Document:

Exhibit
      10.2

    

    REGISTRATION
      RIGHTS AGREEMENT

    

    REGISTRATION
      RIGHTS AGREEMENT
      (this
      "Agreement"),
      dated
      as of July 15, 2008, by and between UBID.COM
      HOLDINGS, INC., a
      Delaware corporation, (the "Company"),
      and
FUSION
      CAPITAL FUND II, LLC, an
      Illinois limited liability company (together with it permitted assigns, the
      “Buyer”).
      Capitalized terms used herein and not otherwise defined herein shall have the
      respective meanings set forth in the Common Stock Purchase Agreement by and
      between the parties hereto, dated as of the date hereof (as amended, restated,
      supplemented or otherwise modified from time to time, the "Purchase
      Agreement").

    

    WHEREAS:

    

    A. The
      Company has agreed, upon the terms and subject to the conditions of the Purchase
      Agreement, to issue to the Buyer (i) up to Ten Million Dollars ($10,000,000)
      of
      the Company's common stock, par value $0.001 per share (the "Common
      Stock")
      (the
      "Purchase
      Shares"),
      and
      (ii) such number of shares of Common Stock as is required pursuant to Section
      4(e) of the Purchase Agreement (the "Commitment
      Shares");
      and

    

    B. To
      induce
      the Buyer to enter into the Purchase Agreement, the Company has agreed to
      provide certain registration rights under the Securities Act of 1933, as
      amended, and the rules and regulations thereunder, or any similar successor
      statute (collectively, the "1933
      Act"),
      and
      applicable state securities laws.

    

    NOW,
      THEREFORE,
      in
      consideration of the premises and the mutual covenants contained herein and
      other good and valuable consideration, the receipt and sufficiency of which
      are
      hereby acknowledged,
      the Company and the Buyer hereby agree as follows:

    

    1. DEFINITIONS.

    

    As
      used
      in this Agreement, the following terms shall have the following
      meanings:

    

    a. "Investor"
      means
      the Buyer, any transferee or assignee thereof to whom a Buyer assigns its rights
      under this Agreement and who agrees to become bound by the provisions of this
      Agreement in accordance with Section 9 and any transferee or assignee thereof
      to
      whom a transferee or assignee assigns its rights under this Agreement and who
      agrees to become bound by the provisions of this Agreement in accordance with
      Section 9.

    

    b. "Person"
      means
      any person or entity including any corporation, a limited liability company,
      an
      association, a partnership, an organization, a business, an individual, a
      governmental or political subdivision thereof or a governmental
      agency.

    

    c. "Register,"
      "registered,"
      and
      "registration"
      refer
      to a registration effected by preparing and filing one or more registration
      statements of the Company in compliance with the 1933 Act and pursuant to Rule
      415 under the 1933 Act or any successor rule providing for offering securities
      on a continuous basis ("Rule
      415"),
      and
      the declaration or ordering of effectiveness of such registration statement(s)
      by the United States Securities and Exchange Commission (the "SEC").

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    d. "Registrable
      Securities"
      means
      the Purchase Shares which have been, or which may from time to time be, issued
      or issuable upon purchases of the Available Amount under the Purchase Agreement
      (without regard to any limitation or restriction on purchases) and the
      Commitment Shares issued or issuable to the Investor and any shares of capital
      stock issued or issuable with respect to the Purchase Shares, the Commitment
      Shares,
      or
      the
      Purchase Agreement as a result of any stock split, stock dividend,
      recapitalization, exchange or similar event or otherwise, without regard to
      any
      limitation on purchases under the Purchase Agreement.

    

    e. "Registration
      Statement"
      means
      the registration statement of the Company covering only the sale of the
      Registrable Securities.

    

    2. REGISTRATION.

    

    a. Mandatory
      Registration.
      The
      Company shall within twenty (20) Business Days from the date hereof file with
      the SEC the Registration Statement. The Registration Statement shall register
      only the Registrable Securities and no other securities of the Company. The
      Investor and its counsel shall have a reasonable opportunity to review and
      comment upon such registration statement or amendment to such registration
      statement and any related prospectus prior to its filing with the SEC. Investor
      shall furnish all information reasonably requested by the Company for inclusion
      therein. The Company shall use its best efforts to have the Registration
      Statement or amendment declared effective by the SEC at the earliest possible
      date. The Company shall use reasonable best efforts to keep the Registration
      Statement effective pursuant to Rule 415 promulgated under the 1933 Act and
      available for sales of all of the Registrable Securities at all times until
      the
      earlier of (i) the date as of which the Investor may sell all of the Registrable
      Securities without restriction pursuant to Rule 144(k) promulgated under the
      1933 Act (or successor thereto) or (ii) the date on which (A) the Investor
      shall
      have sold all the Registrable Securities and no Available Amount remains under
      the Purchase Agreement (the "Registration
      Period").
      The
      Registration Statement (including any amendments or supplements thereto and
      prospectuses contained therein) shall not contain any untrue statement of a
      material fact or omit to state a material fact required to be stated therein,
      or
      necessary to make the statements therein, in light of the circumstances in
      which
      they were made, not misleading.

    

    b. Rule
      424 Prospectus.
      The
      Company shall, as required by applicable securities regulations, from time
      to
      time file with the SEC, pursuant to Rule 424 promulgated under the 1933 Act,
      the
      prospectus and prospectus supplements, if any, to be used in connection with
      sales of the Registrable Securities under the Registration Statement. The
      Investor and its counsel shall have a reasonable opportunity to review and
      comment upon such prospectus prior to its filing with the SEC. The Investor
      shall use its reasonable best efforts to comment upon such prospectus within
      one
      (1) Business Day from the date the Investor receives the final version of such
      prospectus. 

    

    c. Sufficient
      Number of Shares Registered.
      In the
      event the number of shares available under the Registration Statement is
      insufficient to cover all of the Registrable Securities, the Company shall
      amend
      the Registration Statement or file a new registration statement (a ”New
      Registration Statement”),
      so as
      to cover all of such Registrable Securities as soon as practicable, but in
      any
      event not later than ten (10) Business Days after the necessity therefor arises.
      The Company shall use it reasonable best efforts to cause such amendment and/or
      New Registration Statement to become effective as soon as practicable following
      the filing thereof. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    3. RELATED
      OBLIGATIONS.

    

    With
      respect to the Registration Statement and whenever any Registrable Securities
      are to be registered pursuant to Section 2(b) including on any New Registration
      Statement, the Company shall use its reasonable best efforts to effect the
      registration of the Registrable Securities in accordance with the intended
      method of disposition thereof and, pursuant thereto, the Company shall have
      the
      following obligations:

    

    a. The
      Company shall prepare and file with the SEC such amendments (including
      post-effective amendments) and supplements to any registration statement and
      the
      prospectus used in connection with such registration statement, which prospectus
      is to be filed pursuant to Rule 424 promulgated under the 1933 Act, as may
      be
      necessary to keep the Registration Statement or any New Registration Statement
      effective at all times during the Registration Period, and, during such period,
      comply with the provisions of the 1933 Act with respect to the disposition
      of
      all Registrable Securities of the Company covered by the Registration Statement
      or any New Registration Statement until such time as all of such Registrable
      Securities shall have been disposed of in accordance with the intended methods
      of disposition by the seller or sellers thereof as set forth in such
      registration statement.

    

    b. The
      Company shall permit the Investor to review and comment upon the Registration
      Statement or any New Registration Statement and all amendments and supplements
      thereto at least two (2) Business Days prior to their filing with the SEC,
      and
      not file any document in a form to which Investor reasonably objects. The
      Investor shall use its reasonable best efforts to comment upon the Registration
      Statement or any New Registration Statement and any amendments or supplements
      thereto within two (2) Business Days from the date the Investor receives the
      final version thereof. The Company shall furnish to the Investor, without charge
      any correspondence from the SEC or the staff of the SEC to the Company or its
      representatives relating to the Registration Statement or any New Registration
      Statement.

    

    c. Upon
      request of the Investor, the Company shall furnish to the Investor, (i) promptly
      after the same is prepared and filed with the SEC, at least one copy of such
      registration statement and any amendment(s) thereto, including financial
      statements and schedules, all documents incorporated therein by reference and
      all exhibits, (ii) upon the effectiveness of any registration statement, a
      copy
      of the prospectus included in such registration statement and all amendments
      and
      supplements thereto (or such other number of copies as the Investor may
      reasonably request) and (iii) such other documents, including copies of any
      preliminary or final prospectus, as the Investor may reasonably request from
      time to time in order to facilitate the disposition of the Registrable
      Securities owned by the Investor.

