and completeness of such
      representations, warranties and covenants; (iii) the Company’s Form 10-KSB for
      the fiscal year ended December 31, 2005; (iv) the Company’s Form 10-QSB for the
      fiscal quarter ended March 31, 2006 and (v) answers to all questions each Buyer
      submitted to the Company regarding an investment in the Company; and each Buyer
      has relied on the information contained therein and has not been furnished
      any
      other documents, literature, memorandum or prospectus.

     

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

     

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

     

    3.  REPRESENTATIONS
      AND WARRANTIES OF THE COMPANY.

     

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

     

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

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

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

     

    (c)  Capitalization.
      The
      authorized capital stock of the Company consists of 4,000,000,000 shares of
      Common Stock, par value $0.001 per share, and 2,000,000,000 shares of Preferred
      Stock, par value $0.001 (“Preferred
      Stock”).
      As of
      the date hereof, 300,000,000 shares of Common Stock and 1,500,000,000 shares
      of
      Preferred Stock are issued and outstanding. All of such outstanding shares
      have
      been validly issued and are fully paid and nonassessable. No shares of Common
      Stock are subject to preemptive rights or any other similar rights or any liens
      or encumbrances suffered or permitted by the Company. As of the date of this
      Agreement, (i) there are no outstanding options, warrants, scrip, rights to
      subscribe to, calls or commitments of any character whatsoever relating to,
      or
      securities or rights convertible into, any shares of capital stock of the
      Company or any of its subsidiaries, or contracts, commitments, understandings
      or
      arrangements by which the Company or any of its subsidiaries is or may become
      bound to issue additional shares of capital stock of the Company or any of
      its
      subsidiaries or options, warrants, scrip, rights to subscribe to, calls or
      commitments of any character whatsoever relating to, or securities or rights
      convertible into, any shares of capital stock of the Company or any of its
      subsidiaries, (ii) there are no outstanding debt securities and (iii) there
      are
      no agreements or arrangements under which the Company or any of its subsidiaries
      is obligated to register the sale of any of their securities under the
      Securities Act (except pursuant to the Registration Rights Agreement) and (iv)
      there are no outstanding registration statements and there are no outstanding
      comment letters from the SEC or any other regulatory agency. There are no
      securities or instruments containing anti-dilution or similar provisions that
      will be triggered by the issuance of the Convertible Debentures as described
      in
      this Agreement. The Company has furnished to the Buyer true and correct copies
      of the Company’s Articles of Incorporation, as amended and as in effect on the
      date hereof (the “Articles
      of Incorporation”),
      and
      the Company’s By-laws, as in effect on the date hereof (the “By-laws”),
      and
      the terms of all securities convertible into or exercisable for Common Stock
      and
      the material rights of the holders thereof in respect thereto other than stock
      options issued to employees and consultants. 

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

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

     

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

     

    (i)  Acknowledgment
      Regarding Buyer’s Purchase of the Convertible Debentures.
      The
      Company acknowledges and agrees that the Buyer(s) is acting solely in the
      capacity of an arm’s length purchaser with respect to this Agreement and the
      transactions contemplated hereby. The Company further acknowledges that the
      Buyer(s) is not acting as a financial advisor or fiduciary of the Company (or
      in
      any similar capacity) with respect to this Agreement and the transactions
      contemplated hereby and any advice given by the Buyer(s) or any of their
      respective representatives or agents in connection with this Agreement and
      the
      transactions contemplated hereby is merely incidental to such Buyer’s purchase
      of the Convertible Debentures or the Conversion Shares. The Company further
      represents to the Buyer that the Company’s decision to enter into this Agreement
      has been based solely on the independent evaluation by the Company and its
      representatives.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

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

     

    (k)  No
      Integrated Offering.
      Neither
      the Company, nor any of its affiliates, nor any person acting on its or their
      behalf has, directly or indirectly, made any offers or sales of any security
      or
      solicited any offers to buy any security, under circumstances that would require
      registration of the Convertible Debentures or the Conversion Shares under the
      Securities Act or cause this offering of the Convertible Debentures or the
      Conversion Shares to be integrated with prior offerings by the Company for
      purposes of the Securities Act.

     

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

     

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

     

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

     

    (o)  Title.
      Any
      real property and facilities held under lease by the Company and its
      subsidiaries are held by them under valid, subsisting and enforceable leases
      with such exceptions as are not material and do not interfere with the use
      made
      and proposed to be made of such property and buildings by the Company and its
      subsidiaries.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

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

     

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

     

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

     

    (s)  No
      Material Adverse Breaches, etc.
      Neither
      the Company nor any of its subsidiaries is subject to any charter, corporate
      or
      other legal restriction, or any judgment, decree, order, rule or regulation
      which in the judgment of the Company’s officers has or is expected in the future
      to have a material adverse effect on the business, properties, operations,
      financial condition, results of operations or prospects of the Company or its
      subsidiaries. Neither the Company nor any of its subsidiaries is in breach
      of
      any contract or agreement which breach, in the judgment of the Company’s
      officers, has or is expected to have a material adverse effect on the business,
      properties, operations, financial condition, results of operations or prospects
      of the Company or its subsidiaries.

     

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

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

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

     

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

     

    4.  COVENANTS.

     

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

     

    (b)  Form
      D.
      The
      Company agrees to file a Form D with respect to the Conversion Shares as
      required under Regulation D and to provide a copy thereof to each Buyer promptly
      after such filing. The Company shall, on or before the Closing Date, take such
      action as the Company shall reasonably determine is necessary to qualify the
      Conversion Shares, or obtain an exemption for the Conversion Shares 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, and shall provide
      evidence of any such action so taken to the Buyers on or prior to the Closing
      Date.

     

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

     

    (d)  Use
      of
      Proceeds.
      The
      Company will use the proceeds from the sale of the Convertible Debentures for
      general corporate and working capital purposes. On the date hereof, the Company
      shall pay to La Jolla the amount of $971,020.11, which shall be paid and
      deducted from the gross proceeds of the First Closing. 

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

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

     

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

     

    (g)  Fees
      and Expenses.
      

     

    (i)  Each
      of
      the Company and the Buyer(s) shall pay all costs and expenses incurred by such
      party in connection with the negotiation, investigation, preparation, execution
      and delivery of the Transaction Documents. The Company shall pay Yorkville
      Advisors LLC a fee equal to ten percent (10%) of the Purchase Price, which
      shall
      be paid pro rata directly from the gross proceeds of each closing. 

     

    (ii)  The
      Company shall pay a structuring fee to Yorkville Advisors LLC of Fifteen
      Thousand Dollars ($15,000), of which the remaining balance of Ten Thousand
      Dollars ($10,000) shall be paid directly from the proceeds of the First Closing.
      

     

    (iii)  The
      Company shall pay Yorkville Advisors, LLC a non-refundable due diligence fee
      of
      Five Thousand Dollars ($5,000) which has previously been paid.

     

    (iv)  The
      Company shall issue to the Buyers warrants (the “Warrants”)
      to
      purchase in the aggregate Two Billion Nine Hundred Million (2,900,000,000)
      shares of the Company’s Common Stock as follows: 

     

    (A)
      a
      warrant to purchase 1,000,000,000 shares of the Company’s Common Stock for
      a period of five (5) years at an exercise price of $0.003 per share;

     

    (B)
      a
      warrant to purchase 1,000,000,000 shares of the Company’s Common Stock for
      a period of five (5) years at an exercise price of $0.006 per share;

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    (C)
      a
      warrant to purchase 300,000,000 shares of the Company’s Common Stock for a
      period of five (5) years at an exercise price of $0.010 per share; 

     

    (D)
      a
      warrant to purchase 200,000,000 shares of the Company’s Common Stock for a
      period of five (5) years at an exercise price of $0.015 per share; 

     

    (E)
      a
      warrant to purchase 150,000,000 shares of the Company’s Common Stock for a
      period of five (5) years at an exercise price of $0.020 per share; 

     

    (F)
      a
      warrant to purchase 100,000,000 shares of the Company’s Common Stock for a
      period of five (5) years at an exercise price of $0.030 per share; 

     

    (G)
      a
      warrant to purchase 60,000,000 shares of the Company’s Common Stock for a
      period of five (5) years at an exercise price of $0.050 per share;

     

    (H)
      a
      warrant to purchase 40,000,000 shares of the Company’s Common Stock for a
      period of five (5) years at an exercise price of $0.075 per share; 

     

    (I)
      a
      warrant to purchase 30,000,000 shares of the Company’s Common Stock for a
      period of five (5) years at an exercise price of $0.10 per share;
      and

     

    (J)
      a
      warrant to purchase 20,000,000 shares of the Company’s Common Stock for a
      period of five (5) years at an exercise price of $0.15 per share. The shares
      of
      Common Stock underlying the Warrants shall collectively be referred to as the
      “Warrant
      Shares.”

