Document:

Unassociated Document

    LETTER
      OF CREDIT AND 

    SECURITY
      AGREEMENT

    Supplement
      to Loan, Security and Bulk Purchase Agreement

     

    THIS
      SUPPLEMENT
      (“Supplement”) made and executed this 30th day of April, 2008 by and
      between INFOSONICS CORPORATION (“Client”) and WELLS FARGO CENTURY, INC.
      (“WFC”).

     

    1. Supplement
      to Agreement

     

    1.1 Supplement.
      This
      Supplement shall constitute a supplement to the Loan, Security and Bulk Purchase
      Agreement, entered into between WFC and Client and any other agreements
      documents amendments or supplements executed in connection therewith
      (collectively, the “Agreement”.) All of the terms and conditions of the
      Agreement which are not inconsistent with the terms and conditions of this
      Supplement shall apply with full force and effect to all Transactions covered
      by
      this Supplement. This Supplement shall be deemed to be guaranteed by all
      guaranties and secured by all pledge and security agreements in favor of WFC
      and
      relating to indebtedness of Client to WFC, notwithstanding anything to the
      contrary in any such document or agreement.

     

    2. Transactions

     

    2.1 Purchase
      Guaranty; Letter of Credit.
      From
      time to time, upon Client’s request but subject, in each instance, to WFC’s
      approval thereof, WFC will guarantee payment by Client (i) to vendors for
      purchases made by Client in the regular course of Client’s business (a “Purchase
      Guaranty”); or (ii) to banks under letters of credit to be opened by Client in a
      bank designated by WFC, in Client’s name and for Client’s account, and any
      drafts or acceptances thereunder, for the purchase of merchandise required
      by
      Client in the regular course of Client’s business or on a standby basis (a
“Letter of Credit”); provided,
      that,
      in any event, the aggregate of all Purchase Guaranties and Letters of Credit
      issued and outstanding at any time shall not exceed $10,000,000. In each such
      instance Client will execute a form of request for Purchase Guaranty on WFC’s
      form or application for credit on the form of such bank requesting WFC to
      deliver same to the bank and to cause it to issue an irrevocable Letter of
      Credit in conformity with the application. Each Letter of Credit shall be fully
      reserved against under the Agreement. 

     

    2.2 Scope.
      The
      term “Transaction”, whenever used in this Supplement, shall mean and include any
      such Letter of Credit or Purchase Guaranty which may be made or issued by WFC
      hereunder, or any drafts and acceptances thereunder, any air release, steamship
      guaranty or other indemnity issued in connection with any Letter of Credit,
      all
      merchandise which may be the subject of any such Purchase Guaranty or Letter
      of
      Credit so guaranteed and all documents and instruments of every kind relating
      thereto, including, without limitation, all documents of title, transport,
      indebtedness and payment, or evidencing any thereof.

     

    2.3 Terms.
      Each
      Transaction hereunder shall be in such form and shall contain such terms,
      conditions and provisions as WFC, in WFC’s sole discretion, may elect. Client
      shall, if WFC so elects in any Transaction, deposit with Client either cash
      or
      other collateral satisfactory to WFC, in such amounts as WFC, in WFC’s sole
      discretion, may require from time to time, prior to any
      Transaction.

     

    
      
        
        

      

      
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    2.4 Limitations.
      Notwithstanding anything to the contrary herein, the total amount of
      Transactions hereunder which may be outstanding at any time may be limited
      by
      WFC, in WFC’s sole and absolute discretion. Nothing herein contained shall be
      deemed or construed to grant to Client any right, power or authority to pledge
      WFC’s credit in any manner or to any extent whatever.

     

    2.5 Issuance.
      All
      Letters of Credit guaranteed by WFC hereunder shall be issued in Client’s
      name.

     

    3. Client’s
      Obligations; Representations and Warranties

     

    3.1 Payment.
      Client
      shall promptly pay, satisfy and discharge, in full, as and when due, all debts,
      liabilities and obligations of any kind incurred by Client in connection with
      each and every Transaction, including, without limitation, all fees and charges
      of any bank; and Client shall pay to WFC, forthwith upon demand and in full,
      any
      and all moneys which WFC may pay or be obligated to pay on, under, in connection
      with, or by reason of, any Transaction, including all attorney’s fees, if
      any.

     

    3.2 Indemnities.
      Client
      shall indemnify WFC and any bank which may issue any Letter of Credit guaranteed
      by WFC hereunder or any air release, steamship guarantee or other indemnity
      and
      any correspondent of any such bank which may have any connection with any
      Transaction or any drafts or acceptances thereunder or any air release,
      steamship guarantee or other indemnity, and hold WFC and them harmless against
      any and all third party claims, losses, liabilities, expense, demands and causes
      of action ("Claims") which may be made, asserted, or brought against WFC, or
      any
      of them, arising on, under, in connection with, or by reason of, any
      Transaction, except for Claims arising from WFC's acts or
      omissions.

     

    3.3 Additional
      Documents.
      Client
      shall, upon WFC’s request, execute and deliver to Client any trust receipts
      which WFC may reasonably require in connection with the release to Client of
      any
      merchandise or documents and any financing statements that WFC may, from time
      to
      time, reasonably require.

     

    3.4 Insurance.
      Client
      shall cause all merchandise which may be the subject of any Transaction to
      be
      appropriately insured under an all risk United States dollar policy, at Client’s
      sole cost, but for WFC’s account and benefit as WFC’s interest may appear, in
      amounts and by insurance companies reasonably satisfactory to WFC; and shall
      deliver to WFC forthwith proof of full payment of all premiums thereon if
      requested by WFC. Upon Client’s failure or refusal, for any reason, to deliver
      any such prepaid policies to WFC, WFC shall have the right, but not the
      obligation, to procure such policies and to pay the premiums thereon for
      Client’s account; and Client shall pay to WFC, forthwith, the amount of such
      premiums so paid by WFC with interest thereon computed as provided in Section
      8.2 hereof. Client’s liability to WFC hereunder shall not be affected, impaired,
      released, or discharged, in whole or in part, by reason of any loss, theft,
      or
      destruction of, or depreciation or damage to, any merchandise which is not
      fully
      covered by the proceeds of insurance thereon actually received by WFC,
      regardless of the cause of any such loss, theft, destruction, depreciation
      or
      damage, or absence or nonreceipt of insurance proceeds and whether such
      nonreceipt of insurance proceeds is caused by the failure of the insurer to
      pay
      claims or otherwise.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    

     

    3.5 Importation.
      Client
      agrees that any necessary import, export or other licenses or certificates
      for
      the import or handling of the Collateral (as defined in Section 5.1 hereof)
      will
      have been promptly procured; all foreign and domestic governmental laws and
      regulations in regard to the shipment and importation of the Collateral, or
      the
      financing thereof will have been promptly and fully complied with; and any
      certificates in that regard that WFC may at any time reasonably request that
      are
      necessary for WFC in connection with the performance of its services hereunder
      will be promptly furnished. In this connection, Client warrants and represents
      that, to its knowledge as of the date of shipment, all shipments made under
      any
      such Letters of Credit are in accordance with the governmental laws and
      regulations of the countries in which the shipments originate and terminate,
      and
      are not prohibited by any such laws and regulations.

     

    3.6 Taxes
      and Duties.
      Client
      assumes all risk, liability and responsibility for, and agrees to pay and
      discharge, all present and future local, state, federal or foreign taxes,
      duties, or levies. Any embargo, restriction, law, custom or regulation of any
      country, state, city, or other political subdivision, where the Collateral
      is or
      may be located, or wherein payments are to be made, or wherein drafts may be
      drawn, negotiated, accepted, or paid, shall be solely Client’s risk, liability
      and responsibility.

     

    3.7 Solvency.
      Client
      is and will continue to be solvent.

     

    3.8 Genuineness.
      Each
      Letter of Credit Client presents to WFC naming Client as beneficiary shall,
      to
      Client's knowledge, be genuine, correct and complete and will not have been
      drawn against except to the extent stated to Client in writing at the time
      of
      such presentation; and all invoices, receipts and other documents and
      instruments of every kind which Client presents, displays, or delivers to WFC
      for any purpose will, to Client's knowledge, be genuine, correct and
      complete.