    

    d. The
      Company shall use reasonable best efforts to (i) register and qualify the
      Registrable Securities covered by a registration statement under such other
      securities or "blue sky" laws of such jurisdictions in the United States as
      the
      Investor reasonably requests, (ii) prepare and file in those jurisdictions,
      such
      amendments (including post-effective amendments) and supplements to such
      registrations and qualifications as may be necessary to maintain the
      effectiveness thereof during the Registration Period, (iii) take such other
      actions as may be necessary to maintain such registrations and qualifications
      in
      effect at all times during the Registration Period, and (iv) take all other
      actions reasonably necessary or advisable to qualify the Registrable Securities
      for sale in such jurisdictions; provided, however, that the Company shall not
      be
      required in connection therewith or as a condition thereto to (x) qualify to
      do
      business in any jurisdiction where it would not otherwise be required to qualify
      but for this Section 3(d), (y) subject itself to general taxation in any such
      jurisdiction, or (z) file a general consent to service of process in any such
      jurisdiction. The Company shall promptly notify the Investor who holds
      Registrable Securities of the receipt by the Company of any notification with
      respect to the suspension of the registration or qualification of any of the
      Registrable Securities for sale under the securities or "blue sky" laws of
      any
      jurisdiction in the United States or its receipt of actual notice of the
      initiation or threatening of any proceeding for such purpose.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    e. As
      promptly as practicable after becoming aware of such event or facts, the Company
      shall notify the Investor in writing of the happening of any event or existence
      of such facts as a result of which the prospectus included in any registration
      statement, as then in effect, includes an untrue statement of a material fact
      or
      omits to state a material fact required to be stated therein or necessary to
      make the statements therein, in light of the circumstances under which they
      were
      made, not misleading, and promptly prepare a supplement or amendment to such
      registration statement to correct such untrue statement or omission, and deliver
      a copy of such supplement or amendment to the Investor (or such other number
      of
      copies as the Investor may reasonably request). The Company shall also promptly
      notify the Investor in writing (i) when a prospectus or any prospectus
      supplement or post-effective amendment has been filed, and when a registration
      statement or any post-effective amendment has become effective (notification
      of
      such effectiveness shall be delivered to the Investor by facsimile on the same
      day of such effectiveness and by overnight mail), (ii) of any request by the
      SEC
      for amendments or supplements to any registration statement or related
      prospectus or related information, and (iii) of the Company's reasonable
      determination that a post-effective amendment to a registration statement would
      be appropriate.

    

    f. The
      Company shall use its reasonable best efforts to prevent the issuance of any
      stop order or other suspension of effectiveness of any registration statement,
      or the suspension of the qualification of any Registrable Securities for sale
      in
      any jurisdiction and, if such an order or suspension is issued, to obtain the
      withdrawal of such order or suspension at the earliest possible moment and
      to
      notify the Investor of the issuance of such order and the resolution thereof
      or
      its receipt of actual notice of the initiation or threat of any proceeding
      for
      such purpose.

    

    g. The
      Company shall (i) cause all the Registrable Securities to be listed on each
      securities exchange on which securities of the same class or series issued
      by
      the Company are then listed, if any, if the listing of such Registrable
      Securities is then permitted under the rules of such exchange, or (ii) secure
      designation and quotation of all the Registrable Securities on the Principal
      Market. The Company shall pay all fees and expenses in connection with
      satisfying its obligation under this Section.

    

    h. The
      Company shall cooperate with the Investor to facilitate the timely preparation
      and delivery of certificates (not bearing any restrictive legend) representing
      the Registrable Securities to be offered pursuant to any registration statement
      and enable such certificates to be in such denominations or amounts as the
      Investor may reasonably request and registered in such names as the Investor
      may
      request.

    

    i. The
      Company shall at all times provide a transfer agent and registrar with respect
      to its Common Stock.

    

    j. If
      reasonably requested by the Investor, the Company shall (i) immediately
      incorporate in a prospectus supplement or post-effective amendment such
      information as the Investor believes should be included therein relating to
      the
      sale and distribution of Registrable Securities, including, without limitation,
      information with respect to the number of Registrable Securities being sold,
      the
      purchase price being paid therefor and any other terms of the offering of the
      Registrable Securities; (ii) make all required filings of such prospectus
      supplement or post-effective amendment as soon as notified of the matters to
      be
      incorporated in such prospectus supplement or post-effective amendment; and
      (iii) supplement or make amendments to any registration statement.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    k. The
      Company shall use its reasonable best efforts to cause the Registrable
      Securities covered by the any registration statement to be registered with
      or
      approved by such other governmental agencies or authorities as may be necessary
      to consummate the disposition of such Registrable Securities.

     

    l. Within
      one (1) Business Day after any registration statement which includes the
      Registrable Securities is ordered effective by the SEC, the Company shall
      deliver, and shall cause legal counsel for the Company to deliver, to the
      transfer agent for such Registrable Securities (with copies to the Investor)
      confirmation that such registration statement has been declared effective by
      the
      SEC in the form attached hereto as Exhibit
      A.
      Thereafter, if requested by the Buyer at any time, the Company shall require
      its
      counsel to deliver to the Buyer a written confirmation whether or not the
      effectiveness of such registration statement has lapsed at any time for any
      reason (including, without limitation, the issuance of a stop order) and whether
      or not the registration statement is current and available to the Buyer for
      sale
      of all of the Registrable Securities.

    

    m. The
      Company shall take all other reasonable actions necessary to expedite and
      facilitate disposition by the Investor of Registrable Securities pursuant to
      any
      registration statement.

    

    4. OBLIGATIONS
      OF THE INVESTOR.

    

    a. The
      Company shall notify the Investor in writing of the information the Company
      reasonably requires from the Investor in connection with any registration
      statement hereunder. The Investor shall furnish to the Company such information
      regarding itself, the Registrable Securities held by it and the intended method
      of disposition of the Registrable Securities held by it as shall be reasonably
      required to effect the registration of such Registrable Securities and shall
      execute such documents in connection with such registration as the Company
      may
      reasonably request.

    

    b. The
      Investor agrees to cooperate with the Company as reasonably requested by the
      Company in connection with the preparation and filing of any registration
      statement hereunder.

    

    c. The
      Investor agrees that, upon receipt of any notice from the Company of the
      happening of any event or existence of facts of the kind described in Section
      3(f) or the first sentence of 3(e), the Investor will immediately discontinue
      disposition of Registrable Securities pursuant to any registration statement(s)
      covering such Registrable Securities until the Investor's receipt of the copies
      of the supplemented or amended prospectus contemplated by Section 3(f) or the
      first sentence of 3(e). Notwithstanding anything to the contrary, the Company
      shall cause its transfer agent to promptly deliver shares of Common Stock
      without any restrictive legend in accordance with the terms of the Purchase
      Agreement in connection with any sale of Registrable Securities with respect
      to
      which an Investor has entered into a contract for sale prior to the Investor's
      receipt of a notice from the Company of the happening of any event of the kind
      described in Section 3(f) or the first sentence of 3(e) and for which the
      Investor has not yet settled.

    

    5. EXPENSES
      OF REGISTRATION.

    

    All
      reasonable expenses, other than sales or brokerage commissions, incurred in
      connection with registrations, filings or qualifications pursuant to Sections
      2
      and 3, including, without limitation, all registration, listing and
      qualifications fees, printers and accounting fees, and fees and disbursements
      of
      counsel for the Company, shall be paid by the Company.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    6. INDEMNIFICATION.

    

    a. To
      the
      fullest extent permitted by law, the Company will, and hereby does, indemnify,
      hold harmless and defend the Investor, each Person, if any, who controls the
      Investor, the members, the directors, officers, partners, employees, agents,
      representatives of the Investor and each Person, if any, who controls the
      Investor within the meaning of the 1933 Act or the Securities Exchange Act
      of
      1934, as amended (the "1934
      Act")
      (each,
      an "Indemnified
      Person"),
      against any losses, claims, damages, liabilities, judgments, fines, penalties,
      charges, costs, attorneys' fees, amounts paid in settlement or expenses, joint
      or several, (collectively, "Claims")
      incurred in investigating, preparing or defending any action, claim, suit,
      inquiry, proceeding, investigation or appeal taken from the foregoing by or
      before any court or governmental, administrative or other regulatory agency,
      body or the SEC, whether pending or threatened, whether or not an indemnified
      party is or may be a party thereto ("Indemnified
      Damages"),
      to
      which any of them may become subject insofar as such Claims (or actions or
      proceedings, whether commenced or threatened, in respect thereof) arise out
      of
      or are based upon: (i) any untrue statement or alleged untrue statement of
      a
      material fact in the Registration Statement, any New Registration Statement
      or
      any post-effective amendment thereto or in any filing made in connection with
      the qualification of the offering under the securities or other "blue sky"
      laws
      of any jurisdiction in which Registrable Securities are offered ("Blue
      Sky Filing"),
      or
      the omission or alleged omission to state a material fact required to be stated
      therein or necessary to make the statements therein not misleading, (ii) any
      untrue statement or alleged untrue statement of a material fact contained in
      the
      final prospectus (as amended or supplemented, if the Company files any amendment
      thereof or supplement thereto with the SEC) or the omission or alleged omission
      to state therein any material fact necessary to make the statements made
      therein, in light of the circumstances under which the statements therein were
      made, not misleading, (iii) any violation or alleged violation by the Company
      of
      the 1933 Act, the 1934 Act, any other law, including, without limitation, any
      state securities law, or any rule or regulation thereunder relating to the
      offer
      or sale of the Registrable Securities pursuant to the Registration Statement
      or
      any New Registration Statement or (iv) any material violation by the Company
      of
      this Agreement (the matters in the foregoing clauses (i) through (iv) being,
      collectively, "Violations").
      The
      Company shall reimburse each Indemnified Person promptly as such expenses are
      incurred and are due and payable, for any legal fees or other reasonable
      expenses incurred by them in connection with investigating or defending any
      such
      Claim. Notwithstanding anything to the contrary contained herein, the
      indemnification agreement contained in this Section 6(a): (i) shall not apply
      to
      a Claim by an Indemnified Person arising out of or based upon a Violation which
      occurs in reliance upon and in conformity with information furnished in writing
      to the Company by such Indemnified Person expressly for use in connection with
      the preparation of the Registration Statement, any New Registration Statement
      or
      any such amendment thereof or supplement thereto, if such prospectus was timely
      made available by the Company pursuant to Section 3(c) or Section 3(e); (ii)
      with respect to any superceded prospectus, shall not inure to the benefit of
      any
      such person from whom the person asserting any such Claim purchased the
      Registrable Securities that are the subject thereof (or to the benefit of any
      person controlling such person) if the untrue statement or omission of material
      fact contained in the superceded prospectus was corrected in the revised
      prospectus, as then amended or supplemented, if such revised prospectus was
      timely made available by the Company pursuant to Section 3(c) or Section 3(e),
      and the Indemnified Person was promptly advised in writing not to use the
      incorrect prospectus prior to the use giving rise to a violation and such
      Indemnified Person, notwithstanding such advice, used it; (iii) shall not be
      available to the extent such Claim is based on a failure of the Investor to
      deliver or to cause to be delivered the prospectus made available by the
      Company, if such prospectus was timely made available by the Company pursuant
      to
      Section 3(c) or Section 3(e); and (iv) shall not apply to amounts paid in
      settlement of any Claim if such settlement is effected without the prior written
      consent of the Company, which consent shall not be unreasonably withheld. Such
      indemnity shall remain in full force and effect regardless of any investigation
      made by or on behalf of the Indemnified Person and shall survive the transfer
      of
      the Registrable Securities by the Investor pursuant to Section 9.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    b. In
      connection with the Registration Statement or any New Registration Statement,
      the Investor agrees to severally and not jointly indemnify, hold harmless and
      defend, to the same extent and in the same manner as is set forth in Section
      6(a), the Company, each of its directors, each of its officers who signs the
      Registration Statement or any New Registration Statement, each Person, if any,
      who controls the Company within the meaning of the 1933 Act or the 1934 Act
      (collectively and together with an Indemnified Person, an "Indemnified
      Party"),
      against any Claim or Indemnified Damages to which any of them may become
      subject, under the 1933 Act, the 1934 Act or otherwise, insofar as such Claim
      or
      Indemnified Damages arise out of or are based upon any Violation, in each case
      to the extent, and only to the extent, that such Violation occurs in reliance
      upon and in conformity with written information about the Investor set forth
      on
Exhibit
      B
      attached
      hereto and furnished to the Company by the Investor expressly for use in
      connection with such registration statement; and, subject to Section 6(d),
      the
      Investor will reimburse any legal or other expenses reasonably incurred by
      them
      in connection with investigating or defending any such Claim; provided, however,
      that the indemnity agreement contained in this Section 6(b) and the agreement
      with respect to contribution contained in Section 7 shall not apply to amounts
      paid in settlement of any Claim if such settlement is effected without the
      prior
      written consent of the Investor, which consent shall not be unreasonably
      withheld; provided, further, however, that the Investor shall be liable under
      this Section 6(b) for only that amount of a Claim or Indemnified Damages as
      does
      not exceed the net proceeds to the Investor as a result of the sale of
      Registrable Securities pursuant to such registration statement. Such indemnity
      shall remain in full force and effect regardless of any investigation made
      by or
      on behalf of such Indemnified Party and shall survive the transfer of the
      Registrable Securities by the Investor pursuant to Section 9. 