     

    (v)  Upon
      the
      execution of this Agreement, the Company shall issue to the Buyer Thirty Million
      (30,000,000) shares of the Company’s Common Stock (the “Commitment
      Shares”).
      The
      Commitment Shares shall be deemed fully earned on the date hereof and shall
      have
“piggy-back” and demand registration rights.

     

    (vi)  The
      shares of Common Stock underlying the Warrants shall collectively be referred
      to
      as the “Warrant
      Shares.”
The
      Warrant Shares shall have “piggy-back” and demand registration rights.

     

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

     

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

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

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

     

    (k)  Restriction
      on Issuance of the Capital Stock.
      So long
      as any Convertible Debentures are outstanding, except for exercises or
      conversions of currently outstanding options and warrants disclosed in the
      SEC
      Documents or the disclosure schedules hereto, the Company shall not, except
      for
      Permitted Issuances, without the prior written consent of the Buyer(s), which
      consent shall not be unreasonably withheld or delayed (i) issue or sell shares
      of Common Stock or Preferred Stock without consideration or for a consideration
      per share less than the Bid Price of the Common Stock (the “Bid
      Price”),
      as
      quoted by Bloomberg, LP, determined immediately prior to its issuance, (ii)
      issue any preferred stock, warrant, option, right, contract, call, or other
      security or instrument granting the holder thereof the right to acquire Common
      Stock without consideration or for a consideration less than such Common Stock’s
      Bid Price determined immediately prior to it’s issuance, (iii) enter into any
      security instrument, except Permitted Liens, granting the holder a security
      interest in any and all assets of the Company, or (iv) file any registration
      statement on Form S-8.
      “Permitted Issuances” shall mean (i) securities
      issuable pursuant to any agreement in effective as of the date hereof and as
      set
      forth in the Disclosure Schedule and (ii) up to 25 million securities (or
      options to purchase such securities) issuable to officers, directors, employees,
      or consultants to the Company pursuant to a stock option/stock incentive
      plan to be approved by the Company's Board of Directors and shareholders.
“Permitted Liens” shall mean (i) liens
      in
      effect on the date hereof (and renewals and replacements thereof); (ii) liens
      arising from purchase money liens or the interests of lessors under capital
      leases to the extent that such liens or interests secure purchase money
      indebtedness and so long as such Lien attaches only to the asset purchased
      or
      acquired and the proceeds thereof; and (iii) liens granted as security for
      surety or appeal bonds in connection with obtaining such bonds in the ordinary
      course of business.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    (l)  Neither
      the Buyer(s) nor any of its affiliates have an open short position in the Common
      Stock of the Company, and the Buyer(s) agrees that it shall not, and that it
      will cause its affiliates not to, engage in any short sales of or hedging
      transactions with respect to the Common Stock as long as any Convertible
      Debentures shall remain outstanding. 

     

    (m)  Rights
      of First Refusal.
      For
      a
      period of 12 months from the date of the First Closing, if the Company intends
      to raise additional capital by the issuance or sale of capital stock of the
      Company, including without limitation shares of any class of common stock,
      any
      class of preferred stock, options, warrants or any other securities convertible
      or exercisable into shares of common stock (whether the offering is conducted
      by
      the Company, underwriter, placement agent or any third party) the Company shall
      be obligated to offer to the Buyers such issuance or sale of capital stock,
      by
      providing in writing the principal amount of capital it intends to raise and
      outline of the material terms of such capital raise, prior to the offering
      such
      issuance or sale of capital stock  to any third parties including, but not
      limited to, current or former officers or directors, current or former
      shareholders and/or investors of the obligor, underwriters, brokers, agents
      or
      other third parties.  The Buyers shall have five (5) business days from
      receipt of such notice of the sale or issuance of capital stock to exercise
      their right during
      the five (5) business days following receipt of the notice to purchase up all
      or
      a portion of such offered Common
      Stock, any class of preferred stock, options, warrants or any other securities
      convertible or exercisable into shares of Common Stock
      in
      accordance with the terms and conditions set forth in the notice of sale in
      the
      same proportion as their portion of the purchase price bears to the total
      purchase price.

     

    5.  TRANSFER
      AGENT INSTRUCTIONS.

     

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

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    (x)  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.

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

    (iv)  The
      Company shall have certified that all conditions to the Second Closing have
      been
      satisfied and that the Company will file the Registration Statement with the
      SEC
      in compliance with the rules and regulations promulgated by the SEC for filing
      thereof two (2) business days after the Second Closing. If requested by the
      Buyer, the Buyer shall have received a certificate, executed by the CEO of
      the
      Company, dated as of the Second Closing Date, to the foregoing effect.

     

    (v)  No
      Event
      of Default shall have occurred under the Transaction Documents.

     

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

     

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

     

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

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

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

     

    (iv)  The
      Company shall have certified that all conditions to the Third Closing have
      been
      satisfied, the Company has answered any and all comments to the Registration
      Statement with the SEC and shall within two (2) business days after the Third
      Closing request acceleration of the Registration Statement. If requested by
      the
      Buyer, the Buyer shall have received a certificate, executed by the CEO of
      the
      Company, dated as of the Third Closing Date, to the foregoing effect.

     

    8.  INDEMNIFICATION.

     

    (a)  In
      consideration of the Buyer’s execution and delivery of this Agreement and
      acquiring the Convertible Debentures and the Conversion Shares hereunder, and
      in
      addition to all of the Company’s other obligations under this Agreement, the
      Company shall defend, protect, indemnify and hold harmless the Buyer(s) and
      each
      other holder of the Convertible Debentures and the Conversion Shares, and all
      of
      their officers, directors, employees and agents (including, without
      limitation, those retained in connection with the transactions contemplated
      by
      this Agreement) (collectively, the “Buyer
      Indemnitees”)
      from
      and against any and all actions, causes of action, suits, claims, losses, costs,
      penalties, fees, liabilities and damages, and expenses in connection therewith,
      and including reasonable attorneys’ fees and disbursements (the “Indemnified
      Liabilities”),
      incurred by the Buyer Indemnitees or any of them as a result of, or arising
      out
      of, or relating to (a) any misrepresentation or breach of any representation
      or
      warranty made by the Company in this Agreement, the Convertible Debentures
      or
      the Investor Registration Rights Agreement or any other certificate, instrument
      or document contemplated hereby or thereby, (b) any breach of any covenant,
      agreement or obligation of the Company contained in this Agreement, or the
      Investor Registration Rights Agreement or any other certificate, instrument
      or
      document contemplated hereby or thereby, or (c) any cause of action, suit or
      claim brought or made against such Indemnitee based on material
      misrepresentations or due to a material breach and arising out of or resulting
      from the execution, delivery, performance or enforcement of this Agreement
      or
      any other instrument, document or agreement executed pursuant hereto by any
      of
      the parties hereto, any transaction financed or to be financed in whole or
      in
      part, directly or indirectly, with the proceeds of the issuance of the
      Convertible Debentures or the status of the Buyer or holder of the Convertible
      Debentures or the Conversion Shares, as a Buyer of Convertible Debentures in
      the
      Company, provided, however, that indemnification shall not apply to Indemnified
      Liabilities resulting from the gross negligence or willful misconduct of
      Buyer(s). To the extent that the foregoing undertaking by the Company may be
      unenforceable for any reason, the Company shall make the maximum contribution
      to
      the payment and satisfaction of each of the Indemnified Liabilities, which
      is
      permissible under applicable law.

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

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

     

    9.  GOVERNING
      LAW: MISCELLANEOUS.

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

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

     

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

     

    
      	
              If
                to the Company, to:

            	 	
              Savi
                Corp.

            
	
               

            	 	
              9852
                W. Katella Avenue - #363

            
	
               

            	 	
              Anaheim,
                CA 92804

            
	
               

            	 	
              Attention: Mario
                Procopio, CEO

            
	
               

            	 	
              Telephone: (714)
                740-0601

            
	
               

            	 	
              Facsimile: (714)
                740-0300

            
	
               

            	 	
               

            
	
              With
                a copy to:

            	 	
              Sichenzia
                Ross Friedman Ference LLP

            
	
               

            	 	
              1065
                Avenue of the Americas - 21st
                Floor

            
	
               

            	 	
              New
                York, NY 10018

            
	
               

            	 	
              Attention: Gregory
                Sichenzia, Esq.

            
	
               

            	 	
              Telephone: (212)
                930-9700

            
	
               

            	 	
              Facsimile: (212)
                930-9725

            
	
               

            	 	
               

            
	
               

            	 	
               

            

    

     

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

     

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

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    (h)  No
      Third Party Beneficiaries.
      This
      Agreement is intended for the benefit of the parties hereto and their respective
      permitted successors and assigns, and is not for the benefit of, nor may any
      provision hereof be enforced by, any other person.

     

    (i)  Survival.
      Unless
      this Agreement is terminated under Section 9(l), the representations and
      warranties of the Company and the Buyer(s) contained in Sections 2 and 3, the
      agreements and covenants set forth in Sections 4, 5 and 9, and the
      indemnification provisions set forth in Section 8, shall survive the Closing
      for
      a period of two (2) years following the date on which the Convertible Debentures
      are converted, redeemed or otherwise disposed of in full. The Buyer(s) shall
      be
      responsible only for its own representations, warranties, agreements and
      covenants hereunder.

