Document:

f8k1209ex10i_yesdtc.htm

    Exhibit 10.1

     

    SUBSCRIPTION
AGREEMENT

     

     

    THIS SUBSCRIPTION AGREEMENT
(this “Agreement”), is
dated as of December 11, 2009, by and between YesDTC, Inc., a Delaware
corporation (the “Company”), and the subscribers
listed on Schedule
I hereto (the “Subscribers”).

    

    WHEREAS, the Company and the
Subscribers are executing and delivering this Agreement in reliance upon an
exemption from securities registration afforded by the provisions of Section
4(2), Section 4(6) and/or Regulation D (“Regulation D”) as promulgated
by the United States Securities and Exchange Commission (the “Commission”) under the
Securities Act of 1933, as amended (the “1933 Act”);

     

    WHEREAS, the parties desire
that, upon the terms and subject to the conditions contained herein, the Company
shall issue and sell to the Subscribers, as provided herein, and the Subscribers
shall purchase for an aggregate of $200,000 (the “Purchase Price”) (i) $200,000
principal amount (“Principal
Amount”) of secured  promissory notes of the Company (“Note” or “Notes”), a form of which is
annexed hereto as Exhibit
A, convertible into shares of the Company’s Common Stock, $0.0001 par
value (the “Common
Stock”) at a per share conversion price set forth in the Notes (“Conversion Price”); and (ii)
share purchase warrants (the “Warrants”) in the form
attached hereto as Exhibit B,
to purchase shares of the Company’s Common Stock (the “Warrant Shares”) (the “Offering”).  The
Notes, shares of Common Stock issuable upon conversion of the Notes (the “Conversion Shares”), the
Warrants and the Warrant Shares are collectively referred to herein as the
“Securities.”;
and

     

    WHEREAS, the aggregate
proceeds of the sale of the Notes and the Warrants contemplated hereby shall be
held in escrow by Anslow & Jaclin, LLP (the “Escrow Agent”) pursuant to the
terms of an Escrow Agreement to be executed by the parties substantially in the
form attached hereto as Exhibit
C (the “Escrow
Agreement”).

     

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

     

    1.           Closing
Date.   The “Closing Date” shall be the
date that the Purchase Price is transmitted by wire transfer or otherwise
credited to or for the benefit of the Company. The consummation of the
transactions contemplated herein shall take place at the offices of Anslow &
Jaclin, LLP, 195 Route 9 South, Suite 204, Manalpan, New Jersey 07726, upon the
satisfaction or waiver of all conditions to closing set forth in this
Agreement.   Subject to the satisfaction or waiver of the terms
and conditions of this Agreement, on the Closing Date, Subscribers shall
purchase and the Company shall sell to Subscribers the Notes and Warrants as
described in Section 2 of this Agreement.

    

    2.           Notes and
Warrants.

    

    (a)           Notes.   Subject
to the satisfaction or waiver of the terms and conditions of this Agreement, on
the Closing Date, each Subscriber shall purchase and the Company shall sell to
the Subscriber a Note in the Principal Amount designated on Schedule
I hereto for such Subscriber’s Purchase Price indicated
thereon.

    

    (b)           Warrants.  On
the Closing Date, the Company will issue and deliver the Warrants to the
Subscribers.  One Warrant will be issued for each Share which would be
issued on the Closing Date assuming the complete conversion of the Notes on the
Closing Date at the Conversion Price.  The exercise price to acquire a
Warrant Share upon exercise of a Warrant shall be equal to $0.10, subject to
reduction as described in the Warrants.  The Warrants shall be
exercisable until five (5) years after the issue date of the
Warrants.

     

    
      
        
        

      

      
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    (c)           Allocation of Purchase
Price.   The Purchase Price will be allocated among the
components of the Securities so that each component of the Securities will be
fully paid and non-assessable.

    

    (d)           Distribution of Purchase
Price.  Notwithstanding anything to the contrary contained in
this Agreement or otherwise, pursuant to the terms of the Escrow Agreement, on
the Closing Date the Escrow Agent shall deliver to the Company $200,000 of the
Purchase Price, less payment of reasonable legal fees associated with the
preparation of this agreement.

    3.           Security
Interest.   The Subscriber will be granted a security
interest in certain assets of the Company and Subsidiaries (as defined in
Section 5(a) of this Agreement), which security interest will be
memorialized in a “Security
Agreement,” a form of which is annexed hereto as Exhibit
D.   The Company will execute such other agreements,
documents and financing statements reasonably requested by the Subscribers,
which will be filed at the Company’s expense with the jurisdictions, states and
counties designated by the Subscribers.

    

                          4.           Subscriber Representations
and Warranties.  Each of the Subscribers hereby represents and
warrants to and agrees with the Company that:

    

    (a)          Organization and Standing of
the Subscriber.  Subscriber, to
the extent applicable, is a corporation duly incorporated, validly existing and
in good standing under the laws of the jurisdiction of its
incorporation.

    

    (b)          Authorization and
Power.  Subscriber has the
requisite power and authority to enter into and perform this Agreement and the
other Transaction Documents and to purchase the Note and Warrant being sold to
it hereunder.  The execution, delivery and performance of this
Agreement and the other Transaction Documents by Subscriber and the consummation
by it of the transactions contemplated hereby and thereby have been duly
authorized by all necessary corporate action, and no further consent or
authorization of Subscriber or its Board of Directors or stockholders, if
applicable, is required.  This Agreement and the other Transaction
Documents have been duly authorized, executed and when delivered by Subscriber
and constitute, or shall constitute when executed and delivered, a valid and
binding obligation of Subscriber, enforceable against Subscriber in accordance
with the terms thereof.

    

    (c)           No Conflicts.  The execution, delivery and performance of
this Agreement and the other Transaction Documents and the consummation by
Subscriber of the transactions contemplated hereby and thereby or relating
hereto do not and will not (i) result in a violation of Subscriber’s charter
documents, bylaws or other organizational documents, if applicable, (ii)
conflict with nor constitute a default (or an event which with notice or lapse
of time or both would become a default) under any agreement to which Subscriber
is a party, nor (iii) result in a violation of any law, rule, or regulation, or
any order, judgment or decree of any court or governmental agency applicable to
Subscriber or its properties (except for such conflicts, defaults and violations
as would not, individually or in the aggregate, have a material adverse effect
on Subscriber).  Subscriber is not required to obtain any consent,
authorization or order of, or make any filing or registration with, any court or
governmental agency in order for it to execute, deliver or perform any of its
obligations under this Agreement and the other Transaction
Documents  nor to purchase the Securities in accordance with the terms
hereof, provided that for purposes of the representation made in this sentence,
Subscriber is assuming and relying upon the accuracy of the relevant
representations and agreements of the Company herein.

    

    (d)           Information on
Company.   Subscriber has been furnished with or has had
access and may have received in writing from the Company such other information
concerning its operations, financial condition and other matters as Subscriber
has requested in writing, identified thereon as “REPORTS” or OTHER WRITTEN
INFORMATION (such other information is collectively, the “Reports” or "Other Written Information"),
and considered all factors Subscriber deems
material in deciding on the advisability of investing in the
Securities.

     

    
      
        
        

      

      
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    (e)           Information on
Subscriber.   Subscriber is, and will be at the time of
the conversion of the Notes and exercise of the Warrants, an "accredited investor", as such
term is defined in Regulation D promulgated by the Commission under the 1933
Act, is experienced in investments and business matters, has made investments of
a speculative nature and has purchased securities of United States
publicly-owned companies in private placements in the past and, with its
representatives, has such knowledge and experience in financial, tax and other
business matters as to enable Subscriber to
utilize the information made available by the Company to evaluate the merits and
risks of and to make an informed investment decision with respect to the
proposed purchase, which represents a speculative
investment.  Subscriber has the authority and is duly and legally
qualified to purchase and own the Securities.  Subscriber is able to
bear the risk of such investment for an indefinite period and to afford a
complete loss thereof.  The information set forth on Schedule
I hereto
regarding Subscriber is
accurate.

    

    (f)           Purchase of
Notes  and Warrants.  On the Closing Date, Subscriber will purchase its Note and Warrants as
principal for its own account for investment only and not with a view toward, or
for resale in connection with, the public sale or any distribution
thereof.

    

    (g)           Compliance with Securities
Act.   Subscriber understands and agrees that the
Securities have not been registered under the 1933 Act or any applicable state
securities laws, by reason of their issuance in a transaction that does not
require registration under the 1933 Act (based in part on the accuracy of the
representations and warranties of the Subscriber contained herein), and that such
Securities must be held indefinitely unless a subsequent disposition is
registered under the 1933 Act or any applicable state securities laws or is
exempt from such registration.  In any event, and subject to
compliance with applicable securities laws, the Subscriber may enter into lawful
hedging transactions in the course of hedging the position they assume and the
Subscriber may also enter into lawful short positions or other derivative
transactions relating to the Securities, or interests in the Securities, and
deliver the Securities, or interests in the Securities, to close out their short
or other positions or otherwise settle other transactions, or loan or pledge the
Securities, or interests in the Securities, to third parties who in turn may
dispose of these Securities.

    

    (h)           Conversion Shares and
Warrant Shares Legend.  The Conversion Shares and Warrant
Shares shall bear the following or similar legend:

    

    "THE ISSUANCE AND SALE OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, NOR APPLICABLE STATE SECURITIES
LAWS.  THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION
OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS
SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID
ACT.  NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING
ARRANGEMENT SECURED BY THE SECURITIES."

     

    
      
        
        

      

      
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    (i)           Notes and Warrants
Legend.  The Notes and Warrants shall bear the following
legend:

     

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

     

    (j)           Communication of
Offer.  The offer to sell the Securities was directly
communicated to Subscriber by the Company.  At no time was Subscriber
presented with or solicited by any leaflet, newspaper or magazine article, radio
or television advertisement, or any other form of general advertising or
solicited or invited to attend a promotional meeting otherwise than in
connection and concurrently with such communicated offer.

    

    (k)           Restricted
Securities.   Subscriber understands that the Securities
have not been registered under the 1933 Act and Subscriber will not sell, offer
to sell, assign, pledge, hypothecate or otherwise transfer any of the Securities
unless pursuant to an effective registration statement under the 1933 Act, or
unless an exemption from registration is available.  Notwithstanding
anything to the contrary contained in this Agreement, Subscriber may transfer
(without restriction and without the need for an opinion of counsel) the
Securities to its Affiliates (as defined below) provided that each such
Affiliate is an “accredited investor” under Regulation D and such Affiliate
agrees to be bound by the terms and conditions of this Agreement. For the
purposes of this Agreement, an “Affiliate” of any person or
entity means any other person or entity directly or indirectly controlling,
controlled by or under direct or indirect common control with such person or
entity.  Affiliate includes each Subsidiary of the
Company.  For purposes of this definition, “control” means the power to
direct the management and policies of such person or firm, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise.

    

    (l)           No Governmental
Review.  Subscriber understands that no United States federal
or state agency or any other governmental or state agency has passed on or made
recommendations or endorsement of the Securities or the suitability of the
investment in the Securities nor have such authorities passed upon or endorsed
the merits of the offering of the Securities.

    

    (m)          Correctness of
Representations.  Subscriber represents that the foregoing
representations and warranties are true and correct as of the date hereof and,
unless Subscriber otherwise notifies the Company prior to the Closing Date,
shall be true and correct as of the Closing Date.

     

    
      
        
        

      

      
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    (n)           Survival.  The
foregoing representations and warranties shall survive the Closing
Date.

     

    5.           Company Representations and
Warranties.  The Company represents and warrants to and agrees
with each Subscriber that:

     

    (a)           Due
Incorporation.  The Company is a corporation duly incorporated,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation and has the requisite corporate power to own its properties and to
carry on its business as presently conducted.  The Company is duly
qualified as a foreign corporation to do business and is in good standing in
each jurisdiction where the nature of the business conducted or property owned
by it makes such qualification necessary, other than those jurisdictions in
which the failure to so qualify would not have a Material Adverse
Effect.  For purposes of this Agreement, a “Material Adverse Effect” shall
mean a material adverse effect on the financial condition, results of
operations, prospects, properties or business of the Company and its
Subsidiaries taken as a whole.  For purposes of this Agreement, “Subsidiary” means, with
respect to any entity at any date, any corporation, limited or general
partnership, limited liability company, trust, estate, association, joint
venture or other business entity of which more than 30% of (i) the
outstanding capital stock having (in the absence of contingencies) ordinary
voting power to elect a majority of the board of directors or other managing
body of such entity, (ii) in the case of a partnership or limited liability
company, the interest in the capital or profits of such partnership or limited
liability company or (iii) in the case of a trust, estate, association,
joint venture or other entity, the beneficial interest in such trust, estate,
association or other entity business is, at the time of determination, owned or
controlled directly or indirectly through one or more intermediaries, by such
entity.  As of the Closing Date, all of the Company’s Subsidiaries and
the Company’s ownership interest therein is set forth on Schedule
5(a).

     

    (b)           Outstanding
Stock.  All issued and outstanding shares of capital stock and
equity interests in the Company have been duly authorized and validly issued and
are fully paid and non-assessable.

     

    (c)           Authority;
Enforceability.  This Agreement, the Notes, Conversion Shares,
Warrants, Security Agreement, the Escrow Agreement, and any other agreements
delivered together with this Agreement or in connection herewith (collectively
“Transaction Documents”)
have been duly authorized, executed and delivered by the Company and are valid
and binding agreements of the Company enforceable in accordance with their
terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights generally and to general principles of equity.  The
Company has full corporate power and authority necessary to enter into and
deliver the Transaction Documents and to perform its obligations
thereunder.

     

    (d)           Capitalization and
Additional Issuances.   The authorized and outstanding
capital stock of the Company and Subsidiaries on a fully diluted basis as of the
date of this Agreement and the Closing Date (not including the Securities) are
set forth on Schedule
5(d).  Except as set forth on Schedule
5(d), there are no options, warrants, or rights to subscribe to,
securities, rights, understandings or obligations convertible into or
exchangeable for or giving any right to subscribe for any shares of capital
stock or other equity interest of the Company or any of the
Subsidiaries.  The only officer, director, employee and consultant
stock option or stock incentive plan or similar plan currently in effect or
contemplated by the Company is described on Schedule
5(d).  There are no outstanding agreements or preemptive or
similar rights affecting the Company's Common Stock.

     

    
      
        
        

      

      
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    (e)           Consents.  No
consent, approval, authorization or order of any court, governmental agency or
body or arbitrator having jurisdiction over the Company, or any of its
Affiliates, the OTC Bulletin Board (the “Bulletin Board”) or the
Company's shareholders is required for the execution by the Company of the
Transaction Documents and compliance and performance by the Company of its
obligations under the Transaction Documents, including, without limitation, the
issuance and sale of the Securities.  The Transaction Documents and
the Company’s performance of its obligations thereunder have been unanimously
approved by the Company’s Board of Directors.  No consent, approval,
order or authorization of, or registration, qualification, designation,
declaration or filing with, any governmental authority in the world, including
without limitation, the United States, or elsewhere is required by the Company
or any Affiliate of the Company in connection with the consummation of the
transactions contemplated by this Agreement, except as would not otherwise have
a Material Adverse Effect or the consummation of any of the other agreements,
covenants or commitments of the Company or any Subsidiary contemplated by the
other Transaction Documents. Any such qualifications and filings will, in the
case of qualifications, be effective on the Closing and will, in the case of
filings, be made within the time prescribed by law.