    

    c. Promptly
      after receipt by an Indemnified Person or Indemnified Party under this Section
      6
      of notice of the commencement of any action or proceeding (including any
      governmental action or proceeding) involving a Claim, such Indemnified Person
      or
      Indemnified Party shall, if a Claim in respect thereof is to be made against
      any
      indemnifying party under this Section 6, deliver to the indemnifying party
      a
      written notice of the commencement thereof, and the indemnifying party shall
      have the right to participate in, and, to the extent the indemnifying party
      so
      desires, jointly with any other indemnifying party similarly noticed, to assume
      control of the defense thereof with counsel mutually satisfactory to the
      indemnifying party and the Indemnified Person or the Indemnified Party, as
      the
      case may be; provided, however, that an Indemnified Person or Indemnified Party
      shall have the right to retain its own counsel with the fees and expenses to
      be
      paid by the indemnifying party, if, in the reasonable opinion of counsel
      retained by the indemnifying party, the representation by such counsel of the
      Indemnified Person or Indemnified Party and the indemnifying party would be
      inappropriate due to actual or potential differing interests between such
      Indemnified Person or Indemnified Party and any other party represented by
      such
      counsel in such proceeding. The Indemnified Party or Indemnified Person shall
      cooperate fully with the indemnifying party in connection with any negotiation
      or defense of any such action or claim by the indemnifying party and shall
      furnish to the indemnifying party all information reasonably available to the
      Indemnified Party or Indemnified Person which relates to such action or claim.
      The indemnifying party shall keep the Indemnified Party or Indemnified Person
      fully apprised at all times as to the status of the defense or any settlement
      negotiations with respect thereto. No indemnifying party shall be liable for
      any
      settlement of any action, claim or proceeding effected without its written
      consent, provided, however, that the indemnifying party shall not unreasonably
      withhold, delay or condition its consent. No indemnifying party shall, without
      the consent of the Indemnified Party or Indemnified Person, consent to entry
      of
      any judgment or enter into any settlement or other compromise which does not
      include as an unconditional term thereof the giving by the claimant or plaintiff
      to such Indemnified Party or Indemnified Person of a release from all liability
      in respect to such claim or litigation. Following indemnification as provided
      for hereunder, the indemnifying party shall be subrogated to all rights of
      the
      Indemnified Party or Indemnified Person with respect to all third parties,
      firms
      or corporations relating to the matter for which indemnification has been made.
      The failure to deliver written notice to the indemnifying party within a
      reasonable time of the commencement of any such action shall not relieve such
      indemnifying party of any liability to the Indemnified Person or Indemnified
      Party under this Section 6, except to the extent that the indemnifying party
      is
      prejudiced in its ability to defend such action.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    d. The
      indemnification required by this Section 6 shall be made by periodic payments
      of
      the amount thereof during the course of the investigation or defense, as and
      when bills are received or Indemnified Damages are incurred.

    

    e. The
      indemnity agreements contained herein shall be in addition to (i) any cause
      of
      action or similar right of the Indemnified Party or Indemnified Person against
      the indemnifying party or others, and (ii) any liabilities the indemnifying
      party may be subject to pursuant to the law.

    

    7. CONTRIBUTION.

    

    To
      the
      extent any indemnification by an indemnifying party is prohibited or limited
      by
      law, the indemnifying party agrees to make the maximum contribution with respect
      to any amounts for which it would otherwise be liable under Section 6 to the
      fullest extent permitted by law; provided, however, that: (i) no seller of
      Registrable Securities guilty of fraudulent misrepresentation (within the
      meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution
      from
      any seller of Registrable Securities who was not guilty of fraudulent
      misrepresentation; and (ii) contribution by any seller of Registrable Securities
      shall be limited in amount to the net amount of proceeds received by such seller
      from the sale of such Registrable Securities.

    

    8. REPORTS
      AND DISCLOSURE UNDER THE SECURITIES ACTS.

    

    With
      a
      view to making available to the Investor the benefits of Rule 144 promulgated
      under the 1933 Act or any other similar rule or regulation of the SEC that
      may
      at any time permit the Investor to sell securities of the Company to the public
      without registration ("Rule
      144"),
      the
      Company agrees, at the Company’s sole expense, to:

    

    a. make
      and
      keep public information available, as those terms are understood and defined
      in
      Rule 144;

    

    b. file
      with
      the SEC in a timely manner all reports and other documents required of the
      Company under the 1933 Act and the 1934 Act so long as the Company remains
      subject to such requirements and the filing of such reports and other documents
      is required for the applicable provisions of Rule 144; and

    

    c. furnish
      to the Investor so long as the Investor owns Registrable Securities, promptly
      upon request, (i) a written statement by the Company that it has complied with
      the reporting and or disclosure provisions of Rule 144, the 1933 Act and the
      1934 Act, (ii) a copy of the most recent annual or quarterly report of the
      Company and such other reports and documents so filed by the Company, and (iii)
      such other information as may be reasonably requested to permit the Investor
      to
      sell such securities pursuant to Rule 144 without registration.

    

    d. take
      such
      additional action as is requested by the Investor to enable the Investor to
      sell
      the Registrable Securities pursuant to Rule 144, including, without limitation,
      delivering all such legal opinions, consents, certificates, resolutions and
      instructions to the Company’s Transfer Agent as may be requested from time to
      time by the Investor and otherwise fully cooperate with Investor and Investor’s
      broker to effect such sale of securities pursuant to Rule 144.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    The
      Company agrees that damages may be an inadequate remedy for any breach of the
      terms and provisions of this Section 8 and that Investor shall, whether or
      not
      it is pursuing any remedies at law, be entitled to equitable relief in the
      form
      of a preliminary or permanent injunctions, without having to post any bond
      or
      other security, upon any breach or threatened breach of any such terms or
      provisions.

    

    
      
        9.
          ASSIGNMENT
          OF REGISTRATION RIGHTS.

      

    

    

    The
      Company shall not assign this Agreement or any rights or obligations hereunder
      without the prior written consent of the Investor, including by merger or
      consolidation. The Investor may not assign its rights under this Agreement
      without the written consent of the Company, other than to an affiliate of the
      Investor controlled by Steven G. Martin or Joshua B. Scheinfeld.

    

    10. AMENDMENT
      OF REGISTRATION RIGHTS.

    

    Provisions
      of this Agreement may be amended and the observance thereof may be waived
      (either generally or in a particular instance and either retroactively or
      prospectively), only with the written consent of the Company and the
      Investor.

    

    11. MISCELLANEOUS.

    

    a. A
      Person
      is deemed to be a holder of Registrable Securities whenever such Person owns
      or
      is deemed to own of record such Registrable Securities. If the Company receives
      conflicting instructions, notices or elections from two or more Persons with
      respect to the same Registrable Securities, the Company shall act upon the
      basis
      of instructions, notice or election received from the registered owner of such
      Registrable Securities.

    

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

    

    
      	
              If
                to the Company:

            
	 	
              uBid.com
                Holdings, Inc.

            
	 	
              8725
                West Higgins Road, Suite 900

            
	 	
              Chicago,
                IL 60631

            
	 	
              Telephone:

            	
              773-272-5000

            
	 	
              Facsimile:

            	
              773-272-4030

            
	 	
              Attention:
                

            	
              Miguel
                Martinez, Jr.

