Document:

Unassociated Document

    Exhibit  10.9

     

    Highland
Realty 8, Development

    10801
Johnston Road

    Charlotte,
NC 28226

    Phone:
704-542-8348, Fax: 704-542-8281

    
    

     

    
      	
              REALTOR*
      

              Commercial Alliance

            	 
	
              REALTOR*
      North Carolina
      Association 

              of REALTORS®

            	
               COMMERCIAL LEASE
      AGREEMENT

              (Multi-Tenant
      Facility)

            
	 	 

    

     

    THIS LEASE AGREEMENT,
including any and all addenda attached hereto ("Lease"), is by and
between

     

    Fran
Baltmiskis

    , a(n)
an
individual___________________ ("Landlord"),

    (individual
or
State of formation and type of entity)

    
      whose address is 10801 Johnston Rd., Suite
214, Charlotte, N.C. 28226______________________________________________________
and

    

     

    Anchor
Funding
Services, LLC

     

    , a(n) North
Carolina Limited Liability  ("Tenant").

    (individual
or
State of formation and type of entity)

    whose
address is 10801 Johnston Rd., Suite
209-210, Charlotte, N.C. 28226

     

     

    oIf this box is checked,
the obligations of Tenant under this Lease are secured by the guaranty of n/a
(name(s) of guarantor(s)) attached hereto and incorporated herein by
reference.

     

    (Note:
Any guaranty should be prepared by an attorney at law.)

     

    For and
in consideration of the mutual promises set forth herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

     

    PREMISES/PROPERTY

    (Note:
In this paragraph, Premises is the actual space being leased and Property is the
broader site/location of the Premises.)

     

        1. (a)
Landlord leases unto Tenant, and Tenant hereby leases and takes upon the terms
and conditions which hereinafter appear, those certain premises depicted on
Exhibit
A
attached hereto and incorporated herein by reference (hereinafter called
the "Premises"), which is a part of a building or buildings located at the
Property (defined below).

     

    The
address of the Premises is: 

    (Address):

     

    10801
Johnston Rd., Suite 211, Charlotte, N.C. 28226

     

    (b) The
Premises is located at the following described property ("Property"):

     

    (Address):

     

    McGregor
Downs Building, 10801 Johnston Rd., Charlotte, N.C. 28226

     

    o All o A portion of the property in Deed
Reference: Book   n/a ________,
Page No_____________
n/a

    County;
consisting of approximately __________________n/a ______________________________________  acres.

     

    Plat Reference: Lot(s)
________________n/a                                            
  Block or Section n/a___________________________ as shown on Plat Book or Slide
n/a

    at Page(s)
_________________n/a______________, n/a_______________________Contry,
consisting of ____________n/a___________________acres

     

    o If
this box is checked, Property shall mean that property described on Exhibit B
attached hereto and incorporated herewith by reference.

     

    (For information purposes only, the tax
parcel number of the Property is n/a

     

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

     

    All
facilities furnished at the Property and designated for the general use,
in common, of occupants of the Property and their invitees, agents or
employees, including Tenant hereunder, including but not limited to parking
areas, streets, driveway s, sidewalks, canopies, roadways, loading platforms,
shelters, ramps, landscaped areas, exterior water faucets, irrigation systems,
exterior lighting fixtures, signs and other facilities whether of a similar or
dissimilar nature ("Common Areas") shall at all times be subject to the
exclusive control and management of Landlord, and Landlord shall have the right
from time to time to change the area, level, location and arrangement of the
Common Areas and to restrict parking by tenants and their employees to employee
parking areas, to make Rules and Regulations (as herein defined) and do such
things from time to time as in Landlord's reasonable discretion may be necessary
regarding the Common Areas.

     

    Tenant
shall also have a non-exclusive right, in common with other tenants at the
Property, to the use of the Common Areas at the Property, subject to the terms
hereof.

     

    TERM

     

    2. The term of this
Lease shall commence on November
01
, 2007 ("Lease Commencement Date"), and shall end at midnight
on May
30,
2009  , unless
sooner terminated as herein provided. The first Lease Year Anniversary shall be
the date twelve (12) calendar months after the first day of the first full month
immediately following the Lease Commencement Date and successive Lease Year
Anniversaries shall be the date twelve (12) calendar months from the previous
Lease Year Anniversary.

    
       

      o If this box is checked,
Tenant shall have the option of renewing this Lease, upon written notice given
to Landlord at least 90
days prior to the end of
the then expiring term of this Lease, for oneadditional term(s) of Two years
each.

    

     

    o
Option to Lease- If this box is checked, Tenant, upon the payment
of the sum of $ n/a  (which
sum is not rental or security deposit hereunder, but is consideration for this
Option to Lease and is non-refundable under any circumstances) shall have a
period of n/a  days
prior to the Lease Commencement Date ("Option Period") in which to inspect the
Premises and make inquiry regarding such sign regulations, zoning regulations,
utility availability, private restrictions or permits or other regulatory
requirements as Tenant may deem appropriate to satisfy itself as to the use of
the Premises for Tenant's intended purposes. Tenant shall conduct all such
on-site inspections, examinations, inquiries and other review of the Premises in
a good and workmanlike manner, shall repair any damage to the Premises caused by
Tenant's entry and on-site inspections and shall conduct same in a manner that
does not unreasonably interfere with Landlord's or any tenant's use and
enjoyment of the Property. In that respect, Tenant shall make reasonable efforts
to undertake on-site inspections outside of the hours any tenant's business is
open to the public and shall give prior notice to the tenant at the Premises of
any entry onto the Premises for the purpose of conducting inspections. Upon
Landlord's request, Tenant shall provide to Landlord evidence of general
liability insurance. Tenant shall also have a right to review and inspect all
contracts or other agreements affecting or related directly to the Premises and
shall be entitled to review such books and records of Landlord that relate
directly to the operation and maintenance of the Premises, provided, however,
that Tenant shall not disclose any information regarding the Property (or any
tenant therein) unless required by law and the same shall be regarded as
confidential, to any person, except to its attorneys, accountants, lenders and
other professional advisors, in which case Tenant shall obtain their agreement
to maintain such confidentiality. Tenant assumes all responsibility for the acts
of itself, its agents or representatives in exercising its rights under this
Option to Lease and agrees to indemnify and hold Seller harmless from any
damages resulting therefrom. This indemnification obligation of Tenant shall
survive the termination of this Option to Lease or this Lease. Tenant shall, at
Tenant's expense, promptly repair any damage to the Premises or Property caused
by Tenant's entry and on-site inspections. IF
TENANT CHOOSES NOT TO LEASE
THE PREMISES, FOR ANY REASON OR NO REASON, AND PROVIDES WRITTEN NOTICE TO
LANDLORD THEREOF
PRIOR TO THE EXPIRATION OF THE OPTION PERIOD, THEN THIS LEASE SHALL TERMINATE
AND NEITHER PARTY SHALL HAVE ANY FURTHER OBLIGATIONS HEREUNDER AND LANDLORD
SHALL RETURN TO TENANT
ANY RENTAL OR SECURITY DEPOSIT PAID TO LANDLORD HEREUNDER. Tenant shall
be deemed to have exercised its Option to Lease and to be bound under the terms
of this Lease if (i) Tenant shall occupy the Premises prior to the expiration of
the Option Period, whereupon the date of occupancy shall be deemed the Lease
Commencement Date, or (ii) Tenant shall not provide written notice to Landlord
of its termination of this Lease prior to the expiration of the Option
Period.

     

    RENTAL

     

    3.
Beginning on November
01, 2007 ("Rent Commencement Date"), Tenant agrees to pay Landlord (or
its Agent as directed
by Landlord), without notice, demand, deduction or set off, an annual rental of
$ 9,000.00 , payable
in equal monthly installments
of $ 750.00  ,
in advance on the first day of each calendar month during the term hereof. Upon
execution of this Lease, Tenant shall pay to Landlord the first monthly
installment of rent due hereunder. Rental for any period during the term hereof
which is less than one month shall be the pro-rated portion of the monthly
installment of rental due, based upon a 30 day month.