     

    (f)           No Violation or
Conflict.  Assuming the representations and warranties of the
Subscriber in Section 4 are true and correct, neither the issuance and sale of
the Securities nor the performance of the Company’s obligations under this
Agreement and all other agreements entered into by the Company relating thereto
by the Company will:

     

    (i)           violate,
conflict with, result in a breach of, or constitute a default (or an event which
with the giving of notice or the lapse of time or both would be reasonably
likely to constitute a default) under (A) the articles or certificate of
incorporation, charter or bylaws of the Company, (B) to the Company's knowledge,
any decree, judgment, order, law, treaty, rule, regulation or determination
applicable to the Company of any court, governmental agency or body, or
arbitrator having jurisdiction over the Company or over the properties or assets
of the Company or any of its Affiliates, (C) the terms of any bond, debenture,
note or any other evidence of indebtedness, or any agreement, stock option or
other similar plan, indenture, lease, mortgage, deed of trust or other
instrument to which the Company or any of its Affiliates is a party, by which
the Company or any of its Affiliates is bound, or to which any of the properties
of the Company or any of its Affiliates is subject, or (D) the terms of any
"lock-up" or similar provision of any underwriting or similar agreement to which
the Company, or any of its Affiliates is a party except the violation, conflict,
breach, or default of which would not have a Material Adverse Effect;
or

     

    (ii)           result
in the creation or imposition of any lien, charge or encumbrance upon the
Securities or any of the assets of the Company or any of its Affiliates except
in favor of Subscribers as described herein; or

     

    (iii)           except
as described on Schedule
5(f)(iii), result in the activation of any anti-dilution rights or a
reset or repricing of any debt, equity or security instrument of any creditor or
equity holder of the Company, or the holder of the right to receive any debt,
equity or security instrument of the Company nor result in the acceleration of
the due date of any obligation of the Company; or

     

                   
(iv)           except as
described on Schedule
5(f)(iv), result in the triggering of any piggy-back or other
registration rights of any person or entity holding securities of the Company or
having the right to receive securities of the Company.

     

    (g)           The
Securities.  The Securities upon issuance:

     

    (i)           are,
or will be, free and clear of any security interests, liens, claims or other
encumbrances, subject only to restrictions upon transfer under the 1933 Act and
any applicable state securities laws;

     

    
      
        
        

      

      
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    (ii)           have
been, or will be, duly and validly authorized and on the dates of issuance of
the Conversion Shares upon conversion of the Notes, and the Warrant Shares upon
exercise of the Warrants, such Conversion Shares and Warrant Shares will be duly
and validly issued, fully paid and non-assessable and if registered pursuant to
the 1933 Act and resold pursuant to an effective registration statement or
exempt from registration will be free trading, unrestricted and
unlegended;

     

    (iii)           will
not have been issued or sold in violation of any preemptive or other similar
rights of the holders of any securities of the Company or rights to acquire
securities of the Company;

     

    (iv)           will
not subject the holders thereof to personal liability by reason of being such
holders; and

     

                 
  (v)           assuming
the representations and warranties of the Subscribers as set forth in Section 4
hereof are true and correct, will not result in a violation of Section 5 under
the 1933 Act.

     

    (h)           Litigation.  There
is no pending or, to the best knowledge of the Company, threatened action, suit,
proceeding or investigation before any court, governmental agency or body, or
arbitrator having jurisdiction over the Company, or any of its Affiliates that
would affect the execution by the Company or the complete and timely performance
by the Company of its obligations under the Transaction
Documents.  Except as disclosed in the Reports, there is no pending
or, to the best knowledge of the Company, basis for or threatened action, suit,
proceeding or investigation before any court, governmental agency or body, or
arbitrator having jurisdiction over the Company, or any of its Affiliates which
litigation if adversely determined would have a Material Adverse
Effect.

     

    (i)           No Market
Manipulation.  The Company and its Affiliates have not taken,
and will not take, directly or indirectly, any action designed to, or that might
reasonably be expected to, cause or result in stabilization or manipulation of
the price of the Common Stock to facilitate the sale or resale of the Securities
or affect the price at which the Securities may be issued or
resold.

     

    (j)           Information Concerning
Company.  The Reports and Other Written Information contain all
material information relating to the Company and its operations and financial
condition as of their respective dates which information is required to be
disclosed therein.   Since December 31, 2007 and except as
modified in the Reports and Other Written Information or in the Schedules
hereto, there has been no Material Adverse Event relating to the Company's
business, financial condition or affairs. The Reports and Other Written
Information including the financial statements included therein do not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, taken
as a whole, not misleading in light of the circumstances and when
made.

     

    (k)           Solvency.  Based
on the financial condition of the Company as of the Closing Date, (i) the
Company’s fair saleable value of its assets exceeds the amount that will be
required to be paid on or in respect of the Company’s existing debts and other
liabilities (including known contingent liabilities) as they mature; (ii) the
Company’s assets do not constitute unreasonably small capital to carry on its
business for the current fiscal year as now conducted and as proposed to be
conducted including its capital needs taking into account the particular capital
requirements of the business conducted by the Company, and projected capital
requirements and capital availability thereof; and (iii) the current cash flow
of the Company, together with the proceeds the Company would receive, were it to
liquidate all of its assets, after taking into account all anticipated uses of
the cash, would be sufficient to pay all amounts on or in respect of its debt
when such amounts are required to be paid.  The Company does not
intend to incur debts beyond its ability to pay such debts as they mature
(taking into account the timing and amounts of cash to be payable on or in
respect of its debt).

     

    
      
        
        

      

      
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    (l)           Defaults.  The
Company is not in violation of its articles of incorporation or
bylaws.   Except as set forth in Schedule
5(l), the Company is (i) not in default under or in violation of any
other material agreement or instrument to which it is a party or by which it or
any of its properties are bound or affected, which default or violation would
have a Material Adverse Effect, (ii) not in default with respect to any order of
any court, arbitrator or governmental body or subject to or party to any order
of any court or governmental authority arising out of any action, suit or
proceeding under any statute or other law respecting antitrust, monopoly,
restraint of trade, unfair competition or similar matters, or (iii) not in
violation of any statute, rule or regulation of any governmental authority which
violation would have a Material Adverse Effect.

     

    (m)           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 of the Company nor solicited
any offers to buy any security of the Company under circumstances that would
cause the offer of the Securities pursuant to this Agreement to be integrated
with prior offerings by the Company for purposes of the 1933 Act or any
applicable stockholder approval provisions, including, without limitation, under
the rules and regulations of the Bulletin Board.  No prior offering
will impair the exemptions relied upon in this Offering or the Company’s ability
to timely comply with its obligations hereunder.  Neither the Company
nor any of its Affiliates will take any action or steps that would cause the
offer or issuance of the Securities to be integrated with other offerings which
would impair the exemptions relied upon in this Offering or the Company’s
ability to timely comply with its obligations hereunder.  The Company
will not conduct any offering other than the transactions contemplated hereby
that may be integrated with the offer or issuance of the Securities that would
impair the exemptions relied upon in this Offering or the Company’s ability to
timely comply with its obligations hereunder.

     

    (n)           No General
Solicitation.  Neither the Company, nor any of its Affiliates,
nor to its knowledge, 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 1933 Act) in connection with the offer or sale of the
Securities.

     

    (o)           No Undisclosed
Liabilities.  The Company has no liabilities or obligations
which are material, individually or in the aggregate, other than those incurred
in the ordinary course of the Company businesses since December 31, 2007 and
which, individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect, except as disclosed in the Reports or on Schedule
5(o).

     

    (p)           No Undisclosed Events or
Circumstances.  Since September 30, 2008, except as disclosed
in the Reports, no event or circumstance has occurred or exists with respect to
the Company or its businesses, properties, operations or financial condition,
that, under applicable law, rule or regulation, requires public disclosure or
announcement prior to the date hereof by the Company but which has not been so
publicly announced or disclosed in the Reports.

     

    (q)           Banking.  Schedule
5(q) contains a list of all financial institutions at which the Company
and Subsidiaries maintain deposit, checking and other accounts. The list
includes the accurate addresses of such financial institutions and account
numbers of such accounts.

     

    (r)           Dilution.   The
Company's executive officers and directors understand the nature of the
Securities being sold hereby and recognize that the issuance of the Securities
will have a potential dilutive effect on the equity holdings of other holders of
the Company’s equity or rights to receive equity of the Company.  The
board of directors of the Company has concluded, in its good faith business
judgment, that the issuance of the Securities is in the best interests of the
Company.  The Company specifically acknowledges that its obligation to
issue the Conversion Shares upon conversion of the Notes and the Warrant Shares
upon exercise of the Warrants is binding upon the Company and enforceable
regardless of the dilution such issuance may have on the ownership interests of
other shareholders of the Company or parties entitled to receive equity of the
Company.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    (s)           No Disagreements with
Accountants and Lawyers.  Except as set forth on Schedule
5(s), there are no material disagreements of any kind presently existing,
or reasonably anticipated by the Company to arise between the Company and the
accountants and lawyers previously and presently employed by the Company,
including but not limited to disputes or conflicts over payment owed to such
accountants and lawyers, nor have there been any such disagreements during the
two years prior to the Closing Date.

    

    (t)           Investment
Company.   Neither the Company nor any Affiliate of the
Company is an “investment company” within the meaning of the Investment Company
Act of 1940, as amended.

    

    (u)           Foreign Corrupt
Practices.  Neither the Company, nor to the knowledge of the
Company, any agent or other person acting on behalf of the Company, has (i)
directly or indirectly, used any funds for unlawful contributions, gifts,
entertainment or other unlawful expenses related to foreign or domestic
political activity, (ii) made any unlawful payment to foreign or domestic
government officials or employees or to any foreign or domestic political
parties or campaigns from corporate funds, (iii) failed to disclose fully any
contribution made by the Company (or made by any person acting on its behalf of
which the Company is aware) which is  in violation of law, or (iv)
violated in any material respect any provision of the Foreign Corrupt Practices
Act of 1977, as amended.

    

    (v)           Reserved.

    

    (w)           Reserved.

    

    (x)           Reserved.

    

    (y)           Company Predecessor and
Subsidiaries.  The Company makes each of the representations
contained in Sections 5(a), (b), (c), (d), (e), (f), (h), (j), (l), (o), (p),
(q), (s), (t) and (u) of this Agreement, as same relate or could be applicable
to each Subsidiary.  All representations made by or relating to the
Company of a historical or prospective nature and all undertakings described in
Sections 9(g) through 9(l) shall relate, apply and refer to the Company and its
predecessors and successors.  The Company represents that it owns all
of the equity of the Subsidiaries and rights to receive equity of the
Subsidiaries identified on Schedule
5(a), free and clear of all liens, encumbrances and claims, except as set
forth on Schedule
5(a).  No person or entity other than the Company has the right
to receive any equity interest in the Subsidiaries.  The Company
further represents that the Subsidiaries have not been known by any other name
for the prior five years.

    

    (z)           Correctness of
Representations.  The Company represents that the foregoing
representations and warranties are true and correct as of the date hereof in all
material respects, and, unless the Company otherwise notifies the Subscribers
prior to the Closing Date, shall be true and correct in all material respects as
of the Closing Date; provided, that, if such representation or warranty is made
as of a different date, in which case such representation or warranty shall be
true as of such date.

     

    (AA)           Survival.  The
foregoing representations and warranties shall survive the Closing
Date.

     

    6.           Regulation D Offering/Legal
Opinion.  The offer and issuance of the Securities to the
Subscribers is being made pursuant to the exemption from the registration
provisions of the 1933 Act afforded by Section 4(2) or Section 4(6) of the 1933
Act and/or Rule 506 of Regulation D promulgated thereunder.  The
Company will provide, at the Company's expense, to the Subscriber, such other
legal opinions, if any, as are reasonably necessary in each Subscriber’s and
such counsel’s opinion for the issuance and resale of the Conversion Shares,
Warrant Shares and Fee Shares pursuant to an effective registration statement,
Rule 144 under the 1933 Act or an exemption from registration.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

                          7.1.           Conversion of
Notes.

    

    (a)           Upon
the conversion of a Note or part thereof, the Company shall, at its own cost and
expense, take all necessary action, including obtaining and delivering an
opinion of counsel, to assure that the Company's transfer agent shall issue
stock certificates in the name of a Subscriber (or its permitted nominee) or
such other persons as designated by Subscriber and in such denominations to be
specified at conversion representing the number of shares of Common Stock
issuable upon such conversion.  The Company warrants that no
instructions other than these instructions have been or will be given to the
transfer agent of the Company's Common Stock and that the certificates
representing such shares shall contain no legend other than the legend set forth
in Section 4(h).  If and when a Subscriber sells the Conversion
Shares, assuming (i) a registration statement including such Conversion Shares
for registration has been filed with the Commission, is effective and the
prospectus, as supplemented or amended, contained therein is current and (ii)
Subscriber or its agent confirms in writing to the transfer agent that
Subscriber has complied with the prospectus delivery requirements, the Company
will reissue the Conversion Shares without restrictive legend and the Conversion
Shares will be free-trading, and freely transferable.  In the event
that the Conversion Shares are sold in a manner that complies with an exemption
from registration, the Company will promptly instruct its counsel to issue to
the transfer agent an opinion permitting removal of the legend indefinitely, if
pursuant to Rule 144(b)(1)(i) of the 1933 Act, provided that Subscriber delivers
all reasonably requested representations in support of such
opinion.

    

    (b)           Each
Subscriber will give notice of its decision to exercise its right to convert its
Note, interest, or part thereof by telecopying or otherwise delivering a
completed Notice of Conversion (a form of which is annexed as Exhibit A to the Note) to the
Company via confirmed telecopier transmission or otherwise pursuant to Section
13(a) of this Agreement.  Subscriber will not be required to surrender
the Note until the Note has been fully converted or satisfied.  Each
date on which a Notice of Conversion is telecopied to the Company in accordance
with the provisions hereof by 6 PM Eastern Time (“ET”) (or if received by the
Company after 6 PM ET, then the next business day) shall be deemed a “Conversion
Date.”  The Company will itself or cause the Company’s transfer
agent to transmit the Company's Common Stock certificates representing the
Conversion Shares issuable upon conversion of the Note to Subscriber via express
courier for receipt by Subscriber within five (5) business days after the
Conversion Date (such fifth day being the "Delivery Date").  In
the event the Conversion Shares are electronically transferable, then delivery
of the Shares must be made by
electronic transfer provided request for such electronic transfer has been made
by the Subscriber.   A Note representing the balance of the Note
not so converted will be provided by the Company to Subscriber if requested by
Subscriber, provided Subscriber delivers the original Note to the
Company.