     

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

     

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

     

    (l)  Termination.
      In the
      event that the First Closing shall not have occurred with respect to the Buyers
      on or before five (5) business days from the date hereof due to the Company’s or
      the Buyer’s failure to satisfy the conditions set forth in Sections 6 and 7
      above (and the non-breaching party’s failure to waive such unsatisfied
      condition(s)), the non-breaching party shall have the option to terminate this
      Agreement with respect to such breaching party at the close of business on
      such
      date without liability of any party to any other party; provided, however,
      that
      if this Agreement is terminated by the Buyer(s) pursuant to this Section 9(l),
      the Company shall remain obligated to reimburse the Buyer(s) for the fees and
      expenses of Yorkville Advisors LLC described in Section 4(g) (ii) and (iii)
      above.

     

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

     

    

    [REMAINDER
      PAGE INTENTIONALLY LEFT BLANK]

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

    

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

     

    
      	
               

            	
              COMPANY:

            
	
               

            	
              SAVI
                CORP. 

            
	
               

            	
               

            
	
               

            	
              By:
                /s/
                MARIO PROCOPIO

            
	
               

            	
              Name: Mario
                Procopio

            
	
               

            	
              Title: CEO

            
	
               

            	
               

            

    

    

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
      I

     

    SCHEDULE
      OF BUYERS 

     

    
      	
              Name

            	
               

            	
              Signature

            	
               

            	
              Address/Facsimile
                

              Number
                of Buyer

            	
               

            	
              Amount of
                Subscription

            
	
               

            	
               

            	
               

            	
               

            	
               

            	
               

            	
               

            
	
               

            	
               

            	
               

            	
               

            	
               

            	
               

            	
               

            
	
              Cornell
                Capital Partners, LP 

            	
               

            	
              By: Yorkville
                Advisors, LLC

            	
               

            	
              101
                Hudson Street - Suite 3700

            	
               

            	
              $2,970,000

            
	
               

            	
               

            	
              Its: General
                Partner

            	
               

            	
              Jersey
                City, NJ 07303

            	
               

            	
               

            
	
               

            	
               

            	
               

            	
               

            	
              Facsimile: (201)
                985-8266

            	
               

            	
               

            
	
               

            	
               

            	
               

            	
               

            	
               

            	
               

            	
               

            
	
               

            	
               

            	
               

            	
               

            	
               

            	
               

            	
               

            
	
               

            	
               

            	
              By:
                /s/
                MARK ANGELO

            	
               

            	
               

            	
               

            	
               

            
	
               

            	
               

            	
              Name: Mark
                Angelo

            	
               

            	
               

            	
               

            	
               

            
	
               

            	
               

            	
              Its: Portfolio
                Manager

            	
               

            	
               

            	
               

            	
               

            
	
               

            	
               

            	
               

            	
               

            	
               

            	
               

            	
               

            
	
              With
                a copy to: 

            	
               

            	
              David
                Gonzalez, Esq.

            	
               

            	
              101
                Hudson Street - Suite 3700

            	
               

            	
               

            
	
               

            	
               

            	
               

            	
               

            	
              Jersey
                City, NJ 07302

            	
               

            	
               

            
	
               

            	
               

            	
               

            	
               

            	
              Facsimile:
                (201) 985-8266Unassociated Document

    
      Exhibit
        4.2

       

      Dated:
        July 10, 2006

       

      NEITHER
        THIS DEBENTURE NOR THE SECURITIES INTO WHICH THIS DEBENTURE IS CONVERTIBLE
        HAVE
        BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
        COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
        THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
        ACT”),
        AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
        REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
        EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
        REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
        SECURITIES LAWS.

       

      
        	No. SVMI-1	
                $1,670,000

              

      

       

      SAVI
        CORP.

       

      Secured
        Convertible Debenture

       

       

      Due:
        July 10, 2008

       

      This
        Secured Convertible Debenture (the “Debenture”)
        is
        issued by SAVI
        CORP., a
        Nevada
        corporation (the “Company”),
        to
CORNELL
        CAPITAL PARTNERS, LP
        (the
“Holder”),
        pursuant to that certain Securities Purchase Agreement (the “Securities
        Purchase Agreement”)
        dated
        July 10, 2006. 

       

      FOR
        VALUE RECEIVED,
        the
        Company hereby promises to pay to the Holder or its successors and assigns
        the
        principal sum of One Million Six Hundred Seventy Thousand Dollars ($1,670,000)
        together with accrued but unpaid interest on or before July 10, 2008 (the
        “Maturity
        Date”)
        in
        accordance with the following terms:

       

      Section
        1. General
        Terms

       

      (a) Interest.
        Interest shall accrue on the outstanding principal balance hereof at an annual
        rate equal to ten percent (10%). Interest shall be calculated on the basis
        of a
        365-day year and the actual number of days elapsed, to the extent permitted
        by
        applicable law. Interest hereunder shall be paid on the Maturity Date (or
        sooner
        as provided herein) to the Holder or its assignee in whose name this Debenture
        is registered on the records of the Company regarding registration and transfers
        of Debentures in cash or in Common Stock (valued at the Closing Bid Price
        on the
        Trading Day immediately prior to the date paid) at the option of the Company.
        

       

      (b)  Security.
        This
        Debenture is secured by a Pledge and Escrow Agreement (the “Pledge
        Agreement”)
        of
        even date herewith by and among the Company, the Pledgor, the Holder, the
        Escrow
        Agent, and a Security Agreement (the “Security
        Agreement”)
        of
        even date herewith by and between the Company and the Holder.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      Section
        2. Events
        of Default.

       

      (a) An
        “Event
        of Default”,
        wherever used herein, means any one of the following events (whatever the
        reason
        and whether it shall be voluntary or involuntary or effected by operation
        of law
        or pursuant to any judgment, decree or order of any court, or any order,
        rule or
        regulation of any administrative or governmental body):

       

      (i)
        Any
        default in the payment of the principal of, interest on or other charges
        in
        respect of this Debenture, free of any claim of subordination, as and when
        the
        same shall become due and payable whether upon a Mandatory Redemption (as
        defined in Section
        3(b)),
        an
        Optional Redemption (as defined in Section
        3(a)),
        or the
        Maturity Date or by acceleration or otherwise;

       

      (ii)
        The
        Company or any subsidiary of the Company shall commence, or there shall be
        commenced against the Company or any subsidiary of the Company under any
        applicable bankruptcy or insolvency laws as now or hereafter in effect or
        any
        successor thereto, or the Company or any subsidiary of the Company commences
        any
        other proceeding under any reorganization, arrangement, adjustment of debt,
        relief of debtors, dissolution, insolvency or liquidation or similar law
        of any
        jurisdiction whether now or hereafter in effect relating to the Company or
        any
        subsidiary of the Company or there is commenced against the Company or any
        subsidiary of the Company any such bankruptcy, insolvency or other proceeding
        which remains undismissed for a period of 61 days; or the Company or any
        subsidiary of the Company is adjudicated insolvent or bankrupt; or any order
        of
        relief or other order approving any such case or proceeding is entered; or
        the
        Company or any subsidiary of the Company suffers any appointment of any
        custodian, private or court appointed receiver or the like for it or any
        substantial part of its property which continues undischarged or unstayed
        for a
        period of sixty one (61) days; or the Company or any subsidiary of the Company
        makes a general assignment for the benefit of creditors; or the Company or
        any
        subsidiary of the Company shall fail to pay, or shall state that it is unable
        to
        pay, or shall be unable to pay, its debts generally as they become due; or
        the
        Company or any subsidiary of the Company shall call a meeting of its creditors
        with a view to arranging a composition, adjustment or restructuring of its
        debts; or the Company or any subsidiary of the Company shall by any act or
        failure to act expressly indicate its consent to, approval of or acquiescence
        in
        any of the foregoing; or any corporate or other action is taken by the Company
        or any subsidiary of the Company for the purpose of effecting any of the
        foregoing;

       

      (iii)
        The
        Company or any subsidiary of the Company shall default in any of its obligations
        under any other debenture or any mortgage, credit agreement or other facility,
        indenture agreement, factoring agreement or other instrument under which
        there
        may be issued, or by which there may be secured or evidenced any indebtedness
        for borrowed money or money due under any long term leasing or factoring
        arrangement of the Company or any subsidiary of the Company in an amount
        exceeding $100,000, whether such indebtedness now exists or shall hereafter
        be
        created and such default shall result in such indebtedness becoming or being
        declared due and payable prior to the date on which it would otherwise become
        due and payable;