            
	 	 	 
	
              With
                a copy to:

            
	 	
              Fredrikson
                and Byron, P.A.

            
	 	
              200
                South Sixth Street, Suite 4000

            
	 	
              Minneapolis,
                MN 55402-1425

            
	 	
              Telephone:

            	
              612-492-7338

            
	 	
              Facsimile:

            	
              612-492-7077

            
	 	
              Attention:

            	
              Thomas
                F. Steichen, Esq.

            
	 	 	 

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              If
                to the Investor:

            
	 	
              Fusion
                Capital Fund II, LLC

            
	 	
              222
                Merchandise Mart Plaza, Suite 9-112

            
	 	
              Chicago,
                IL 60654

            
	 	
              Telephone:

            	
              312-644-6644

            
	 	
              Facsimile:

            	
              312-644-6244

            
	 	
              Attention:

            	
              Steven
                G. Martin

            

    

    

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

    

    c. Failure
      of any party to exercise any right or remedy under this Agreement or otherwise,
      or delay by a party in exercising such right or remedy, shall not operate as
      a
      waiver thereof.

    

    d. The
      corporate laws of the State of Delaware shall govern all issues concerning
      the
      relative rights of the Company and its stockholders. All other questions
      concerning the construction, validity, enforcement and interpretation of this
      Agreement shall be governed by the internal laws of the State of Illinois,
      without giving effect to any choice of law or conflict of law provision or
      rule
      (whether of the State of Illinois or any other jurisdictions) that would cause
      the application of the laws of any jurisdictions other than the State of
      Illinois. Each party hereby irrevocably submits to the exclusive jurisdiction
      of
      the state and federal courts sitting the City of Chicago, for the adjudication
      of any dispute hereunder or in connection herewith or with any transaction
      contemplated hereby or discussed herein, and hereby irrevocably waives, and
      agrees not to assert in any suit, action or proceeding, any claim that it is
      not
      personally subject to the jurisdiction of any such court, that such suit, action
      or proceeding is brought in an inconvenient forum or that the venue of such
      suit, action or proceeding is improper. Each party hereby irrevocably waives
      personal service of process and consents to process being served in any such
      suit, action or proceeding by mailing a copy thereof to such party at the
      address for such notices to it under this Agreement and agrees that such service
      shall constitute good and sufficient service of process and notice thereof.
      Nothing contained herein shall be deemed to limit in any way any right to serve
      process in any manner permitted by law. If any provision of this Agreement
      shall
      be invalid or unenforceable in any jurisdiction, such invalidity or
      unenforceability shall not affect the validity or enforceability of the
      remainder of this Agreement in that jurisdiction or the validity or
      enforceability of any provision of this Agreement in any other jurisdiction.
      EACH
      PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
      REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
      CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
      CONTEMPLATED HEREBY.

    

    e. This
      Agreement, and the Purchase Agreement constitute the entire agreement among
      the
      parties hereto with respect to the subject matter hereof and thereof. There
      are
      no restrictions, promises, warranties or undertakings, other than those set
      forth or referred to herein and therein. This Agreement and the Purchase
      Agreement supersede all prior agreements and understandings among the parties
      hereto with respect to the subject matter hereof and thereof.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    f. Subject
      to the requirements of Section 9, this Agreement shall inure to the benefit
      of
      and be binding upon the permitted successors and assigns of each of the parties
      hereto.

    

    g. The
      headings in this Agreement are for convenience of reference only and shall
      not
      limit or otherwise affect the meaning hereof.

    

    h. This
      Agreement may be executed in identical counterparts, each of which shall be
      deemed an original but all of which shall constitute one and the same agreement.
      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.

    

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

    

    j. 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.

    

    k. 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.

    

    *
      * * * * *

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF,
      the
      parties have caused this Registration Rights Agreement to be duly executed
      as of
      day and year first above written.

    

    
      	
              THE
                COMPANY:

            	 
	 	 
	
              UBID.COM
                HOLDINGS, INC.

            	 
	 	 	 
	 	 	 
	
              By:

            	
              /s/
                Miguel A. Martinez Jr.

            	 
	Name:
              Miguel A. Martinez Jr.	 
	Title:
              Chief Financial Officer	 
	 	 	 
	 	 	 
	
              BUYER:

            	 
	 	 
	
              FUSION
                CAPITAL FUND II, LLC

            	 
	
              BY:
                FUSION CAPITAL PARTNERS, LLC

            	 
	
              BY:
                SGM HOLDINGS CORP.

            	 
	 	 	 
	
              By:

            	
              /s/
                Steven G. Martin

            	 
	Name:
              Steven G. Martin	 
	Title:
              PresidentACQUISITION
      AGREEMENT

     

    This
      ACQUISITION AGREEMENT (the “Agreement”),
      is
      entered into and effective as of July 15, 2008 (the “Closing Date”), by and
      among the members listed on Schedule
      A
      and
      signatories hereto (each, a “Member,”
      collectively, the “Members”),
      and
      Platinum Studios, Inc., a California corporation (“Purchaser”).
      Members and Purchaser are sometimes individually or collectively referred to
      as
      a “Party”
or
      the
“Parties.”

    

    RECITALS

    

    WHEREAS,
      the Members own collectively one hundred percent (100%) of the issued and
      outstanding membership interests and other ownership interests (collectively,
      the “Membership
      Interests”)
      in
      WOWIO, LLC, a Pennsylvania limited liability company with its principal office
      located at 2525 Driscoll Street, Houston, Texas 77019 (the “Company”);

    

    WHEREAS,
      the Members desire to sell, assign and transfer to Purchaser, and Purchaser
      desires to purchase from the Members, the Membership Interests and to operate
      the Company as a wholly-owned subsidiary of the Purchaser, upon the terms and
      subject to the conditions set forth in this Agreement.

    

    AGREEMENT

    

    NOW,
      THEREFORE, in consideration of the promises and the mutual covenants set forth
      in this Agreement, and other good and valuable consideration, the receipt and
      sufficiency of which are hereby acknowledged, the Parties agree as
      follows:

    

    
      	
              1.

            	
              Definitions.

            

    

    

    “Action”
means
      any action, arbitration, audit, demand, claim, complaint, dispute, hearing,
      inquiry, investigation, litigation, prosecution or suit (whether civil,
      criminal, administrative, judicial or investigative, whether formal or informal,
      whether public or private).

    

    “Ancillary
      Documents”
means,
      collectively,
      the
      Covenants Not To Compete, the Investment Representations, the Lock-Up Agreement
      and all releases and instruments executed, filed or otherwise prepared,
      exchanged or delivered in accordance with this Agreement.

    

    “Assumed
      Company Liabilities”
shall
      have the meaning set forth in Section
      2.3.

    

    “Claims”
have
      the meaning set forth in Section
      8.5(a).

    

    “Closing”
and
      “Closing
      Date”
shall
      have the meanings set forth in Section
      3.1.

    

    “Company
      Assets”
shall
      have the meaning set forth in Section
      2.4
      hereto.

    

    “Contested
      Claims”
shall
      have the meaning set forth in Section
      8.6(b).

    

    “Court
      Order”
means
      any judgment, decision, decree, injunction, order, writ, award, determination
      or
      ruling of any Governmental Entity or arbitrator.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    “Covenants
      Not to Compete”
means
      those certain Covenants Not to Compete, dated as of the Closing Date,
      substantially in the forms set forth in Exhibit
      A-1
      through
Exhibit
      A-5
      hereto.

    

    “Disclosure
      Schedules”
shall
      have the meaning set forth in Section
      4.

    

    “Domain
      Names”
means
      “WOWIO.COM,” “WOWIOCOMICS.COM,” “WOWIWOCHRISTIAN.COM,” “WOWIODEMO.COM,”
“PROJECTTEXTBOOK.COM,” and all urls associated therewith; 

    

    “Domain
      Name Transfer Filings”
means
      any all necessary forms and documents required to be filed by the Company with
      Network Solutions, Inc. for
      the
      Domain Names in order to transfer full control of the Company’s Domain Names to
      Purchaser, free and clear of all Encumbrances.

    

    “Encumbrance”
means
      any claim, lien, mortgage, pledge, security interest, restriction, easement,
      deed of trust, right of way, encroachment, conditional sales agreement, prior
      assignment, option, encumbrance, charge, agreement, or claim or right of any
      kind of a third party, whether voluntarily incurred or arising by operation
      of
      law, and includes, without limitation, any agreement to give any of the
      foregoing in the future, and any contingent sale or other title retention
      agreement or lease in the nature thereof.

    

    “Financial
      Statements”
shall
      mean, collectively, the financial statements of the Company for the two-year
      period ended December 31, 2007 and for the five month period ended May 31,
      2008.

    

    “Final
      Award”
shall
      have the meaning set forth in Section
      8.6(c)(iii).

    

    “Force
      Majeure”
shall
      mean any delay or failure in performance due to any reason or unforeseen
      circumstance beyond a Party’s reasonable control, including (without limitation)
      acts of God or public authorities, war and war measures (whether or not a formal
      declaration of war is in effect), terrorist activities, civil unrest, fire,
      epidemics, floods, earthquakes, hurricanes, or other natural disasters, or
      delays in transportation, delivery or supply.

    

    “Governmental
      Entity”
means
      any court, administrative agency or commission or other governmental authority
      or instrumentality, domestic or foreign.

    

    “Governmental
      Rule”
shall
      have the meaning set forth in Section
      4.3.

    

    “Indemnification
      Notice”
shall
      have the meaning set forth in Section
      8.5(a).

    

    “Indemnified
      Party”
shall
      have the meaning set forth in Section
      8.5(a).

    

    “Indemnitor”
shall
      have the meaning set forth in Section
      8.5(a).