     

    4. Power
      of Attorney

     

    4.1 Scope.
      In
      connection with all Transactions, Client hereby appoints each officer of WFC’s
      corporation as Client’s attorney-in-fact, with full power and authority in each
      of them (i) to sign and endorse Client’s name upon all Title Documents; (ii) in
      Client’s name or WFC’s, to complete any Transaction, to obtain, execute and
      deliver all necessary or proper documents in connection therewith and to collect
      the proceeds thereof; (iii) upon any material default under the Agreement,
      or
      this Supplement, or in any Transaction, to cancel, rescind, terminate, modify,
      amend, or adjust in any other way, in whole or in part, any pending Transaction;
      and (iv) upon Client’s refusal to do so following WFC’s request, in Client’s
      name and for Client’s account, to do any and all other acts and things which may
      be necessary or proper in connection with this Supplement or any Transaction,
      or
      both, or to enable WFC to obtain payment of any monies owed to WFC, or for
      which
      Client may thereafter become liable to WFC, in any Transaction or otherwise
      hereunder. The said power and authority is coupled with an interest and shall
      be
      irrevocable (except as to future Transactions) until all Transactions shall
      have
      been fully consummated and all monies owed to WFC have been paid in
      full.

     

    
      
        
        

      

      
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    5. Security

     

    5.1 Collateral.
      As
      collateral security for the full payment, performance and discharge of any
      and
      all of Client’s debts, obligations and liabilities to WFC, whether arising under
      the Agreement, or hereunder, or otherwise, whether direct or indirect,
      liquidated or not, absolute or contingent, due or not due, now existing or
      hereafter arising, Client hereby pledges to WFC and grants to WFC a general
      lien
      upon and continuing security interest in and a right to set-off against, all
      now
      existing and hereafter arising Documents of Title, and goods and inventory,
      together with all credit balances, equities other property, tangible or
      intangible, now or hereafter existing in any of Client’s accounts with WFC,
      including, but not limited to, Client’s account with WFC hereunder and under the
      Agreement and all property and securities of every kind and nature which have
      been or at any time hereafter may be delivered to or otherwise come into WFC’s
      possession, custody or control, as collateral security, or for safekeeping,
      or
      for any other or different purpose of any kind or which shall be in transit
      to
      WFC or set apart for WFC by anyone for WFC, in any way, by Client or for
      Client’s account, or in which Client may have any interest, whether WFC shall
      accept the same for the purpose for which delivered or not, and any and all
      proceeds of said property and securities and every part thereof (“Collateral”);
      with the right to WFC, in WFC’s discretion, to resort first to any part of said
      security and to apply any proceeds thereof to Client’s Obligations in such order
      and amounts as WFC may elect. Recourse to security shall not be
      required.

     

    5.2 Additional
      Security.
      As
      further security for the payment of all of Client’s debts, obligations and
      liabilities hereunder, Client shall, in connection with each Transaction, assign
      to WFC the purchase order, selling order, letter of credit in Client’s favor and
      all other instruments in connection with the Transaction which WFC may require;
      and all of the same shall be deemed to have been automatically assigned to
      WFC
      and shall become WFC’s property immediately upon the occurrence of each
      Transaction and without any formal assignment thereof. All invoices, cash,
      checks, drafts, notes, documents, bills of lading, warehouse, shipping and
      dock
      receipts, and other title, payment, or other instruments pertaining to each
      Transaction (collectively, “Title Documents”) and the merchandise relating
      thereto shall be deemed to be WFC’s sole property and in furtherance thereof,
      Client, upon the occurrence and during the continuation of an Event of Default,
      shall instruct all suppliers, shippers, carriers, forwarders, warehouses, banks
      and other persons holding or receiving any of such Title Documents or
      merchandise to deliver the same to WFC or upon WFC’s order. If any of the Title
      Documents shall come into Client’s possession, Client shall hold same in trust
      for WFC and shall forthwith deliver the same to WFC in their original form.
      Unless WFC instructs otherwise, upon the occurrence and during the continuation
      of an Event of Default, Client may dispose of merchandise imported by Client
      in
      connection with Transactions in the ordinary course of Client’s
      business.

     

    5.3 Additional
      Rights.
      Any
      rights, remedies, duties or obligations granted or undertaken by Client to
      any
      bank in any application for Letters of Credit, or any standing agreement
      relating to Letters of Credit or otherwise, shall be deemed to have been granted
      to WFC and apply in all respects to WFC and shall be in addition to any rights,
      remedies, duties or obligations contained herein

     

    
      
        
        

      

      
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    6. Steamship
      Guaranties and Airway Releases

     

    6.1 Guaranties
      and Releases.
      From
      time to time, merchandise purchased by Client under Letters of Credit may arrive
      at a designated location before receipt and availability of the Documents of
      Title that would permit Client to obtain possession of the merchandise. Upon
      Client’s request but subject, in each instance, to WFC’s approval thereof, which
      shall not be unreasonably withheld, delayed or conditioned, WFC will cause
      WFC’s
      banks to issue air releases, steamship guarantees or other such indemnities
      on
      Client’s behalf in respect of Letters of Credit opened through such banks to
      induce carriers to release to Client shipments of merchandise without
      presentation of the original bills of lading or other evidence of shipment
      properly endorsed. Upon issuance of such air way releases, steamship guarantees
      or other indemnities, Client irrevocably and unconditionally waives any and
      all
      discrepancies, mistakes, defects or omissions in any of the documents presented
      or to be presented to WFC’s banks for negotiation or acceptance in connection
      therewith and Client hereby agrees to indemnify WFC and hold WFC harmless from
      and against any and all consequences which may result from the issuance of
      such
      air releases, steamship guaranties or other indemnities. Upon issuance of an
      airway release, steamship guarantee or other indemnity, WFC shall have the
      right
      prior to presentation, negotiation or acceptance of documents at WFC’s banks
      under the related Letters of Credit to charge to Client’s account the face
      amount of such outstanding airway releases, steamship guarantees or
      indemnities.

     

    7. WFC’s
      Responsibility

     

    7.1 Limitation
      of Liability.
      WFC
      shall not be liable or responsible, in any manner or to any extent, for any
      damage caused by faithfully and dutifully following Client’s instructions or
      those contained in any Letter of Credit or Purchase Guaranty in connection
      with
      or relating to any Transaction or waivers of discrepancies issued hereunder
      and
      any drafts or acceptances under any such Transaction, or any Documents of Title,
      transport, payment, or indebtedness or any other instruments or documents,
      whether or not transferred to WFC hereunder, or the completion of execution
      of
      any Transaction; or for any loss or depreciation of, or damage to, any
      merchandise, Documents of Title, transport, payment, or indebtedness of any
      other documents or instruments, regardless of the cause of any thereof (except
      for Claims caused by the acts of omissions of WFC). Except as set forth in
      this
      Agreement, all Transactions hereunder shall be entirely without recourse against
      WFC in any event.

     

    7.2 Reliance.
      WFC and
      any bank shall have the right to rely upon any oral (if from an officer of
      Client), telecopy or other facsimile instruction or communication received
      from
      Client in connection with any proposed modifications, deviations, extensions
      or
      other actions affecting a Transaction, including, without limitation, waivers
      of
      discrepancies. WFC retains WFC’s independent right to refuse any documents
      presented containing discrepancies despite the fact that WFC has contacted
      Client and Client has accepted such discrepancies.

     

    7.3 Waiver
      of Discrepancies.
      WFC
      reserves the sole right, after consulting with Client, in WFC’s reasonable
      discretion, to waive any discrepancies, defects or mistakes in any of the
      documents presented to WFC or WFC’s banks for negotiation or
      acceptance.

     

    
      
        
        

      

      
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    8. Fees

     

    8.1 Compensation.
      In
      addition to any commissions, discount, interest, charges, fees or expenses
      charged to WFC for Client’s account by any bank, or by WFC under Schedule 1
      hereto, in connection with any Transaction (all of which will be charged to
      Client’s account and when made by the bank shall be conclusive on Client absent
      manifest error), Client shall pay to WFC, as compensation for the issuance
      of
      Purchase Guaranties or Letters of Credit by WFC hereunder and for all services
      which WFC may render hereunder, the following:

     

    (a) As
      to
      commercial Letters of Credit:

     

    (i) an
      issuance (opening) charge equal to 0.125% of the full face amount of each
      commercial Letter of Credit; plus

     

    (ii) 0.125%
      of
      the amount of each increase of any such commercial Letter of Credit;
      plus

     

    (iii) a
      charge
      equal to not less than 0.125% on each negotiation under each commercial Letter
      of Credit.

     

    (b) As
      to
      standby Letters of Credit, a 2.0% per annum fee on the full face amount of
      each
      standby Letter of Credit, payable on the issuance date and on each anniversary
      of the issuance date during the term thereof.

     

    (c) As
      to
      Purchase Guaranties:

     

    (i) an
      issuance (opening) charge equal to 0.125% of the full face amount of each
      Purchase Guaranty; plus

     

    (ii) a
      charge
      equal to not less than 0.125% on each negotiation under each Purchase
      Guaranty.