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      
        (iv)
          The
          Common Stock shall cease to be quoted for trading or listing for trading
          on any
          of (a) the American Stock Exchange, (b) New York Stock Exchange, (c) the
          Nasdaq
          National Market, (d) the Nasdaq Capital Market, or (e) the NASD OTC Bulletin
          Board (“OTC”)
          (each,
          a “Primary
          Market”)
          and
          shall not again be quoted or listed for trading on any Primary Market within
          five (5) Trading Days of such delisting; 

      

       

      (v)
        The
        Company or any subsidiary of the Company shall be a party to any Change of
        Control Transaction (as defined in Section
        6);
        

       

      (vi)
        The
        Company shall fail to file the Underlying Shares Registration Statement (as
        defined in Section
        6)
        with
        the Commission (as defined in Section
        6),
        or the
        Underlying Shares Registration Statement shall not have been declared effective
        by the Commission, in each case within the time periods set forth in the
        Investor Registration Rights Agreement (“Registration
        Rights Agreement”)
        of
        even date herewith by and between the Company and the Holder;

       

      (vii)
        If
        the
        effectiveness of the Underlying Shares Registration Statement lapses for
        any
        reason or the Holder shall not be permitted to resell the shares of Common
        Stock
        underlying this Debenture under the Underlying Shares Registration Statement,
        in
        either case, for more than five (5) consecutive Trading Days or an aggregate
        of
        eight Trading Days (which need not be consecutive Trading Days);

       

      (viii)
        The
        Company shall fail for any reason to deliver Common Stock certificates to
        a
        Holder prior to the fifth (5th)
        Trading
        Day after a Conversion Date or after a Redemption Date if the Company chose
        to
        settle a Mandatory Redemption in shares of Common Stock, or the Company shall
        provide notice to the Holder, including by way of public announcement, at
        any
        time, of its intention not to comply with requests for conversions, or
        settlements of Mandatory Redemptions in shares of Common Stock, in accordance
        with the terms hereof; 

       

      (ix)
        The
        Company shall fail for any reason to deliver the payment in cash pursuant
        to a
        Buy-In (as defined herein) within three (3) days after notice is claimed
        delivered hereunder; 

       

      (x)
        The
        Company shall fail to observe or perform any other covenant, agreement or
        warranty contained in, or otherwise commit any breach or default of any
        provision of this Debenture (except as may be covered by Section
        2(a)(i) through 2(a)(ix)
        hereof)
        or any Transaction Document (as defined in Section
        6)
        which
        is not cured with in ten (10) days notice of such default, or an Event of
        Default under any other debenture issued to the Holder in connection with
        the
        Securities Purchase Agreement shall occur;

       

      (b) During
        the time that any portion of this Debenture is outstanding, if any Event
        of
        Default has occurred, the full principal amount of this Debenture, together
        with
        interest and other amounts owing in respect thereof, to the date of acceleration
        shall become at the Holder's election, immediately due and payable in cash,
        provided
        however,
        the
        Holder may request (but shall have no obligation to request) payment of such
        amounts in Common Stock of the Company. If an Event of Default shall occur
        pursuant to sections 2(a) (i), (iv), (viii) or (ix) the Conversion Price
        shall
        be permanently reduced to $0.003 (the “Default
        Conversion Price”).
        Furthermore, in addition to any other remedies, the Holder shall have the
        right
        (but not the obligation) to convert this Debenture at any time after (x)
        an
        Event of Default or (y) the Maturity Date at the Conversion Price then
        in-effect. The Holder need not provide and the Company hereby waives any
        presentment, demand, protest or other notice of any kind (other than the
        ten
        (10) business day notice set forth in Section 2(a)), and the Holder may
        immediately and without expiration of any grace period (other than the ten
        (10)
        business day notice set forth in Section 2(a)) enforce any and all of its
        rights
        and remedies hereunder and all other remedies available to it under applicable
        law. Such declaration may be rescinded and annulled by Holder at any time
        prior
        to payment hereunder. No such rescission or annulment shall affect any
        subsequent Event of Default or impair any right consequent thereon. Upon
        an
        Event of Default, notwithstanding any other provision of this Debenture or
        any
        Transaction Document, the Holder shall have no obligation to comply with
        or
        adhere to any limitations, if any, on the conversion of this Debenture or
        the
        sale of the Underlying Shares. 

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

      Section
        3. Redemptions.

       

      (a) Company’s
        Optional Cash Redemption.
        The
        Company at its option shall have the right to redeem (“Optional
        Redemption”)
        a
        portion or all amounts outstanding under this Debenture prior to the Maturity
        Date provided
        that
        as of
        the date of the Holder’s receipt of a Redemption Notice (as defined herein) (i)
        the Closing Bid Price of the of the Common Stock, as reported by Bloomberg,
        LP,
        is less than the Conversion Price, (ii) the Underlying Share Registration
        Statement is effective, and (iii) no Event of Default has occurred. The Company
        shall pay an amount equal to the principal amount being redeemed plus a
        redemption premium (“Redemption
        Premium”)
        equal
        to fifteen percent (15%) of the principal amount being redeemed, and accrued
        interest, (collectively referred to as the “Redemption
        Amount”).
        In
        order to make a redemption, the Company shall first provide written notice
        to
        the Holder of its intention to make a redemption (the “Redemption
        Notice”)
        setting forth the amount of principal it desires to redeem. After receipt
        of the
        Redemption Notice the Holder shall have three (3) business days to elect
        to
        convert all or any portion of this Debenture, subject to the limitations
        set
        forth in Section
        4(b).
        On the
        fourth (4th)
        business day after the Redemption Notice, the Company shall deliver to the
        Holder the Redemption Amount with respect to the principal amount redeemed
        after
        giving effect to conversions effected during the three (3) business day period.
        

       

      (b) Mandatory
        Redemptions.
        Beginning on the earlier of (i) the first Trading Day of the month immediately
        following the month in which the Underlying Share Registration Statement
        is
        first declared effective or (ii) November 1, 2006, and continuing on the
        first
        Trading Day of each calendar month thereafter, the Company shall make mandatory
        redemptions (“Mandatory
        Redemptions”)
        consisting of outstanding principal and accrued and unpaid interest. The
        principal amount of each Mandatory Redemption shall be equal to $225,000
        (“Mandatory
        Redemption Amount”)
        per
        calendar month, until all amounts owed under this Debenture have been paid
        in
        full. 

       

      The
        Company shall transmit a copy of a Redemption Notice in the form attached
        hereto
        as Exhibit
        A
        (the
“Redemption
        Notice”)
        via
        facsimile (or other delivery) for receipt on or prior to 2:00 pm New York
        City
        time on the due date of such Mandatory Redemption (the “Redemption
        Date”) which
        shall (i) indicate the applicable Mandatory Redemption Amount, (ii) indicate
        the
        Company’s choice of settlement options (pursuant to Section
        3(c))
        with
        respect to such Redemption Notice, and (iii) be signed by an officer of the
        Company. The Company shall settle all Mandatory Redemptions within 5 Trading
        Days of the Redemption Date (the “Settlement
        Date”).
        The
        Holder shall have the absolute right, in its sole discretion, to suspend
        the
        Company’s obligations to make Mandatory Redemptions by providing the Company
        with written notice of such election (a “Suspension
        Notice”)
        prior
        to a Redemption Date. The Holder shall have no obligation to accept any
        Mandatory Redemptions made by the Company during any suspension period specified
        in a Suspension Notice after the Holder’s submission of such Suspension Notice.
        The obligation of the Company to make Mandatory Redemptions shall resume
        on the
        first Trading Day of the month following the expiration of the suspension
        period
        specified in a Suspension Notice. 

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

       

      (c) Company’s
        Settlement of Mandatory Redemptions.
        The
        Company has the option, in its sole discretion, to settle Mandatory Redemptions
        by (i) paying the Holder cash in an amount equal to the Mandatory Redemption
        Amount plus the Redemption Premium, or (ii) issuing to the Holder the number
        of
        shares of Common Stock (the “Redemption
        Shares”)
        equal
        to the Mandatory Redemption Amount divided by $0.007 (the “Redemption
        Conversion Price”)
        provided
        that in
        order for the Company to choose option (ii) of this Section
        3(c),
        (A) the
        Underlying Share Registration Statement shall have been declared effective
        and
        shall remain effective on the Redemption Date, (B) no Event of Default shall
        have occurred, and (C) the Closing Bid Price for the Common Stock shall be
        greater than the Redemption Conversion Price as of the Trading Day immediately
        prior to the Redemption Date.  Notwithstanding
        the foregoing, in the event that (A) the Underlying Share Registration Statement
        shall have been declared effective and shall remain effective on the Redemption
        Date, (B) no Event of Default shall have occurred, and (C) the Closing Bid
        Price
        for the Common Stock shall be greater than the Default Conversion Price as
        of
        the Trading Day immediately prior to the Redemption Date, the Company shall
        have
        the option to settle Mandatory Redemptions (otherwise to be settled in cash
        as
        set forth herein) by issuing to the Holder the number of shares of Common
        Stock
        equal to the Mandatory Redemption Amount divided by the Default Conversion
        Price.