    

    “Intellectual
      Property”
means,
      collectively, all rights in or affecting intellectual or industrial property
      or
      other proprietary rights, existing now or in the future, in the United States
      or
      anywhere in the universe, including, without limitation, any and all rights
      in,
      to, or subsisting in the following: (a) all issued patents, reissued or
      reexamined patents, revivals of patents, Company, continuations and
      continuations-in-part of patents, all renewals and extensions thereof, utility
      models, certificates and records of invention, invention disclosures, and
      published or unpublished nonprovisional and provisional patent applications,
      including the right to file other or further applications, reexamination
      proceedings; (b) all copyrights and copyrightable works, including, without
      limitation, all rights of authorship, use, publication, reproduction,
      distribution, performance, transformation, moral rights and ownership of
      copyrightable works, the right to create derivative works, and all applications
      for registration, registrations, renewals and extensions of registrations;
      (c)
      all trademarks, service marks, logos, trade names, fictitious business names,
      domain names, 1-800, 1-888, 1-877 and other “vanity” telephone numbers, together
      with the goodwill of the business associated therewith, all applications for
      registration and registrations thereof, renewals thereof, the right to bring
      opposition and cancellation proceedings and any and all rights under the laws
      of
      trade dress; (d) all business information and materials, whether or not
      patentable or copyrightable, and whether or not reduced to practice, including,
      without limitation, all technology, ideas, research and development, inventions,
      proprietary information, manufacturing, engineering, and operating
      specifications and practices, methods, processes, procedures, schematics,
      know-how, formulae, customer, member, visitor, subscriber and supplier lists
      and
      information, product surveys, shop rights, designs, drawings, patterns, plans,
      prototypes, trade secrets, technical data, research records, market surveys,
      computer programs, and all hardware, software and processes; and (e) all other
      intangible assets, properties and rights (whether or not appropriate steps
      have
      been taken to protect, under applicable law, such other intangible assets,
      properties or rights) including, without limitation, all claims, causes of
      action and rights to sue for past, present and future infringement or
      unconsented use of any of the Intellectual Property, the right to file
      applications and obtain registrations, and all rights arising therefrom and
      pertaining thereto and all products, proceeds, revenues and royalties arising
      from or relating to any and all of the foregoing. Notwithstanding anything
      herein to the contrary, “Intellectual Property” shall not include any rights or
      copyrights obtained by the Company pursuant to any of the Licensing Agreements.
      

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    “Investment
      Representations”
means
      those investment representations, dated as of the Closing Date, in the form
      set
      forth in Exhibit
      C.

     

    “Lock-Up
      Agreement”
means
      that certain Lock-Up and Leak Out Agreement, dated as of the Closing Date,
      and
      executed by all the Members, in substantially the same form as Exhibit
      B.

    

    “Losses”
shall
      have the meaning set forth in Section
      8.1.

    

    “Major
      Members”
shall
      mean the following Members: William Lidwell, David Palumbo, Kristine Wasilewski,
      Almarmal, LLC and Robert Kingslyn.

    

    “Material
      Adverse Effect”
or
      “Material
      Adverse Change”
means
      any change, event or effect that is or could reasonably be expected to be
      materially adverse to the business, assets (including intangible assets),
      condition (financial or other), liabilities, properties, prospects or results
      of
      operations of the Company, the Company Assets or which otherwise could
      reasonably be expected to prevent the consummation of the transactions
      contemplated by this Agreement.

    

    “Material
      Contracts”
shall
      have the meaning set forth in Section
      2.3(f).

    

    “Permits”
shall
      mean all licenses, permits, franchises, approvals, authorizations, consents
      or
      orders of, or filings with, any Governmental Entity, whether foreign, federal,
      state or local, or any other Person, necessary or desirable for the past,
      present or anticipated conduct of, or relating to the operation of the business
      of the Company and/or the use of the Company Assets.

    

    “Person”
means
      any individual, corporation, limited liability company, partnership, joint
      venture, trust, business, association or other entity.

    

    “Purchase
      Price”
shall
      have the meaning set forth in Section
      2.1(b).

    

    “Resignations”
shall
      have the meaning set forth in Section
      3.2.
      

    

    “Subsidiary”
means,
      with respect to any Person (including Members)(the “Owner”), any corporation or
      other Person of which securities or other interests having the power to elect
      a
      majority of that corporation’s or other Person’s board of directors or similar
      governing body, or otherwise having the power to direct the business and
      policies of that corporation or other Person (other than securities or other
      interests having such power only upon the happening of a contingency that has
      not occurred), are held by the Owner or one or more of its
      Subsidiaries.

    

    “Taxes”
means
      all federal, state, local and foreign taxes, charges, fees, levies and other
      assessments, including, without limitation, any income, alternative or add-on
      minimum tax, gross receipts, sales, use, ad valorem, value added, transfer,
      franchise, profits, withholding, payroll, employment, excise, stamp, property,
      environmental or other tax, together with all interest, penalties and additions
      with respect thereto.

    

    “Uncontested
      Claims”
shall
      have the meaning set forth in Section
      8.6(a).

    

    
      	
              2.

            	
              Purchase
                and Sale of Membership Interests; Earn-Out; Assumed Liabilities;
                Company
                Assets.

            

    

     

    
      	 	
              2.1

            	
              Purchase
                and Sale of Membership Interests.
                

            

    

     

    (a) Subject
      to the terms and conditions of this Agreement, simultaneously with the execution
      of this Agreement by all Parties hereto, each of the Members hereby conveys,
      transfers, assigns and delivers to the Purchaser, and Purchaser hereby acquires
      from each of the Members, good and valid title, free and clear of all
      Encumbrances, to the Membership Interests, as set forth opposite each of the
      Members names on Schedule
      A.
      

    

    (b)
      Purchaser
      hereby purchases the Membership Interests from the Members for an aggregate
      purchase price of $3,150,000 (“Purchase Price”). The Purchase Price shall be
      allocated among the Members in accordance with the percentage holding of
      Membership Interests held by each of the Members, as set forth opposite each
      of
      the Members names on Schedule A (the “Pro Rata Distribution”). The Purchase
      Price shall be payable in the form of shares of common stock of Purchaser (the
      “Purchase Price Shares”) issued in the names of the Members in accordance with
      the Pro Rata Distribution, in the amounts and as of the dates set forth below
      (each, a “Payment Date”):

    

    (i) One-third
      of the Purchase Price Shares shall be issued simultaneously with the execution
      of this Agreement by all Parties hereto (“Closing Purchase Price
      Shares”);

    

    (ii) One-third
      of the Purchase Price Shares shall be issued on the three-month anniversary
      of
      the Closing Date; and

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    (iii) One-third
      of the Purchase Price Shares shall be issued on the twelve month anniversary
      of
      the Closing Date.

    

    (c) The
      Purchase Price Shares shall be subject to the Lock-Up Agreement. 

    

    (d) The
      number of Purchase Price Shares issued on a particular Payment Date shall be
      calculated by dividing one third of the Purchase Price by the average closing
      trading price of a share of Purchaser’s common stock for the five trading days
      immediately prior to such Payment Date (the “Purchase Price Per Share
      Denominator”); provided
      that, each of the Members acknowledges and agrees, in no event shall the
      Purchase Price Per Share Denominator be less than $.15 regardless of the
      five-day average closing trading price of a share of Purchaser’s common stock
      for the five trading days immediately prior to such Payment
      Date.
      If the
      five-day average closing trading price of a share of Purchaser’s common stock
      for any Payment Date is less than $.15, then the Purchase Price Per Share
      Denominator shall be $.15. In connection herewith, the Members acknowledge
      and
      agree that although Purchaser will direct its transfer agent within two business
      days of a particular Payment Date to prepare and deliver to the Members the
      stock certificates evidencing the Purchase Price Shares, the actual date of
      delivery of the stock certificates to Members is in the transfer agent’s control
      and it shall not a be a breach of this Agreement that such stock certificates
      are not delivered to Members on the particular Payment Date so long as Purchaser
      directs the transfer agent to issue such stock certificates within two business
      days of the particular Payment Date. .

    

    2.2    Earn-Out.

    

    (a) In
      addition to the Purchase Price Shares, the Members shall be entitled to the
      issuance of up to an additional $600,000 in shares of common stock of the
      Purchaser (the “Earn Out Shares”) during the 18 month period following the
      Closing Date (the “Earn Out Period”) based on the gross revenues of the Company
      derived from the exploitation of the content licensed pursuant to the Licensing
      Agreements (defined below) as well as the eBooks (collectively, the “Earn Out
      Revenues”), as follows (each, an “Earn Out Date”):

    

    (i) $150,000
      in Earn Out Shares if and when the monthly Earn Out Revenues for two consecutive
      calendar months during the Earn Out Period, equal or exceed $50,000,
      plus

    

    (ii) $150,000
      in Earn Out Shares if and when the monthly Earn Out Revenues for two consecutive
      calendar months during the Earn Out Period equal or exceed $100,000,
      plus

    

    (iii) $150,000
      in Earn Out Shares if and when the monthly Earn Out Revenues for two consecutive
      calendar months during the Earn Out Period equal or exceed $200,000, and
      plus

     

    (iv) $150,000
      in Earn Out Shares if and when the monthly Earn Out Revenues for two consecutive
      calendar months during the Earn Out Period equal or exceed
      $250,000.