    

    (c)           The
Company understands that a delay in the delivery of the Conversion Shares in the
form required pursuant to Section 7.1 hereof later than the Delivery Date could
result in economic loss to the Subscribers.  As compensation to
Subscribers for such loss, the Company agrees to pay (as liquidated damages and
not as a penalty) to each applicable Subscriber for late issuance of Conversion
Shares in the form required pursuant to Section 7.1 hereof upon Conversion of
the Note, the amount of $100 per business day after the Delivery Date for each
$10,000 of Note principal amount and interest (and proportionately for other
amounts) being converted of the corresponding Conversion Shares which are not
timely delivered.  The Company shall pay any payments incurred under
this Section upon demand.  Furthermore, in addition to any other
remedies which may be available to the Subscribers, in the event that the
Company fails for any reason to effect delivery of the Conversion Shares within
seven (7) business days after the Delivery Date, the relevant Subscriber will be
entitled to revoke all or part of the relevant Notice of Conversion by delivery
of a notice to such effect to the Company whereupon the Company and Subscriber
shall each be restored to their respective positions immediately prior to the
delivery of such notice, except that the damages payable in connection with the
Company’s default shall be payable through the date notice of revocation or
rescission is given to the Company.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

       

      7.2.           Reserved.

    

    

             
     7.3.          Maximum
Conversion.  A Subscriber shall not be entitled to convert on a
Conversion Date that amount of a Note nor may the Company make any payment
including principal, interest, or liquidated or other damages by delivery of
Conversion Shares in connection with that number of Conversion Shares which
would be in excess of the sum of (i) the number of shares of Common Stock
beneficially owned by such Subscriber and its Affiliates on a Conversion Date or
payment date, and (ii) the number of Conversion Shares issuable upon the
conversion of the Note with respect to which the determination of this provision
is being made on a calculation date, which would result in beneficial ownership
by Subscriber and its Affiliates of more than 4.99% of the outstanding shares of
Common Stock of the Company on such Conversion Date.  For the purposes
of the immediately preceding sentence, beneficial ownership shall be determined
in accordance with Section 13(d) of the Securities Exchange Act of 1934, as
amended, and Rule 13d-3 thereunder.  Subject to the foregoing, the
Subscriber shall not be limited to aggregate conversions of only 4.99% and
aggregate conversions by the Subscriber may exceed 4.99%.  The
Subscriber may increase the permitted beneficial ownership amount up to 9.99%
upon and effective after 61 days prior written notice to the
Company.  Subscriber may allocate which of the equity of the Company
deemed beneficially owned by Subscriber shall be included in the 4.99% amount
described above and which shall be allocated to the excess above
4.99%.

    

    7.4.          Injunction Posting of
Bond.  In the event a Subscriber shall elect to convert a Note
or part thereof, the Company may not refuse conversion based on any claim that
Subscriber or any one associated or affiliated with Subscriber has been engaged
in any violation of law, or for any other reason, unless, a final non-appealable
injunction from a court made on notice to Subscriber, restraining and or
enjoining conversion of all or part of such Note shall have been sought and
obtained by the Company or the Company has posted a surety bond for the benefit
of Subscriber in the amount of 120% of the outstanding principal and accrued but
unpaid interest of the Note, or aggregate purchase price of the Conversion
Shares which are sought to be subject to the injunction, which bond shall remain
in effect until the completion of arbitration/litigation of the dispute and the
proceeds of which shall be payable to Subscriber to the extent the judgment or
decision is in Subscriber’s favor.

    

                 
  7.5.          Buy-In.   In
addition to any other rights available to Subscribers, if the Company fails to
deliver to a Subscriber Conversion Shares by the Delivery Date and if after the
Delivery Date Subscriber or a broker on Subscriber’s behalf purchases (in an
open market transaction or otherwise) shares of Common Stock to deliver in
satisfaction of a sale by Subscriber of the Common Stock which Subscriber was
entitled to receive upon such conversion (a "Buy-In"), then the Company
shall pay to Subscriber (in addition to any remedies available to or elected by
the Subscriber) the amount by which (A) Subscriber's total purchase price
(including brokerage commissions, if any) for the shares of Common Stock so
purchased exceeds (B) the aggregate principal and/or interest amount of the Note
for which such conversion request was not timely honored together with interest
thereon at a rate of 15% per annum, accruing until such amount and any accrued
interest thereon is paid in full (which amount shall be paid as liquidated
damages and not as a penalty).  For example, if a Subscriber purchases
shares of Common Stock having a total purchase price of $11,000 to cover a
Buy-In with respect to an attempted conversion of $10,000 of Note principal
and/or interest, the Company shall be required to pay Subscriber $1,000 plus
interest. Subscriber shall provide the Company written notice and evidence
indicating the amounts payable to Subscriber in respect of the
Buy-In.

    

    7.6           Adjustments.   The
Conversion Price, Warrant exercise price and amount of Conversion Shares and
Warrant Shares shall be equitably adjusted and as otherwise described in this
Agreement, the Notes and Warrants.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    7.7.          Redemption.    The
Note shall not be redeemable or callable by the Company, except as described in
the Note.

    

    8.            
Fees.

     

    (a)           Brokers.   The
Company represents that there are no parties entitled to receive fees,
commissions, credit enhancement fees, due diligence fees, lead investor fees, or
similar payments in connection with the Offering.

     

             
     (b)           Subscriber’s Legal
Fees.   The Company shall pay to Anslow & Jaclin, LLP,
a fee of $5,000 as reimbursement for services rendered in connection with this
Agreement.  Such fees shall be paid out of the firest runds received
by the Company pursuant to Section 2(d) above 

     

    (c)           
Company’s Legal
Fees.  The Company shall pay to Sichenzia Ross Friedman Ference
LLP a cash fee of $7,5000 as reimbursement for services rendered to the Company
in connection with this Agreement and the Offering.  Such fee shall be
paid out of the first funds received by the Company pursuant to Section 2(d)
above.

     

    9.           
Covenants of the
Company.  The Company covenants and agrees with the Subscribers
as follows, provided the Company or any successor has a class of securities that
is or becomes registered pursuant to Section 12 of the Securities Exchange Act
of 1934, as amended (the “Exchange Act”), or is required to file reports under
Section 15(d) of the Exchange Act, with respect to (a) – (d), (f) and
(g)below:

     

    (a)           Stop
Orders.  Subject to the prior notice requirement described in
Section 9(n), the Company will advise the Subscribers, within twenty-four hours
after it receives notice of issuance by the Commission, any state securities
commission or any other regulatory authority of any stop order or of any order
preventing or suspending any offering of any securities of the Company, or of
the suspension of the qualification of the Common Stock of the Company for
offering or sale in any jurisdiction, or the initiation of any proceeding for
any such purpose.  The Company will not issue any stop transfer order
or other order impeding the sale, resale or delivery of any of the Securities,
except as may be required by any applicable federal or state securities laws and
unless contemporaneous notice of such instruction is given to the
Subscribers.

     

    (b)           Listing/Quotation.  The
Company shall promptly secure the quotation or listing of the Conversion Shares
and Warrant Shares upon each national securities exchange, or automated
quotation system upon which the Company’s Common Stock is quoted or listed and
upon which such Conversion Shares and Warrant Shares are or become eligible for
quotation or listing (subject to official notice of issuance) and shall maintain
same so long as any Notes and Warrants are outstanding.  The Company
will maintain the quotation or listing of its Common Stock on the American Stock
Exchange, Nasdaq Capital Market, Nasdaq Global Market, Nasdaq Global Select
Market, Bulletin Board, or New York Stock Exchange (whichever of the foregoing
is at the time the principal trading exchange or market for the Common Stock
(the “Principal
Market”), and will comply in all respects with the Company's reporting,
filing and other obligations under the bylaws or rules of the Principal Market,
as applicable. The Company will provide Subscribers with copies of all notices
it receives notifying the Company of the threatened and actual delisting of the
Common Stock from any Principal Market.  As of the date of this
Agreement and the Closing Date, the Bulletin Board is and will be the Principal
Market.

     

    (c)           Market
Regulations.  If required, the Company shall notify the
Commission, the Principal Market and applicable state authorities, in accordance
with their requirements, of the transactions contemplated by this Agreement, and
shall take all other necessary action and proceedings as may be required and
permitted by applicable law, rule and regulation, for the legal and valid
issuance of the Securities to the Subscribers and promptly provide copies
thereof to the Subscribers.

     

    
      
        
        

      

      
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    (d)           Filing
Requirements.  From the date of this Agreement and until the
last to occur of (i) all the Conversion Shares have been resold or transferred
by the Subscribers pursuant to a registration statement or pursuant to Rule
144(b)(1)(i), or (ii) the Notes and Warrants are no longer outstanding (the date
of such latest occurrence being the “End Date”), the Company will
(A) cause its Common Stock to continue to be registered under Section 12(b) or
12(g) of the 1934 Act, (B) comply in all respects with its reporting and filing
obligations under the 1934 Act, (C) voluntarily comply with all reporting
requirements that are applicable to an issuer with a class of shares registered
pursuant to Section 12(g) of the 1934 Act, if the Company is not subject to such
reporting requirements, and (D) comply with all requirements related to any
registration statement filed pursuant to this Agreement.  The Company
will use its best efforts not to take any action or file any document (whether
or not permitted by the 1933 Act or the 1934 Act or the rules thereunder) to
terminate or suspend such registration or to terminate or suspend its reporting
and filing obligations under said acts until the End Date.  Until the
End Date, the Company will continue the listing or quotation of the Common Stock
on a Principal Market and will comply in all respects with the Company’s
reporting, filing and other obligations under the bylaws or rules of the
Principal Market.  The Company agrees to timely file a Form D with
respect to the Securities if required under Regulation D and to provide a copy
thereof to Subscribers promptly after such filing.

     

    (e)           Use of
Proceeds.   The proceeds of the Offering will be employed
by the Company for expenses of the Offering and general working
capital.  Except as described on Schedule
9(e), the Purchase Price may not and will not be used for accrued and
unpaid officer and director salaries, payment of financing related debt,
redemption of outstanding notes or equity instruments of the Company nor
non-trade obligations outstanding on the Closing Date.  For so long as
any Note is outstanding, the Company will not prepay any financing related debt
obligations, except equipment payments, nor redeem any equity instruments of the
Company without the prior consent of the Subscribers.

     

    (f)           Reservation.   Prior
to the Closing, the Company undertakes to reserve on behalf of Subscribers from
its authorized but unissued Common Stock, a number of shares of Common Stock
equal to 150% of the amount of Common Stock necessary to allow Subscribers to be
able to convert the entire Notes and 100% of the amount of Warrant Shares
issuable upon exercise of the Warrants (“Required
Reservation”).   Failure to have sufficient shares
reserved pursuant to this Section 9(f) at any time shall be a material default
of the Company’s obligations under this Agreement and an Event of Default under
the Notes.  If at any time Notes and Warrants are outstanding the
Company has insufficient Common Stock reserved on behalf of the Subscribers in
an amount less than 125% of the amount necessary for full conversion of the
outstanding Notes principal and interest at the conversion price that would be
in effect on every such date and 100% of the Warrant Shares (“Minimum Required
Reservation”), the Company will promptly reserve the Minimum Required
Reservation, or if there are insufficient authorized and available shares of
Common Stock to do so, the Company will take all action necessary to increase
its authorized capital to be able to fully satisfy its reservation requirements
hereunder, including the filing of a preliminary proxy with the Commission not
later than fifteen business days after the first day the Company has less than
the Minimum Required Reservation.  The Company agrees to provide
notice to the Subscribers not later than three days after the date the Company
has less than the Minimum Required Reservation reserved on behalf of the
Subscriber.

     

    (g)           DTC
Program.  At all times that Notes or Warrants are outstanding,
the Company will employ as the transfer agent for the Common Stock, Conversion
Shares and Warrant Shares a participant in the Depository Trust Company
Automated Securities Transfer Program.

     

    (h)           Taxes.  From
the date of this Agreement and until the End Date, the Company will promptly pay
and discharge, or cause to be paid and discharged, when due and payable, all
lawful taxes, assessments and governmental charges or levies imposed upon the
income, profits, property or business of the Company; provided, however, that
any such tax, assessment, charge or levy need not be paid if the validity
thereof shall currently be contested in good faith by appropriate proceedings
and if the Company shall have set aside on its books adequate reserves with
respect thereto, and provided, further, that the Company will pay all such
taxes, assessments, charges or levies forthwith upon the commencement of
proceedings to foreclose any lien which may have attached as security
therefore.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    (i)           Insurance.  From
the date of this Agreement and until the End Date, the Company will keep its
assets which are of an insurable character insured by financially sound and
reputable insurers against loss or damage by fire, explosion and other risks
customarily insured against by companies in the Company’s line of business and
location, in amounts and to the extent and in the manner customary for companies
in similar businesses similarly situated and located and to the extent available
on commercially reasonable terms.

     

    (j)           Books and
Records.  From the date of this Agreement and until the End
Date, the Company will keep true records and books of account in which full,
true and correct entries will be made of all dealings or transactions in
relation to its business and affairs in accordance with generally accepted
accounting principles applied on a consistent basis.

     

    (k)           Governmental
Authorities.   From the date of this Agreement and until
the End Date, the Company shall duly observe and conform in all material
respects to all valid requirements of governmental authorities relating to the
conduct of its business or to its properties or assets.

     

    (l)           Intellectual
Property.  From the date of this Agreement and until the End
Date, the Company shall maintain in full force and effect its corporate
existence, rights and franchises and all licenses and other rights to use
intellectual property owned or possessed by it and reasonably deemed to be
necessary to the conduct of its business, unless it is sold for
value.  Schedule
9(l) hereto identifies all of the intellectual property owned by the
Company and Subsidiaries.

     

    (m)           Properties.  From
the date of this Agreement and until the End Date, the Company will keep its
properties in good repair, working order and condition, reasonable wear and tear
excepted, and from time to time make all necessary and proper repairs, renewals,
replacements, additions and improvements thereto; and the Company will at all
times comply with each provision of all leases and claims to which it is a party
or under which it occupies or has rights to property if the breach of such
provision could reasonably be expected to have a Material Adverse
Effect.  The Company will not abandon any of its assets except for
those assets which have negligible or marginal value or for which it is prudent
to do so under the circumstances.

     

    (n)           Confidentiality/Public
Announcement.   From the date of this Agreement and until
the End Date, the Company agrees that except in connection with a Form 8-K, Form
10-Q, Form 10-K and the registration statement or statements regarding the
Subscribers’ Securities or in correspondence with the Commission regarding same,
it will not disclose publicly or privately the identity of the Subscribers
unless expressly agreed to in writing by Subscribers or only to the extent
required by law and then only upon not less than three days prior notice to
Subscribers.  In any event and subject to the foregoing, the Company
undertakes to file a Form 8-K describing the Offering not later than the fourth
(4th)
business day after the Closing Date.  Prior to the filing date of such
Form 8-K, a draft in the final form will be provided to Subscribers for
Subscribers’ review and approval.  In the Form 8-K, the Company will
specifically disclose the amount of Common Stock outstanding immediately after
the Closing.  Upon  delivery by the Company to the
Subscribers after the Closing Date of any notice or information, in writing,
electronically or otherwise, and while a Note, Conversion Shares or Warrants are
held by Subscribers, unless the  Company has in good faith determined
that the matters relating to such notice do not
constitute material, nonpublic information relating to
the Company or Subsidiaries, the Company  shall within one
business day after any such delivery publicly disclose such 
material,  nonpublic  information on a
Report on Form 8-K.  In the event that
the Company believes that a notice or communication to
Subscribers contains material, nonpublic information relating to the Company or
Subsidiaries, the Company shall so indicate to Subscribers prior to delivery of
such notice or information.  Subscribers will be granted sufficient
time to notify the Company that Subscribers elects not to receive such
information.   In such case, the Company will not deliver such
information to Subscribers.  In the absence of any such
indication, Subscribers shall be allowed to presume that all matters
relating to such notice and information do not constitute material,
nonpublic information relating to the Company or
Subsidiaries.