     

    8.2 Interest.
      In
      addition to the foregoing, interest shall be computed at a rate to be fixed
      as
      provided in the Agreement, on all funds actually paid by WFC to any bank,
      supplier, or other party on, under, by reason of, or in connection with any
      Letter of Credit or Purchase Guaranty issued by WFC hereunder or any Transaction
      covered thereby.

     

    8.3 Reserved.

     

    8.4 Standard
      Charges.
      Attached hereto as Schedule 1 are the standard commissions, charges, fees and
      expenses of our banks (including our standard processing charge per item) as
      of
      the date hereof, which Schedule may be amended from time to time upon written
      notice to you.

     

    8.5 Costs.
      Client
      shall reimburse WFC for all reasonable and necessary out-of-pocket costs and
      expenses (including legal fees and disbursements) incurred by WFC in connection
      with the execution and delivery of this Supplement and perfection of WFC’s
      security interest in the Collateral, or to obtain or enforce payment of any
      of
      Client’s Obligations to WFC hereunder.

     

    
      
        
        

      

      
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    9. WFC’s
      Remedies

     

    9.1 Remedies.
      In the
      event of any default by Client under the Agreement or hereunder, WFC shall
      have
      the right to sell, at public or private sale, all Collateral and documents
      relating thereto which WFC may hold as security and shall generally have all
      of
      the rights and remedies of a secured party under the Uniform Commercial Code
      and
      in accordance with Section 7.2 of the Agreement.

     

    10. Miscellaneous

     

    10.1 Term.
      The
      term of this Supplement shall commence on the date hereof and shall continue
      until the term of the Agreement ends under the provisions thereof.

     

    10.2 Waiver.
      Client
      waives presentment, demand, protest, notice of nonpayment and notice of protest
      as to all instruments, as well as any and all other notices to which Client
      might otherwise be entitled. WFC’s failure to enforce any right or remedy
      hereunder or WFC’s waiver of any default hereunder shall not constitute a waiver
      of any such right of remedy or of any subsequent default. This Supplement shall
      be binding upon and inure to the benefit of Client’s and WFC’s respective
      successors and assigns

     

    10.3 Recapture.
      To the
      extent WFC, or any beneficiary of a Transaction to whom WFC may owe an
      obligation receives payment on account of the Obligations herein described,
      which payment is thereafter set aside or required to be repaid by WFC in whole
      or in part, then, to the extent of any sum not finally retained by WFC or such
      beneficiary (regardless of whether such sum is recovered from WFC by Client,
      Client’s estate or trustee or any party acting for, on behalf of or through
      Client or as Client’s representative), Client’s obligations to WFC shall be
      reinstated and the security interests created hereby shall remain in full force
      and effect (or be reinstated) until Client shall have made payment to WFC,
      which
      payment shall be due on demand.

     

    10.4 Entire
      Agreement.
      This
      Supplement contains WFC’s sole and entire understanding and agreement with
      respect to its entire subject matter, and all prior negotiations, disclaimers,
      commitments, agreements and understandings heretofore had between WFC and Client
      with respect thereto are hereby merged herein. This Supplement cannot be changed
      or terminated orally.

     

    10.5 Governing
      Law.
      This
      Supplement is executed and delivered in the State of California and shall be
      governed, construed and interpreted, as to validity, enforcement and in all
      other respects, in accordance with the law of the State of California.
      Termination of this Agreement shall not affect Obligations on Transactions
      having their inception prior thereto.

     

    10.6 Waiver
      of Jury Trial and Reference.
      EACH OF
      CLIENT AND WFC HEREBY AGREE THAT THIS SUPPLEMENT SHALL BE SUBJECT TO THE TERMS
      OF SECTIONS 9.7 AND 9.8 OF THE AGREEMENT.

     

    
      
        
        

      

      
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    IN
      WITNESS WHEREOF, the parties hereto have executed this Supplement as of the
      day
      and year first above written.

     

    
      	 	
              WELLS
                FARGO CENTURY, INC.

            
	 	 	 
	 	 	 
	 	
              By:

            	
              /S/
                Joseph Ram

            
	 	
              Name:

            	
              Joseph
                Ram

            
	 	
              Title:

            	
              CEO

            
	 	 	 
	 	 	 
	 	
              INFOSONICS
                CORPORATION

            
	 	 	 
	 	 	 
	 	
              By:

            	/s/
              Kevin Sullivan
	 	
              Name:

            	Kevin
              Sullivan
	 	
              Title:

            	Executive
              Vice President, Western
              Region

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    AUTHORIZED
      SIGNATURES OF

    INFOSONICS
      CORPORATION,
      INC.

     

     

    April
      30,
      2008

     

    Wells
      Fargo Century, Inc.

    333
      South
      Grand Avenue, Suite 4150

    Los
      Angeles, CA 90071

     

    Gentlemen:

     

    The
      names
      of the persons authorized, to make, sign and deliver on behalf of this
      Corporation, Letters of Credit, Purchase Guaranties, amendments to Letters
      of
      Credit and amendments to Purchase Guarantees, authorize the waiver of
      discrepancies, and authorize the issuance of air releases and/or steamship
      indemnities, relative to this Corporation’s Loan, Security and Bulk Purchase
      Agreement, and any Supplement thereto, with Wells Fargo Century, Inc., are
      as
      follows:

     

    
      	
              NAME
                (PRINT)

            	 	
              SIGNATURE

            
	 	 	 
	
              Jeff
                Klausner

            	
              CFO

            	/s/ 
Jeff
              Klausner
	 	 	
              (Signature)

            
	 	 	 
	
              Joseph
                Ram

            	
              CEO

            	/s/ 
Joseph
              Ram
	 	 	
              (Signature)

            
	 	 	 
	
              Josh
                Haims

            	
              VP
                Finance

            	/s/
              Josh Haims
	 	 	
              (Signature)

            

    

    

    
      	 	
              Very
                truly yours,

            
	 	 	 
	 	
              INFOSONICS
                CORPORATION

            
	 	 	 
	 	 	 
	 	
              By:

            	
              /s/
                Joseph Ram

            
	 	
              
                Name:

              

            	Joseph
              Ram
	 	
              Title:

            	CEO

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    SCHEDULE
      1

    LETTER
      OF CREDIT AND SECURITY AGREEMENT

    BANK
      FEE SCHEDULE-

    AS
      OF April 30, 2008

     

    

      
        	
                Issuance
                  (Opening)

              	
                $100
                  Flat

              
	 	 
	
                Cable
                  Notification

              	
                $
                  25 Per Page

              
	 	 
	
                Amendment
                  Fee

              	
                $
                  75 Flat (1-3)

              
	 	
                $100
                  Flat (After 3)

              
	 	 
	
                Acceptance
                  Commission

              	
                1.5%
                  p.a.

              
	 	 
	 	
                Minimum
                  $125

              
	 	 
	
                Negotiation
                  Commission

              	
                Refer
                  to L/C Supplement Agreement/

              
	 	
                $100
                  Minimum

              
	 	 
	
                Processing
                  Fee

              	
                $100
                  Per Invoice Negotiated

              
	 	 
	
                Discrepancy
                  Fee

              	
                $150
                  Per Discrepancy

              
	 	 
	
                Document
                  Against Payment

              	
                1/8%
                  Flat

              
	 	
                $100
                  Minimum

              
	
                Expiration
                  Commission

              	
                1/8%
                  Flat/

              
	 	
                $100
                  Minimum

              
	 	 
	
                Authorization
                  to Pay/

              	
                1/8%
                  Flat/

              
	
                Reinstatement
                  of Expired 

              	
                $100
                  Minimum

              
	
                Letter
                  of Credit

              	 
	 	 
	
                Letter
                  of Indemnity

              	
                $100
                  Flat to Issue and

              
	
                (Steamship
                  Guarantee)

              	
                $
                  50 Flat for Each 30 Days

              
	
                Outstanding

              	 
	 	 
	
                Air
                  Release

              	
                $100
                  FlatSECURITIES
      PURCHASE
      AGREEMENT

     

    THIS
      SECURITIES PURCHASE AGREEMENT (this “Agreement”)
      is
      made as of April 30, 2008, by and among Infosmart Group, Inc., a California
      corporation (the “Company”),
      and
      each of those persons and entities, severally and not jointly, whose names
      are
      set forth on the Schedule of Purchasers attached hereto as Exhibit
      A
      (which
      persons and entities are hereinafter collectively referred to as “Purchasers”
and
      each individually as a “Purchaser”).