    

    (b) The
      Earn
      Out Shares, if any, shall be allocated among the Members, and issued in the
      names of the Members, in accordance with the Pro Rata Distribution.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    (c) The
      number of Earn Out Shares issued on a particular Earn Out Date shall be
      calculated by dividing $150,000 by the average closing trading price of a share
      of Purchaser’s common stock for the five trading days immediately prior to such
      Earn Out Date (the “Earn Out Per Share Denominator”); provided that, each of the
      Members acknowledges and agrees, in no event shall the Earn Out Per Share
      Denominator be less than $.15 five-day average closing trading price of a share
      of Purchaser’s common stock for the five trading days immediately prior to such
      Earn Out Date. If the five-day average closing trading price of a share for
      any
      Earn Out Date is less than $.15, then the Purchase Price Per Share Denominator
      shall be $.15. In connection herewith, the Members acknowledge and agree that
      calculation of the monthly gross revenues for purposes of determining whether
      any Earn Out Shares are issuable shall occur within 15 days of the end of each
      calendar month during the Earn Out Period and the direction to the transfer
      agent to issue the stock certificates evidencing the Earn Out Shares, if any,
      shall not be made until such calculation is complete. The monthly gross revenues
      of the Company for each month within the Earn Out Period shall be reported
      to
      the Members within 15 days after the end of such month. Each Earn Out Date
      shall
      be no later than the 20th day after the end of the month in which the Members
      earned the Earn Out Shares pursuant to subsection 2.2(a) above. 

    

    (d) The
      Earn
      Out Shares payable under subsection 2.2(a) above shall be calculated in the
      aggregate (i.e. if the monthly Earn Out Revenues of the Company during the
      first
      two months of the Earn Out Period equal $100,000, the Members shall be entitled
      to $300,000 in Earn Out Shares). Earn Out Share eligibility shall be calculated
      for each two-month period during the Earn Out Period. Notwithstanding anything
      herein to the contrary, the Members shall not be entitled to receive more than
      $600,000 in aggregate Earn Out Shares, even if the monthly Earn Out Revenues
      would otherwise entitle the Members to additional Earn Out Shares.

     

    
      	
            	2.3	
              Company
                Liabilities.
                

            

    

    

    (a) Digital
      Content Licensing Agreements.
      Schedule
      B
      sets
      forth a list of the Company’s Digital Content Licensing Agreements in effect
      prior to the Closing Date (the “Licensing Agreements”). After the Closing, the
      Purchaser shall attempt to (i) amend the Licensing Agreements to eliminate
      any
      royalties payable thereunder, or (ii) terminate the Licensing Agreements without
      any further liability to the Company. In connection herewith, Purchaser agrees
      to consult meaningfully with Will Lidwell and David Palumbo with respect to
      negotiating amendments to the Licensing Agreements. Purchaser agrees not to
      continue offering for download content subject to a License Agreement which
      has
      not been amended as set forth in (i) or (ii) above, unless there is a
      corresponding integrated sponsorship or payment by user which fully covers
      the
      royalty payable under the Licensing Agreements.

    

    (b) Other
      Company Liabilities.
      Except
      for those specific liabilities of the Company set forth on Schedule
      D
      attached
      hereto (the “Assumed Company Liabilities”), which shall be assumed by Purchaser,
      the Company shall remain liable for any and all other liabilities of the Company
      of any kind, character or description, whether known or unknown, actual or
      contingent, matured or unmatured, liquidated or unliquidated, disputed or
      undisputed, executory, determined, determinable or otherwise, related to the
      Company Assets and/or the business of the Company which liabilities arise out
      of
      the operation of the business of the Company prior to the Closing Date or as
      a
      direct result of the sale of the Membership Interests to Purchaser hereunder
      (collectively, the “General Liabilities”), but subject to the indemnification
      provisions of Sections 8.1(a) and 8.1(b) hereof. The Company shall maintain
      its
      current general liability insurance through the Closing Date, until such time
      as
      Purchaser determines that such coverage is no longer necessary, to cover the
      General Liabilities.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    2.4    Company
      Assets.
      On the
      Closing Date, the Company shall continue to possess all right, title and
      interest in, to and under all the assets, properties and rights of every nature,
      kind and description, of the Company which right, title and interest existed
      as
      of May 31, 2008, whether tangible or intangible, real, personal or mixed,
      wherever located and whether or not carried or reflected on the books and
      records of the Company, and all goodwill associated therewith (with the
      exception of any goodwill possessed individually by the Members), and which
      shall include (without limitation) the following (collectively, the “Company
      Assets”):

    

    (a) All
      accounts receivables of the Company, whether or not reflected on the books
      and
      records of the Company as of the Closing Date;

    

    (b) the
      Licensing Agreements set forth on Schedule
      B
      attached
      hereto;

    

    (c) the
      eBooks listed on Schedule
      E
      attached
      hereto, including all copyrights and other proprietary rights therein and the
      thereto (the “eBooks”);

    

    (d) the
      inventory listed on Schedule
      F
      attached
      hereto; 

    

    (e) the
      material contracts listed on Schedule
      G
      attached
      hereto (the “Material Contracts”);

    

    (f) the
      Domain Names: 

    

    (g) a
      database of approximately 200,000 registered users;

    

    (h) 14
      servers;

    

    (j) United
      States Patent Application No. 11/464,154

    

    2.5    Closing
      Costs; Taxes and Fees
      Members
      shall pay, or cause to be paid, when due all Taxes for which the Members are
      or
      may be liable or that are or may become payable as a direct result of
      consummation of the transactions contemplated hereunder. Each of the Members
      shall pay any and all income tax liability attributable to such Member as a
      result of the sale of such Member’s Membership Interests. Each Party shall be
      responsible for filing its own tax returns and other tax forms of whatever
      sort
      deemed appropriate and necessary by the filing Party.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    3.    The
      Closing.

     

    3.1    Closing
      Date.
       The
      consummation of the sale and transfer of the Membership Interests contemplated
      in this Agreement shall take place at the offices of Purchase simultaneously
      with the execution of this Agreement by all of the Parties (the “Closing
      Date”).

    

    
      	 	
              3.2

            	
              Deliveries.

            

    

    

    (a) On
      the
      Closing Date, Members shall execute and deliver to Purchaser the
      following:

    

    (i) certificate
      of good standing for the Company, dated not more than thirty (30) days prior
      to
      the Closing Date, from the Secretary of State of the State of
      Pennsylvania;

    

    (ii) a
      certificate executed by the Secretary of the Company certifying, as of the
      Closing Date, as to a true and complete copy of the resolutions of the board
      of
      directors and members of the Company authorizing the sale of the Company through
      a sale of all of the membership interests;

    

    (iii) any
      certificates or other instruments previously issued to the Members documenting
      their Membership Interests, endorsed for transfer to Purchaser, free and clear
      of all Encumbrances, including any necessary assignments from the Members to
      the
      Purchaser;

    

    (iv) any
      and
      all third party consents required for the valid transfer of the Membership
      Interests free and clear of all Encumbrances as contemplated by this
      Agreement;

    

    (v) any
      and
      all third party consents required under any Material Contracts due to a change
      in control of the Company which is triggered by the purchase of the Membership
      Interests as contemplated hereunder;

    

    (vi) the
      resignation of all officers and directors of the Company effective as of the
      Closing Date (the “Resignations”);

    

    (vii) Covenants
      Not to Compete executed by each of the Major Members;

    

    (viii) the
      Lock-Up Agreement;

    

    (ix) the
      Investment Representations;

    

    (x) satisfactory
      proof of the filing and recordation of all Domain Name Transfer Filings and
      other instruments required to be recorded and filed in order to consummate
      the
      transfer of control of the Domain Names to Purchaser free and clear of all
      Encumbrances;

    

    (xi) such
      other documents or instruments as Purchaser or its counsel may reasonably
      request to demonstrate compliance with the provisions set forth in this
      Agreement.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    (b) On
      the
      Closing Date, Purchaser
      shall
      execute and deliver to the Members the following: 

    

    (i) a
      copy of
      instructions sent by Purchaser to its transfer agent to issue and deliver stock
      certificates representing the Closing Purchase Price Shares; and 

    

    (ii) the
      Covenants Not to Compete.

    

    (iii) the
      Lock-Up Agreement.

    

    4.    Representations
      and Warranties of Members.
      The
      Members hereby represent and warrant, subject only to the exceptions disclosed
      in writing in the disclosure schedule attached to this Agreement as Schedule
      I
      (the
“Disclosure
      Schedule”),
      as of
      the date hereof, to and for the benefit of Purchaser as follows:

    

    4.1    Organization,
      Standing and Power; Capitalization.
      The
      Company is a limited liability company duly organized, validly existing and
      in
      good standing under the laws of the State of Pennsylvania and has all requisite
      power and authority to own, operate and transfer its properties and assets
      and
      to carry on its business as now being conducted. The Company is duly qualified
      and is authorized to do business and is in good standing as a foreign
      corporation in each jurisdiction in which the nature of its activities and
      of
      its properties (both owned and leased) makes such qualification necessary.
      

     

    4.2    Membership
      Interests.
      The
      Members collectively own all of the Membership Interests free and clear of
      all
      Encumbrances and there are no other outstanding equity, ownership or voting
      interests in the Company or outstanding options to acquire any equity, ownership
      or voting interests in the Company or outstanding securities convertible into
      any equity, ownership or voting interests in the Company or any agreements
      by
      the Company or the Members to issue or grant any of the foregoing.

     

    4.3    Authority
      and Enforceability.
      Each of
      the Members has the full legal power, capacity and authority to enter into
      and
      execute this Agreement and, to the extent applicable to such Member, the
      Ancillary Documents required to be executed hereunder, and to perform such
      Member’s obligations and to consummate the transactions contemplated in this
      Agreement in accordance with its terms, including the sale and transfer to
      Purchaser of such Member’s Membership Interests. The execution, delivery and
      performance of this Agreement and all of the transactions required hereunder
      to
      be performed by the Members have been duly and validly authorized and approved
      by all necessary action by the Members as a class or group, and approval of
      the
      board of directors of the Company has been duly obtained in accordance with
      the
      provisions of the Company’s Restated and Amended Operating Agreement and any
      amendments thereto and applicable law. This Agreement and each Ancillary
      Document constitutes the valid and legally binding obligation of the signatory
      Members thereto in accordance with their respective terms, except as the same
      may be limited by bankruptcy, insolvency, reorganization or similar laws
      affecting the rights of creditors generally.