       

      (d) Special
        Instructions Regarding Settlement of Mandatory Redemptions in Shares of Common
        Stock.
        In the
        event that the Company chooses (if such option is available) to settle a
        Mandatory Redemption in shares of Common Stock pursuant to option (ii) of
        Section
        3(c),
        upon
        notice to the Holder of such settlement selection option, the Redemption
        Notice
        shall be treated as a Conversion Notice submitted by the Holder and processed
        in
        accordance with the provisions for Conversion Notices set forth in Section
        4(a)(iii).
        The
        limitations on Conversions set forth in Section
        4(b)
        hereof
        shall apply to any shares of Common Stock issued pursuant to this Section
        3.

       

      Section
        4. Conversion.

       

      (a) Conversion
        at Option of Holder.

       

      (i) This
        Debenture shall be convertible into shares of Common Stock at the option
        of the
        Holder, in whole or in part at any time and from time to time, after the
        Original Issue Date (as defined in Section
        6)
        (subject to the limitations on conversion set forth in Section
        4(b)
        hereof).
        The number of shares of Common Stock issuable upon a conversion hereunder
        equals
        the quotient obtained by dividing (x) the outstanding amount of this Debenture
        to be converted by (y) the Conversion Price (as defined in Section
        4(c)(i)).
        The
        Company shall deliver Common Stock certificates to the Holder prior to the
        Fifth
        (5th)
        Trading
        Day after a Conversion Date.

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

      (ii) Notwithstanding
        anything to the contrary contained herein, if on any Conversion Date: (1)
        the
        number of shares of Common Stock at the time authorized, unissued and unreserved
        for all purposes, or held as treasury stock, is insufficient to pay principal
        and interest hereunder in shares of Common Stock; (2) the Common Stock is
        not
        listed or quoted for trading on the OTC or on a Principal Market; or (3)
        the
        Company has failed to timely satisfy its conversion; then, at the option
        of the
        Holder, the Company, in lieu of delivering shares of Common Stock pursuant
        to
Section
        4(a)(i),
        shall
        deliver, within three (3) Trading Days of each applicable Conversion Date,
        an
        amount in cash equal to the product of the outstanding principal amount to
        be
        converted divided by the applicable Conversion Price, and multiplied by the
        highest Closing Price of the stock from date of the conversion notice till
        the
        date that such cash payment is made. Upon receipt of such cash payment by
        the
        Holder, the outstanding amount of this Debenture shall be reduced by the
        outstanding amount of this Debenture that was to be converted.

       

      Further,
        if the Company shall not have delivered any cash due in respect of conversion
        of
        this Debenture by the fifth (5th)
        Trading
        Day after the Conversion Date, the Holder may, by notice to the Company,
        require
        the Company to issue shares of Common Stock pursuant to Section
        4(c),
        except
        that for such purpose the Conversion Price applicable thereto shall be the
        lesser of the Conversion Price on the Conversion Date and the Conversion
        Price
        on the date of such Holder demand. Any such shares will be subject to the
        provisions of this Section.

       

      (iii) The
        Holder shall effect conversions by delivering to the Company a completed
        notice
        in the form attached hereto as Exhibit B (a “Conversion
        Notice”).
        The
        date on which a Conversion Notice is delivered is the “Conversion
        Date.”
Unless
        the Holder is converting the entire principal amount outstanding under this
        Debenture, the Holder is not required to physically surrender this Debenture
        to
        the Company in order to effect conversions. Conversions hereunder shall have
        the
        effect of lowering the outstanding principal amount of this Debenture plus
        all
        accrued and unpaid interest thereon in an amount equal to the applicable
        conversion. The Holder and the Company shall maintain records showing the
        principal amount converted and the date of such conversions. 

       

      (b) Certain
        Conversion Restrictions.

       

      (i) A
        Holder
        may not convert this Debenture or receive shares of Common Stock as payment
        of
        interest hereunder to the extent such conversion or receipt of such interest
        payment would result in the Holder, together with any affiliate thereof,
        beneficially owning (as determined in accordance with Section 13(d) of the
        Exchange Act and the rules promulgated thereunder) in excess of 4.99% of
        the
        then issued and outstanding shares of Common Stock, including shares issuable
        upon conversion of, and payment of interest on, this Debenture held by such
        Holder after application of this Section. Since the Holder will not be obligated
        to report to the Company the number of shares of Common Stock it may hold
        at the
        time of a conversion hereunder, unless the conversion at issue would result
        in
        the issuance of shares of Common Stock in excess of 4.99% of the then
        outstanding shares of Common Stock without regard to any other shares which
        may
        be beneficially owned by the Holder or an affiliate thereof, the Holder shall
        have the authority and obligation to determine whether the restriction contained
        in this Section will limit any particular conversion hereunder and to the
        extent
        that the Holder determines that the limitation contained in this Section
        applies, the determination of which portion of the principal amount of this
        Debenture is convertible shall be the responsibility and obligation of the
        Holder. If the Holder has delivered a Conversion Notice for a principal amount
        of this Debenture that, without regard to any other shares that the Holder
        or
        its affiliates may beneficially own, would result in the issuance in excess
        of
        the permitted amount hereunder, the Company shall notify the Holder of this
        fact
        and shall honor the conversion for the maximum principal amount permitted
        to be
        converted on such Conversion Date in accordance with the periods described
        in
Section
        4(a)(i)
        and, at
        the option of the Holder, either retain any principal amount tendered for
        conversion in excess of the permitted amount hereunder for future conversions
        or
        return such excess principal amount to the Holder. Upon an Event of Default,
        provisions of this Section may be waived by a Holder (but only as to itself
        and
        not to any other Holder) upon not less than 65 days prior notice to the Company.
        Other Holders shall be unaffected by any such waiver. 

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

       

      (c) Conversion
        Price and Adjustments to Conversion Price.

       

      (i) The
        conversion price in effect on any Conversion Date shall be equal to $0.013
        per
        share (the “Conversion
        Price”).
        The
        Conversion Price may be adjusted pursuant to the terms of this
        Debenture.

       

      (ii) If
        the
        Company, at any time while this Debenture is outstanding, shall (a) pay a
        stock dividend or otherwise make a distribution or distributions on shares
        of
        its Common Stock or any other equity or equity equivalent securities payable
        in
        shares of Common Stock, (b) subdivide outstanding shares of Common Stock
        into a
        larger number of shares, (c) combine (including by way of reverse stock split)
        outstanding shares of Common Stock into a smaller number of shares, or (d)
        issue
        by reclassification of shares of the Common Stock any shares of capital stock
        of
        the Company, then the Conversion Price shall be multiplied by a fraction
        of
        which the numerator shall be the number of shares of Common Stock (excluding
        treasury shares, if any) outstanding before such event and of which the
        denominator shall be the number of shares of Common Stock outstanding after
        such
        event. Any adjustment made pursuant to this Section shall become effective
        immediately after the record date for the determination of stockholders entitled
        to receive such dividend or distribution and shall become effective immediately
        after the effective date in the case of a subdivision, combination or
        re-classification.

       

      (iii) If
        the
        Company, at any time while this Debenture is outstanding, shall issue rights,
        options or warrants to all holders of Common Stock (and not to the Holder)
        entitling them to subscribe for or purchase shares of Common Stock at a price
        per share less than the Conversion Price (except for Permitted Issuances),
        then
        the Conversion Price shall be multiplied by a fraction, of which the denominator
        shall be the number of shares of the Common Stock (excluding treasury shares,
        if
        any) outstanding on the date of issuance of such rights or warrants (plus
        the
        number of additional shares of Common Stock offered for subscription or
        purchase), and of which the numerator shall be the number of shares of the
        Common Stock (excluding treasury shares, if any) outstanding on the date
        of
        issuance of such rights or warrants, plus the number of shares which the
        aggregate offering price of the total number of shares so offered would purchase
        at the Conversion Price. Such adjustment shall be made whenever such rights
        or
        warrants are issued, and shall become effective immediately after the record
        date for the determination of stockholders entitled to receive such rights,
        options or warrants. However, upon the expiration of any such right, option
        or
        warrant to purchase shares of the Common Stock the issuance of which resulted
        in
        an adjustment in the Conversion Price pursuant to this Section, if any such
        right, option or warrant shall expire and shall not have been exercised,
        the
        Conversion Price shall immediately upon such expiration be recomputed and
        effective immediately upon such expiration be increased to the price which
        it
        would have been (but reflecting any other adjustments in the Conversion Price
        made pursuant to the provisions of this Section after the issuance of such
        rights or warrants) had the adjustment of the Conversion Price made upon
        the
        issuance of such rights, options or warrants been made on the basis of offering
        for subscription or purchase only that number of shares of the Common Stock
        actually purchased upon the exercise of such rights, options or warrants
        actually exercised.