     

    q If this
box is checked, the annual rental payable hereunder (and accordingly the monthly
installments) shall be adjusted every one  Lease
Year Anniversary by 4 %
over the amount then payable hereunder. In the event renewal of this
Lease is provided for in paragraph
2 hereof and effectively exercised by Tenant, the rental adjustments provided
herein shall apply to the term of the Lease so renewed, or

     

    q If this
box is checked, the annual rental payable hereunder (and accordingly the monthly
installments) shall be adjusted every n/a  Lease
Year Anniversary by $ nia over
the amount then payable hereunder. In the event renewal of this Lease is
provided

     

     

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    for in
paragraph 2 hereof and effectively exercised by Tenant, the rental adjustments
provided herein shall apply to the term of the Lease so renewed,

     

    x  If this box is
checked, Tenant shall pay all rental to Landlord's Agent at the following
address:

    Highland Realty &
Development, Ltd., 10801 Johnston Rd., Suite 116, Charlotte, N.C.
28226

     

    LATE
CHARGES

    4. If
Landlord fails to receive full rental payment within 10
days after it becomes due, Tenant shall pay Landlord, as
additional

    rental, a
late charge equal to ten  percent
10
(%) of the overdue amount or $
n/a  whichever
is greater, plus any actual bank fees incurred for dishonored payments. The
parties agree that such a late charge represents a fair and reasonable estimate
of the cost Landlord will incur by reason of such late payment.

     

    SECURITY
DEPOSIT

    5. Upon the
execution of this Lease, Tenant shall deposit with Landlord the sum of $
750
- 00  as a security deposit which shall be held by Landlord as
security for the full and faithful performance by Tenant of each and every term,
covenant and condition of this Lease. The security deposit does not represent
payment of and Tenant shall not presume application of same as payment of the
last monthly installment of rental due under this Lease. Landlord shall have no
obligation to segregate or otherwise account for the security deposit except as
provided in this paragraph 5. If any of the rental or other charges or sums
payable by Tenant shall be over-due and unpaid or should payments be made by
Landlord on behalf of Tenant, or should Tenant fail to perform any of the terms
of this Lease, then Landlord may, at its option, appropriate and apply the
security deposit, or so much thereof as may be
necessary, to compensate toward the payment of the rents, charges or other sums
due from Tenant, or towards any loss, damage or expense sustained by Landlord
resulting from such default on the part of the Tenant; and in such event Tenant
upon demand shall restore the security deposit to the amount set forth above in
this paragraph 5. In the event Tenant furnishes Landlord with proof that all
utility bills and other bills of Tenant related to the Premises have been paid
through the date of Lease termination, and performs all of Tenant's other
obligations under this Lease, the security deposit shall be returned to Tenant
within sixty (60) days after the date of the expiration or sooner termination of
the term of this Lease and the surrender of the Premises by Tenant in compliance
with the provisions of this Lease.

     

    x If this box is checked,
Agent shall hold the security deposit in trust and shall be entitled to the
interest, if any, thereon.

     

    UTILITY
BILLS/SERVICE CONTRACTS

    6.
Landlord and Tenant agree that utility bills and service contracts ("Service
Obligations") for the Premises shall be paid by the party indicated below as to
each Service Obligation. in each instance, the party undertaking responsibility
for payment of a Service Obligation covenants that they will pay the applicable
bills prior to delinquency. The responsibility to pay for a Service Obligation
shall include all metering, hook-up fees or other miscellaneous charges
associated with establishing, installing and maintaining such utility or
contract in said party's name. Within thirty (30) days of the Lease Commencement
Date, Tenant shall provide Landlord with a copy of any requested Tenant Service
Obligation information.

     

    
      	
              Service
      Obligation

            	
              Landlord

            	
              Tenant

            	
              Not
      Applicable

            
	 
      	 
      	 
      

    

    
      	
              Sewer/Septic

            	
              
                      
                  x

                

              

            	
                    
                q

              

            	
                    
                q

              

            
	
              Water

            	
              
                      
                  x

                

              

            	
                    
                q

              

            	
              q

            
	
              Electric

            	
              q

            	
                    
                      
                  x

                

              

            	
                    
                q

              

            
	
              Gas

            	
              
                q

              

            	
              q

            	
                    
                      
                  x

                

              

            
	
              Telephone

            	
              
                q

              

            	
                    
                      
                  x

                

              

            	
                    
                q

              

            
	
              HVAC
      (maintenance/service contract)

            	
                    
                x

              

            	
                    
                q

              

            	
              q

            
	
              Elevator
      (including phone line)

            	
              
                q

              

            	
              q

            	
                    
                      
                  x

                

              

            
	
              Security System

            	
              
                q

              

            	
                    
                q

              

            	
                    
                      
                  x

                

              

            
	
              Fiber Optic

            	
              
                q

              

            	
                    
                q

              

            	
                    
                      
                  x

                

              

            
	
              Janitor/Cleaning

            	
                    
                q

              

            	
                    
                q

              

            	
                    
                q

              

            
	
              Trash/Dumpster

            	
                    
                      
                  x

                

              

            	
                    
                q

              

            	
              q

            
	
              Landscaping/Maintenance

            	
                    
                      
                  x

                

              

            	
                    
                q

              

            	
                    
                q

              

            
	
              Sprinkler System (including phone
      line)

            	
              q

            	
                    
                q

              

            	
                    
                      
                  x

                

              

            
	
              Pest
      Control

            	
              q

            	
                    
                q

              

            	
                    
                      
                  x

                

              

            
	
              n/a

            	
                    
                q

              

            	
              q

            	
                    
                      
                  x

                

              

            
	
              n/a

            	
              q

            	
              q

            	
              q

            
	
              n/a

            	
              q

            	
                    
                q

              

            	
                    
                q

              

            
	
              n/a

            	
                    
                q

              

            	
                    
                q

              

            	
              q

            

    

    

     

     

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    Landlord
shall not be liable for injury to Tenant's business or loss of income there-from
or for damage that may be sustained by the person, merchandise or personal
property of Tenant, its employees, agents, invitees or contractors or any other
person in or about the Premises, caused by or resulting from fire, steam,
electricity, gas, water or rain, which may leak or flow from or into any part of
the Premises, or from the breakage, leakage, obstruction or other defects of any
utility installations, air conditioning system or other components of the
Premises or the Property, except to the extent that such damage or loss is
caused by Landlord's gross negligence or willful misconduct. Landlord makes no
representations or warranties with respect to the heating, ventilation and air
conditioning system(s) or utility installations existing as of the date hereof
or in the future. Subject to the provisions of this paragraph 6, Landlord shall
not be liable in damages or otherwise for any discontinuance, failure or
interruption of service to the Premises of utilities or the heating, ventilation
and air conditioning system(s) and Tenant shall have no right to terminate this
Lease or withhold rental because of the same.

     

    RULES
AND REGULATIONS

    7. The rules
and regulations, if any, attached hereto ("Rules and Regulations") are made a
part of this Lease. Tenant agrees to comply with any Rules and Regulations of
Landlord in connection with the Premises which are in effect at the time of the
execution of the Lease or which may be from time to time promulgated by Landlord
in its reasonable discretion, provided such Rules and Regulations are in writing
and are not in conflict with the terms and conditions of the Lease. Landlord
shall use commercially reasonable efforts to enforce such Rules and Regulations
at the Property, provided, however, in no event shall Landlord be obligated to
make any material expenditures in connection with the enforcement of such Rules
and Regulations. Landlord shall not be liable for any damages arising from any
use, act or failure to act of any other tenant or occupant (including such
tenant's or occupant's invitees, agents or employees), if any, of the
Property.

     

    PERMITTED
USES

    8. The permitted use of the Premises shall
be Professional
Office
Use Only

    ("Permitted
Use"). The Premises shall be used and wholly occupied by Tenant solely for the
purposes of conducting the Permitted Use, and the Premises shall not be used for
any other purposes unless Tenant obtains Landlord's prior written approval of
any change in use. Landlord makes no representation or warranty regarding the
suitability of the Premises for or the legality (under zoning or other
applicable ordinances) of the Permitted Use for the Premises, provided however,
that Landlord does represent that it has no contractual obligations with other
parties which will materially interfere with or prohibit the Permitted Use of
Tenant at the Premises. At Tenant's sole expense, Tenant shall procure, maintain
and make available for Landlord's inspection from time to time any governmental
license(s) or permit(s) required for the proper and lawful conduct of Tenant's
business in the Premises. Tenant shall not cause or permit any waste to occur in
the Premises and shall not overload the floor, or any mechanical, electrical,
plumbing or utility systems serving the Premises. Tenant shall keep the
Premises, and every part thereof, in a clean and wholesome condition, free from
any objectionable noises, loud music, objectionable odors or
nuisances.