    

    4.4    No
      Violation, Conflict or Consent.
      The
      execution, delivery and performance of this Agreement by Members does not,
      and
      the consummation of the transactions contemplated hereby and the compliance
      with
      the terms hereof will not: (a) violate any law, judgment, order, decree,
      statute, ordinance, rule or regulation of any governmental subdivision or agency
      applicable to Members (“Governmental
      Rule”);
      (b)
      conflict with any provision of the Company’s organizational documents; (c)
      violate, conflict with, or result in or constitute a default under, or result
      in
      the termination or acceleration under, or result in the creation of any
      Encumbrance upon, any of the Company Assets or under any of the terms,
      conditions or provisions of any contract affecting any of the Company Assets;
      or
      (d) require any consent, approval, order or authorization of, or the
      registration, declaration or filing with, any Governmental Entity or other
      Person. The Company does not require the consent of any Person to permit
      Purchaser to operate the business of the Company in the manner in which it
      is
      presently being operated. Neither the Company nor any of the Members are
      required to give any notice to or obtain any consent from any Person in
      connection with the execution and delivery of this Agreement, the Ancillary
      Documents or the consummation or performance of any of the transactions
      contemplated in this Agreement or the Ancillary Documents.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    4.5    Compliance
      with the Laws.
      The
      Company is and has been in compliance with all laws applicable thereto and
      all
      Court Orders. Neither the Company nor any of the Members has received any
      written notice to the effect that, or otherwise been advised in writing that,
      the Company is not in compliance with any such applicable laws or Court Orders,
      and none of the Members is aware of any circumstances that are likely to result
      in violations of any of the foregoing.

    

    4.6    Litigation.
      There
      are no Actions or Court Orders pending or threatened against or by the Company
      in any court or before any arbitrator, private alternative dispute resolution
      system or Governmental Entity, nor has the Company been charged with, nor is
      the
      Company under investigation with respect to any charge concerning any violation
      of any provision of any federal, state or other applicable law, rule,
      regulation, ordinance, order, decree or governmental restriction. The Company
      is
      not in default with respect to or subject to any Court Order, and there are
      no
      unsatisfied judgments against the Company or any consent decrees, writs,
      restraining orders, or preliminary or permanent injunctions to the Company
      or
      the Company Assets are subject. 

    

    4.7    Absence
      of Changes.
      Since
      May 31, 2008, there has not been any Material Adverse Change in the business,
      financial condition, operations, results of operations or future prospects
      of
      the Company. Without limiting the generality of the foregoing, and other than
      as
      listed in the Disclosure Schedule, since May 31, 2008 there
      has
      not been any:

    

    (a) actual
      or
      threatened adverse change in the financial condition, working capital, Members’
equity, assets, liabilities, reserves, revenues, income, earnings or results
      of
      operation or governing documents (including the Restated and Amended Operating
      Agreement of the Company and any amendments thereto) of the Company or the
      Company Assets or any event, condition or fact, in either case that is, or
      would, with the passage of time, result in a Material Adverse Change to the
      Company Assets or the prospects the Company’s business as presently
      conducted;

    

    (b) sale
      or
      other disposition, except in the ordinary course of business of any of the
      Company Assets, or any Encumbrance placed on the Company Assets;

    

    (c) damage,
      destruction or loss (whether or not covered by insurance) materially adversely
      affecting the Company Assets;

    

    (d) imposition
      of any security interest upon any of the Company Assets, except in the ordinary
      course of business;

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    (e) any
      capital expenditure (or series of capital expenditures) by the Company outside
      of the ordinary course of business;

    

    (f) acceleration,
      amendment, cancellation or termination of any contract, commitment, agreement,
      lease, transaction or Permit relating to the Company Assets or entry into any
      contract, commitment, agreement, lease, transaction or Permit which is not
      in
      the ordinary course of the Company’s business;

    

    (i) cancellation,
      compromise, waiver or release of any right or claims (or series of related
      rights and claims) related to the Company Assets either involving more than
      $5,000 or outside the ordinary course of the Company’s business;

    

    (j) adverse
      change in relations with publishers and/or users which has or is reasonably
      likely to have a material adverse effect on the financial condition, results
      of
      operations or the business of the Company;

    

    (k) disposition
      or lapsing of any Intellectual Property of the Company, which is has or is
      reasonably likely to have a material adverse effect on the financial condition,
      results of operations or the business of the Company;

    

    (l) any
      disposition or disclosure to any person of any Intellectual Property of the
      Company not theretofore a matter of public knowledge;

    

    (m) grant
      of
      any exclusive rights with respect to, or entry into any licensing agreements
      with, any third party in connection with any of the Company Assets;
      and

    

    (n) commitment
      by the Company or any of the Members to any of the foregoing.

     

    4.8    Title
      and Condition of the Company Assets.
      The
      Company has good and marketable title to the Company Assets, free and clear
      of
      any Encumbrances, other than those Encumbrances which are Assumed Company
      Liabilities and no Encumbrance shall be created or attach to the Company Assets
      as a result of the consummation of the sale of the Membership Interests to
      Purchaser hereunder. The Company Assets include, without limitation, all assets,
      tangible and intangible, of any nature whatsoever, necessary or material for
      the
      conduct of the business of the Company as presently conducted, except for the
      Excluded Assets. All tangible assets and properties which are part of the
      Company Assets are in good operating condition and repair, properly perform
      their intended functions, are usable in the ordinary course of business and
      conform to all applicable laws relating to their construction, use and
      operation. 

    

    
      	 	
              4.9

            	
              Intellectual
                Property 

            

    

    

    (a) Schedule
      4.8
      sets
      forth a true, complete and accurate list of all Intellectual Property of the
      Company (except the Excluded Assets). Schedule
      4.8
      sets
      forth a true, complete and accurate list of all jurisdictions where the
      Intellectual Property of the Company is registered or where applications have
      been filed, and all patent, registration and application numbers. True and
      correct copies of all patents and patent applications, trademark and service
      mark applications and registrations, copyright applications and registrations
      and domain name registrations comprising the Intellectual Property of the
      Company have been provided to Purchaser.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    (b) The
      Company owns exclusively and has the exclusive right to use all of the
      Intellectual Property of the Company free and clear of all Encumbrances, and
      the
      Intellectual Property of the Company will not cease to be valid by reason of
      the
      execution, delivery and performance of this Agreement or the consummation of
      the
      transactions contemplated hereby. Neither the Company nor any of the Members
      is
      aware of any conduct or use by the Company that would void or invalidate or
      constitute misuse of any of the Intellectual Property of the Company. Neither
      the Company nor any of the Members is aware of any Action that is pending or
      threatened and no claim or demand been made, which claims infringement or
      misappropriation or challenges the legality, validity, enforceability or
      ownership of the Intellectual Property of the Company, and neither the Company
      nor any of the Members has received any notice of invalidity or infringement
      of
      any rights of others with respect to the Intellectual Property of the Company.
      The Company has taken reasonable and prudent steps to protect the Intellectual
      Property of the Company from infringement by any Person. No other Person has
      notified the Company or any of the Members that such Person is claiming any
      ownership of or the right to use any of the Intellectual Property of the
      Company, or is infringing upon any of the Intellectual Property of the Company.
      To the best knowledge of the Members, the Intellectual Property of the Company
      is valid, subsisting and enforceable, and does not and will not infringe upon,
      misappropriate or otherwise violate the rights of any Person. To the best
      knowledge of the Members, all software used in connection with the Company
      is
      free from any faults, defects, viruses, worms, disabling programming codes,
      instructions or other such items that may threaten, infect, damage, disable
      or
      otherwise interfere with the use of such software. 

    

    (c) A
      copy of
      all documentation relating to any trade secrets and confidential information
      comprising any part of the Intellectual Property of the Company has been
      furnished to Purchaser. Such documentation is current, accurate, complete and
      in
      sufficient detail and content to explain all material aspects of the trade
      secrets and confidential information and to allow its full and proper use
      without reliance on the memory of other Persons. To the best knowledge of the
      Members, such trade secrets are not part of the public domain or literature
      nor
      have they been used, divulged or appropriated for the benefit of any Person
      (other than the Company) or to the detriment of the Company. The Company has
      taken reasonable security measures to protect the secrecy, confidentiality
      and
      value of all of such trade secrets and confidential information.

    

    (d) To
      the
      best of the Members’ knowledge, neither the Members nor any of the employees or
      independent contractors of the Company are in violation of any non-competition,
      non-disclosure or other similar agreements which would prohibit the Company
      from
      entering into or consummating the transactions contemplated hereby.

    

    4.10    Absence
      of Defaults
      All of
      the contracts and leases by which any of the Company Assets is bound or affected
      are valid, binding and enforceable in accordance with their terms. Except as
      specifically set forth in the Disclosure Schedule, the Company has fulfilled,
      or
      taken all action necessary to enable it to fulfill when due, all of its
      obligations under each of such contracts and leases. Except as set forth in
      the
      Disclosure Schedule, all parties to such contracts and leases have, to the
      Members’ best knowledge, complied with the provisions thereof, no party is in
      default thereunder and no notice of any claim of default has been given to
      the
      Company or any of the Members. There is no reason to believe that the services
      called for by any unfinished contract cannot be supplied by the Company in
      accordance with the terms of such contract, including time specifications,
      and
      has no reason to believe that any unfinished contract will upon performance
      by
      the Company result in a loss to the Company. With respect to any leases, neither
      the Company nor any of the Members have received any notice of cancellation
      or
      termination under any option or right reserved to the lessor, or any notice
      of
      default, thereunder. 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    4.11    Books
      and Records.
      The
      Company has made and kept (and given Purchaser access to) books and records
      and
      accounts, which, in reasonable detail, accurately and fairly reflect the
      business of the Company as conducted since its formation. 