     

    
      
        
        

      

      
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     (o)           Non-Public
Information.  The Company covenants
and agrees that except for the Reports, Other Written Information and schedules
and exhibits to this Agreement and the Transaction Documents, which information
the Company undertakes to publicly disclose on the Form 8-K described in Section
9(n) above, neither it nor any other person acting on its behalf will at any
time provide Subscribers or its agents or counsel with any information that the
Company believes constitutes material non-public information, unless prior
thereto Subscribers shall have agreed in writing to accept such
information.  The Company understands and confirms that Subscribers
shall be relying on the foregoing representations in effecting transactions in
securities of the Company.

    

    (p)           Negative
Covenants.   So long as a Note is outstanding, without the
consent of the Subscribers, the Company will not and will not permit any of its
Subsidiaries to directly or indirectly:

    

    (i)           create,
incur, assume or suffer to exist any pledge, hypothecation, assignment, deposit
arrangement, lien, charge, claim, security interest, security title, mortgage,
security deed or deed of trust, easement or encumbrance, or preference, priority
or other security agreement or preferential arrangement of any kind or nature
whatsoever (including any lease or title retention agreement, any financing
lease having substantially the same economic effect as any of the foregoing, and
the filing of, or agreement to give, any financing statement perfecting a
security interest under the Uniform Commercial Code or comparable law of any
jurisdiction) (each, a “Lien”) upon any of its
property, whether now owned or hereafter acquired except for:  (A) the
Excepted Issuances (as defined in Section 12 hereof), and (B) (a) Liens imposed
by law for taxes that are not yet due or are being contested in good faith and
for which adequate reserves have been established in accordance with generally
accepted accounting principles; (b) carriers’, warehousemen’s, mechanics’,
material men’s, repairmen’s and other like Liens imposed by law, arising in the
ordinary course of business and securing obligations that are not overdue by
more than 30 days or that are being contested in good faith and by appropriate
proceedings; (c) pledges and deposits made in the ordinary course of business in
compliance with workers’ compensation, unemployment insurance and other social
security laws or regulations; (d) deposits to secure the performance of bids,
trade contracts, leases, statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature, in each case in the
ordinary course of business; (e) Liens created with respect to the financing of
the purchase of new property in the ordinary course of the Company’s business up
to the amount of the purchase price of such property; (f) easements, zoning
restrictions, rights-of-way and similar encumbrances on real property imposed by
law or arising in the ordinary course of business that do not secure any
monetary obligations and do not materially detract from the value of the
affected property; and (g) Liens set forth on Schedule
9(p)(i) (each of (a) through (g), a “Permitted Lien”);

    

                                                                  
 (ii)           amend
its certificate of incorporation, bylaws or its charter documents so as to
materially and adversely affect any rights of the Subscribers (an increase in
the amount of authorized shares and an increase in the number of directors will
not be deemed adverse to the rights of the Subscribers);

    

    (iii)           repay,
repurchase or offer to repay, repurchase or otherwise acquire or make any
dividend or distribution in respect of any of its Common Stock, preferred stock,
or other equity securities other than to the extent permitted or required under
the Transaction Documents;

    

    (iv)           engage
in any transactions with any officer, director, employee or any Affiliate of the
Company, 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 entity in
which any officer, director, or any such employee has a substantial interest or
is an officer, director, trustee or partner, in each case in excess of $100,000
other than (i) for payment of salary, or fees for services rendered, (ii)
reimbursement for expenses incurred on behalf of the Company, and (iii) for
other employee benefits, including stock option agreements under any stock
option plan of the Company; or

     

    
      
        
        

      

      
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    (v)           prepay
or redeem any financing related debt or past due obligations or securities
outstanding as of the Closing Date, or past due obligations (except with respect
to vendor obligations, or any such obligations which in management’s good faith,
reasonable judgment must be repaid to avoid disruption of the Company’s
businesses).

     

    (q)           Further Registration
Statements.   Except for a registration statement filed
exclusively on behalf of the Subscribers, the Company will not, without the
consent of the Subscribers, file with the Commission or with state regulatory
authorities any registration statements (excluding Forms S-8) or amend any
already filed registration statement to increase the amount of Common Stock
registered therein, or reduce the price of which such company securities are
registered therein, until the expiration of the “Exclusion Period,” which shall
be defined as the sooner of (i) the date all of the Registrable Securities [as
defined in Section 11.1] have been registered in an effective registration
statement, or (ii) until all the Conversion Shares and Warrant Shares have been
resold by the Subscribers pursuant to a registration statement or Rule
144b(1)(i), without regard to volume limitations.  The Exclusion
Period will be tolled or reinstated, as the case may be, during the pendency of
an Event of Default as defined in the Note.

     

    (r)           Offering
Restrictions.   For so long as the Notes are outstanding,
the Company will not enter into any Equity Line of Credit or similar agreement,
nor issue nor agree to issue any floating or Variable Priced Equity Linked
Instruments nor any of the foregoing or equity with price reset rights
(collectively, the “Variable
Rate Restrictions”).   For purposes hereof, “Equity Line of Credit” shall
include any transaction involving a written agreement between the Company and an
investor or underwriter whereby the Company has the right to “put” its
securities to the investor or underwriter over an agreed period of time and at
an agreed price or price formula, and “Variable Priced Equity Linked
Instruments” shall include: (A) any debt or equity securities which are
convertible into, exercisable or exchangeable for, or carry the right to receive
additional shares of Common Stock either (1) at any conversion, exercise or
exchange rate or other price that is based upon and/or varies with the trading
prices of or quotations for Common Stock at any time after the initial issuance
of such debt or equity security, or (2) with a fixed conversion, exercise or
exchange price that is subject to being reset at some future date at any time
after the initial issuance of such debt or equity security due to a change in
the market price of the Company’s Common Stock since date of initial issuance,
and (B) any amortizing convertible security which amortizes prior to its
maturity date, where the Company is required or has the option to (or any
investor in such transaction has the option to require the Company to) make such
amortization payments in shares of Common Stock which are valued at a price that
is based upon and/or varies with the trading prices of or quotations for Common
Stock at any time after the initial issuance of such debt or equity security
(whether or not such payments in stock are subject to certain equity
conditions).

     

    (s)           Seniority.   Except
for Permitted Liens, until the Notes are fully satisfied or converted, the
Company shall not grant nor allow any security interest to be taken in any
assets of the Company or any Subsidiary or any Subsidiary’s assets; nor issue
any debt, equity or other instrument which would give the holder thereof
directly or indirectly, a right in any assets of the Company or any Subsidiary
or any right to payment equal to or superior to any right of the Subscribers as
holders of the Notes in or to such assets or payment, nor issue or incur any
debt not in the ordinary course of business.

     

    
      
        
        

      

      
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    (t)           Notices.   For
so long as the Subscribers hold any Securities, the Company will maintain a
United States address and United States fax number for notice purposes under the
Transaction Documents.

     

    (u)           Transactions With
Insiders.  So long as the Notes 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 relating to
the sale, transfer or assignment of any of the Company’s tangible or intangible
assets with any of its Insiders (as defined below)(or any persons who were
Insiders at any time during the previous two (2) years), or any Affiliates (as
defined below) thereof, or with any individual related by blood, marriage, or
adoption to any such individual.  “Affiliate” for purposes of this
Section 9(u) 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.  For purposes hereof, “Insiders” shall mean any officer,
director or manager of the Company, including but not limited to the Company’s
president, chief executive officer, chief financial officer and chief operations
officer, and any of their affiliates or family members. 

     

    10.           Covenants of the Company
Regarding Indemnification.

     

    (a)           The
Company agrees to indemnify, hold harmless, reimburse and defend the
Subscribers, the Subscribers’ officers, directors, agents, counsel, Affiliates,
members, managers, control persons, and principal shareholders, against any
claim, cost, expense, liability, obligation, loss or damage (including
reasonable legal fees) of any nature, incurred by or imposed upon the
Subscribers or any such person which results, arises out of or is based upon (i)
any material misrepresentation by Company or breach of any representation or
warranty by Company in this Agreement or in any Exhibits or Schedules attached
hereto in any Transaction Document, or other agreement delivered pursuant hereto
or in connection herewith, now or after the date hereof; or (ii) after any
applicable notice and/or cure periods, any breach or default in performance by
the Company of any covenant or undertaking to be performed by the Company
hereunder, or any other agreement entered into by the Company and Subscribers
relating hereto.

     

    (b)           In
no event shall the liability of the Subscribers or permitted successor hereunder
or under any Transaction Document or other agreement delivered in connection
herewith be greater in amount than the dollar amount of the net proceeds
actually received by such Subscriber or successor upon the sale of Registrable
Securities (as defined herein).

     

    (c)           The
procedures set forth in Section 11.6 shall apply to the indemnification set
forth in Section 10(a).

     

    11.1.           Registration
Rights.  The Company hereby grants the following registration
rights to holders of the Securities.

     

    (i)       
    On one occasion, commencing one hundred and eighty (180)
days after the Closing Date, but not later than one year after the Closing Date,
upon a written request therefor from any record holder or holders of more than
50% of the Conversion Shares issued and issuable upon conversion of the
outstanding Notes and outstanding Warrant Shares, the Company shall prepare and
file with the Commission a registration statement under the 1933 Act registering
the Registrable Securities, as defined in Section 11.1(iv) hereof, which are the
subject of such request for unrestricted public resale by the holder
thereof.  For purposes of Sections 11.1(i) and 11.1(ii), Registrable
Securities shall not include Securities which are (A) registered for resale in
an effective registration statement, (B) included for registration in a pending
registration statement, (C) which have been issued without further transfer
restrictions after a sale or transfer pursuant to Rule 144 under the 1933 Act or
(D) which may be resold under Rule 144 without volume
limitations.  Upon the receipt of such request, the Company shall
promptly give written notice to all other record holders of the Registrable
Securities that such registration statement is to be filed and shall include in
such registration statement Registrable Securities for which it has received
written requests within ten days after the Company gives such written
notice.  Such other requesting record holders shall be deemed to have
exercised their demand registration right under this Section
11.1(i).

     

    
      
        
        

      

      
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    (ii)           If
the Company at any time proposes to register any of its securities under the
1933 Act for sale to the public, whether for its own account or for the account
of other security holders or both, except with respect to registration
statements on Forms S-4, S-8 or another form not available for registering the
Registrable Securities for sale to the public, provided the Registrable
Securities are not otherwise registered for resale by the Subscribers or Holder
pursuant to an effective registration statement, each such time it will give at
least ten (10) days' prior written notice to the record holder of the
Registrable Securities of its intention so to do. Upon the written request of
the holder, received by the Company within ten (10) days after the giving of any
such notice by the Company, to register any of the Registrable Securities not
previously registered, the Company will cause such Registrable Securities as to
which registration shall have been so requested to be included with the
securities to be covered by the registration statement proposed to be filed by
the Company, all to the extent required to permit the sale or other disposition
of the Registrable Securities so registered by the holder of such Registrable
Securities (the “Seller”
or “Sellers”). In the
event that any registration pursuant to this Section 11.1(ii) shall be, in whole
or in part, an underwritten public offering of common stock of the Company, the
number of shares of Registrable Securities to be included in such an
underwriting may be reduced by the managing underwriter if and to the extent
that the Company and the underwriter shall reasonably be of the opinion that
such inclusion would adversely affect the marketing of the securities to be sold
by the Company therein; provided, however, that the Company shall notify the
Seller in writing of any such reduction. Notwithstanding the foregoing
provisions, or Section 11.4 hereof, the Company may withdraw or delay or suffer
a delay of any registration statement referred to in this Section 11.1(ii)
without thereby incurring any liability to the Seller.

     

    (iii)           If,
at the time any written request for registration is received by the Company
pursuant to Section 11.1(i), the Company has determined to proceed with the
actual preparation and filing of a registration statement under the 1933 Act in
connection with the proposed offer and sale for cash of any of its securities
for the Company's own account and the Company actually does file such other
registration statement, such written request shall be deemed to have been given
pursuant to Section 11.1(ii) rather than Section 11.1(i), and the rights of the
holders of Registrable Securities covered by such written request shall be
governed by Section 11.1(ii).

     

    (iv)           The
Company shall file with the Commission a Form S-1 registration statement (the
“Registration
Statement”) (or such other form that it is eligible to use) in order to
register the Registrable Securities for resale and distribution under the 1933
Act within one hundred and eighty (180) calendar days after the Closing Date
(the “Filing Date”), and
use its best efforts to cause the Registration Statement to be declared
effective not later than three hundred and sixty five (365) days after the
Closing Date (the “Effective
Date”).  The Company will register not less than a number of
shares of common stock in the aforedescribed registration statement that is
equal to 125% of the Conversion Shares issued and issuable upon conversion of
all of the Notes and 100% of the Warrant Shares issuable upon exercise of the
Warrants (collectively the “Registrable Securities”). The
Registrable Securities shall be reserved and set aside exclusively for the
benefit of each Subscriber and Warrant holder, pro rata, and not issued,
employed or reserved for anyone other than each Subscriber and Warrant
holder.  The Registration Statement will immediately be amended or
additional registration statements will be immediately filed by the Company as
necessary to register additional shares of Common Stock to allow the public
resale of all Common Stock included in and issuable by virtue of the Registrable
Securities.  Except as set forth on Schedule
11.1 or with the written consent of the Subscribers, no securities of the
Company other than the Registrable Securities will be included in the
Registration Statement.  It shall be deemed a Non-Registration Event
if at any time after the date the Registration Statement is declared effective
by the Commission (“Actual
Effective Date”) the Company has registered for unrestricted resale on
behalf of the Subscribers fewer than 110% of the amount of Common Shares
issuable upon full conversion of all sums due under the Notes and Warrant Shares
(the difference between such 110% and the actual amount of shares registered
being the “Shortfall”).  In
such event, the Company shall take all actions necessary to cause at least 105%
of the amount of shares of Common Stock issuable upon full conversion of all
sums due under the Notes and 100% of the Warrant Shares to be registered within
ninety (90) days after the first day such Shortfall exists.  Failure
to file the Registration Statement within thirty (30) days after the first day
such Shortfall first exists or failure to cause such registration to become
effective within ninety (90) days after such Shortfall first exists shall be a
Non-Registration Event.