     

    RECITALS

     

    WHEREAS,
      the
      Company has been authorized to enter into this Agreement and issue debentures
      in
      the aggregate principal amount of $5,000,000 (the “Debentures”)
      with
      Warrants and a potential subsequent conversion of the Loan, evidenced by
      Debentures, to a secured convertible debenture issuable upon Company’s sole
      discretion (the “Restructure,”
as
      defined below) (collectively, this Loan, the secured debentures and warrants
      shall be referred to as the “Securities”)
      as
      provided herein; and

     

    WHEREAS,
      at the
      Closing (as defined herein), the Purchasers desire to loan to the Company the
      amount of $5,000,000, severally and not jointly, at a 20% original issue
      discount upon the terms and conditions stated in this Agreement,

     

    NOW,
      THEREFORE,
      in
      consideration of the foregoing recitals and the mutual promises,
      representations, warranties and covenants hereinafter set forth and for other
      good and valuable consideration, the receipt and sufficiency of which are hereby
      acknowledged, the parties hereto agree as follows:

     

    ARTICLE
      1

     

    THE
      LOAN

     

    1.1
      The
      Loan.
      The
      Purchasers have agreed to grant the Company a loan in the amount of $5,000,000
      (the “Loan”),
      evidenced by Debentures, a form of which is attached hereto as Exhibit
      B,
      and
      execute and deliver the other documents identified in (a), (b) and (c)
      below:

     

    (a)
      A
      Security Agreement (the "Security
      Agreement")
      among
      the Company and the Purchasers, a form of which is attached hereto as
Exhibit
      C;
      

     

    (b)
      A
      Registration Rights Agreement (the "Registration
      Rights Agreement"),
      a
      form of which is attached hereto as Exhibit
      D,
      among
      the Company and the Purchasers; and

     

    (c)
      An
      Escrow
      Agreement (the “Escrow Agreement”), a form of which is attached hereto as
Exhibit
      E.
      This
      Agreement, the Securities, the Security Agreement, the Registration Rights
      Agreement, and the Escrow Agreement are sometimes collectively referred to
      herein as the "Transaction
      Documents."
      

     

    1.2
      Original
      Issue Discount.
      The
      Company agrees to accept the Loan at an original issue discount of 20% or an
      amount equal to $4,000,000 (the “Issue
      Amount”).

     

    1.3
      Terms
      of Repayment.
      Principal and interest shall be paid as follows:

     

    (a)
      Interest
      at the rate of twelve percent (12%) per annum from the date hereof through
      the
      one year anniversary of the Closing Date shall be paid monthly by the Borrower
      in cash or, at the sole option of the Company, in registered shares of the
      Company’s common stock, no par value (“Common
      Stock”).
      If
      the Company elects to pay the interest in cash, the payment shall be made by
      the
      fifth business day following the payment date. If the Company elects to pay
      the
      interest in registered shares of Common Stock, the number of shares issued
      to
      the Purchasers shall be determined by dividing the dollar amount of interest
      owed by the average closing bid price for the five trading days preceding the
      payment date.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (b)
      Principal
      shall be due and payable in full on the one year anniversary of the Closing
      Date
      and shall be paid in cash.

     

    1.4
      Issuance
      of Warrants. The
      Company shall issue to the Purchasers 19,083,970 Warrants, in the form of
Exhibit
      F
      attached
      hereto, exercisable at $0.262 per share and expiring five (5) years from the
      effective date of a registration statement filed pursuant to the Registration
      Rights Agreement (the “Warrant
      Shares”).
      In
      the event the Company does not exercise its option to Restructure as defined
      in
      Article 2 below, the exercise price of the Warrants shall adjust to $0.01 per
      share automatically on the eleventh (11th)
      day of
      September 2008. The complete terms of the Warrant and the Warrant Shares shall
      be contained in the Warrants, and any inconsistency or conflict of terms between
      this Agreement and the Warrants shall be controlled by the express provisions
      in
      the Warrant.

     

    1.5
      Quotation
      of Warrants on the OTCBB. Within
      one hundred eighty (180) days of the Closing Date (the “Quotation
      Deadline”),
      the
      Company shall obtain a ticker symbol for the Warrants and have the Warrants
      quoted on the OTC Bulletin Board (“OTCBB”)
      with
      the assistance of a market-maker that files the Form 2-11 for such quotation
      with the OTCBB. All fees associated with the quotation of the Warrants on the
      OTCBB, including any offering of the Warrants in connection with such quotation,
      shall be borne by Spencer Clarke, not to exceed $10,000 in the aggregate, and
      all amounts over $10,000 shall be paid by the Company. 

     

    If
      the
      Warrants are not quoted on the OTC Bulletin Board or a similar exchange
      acceptable to the Holder within 180 days from the date of the issuance of the
      Warrants, the Company shall pay to the Holder the equivalent of 1.5% of the
      total amount of the principal amount of the Loan per month not to exceed a
      total
      amount of 18%.

     

    1.6
      Security
      Interest.
      The Loan
      shall be secured by the terms and conditions set forth in the Security Agreement
      as included in the Transaction Documents. 

     

    1.7
      Material
      Terms.
      All of
      the terms, representations and warranties contained in the other Transaction
      Documents shall be incorporated into the terms of this Loan.

     

    1.8
      Termination
      of the Loan. In
      the
      event the Company elects to restructure the debt pursuant to Article 2 below,
      the Loan shall terminate immediately on the notification of the Restructure.
      If
      the Company does not elect to Restructure, the Loan shall mature on the one
      year
      anniversary of the Closing Date.

     

    ARTICLE
      2

     

    AUTHORIZATION
      AND SALE OF SECURITIES

     

    2.1
      Election
      to Restructure. Upon
      the
      earlier of: (i) September 1, 2008; or (ii) the date that 100% of the Company’s
      outstanding and unconverted Series B Convertible Preferred Stock is mandatorily
      converted into shares of Common Stock pursuant to the terms of the Company’s
      Certificate of Determination of Rights, Preferences, Privileges and Restrictions
      of Series B Convertible Preferred Stock, the Company shall have the option
      to
      replace the Loan
      which
      shall at that time be deemed fully paid and shall be terminated, cancelled
      and
      deemed
null
      and
      void and, in exchange for the cancellation of the Debentures, shall sell
      and
      issue up to $5,000,000 in principal amount of its 12% Secured Convertible
      Debentures to be executed by the parties substantially in the form attached
      hereto as Exhibit
      G
      (the
      "Convertible
      Debentures"),
      convertible into shares of Common Stock (the “Restructure”).
      Such
      election shall be made by the Company by delivering a completed Notice of
      Restructure (a form of which is attached hereto as Exhibit
      I)
      along
      with the Convertible Debentures to the Purchasers. The Company’s option to
      Restructure shall expire on the tenth business day of September 2008.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    2.2
      Sale
      of Securities. Upon
      the
      Company’s election to Restructure, subject to the terms and conditions of this
      Agreement and the Convertible Debentures, the Company agrees to issue and sell
      to each Purchaser, severally and not jointly, and each Purchaser agrees to
      purchase from the Company, severally and not jointly, securities consisting
      of
      the instruments identified in (a) below: 

     

    (a)
      Convertible
      Debentures in the principal amount set forth opposite such Purchaser’s name on
Exhibit
      A under
      the
      heading “Principal Amount of Debentures.”

     

    2.3
      Independent
      Nature of Investors’ Obligations and Rights.
      The
      obligations of each Purchaser under this Agreement are several and not joint
      with the obligations of any other Purchaser, and no Purchaser shall be
      responsible in any way for the performance of the obligations of any other
      Purchaser hereunder. The decision of each Purchaser to purchase the Securities
      pursuant to this Agreement has been made by such Purchaser independently of
      any
      other Purchaser. Nothing contained herein or therein, and no action taken by
      any
      Purchaser pursuant hereto or thereto, shall be deemed to constitute the
      Purchasers as a partnership, an association, a joint venture or any other kind
      of entity, or create a presumption that the Purchasers are in any way acting
      in
      concert or as a group with respect to such obligations or the transactions
      contemplated hereby. Each Purchaser acknowledges that no other Purchaser has
      acted as agent for such Purchaser in connection with making its investment
      hereunder and that no Purchaser will be acting as agent of such Purchaser in
      connection with monitoring its investment in the Securities or enforcing its
      rights under this Agreement. Each Purchaser shall be entitled independently
      to
      protect and enforce its rights, including without limitation the rights arising
      out of this Agreement, and it shall not be necessary for any other Purchaser
      to
      be joined as an additional party in any proceeding for such
      purpose.