    TAXES,
INSURANCE AND COMMON AREA AND PROPERTY OPERATING EXPENSES

    9.
Landlord shall pay all taxes (including but not limited to, ad valorem taxes,
special assessments and any other governmental charges) on the Property, shall
procure and pay for such commercial general liability, broad form fire and
extended and special perils insurance with respect to the Property as Landlord
in its reasonable discretion may deem appropriate and shall maintain and operate
the Common Areas and the Property. Tenant shall reimburse Landlord for its
proportionate share of all taxes, insurance and Common Areas and Property
operating expenses as provided herein within fifteen (15) days after receipt of
notice from Landlord as to the amount due. Tenant shall be solely responsible
for insuring Tenant's personal and business property and for paying any taxes or
governmental assessments levied thereon. Tenant shall reimburse Landlord for its
proportionate share of taxes, insurance and Common Areas and Property operating
expenses during the term of this Lease, and any extension or renewal thereof; as
follows:

     

    Taxes

     

    o Its proportionate share
of the amount by which all taxes (including but not limited to, ad valorem
taxes, special assessments and any other governmental charges) on the Property
for each tax year exceed all taxes on the Property for the tax year n/a ; or

     

    o Its proportionate share
of all taxes (including but not limited to, ad valorem taxes, special
assessments and any other governmental charges) on the Property for each tax
year.

     

    If the
final Lease Year of the term fails to coincide with the tax year, then any
excess for the tax year during which the term ends shall be reduced by the pro
rata part of such tax year beyond the Lease term. If such taxes for the year in
which the Lease terminates are not ascertainable before payment of the last
month's rental, then the amount of such taxes assessed against the Property for
the previous tax year shall be used as a basis for determining the pro rata
share, if any, to be paid by Tenant for that portion of the last Lease
Year.

     

    o If this box is checked,
Tenant shall reimburse Landlord for its proportionate share of taxes by paying
to Landlord, beginning on the Rent Commencement Date and on the first day of
each calendar month during the term hereof, an amount equal to one-twelfth
(1/12) of its proportionate share of the then current tax payments for the
Property. Upon receipt of bills, statements or other evidence of taxes due,
Landlord shall pay or cause to be paid the taxes. If at any time the
reimbursement payments by Tenant hereunder do not equal its proportionate share
of the amount of taxes paid by Landlord, Tenant shall upon demand pay to
Landlord an amount equal to the deficiency or Landlord shall refund to Tenant
any overpayment (as applicable) as documented
by Landlord. Landlord shall have no obligation to segregate or otherwise account
for the tax reimbursements paid hereunder except as provided in this paragraph
9.

     

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    Insurance

    Its
proportionate share of the excess cost of commercial general liability, broad
form fire and extended and special perils insurance with respect to the Property
over the cost of the first year of the Lease term for each subsequent year
during the term of this Lease; or

     

    q Its proportionate share of the
cost of all commercial general liability, broad form fire and extended and
special perils insurance with respect to the Property.

     

    Provided,
however, that in the event Tenant's use of the Premises results in an increase
in the rate of insurance on the Property, Tenant also shall pay to Landlord,
upon demand and as additional rental, the amount of any such
increase.

     

    
      	
               
      o

            	
              If
      this box is checked, Tenant shall reimburse Landlord for its proportionate
      share of insurance by paying to Landlord, beginning on the Rent
      Commencement Date and on the first day of each calendar month during the
      term hereof, an amount equal to one-twelfth (1/12) of its proportionate
      share of the then current insurance premiums for the Property. Upon
      receipt of bills, statements or other evidence of insurance premiums due,
      Landlord shall pay or cause to be paid the insurance premiums. If at any
      time the reimbursement payments by Tenant hereunder do not equal its
      proportionate share of the amount of insurance premiums paid by Landlord,
      Tenant shall upon demand pay to Landlord an amount equal to the deficiency
      or Landlord shall refund to Tenant any overpayment (as applicable) as
      documented by Landlord. Landlord shall have no obligation to segregate or
      otherwise account for the insurance premium reimbursements paid hereunder
      except as provided in this paragraph
9.

            

    

     

    Common
Areas and Property Operating Expenses

     

    Its
proportionate share of all Common Areas and Property operating
expenses.

     

    For the purpose of this Lease, Common
Areas and Property operating expenses shall include: (a) the cost of water and
sewer services for any exterior landscaping irrigation systems; (b) the cost of
utilities to service the Property (not separately metered to tenants and
regardless of their
allocation to Landlord under paragraph 6 hereof) including but not limited to,
electric service for any parking lot lighting, marquee signs, ground signs, pylon signs, time
clocks, irrigation systems, common electric outlets used in connection with
maintenance of the Property, and such other electric costs,
including the replacement of light bulbs in Common Areas light fixtures as
necessary to properly maintain and operate the Common Areas; (c) the
cost of the removal of any trash, including the rental cost of dumpster units
and fees for refuse removal; (d) the cost of exterior
window washing of vacant spaces, cleaning of any building exterior, awnings,
sidewalks, driveways and parking areas; (e) the cost of
anygrounds maintenance, including but not limited to charges for maintaining
plant materials, fertilizer, pesticides, grass mowing, pruning of plants,
planting of annual flowers, removal of debris and trash from Common Areas,
cleaning supplies, and such other expenses necessary to maintain
the Property; (f) the cost of service contracts with independent contractors to
maintain on a regular basis the plumbing systems outside the
rentable areas of each tenant, and to provide for pest control and exterminating
services for the Common
Areas; (g) the cost of maintaining the parking areas and driveways, including
the re-striping of parking spaces, patching of deteriorated pavement,
replacement of parking signs or directional signs; (h) the cost of Landlord's
personnel when such personnel are engaged directly in the maintenance of
the Common Areas of the Property, including the cost of employer taxes and a
proration of employee benefits; (i) the cost of snow and ice
removal from parking areas, driveways, walkways and service areas; (j) the cost
of telephone, telegraph, stationery, advertising, and mail or shipping costs
related directly to the maintenance or operation of the Property; (k) the cost
of all capital and
structural repair maintenance for the Property and systems related thereto; and
(1) such other costs and expenses as are typically incurred in the maintenance and
operation of a property of this type, inclusive of a management fee paid by
Landlord to a property manager or property management company or organization
for the management of the Property and any owner association dues or
assessments. Within one
hundred eighty (180) days following the end of each calendar year, Landlord
shall cause a statement to be prepared of the actual cost of Common Areas and
Property operating expenses for such calendar year and shall provide Tenant a
copy of same. Tenant's proportionate share of Common Areas and Property
operating expenses is presently estimated to be the sum of $ n/a
annually
or $ n/a per
month.

     

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    o If this box is checked,
Tenant shall reimburse Landlord for its proportionate share of Common Areas and
Property operating expenses by paying to Landlord, beginning on the Rent
Commencement Date and on the first day of each calendar month during the term
hereof, the amount set forth above as the presently estimated per month
proportionate share of Common Areas and Property operating expenses for the
Premises. Landlord shall pay or cause to be paid the Common Areas and Property
operating expenses. Within one hundred eighty (180) days following the end of
each calendar year, Landlord shall: (i) cause a statement to be prepared of the
actual cost of Common Areas and Property operating expenses for such calendar
year and shall notiy Tenant of any overpayment or underpayment of Tenant's
proportionate share of these items during such prior calendar year; and, (ii)
establish an estimate of the cost of Common Areas and Property operating
expenses for the then current calendar year. To the extent Tenant has overpaid
Tenant's proportionate share of these items for the preceding calendar year,
such overage shall be credited to Tenant's proportionate share of these items
for the current calendar year. To the extent Tenant has underpaid Tenant's
proportionate share of these items for the preceding calendar year, Tenant
shall, on
the first day of the calendar month following receipt of the statement from
Landlord setting forth the amount of such underpayment, pay to Landlord the full
amount of such underpayment for the preceding calendar year. In addition,
beginning on the first day of the calendar month following the date upon which
Landlord shall have delivered to Tenant the statement for the estimated Common
Areas and Property operating expenses for the then current calendar year, Tenant
shall pay to Landlord the product of one-twelfth (1/12) of Tenant's
proportionate share of the estimated Common Areas and Property operating
expenses for the then current calendar year multiplied by the number of calendar
months in the calendar year which shall have begun as of said first day, minus
the aggregate amount
of the monthly payments for Tenant's proportionate share of expenses
theretofore paid by Tenant during such calendar year. The remainder of Tenant's
proportionate share of such expenses for the then current calendar year shall be
paid by Tenant to Landlord on the first day of each succeeding month in equal
consecutive monthly installments of one-twelfth (1/12) of the total amount of
Tenant's proportionate share of Common Areas and Property operating expenses as
shown on the estimate thereof provided by Landlord. Landlord shall have no
obligation to segregate or otherwise account for the insurance premium
reimbursements paid hereunder except as provided in this paragraph
9.