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

       

      (iv) If
        the
        Company or any subsidiary thereof, as applicable, at any time while this
        Debenture is outstanding, shall issue, except for Permitted Issuances, shares
        of
        Common Stock or rights, warrants, options or other securities or debt that
        are
        convertible into or exchangeable for shares of Common Stock (“Common
        Stock Equivalents”)
        entitling any Person to acquire shares of Common Stock, at a price per share
        less than the Conversion Price (if the holder of the Common Stock or Common
        Stock Equivalent so issued shall at any time, whether by operation of purchase
        price adjustments, reset provisions, floating conversion, exercise or exchange
        prices or otherwise, or due to warrants, options or rights per share which
        is
        issued in connection with such issuance, be entitled to receive shares of
        Common
        Stock at a price per share which is less than the Conversion Price, such
        issuance shall be deemed to have occurred for less than the Conversion Price),
        then, at the sole option of the Holder, the Conversion Price shall be adjusted
        to mirror the conversion, exchange or purchase price for such Common Stock
        or
        Common Stock Equivalents (including any reset provisions thereof) at issue.
        Such
        adjustment shall be made whenever such Common Stock or Common Stock Equivalents
        are issued. The Company shall notify the Holder in writing, no later than
        one
        (1) business day following the issuance of any Common Stock or Common Stock
        Equivalent subject to this Section, indicating therein the applicable issuance
        price, or of applicable reset price, exchange price, conversion price and
        other
        pricing terms. No adjustment under this Section shall be made as a result
        of
        issuances of Excluded Securities or Permitted Issuances.

       

      (v) If
        the
        Company, at any time while this Debenture is outstanding, shall distribute
        to
        all holders of Common Stock (and not to the Holder) evidences of its
        indebtedness or assets or rights or warrants to subscribe for or purchase
        any
        security, then in each such case the Conversion Price at which this Debenture
        shall thereafter be convertible shall be determined by multiplying the
        Conversion Price in effect immediately prior to the record date fixed for
        determination of stockholders entitled to receive such distribution by a
        fraction of which the denominator shall be the Closing Bid Price determined
        as
        of the record date mentioned above, and of which the numerator shall be such
        Closing Bid Price on such record date less the then fair market value at
        such
        record date of the portion of such assets or evidence of indebtedness so
        distributed applicable to one outstanding share of the Common Stock as
        determined by the Board of Directors in good faith. In either case the
        adjustments shall be described in a statement provided to the Holder of the
        portion of assets or evidences of indebtedness so distributed or such
        subscription rights applicable to one share of Common Stock. Such adjustment
        shall be made whenever any such distribution is made and shall become effective
        immediately after the record date mentioned above.

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

       

      (vi) In
        case
        of any reclassification of the Common Stock or any compulsory share exchange
        pursuant to which the Common Stock is converted into other securities, cash
        or
        property, the Holder shall have the right thereafter to, at its option, (A)
        convert the then outstanding principal amount, together with all accrued
        but
        unpaid interest and any other amounts then owing hereunder in respect of
        this
        Debenture into the shares of stock and other securities, cash and property
        receivable upon or deemed to be held by holders of the Common Stock following
        such reclassification or share exchange, and the Holder of this Debenture
        shall
        be entitled upon such event to receive such amount of securities, cash or
        property as the shares of the Common Stock of the Company into which the
        then
        outstanding principal amount, together with all accrued but unpaid interest
        and
        any other amounts then owing hereunder in respect of this Debenture could
        have
        been converted immediately prior to such reclassification or share exchange
        would have been entitled, or (B) require the Company to prepay the outstanding
        principal amount of this Debenture, plus all interest and other amounts due
        and
        payable thereon. The entire prepayment price shall be paid in cash. This
        provision shall similarly apply to successive reclassifications or share
        exchanges.

       

      (vii) Whenever
        the Conversion Price is adjusted pursuant to Section
        4
        hereof,
        the Company shall promptly mail to the Holder a notice setting forth the
        Conversion Price after such adjustment and setting forth a brief statement
        of
        the facts requiring such adjustment.

       

      (viii) If
        (A)
        the Company shall declare a dividend (or any other distribution) on the Common
        Stock; (B) the Company shall declare a special nonrecurring cash dividend
        on or
        a redemption of the Common Stock; (C) the Company shall authorize the granting
        to all holders of the Common Stock rights or warrants to subscribe for or
        purchase any shares of capital stock of any class or of any rights; (D) the
        approval of any stockholders of the Company shall be required in connection
        with
        any reclassification of the Common Stock, any consolidation or merger to
        which
        the Company is a party, any sale or transfer of all or substantially all
        of the
        assets of the Company, of any compulsory share exchange whereby the Common
        Stock
        is converted into other securities, cash or property; or (E) the Company
        shall
        authorize the voluntary or involuntary dissolution, liquidation or winding
        up of
        the affairs of the Company; then, in each case, the Company shall cause to
        be
        filed at each office or agency maintained for the purpose of conversion of
        this
        Debenture, and shall cause to be mailed to the Holder at its last address
        as it
        shall appear upon the stock books of the Company, at least twenty (20) calendar
        days prior to the applicable record or effective date hereinafter specified,
        a
        notice stating (x) the date on which a record is to be taken for the purpose
        of
        such dividend, distribution, redemption, rights or warrants, or if a record
        is
        not to be taken, the date as of which the holders of the Common Stock of
        record
        to be entitled to such dividend, distributions, redemption, rights or warrants
        are to be determined or (y) the date on which such reclassification,
        consolidation, merger, sale, transfer or share exchange is expected to become
        effective or close, and the date as of which it is expected that holders
        of the
        Common Stock of record shall be entitled to exchange their shares of the
        Common
        Stock for securities, cash or other property deliverable upon such
        reclassification, consolidation, merger, sale, transfer or share exchange,
        provided, that the failure to mail such notice or any defect therein or in
        the
        mailing thereof shall not affect the validity of the corporate action required
        to be specified in such notice. The Holder is entitled to convert this Debenture
        during the 20-day calendar period commencing the date of such notice to the
        effective date of the event triggering such notice.

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

       

      (ix) In
        case
        of any (1) merger or consolidation of the Company or any subsidiary of the
        Company with or into another Person, or (2) sale by the Company or any
        subsidiary of the Company of more than one-half of the assets of the Company
        in
        one or a series of related transactions, a Holder shall have the right to
        (A)
        exercise any rights under Section
        2(b),
        (B)
        convert the aggregate amount of this Debenture then outstanding into the
        shares
        of stock and other securities, cash and property receivable upon or deemed
        to be
        held by holders of Common Stock following such merger, consolidation or sale,
        and such Holder shall be entitled upon such event or series of related events
        to
        receive such amount of securities, cash and property as the shares of Common
        Stock into which such aggregate principal amount of this Debenture could
        have
        been converted immediately prior to such merger, consolidation or sales would
        have been entitled, or (C) in the case of a merger or consolidation, require
        the
        surviving entity to issue to the Holder a convertible Debenture with a principal
        amount equal to the aggregate principal amount of this Debenture then held
        by
        such Holder, plus all accrued and unpaid interest and other amounts owing
        thereon, which such newly issued convertible Debenture shall have terms
        identical (including with respect to conversion) to the terms of this Debenture,
        and shall be entitled to all of the rights and privileges of the Holder of
        this
        Debenture set forth herein and the agreements pursuant to which this Debentures
        were issued. In the case of clause (C), the conversion price applicable for
        the
        newly issued shares of convertible preferred stock or convertible Debentures
        shall be based upon the amount of securities, cash and property that each
        share
        of Common Stock would receive in such transaction and the Conversion Price
        in
        effect immediately prior to the effectiveness or closing date for such
        transaction. The terms of any such merger, sale or consolidation shall include
        such terms so as to continue to give the Holder the right to receive the
        securities, cash and property set forth in this Section upon any conversion
        or
        redemption following such event. This provision shall similarly apply to
        successive such events.

       

      (d) Other
        Provisions.

       

      (i) The
        Company shall at all times reserve and keep available out of its authorized
        Common Stock the full number of shares of Common Stock issuable upon conversion
        of all outstanding amounts under this Debenture; and within three (3) Business
        Days following the receipt by the Company of a Holder's notice that such
        minimum
        number of Underlying Shares is not so reserved, the Company shall promptly
        reserve a sufficient number of shares of Common Stock to comply with such
        requirement.

       

      (ii) All
        calculations under this Section
        4
        shall be
        rounded up to the nearest $0.0001 or whole share.

       

      (iii) The
        Company covenants that it will at all times reserve and keep available out
        of
        its authorized and unissued shares of Common Stock solely for the purpose
        of
        issuance upon conversion of this Debenture and payment of interest on this
        Debenture, each as herein provided, free from preemptive rights or any other
        actual contingent purchase rights of persons other than the Holder, not less
        than such number of shares of the Common Stock as shall (subject to any
        additional requirements of the Company as to reservation of such shares set
        forth in this Debenture or the Transaction Documents) be issuable (taking
        into
        account the adjustments and restrictions set forth herein) upon the conversion
        of the outstanding principal amount of this Debenture and payment of interest
        hereunder. The Company covenants that all shares of Common Stock that shall
        be
        so issuable shall, upon issue, be duly and validly authorized, issued and
        fully
        paid, nonassessable and, if the Underlying Shares Registration Statement
        has
        been declared effective under the Securities Act, registered for public sale
        in
        accordance with such Underlying Shares Registration Statement.