     

    
      
        
        

      

      
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                          11.2.           Registration
Procedures. If and whenever the Company is required by the provisions of
Section 11.1 to effect the registration of any Registrable Securities under the
1933 Act, the Company will, as expeditiously as possible, and will cause any
successor to as a condition of any merger or exchange agreement with such
entity:

     

    (a)           subject
to the timelines provided in this Agreement, prepare and file with the
Commission a registration statement required by Section 11.1 with respect to
such securities and use its best efforts to cause such registration statement to
become and remain effective for the period of the distribution contemplated
thereby (determined as herein provided), promptly provide to the holders of the
Registrable Securities copies of all filings and Commission letters of comment
and notify the Sellers  (by telecopier and by e-mail addresses
provided by the Subscribers) on or before the second  business day
thereafter that the Company receives notice that (i) the Commission has no
comments or no further comments on the registration statement, and (ii) the
registration statement has been declared effective [failure to timely provide
notice as required by this Section 11.2(a) shall be a material breach of the
Company’s obligation and an Event of Default as defined in the Notes and a
Non-Registration Event as defined in Section 11.4 of this
Agreement];

     

    (b)           prepare
and file with the Commission such amendments and supplements to such
registration statement and the prospectus used in connection therewith as may be
necessary to keep such registration statement effective until such registration
statement has been effective for a period of one (1) year, and comply with the
provisions of the 1933 Act with respect to the disposition of all of the
Registrable Securities covered by such registration statement in accordance with
the Sellers’ intended method of disposition set forth in such registration
statement for such period;

     

    (c)           furnish
to the Sellers, at the Company’s expense, such number of copies of the
registration statement and the prospectus included therein (including each
preliminary prospectus) as such persons reasonably may request in order to
facilitate the public sale or their disposition of the securities covered by
such registration statement or make them electronically available;

     

    (d)           use
its reasonable best efforts to register or qualify the Registrable Securities
covered by such registration statement under the securities or “blue sky” laws
of New York and such jurisdictions as the Sellers shall request in writing,
provided, however, that the Company shall not for any such purpose be required
to qualify generally to transact business as a foreign corporation in any
jurisdiction where it is not so qualified or to consent to general service of
process in any such jurisdiction;

     

    (e)           list
the Registrable Securities covered by such registration statement with any
securities exchange on which the Common Stock of the Company is then
listed;

     

    
      
        
        

      

      
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    (f)           notify
the Sellers within twenty-four (24) hours of the happening of any event of which
the Company has knowledge as a result of which the prospectus contained in such
registration statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing or which becomes subject to a Commission, state or
other governmental order suspending the effectiveness of the registration
statement covering any of the Registrable Securities;

     

    (g)           provided
same would not be in violation of the provision of Regulation FD under the 1934
Act, make available for inspection by the Sellers during reasonable business
hours,  and any attorney, accountant or other agent retained by the
Sellers, all publicly available, non-confidential financial and other records,
pertinent corporate documents and properties of the Company, and cause the
Company's officers, directors and employees to supply all publicly available,
non-confidential information reasonably requested by the Sellers, attorney,
accountant or agent in connection with such registration statement at such
requesting Seller’s expense; and

     

        
           (h)           provide
to the Sellers copies of the Registration Statement and amendments thereto five
(5) business days prior to the filing thereof with the
Commission.  Any Seller’s failure to comment on any registration
statement or other document provided to a Subscriber or its counsel shall not be
construed to constitute approval thereof nor the accuracy thereof.

     

    11.3.           Provision of
Documents.  In connection with each registration described in
this Section 11, each Seller will furnish to the Company in writing such
information and representation letters with respect to itself and the proposed
distribution by it as reasonably shall be necessary in order to assure
compliance with federal and applicable state securities laws.

     

    11.4.           Non-Registration
Events.  The Company agrees that the Sellers will suffer
damages if the Registration Statement is not filed by the Filing Date and not
declared effective by the Commission by the Effective Date, and any registration
statement required under Section 11.1(i) or 11.1(ii) is not filed within 60 days
after written request and declared effective by the Commission within 90 days
after such request, and maintained in the manner and within the time periods
contemplated by Section 11 hereof, and it would not be feasible to ascertain the
extent of such damages with precision.  Accordingly, if (A) the
Registration Statement is not filed on or before the Filing Date, (B) the
Registration Statement is not declared effective on or before the required
Effective Date, (C) due to the action or inaction of the Company the
Registration Statement is not declared effective within three (3) business days
after receipt by the Company or its attorneys of a written or oral communication
from the Commission that the Registration Statement will not be reviewed or that
the Commission has no further comments, (D) if the registration statement
described in Section 11.1(i) or 11.1(ii) is not filed within 60 days after such
written request, or is not declared effective within 120 days after such written
request, or (E) any registration statement described in Sections 11.1(i),
11.1(ii) or 11.1(iv) is filed and declared effective but shall thereafter cease
to be effective without being succeeded within twenty-five (25) business days by
an effective replacement or amended registration statement or for a period of
time which shall exceed forty (45) days in the aggregate per year (defined as
every rolling period of 365 consecutive days commencing on the Actual Effective
Date) (each such event referred to in clauses A through E of this Section 11.4
is referred to herein as a "Non-Registration Event"), then
the exercise price of the Warrants shall automatically be reduced to $0.05 per
Warrant Share and the Company shall deliver to the holder of Registrable
Securities, as Liquidated
Damages, an amount equal to one percent (1%) for each thirty (30) days
(or such lesser pro-rata amount for any period of less than thirty (30) days) of
the principal amount of the outstanding Notes and purchase price of Conversion
Shares and Warrant Shares issued upon conversion of Notes and exercise (but
excluding cashless exercise) of Warrants held by Subscribers which are subject
to such Non-Registration Event.  The Company must pay the Liquidated
Damages in cash.  The Liquidated Damages must be paid within ten (10)
days after the end of each thirty (30) day period or shorter part thereof for
which Liquidated Damages are payable.  In the event a Registration
Statement is filed by the Filing Date but is withdrawn prior to being declared
effective by the Commission, then such Registration Statement will be deemed to
have not been filed and Liquidated Damages will be calculated
accordingly.  All oral or written comments received from the
Commission relating to a registration statement must be responded to within ten
(10) business days after receipt of comments from the
Commission.  Failure to timely respond to Commission comments is a
Non-Registration Event for which Liquidated Damages shall accrue and be payable
by the Company to the holders of Registrable Securities at the same rate and
amounts set forth above calculated from the date the response was required to
have been made.  Liquidated Damages shall not be payable pursuant to
this Section 11.4 in connection with Registrable Securities for such times as
such Registrable Securities may be sold by the holder thereof without
restriction pursuant to Section 144(b)(1)(i) of the 1933 Act.  To the
extent that the registration of any or all of the Registrable Securities by the
Company on a registration statement is prohibited (the “Non-Registered
Shares”) as a result of rules, regulations, positions or releases issued
or actions taken by the Commission pursuant to its authority with respect to
Rule 415 and the Company has registered at such time the maximum number of
Registrable Securities permissible upon consultation with the Commission
(applied on a pro rata basis based on the total number of unregistered
Registrable Securities held by each Seller), then the Liquidated Damages
described in this Section 11.4 shall not be applicable to such Non-Registered
Shares for so long as such Rule 415 related impediment is extant, however the
aforedescribed reduction of the Warrant exercise price shall be
applied.

     

    
      
        
        

      

      
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    11.5.           Expenses.  All
expenses incurred by the Company in complying with Section 11, including,
without limitation, all registration and filing fees, printing expenses (if
required), fees and disbursements of counsel and independent public accountants
for the Company, fees and expenses (including reasonable counsel fees) incurred
in connection with complying with state securities or “blue sky” laws, fees of
FINRA, transfer taxes, and fees of transfer agents and registrars, are called
“Registration Expenses.”
All underwriting discounts and selling commissions applicable to the sale of
Registrable Securities are called "Selling
Expenses."  The Company will pay all Registration Expenses in
connection with any registration statement described in Section
11.  Selling Expenses in connection with each such registration
statement shall be borne by the Seller and may be apportioned among the Sellers
in proportion to the number of shares included on behalf of the Seller relative
to the aggregate number of shares included under such registration statement for
all Sellers, or as all Sellers thereunder may agree.

     

    11.6.           Indemnification and
Contribution.

     

    (a)           In
the event of a registration of any Registrable Securities under the 1933 Act
pursuant to Section 11, the Company will, to the extent permitted by law,
indemnify and hold harmless the Seller, each of the officers, directors, agents,
Affiliates, members, managers, control persons, and principal shareholders of
the Seller, each underwriter of such Registrable Securities thereunder and each
other person, if any, who controls such Seller or underwriter within the meaning
of the 1933 Act, against any losses, claims, damages or liabilities, joint or
several, to which the Seller, or such underwriter or controlling person may
become subject under the 1933 Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in any registration statement under which such Registrable Securities
was registered under the 1933 Act pursuant to Section 11, any preliminary
prospectus or final prospectus contained therein, or any amendment or supplement
thereof, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading in light of the circumstances when made,
and will subject to the provisions of Section 11.6(c) reimburse the Seller, each
such underwriter and each such controlling person for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the Company shall not be liable to the Seller to the extent that any such
damages arise out of or are based upon an untrue statement or omission made in
any preliminary prospectus if (i) the Seller failed to send or deliver a copy of
the final prospectus delivered by the Company to the Seller with or prior to the
delivery of written confirmation of the sale by the Seller to the person
asserting the claim from which such damages arise, (ii) the final prospectus
would have corrected such untrue statement or alleged untrue statement or such
omission or alleged omission, or (iii) to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission so made in conformity
with information furnished by any such Seller in writing specifically for use in
such registration statement or prospectus.

     

    
      
        
        

      

      
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    (b)           In
the event of a registration of any of the Registrable Securities under the 1933
Act pursuant to Section 11, each Seller severally but not jointly will, to the
extent permitted by law, indemnify and hold harmless the Company, and each
person, if any, who controls the Company within the meaning of the 1933 Act,
each officer of the Company who signs the registration statement, each director
of the Company, each underwriter and each person who controls any underwriter
within the meaning of the 1933 Act, against all losses, claims, damages or
liabilities, joint or several, to which the Company or such officer, director,
underwriter or controlling person may become subject under the 1933 Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the registration statement
under which such Registrable Securities were registered under the 1933 Act
pursuant to Section 11, any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereof, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
and will reimburse the Company and each such officer, director, underwriter and
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Seller will be liable hereunder
in any such case if and only to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in reliance upon and in
conformity with information pertaining to such Seller, as such, furnished in
writing to the Company by such Seller specifically for use in such registration
statement or prospectus, and provided, further, however, that the liability of
the Seller hereunder shall be limited to the net proceeds actually received by
the Seller from the sale of Registrable Securities pursuant to such registration
statement.

     

    (c)           Promptly
after receipt by an indemnified party hereunder of notice of the commencement of
any action, such indemnified party shall, if a claim in respect thereof is to be
made against the indemnifying party hereunder, notify the indemnifying party in
writing thereof, but the omission so to notify the indemnifying party shall not
relieve it from any liability which it may have to such indemnified party other
than under this Section 11.6(c) and shall only relieve it from any liability
which it may have to such indemnified party under this Section 11.6(c), except
and only if and to the extent the indemnifying party is prejudiced by such
omission. In case any such action shall be brought against any indemnified party
and it shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate in and, to the extent it
shall wish, to assume and undertake the defense thereof with counsel
satisfactory to such indemnified party, and, after notice from the indemnifying
party to such indemnified party of its election so to assume and undertake the
defense thereof, the indemnifying party shall not be liable to such indemnified
party under this Section 11.6(c) for any legal expenses subsequently incurred by
such indemnified party in connection with the defense thereof other than
reasonable costs of investigation and of liaison with counsel so selected,
provided, however, that, if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnifying party shall
have reasonably concluded that there may be reasonable defenses available to
indemnified party which are different from or additional to those available to
the indemnifying party or if the interests of the indemnified party reasonably
may be deemed to conflict with the interests of the indemnifying party, the
indemnified parties, as a group, shall have the right to select one separate
counsel, reasonably satisfactory to the indemnified and indemnifying party, and
to assume such legal defenses and otherwise to participate in the defense of
such action, with the reasonable expenses and fees of such separate counsel and
other expenses related to such participation to be reimbursed by the
indemnifying party as incurred.

     

    
      
        
        

      

      
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    (d)           In
order to provide for just and equitable contribution in the event of joint
liability under the 1933 Act in any case in which either (i) a Seller, or any
controlling person of a Seller, makes a claim for indemnification pursuant to
this Section 11.6 but it is judicially determined (by the entry of a final
judgment or decree by a court of competent jurisdiction and the expiration of
time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact that
this Section 11.6 provides for indemnification in such case, or (ii)
contribution under the 1933 Act may be required on the part of the Seller or
controlling person of the Seller in circumstances for which indemnification is
not provided under this Section 11.6; then, and in each such case, the Company
and the Seller will contribute to the aggregate losses, claims, damages or
liabilities to which they may be subject (after contribution from others) in
such proportion so that the Seller is responsible only for the portion
represented by the percentage that the public offering price of its securities
offered by the registration statement bears to the public offering price of all
securities offered by such registration statement, provided, however, that, in
any such case, (y) the Seller will not be required to contribute any amount in
excess of the public offering price of all such securities sold by it pursuant
to such registration statement; and (z) no person or entity guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) will be
entitled to contribution from any person or entity who was not guilty of such
fraudulent misrepresentation and provided, further, however, that the liability
of the Seller hereunder shall be limited to the net proceeds actually received
by the Seller from the sale of Registrable Securities pursuant to such
registration statement.

     

    11.7.        Delivery of Unlegended
Shares.

     

    (a)           Within
three (3) business days (such third business day being the “Unlegended Shares Delivery
Date”) after the business day on which the Company has received (i) a
notice that Conversion Shares, Warrant Shares or any other Common Stock held by
Subscriber has been sold pursuant to the Registration Statement or Rule 144
under the 1933 Act, (ii) a representation that the prospectus delivery
requirements, or the requirements of Rule 144, as applicable and if required,
have been satisfied, (iii) the original share certificates representing the
shares of Common Stock that have been sold, and (iv) in the case of sales under
Rule 144, customary representation letters of the Subscriber and, if required,
Subscriber’s broker regarding compliance with the requirements of Rule 144, the
Company at its expense, (y) shall deliver, and shall cause legal counsel
selected by the Company to deliver to its transfer agent (with copies to
Subscriber) an appropriate instruction and opinion of such counsel, directing
the delivery of shares of Common Stock without any legends including the legend
set forth in Section 4(i) above (the “Unlegended Shares”); and (z)
cause the transmission of the certificates representing the Unlegended Shares
together with a legended certificate representing the balance of the submitted
Common Stock certificate, if any, to the Subscriber at the address specified in
the notice of sale, via express courier, by electronic transfer or otherwise on
or before the Unlegended Shares Delivery Date.

     

    (b)           In
lieu of delivering physical certificates representing the Unlegended Shares,
upon request of Subscribers, so long as the certificates therefor do not bear a
legend and the Subscriber is not obligated to return such certificate for the
placement of a legend thereon, the Company shall cause its transfer agent to
electronically transmit the Unlegended Shares by crediting the account of
Subscriber’s prime broker with the Depository Trust Company through its Deposit
Withdrawal Agent Commission system, if such transfer agent participates in such
DWAC system.  Such delivery must be made on or before the Unlegended
Shares Delivery Date.