     

    For purposes of this paragraph 9,
"Tenant's proportionate share" shall mean (check
one):

     

    
    

     

    
      	o	n/a  %
      of the expenses above designated; or
	 	 
	o	$ n/a
      payable monthly, in satisfaction of all reimbursements under this
      paragraph 9; or
	 	 
	o	None-
      Tenant shall have no responsibility to reimburse Landlord for taxes,
      insurance or Common Areas and Property operating
  expenses.

    

     

     

    INSURANCE;
WAIVER; INDEMNITY

    10.  
(a) During the term of this Lease, Tenant shall maintain commercial general
liability insurance coverage (occurrence coverage) with broad form contractual liability
coverage and with coverage limits of not less than 1,000,000.00
combined
single limit, per occurrence, specifically including liquor liability
insurance covering consumption of alcoholic beverages by customers of
Tenant should Tenant choose to sell alcoholic beverages. Such policy shall
insure Tenant's performance of the indemnity provisions of this Lease, but the
amount of such insurance shall not limit Tenant's liability nor relieve Tenant
of any obligation hereunder. All policies of insurance provided for herein shall
name as "additional insureds" Landlord, Landlord's Agent, all mortgagees of
Landlord and such other individuals or entities as Landlord may from time to
time designate upon written notice to Tenant. Tenant shall provide to Landlord,
at least thirty (30) days prior to expiration, certificates of insurance to
evidence any renewal or additional insurance procured by Tenant. Tenant shall
provide evidence of all insurance required under this Lease to Landlord prior to
the Lease Commencement Date.

     

        (b) Landlord
(for itself and its insurer) waives any rights, including rights of subrogation,
and Tenant (for itself and its insurer) waives any rights, including rights of
subrogation, each may have against the other for compensation of any loss or
damage occasioned to Landlord or Tenant arising from any risk generally covered
by the "all risks" insurance required to be carried by Landlord and Tenant. The
foregoing waivers of subrogation shall be operative only so long as available in
the State of North Carolina. The foregoing waivers shall be effective whether or
not the parties maintain the insurance required to be carried pursuant to this
Lease.

     

        (c) Except as
otherwise provided in paragraph 10(b), Tenant indemnifies Landlord for damages
proximately caused by the negligence or wrongful conduct of Tenant and Tenant's
employees, agents, invitees or contractors. Except as otherwise provided in
paragraph 10(b), Landlord indemnifies Tenant for damages proximately caused by
the negligence or wrongful conduct of Landlord and Landlord's employees, agents,
invitees or contractors. The indemnity provisions in this paragraph 10 cover
personal injury and property damage and shall bind the employees, agents,
invitees or contractors of Landlord and Tenant (as the case may be). The
indemnity obligations in this paragraph 10 shall survive the expiration or
earlier termination of this Lease.

     

    REPAIRS
BY LANDLORD

    11.
Landlord agrees to keep in good repair the roof, foundation, structural
supports, exterior walls (exclusive of all glass and exclusive of all exterior
doors) and the Common Areas of the Property, except repairs rendered necessary
by the negligence or intentional wrongful acts of Tenant, its employees, agents,
invitees or contractors. Tenant shall promptly report in writing to Landlord any
defective condition known to it which Landlord is required to repair and failure
to report such conditions shall make Tenant responsible to Landlord for any
liability incurred by Landlord by reason of such conditions.

     

    REPAIRS
BY TENANT

     12. (a) Tenant accepts the Premises in
their present condition and as suited for the Permitted Use and Tenant's
intended purposes. Tenant,
throughout the initial term of this Lease, and any extension or renewal thereof,
at its expense, shall maintain in good order and repair the Premises, except those
repairs expressly required to be made by Landlord hereunder. Tenant shall use
only licensed contractors for repairs where such license is
required. Landlord shall have the right to approve the contractor as to any
repairs in excess of $ 100.00

     

        (b) Tenant
agrees to return the Premises to Landlord at the expiration or prior termination
of this Lease, in as good condition and repair as on the Lease Commencement
Date, natural wear and tear, damage by storm, fire, lightning, earthquake or
other casualty alone excepted.
Tenant, Tenant's employees, agents, invitees or contractors shall take no action
which may void any manufacturers or installers warranty with relation to the
Premises or the Property. Tenant shall indemnify and hold Landlord harmless from
any liability, claim, demand or cause of action arising on account of Tenant's
breach of the provisions of this paragraph 12.

     

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

    o If this box is checked,
there is heating, ventilation and air conditioning equipment exclusively serving
the Premises. Tenant, at its expense, shall maintain in good order and repair,
including but not limited to replacement of parts, compressors, air handling
units and heating units; provided that, as to repair or replacement expenses for
heating, ventilation and air conditioning equipment in excess of $ n/a
(per occurrence) or $ n/a
(annually), Landlord shall reimburse Tenant for the amount in
excess of
the stated amount, provided that Tenant has obtained Landlord's prior written
approval of the contractor and the repair or replacement.

     

    ALTERATIONS

    13. Tenant
shall not make any alterations, additions, or improvements to the Premises
without Landlord's prior written consent, which consent shall not be
unreasonably withheld, conditioned or delayed. Tenant shall promptly remove any
alterations, additions, or improvements constructed in violation of this
paragraph 13 upon Landlord's written request. All approved alterations,
additions, and improvements will be accomplished in a good and workmanlike
manner, in conformity with all applicable laws and regulations, and by a
contractor approved by Landlord, free of any liens or encumbrances. Landlord may
require Tenant to remove any alterations, additions or improvements (whether or
not made with Landlord's consent) at the termination of the Lease and to restore
the Premises to its prior condition, all at Tenant's expense. All alterations,
additions and improvements which Landlord has not required Tenant to remove
shall become Landlord's property and shall be surrendered to Landlord upon the
termination of this Lease, except that Tenant may remove any of Tenant's
machinery, equipment or trade fixtures which can be removed without material
damage to the Premises or the Property. Tenant shall repair, at Tenant's
expense, any damage to the Premises or the Property caused by the removal of any
such machinery, equipment or trade fixtures.

     

    DESTRUCTION
OF OR DAMAGE TO PREMISES

    14. (a) If
the Premises are totally destroyed by storm, fire, lightning, earthquake or
other casualty , Landlord shall have the right to terminate this Lease on
written notice to Tenant within thirty (30) days after such destruction and this
Lease shall terminate as of the date of such destruction and rental shall be
accounted for as between Landlord and Tenant as of that date.

     

        (b) If the
Premises are damaged but not wholly destroyed by any such casualties or if the
Landlord does not elect to terminate the Lease under paragraph 14(a) above,
Landlord shall commence (or shall cause to be commenced) reconstruction of the
Premises within one hundred twenty (120) days after such occurrence and
prosecute the same diligently to completion, not to exceed two hundred seventy
(270) days from the date upon which Landlord receives applicable permits and
insurance proceeds. In the event Landlord shall fail to substantially complete
reconstruction of the Premises within said two hundred seventy (270) day period,
Tenant's sole remedy shall be to terminate this Lease.

     

        (c) In the
event of any casualty at the Premises during the last one (1) year of the Lease
Term, Landlord and Tenant each shall have the option to terminate this Lease on
written notice to the other of exercise thereof within sixty (60) days after
such occurrence.

     

        (d) In the
event of reconstruction of the Premises, Tenant shall continue the operation of
its business in the Premises during any such period to the extent reasonably
practicable from the standpoint of prudent business management, and the
obligation of Tenant to pay annual rental and any other sums due under this
Lease shall remain in full force and effect during the period of reconstruction.
The annual rental and other sums due under this Lease shall be abated
proportionately with the degree to which Tenant's use of the Premises is
impaired, commencing from the date of destruction and continuing during the
period of such reconstruction. Tenant shall not be entitled to any compensation
or damages from Landlord for loss of use of the whole or any part of the
Premises, Tenant's personal property, or any inconvenience or annoyance
occasioned by such damage, reconstruction or replacement.

     

        (e) In the
event of the termination of this Lease under any of the provisions of this
paragraph 14, both Landlord and Tenant shall be released from any liability or
obligation under this Lease arising after the date of termination, except as
otherwise provided for in this Lease.