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

      (iv) Upon
        a
        conversion hereunder the Company shall not be required to issue stock
        certificates representing fractions of shares of the Common Stock, but may
        if
        otherwise permitted, make a cash payment in respect of any final fraction
        of a
        share based on the Closing Bid Price at such time. If the Company elects
        not, or
        is unable, to make such a cash payment, the Holder shall be entitled to receive,
        in lieu of the final fraction of a share, one whole share of Common
        Stock.

       

      (v) The
        issuance of certificates for shares of the Common Stock on conversion of
        this
        Debenture shall be made without charge to the Holder thereof for any documentary
        stamp or similar taxes that may be payable in respect of the issue or delivery
        of such certificate, provided that the Company shall not be required to pay
        any
        tax that may be payable in respect of any transfer involved in the issuance
        and
        delivery of any such certificate upon conversion in a name other than that
        of
        the Holder of such Debenture so converted and the Company shall not be required
        to issue or deliver such certificates unless or until the person or persons
        requesting the issuance thereof shall have paid to the Company the amount
        of
        such tax or shall have established to the satisfaction of the Company that
        such
        tax has been paid.

       

      (vi) Nothing
        herein shall limit a Holder's right to pursue actual damages or declare an
        Event
        of Default pursuant to Section
        2
        herein
        for the Company 's failure to deliver certificates representing shares of
        Common
        Stock upon conversion within the period specified herein and such Holder
        shall
        have the right to pursue all remedies available to it at law or in equity
        including, without limitation, a decree of specific performance and/or
        injunctive relief, in each case without the need to post a bond or provide
        other
        security. The exercise of any such rights shall not prohibit the Holder from
        seeking to enforce damages pursuant to any other Section hereof or under
        applicable law. 

       

      (vii) In
        addition to any other rights available to the Holder, if the Company fails
        to
        deliver to the Holder such certificate or certificates pursuant to Section
        4(a)(i) by
        the
        fifth (5th)
        Trading
        Day after the Conversion Date, and if after such fifth (5th)
        Trading
        Day the Holder purchases (in an open market transaction or otherwise) Common
        Stock to deliver in satisfaction of a sale by such Holder of the Underlying
        Shares which the Holder anticipated receiving upon such conversion (a
“Buy-In”),
        then
        the Company shall (A) pay in cash to the Holder (in addition to any remedies
        available to or elected by the Holder) the amount by which (x) the Holder's
        total purchase price (including brokerage commissions, if any) for the Common
        Stock so purchased exceeds (y) the product of (1) the aggregate number of
        shares
        of Common Stock that such Holder anticipated receiving from the conversion
        at
        issue multiplied by (2) the market price of the Common Stock at the time
        of the
        sale giving rise to such purchase obligation and (B) at the option of the
        Holder, either reissue a Debenture in the principal amount equal to the
        principal amount of the attempted conversion or deliver to the Holder the
        number
        of shares of Common Stock that would have been issued had the Company timely
        complied with its delivery requirements under Section
        4(a)(i).
        For
        example, if the Holder purchases Common Stock having a total purchase price
        of
        $11,000 to cover a Buy-In with respect to an attempted conversion of Debentures
        with respect to which the market price of the Underlying Shares on the date
        of
        conversion was a total of $10,000 under clause (A) of the immediately preceding
        sentence, the Company shall be required to pay the Holder $1,000. The Holder
        shall provide the Company written notice indicating the amounts payable to
        the
        Holder in respect of the Buy-In.

       

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

       

      Section
        5. Notices.
         Any
        notices, consents, waivers or other communications required or permitted
        to be
        given under the terms hereof must be in writing and will be deemed to have
        been
        delivered: (i) upon receipt, when delivered personally; (ii) upon receipt,
        when
        sent by facsimile (provided confirmation of transmission is mechanically
        or
        electronically generated and kept on file by the sending party); or (iii)
        one
        (1) Trading Day after deposit with a nationally recognized overnight delivery
        service, in each case properly addressed to the party to receive the same.
        The
        addresses and facsimile numbers for such communications shall be:

      

      
        	
                If
                  to the Company, to:

              	
                SAVI
                  CORP.

              
	 	
                9852
                  W. Katella Avenue - #363

              
	 	
                Anaheim,
                  CA 92804

              
	 	
                Attention: Mario
                  Procopio, CEO

              
	 	
                Telephone: (714)
                  740-0601

              
	 	
                Facsimile: (714)
                  740-0300

              
	 	 
	
                With
                  a copy to: 

              	
                Sichenzia
                  Ross Friedman Ference LLP

              
	 	
                1065
                  Avenue of the Americas - 21st
                  Floor

              
	 	
                New
                  York, NY 10018

              
	 	
                Attention: Gregory
                  Sichenzia, Esq.

              
	 	
                Telephone: (212)
                  930-9700

              
	 	
                Facsimile: (212)
                  930-9725

              
	 	 

      

      
        	
                If
                  to the Holder:

              	
                Cornell
                  Capital Partners, LP

              
	 	
                101
                  Hudson Street, Suite 3700

              
	 	
                Jersey
                  City, NJ 07303

              
	 	
                Attention: Mark
                  Angelo

              
	 	
                Telephone: (201)
                  985-8300

              
	 	 
	
                With
                  a copy to:

              	
                David
                  Gonzalez, Esq.. 

              
	 	
                101
                  Hudson Street - Suite 3700

              
	 	
                Jersey
                  City, NJ 07302

              
	 	
                Telephone: (201)
                  985-8300

              
	 	
                Facsimile: (201)
                  985-8266

              

      

      

      or
        at
        such other address and/or facsimile number and/or to the attention of such
        other
        person as the recipient party has specified by written notice given to each
        other party three (3) business days prior to the effectiveness of such change.
        Written confirmation of receipt (i) given by the recipient of such notice,
        consent, waiver or other communication, (ii) mechanically or electronically
        generated by the sender's facsimile machine containing the time, date, recipient
        facsimile number and an image of the first page of such transmission or (iii)
        provided by a nationally recognized overnight delivery service, shall be
        rebuttable evidence of personal service, receipt by facsimile or receipt
        from a
        nationally recognized overnight delivery service in accordance with clause
        (i),
        (ii) or (iii) above, respectively.

       

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

       

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

       

      “Approved
        Stock Plan”
means
        a
        stock option plan that has been approved by the Board of Directors of the
        Company prior to the date of the Securities Purchase Agreement, pursuant
        to
        which the Company’s securities may be issued only to any employee, officer or
        director for services provided to the Company.

       

      “Business
        Day”
means
        any day except Saturday, Sunday and any day which shall be a federal legal
        holiday in the United States or a day on which banking institutions are
        authorized or required by law or other government action to close.

       

      “Change
        of Control Transaction”
means
        the occurrence of (a) an acquisition after the date hereof by an individual
        or
        legal entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the
        Exchange Act) of effective control (whether through legal or beneficial
        ownership of capital stock of the Company, by contract or otherwise) of in
        excess of fifty percent (50%) of the voting securities of the Company (except
        that the acquisition of voting securities by the Holder shall not constitute
        a
        Change of Control Transaction for purposes hereof), (b) a replacement at
        one
        time or over time of more than one-half of the members of the board of directors
        of the Company which is not approved by a majority of those individuals who
        are
        members of the board of directors on the date hereof (or by those individuals
        who are serving as members of the board of directors on any date whose
        nomination to the board of directors was approved by a majority of the members
        of the board of directors who are members on the date hereof), (c) the merger,
        consolidation or sale of fifty percent (50%) or more of the assets of the
        Company or any subsidiary of the Company in one or a series of related
        transactions with or into another entity, or (d) the execution by the Company
        of
        an agreement to which the Company is a party or by which it is bound, providing
        for any of the events set forth above in (a), (b) or (c).

       

      “Closing
        Bid Price”
means
        the price per share in the last reported trade of the Common Stock on the
        Principal Market or on the exchange which the Common Stock is then listed
        as
        quoted by Bloomberg, LP.

       

      “Commission”
means
        the Securities and Exchange Commission.

       

      “Common
        Stock”
means
        the common stock, par value $.001, of the Company and stock of any other
        class
        into which such shares may hereafter be changed or reclassified.

       

      “Conversion
        Date”
shall
        mean the date upon which the Holder gives the Company notice of their intention
        to effectuate a conversion of this Debenture into shares of the Company’s Common
        Stock as outlined herein.