     

    ARTICLE
      3

     

    CLOSING
      DATE; DELIVERY

     

    3.1
      Closing
      Date. The
      closing of the transactions contemplated by this Agreement (the “Closing”)
      shall
      be held at the offices of Richardson
      & Patel
      at
1:30
      p.m.
      New
      York time on or before April 30, 2008 or at such other time and place upon
      which
      the Company and the Purchasers purchasing, in the aggregate, the majority in
      principal amount of the Debentures (the “Majority
      in Interest”)
      shall
      agree. 

     

    3.2
      Delivery.
      At
      the
      Closing, the Company will deliver to each Purchaser this Agreement memorializing
      the terms of the Loan to be effective until such time as the Company elects
      to
      Restructure. The Company will also deliver to each Purchaser a duly executed
      Board Resolution authorizing the Company to enter into this transaction, a
      Debenture in the principal amount set forth opposite such Purchaser's name
      on
Exhibit
      A,
      and a
      Warrant representing the right to purchase the number of Warrant Shares which
      such Purchaser is entitled to purchase and a signed counterpart of each of
      the
      other Transaction Documents. 

     

    Such
      delivery shall be against payment of the purchase price therefor by wire
      transfer of immediately available funds to the Company in accordance with the
      Company’s written wiring instructions, which instructions shall have been
      delivered to Purchasers’ counsel. The Company shall also deliver to the
      Purchasers an opinion of Richardson & Patel, LLP, counsel to the Company,
      substantially in the form attached hereto as Exhibit
      H
      and (b)
      a certificate from a duly authorized officer of the Company certifying that
      the
      representations made by the Company in Article 4 are true and correct as of
      the
      Closing.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    ARTICLE
      4

     

    REPRESENTATIONS
      AND WARRANTIES OF THE COMPANY

     

    The
      Company represents and warrants to the Purchasers, as of the date hereof, as
      follows:

     

    4.1
      Organization
      and Standing. The
      Company is a corporation duly organized and validly existing under, and by
      virtue of, the laws of the State of California and is in good standing under
      the
      laws of said state, with requisite corporate power and authority to own its
      properties and assets and to carry on its business as currently conducted.
      The
      Company is not in violation of any of the provisions of its Articles of
      Incorporation (the “Articles”)
      or
      Bylaws.

     

    4.2
      Corporate
      Power; Authorization. The
      Company has all requisite legal and corporate power and has taken all requisite
      corporate action to execute and deliver this Agreement and the other Transaction
      Documents, to sell and issue the Securities, to issue the Warrant Shares upon
      exercise of the Warrants in accordance with the terms of such Warrants, and
      to
      carry out and perform all of its obligations under this Agreement and the
      Warrants. Other than as set forth on Schedule 4.2 to the Disclosure Schedules,
      this Agreement, the Security Agreement, and the Registration Rights Agreement
      constitute, and upon execution and delivery by the Company of the Debentures
      and
      the Warrants, the Debentures and the Warrants will constitute, legal, valid
      and
      binding obligations of the Company, enforceable in accordance with their
      respective terms, except (a) as limited by applicable bankruptcy, insolvency,
      reorganization or similar laws relating to or affecting the enforcement of
      creditors’ rights generally and (b) as limited by equitable principles
      generally. The execution and delivery of the Transaction Documents do not,
      and
      the performance of the Transaction Documents and the compliance with the
      provisions hereof and thereof, including the issuance, sale and delivery of
      the
      Securities by the Company will not, conflict with, or result in a breach or
      violation of the terms, conditions or provisions of, or constitute a default
      under, or result in the creation or imposition of any lien pursuant to the
      terms
      of, the Articles or Bylaws of the Company, each as amended to date, or any
      statute, law, rule or regulation or any state or federal order, judgment or
      decree or any indenture, mortgage, lease or other agreement or instrument to
      which the Company or any of its properties is subject, except for any conflict,
      breach, violation, default or imposition of a lien (other than pursuant to
      the
      terms of the Articles or Bylaws) that would not, individually or in the
      aggregate, reasonably be expected to have a material adverse effect on the
      assets, liabilities, financial condition, business or operations of the
      Company.

     

    4.3
      Issuance
      and Delivery of the Securities. The
      Securities are duly authorized and, when issued,
      will
      be validly issued, and the Common Stock underlying the Debentures, when issued,
      will be fully paid and nonassessable. The Warrant Shares are duly authorized
      and, upon exercise of the Warrants in accordance with the terms thereof, will
      be
      validly issued, fully paid and nonassessable. The issuance and delivery of
      the
      Securities is not subject to any right of first refusal, preemptive right,
      right
      of participation, or any similar right existing in favor of any person or any
      liens or encumbrances. 

     

    4.4
      SEC
      Documents; Financial Statements. The
      Company has timely filed when due (or obtained extensions in respect thereof
      and
      filed within the applicable grace period) all reports, schedules, forms,
      statements and other documents required to be filed by it with the Securities
      and Exchange Commission (the “SEC”)
      under
      the Securities Exchange Act of 1934, as amended (the “Exchange
      Act”)
      during
      the twelve calendar months preceding the date hereof, including material filed
      pursuant to Section 13(a) or 15(d) of the Exchange Act (all of the foregoing
      including filings incorporated by reference therein being referred to herein
      as
      the “SEC
      Documents”),
      except as disclosed on Schedule 4.4 of the Disclosure Schedules. The Company
      has
      delivered or made available to the Purchasers via EDGAR or another Internet
      web-site true and complete copies of the SEC Documents. As of their respective
      filing dates, all SEC Documents complied in all material respects with the
      requirements of the Exchange Act. None of the SEC Documents as of their
      respective dates contained any untrue statement of material fact or omitted
      to
      state a material fact required to be stated therein or necessary to make the
      statements made therein, in light of the circumstances under which they were
      made, not misleading. The financial statements of the Company included in the
      SEC Documents (the “Financial
      Statements”)
      comply
      in all material respects with applicable accounting requirements and with the
      published rules and regulations of the SEC with respect thereto. The Financial
      Statements have been prepared in accordance with generally accepted accounting
      principles consistently applied and fairly present the consolidated financial
      position of the Company and its subsidiaries, if any, at the dates thereof
      and
      the consolidated results of their operations and consolidated cash flows for
      the
      periods then ended (subject, in the case of unaudited statements, to normal,
      recurring adjustments or to the extent that such unaudited statements do not
      include footnotes).

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    4.5
      Governmental
      Consents. No
      consent, approval, order or authorization of, or registration, qualification,
      designation, declaration or filing with, any federal, state, or local
      governmental authority on the part of the Company is required in connection
      with
      the consummation of the transactions contemplated by this Agreement except
      for
      filing of a Form D with respect to the Securities as required under Regulation
      D, and notice filings required pursuant to applicable “blue sky” laws in the
      states in which the Securities are offered and/or sold. The Company 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 in compliance with such laws.

     

    4.6
      Capitalization.

     

    (a)
      The
      authorized capital stock of the Company consists of 300,000,000 shares of Common
      Stock of which, as of the date immediately prior to Closing, 147,774,923 shares
      were issued and outstanding, and

     

    (b)
      Except
      (i) as disclosed to the Purchasers in Schedule 4.6(b) of the Disclosure
      Schedules, or (ii) as contemplated herein, there are no outstanding warrants,
      options, convertible or exchangeable securities or other rights, agreements
      or
      arrangements of any character under which the Company is or may be obligated
      to
      issue any equity securities of any kind.

     

    4.7
      Litigation.
      Except
      as
      disclosed to the Purchasers on Schedule 4.7 of the Disclosure Schedules and
      except as disclosed in the SEC Documents, there are no actions, suits,
      proceedings or investigations pending or, to the best of the Company’s
      knowledge, threatened against the Company or any of its properties before or
      by
      any court or arbitrator or any governmental body, agency or official in which
      there is a reasonable likelihood (in the reasonable judgment of the Company)
      of
      an adverse decision that (a) could have a material adverse effect on the assets,
      liabilities, financial condition, business or operations of the Company, or
      (b)
      could impair the ability of the Company to perform in any material respect
      its
      obligations under this Agreement, the Debentures or the Warrants or any other
      Transaction Document.

     

    4.8
      Company
      not an “Investment Company”.
      The
      Company is not, and immediately after receipt of payment for the Securities
      will
      not be, an “investment company” or an entity “controlled” by an “investment
      company” within the meaning of the Investment Company Act of 1940 and shall
      conduct its business in a manner so that it will not become subject to such
      Act.