     

     

    GOVERNMENTAL
ORDERS

    15. Tenant, at its
own expense, agrees to comply with: (a) any law, statute, ordinance, regulation,
rule, requirement, order, court decision or procedural requirement of any
governmental or quasi-governmental authority having jurisdiction over the
Premises; (b) the rules and regulations of any applicable governmental insurance
authority or any similar body, relative to the Premises and Tenant's activities
therein; (c) provisions of or rules enacted pursuant to any private use
restrictions, as the same may be amended from time to time and (d) the Americans
with Disabilities Act (42 U.S.C. S. § 12101, et seq.) and the regulations and
accessibility guidelines enacted pursuant thereto, as the same may be amended
from time to time. Landlord and Tenant agree, however, that if in order to
comply with such requirements the cost to Tenant shall exceed a sum equal to one
(1) year's rent, then Tenant may terminate this Lease by giving written notice
of termination to Landlord in accordance with the terms of this Lease, which
termination shall become effective sixty (60) days after receipt of such notice
and which notice shall eliminate the necessity of compliance with such
requirements, unless, within thirty (30) days of receiving such notice, Landlord
agrees in writing to be responsible for such compliance, at its own expense, and
commences compliance activity, in which case Tenant's notice given hereunder
shall not terminate this Lease.

     

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

     

     

    EXTERIOR
SIGNS

    20. Tenant
shall place no signs upon the outside walls, doors or roof of the Premises or
anywhere on the Property, except with the express written consent of the
Landlord in Landlord's sole discretion. Any consent given by Landlord shall
expressly not be a representation of or warranty of any legal entitlement to
signage at the Premises or on the Property. Any and all signs placed on the
Premises or the Property by Tenant shall be maintained in compliance with
governmental rules and regulations governing such signs and Tenant shall be
responsible to Landlord for any damage caused by installation, use or
maintenance of said signs, and all damage incident to removal
thereof.

     

    LANDLORD'S
ENTRY OF PREMISES

    21. Landlord
may advertise the Premises "For Rent" or "For Sale" 60  days
before the termination of this Lease. Landlord may enter the Premises upon prior
notice at reasonable hours to exhibit same to prospective purchasers or tenants,
to make repairs required of Landlord under the terms hereof, for reasonable
business purposes and otherwise as may be agreed by Landlord and Tenant.
Landlord may enter the Premises at any time without prior notice, in the event
of an emergency or to make emergency repairs to the Premises. Upon request of
Landlord, Tenant shall provide Landlord with a functioning key to the Premises
and shall replace such key if the locks to the Premises are
changed.

     

    QUIET
ENJOYMENT

    22. So long
as Tenant observes and performs the covenants and agreements contained herein,
it shall at all times during the Lease term peacefully and quietly have and
enjoy possession of the Premises, subject to the terms hereof.

     

    HOLDING
OVER

    23. If Tenant
remains in possession of the Premises after expiration of the term hereof,
Tenant shall be a tenant at sufferance and there shall be no renewal of this
Lease by operation of law. In such event, commencing on the date following the
date of expiration of the term, the monthly rental payable under Paragraph 3
above shall for each month, or fraction thereof during which Tenant so remains
in possession of the Premises, be twice the
monthly rental otherwise payable under Paragraph 3 above.

     

    ENVIRONMENTAL
LAWS

    24. (a)
Tenant covenants that with respect to any Hazardous Materials (as defined below)
it will comply with any and all federal, state or local laws, ordinances, rules,
decrees, orders, regulations or court decisions relating to hazardous
substances, hazardous materials, hazardous waste, toxic substances,
environmental conditions on, under or about the Premises or the Property or soil
and ground water conditions, including, but not limited to, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Resource
Conservation and Recovery Act, the Hazardous Materials Transportation Act, any
other legal requirement concerning hazardous or toxic substances, and any
amendments to the foregoing (collectively, all such matters being "Hazardous
Materials Requirements"). Tenant shall remove all Hazardous Materials from the
Premises, either after their use by Tenant or upon the expiration or earlier
termination of this Lease, in compliance with all Hazardous Materials
Requirements.

     

        (b) Tenant
shall be responsible for obtaining all necessary permits in connection with its
use, storage and disposal ofHazardous Materials, and shall develop and maintain,
and where necessary file with the appropriate authorities, all reports,
receipts, manifest, filings, lists and invoices covering those Hazardous
Materials and Tenant shall provide Landlord with copies of all such items upon
request. Tenant shall provide within five (5) days after receipt thereof, copies
of all notices, orders, claims or other correspondence from any federal, state
or local government or agency alleging any violation of any Hazardous Materials
Requirements by Tenant, or related in any manner to Hazardous Materials. In
addition, Tenant shall provide Landlord with copies of all responses to such
correspondence at the time of the response.

     

        (c) Tenant
hereby indemnifies and holds harmless Landlord, its successors and assigns from
and against any and all losses, liabilities, damages, injuries, penalties,
fines, costs, expenses and claims of any and every kind whatsoever (including
attorney's fees and costs) paid, incurred or suffered by, or asserted against
Landlord as a result of any claim, demand or judicial or administrative action
by any person or entity (including governmental or private entities) for, with
respect to, or as a direct or indirect result of, the presence on or under or
the escape, seepage, leakage, spillage, discharge, emission or release from the
Premises or the Property of any Hazardous Materials caused by Tenant or Tenant's
employees, agents, invitees or contractors. This indemnity shall also apply to
any release of Hazardous Materials caused by a
fire or other casualty to the Premises if such Hazardous Materials were
stored on the Premises or the Property
by Tenant, its agents, employees, invitees or successors in
interest.

     

        (d) For
purposes of this Lease, "Hazardous Materials" means any chemical, compound,
material, substance or other matter that: (i) is defined as a hazardous
substance, hazardous material or waste, or tox c substance pursuant to any
Hazardous Materials Requirements, (ii) is regulated, controlled or governed by
any Hazardous Materials Requirements, (iii) is petroleum or a petroleum product,
or (iv) is asbestos, formaldehyde, a radioactive material, drug, bacteria,
virus, or other injurious or potentially injurious material (by itself or in
combination with other materials).

     

    (e) The
warranties and indemnities contained in this paragraph 24 shall survive the
termination of this Lease. 

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

     

     

    SUBORDINATION; ATTORNMENT;
ESTOPPEL

    25. (a)
This Lease and all of Tenant's rights hereunder are and shall be subject and
subordinate to all currently existing and future mortgages affecting the
Premises. Within ten (10) days after the receipt of a written request from
Landlord or any Landlord mortgagee, Tenant shall confirm such subordination by
executing and delivering Landlord and Landlord's mortgagee a recordable
subordination agreement and such other documents as may be reasonably requested,
in form and content satisfactory to Landlord and Landlord's mortgagee. Provided,
however, as a condition to Tenant's obligation to execute and deliver any such
subordination agreement, the applicable mortgagee must agree that mortgagee
shall not unilaterally, materially alter this Lease and this Lease shall not be
divested by foreclosure or other default proceedings thereunder so long as
Tenant shall not be in default under the terms of this Lease beyond any
applicable cure period set forth herein. Tenant acknowledges that any Landlord
mortgagee has the right to subordinate at any time its interest in this Lease
and the leasehold estate to that of Tenant, without Tenant's
consent.

     

        (b) If
Landlord sells, transfers, or conveys its interest in the Premises or this
Lease, or if the same is foreclosed judicially or nonjudicially, or otherwise
acquired, by a Landlord mortgagee, upon the request of Landlord or Landlord's
successor, Tenant shall attorn to said successor, provided said successor
accepts the Premises subject to this Lease. Tenant shall, upon the request of
Landlord or Landlord's successor, execute an attornment agreement confirming the
same, in form and substance acceptable to Landlord or Landlord's successor and
Landlord shall thereupon be released and discharged from all its covenants and
obligations under this Lease, except those obligations that have accrued prior
to such sale, transfer or conveyance; and Tenant agrees to look solely to the
successor in interest of Landlord for the performance of those covenants
accruing after such sale, transfer or conveyance. Such agreement shall provide,
among other things, that said successor shall not be bound by (a) any prepayment
of more than one (1) month's rental (except the Security Deposit) or (b) any
material amendment of this Lease made after the later of the Lease Commencement
Date or the date that such successor's lien or interest first arose, unless said
successor shall have consented to such amendment.

     

        (c) Within
ten (10) days after request from Landlord, Tenant shall execute and deliver to
Landlord an estoppel certificate (to be prepared by Landlord and delivered to
Tenant) with appropriate facts then in existence concerning the status of this
Lease and Tenant's occupancy, and with any exceptions thereto noted in writing
by Tenant. Tenant's failure to execute and deliver the Estoppel Certificate
within said ten (10) day period shall be deemed to make conclusive and binding
upon Tenant in favor of Landlord and any potential mortgagee or transferee the
statements contained in such estoppel certificate without
exception.