       

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

       

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

       

      “Excluded
        Securities”
means,
        (a) shares issued or deemed to have been issued by the Company pursuant to
        an
        Approved Stock Plan (b) shares of Common Stock issued or deemed to be issued
        by
        the Company upon the conversion, exchange or exercise of any right, option,
        obligation or security outstanding on the date prior to date of the Securities
        Purchase Agreement, provided that the terms of such right, option, obligation
        or
        security are not amended or otherwise modified on or after the date of the
        Securities Purchase Agreement, and provided that the conversion price, exchange
        price, exercise price or other purchase price is not reduced, adjusted or
        otherwise modified and the number of shares of Common Stock issued or issuable
        is not increased (whether by operation of, or in accordance with, the relevant
        governing documents or otherwise) on or after the date of the Securities
        Purchase Agreement, and (c) the shares of Common Stock issued or deemed to
        be issued by the Company upon conversion of this Debenture.

       

      “Original
        Issue Date”
shall
        mean the date of the first issuance of this Debenture regardless of the number
        of transfers and regardless of the number of instruments, which may be issued
        to
        evidence such Debenture.

       

      “Person”
means
        a
        corporation, an association, a partnership, organization, a business, an
        individual, a government or political subdivision thereof or a governmental
        agency.

       

      “Securities
        Act”
means
        the Securities Act of 1933, as amended, and the rules and regulations
        promulgated thereunder.

       

      “Trading
        Day”
means
        a
        day on which the shares of Common Stock are quoted on the OTC or quoted or
        traded on such Principal Market on which the shares of Common Stock are then
        quoted or listed; provided, that in the event that the shares of Common Stock
        are not listed or quoted, then Trading Day shall mean a Business
        Day.

       

      “Transaction
        Documents”
means
        the Securities Purchase Agreement or any other agreement delivered in connection
        with the Securities Purchase Agreement, including, without limitation, the
        Pledge Agreement, the Security Agreement, the Irrevocable Transfer Agent
        Instructions, and the Registration Rights Agreement.

       

      “Underlying
        Shares”
means
        the shares of Common Stock issuable upon conversion of this Debenture or
        as
        payment of interest in accordance with the terms hereof.

       

      “Underlying
        Shares Registration Statement”
means
        a
        registration statement meeting the requirements set forth in the Registration
        Rights Agreement, covering among other things the resale of the Underlying
        Shares and naming the Holder as a “selling stockholder” thereunder.

       

      Section
        7. Except
        as
        expressly provided herein, no provision of this Debenture shall alter or
        impair
        the obligations of the Company, which are absolute and unconditional, to
        pay the
        principal of, interest and other charges (if any) on, this Debenture at the
        time, place, and rate, and in the coin or currency, herein prescribed. This
        Debenture is a direct obligation of the Company. This Debenture ranks pari
        passu
        with all other Debentures now or hereafter issued under the terms set forth
        herein. As long as this Debenture is outstanding, the Company shall not and
        shall cause their subsidiaries not to, without the consent of the Holder,
        (i)
        amend its certificate of incorporation, bylaws or other charter documents
        so as
        to adversely affect any rights of the Holder; (ii) repay, repurchase or offer
        to
        repay, repurchase or otherwise acquire shares of its Common Stock or other
        equity securities other than as to the Underlying Shares to the extent permitted
        or required under the Transaction Documents; or (iii) enter into any agreement
        with respect to any of the foregoing. 

       

      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

       

      Section
        8. This
        Debenture shall not entitle the Holder to any of the rights of a stockholder
        of
        the Company, including without limitation, the right to vote, to receive
        dividends and other distributions, or to receive any notice of, or to attend,
        meetings of stockholders or any other proceedings of the Company, unless
        and to
        the extent converted into shares of Common Stock in accordance with the terms
        hereof.

       

      Section
        9. If
        this
        Debenture is mutilated, lost, stolen or destroyed, the Company shall execute
        and
        deliver, in exchange and substitution for and upon cancellation of the mutilated
        Debenture, or in lieu of or in substitution for a lost, stolen or destroyed
        Debenture, a new Debenture for the principal amount of this Debenture so
        mutilated, lost, stolen or destroyed but only upon receipt of evidence of
        such
        loss, theft or destruction of such Debenture, and of the ownership hereof,
        and
        indemnity, if requested, all reasonably satisfactory to the
        Company.

       

      Section
        10. No
        indebtedness of the Company is senior to this Debenture in right of payment,
        whether with respect to interest, damages or upon liquidation or dissolution
        or
        otherwise. Without the Holder’s consent, the Company will not and will not
        permit any of their subsidiaries to, directly or indirectly, enter into,
        create,
        incur, assume or suffer to exist any indebtedness of any kind, on or with
        respect to any of its property or assets now owned or hereafter acquired
        or any
        interest therein or any income or profits there from that is senior in any
        respect to the obligations of the Company under this Debenture.

       

      Section
        11. This
        Debenture shall be governed by and construed in accordance with the laws
        of the
        State of New Jersey, without giving effect to conflicts of laws thereof.
        Each of
        the parties consents to the jurisdiction of the Superior Courts of the State
        of
        New Jersey sitting in Hudson County, New Jersey and the U.S. District Court
        for the District of New Jersey sitting in Newark, New Jersey in connection
        with
        any dispute arising under this Debenture and hereby waives, to the maximum
        extent permitted by law, any objection, including any objection based on
        forum non conveniens
        to the
        bringing of any such proceeding in such jurisdictions. 

       

      Section
        12. If
        the
        Company fails to strictly comply with the terms of this Debenture, then the
        Company shall reimburse the Holder promptly for all fees, costs and expenses,
        including, without limitation, attorneys’ fees and expenses incurred by the
        Holder in any action in connection with this Debenture, including, without
        limitation, those incurred: (i) during any workout, attempted workout, and/or
        in
        connection with the rendering of legal advice as to the Holder’s rights,
        remedies and obligations, (ii) collecting any sums which become due to the
        Holder, (iii) defending or prosecuting any proceeding or any counterclaim
        to any
        proceeding or appeal; or (iv) the protection, preservation or enforcement
        of any
        rights or remedies of the Holder.

       

      Section
        13. Any
        waiver by the Holder of a breach of any provision of this Debenture shall
        not
        operate as or be construed to be a waiver of any other breach of such provision
        or of any breach of any other provision of this Debenture. The failure of
        the
        Holder to insist upon strict adherence to any term of this Debenture on one
        or
        more occasions shall not be considered a waiver or deprive that party of
        the
        right thereafter to insist upon strict adherence to that term or any other
        term
        of this Debenture. Any waiver must be in writing.

       

      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

      

       

      Section
        14. If
        any
        provision of this Debenture is invalid, illegal or unenforceable, the balance
        of
        this Debenture shall remain in effect, and if any provision is inapplicable
        to
        any person or circumstance, it shall nevertheless remain applicable to all
        other
        persons and circumstances. If it shall be found that any interest or other
        amount deemed interest due hereunder shall violate applicable laws governing
        usury, the applicable rate of interest due hereunder shall automatically
        be
        lowered to equal the maximum permitted rate of interest. The Company covenants
        (to the extent that it may lawfully do so) that it shall not at any time
        insist
        upon, plead, or in any manner whatsoever claim or take the benefit or advantage
        of, any stay, extension or usury law or other law which would prohibit or
        forgive the Company from paying all or any portion of the principal of or
        interest on this Debenture as contemplated herein, wherever enacted, now
        or at
        any time hereafter in force, or which may affect the covenants or the
        performance of this indenture, and the Company (to the extent it may lawfully
        do
        so) hereby expressly waives all benefits or advantage of any such law, and
        covenants that it will not, by resort to any such law, hinder, delay or impeded
        the execution of any power herein granted to the Holder, but will suffer
        and
        permit the execution of every such as though no such law has been
        enacted.

       

      Section
        15. Whenever
        any payment or other obligation hereunder shall be due on a day other than
        a
        Business Day, such payment shall be made on the next succeeding Business
        Day.

       

      Section
        16. This
        Debenture is exchangeable for an equal aggregate principal amount of Debentures
        of different authorized denominations, as requested by the Holder surrendering
        the same. No service charge will be made for such registration of transfer
        or
        exchange.

       

      Section
        17. THE
        PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT ANY
        OF
        THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON
        OR
        ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION
        DOCUMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
        VERBAL
        OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT
        FOR
        THE PARTIES’ ACCEPTANCE OF THIS AGREEMENT.

       

      [REMAINDER
        OF PAGE INTENTIONLLY LEFT BLANK]

       

      
        
          
          

        

        
          16

          
            

          

        

        
          
          

        

      

       

      IN
        WITNESS WHEREOF,
        the
        Company has caused this Secured Convertible Debenture to be duly executed
        by a
        duly authorized officer as of the date set forth above.

       

      
        	 	 	 
	 	
                COMPANY:
                  
                  SAVI
                    CORP. 

                

              
	 
 	 
 	 
 
	 	By:  	/s/ MARIO
                PROCOPIO
	 	
                

                Name: Mario
                  Procopio

              
	 	
                Title: CEO

              

      

       

      
        
          
          

        

        
          17

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00106-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00106-of-00352.parquet"}]]