     

    4.9
      Compliance.
      The
      Company’s Common Stock is registered pursuant to Section 12(g) of the Exchange
      Act and is quoted on the OTCBB, and the Company has taken no action designed
      for
      the purpose of, or likely to have the effect of, terminating the registration
      of
      its Common Stock under the Exchange Act or de-listing the Common Stock from
      the
      OTCBB, nor has the Company received any notification that the SEC or the OTCBB
      is contemplating terminating such registration or listing. The Company is in
      material compliance with the listing and maintenance requirements for continued
      listing of the Common Stock on the OTCBB.

     

    4.10
      Use
      of Proceeds.
      The
      proceeds of this Agreement shall be used for other general corporate
      purposes.

     

    4.11
      Brokers
      and Finders.
      Except
      as otherwise disclosed on Schedule 4.11 of the Disclosure Schedules, no person
      or entity will have, as a result of or in connection with the transactions
      contemplated by this Agreement, any valid right, interest or claim against
      or
      upon the Company or any Purchaser for any commission, fee or other compensation
      pursuant to any agreement, arrangement or understanding, written or oral,
      entered into by or on behalf of the Company.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    4.12
      Intellectual
      Property.

     

    (a)
      “Intellectual
      Property”
shall
      mean patents, patent applications, trademarks, trademark applications, service
      marks, trade names, copyrights, trade secrets, licenses, information and other
      proprietary rights and processes.

     

    (b)
      Except
      as
      disclosed in the SEC Documents and to the best knowledge of the Company, the
      Company owns or has the valid right to use all of the Intellectual Property
      that
      is necessary for the conduct of the Company’s business as currently conducted or
      as currently proposed to be conducted free and clear of all material liens
      and
      encumbrances.

     

    (c)
      Except
      as
      disclosed to the Purchasers on Schedule 4.12(c) of the Disclosure Schedules
      or
      as disclosed in the SEC Documents and to the knowledge of the Company, (i)
      the
      conduct of the Company’s business as currently conducted does not infringe or
      otherwise conflict with (collectively, “Infringe”)
      any
      Intellectual Property rights of any third party or any confidentiality
      obligation owed by the Company to a third party and the Company has not received
      any written notice of any such Infringement, and (ii) the Intellectual Property
      and confidential information of the Company are not being Infringed by any
      third
      party.

     

    (d)
      Except
      as
      disclosued on Schedule 4.12(d) of the Disclosure Schedules, each employee,
      consultant and contractor of the Company who has had access to confidential
      information of the Company that is necessary for the conduct of Company’s
      business as currently conducted or as currently proposed to be conducted has
      executed an agreement to maintain the confidentiality of such confidential
      information and has executed agreements that are substantially consistent with
      the Company’s standard forms thereof.

     

    4.13
      Questionable
      Payments.
      Neither
      the Company nor, to the best knowledge of the Company, any of its current or
      former stockholders, directors, officers, employees, agents or other persons
      acting on behalf of the Company, has on behalf of the Company or in connection
      with its business: (a) used any corporate funds for unlawful contributions,
      gifts, entertainment or other unlawful expenses relating to political activity;
      (b) made any direct or indirect unlawful payments to any governmental officials
      or employees from corporate funds; (c) established or maintained any unlawful
      or
      unrecorded fund of corporate monies or other assets; (d) made any false or
      fictitious entries on the books and records of the Company; or (e) made any
      unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful
      payment of any nature.

     

    4.14
      Transactions
      with Affiliates.
      Except
      as disclosed in the SEC Documents or on Schedule 4.14 of the Disclosure
      Schedules, none of the officers, directors or shareholders of the Company and,
      to the best knowledge of the Company, none of the employees of the Company
      is
      presently a party to any transaction with the Company or to a presently
      contemplated transaction (other than for services as employees, officers and
      directors) that would be required to be disclosed pursuant to Item 404 of
      Regulation S-B promulgated under the Securities Act of 1933, as amended (the
      “Securities
      Act”).

     

    4.15
      Insurance.
      The
      Company maintains and will continue to maintain insurance with financially
      sound
      and reputable insurers in such amounts and covering such risks and in such
      amounts as are reasonably adequate, prudent and consistent with industry
      practice for the conduct of its business and the value of its property, all
      of
      which insurance is in full force and effect. The Company has not received notice
      from, and has no knowledge of any threat by, any insurer that has issued any
      insurance policy to the Company that such insurer intends to deny coverage
      under
      or cancel, discontinue or not renew any insurance policy in force as of the
      date
      hereof.

     

    4.16
      No
      Additional Agreements.
      The
      Company does not have any agreement or understanding with any Purchaser with
      respect to the transactions contemplated by this Agreement other than as
      specified in this Agreement.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    4.17
      Absence
      of Undisclosed Liabilities.
      The
      Company has no material liabilities of any nature (whether absolute, accrued,
      contingent or otherwise), except (i) as and to the extent reflected in the
      Financial Statements as of and for the fiscal year ended December 31, 2007
      and
      the most recent fiscal quarter ended March 31, 2008, and (ii) for liabilities
      that have been incurred in the ordinary course of business consistent with
      past
      practice since December 31, 2007 and the most recent fiscal quarter ended March
      31, 2008 and that would not, individually and in the aggregate, reasonably
      be
      expected to have a material adverse effect on the assets, financial condition,
      business or operations of the Company.

     

    4.18
      Governmental
      Authorizations. The
      Company has all permits, licenses and other authorizations of governmental
      authorities that are required for the conduct of its business and operations
      as
      currently conducted or as currently proposed to be conducted, the lack of which
      could materially and adversely affect the assets, financial condition, business
      or operations of the Company, except as described in the SEC Documents. The
      Company is, and at all times has been, in compliance with the provisions of
      its
      material permits, licenses and other governmental authorizations.

     

    4.19
      No
      Material Adverse Change. Except
      as
      otherwise disclosed herein or in the SEC Documents, since December 31, 2007,
      there have not been any changes in the assets, liabilities, financial condition
      or operations of the Company from that reflected in the Financial Statements
      except changes in the ordinary course of business that have not been, either
      individually or in the aggregate, materially adverse. The Company does not
      have
      pending before the SEC any request for confidential treatment of
      information.

     

    4.20
      Reservation.
      The
      Company has duly reserved for issuance such number of shares of Common Stock
      as
      may be issuable from time to time upon exercise or conversion, as the case
      may
      be, of the Securities.

     

    4.21
      Internal
      Accounting Controls.
      The
      Company maintains a system of internal accounting controls sufficient to provide
      reasonable assurance that (i) transactions are executed in accordance with
      management’s general or specific authorizations, (ii) transactions are recorded
      as necessary to permit preparation of financial statements in conformity with
      GAAP and to maintain asset accountability, (iii) access to assets is permitted
      only in accordance with management’s general or specific authorization, and (iv)
      the recorded accountability for assets is compared with the existing assets
      at
      reasonable intervals and appropriate action is taken with respect to any
      differences. The Company has established disclosure controls and procedures
      (as
      defined in Exchange Rules 13a-15 and 15d-15) for the Company and designed such
      disclosure controls and procedures to ensure that material information relating
      to the Company is made known to the certifying officers by others within those
      entities, particularly during the period in which the Company’s Form 10-K or
      10-Q, as the case may be, is being prepared.

     

    4.22
      Title
      to Assets.
      Except
      as disclosed to Purchasers on Schedule 4.22 of the Disclosure Schedules, the
      Company has good and marketable title in fee simple to all real property owned
      by it that is material to the business of the Company and good and marketable
      title in all tangible personal property owned by them that is material to the
      business of the Company in each case free and clear of all liens, except for
      liens identified on Schedule 4.22 or as do not materially affect the value
      of
      such property and do not materially interfere with the use made and proposed
      to
      be made of such property by the Company, and liens for the payment of federal,
      state or other taxes, the payment of which is neither delinquent nor subject
      to
      penalties. Any real property and facilities held under lease by the Company
      is
      held by it under valid, subsisting and enforceable leases with which the Company
      is in material compliance.

     

    4.23
      Registration
      Rights.
      Except
      as disclosed to the Purchasers on Schedule 4.23 of the Disclosure Schedules,
      the
      Company has not granted or agreed to grant to any person any rights (including
      “piggy back” registration rights) to have any securities of the Company
      registered with the SEC or any other governmental authority. 