     

    ABANDONMENT

    26.
Tenant shall not abandon the Premises at any time during the Lease term. If
Tenant shall abandon the Premises or be dispossessed by process of law, any
personal property belonging to Tenant and left on the Premises, at the option of
Landlord, shall be deemed abandoned, and available to Landlord to use or sell to
offset any rent due or any expenses incurred by removing same and restoring the
Premises.

     

    NOTICES

    27. All
notices required or permitted under this Lease shall be in writing and shall be
personally delivered or sent by U.S. certified mail, return receipt requested,
postage prepaid. Notices to Tenant shall be delivered or sent to the address
shown at the beginning of this Lease, except that upon Tenant taking possession
of the Premises, then the Premises shall be Tenant's address for such purposes.
Notices to Landlord shall be delivered or sent to the address shown at the
beginning of this Lease and notices to Agent, if any, shall be delivered or sent
to the address set forth in Paragraph 3 hereof. All notices shall be effective
upon delivery. Any party may change its notice address upon written notice to
the other parties, given as provided herein.

     

    GENERAL
TERMS

    28. (a)
"Landlord" as used in this Lease shall include the undersigned, its heirs,
representatives, assigns and successors in title to the Premises. "Agent" as
used in this Lease shall mean the party designated as same in Paragraph 3, its
heirs, representatives, assigns and successors. "Tenant" shall include the
undersigned and its heirs, representatives, assigns and successors, and if this
Lease shall be validly assigned or sublet, shall include also Tenant's assignees
or sublessees as to the Premises covered by such assignment or sublease.
"Landlord", "Tenant", and "Agent" include male and female, singular and plural,
corporation, partnership or individual, as may fit the particular
parties.

     

        (b) No
failure of Landlord to exercise any power given Landlord hereunder or to insist
upon strict compliance by Tenant of its obligations hereunder and no custom or
practice of the parties at variance with the terms hereof shall constitute a
waiver of Landlord's right to demand exact compliance with the terms hereof. All
rights, powers and privileges conferred hereunder upon parties hereto shall be
cumulative and not restrictive of those given by law.

     

        (c) Time
is of the essence in this Lease.

     

        (d) This
Lease constitutes the sole and entire agreement among the parties hereto and no
modification of this Lease shall be binding unless in writing and signed by all
parties hereto.

     

        (e) Each
signatory to this Lease represents and warrants that he or she has full
authority to sign this Lease and such instruments as may be necessary to
effectuate any transaction contemplated by this Lease on behalf of the party for
whom he or she signs and that his or her signature binds such
party.

     

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

     

     

        (f) Upon
request by either Landlord or Tenant, the parties hereto shall execute a short
form lease (memorandum of lease) in recordable form, setting forth such
provisions hereof (other than the amount of annual rental and other sums due) as
either party may wish to incorporate. The cost of recording such memorandum of
lease shall be borne by the party requesting execution of same.

     

    SPECIAL
STIPULATIONS 

    o If this box
is checked, additional terms of this Lease are set forth on Exhibit C attached
hereto and incorporated herein by reference. (Note: Under North
Carolina law, real estate agents are not permitted to draft lease
provisions.)

     

    THIS
DOCUMENT IS A LEGAL DOCUMENT. EXECUTION OF THIS DOCUMENT HAS LEGAL CONSEQUENCES
THAT COULD BE ENFORCEABLE IN A COURT OF LAW. THE NORTH CAROLINA ASSOCIATION OF
REALTORS® MAKES NO REPRESENTATIONS CONCERNING THE LEGAL SUFFICIENCY, LEGAL
EFFECT OR TAX CONSEQUENCES OF THIS DOCUMENT OR THE TRANSACTION TO WHICH IT
RELATES AND RECOMMENDS THAT YOU CONSULT YOUR ATTORNEY.

     

    IN WITNESS WHEREOF, the
parties hereto have hereunto caused this Lease to be duly executed.

     

    LANDLORD:

     

    Individual

     

    

    
      	
              LANDLORD

            	 
      	
              (SEAL)

            
	
              Fran
      Baltmiskis

            	 
      

    

     

    
    

     

    
      	Date: 	 	 	 
	Business
      Entity	 	 	 
	n/a	 	 	 
	
              (Name of
      Firm)

            	 	 	 

    

    
       

      
        	By:	(SEAL)	 	 
	Title: n/a	 	 	 
	Date. n/a	 	 	 

      

       

    

     

    Business

    

       

      
        	      
                ANCHOR
      FUNDING SERVICES, INC.

              	 	 	 
	TENTAN: /s/ Brad
      Bernstein	 	 	 
	President for Anchor
      Funding Services, Inc	(SEAL)	 	 
	By: Anchor Funding
      Services, Inc	 	 	 

      

       

       

      
         

        
          	Date: 	 	 	 
	Business
      Entity	 	 	 
	n/a	 	 	 
	
                  (Name of
      Firm)

                	 	 	 

        

        
           

          
            
               

              
                	By:	(SEAL)	 	 
	Title: n/a	 	 	 
	Date. n/aex41.htm

    Exhibit 4.1

    
 

    SECURITIES
PURCHASE AGREEMENT

     

    

     

    SECURITIES
PURCHASE AGREEMENT (this “Agreement”), dated as of May
__, 2008, by and among Bonanza Oil & Gas, Inc., a Nevada corporation, with
headquarters located at 3000 Richmond Avenue, Suite 400, Houston
Texas  77098 (the “Company”), and each of the
purchasers set forth on the signature pages hereto (the “Buyers”).

     

    WHEREAS:

     

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

     

    B. Buyers
desire to purchase and the Company desires to issue and sell, upon the terms and
conditions set forth in this Agreement (i) 8% convertible notes of the Company,
in the form attached hereto as Exhibit “A”, in the aggregate
principal amount of up to Seven  Hundred Fifty Thousand Dollars
($750,000) (the “Notes”), initially convertible
into 1,500,000 shares of common stock, par value $.001 per share, of the Company
(the “Common Stock”),
upon the terms and subject to the limitations, conditions and adjustments set
forth in such Notes; (ii) warrants to purchase 200,000 shares of Common Stock
(the “Warrants”) for
every $100,000 invested (the “Warrants”) of which half of
the Warrants shall be exercisable at $0.75 (the “Series A Warrants”) and
half  shall be exercisable at $1.00 (the “Series B Warrants”); (iii)
50,000 shares of Common Stock (the “Shares”) for every $100,000
invested; and

     

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

     

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

     

    1. PURCHASE
AND SALE OF NOTES AND WARRANTS.

     

    a. Purchase
of Notes, Warrants and Shares.  On the Closing Date (as defined
below), the Company shall issue and sell to each Buyer and each Buyer severally
agrees to purchase from the Company such principal amount of Notes and number of
Warrants as is set forth immediately below such Buyer’s name on the signature
pages hereto, which will represent up to aggregate Seven  Hundred
Fifty Thousand Dollars ($750,000) principal amount of Notes, Series A Warrants
to purchase an aggregate of up to 750,000 shares of Common Stock, Series B
Warrants to purchase an aggregate of up to 750,000 shares of Common Stock and an
aggregate of up to 375,000 Shares.

     

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

     

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

     

    c. Closing
Date.  Subject to the satisfaction (or written waiver) of the
conditions thereto set forth in Section 6 and Section 7 below, the date and time
of the issuance and sale of the Notes, the Warrants and the Shares pursuant to
this Agreement (the “Closing
Date”) shall be 12:00 noon, Eastern Standard Time on May __, 2008 or such
other mutually agreed upon time.  The closing of the transactions
contemplated by this Agreement (the “Closing”) shall occur on the
Closing Date at such location as may be agreed to by the parties.  In
addition, if the full amount of the Purchase Price is not funded on the Closing
Date, subsequent Buyers and the Company may set additional Closing Dates until
the full Purchase Price is reached.

     

    2. BUYERS’
REPRESENTATIONS AND WARRANTIES.  Each Buyer severally (and not
jointly) represents and warrants to the Company solely as to such Buyer
that:

     

    a. Investment
Purpose.  As of the date hereof, the Buyer is purchasing the
Notes and the shares of Common Stock issuable upon conversion of or otherwise
pursuant to the Notes  pursuant to this Agreement, such shares of
Common Stock being collectively referred to herein as the “Conversion Shares”), the
Warrants and the shares of Common Stock issuable upon exercise thereof (the
“Warrant Shares”) and
the Shares (collectively with the Notes, Warrants, Conversion Shares, Warrant
Shares and the Shares are hereinafter referred to as the “Securities”) for its own
account and not with a present view towards the public sale or distribution
thereof, except pursuant to sales registered or exempted from registration under
the 1933 Act; provided, however, that by
making the representations herein, the Buyer does not agree to hold any of the
Securities for any minimum or other specific term and reserves the right to
dispose of the Securities at any time in accordance with or pursuant to a
registration statement or an exemption under the 1933 Act.