    

    (c)           The
Company understands that a delay in the delivery of the Unlegended Shares
pursuant to Section 11.7 hereof later than the Unlegended Shares Delivery Date
could result in economic loss to a Subscriber.  As compensation to a
Subscriber for such loss, the Company agrees to pay late payment fees (as
liquidated damages and not as a penalty) to the Subscriber for late delivery of
Unlegended Shares in the amount of $100 per business day after the Unlegended
Shares Delivery Date for each $10,000 of purchase price of the Unlegended Shares
subject to the delivery default.  If during any 360 day period, the
Company fails to deliver Unlegended Shares as required by this Section 11.7 for
an aggregate of thirty days, then each Subscriber or assignee holding Securities
subject to such default may, at its option, require the Company to redeem all or
any portion of the Shares subject to such default at a price per share equal to
the greater of (i) 105%, or (ii) a fraction in which the numerator is the
highest closing price of the Common Stock during the aforedescribed thirty day
period and the denominator of which is the lowest conversion price during such
thirty day period, multiplied by the price paid by Subscriber for such Common
Stock (“Unlegended Redemption
Amount”).  The Company shall pay any payments incurred under
this Section in immediately available funds upon demand.

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

    (d)           In
the event a Subscriber shall request delivery of Unlegended Shares as described
in Section 11.7 and the Company is required to deliver such Unlegended Shares
pursuant to Section 11.7, the Company may not refuse to deliver Unlegended
Shares based on any claim that such Subscriber or any one associated or
affiliated with such Subscriber has been engaged in any violation of law, or for
any other reason, unless, an injunction or temporary restraining order from a
court, on notice, restraining and or enjoining delivery of such Unlegended
Shares shall have been sought and obtained by the Company and the Company has
posted a surety bond for the benefit of such Subscriber in the amount of 105% of
the amount of the aggregate purchase price of the Common Stock which are subject
to the injunction or temporary restraining order, which bond shall remain in
effect until the completion of arbitration/litigation of the dispute and the
proceeds of which shall be payable to such Subscriber to the extent Subscriber
obtains judgment in Subscriber’s favor.

    

    (e)           
In addition to any other rights available to Subscriber, if the Company fails to
deliver to a Subscriber Unlegended Shares as required pursuant to this Agreement
and after the Unlegended Shares Delivery Date the Subscriber, or a broker on the
Subscriber’s behalf, purchases (in an open market transaction or otherwise)
shares of common stock to deliver in satisfaction of a sale by such Subscriber
of the shares of Common Stock which the Subscriber was entitled to receive from
the Company (a "Buy-In"), then the Company
shall pay in cash to the Subscriber (in addition to any remedies available to or
elected by the Subscriber) the amount by which (A) the Subscriber's total
purchase price (including brokerage commissions, if any) for the shares of
common stock so purchased exceeds (B) the aggregate purchase price of the shares
of Common Stock delivered to the Company for reissuance as Unlegended
Shares together with interest thereon at a rate of 15% per annum accruing
until such amount and any accrued interest thereon is paid in full (which amount
shall be paid as liquidated damages and not as a penalty).  For
example, if a Subscriber purchases shares of Common Stock having a total
purchase price of $11,000 to cover a Buy-In with respect to $10,000 of purchase
price of shares of Common Stock delivered to the Company for reissuance as
Unlegended Shares, the Company shall be required to pay the Subscriber $1,000,
plus interest. The Subscriber shall provide the Company written notice
indicating the amounts payable to the Subscriber in respect of the
Buy-In.

    

                          11.8.           In
the event commencing six months after the Closing Date and ending
twenty-four  (24) months thereafter, the Subscriber is not permitted
to resell any of the Conversion Shares or Warrant Shares without any restrictive
legend or if such sales are permitted but subject to volume limitations or
further restrictions on resale as a result of the unavailability to Subscriber
of Rule 144(b)(1)(i) under the 1933 Act or any successor rule (a “144 Default”), for any reason
including but not limited to failure by the Company to file quarterly, annual or
any other filings by the required filing dates, except for Subscriber’s status
as an Affiliate or “control person” of the Company or as a result of a change in
current applicable securities laws, then the Company shall pay such Subscriber
as liquidated damages and not as a penalty for each thirty days (or such lesser
pro-rata amount for any period less than thirty days) an amount equal to 1% of
the purchase price of the Conversion Shares and Warrant Shares subject to such
144 Default.  Liquidated Damages shall not be payable pursuant to this
Section 11.8 in connection with Shares for such times as such Shares may be sold
by the holder thereof without volume or other restrictions  pursuant
to Section 144(b)(1)(i) of the 1933 Act or pursuant to an effective registration
statement.

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

    
 

    12.           (a)           Right of First
Refusal.  Until the later of one year following the Closing
Date or for so long as any amount remains outstanding on the Notes, the
Subscribers shall be given not less than fifteen (15) business days prior
written notice of any proposed sale by the Company of its common stock or other
securities or equity linked debt obligations, except in connection with the
Excepted Issuances [as defined in Section 12(b)].  If Subscribers
elect to exercise their rights pursuant to this Section 12(a), Subscribers shall
have the right during the fifteen (15) business days following receipt of the
notice to purchase in the aggregate up to all of such offered common stock, debt
or other securities in accordance with the terms and conditions set forth in the
notice of sale relative to each other in proportion to the amount principal of
the Notes to be issued to them on the Closing Date.  In the event such
terms and conditions are modified during the notice period, Subscribers shall be
given prompt notice of such modification and shall have the right during the
fifteen (15) business days following the notice of modification to exercise such
right.

     

    (b)           Favored Nations
Provision.  Other than in connection with (i) full or partial
consideration in connection with a strategic merger, acquisition, consolidation
or purchase of substantially all of the securities or assets of a corporation or
other entity which holders of such securities or debt are not at any time
granted registration rights equal to or greater than those granted to the
Subscribers, (ii) the Company’s issuance of securities in connection with
strategic license agreements and other partnering arrangements so long as such
issuances are not for the purpose of raising capital and which holders of such
securities or debt are not at any time granted registration rights equal to or
greater than those granted to the Subscribers, (iii) the Company’s issuance of
Common Stock or the issuances or grants of options to purchase Common Stock to
employees, directors, and consultants, pursuant to plans described on Schedule
5(d) as such plans are constituted on the Closing Date, (iv) securities
upon the exercise or exchange of or conversion of any securities exercisable or
exchangeable for or convertible into shares of Common Stock issued and
outstanding on the date of this Agreement on the terms in effect on the Closing
Date including the permissible amendment thereof after the Closing Date, and
described on Schedule
5(d), (v) as a result of the exercise of Warrants or conversion of Notes
which are granted or issued pursuant to this Agreement, and (vi) the Company’s
issuance of Common Stock or the issuances or grants of options to purchase
Common Stock to consultants and service providers as set forth on Schedule
12(b) (collectively, the foregoing (i) through (vi) are “Excepted Issuances”), if at
any time the Notes or Warrants are outstanding, the Company shall agree to or
issue (the “Lower Price
Issuance”) any Common Stock or securities convertible into or exercisable
for shares of Common Stock (or modify any of the foregoing which may be
outstanding) to any person or entity at a price per share or conversion or
exercise price per share which shall be less than the Conversion Price in effect
at such time, or if less than the Warrant exercise price in effect at such time,
without the consent of the Subscribers, then the Conversion Price and Warrant
exercise price shall automatically be reduced to such other lower
price.  The average Purchase Price of the Conversion Shares and
average exercise price in relation to the Warrant Shares shall be calculated
separately for the Conversion Shares and Warrant Shares.  Common Stock
issued or issuable by the Company for no consideration or for consideration that
cannot be determined at the time of issue will be deemed issuable or to have
been issued for $0.0001 per share of Common Stock.  The rights of
Subscribers set forth in this Section 12 are in addition to any other rights the
Subscribers have pursuant to this Agreement, the Notes, any Transaction
Document, and any other agreement referred to or entered into in connection
herewith or to which Subscribers and Company are parties.

    

    (c)           Maximum Exercise of
Rights.   In the event the exercise of the rights
described in Section 12(a) and Section 12(b) would or could result in the
issuance of an amount of Common Stock of the Company that would exceed the
maximum amount that may be issued to Subscribers calculated in the manner
described in Section 7.3 of this Agreement, then the issuance of such additional
shares of Common Stock of the Company to Subscribers will be deferred in whole
or in part until such time as Subscribers are able to beneficially own such
Common Stock without exceeding the applicable maximum amount set forth
calculated in the manner described in Section 7.3 of this Agreement and notifies
the Company accordingly.

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

     

    13.           Miscellaneous.

     

    (a)           Notices.  All
notices, demands, requests, consents, approvals, and other communications
required or permitted hereunder shall be in writing and, unless otherwise
specified herein, shall be (i) personally served, (ii) deposited in the mail,
registered or certified, return receipt requested, postage prepaid, (iii)
delivered by reputable air courier service with charges prepaid, or (iv)
transmitted by hand delivery, telegram, or facsimile, addressed as set forth
below or to such other address as such party shall have specified most recently
by written notice.  Any notice or other communication required or
permitted to be given hereunder shall be deemed effective (a) upon hand delivery
or delivery by facsimile, with accurate confirmation generated by the
transmitting facsimile machine, at the address or number designated below (if
delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received) or (b) on the second business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The addresses for
such communications shall be to the last known addresses of such persons as set
forth in the books and records of the Company and: (i) if to the Company,
to:  1155C Arnold Drive, Suite 168, Martinez, CA 94553, (fax
925-922-2560) with a copy to:  Harvey Kesner, Esq., Sichenzia Ross
Friedman Ference LLP, 61 Broadway, 32nd Floor, New York, NY 10006, facsimile:
(212) 930-9725, and (ii) if to the Subscribers, to: the addresses and fax
numbers indicated on Schedule
I hereto.

     

    (b)           Entire Agreement;
Assignment.  This Agreement and other documents delivered in
connection herewith represent the entire agreement between the parties hereto
with respect to the subject matter hereof and may be amended only by a writing
executed by both parties.  Neither the Company nor the Subscribers has
relied on any representations not contained or referred to in this Agreement and
the documents delivered herewith.   No right or obligation of the
Company shall be assigned without prior notice to and the written consent of the
Subscribers.

     

    (c)           Counterparts/Execution.  This
Agreement may be executed in any number of counterparts and by the different
signatories hereto on separate counterparts, each of which, when so executed,
shall be deemed an original, but all such counterparts shall constitute but one
and the same instrument.  This Agreement may be executed by facsimile
signature and delivered by electronic transmission.

     

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

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

     

    (e)           Specific Enforcement,
Consent to Jurisdiction.  The Company and Subscribers
acknowledge and agree that irreparable damage would occur in the event that any
of the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached.  It is accordingly agreed
that the parties shall be entitled to seek an injunction or injunctions to
prevent or cure breaches of the provisions of this Agreement and to enforce
specifically the terms and provisions hereof, this being in addition to any
other remedy to which any of them may be entitled by law or
equity.  Subject to Section 13(d) hereof, the Company hereby
irrevocably waives, and agrees not to assert in any such suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction in
New York of such court, that the suit, action or proceeding is brought in an
inconvenient forum or that the venue of the suit, action or proceeding is
improper.  Nothing in this Section shall affect or limit any right to
serve process in any other manner permitted by law.

     

    (f)           Damages.   In
the event the Subscriber is entitled to receive any liquidated damages pursuant
to the Transactions Documents, the Subscriber may elect to receive the greater
of actual damages or such liquidated damages.

     

    (g)           Maximum
Payments.   Nothing contained herein or in any document
referred to herein or delivered in connection herewith shall be deemed to
establish or require the payment of a rate of interest or other charges in
excess of the maximum permitted by applicable law.  In the event that
the rate of interest or dividends required to be paid or other charges hereunder
exceed the maximum permitted by such law, any payments in excess of such maximum
shall be credited against amounts owed by the Company to the Subscribers and
thus refunded to the Company.

     

    (h)           Calendar
Days.   All references to “days” in the Transaction
Documents shall mean calendar days unless otherwise stated.  The terms
“business days” and “trading days” shall mean days that the New York Stock
Exchange is open for trading for three or more hours.  Time periods
shall be determined as if the relevant action, calculation or time period were
occurring in New York City.  Any deadline that falls on a non-business
day in any of the Transaction Documents shall be automatically extended to the
next business day and interest, if any, shall be calculated and payable through
such extended period.

     

    (i)       
    Captions: Certain
Definitions.  The captions of the various sections and
paragraphs of this Agreement have been inserted only for the purposes of
convenience; such captions are not a part of this Agreement and shall not be
deemed in any manner to modify, explain, enlarge or restrict any of the
provisions of this Agreement.  As used in this Agreement the term
“person” shall
mean and include an individual, a partnership, a joint venture, a corporation, a
limited liability company, a trust, an unincorporated organization and a
government or any department or agency thereof.

     

    (j)         
  Consent.   As
used in this Agreement and the Transaction Documents and any other agreement
delivered in connection herewith, “consent of the Subscribers” or similar
language means the consent of holders of not less than 70% of the outstanding
principal amount of the Notes on the date consent is requested (such amount
being a “Majority in
Interest”).  A Majority in Interest may consent to take or
forebear from any action permitted under or in connection with the Transaction
Documents, modify any Transaction Documents or waive any default or requirement
applicable to the Company, Subsidiaries or Subscribers under the Transaction
Documents provided the effect of such action does not waive any accrued interest
or damages and further provided that the relative rights of the Subscribers to
each other remains unchanged.

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

     

    (k)           Severability.  In
the event that any term or provision of this Agreement shall be finally
determined to be superseded, invalid, illegal or otherwise unenforceable
pursuant to applicable law by an authority having jurisdiction and venue, that
determination shall not impair or otherwise affect the validity, legality or
enforceability: (i) by or before that authority of the remaining terms and
provisions of this Agreement, which shall be enforced as if the unenforceable
term or provision were deleted, or (ii) by or before any other authority of any
of the terms and provisions of this Agreement.

     

    (l)        
   Successor
Laws.  References in the Transaction Documents to laws, rules,
regulations and forms shall also include successors to and functionally
equivalent replacements of such laws, rules, regulations and forms.  A
successor rule to Rule 144(b)(1)(i) shall include any rule that would be
available to a non-Affiliate of the Company for the sale of Common Stock not
subject to volume restrictions and after a six month holding
period.

     

    

     

    [SIGNATURE
PAGE FOLLOWS]

     

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

     

    SIGNATURE PAGE TO
SUBSCRIPTION AGREEMENT (A)

     

    

    Please
acknowledge your acceptance of the foregoing Subscription Agreement by signing
and returning a copy to the undersigned whereupon it shall become a binding
agreement between us.

    

    YES DTC,
INC.

    a
Delaware corporation

    

    

    

    

    By: /s/
Joseph Noel

          Name:
Joseph Noel

          Title:
Chief Executive Officer

    

    Dated:
December 11, 2009

    

    

    

    

    
      	
              SUBSCRIBER

            	
              PURCHASE
      PRICE AND NOTE PRINCIPAL

            	
              WARRANTS

            
	
              Joseph
      Noel, or designee

               

               

               

               

              /s/
      Joseph Noel

              _______________________________________________

              By:

               

            	
              $60,000.00

            	
              15,000,000

            

    

    

     

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

     

    SIGNATURE PAGE TO
SUBSCRIPTION AGREEMENT (B)

     

    

    Please
acknowledge your acceptance of the foregoing Subscription Agreement by signing
and returning a copy to the undersigned whereupon it shall become a binding
agreement between us.