     

    4.24
      Material
      Non-Public Information.
      The
      Company confirms that it has not provided any of the Purchasers or their agents
      or counsel with any information that constitutes or might constitute material
      non-public information as of the Closing Date (other than with respect to the
      transactions contemplated by this Agreement). The Company understands and
      confirms that the Purchasers shall be relying on the foregoing representations
      in effecting transactions in securities of the Company.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    ARTICLE
      5

     

    REPRESENTATIONS,
      WARRANTIES AND COVENANTS OF THE PURCHASERS

     

    Each
      Purchaser hereby severally represents and warrants to the Company:

     

    5.1
      Authorization.
      (a)
      Purchaser has all requisite legal and corporate or other power and capacity
      and
      has taken all requisite corporate or other action to execute and deliver this
      Agreement, the Security Agreement and the Registration Rights Agreement to
      purchase the Debentures and the Warrants to be purchased by it and to carry
      out
      and perform all of its obligations under this Agreement and the other
      Transaction Documents, and (b) this Agreement and the other Transaction
      Documents to which a Purchaser is a party constitutes the legal, valid and
      binding obligation of such Purchaser, enforceable in accordance with its terms,
      except (i) as limited by applicable bankruptcy, insolvency, reorganization,
      or
      similar laws relating to or affecting the enforcement of creditors’ rights
      generally and (ii) as limited by equitable principles generally.

     

    5.2
      No
      Legal, Tax or Investment Advice. Purchaser
      understands that nothing in this Agreement or any other materials presented
      to
      Purchaser in connection with the purchase and sale of the Debentures and the
      Warrants constitutes legal, tax or investment advice. Purchaser has consulted
      such legal, tax and investment advisors as it, in its sole discretion, has
      deemed necessary or appropriate in connection with its purchase of the
      Debentures.

     

    5.3
      Purchaser’s Status. Each
      Purchaser represents that he is an “accredited investor” as defined in
      Regulation D promulgated under the Securities Act. Such Purchaser is not
      required to be registered as a broker-dealer under Section 15 of the Exchange
      Act, and such Purchaser is not a broker-dealer. Purchaser understands that
      the
      Securities must be held indefinitely unless such Securities are registered
      under
      the Securities Act or an exemption from registration is available and confirms
      that Purchaser is familiar with Rule 144 of the rules and regulations of the
      Commission, as amended, promulgated pursuant to the Securities Act
      (“Rule
      144”),
      and
      that Purchaser has been advised that Rule 144 permits resales only under certain
      circumstances. Such Purchaser understands that to the extent that Rule 144
      is
      not available, such Purchaser will be unable to sell any Securities without
      either registration under the Securities Act or the existence of another
      exemption from such registration requirement. Purchaser understands that the
      Securities are being offered and sold in reliance on an exemption from the
      registration requirement of federal and state securities laws, and the Company
      is relying upon the truth and accuracy of the representations, warranties,
      agreements, acknowledgments and understandings of Purchaser set forth herein
      in
      order to determine the applicability of such exemptions and the suitability
      of
      such Purchaser to acquire the Securities.

     

    ARTICLE
      6

     

    ADDITIONAL
      AGREEMENTS OF THE COMPANY

     

    6.1
      Securities
      Laws Disclosure; Publicity. The
      Company shall, by 8:30 a.m. Eastern Standard Time on the third business day
      following the date of this Agreement, issue a press release and file a Current
      Report on Form 8-K, in each case reasonably acceptable to the Majority in
      Interest on behalf of the Purchasers, disclosing the transactions contemplated
      hereby. The Company and the Majority in Interest shall consult with each other
      in issuing any press releases with respect to the transactions contemplated
      hereby, and none of the Company, the Majority in Interest, or any Purchaser
      shall issue any such press release or otherwise make any such public statement
      without the prior consent of the Company (in the case of any press release
      or
      public statement proposed to be issued by the Majority in Interest or any
      Purchaser) or without the prior consent of the Majority in Interest on behalf
      of
      the Purchasers (in the case of any press release or public statement proposed
      to
      be issued by the Company), which consent shall not unreasonably be withheld,
      except if such disclosure is required by law, in which case the disclosing
      party
      shall promptly provide the other party with notice of such public statement
      or
      communication and consult with each other with respect thereto prior to such
      public disclosure. Notwithstanding the foregoing, other than as set forth above,
      the Company shall not publicly disclose the name of any Purchaser, or include
      the name of any Purchaser in any filing with the Commission or any regulatory
      agency or stock exchange, except to the extent such disclosure is required
      by
      law or stock exchange regulation, in which case the Company shall provide the
      Purchasers with prior notice of such disclosure. Notwithstanding anything to
      the
      contrary, herein, the Purchasers consent to their name being disclosed in the
      exhibits in filings made by the Company with the SEC. 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    6.2
      Listing
      of Common Stock. The
      Company hereby agrees to use commercially reasonable efforts to secure and
      maintain the listing on the OTCBB of the Common Stock underlying the Securities
      sold hereunder until the New Listing Event (as defined below). 

     

    The
      Company further agrees that the Company will apply to have its Common Stock
      listed on either the Nasdaq, AMEX or NYSE, and such listing will be obtained
      within 270 calendar days of September 1, 2008 (the “New
      Listing Event”).
      To
      the extent the Company is not successful in having its Common Stock listed
      on
      either the Nasdaq, AMEX or NYSE within 270 calendar days of September 1, 2008,
      the
      Company shall pay to the Purchasers the equivalent of 1% of the principal amount
      of the Debentures not to exceed a total amount of 10%.

     

    6.3
      All
      Assets Free and Clear.
      As a
      condition to Closing, the Company shall deliver to the Purchasers (each as
      a
“Lender”
      pursuant to the Debentures) UCC lien searches, judgment searches, federal and
      local tax lien searches and all other documents reasonably requested by a Lender
      to demonstrate that any and all assets with respect to which a Lender is
      acquiring or being granted a security interest are free and clear of all liens,
      claims and encumbrances, except as specifically noted on Schedule 4.22 of the
      Disclosure Schedules or to the extent any liens, claims and encumbrances shall
      be acquired as security for the benefit of a Lender or satisfied from the
      proceeds of this transaction.

     

    6.4
      Available
      Shares.
      The
      Company shall always have available for issuance to the Purchasers at least
      100%
      of the shares then anticipated to be necessary for issuance upon conversion
      of
      any and all outstanding Convertible Debentures and/or the exercise of all
      Warrants.

     

    ARTICLE
      7

     

    MISCELLANEOUS

     

    7.1
      Waivers
      and Amendments. The
      terms
      of this Agreement may be waived or amended only upon the written consent of
      the
      Company and the Majority in Interest.

     

    7.2
      Governing
      Law. This
      Agreement shall be governed in all respects by and construed in accordance
      with
      the laws of the State of New York without any regard to conflicts of laws
      principles.

     

    7.3
      Survival.
      The
      representations, warranties, covenants and agreements made in this Agreement
      shall survive any investigation made by the Company or the Purchasers and the
      Closing.

     

    7.4
      Successors
      and Assigns. No
      Purchaser shall assign this Agreement without the prior written consent of
      the
      Company.

     

    7.5
      Entire
      Agreement. This
      Agreement and the other Transaction Documents constitute the full and entire
      understanding and agreement between the parties with regard to the subjects
      thereof.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    7.6
      Notices,
      etc. All
      notices and other communications required or permitted under this Agreement
      shall be in writing and may be delivered in person, by telecopy, overnight
      delivery service or registered or certified United States mail, as
      follows:

     

    If
      to the
      Company:

    Infosmart
      Group, Inc.

    5th
      Floor,
      QPL Industrial Building

    126-140
      Texaco Road

    Tsuen
      Wan, Hong Kong

    

    With
      a
      copy to:

    Richardson
      & Patel, LLP

    Attn:
      Kevin Leung

    Murdock
      Plaza 

    10900
      Wilshire Boulevard, Suite 500 

    Los
      Angeles, California  90024 

    Tel:
      (310) 208-1182

    Fax:
      (310) 208-1154

    

    If
      to the
      Purchasers:

    Professional
      Offshore Opportunity Fund, Ltd.

    Attn:
      Howard Berger

    1400
      Old
      Country Road, Suite 206

    Westbury,
      New York 11590 

    Tel:
      (516) 228-0070

    

    With
      a
      copy to:

    Anslow
      & Jaclin, LLP

    Attn:
      Eric M. Stein

    195
      Route
      9 South, Suite 204

    Manalapan,
      New Jersey 07726

    

    All
      notices and other communications shall be effective upon the earlier of actual
      receipt thereof by the person to whom notice is directed or (a) in the case
      of
      notices and communications sent by personal delivery or telecopy, one business
      day after such notice or communication arrives at the applicable address or
      was
      successfully sent to the applicable telecopy number, (b) in the case of notices
      and communications sent by overnight delivery service, at noon (local time)
      on
      the second business day following the day such notice or communication was
      sent,
      and (c) in the case of notices and communications sent by United States mail,
      seven days after such notice or communication shall have been deposited in
      the
      United States mail.