     

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

     

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

     

    d. Information.  The
Buyer and its advisors, if any, have been furnished with all materials relating
to the business, finances and operations of the Company and materials relating
to the offer and sale of the Securities which have been requested by the Buyer
or its advisors.  The Buyer and its advisors, if any, have been
afforded the opportunity to ask questions of the Company.  The Buyer
understands that its investment in the Securities involves a significant degree
of risk.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

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

     

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

     

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

     

    “The
securities represented by this certificate have not been registered under the
Securities Act of 1933, as amended.  The securities may not be sold,
transferred or assigned in the absence of an effective registration statement
for the securities under said Act, or an opinion of counsel, in form, substance
and scope customary for opinions of counsel in comparable transactions, that
registration is not required under said Act or unless sold pursuant to Rule 144
or Regulation S under said Act.”

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    The
legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of any Security upon which it is
stamped, if, unless otherwise required by applicable state securities laws, (a)
such security is registered for sale under an effective registration statement
filed under the 1933 Act or otherwise may be sold pursuant to Rule 144 or
Regulation S without any restriction as to the number of securities as of a
particular date that can then be immediately sold, or (b) such holder provides
the Company with an opinion of counsel, in form, substance and scope customary
for opinions of counsel in comparable transactions, to the effect that a public
sale or transfer of such Security may be made without registration under the
1933 Act, which opinion shall be accepted by the Company so that the sale or
transfer is effected or (c) such holder provides the Company with reasonable
assurances that such Security can be sold pursuant to Rule 144 or Regulation
S.  The Buyer agrees to sell all Securities, including those
represented by a certificate(s) from which the legend has been removed, in
compliance with applicable prospectus delivery requirements, if
any.

     

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

     

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

     

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

     

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

     

    b. Authorization;
Enforcement.  (i) The Company has all requisite corporate power
and authority to enter into and perform this Agreement, the Notes and the
Warrants and to consummate the transactions contemplated hereby and thereby and
to issue the Securities, in accordance with the terms hereof and thereof, (ii)
the execution and delivery of this Agreement, the Notes and the Warrants by the
Company and the consummation by it of the transactions contemplated hereby and
thereby (including without limitation, the issuance of the Notes and the
Warrants and the issuance and reservation for issuance of the Conversion Shares
and Warrant Shares issuable upon conversion or exercise thereof) have been duly
authorized by the Company’s Board of Directors (iii) this Agreement has been
duly executed and delivered by the Company by its authorized representative, and
such authorized representative is the true and official representative with
authority to sign this Agreement and the other documents executed in connection
herewith and bind the Company accordingly, and (iv) this Agreement constitutes,
and upon execution and delivery by the Company of the Notes and the Warrants,
each of such instruments will constitute, a legal, valid and binding obligation
of the Company enforceable against the Company in accordance with its
terms.

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    c. Capitalization.  As
of the date hereof, the authorized capital stock of the Company consists of (i)
60,000,000 shares of Common Stock, of which 25,809,654 shares are issued and
outstanding and (ii) 15,000,000 shares of preferred stock, of which no shares
are issued and outstanding.  All of such outstanding shares of capital
stock are, or upon issuance will be, duly authorized, validly issued, fully paid
and nonassessable.  No shares of capital stock of the Company are
subject to preemptive rights or any other similar rights of the shareholders of
the Company or any liens or encumbrances imposed through the actions or failure
to act of the Company.  Except as disclosed in the SEC Documents, as
of the effective date of this Agreement, (i) there are no outstanding options,
warrants, scrip, rights to subscribe for, puts, calls, rights of first refusal,
agreements, understandings, claims or other commitments or rights of any
character whatsoever relating to, or securities or rights convertible into or
exchangeable for any shares of capital stock of the Company or any of its
Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is
or may become bound to issue additional shares of capital stock of the Company
or any of its Subsidiaries, (ii) there are no agreements or arrangements under
which the Company or any of its Subsidiaries is obligated to register the sale
of any of its or their securities under the 1933 Act  and (iii) there
are no anti-dilution or price adjustment provisions contained in any security
issued by the Company (or in any agreement providing rights to security holders)
that will be triggered by the issuance of the Securities.  The Company
has furnished to the Buyer true and correct copies of the Company’s Articles of
Incorporation as in effect on the date hereof (“Articles of Incorporation”),
the Company’s By-laws, as in effect on the date hereof (the “By-laws”), and the terms of
all securities convertible into or exercisable for Common Stock of the Company
and the material rights of the holders thereof in respect thereto.

     

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

     

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

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    f. No
Conflicts.  The execution, delivery and performance of this
Agreement, the Notes and the Warrants by the Company and the consummation by the
Company of the transactions contemplated hereby and thereby (including, without
limitation, the issuance and reservation for issuance of the Conversion Shares
and Warrant Shares) will not (i) conflict with or result in a violation of any
provision of the Articles of Incorporation or By-laws or (ii) violate or
conflict with, or result in a breach of any provision of, or constitute a
default (or an event which with notice or lapse of time or both could become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture, patent, patent
license or instrument to which the Company or any of its Subsidiaries is a
party, or (iii)  result in a violation of any law, rule, regulation,
order, judgment or decree (including federal and state securities laws and
regulations and regulations of any self-regulatory organizations to which the
Company or its securities are subject) applicable to the Company or any of its
Subsidiaries or by which any property or asset of the Company or any of its
Subsidiaries is bound or affected (except for such conflicts, defaults,
terminations, amendments, accelerations, cancellations and violations as would
not, individually or in the aggregate, have a Material Adverse
Effect).

     

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

     

    h. Absence
of Certain Changes.  Since December 31, 2007, there has been no
material adverse change and no material adverse development in the assets,
liabilities, business, properties, operations, financial condition, results of
operations or prospects of the Company or any of its Subsidiaries.

     

    i. Absence
of Litigation.  There is no action, suit, claim, proceeding,
inquiry or investigation before or by any court, public board, government
agency, self-regulatory organization or body pending or, to the knowledge of the
Company or any of its Subsidiaries, threatened against or affecting the Company
or any of its Subsidiaries, or their officers or directors in their capacity as
such, that could have a Material Adverse Effect.  The Company and its
Subsidiaries are unaware of any facts or circumstances which might give rise to
any of the foregoing.

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

    j. Patents,
Copyrights, etc.    The Company and each of its
Subsidiaries owns or possesses the requisite licenses or rights to use all
patents, patent applications, patent rights, inventions, know-how, trade
secrets, trademarks, trademark applications, service marks, service names, trade
names and copyrights (“Intellectual Property”)
necessary to enable it to conduct its business as now operated.  The
Company and each of its Subsidiaries have taken reasonable security measures to
protect the secrecy, confidentiality and value of their Intellectual
Property.

     

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

     

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

     

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

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

     

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

     

    o. Acknowledgment
Regarding Buyers’ Purchase of Securities.  The Company
acknowledges and agrees that the Buyers are acting solely in the capacity of
arm’s length purchasers with respect to this Agreement and the transactions
contemplated hereby.  The Company further acknowledges that no Buyer
is acting as a financial advisor or fiduciary of the Company (or in any similar
capacity) with respect to this Agreement and the transactions contemplated
hereby and any statement made by any Buyer or any of their respective
representatives or agents in connection with this Agreement and the transactions
contemplated hereby is not advice or a recommendation and is merely incidental
to the Buyers’ purchase of the Securities.  The Company further
represents to each Buyer that the Company’s decision to enter into this
Agreement has been based solely on the independent evaluation of the Company and
its representatives.

     

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

     

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

     

    r. Permits;
Compliance.  The Company and each of its Subsidiaries is in
possession of all franchises, grants, authorizations, licenses, permits,
easements, variances, exemptions, consents, certificates, approvals and orders
necessary to own, lease and operate its properties and to carry on its business
as it is now being conducted (collectively, the “Company Permits”), and there
is no action pending or, to the knowledge of the Company, threatened regarding
suspension or cancellation of any of the Company Permits.  Neither the
Company nor any of its Subsidiaries is in conflict with, or in default or
violation of, any of the Company Permits, except for any such conflicts,
defaults or violations which, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect.  Since June
30, 2007, neither the Company nor any of its Subsidiaries has received any
notification with respect to possible conflicts, defaults or violations of
applicable laws, except for notices relating to possible conflicts, defaults or
violations, which conflicts, defaults or violations would not have a Material
Adverse Effect.