    

    YES DTC,
INC.

    a
Delaware corporation

    

    

    

    

    By: /s/
Joseph Noel

          Name:
Joseph Noel

          Title:
Chief Executive Officer

    

    Dated:
December 11, 2009

    

    

    

    

    
      	
              SUBSCRIBER

            	
              PURCHASE
      PRICE AND NOTE PRINCIPAL

            	
              WARRANTS

            
	
              GRQ
      Consultants Inc 401K Roth FBO Barry Honig

              595
      S. Federal Highway, Suite 600

              Boca
      Raton, FL 33432

              Fax:
      (561) 544-2456

               

               

              /s/
      Barry Honig

              _______________________________________________

               

            	
              $88,000.00

            	
              22,000,000

            

    

    

     

    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

    

     

    SIGNATURE PAGE TO
SUBSCRIPTION AGREEMENT (C)

     

    

    Please
acknowledge your acceptance of the foregoing Subscription Agreement by signing
and returning a copy to the undersigned whereupon it shall become a binding
agreement between us.

    

    YES DTC,
INC.

    a
Delaware corporation

    

    

    

    

    By: /s/
Joseph Noel

          Name:
Joseph Noel

          Title:
Chief Executive Officer

    

    Dated:
December 11, 2009

    

    

    

    

    
      	
              SUBSCRIBER

            	
              PURCHASE
      PRICE AND NOTE PRINCIPAL

            	
              WARRANTS

            
	
              PETER
      BENZ

               

               

               

               

              /s/
      Peter Benz

              _______________________________________________

               

            	
              $20,000.00

            	
              5,000,000

            

    

    

     

    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

    

     

    SIGNATURE PAGE TO
SUBSCRIPTION AGREEMENT (D)

     

    

    Please
acknowledge your acceptance of the foregoing Subscription Agreement by signing
and returning a copy to the undersigned whereupon it shall become a binding
agreement between us.

    

    YES DTC,
INC.

    a
Delaware corporation

    

    

    

    

    By: /s/
Joseph Noel

          Name:
Joseph Noel

          Title:
Chief Executive Officer

    

    Dated:
December 11, 2009

    

    

    

    

    
      	
              SUBSCRIBER

            	
              PURCHASE
      PRICE AND NOTE PRINCIPAL

            	
              WARRANTS

            
	
              PARADOX
      CAPITAL PARTNERS, LLC

               

               

               

               

              /s/
      Harvey Kesner

              _______________________________________________

               

            	
              $16,000.00

            	
              4,000,000

            

    

    

    

    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

    

     

    SIGNATURE PAGE TO
SUBSCRIPTION AGREEMENT (E)

     

    

    Please
acknowledge your acceptance of the foregoing Subscription Agreement by signing
and returning a copy to the undersigned whereupon it shall become a binding
agreement between us.

    

    YES DTC,
INC.

    a
Delaware corporation

    

    

    

    

    By: /s/
Joseph Noel

          Name:
Joseph Noel

          Title:
Chief Executive Officer

    

    Dated:
December 11, 2009

    

    

    

    

    
      	
              SUBSCRIBER

            	
              PURCHASE
      PRICE AND NOTE PRINCIPAL

            	
              WARRANTS

            
	
              MOMONA
      CAPITAL

               

               

               

               

              /s/
      Arie Rabinowitz

              _______________________________________________

               

            	
              $4,000.00

            	
              1,000,000

            

    

    

     

    
      
        
        

      

      
        33

        
          

        

      

      
        
        

      

    

     

    SIGNATURE PAGE TO
SUBSCRIPTION AGREEMENT (F)

     

    

    Please
acknowledge your acceptance of the foregoing Subscription Agreement by signing
and returning a copy to the undersigned whereupon it shall become a binding
agreement between us.

    

    YES DTC,
INC.

    a
Delaware corporation

    

    

    

    

    By: /s/
Joseph Noel

          Name:
Joseph Noel

          Title:
Chief Executive Officer

    

    Dated:
December 11, 2009

    

    

    

    

    
      	
              SUBSCRIBER

            	
              PURCHASE
      PRICE AND NOTE PRINCIPAL

            	
              WARRANTS

            
	
              ANDY
      GRAVES

               

               

               

               

              /s/
      Andy Graves

              _______________________________________________

               

            	
              $12,000.00

            	
              3,000,000

            

    

     

     

    
      
        
        

      

      
        34

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
I

    

    

    

    
      	
              SUBSCRIBER
      AND ADDRESS

            	
              PURCHASE
      PRICE

            	
              NOTE
      PRINCIPAL

            	
              WARRANT
      SHARES

            
	
              JOSEPH
      NOEL, OR DESIGNEE

            	
              $60,000.00

            	
              $60,000.00

            	
              15,000,000

            
	
              GRQ
      Consultants Inc 401K Roth FBO Barry Honig

              595
      S. Federal Highway, Suite 600

              Boca
      Raton, FL 33432

            	
              $88,000.00

            	
              $88,000.00

            	
              22,000,000

            
	
              PETER
      BENZ

            	
              $20,000.00

            	
              $20,000.00

            	
              5,000,000

            
	
              PARADOX
      CAPITAL PARTNERS, LLC

            	
              $16,000.00

            	
              $16,000.00

            	
              4,000,000

            
	
              ARI
      RABINOWITZ

            	
              $4,000.00

            	
              $4,000.00

            	
              1,000,000

            
	
              ANDY
      GRAVES

            	
              $12,000.00

            	
              $12,000.00

            	
              3,000,000

            

    

    
 

     

     

     

     

     

    35f8k1209ex10ii_yesdtc.htm

    Exhibit
10.2

     

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

     

    
      
        	 Principal Amount:
      $________________ 	 Issue Date: December ___,
      2009

      

      
 

    

    SECURED CONVERTIBLE
PROMISSORY NOTE

    

    FOR VALUE
RECEIVED, YesDTC, Inc., a Delaware corporation (hereinafter called “Borrower”), hereby promises to
pay to the order of _________________, at _________________  (the
“Holder”), without
demand, the sum of _____________________ Dollars ($_____________) (“Principal Amount”), with
interest accruing thereon, on December ___, 2011 (the “Maturity Date”), if not sooner
paid.

    

    This Note
has been entered into pursuant to the terms of a subscription agreement between
the Borrower,
the Holder and the other signatories thereto (“Other Holders”) dated at or
about the date hereof (the “Subscription Agreement”), who
have been issued Notes pursuant to the Subscription Agreement (“Other Notes”) and shall be
governed by the terms of such Subscription Agreement.  Unless
otherwise separately defined herein, all capitalized terms used in this Note
shall have the same meaning as is set forth in the Subscription
Agreement.  The following terms shall apply to this Note:

     

    ARTICLE
I

    

    GENERAL
PROVISIONS

    

    1.1           Interest
Rate.   Interest payable on this Note shall accrue at the
annual rate of five (5%) percent  and be payable on the Maturity Date,
accelerated or otherwise, when the principal and remaining accrued but unpaid
interest shall be due and payable, or sooner as described below.

    

    1.2           Payment
Grace Period.  The Borrower shall not
have any grace period to pay any monetary amounts due under this
Note.  During the pendency of an Event of Default (as described in
Article III), a default interest rate of eighteen percent (18%) per annum shall
be in effect.

     

    1.3           Conversion
Privileges.  The Conversion Rights set forth in Article II shall
remain in full force and effect immediately from the date hereof and until the
Note is paid in full regardless of the occurrence of an Event of
Default.  This Note shall be payable in full on the Maturity Date,
unless previously converted into Common Stock in accordance with Article II
hereof.

     

    1.4           Prepayment.  This
Note may be prepaid by the Borrower in whole, at any time, or in part, from time
to time, without penalty or premium, upon thirty (30) days prior written notice
to the Holder.  Upon receipt of such notice, the Holder may determine
to convert the Note pursuant to Article
II.

    

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    

    ARTICLE
II

    

    CONVERSION
RIGHTS

    

    The
Holder shall have the right to convert the principal and any interest due under
this Note into Shares of the Borrower's Common Stock, $0.0001 par value per
share (“Common Stock”)
as set forth below.

    

    2.1.           Conversion into the
Borrower's Common Stock.

    

    (a)           The
Holder shall have the right from and after the date of the issuance of this Note
and then at any time until this Note is fully paid, to convert any outstanding
and unpaid principal portion of this Note, and accrued interest, at the election
of the Holder (the date of giving of such notice of conversion being a "Conversion Date") into fully
paid and non-assessable shares of Common Stock as such stock exists on the date
of issuance of this Note, or any shares of capital stock of Borrower into which
such Common Stock shall hereafter be changed or reclassified, at the conversion
price as defined in Section 2.1(b) hereof
(the "Fixed Conversion
Price"), determined as provided herein.  Upon delivery to the
Borrower of a completed Notice of Conversion, a form of which is annexed hereto
as Exhibit A,
Borrower shall issue and deliver to the Holder within three (3) business days
after the Conversion Date (such third day being the “Delivery Date”) that number of
shares of Common Stock for the portion of the Note converted in accordance with
the foregoing.  At the election of the Holder, the Borrower will
deliver accrued but unpaid interest on the Note, if any, through the Conversion
Date directly to the Holder on or before the Delivery Date.  The
number of shares of Common Stock to be issued upon each conversion of this Note
shall be determined by dividing that portion of the principal of the Note and
interest, if any, to be converted, by the Conversion Price.

    

    (b) Subject
to adjustment as provided in Section 2.1(c)
hereof, the fixed conversion price per share shall be equal to $0.004 (“Fixed Conversion
Price”).

     

    (c)           
The Fixed Conversion Price and number and kind of shares or other securities to
be issued upon conversion determined pursuant to Section 2.1(a), shall
be subject to adjustment from time to time upon the happening of certain events
while this conversion right remains outstanding, as follows:

     

    A.           Merger, Sale of Assets,
etc.  If (A) the Borrower effects any merger
or  consolidation of the Borrower with or into another entity, (B) the
Borrower effects any sale of all or substantially all of its assets in one or a
series of related transactions,  (C) any tender offer or exchange
offer (whether by the Borrower or another entity) is completed pursuant to which
holders of Common Stock are permitted to tender or exchange their shares for
other securities, cash or property, (D) the Borrower consummates a stock
purchase agreement or other business combination (including, without limitation,
a reorganization, recapitalization, spin-off or scheme of arrangement) with one
or more persons or entities whereby such other persons or entities acquire more
than the 50% of the outstanding shares of Common Stock (not including any shares
of Common Stock held by such other persons or entities making or party to, or
associated or affiliated with the other persons or entities making or party to,
such stock purchase agreement or other business combination), (E) any "person"
or "group" (as these terms are used for purposes of Sections 13(d) and 14(d) of
the 1934 Act) is or shall become the "beneficial owner" (as defined in Rule
13d-3 under the 1934 Act), directly or indirectly, of 50% of the aggregate
Common Stock of the Borrower, or (F) the Borrower 

    
      
        
        

      

      
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    effects any
reclassification of the Common Stock or any compulsory share exchange pursuant
to which the Common Stock is effectively converted into or exchanged for other
securities, cash or property (in any such case, a "Fundamental  Transaction"),
this Note, as to the unpaid principal portion thereof and accrued interest
thereon, shall thereafter be deemed to evidence the right to convert into such
number and kind of shares or other securities and property as would have been
issuable or distributable on account of such Fundamental Transaction, upon or
with respect to the securities subject to the conversion right immediately prior
to such Fundamental Transaction.  The foregoing provision shall
similarly apply to successive Fundamental Transactions of a similar nature by
any such successor or purchaser.  Without limiting the generality of
the foregoing, the anti-dilution provisions of this Section shall apply to such
securities of such successor or purchaser after any such Fundamental
Transaction.

     

    B.           Reclassification,
etc.  If the Borrower at any time shall, by reclassification or
otherwise, change the Common Stock into the same or a different number of
securities of any class or classes that may be issued or outstanding, this Note,
as to the unpaid principal portion thereof and accrued interest thereon, shall
thereafter be deemed to evidence the right to purchase an adjusted number of
such securities and kind of securities as would have been issuable as the result
of such change with respect to the Common Stock immediately prior to such
reclassification or other change.

    

    C.           Stock Splits, Combinations
and Dividends.  If the shares of Common Stock are subdivided or
combined into a greater or smaller number of shares of Common Stock, or if a
dividend is paid on the Common Stock in shares of Common Stock, the Conversion
Price shall be proportionately reduced in case of subdivision of shares or stock
dividend or proportionately increased in the case of combination of shares, in
each such case by the ratio which the total number of shares of Common Stock
outstanding immediately after such event bears to the total number of shares of
Common Stock outstanding immediately prior to such event.

    

                                   
D.           Share
Issuance.   So long as this Note is outstanding, if the
Borrower shall issue any Common Stock except for the Excepted Issuances (as
defined in the Subscription Agreement), prior to the complete conversion or
payment of this Note, for a consideration per share that is less than the Fixed
Conversion Price that would be in effect at the time of such issue, then, and
thereafter successively upon each such issuance, the Fixed Conversion Price
shall be reduced to such other lower issue price.  For purposes of
this adjustment, the issuance of any security or debt instrument of the Borrower
carrying the right to convert such security or debt instrument into Common Stock
or of any warrant, right or option to purchase Common Stock shall result in an
adjustment to the Fixed Conversion Price upon the issuance of the
above-described security, debt instrument, warrant, right, or option and again
upon the issuance of shares of Common Stock upon exercise of such conversion or
purchase rights if such issuance is at a price lower than the then applicable
Fixed Conversion Price. Common Stock issued or issuable by the Borrower for no
consideration will be deemed issuable or to have been issued for $0.0001 per
share of Common Stock.  The reduction of the Fixed Conversion Price
described in this paragraph is in addition to the other rights of the Holder
described in the Subscription Agreement.

    

    (d)           Whenever
the Conversion Price is adjusted pursuant to Section 2.1(c) above,
the Borrower shall promptly mail to the Holder a notice setting forth the
Conversion Price after such adjustment and setting forth a statement of the
facts requiring such adjustment.

    

    (e)           During
the period the conversion right exists, Borrower will reserve from its
authorized and unissued Common Stock not less than an amount of Common Stock
equal to 150% of the amount of shares of Common Stock issuable upon the full
conversion of this Note.  Borrower represents that upon issuance, such
shares will be duly and validly issued, fully paid and
non-assessable.  Borrower agrees that its issuance of this Note shall
constitute full authority to its officers, agents, and transfer agents who are
charged with the duty of executing and issuing stock certificates to execute and
issue the necessary certificates for shares of Common Stock upon the conversion
of this Note.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    2.2           Method of
Conversion.  This Note may be converted by the Holder in whole
or in part as described in Section 2.1(a) hereof
and the Subscription Agreement.  Upon partial conversion of this Note,
a new Note containing the same date and provisions of this Note shall, at the
request of the Holder, be issued by the Borrower to the Holder for the principal
balance of this Note and interest which shall not have been converted or
paid.