     

    7.7
      Severability
      of this Agreement. If
      any
      provision of this Agreement shall be judicially determined to be invalid,
      illegal or unenforceable, the validity, legality and enforceability of the
      remaining provisions shall not in any way be affected or impaired
      thereby.

     

    7.8
      Counterparts;
      Signatures by Facsimile. This
      Agreement may be executed in any number of counterparts, each of which shall
      be
      an original, but all of which together shall constitute one instrument. This
      Agreement, once executed by a party, may be delivered to the other parties
      hereto by facsimile transmission of a copy of this Agreement bearing the
      signature of the party so delivering this Agreement.

     

    7.9
      Further
      Assurances. Each
      party to this Agreement shall do and perform or cause to be done and performed
      all such further acts and things and shall execute and deliver all such other
      agreements, certificates, instruments and documents as the other party hereto
      may reasonably request in order to carry out the intent and accomplish the
      purposes of this Agreement and the consummation of the transactions contemplated
      hereby.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    7.10
      Expenses.
      Each
      party shall bear its own expenses, except that (i) the expenses related to
      quotation of the Warrants on the OTCBB shall be governed by Section 1.5 above,
      and (ii) the Company agrees to pay Professional Offshore Opportunity Fund,
      Ltd.
      and Professional Traders Fund, LLC for their legal expenses and counsel fees
      with respect to this Agreement and the transactions contemplated in the
      aggregate amount of $35,000 and agrees to pay Professional Traders Management,
      LLC the sum of $25,000 as a non-accountable due diligence fee. Expenses under
      this subsection (ii) of this provision shall be paid at Closing.

     

    7.11
      Replacement
      of Securities.
      If any
      certificate or instrument evidencing any Securities is mutilated, lost, stolen
      or destroyed, the Company shall issue or cause to be issued in exchange and
      substitution for and upon cancellation thereof, or in lieu of and substitution
      therefore, a new certificate or instrument, but only upon receipt of evidence
      reasonably satisfactory to the Company of such loss, theft or destruction and
      customary and reasonable indemnity, if requested. The applicants for a new
      certificate or instrument under such circumstances shall also pay any reasonable
      third-party costs associated with the issuance of such replacement
      Securities.

     

    [REMAINDER
      OF PAGE LEFT BLANK]

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    [SIGNATURE
      PAGE TO SECURITIES PURCHASE AGREEMENT]

     

    IN
      WITNESS WHEREOF,
      this
      Securities Purchase Agreement is hereby executed as of the date first above
      written.

     

    

    
      	
              INFOSMART
                GROUP, INC.

            	 
	 	 	 
	
              By:

            	 	 
	 	
              Name:
                Parker Seto

            	 
	 	
              Title:
                Chief Executive Officer

            	 
	 	 	 
	
              PROFESSIONAL
                OFFSHORE OPPORTUNITY FUND, LTD.

            	 
	 	 	 
	
              By:

            	 	 
	 	
              Name:

            	 
	 	
              Title:

            	 
	 	 	 
	
              PROFESSIONAL
                TRADERS FUND, LLC

            	 
	 	 	 
	
              By:

            	 	 
	 	
              Name:

            	 
	 	
              Title:

            	 

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      A

     

    SCHEDULE
      OF PURCHASERS

     

    
      	
              PURCHASER

            	 	
              Principal
                

              Amount
                of 

              Debenture

            	 	
              Common

              Shares Underlying
                

              Warrant

            	 
	 	 	 	 	 	 	 	 
	
              Professional
                Offshore Opportunity Fund, Ltd.

              1400
                Old Country
                Road

              Suite
                206

              Westbury,
                New York 11590

            	 	
              $

            	
              4,400,000

            	 	 	
              16,793,893
                

            	 
	 	 	 	 	 	 	 	 
	
              Professional
                Traders Fund, LLC.

              1400
                Old Country
                Road

              Suite
                206

              Westbury,
                New York 11590 

            	 	
              $

            	
              600,000

            	 	 	
              2,290,077

            	 
	 	 	 	 	 	 	 	 
	
              Total

            	 	
              $

            	
              5,000,000

            	 	 	
              19,083,970

            	 

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

      

    EXHIBIT
      B

    

    FORM
      OF DEBENTURE

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      C

    

    FORM
      OF SECURITY AGREEMENT

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      D

    

    FORM
      OF REGISTRATION RIGHTS AGREEMENT

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      E

     

    FORM
      OF ESCROW AGREEMENT

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      F

    

    FORM
      OF WARRANT

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      G

     

    FORM
      OF SECURED CONVERTIBLE DEBENTURE

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      H

     

    FORM
      OF LEGAL OPINION

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      I

    

    NOTICE
      OF RESTRUCTURE

    

    (To
      be
      executed by the Company in order to restructure the Loan)

    

    The
      Company hereby elects to replace the Loan, as described in that certain
      Securities Purchase Agreement entered into by the Company on April 30, 2008,
      which shall at the time of execution of this Notice of Restructure be deemed
      fully paid and shall be terminated, cancelled and deemed null and void, and
      the
      Company shall sell and issue up to $5,000,000 in principal amount of its 12%
      Secured Convertible Debenture to purchase shares of the Company’s Common Stock.

    

    
      	
              Date of Notice:

            	 

    

    

    

    
      	
              Amount of Principal Amount to be Restructured:

            	 

    

    

    
      	
              INFOSMART
                GROUP, INC.

            
	 	 
	
              By:

            	 
	 	 
	
              Its:

            	 

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      J

    

    DISCLOSURE
      SCHEDULES

    

    Schedule
      4.2 – Corporate Powers; Authorization

    

    As
      long
      as any shares of the Company’s Series B Convertible Preferred Stock remain
      outstanding, Section 16 of the Company’s Certificate of Determination of Rights,
      Preferences, Privileges and Restrictions of Series B Convertible Preferred
      Stock
      prohibits the following action without the vote or written consent by the
      holders of Series B Convertibles Preferred Stock of at least sixty-seven percent
      of the outstanding shares of Series B Convertible Preferred Stock, voting
      together as a single class, and unless approved by the Company’s Board of
      Directors:

    

    Authorize
      or issue, or obligate itself to issue, any debt security, or otherwise incur
      indebtedness for borrowed money, other than (A) to a strategic investor in
      connection with a strategic commercial agreement or transaction approved by
      the
      Board of Directors, (B) pursuant to a commercial borrowing, commercial secured
      lending or commercial lease financing transaction approved by the Board of
      Directors, or (c) pursuant to the acquisition of another corporation or entity
      by the Company by consolidation, merger, purchase of all or substantially all
      of
      the assets, or other reorganization;

    

    Schedule
      4.4 – SEC Documents

    

    The
      Company’s Current Report on Form 8-K, due to be filed with the SEC by June 8,
      2007, was untimely filed on June 11, 2007. 

    

    Schedule
      4.6(b) – Obligations to Issue Equity Securities

    

    The
      Company currently has approximately 514,006 shares of Series B Convertible
      Preferred Stock outstanding that are convertible into approximately 13,785,601
      shares of its Common Stock, and warrants outstanding that are convertible into
      approximately 28,510,347 shares of its Common Stock.

    

    Schedule
      4.7 – Litigation

    

    None.
      

    

    Schedule
      4.11 – Brokers & Finders

    

    In
      connection with services provided in the transactions contemplated by this
      Agreement, Spencer Clarke LLC is to receive (i) 7% of the Issue Amount, (ii)
      cash payment of $3,000, (iii) 7% of any cash proceeds received by the Company
      upon exercise of the Warrants, and (iv) four-year warrants to purchase up to
      7%
      of the number of shares of Common Stock issuable upon exercise of the Warrants
      (the “Placement Agent Warrants”), which Placement Agent Warrants shall have an
      exercise price of 125% of the exercise price of the Warrant Shares (as defined
      in Section 1.4 of the Agreement). 

    

    Schedule
      4.12(c) – Infringement of Intellectual Property

    

    None.
      

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Schedule
      4.14 – Transactions with Affiliates

    

    None.
      

    

    Schedule
      4.22 – Title to Assets

    

    None.
      

    

    Schedule
      4.23 – Registration Rights

    

    The
      Company has granted registration rights to the holders of its Series B
      Convertible Preferred Stock, pursuant to the terms of the Registration Rights
      Agreement attached as an exhibit to the Company’s Current Report on Form 8-K
      filed with the Securities and Exchange Commission on August 24,
      2006.

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