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

     

    s. Environmental
Matters.

     

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

     

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

     

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

     

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

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

     

    u. Insurance.  The
Company and each of its Subsidiaries are insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts as
management of the Company believes to be prudent and customary in the businesses
in which the Company and its Subsidiaries are engaged.

     

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

     

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

     

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

     

    4. COVENANTS.

     

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

     

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

     

    c. Reporting
Status.  The Company’s
Common Stock is registered under Section 12(g) of the 1934 Act.  So
long as the Buyer beneficially owns any of the Securities, the Company shall
timely file all reports required to be filed with the SEC pursuant to the 1934
Act, and the Company shall not terminate its status as an issuer required to
file reports under the 1934 Act even if the 1934 Act or the rules and
regulations thereunder would permit such termination.

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

    d. Use of
Proceeds.  The Company shall use the proceeds from the sale of
the Securities in the manner set forth in Schedule 4(d) attached hereto
and made a part hereof and shall not, directly or indirectly, use such proceeds
for any loan to or investment in any other corporation, partnership, enterprise
or other person (except in connection with its currently existing direct or
indirect Subsidiaries).

     

    e. Authorization
and Reservation of Shares.  The Company shall at all times have
authorized, and reserved for the purpose of issuance, a sufficient number of
shares of Common Stock to provide for the full conversion or exercise of the
outstanding Notes and Warrants and issuance of the Conversion Shares and Warrant
Shares in connection therewith (based on the Conversion Price of the Notes or
Exercise Price of the Warrants) and as otherwise required by the
Notes.  The Company shall not reduce the number of shares of Common
Stock reserved for issuance upon conversion of Notes and exercise of the
Warrants without the consent of each Buyer.

     

    f. Listing.  The
Company shall promptly secure the listing of the Conversion Shares and Warrant
Shares upon each national securities exchange or automated quotation system, if
any, upon which shares of Common Stock are then listed (subject to official
notice of issuance) and, so long as any Buyer owns any of the Securities, shall
maintain, so long as any other shares of Common Stock shall be so listed, such
listing of all Conversion Shares and Warrant Shares from time to time issuable
upon conversion of the Notes or exercise of the Warrants.  The Company
will obtain and, so long as any Buyer owns any of the Securities, maintain the
listing and trading of its Common Stock on the Over the Counter Bulletin Board
(“OTCBB”).

     

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

     

    

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

     

    I. Secured
Interest.  In the event that the Company grants a secured
interest in its lease interests or properties in connection with any future
financing, then the Buyer(s) will be entitled to a pari passu interest in such
secured interest with any such investors.  The Company will undertake
to have all required liens filed with the appropriate office to protect the
Buyer(s) secured interest.

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

     

    5. [INTENTIONALLY
LEFT BLANK].

     

    6. CONDITIONS
TO THE COMPANY’S OBLIGATION TO SELL.  The obligation of the
Company hereunder to issue and sell the Notes, Warrants and the Shares to a
Buyer at the Closing is subject to the satisfaction, at or before the Closing
Date of each of the following conditions thereto, provided that these conditions
are for the Company’s sole benefit and may be waived by the Company at any time
in its sole discretion:

     

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

     

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

     

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

     

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

     

    7. CONDITIONS
TO EACH BUYER’S OBLIGATION TO PURCHASE.  The obligation of each
Buyer hereunder to purchase the Notes, Warrants and the Shares at the Closing is
subject to the satisfaction, at or before the Closing Date of each of the
following conditions, provided that these conditions are for such Buyer’s sole
benefit and may be waived by such Buyer at any time in its sole
discretion:

     

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

     

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

     

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

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

     

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

     

    e. No event
shall have occurred which could reasonably be expected to have a Material
Adverse Effect on the Company.

     

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

     

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

     

    8. GOVERNING
LAW; MISCELLANEOUS.

     

    a. Governing
Law.  THIS AGREEMENT SHALL BE ENFORCED, GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD
TO THE PRINCIPLES OF CONFLICT OF LAWS.  THE PARTIES HERETO HEREBY
SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE UNITED STATES FEDERAL COURTS LOCATED
IN NEW YORK, NEW YORK WITH RESPECT TO ANY DISPUTE ARISING UNDER THIS AGREEMENT,
THE AGREEMENTS ENTERED INTO IN CONNECTION HEREWITH OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY. BOTH PARTIES IRREVOCABLY WAIVE THE DEFENSE OF AN
INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH SUIT OR
PROCEEDING.  BOTH PARTIES FURTHER AGREE THAT SERVICE OF PROCESS UPON A
PARTY MAILED BY FIRST CLASS MAIL SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE
SERVICE OF PROCESS UPON THE PARTY IN ANY SUCH SUIT OR
PROCEEDING.  NOTHING HEREIN SHALL AFFECT EITHER PARTY’S RIGHT TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.  BOTH PARTIES AGREE THAT
A FINAL NON-APPEALABLE JUDGMENT IN ANY SUCH SUIT OR PROCEEDING SHALL BE
CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON SUCH JUDGMENT
OR IN ANY OTHER LAWFUL MANNER.  THE PARTY WHICH DOES NOT PREVAIL IN
ANY DISPUTE ARISING UNDER THIS AGREEMENT SHALL BE RESPONSIBLE FOR ALL FEES AND
EXPENSES, INCLUDING ATTORNEYS’ FEES, INCURRED BY THE PREVAILING PARTY IN
CONNECTION WITH SUCH DISPUTE.

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

     

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

     

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

     

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

     

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

     

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

     

    If to the
Company:

    

    Bonanza
Oil & Gas, Inc.

    3000
Richmond Avenue, Suite 400

    Houston,
TX 77098

    Attention:  Chief
Executive Officer

    Telephone:  (713)
333-5808

    Facsimile:   (713)333-5928

     

    With a
copy to:

    

    Law
Offices of Stephen M. Fleming PLLC

    403
Merrick Avenue, 2nd
Floor

    East
Meadow, New York 11554

    Attention:  Stephen
M. Fleming, Esq.

    Telephone:  (516)
833-5034

    Facsimile:   (516)
977-1209

    

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

    

    If to a
Buyer:  To the address set forth immediately below such Buyer’s name
on the signature pages hereto.  Each party shall provide notice to the
other party of any change in address.

     

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

     

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

     

    i. Survival.  The
representations and warranties of the Company and the agreements and covenants
set forth in Sections 3 and 4 shall survive the closing hereunder
notwithstanding any due diligence investigation conducted by or on behalf of the
Buyers for a period of 12 months following the Closing Date.  The
Company agrees to indemnify and hold harmless each of the Buyers and all their
officers, directors, employees and agents for loss or damage arising as a result
of or related to any breach or alleged breach by the Company of any of its
representations, warranties and covenants set forth in Sections 3 and 4 hereof
or any of its covenants and obligations under this Agreement, including
advancement of expenses as they are incurred.

     

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

     

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

     

    

    [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

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

     

    

    

    BONANZA
OIL & GAS, INC.

    

    

    By:________________________________

    William
Wiseman

    Chief
Executive Officer

    

    [BUYER(S)
SIGNATURE PAGES FOLLOW]

    

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

    

    ________________________

    

    

    By:______________________________________

    Name:

    Title:

    

    

    RESIDENCE:

    

    ADDRESS:

    

    

    Facsimile:  (   )    -

    Telephone:  (   )    -

    

    AGGREGATE
SUBSCRIPTION AMOUNT:

    
 

    
      
        	
                Aggregate
      Principal Amount of Notes:

              	 	$	,000	 
	
                Number
      of Series A Warrants:

              	 	 	 	 
	
                Number
      of Series B Warrants:

              	 	 	 	 
	
                Number
      of Shares

              	 	 	 	 
	
                Aggregate
      Purchase Price:

              	 	$	,000	 

      

    

     

    

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

    

    

    

    Schedule
4(d) – Use of Proceeds

    

    
      	
              Development
      of property and drilling

            	 	$	410,000	 
	
              Lease
      acquisition

            	 	$	150,000	 
	
              SG&A

            	 	$	190,000	 
	 
      	 	 	 	 
	
              Total

            	 	$	750,000	 

    

    

    

     

     

     

     

     

     

     

     

     

     

     

     

    18

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