    

    2.3.          Maximum
Conversion.  The Holder shall not be entitled to convert on a
Conversion Date that amount of the Note in connection with that number of shares
of Common Stock which would be in excess of the sum of (i) the number of shares
of Common Stock beneficially owned by the Holder and its affiliates on a
Conversion Date, (ii) any Common Stock issuable in connection with the
unconverted portion of the Note, and (iii) the number of shares of Common Stock
issuable upon the conversion of the Note with respect to which the determination
of this provision is being made on a Conversion Date, which would result in
beneficial ownership by the Holder and its affiliates of more than 4.99% of the
outstanding shares of Common Stock of the Borrower on such Conversion
Date.  For the purposes of the provision to the immediately preceding
sentence, beneficial ownership shall be determined in accordance with Section
13(d) of the Securities Exchange Act of 1934, as amended, and Regulation 13d-3
thereunder.  Subject to the foregoing, the Holder shall not be limited
to aggregate conversions of 4.99%.  The Holder shall have the
authority and obligation to determine whether the restriction contained in this
Section 2.3
will limit any 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 Notes are convertible shall be the responsibility and
obligation of the Holder.  The Holder may waive the conversion
limitation described in this Section 2.3, in whole
or in part, upon and effective after 61 days prior written notice to the
Borrower to increase such percentage to up to 9.99%.

     

    ARTICLE
III

    

    EVENT
OF DEFAULT

    

    The
occurrence of any of the following events of default ("Event of Default") shall, at
the option of the Holder hereof, make all sums of principal and interest then
remaining unpaid hereon and all other amounts payable hereunder immediately due
and payable, upon demand, without presentment, or grace period, all of which
hereby are expressly waived, except as set forth below:

    

    3.1           Failure to Pay Principal or
Interest.  The Borrower fails to pay any installment of
principal, interest or other sum due under this Note when due.

    

    3.2           Breach of
Covenant.  The Borrower breaches any material covenant or other
term or condition of the Subscription Agreement, Transaction Documents or this
Note in any material respect and such breach, if subject to cure, continues for
a period of five (5) business days after written notice to the Borrower from the
Holder.

    

    3.3           Breach of Representations
and Warranties.  Any material representation or warranty of the
Borrower made herein, in the Subscription Agreement, Transaction Documents, or
in any agreement, statement or certificate given in writing pursuant hereto or
in connection therewith shall be false or misleading in any material respect as
of the date made and the Closing Date.

    

    3.4           Liquidation.   Any
dissolution, liquidation or winding up of Borrower or any substantial portion of
its business.

     

    3.5           Cessation of
Operations.   Any cessation of operations by Borrower or
Borrower admits it is otherwise generally unable to pay its debts as such debts
become due.

     

    
      
        
        

      

      
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    3.6           Maintenance of
Assets.   The failure by Borrower to maintain any material
intellectual property rights, personal, real property or other assets which are
necessary to conduct its business (whether now or in the future).

    

    3.7           Receiver or
Trustee.  The Borrower or any Subsidiary of Borrower shall make
an assignment for the benefit of creditors, or apply for or consent to the
appointment of a receiver or trustee for it or for a substantial part of its
property or business; or such a receiver or trustee shall otherwise be
appointed.

    

    3.8           Judgments.  Any
money judgment, writ or similar final process shall be entered or filed against
Borrower or any of its property or other assets for more than $250,000, unless
stayed vacated or satisfied within thirty (30) days.

    

    3.9           Bankruptcy.  Bankruptcy,
insolvency, reorganization or liquidation proceedings or other proceedings or
relief under any bankruptcy law or any law, or the issuance of any notice in
relation to such event, for the relief of debtors shall be instituted by or
against the Borrower or any Subsidiary of Borrower.

     

    3.10        
Delisting.   Delisting
of the Common Stock from any Principal Market; failure to comply with the
requirements for continued listing on a Principal Market for a period of five
(5) consecutive trading days; or notification from a Principal Market that the
Borrower is not in compliance with the conditions for such continued listing on
such Principal Market; provided, however, that so long as the Borrower shall
first become subject to the periodic reporting requirements of the SEC on or
prior to the six (6) months anniversary hereof, this section will not be an
Event of Default under this Section 3.10 prior to
such six (6) months anniversary.

    

    3.11         Non-Payment.   A
default by the Borrower under any one or more obligations in an aggregate
monetary amount in excess of $200,000 for more than twenty (20) days after the
due date, unless the Borrower is contesting the validity of such obligation in
good faith.

    

    3.12         Stop
Trade.  An SEC or judicial stop trade order or Principal Market
trading suspension that lasts for five or more consecutive trading days after
the Borrower has become subject to the reporting requirements of the
SEC.

    

    3.13         Failure to Deliver Common
Stock or Replacement Note.  Borrower's failures to timely
deliver Common Stock to the Holder pursuant to and in the form required by this
Note and Sections 7 and 11 of the Subscription Agreement, or, if required, a
replacement Note.

    

    3.14         Reservation
Default.   Failure by the Borrower to have reserved for
issuance upon conversion of the Note or upon exercise of the Warrants issued in
connection with the Subscription Agreement, the number of shares of Common Stock
as required in the Subscription Agreement, this Note and the
Warrants.

    

    3.15         Financial Statement
Restatement.  The restatement after the date hereof of any
financial statements filed by the Borrower with the SEC for any date or period
from two years prior to the Issue Date of this Note and until this Note is no
longer outstanding, if the result of such restatement would, by comparison to
the unrestated financial statements, have constituted a Material Adverse
Effect.

    

    3.16         Other Note
Default.  The occurrence of any Event of Default under any
Other Note.

    

    3.17         Reverse
Splits.   The Borrower effectuates a reverse split of its
Common Stock without twenty (20) days prior written notice to the
Holder.

    

    3.18         Event Described in
Subscription Agreement.  The occurrence of an Event of Default
as described in the Subscription Agreement that, if susceptible to cure, is not
cured during any designated cure period.

     

    
      
        
        

      

      
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    3.19           Executive Officers Breach of
Duties.  Any of Borrower’s named executive officers or
directors is convicted of a violation of securities laws, or a settlement in
excess of $250,000 is reached by any such officer or director relating to a
violation of securities laws, breach of fiduciary duties or
self-dealing.

    

    3.20           Cross
Default.  A default by the Borrower of a material term,
covenant, warranty or undertaking of any other agreement to which the Borrower
and Holder are parties, or the occurrence of a material event of default under
any such other agreement to which Borrower and Holder are parties which is not
cured after any required notice and/or cure period.

     

    3.21           Business
Purpose.  In the event the Company fails to obtain any
extension, renewal or replacement of its Distribution Agreement with
BioElectronics, Inc., such agreement terminates or is otherwise cancelled, or
the Company is unable to, fails to, or does not profitably engage in the
business intended (marketing and sales of medical devices) for whatever
reason.

    

    ARTICLE
IV

    

    SECURITY
INTEREST

     

    4.           Security Interest/Waiver of
Automatic Stay.   This Note is secured by a security
interest granted to the Holder pursuant to a Security Agreement, as delivered by
Borrower to Holder.  The Borrower acknowledges and agrees that should
a proceeding under any bankruptcy or insolvency law be commenced by or against
the Borrower, or if any of the Collateral (as defined in the Security Agreement)
should become the subject of any bankruptcy or insolvency proceeding, then the
Holder should be entitled to, among other relief to which the Holder may be
entitled under the Transaction Documents and any other agreement to which the
Borrower and Holder are parties (collectively, "Loan Documents") and/or
applicable law, an order from the court granting immediate relief from the
automatic stay pursuant to 11 U.S.C. Section 362 to permit the Holder to
exercise all of its rights and remedies pursuant to the Loan Documents and/or
applicable law. THE BORROWER EXPRESSLY WAIVES THE BENEFIT OF THE AUTOMATIC STAY
IMPOSED BY 11 U.S.C. SECTION 362.  FURTHERMORE, THE BORROWER EXPRESSLY
ACKNOWLEDGES AND AGREES THAT NEITHER 11 U.S.C. SECTION 362 NOR ANY OTHER SECTION
OF THE BANKRUPTCY CODE OR OTHER STATUTE OR RULE (INCLUDING, WITHOUT LIMITATION,
11 U.S.C. SECTION 105) SHALL STAY, INTERDICT, CONDITION, REDUCE OR INHIBIT IN
ANY WAY THE ABILITY OF THE HOLDER TO ENFORCE ANY OF ITS RIGHTS AND REMEDIES
UNDER THE LOAN DOCUMENTS AND/OR APPLICABLE LAW.  The Borrower hereby
consents to any motion for relief from stay that may be filed by the Holder in
any bankruptcy or insolvency proceeding initiated by or against the Borrower
and, further, agrees not to file any opposition to any motion for relief from
stay filed by the Holder.  The Borrower represents, acknowledges and
agrees that this provision is a specific and material aspect of the Loan
Documents, and that the Holder would not agree to the terms of the Loan
Documents if this waiver were not a part of this Note. The Borrower further
represents, acknowledges and agrees that this waiver is knowingly, intelligently
and voluntarily made, that neither the Holder nor any person acting on behalf of
the Holder has made any representations to induce this waiver, that the Borrower
has been represented (or has had the opportunity to he represented) in the
signing of this Note and the Loan Documents and in the making of this waiver by
independent legal counsel selected by the Borrower and that the Borrower has
discussed this waiver with counsel.

     

    
      
        
        

      

      
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    ARTICLE
V

    

    MISCELLANEOUS

    

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

     

    5.2           Notices.  All
notices, demands, requests, consents, approvals, and other communications
required or permitted hereunder shall be in writing and, unless otherwise
specified herein, shall be (i) personally served, (ii) deposited in the mail,
registered or certified, return receipt requested, postage prepaid, (iii)
delivered by reputable air courier service with charges prepaid, or (iv)
transmitted by hand delivery, telegram, or facsimile, addressed as set forth
below or to such other address as such party shall have specified most recently
by written notice.  Any notice or other communication required or
permitted to be given hereunder shall be deemed effective (a) upon hand delivery
or delivery by facsimile, with accurate confirmation generated by the
transmitting facsimile machine, at the address or number designated below (if
delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received) or (b) on the first business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur.  The
addresses for such communications shall be: (i) if to the Borrower to: YesDTC,
Inc., 1155C Arnold Drive, Suite 169, Martinez, CA 94553: (925) 922-2560, with a
copy by fax only to:  Harvey Kesner, Esq., Sichenzia Ross Friedman
Ference LLP, 61 Broadway, 32nd Floor, New York, NY 10006, facsimile: (212)
930-9725, and (ii) if to the Holder, to the name, address and facsimile number
set forth on the front page of this Note, with a copy by fax only to
__________________________________, facsimile:
(   )    -     .

     

    5.3           Amendment
Provision.  The term “Note” and all reference thereto, as used
throughout this instrument, shall mean this instrument as originally executed,
or if later amended or supplemented, then as so amended or
supplemented.

     

    5.4           Assignability.  This
Note shall be binding upon the Borrower and its successors and assigns, and
shall inure to the benefit of the Holder and its successors and
assigns.  The Borrower may not assign its obligations under this
Note.

     

    5.5           Cost of
Collection.  If default is made in the payment of this Note,
Borrower shall pay the Holder hereof reasonable costs of collection, including
reasonable attorneys’ fees.

     

    5.6           Governing
Law.  This Note shall be governed by and construed in
accordance with the laws of the State of New York without regard to conflicts of
laws principles that would result in the application of the substantive laws of
another jurisdiction.  Any action brought by either party against the
other concerning the transactions contemplated by this Agreement must be brought
only in the civil or state courts of New York or in the federal courts located
in the State and county of New York.  Both parties and the individual
signing this Agreement on behalf of the Borrower agree to submit to the
jurisdiction of such courts.  The prevailing party shall be entitled
to recover from the other party its reasonable attorney's fees and
costs.  In the event that any provision of this Note is invalid or
unenforceable under any applicable statute or rule of law, then such provision
shall be deemed inoperative to the extent that it may conflict therewith and
shall be deemed modified to conform with such statute or rule of law. Any such
provision which may prove invalid or unenforceable under any law shall not
affect the validity or unenforceability of any other provision of this Note.
Nothing contained herein shall be deemed or operate to preclude the Holder from
bringing suit or taking other legal action against the Borrower in any other
jurisdiction to collect on the Borrower's obligations to Holder, to realize on
any collateral or any other security for such obligations, or to enforce a
judgment or other decision in favor of the Holder.  This Note shall be deemed an
unconditional obligation of Borrower for the payment of money and, without
limitation to any other remedies of Holder, may be enforced against Borrower by
summary proceeding pursuant to New York Civil Procedure Law and Rules Section
3213 or any similar rule or statute in the jurisdiction where enforcement is
sought.  For purposes of such rule or statute, any other document or
agreement to which Holder and Borrower are parties or which Borrower delivered
to Holder, which may be convenient or necessary to determine Holder’s rights
hereunder or Borrower’s obligations to Holder are deemed a part of this Note,
whether or not such other document or agreement was delivered together herewith
or was executed apart from this Note.

     

    
      
        
        

      

      
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    5.7           Maximum
Payments.  Nothing contained herein shall be deemed to
establish or require the payment of a rate of interest or other charges in
excess of the maximum rate permitted by applicable law.  In the event
that the rate of interest required to be paid or other charges hereunder exceed
the maximum rate permitted by applicable law, any payments in excess of such
maximum rate shall be credited against amounts owed by the Borrower to the
Holder and thus refunded to the Borrower.

     

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

     

    5.9           Redemption.  This
Note may not be redeemed or called without the consent of the Holder except as
described in this Note or the Subscription Agreement.

    

    5.10           Shareholder
Status.  The Holder shall not have rights as a shareholder of
the Borrower with respect to unconverted portions of this
Note.  However, the Holder will have the rights of a shareholder of
the Borrower with respect to the Shares of Common Stock to be received after
delivery by the Holder of a Conversion Notice to the Borrower.

     

    
      
        
        

      

      
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    IN WITNESS WHEREOF, Borrower
has caused this Note to be signed in its name by an authorized officer as of the
____ day of December, 2009.

    

    YESDTC,
INC.

    

    

    By:
________________________________

          Name:
Joe Noel

          Title:
Chief Executive Officer

    

    WITNESS:

    

    

    

    ______________________________________

     

    
      
        
        

      

      
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    NOTICE OF
CONVERSION

    

    (To be
executed by the Registered Holder in order to convert the Note)

     

     

    The
undersigned hereby elects to convert $_________ of the principal and $_________
of the interest due on the Note issued by __________________ on November ___,
2009 into Shares of Common Stock of _______________________ (the “Borrower”)
according to the conditions set forth in such Note, as of the date written
below.

    

    

    

    Date of
Conversion:____________________________________________________________________

    

    

    Conversion
Price:______________________________________________________________________

    

    

    Number of Shares of Common Stock Beneficially Owned on
the Conversion Date: Less than 5% of the
outstanding Common Stock of ______________________.

    

    

    Shares To
Be
Delivered:_________________________________________________________________

    

    

    Signature:___________________________________________________________________________

    

    

    Print
Name:__________________________________________________________________________

    

    

    Address:____________________________________________________________________________

    

    ____________________________________________________________________________

    
 

     

    10

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00166-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00166-of-00352.parquet"}]]