    

    4.12    Financial
      Statements.

    

    (a) The
      Company has delivered the Financial Statements to Purchaser. Such Financial
      Statements were created in the ordinary course of business, consistent with
      the
      past practice of the Company, and, as of their respective dates, are true and
      correct. The Financial Statements were prepared in accordance with generally
      accepted accounting principles and with the past practice of the Company and
      fairly present the financial position, assets, liabilities, and results of
      operations of the Company as of the respective dates thereof or for the periods
      then ended (as applicable), subject to normal year-end adjustments consistent
      with prior periods. There are no claims, obligations or liabilities of the
      Company required to be reflected in the Financial Statements or under generally
      accepted accounting principles relating to the period prior to the Closing
      Date,
      other than those set forth in the Financial Statements. There are no events
      or
      circumstances that have occurred or come into existence since the date of the
      most recent Financial Statements that may reasonably be expected, individually
      or in the aggregate, to have or constitute a Material Adverse Effect on the
      Company, the Company Assets or the Members’ ability to sell the Membership
      Interests to Purchaser and consummate the transactions contemplated hereunder.
      

    

    (b) The
      Company has given Purchaser access to all of the Company’s books and records and
      accounts which currently exist, and which in reasonable detail accurately and
      fairly reflect the business activities of Company. 

    

    4.13    Tax
      Matters

    

    (a) Filing
      of Tax Returns.
      The
      Company has timely filed with the appropriate taxing authorities all returns
      (including, without limitation, information returns and other material
      information) in respect of Taxes required to be filed through the date hereof
      and will timely file any such returns required to be filed on or prior to the
      Closing Date. The returns and other information filed are complete and
      accurate.

    

    (b) Payment
      of Taxes.
      All
      Taxes owed by the Company (whether or not shown on any Tax return of the
      Company) have been paid, and the Company does not have, to Members’ knowledge,
      any liability for any material Taxes in excess of the amounts so paid, except
      for any franchise, income, or other taxes imposed on the Company and applicable
      to the portion of the 2008 calendar year prior to the Closing Date, and due
      and
      payable after the Closing Date. 

    

    (c) Audits,
      Investigations or Claims.
      To the
      Members’ knowledge, no deficiencies for Taxes have been claimed, proposed or
      assessed by any taxing or other Governmental Entity against the Company. To
      the
      Members’ knowledge, there are no pending or threatened audits, investigations or
      claims for or relating to any additional liability in respect of Taxes, and
      there are no matters under discussion with any Governmental Entity with respect
      to Taxes that in the reasonable judgment of the Members, is likely to result
      in
      an additional liability for Taxes. 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    (d) Liens.
      There
      are no filed liens for Taxes on the Company Assets.

    

    4.14    Permits.

    

    (a) Schedule
      4.13
      sets
      forth a complete list of all Permits used in the operation of the business
      of
      the Company. The Company has, and at all times has had, all Permits required
      under any applicable law in the operation of the business of the Company or
      in
      the ownership of the Company Assets, and owns or possesses such Permits free
      and
      clear of all Encumbrances. The Company is not in default, nor has it received
      any notice of any claim of default, with respect to any such Permit. Except
      as
      otherwise governed by law, all such Permits are renewable by their terms or
      in
      the ordinary course of business without the need to comply with any special
      qualification procedures or to pay any amounts other than routine filing fees
      and will not be adversely affected by the completion of the transactions
      contemplated by this Agreement. 

    

    (b) Other
      than as disclosed on the Disclosure Schedule hereto, no notice to, declaration,
      filing or registration with, or Permit from, any Government Entity, or any
      other
      person or entity, is required to be made or obtained by the Company in
      connection with the execution, delivery or performance of this Agreement and
      the
      consummation of the transactions contemplated hereby.

    

    4.15    No
      Other Agreements to Sell the Company Assets.
      Neither
      the Company nor any of its officers, directors, members or affiliates have
      any
      commitment or legal obligation, absolute or contingent, to any other Person
      or
      party other than Purchaser to sell, assign, transfer or effect a sale of the
      Company Assets, to sell or effect a sale of the Membership Interests, to effect
      any merger, consolidation, liquidation, dissolution or other reorganization
      of
      the Company, or to enter into any agreement or cause the entering into of an
      agreement with respect to any of the foregoing, and neither the Company nor
      any
      of its officers, directors, members or affiliates have made any representations
      or entered into any contracts, commitments or other agreements with third
      parties which purport to so bind or obligate Purchaser.

    

    4.16    Brokers
      and Finders.
      Neither
      the Company nor any of the Members nor any of its directors, officers,
      shareholders, members or employees have employed any broker, finder, or
      financial advisor or incurred any liability for any brokerage fee or commission,
      finder’s fee or financial advisory fee, in connection with the transactions
      contemplated hereby, nor is there any basis known to Members for any such fee
      or
      commission to be claimed by any Person.

    

    4.17    No
      Liabilities.
      The
      Company has no liabilities due or to become due, which, individually or in
      the
      aggregate, has or would have a Material Adverse Effect on the business of the
      Company or the Company Assets. None of the Members’ has any claim or right
      against the Company Assets. In connection herewith, the Members represent and
      warrant that as of the Closing Date, any and all outstanding loans to the
      Company have been converted into membership interests being sold hereunder
      or
      have been paid off. 

     

    4.18    Accuracy
      of Information.
      No
      representation or warranty made by the any of the Members in this Agreement,
      the
      Disclosure Schedules attached hereto, or in any agreement, instrument, document,
      certificate, statement or letter furnished or to be furnished to Purchaser
      prior
      to, at or after the Closing by or on behalf of Members in connection with any
      of
      the transactions contemplated by this Agreement contains or will contain any
      untrue statement of material fact or omit or will omit to state any material
      fact necessary in order to make the statements herein or therein not misleading
      in light of the circumstances in which they are made, and all of the foregoing
      completely and correctly present the information required or purported to be
      set
      forth herein or therein.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    5.    Representations
      and Warranties of Purchaser. 

     

    Purchaser
      hereby represents and warrants, as of the date hereof, to and for the benefit
      of
      Members as follows:

     

    5.1    Organization,
      Standing and Power.
      Purchaser is a California corporation duly organized, validly existing and
      in
      good standing under the laws of the State of California, and has all requisite
      company power and authority to own, operate and lease its properties and assets
      and to carry on its business as now being conducted. Purchaser is duly qualified
      and is authorized to do business and is in good standing as a foreign
      corporation in each jurisdiction in which the nature of its activities and
      of
      its properties makes such qualification necessary.

     

    5.2    Authority
      and Enforceability of the Agreement.
      Purchaser has the full company power and authority to enter into and execute
      this Agreement and the Ancillary Documents required by this Agreement and to
      perform its obligations and to consummate the transactions contemplated in
      this
      Agreement in accordance with its terms. The execution, delivery and performance
      of this Agreement and all of the transactions required hereunder to be performed
      by Purchaser have been duly and validly authorized and approved by all necessary
      corporate action. This Agreement has been duly and validly executed and
      delivered, on behalf of Purchaser, by its duly authorized manager. This
      Agreement and each Ancillary Document constitutes the valid and legally binding
      obligation of Purchaser, enforceable in accordance with its terms, except as
      the
      same may be limited by bankruptcy, insolvency, reorganization or similar laws
      affecting the rights of creditors generally.

    

    5.3    No
      Violation, Conflict or Consent.
      The
      execution, delivery and performance of this Agreement by Purchaser does not,
      and
      the consummation of the transactions contemplated hereby and the compliance
      with
      the terms hereof will not: (a) violate any Governmental Rule applicable to
      it;
      (b) conflict with any provision of Purchaser’s organizational documents; (c)
      violate, conflict with, or result in or constitute a default under, or result
      in
      the termination or acceleration under, any of the terms, conditions or
      provisions of any contract, lease binding on Purchaser; or (d) require any
      consent, approval, order or authorization of, or the registration, declaration
      or filing with, any Governmental Entity or other Person.

     

    5.4    Accuracy
      of Information.
      No
      representation or warranty made by Purchaser in this Agreement or in any
      agreement, instrument, document, certificate, statement or letter furnished
      or
      to be furnished to Members prior to, at or after the Closing by or on behalf
      of
      Purchaser in connection with any of the transactions contemplated by this
      Agreement contains or will contain any untrue statement of material fact or
      omit
      or will omit to state any material fact necessary in order to make the
      statements herein or therein not misleading in light of the circumstances in
      which they are made, and all of the foregoing completely and correctly present
      the information required or purported to be set forth herein or
      therein.

    

    5.5    Brokers
      and Finders.
      Neither
      Purchaser nor any of its officers, directors, shareholders, employees agents
      or
      representatives have employed any broker, finder, or financial advisor or
      incurred any liability for any brokerage fee or commission, finder’s fee or
      financial advisory fee, in connection with the transactions contemplated hereby,
      nor is there any basis known to Purchaser for any such fee or commission to
      be
      claimed by any Person.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    5.6    Purchase
      Price Shares; Investment Common Stock and Investment Warrants.
      The
      Purchase Price Shares, Investment Common Stock and shares of common stock
      issuable upon exercise of the Investment Warrants when issued in accordance
      with
      this Agreement, will be duly and validly issued, fully-paid and non-assessable.
      

    

    6.    Post-Closing
      Obligations.

    

    6.1    Consulting
      Agreements.
      As soon
      as practicable following the Closing Date, Will Lidwell and David Palumbo shall
      negotiate in good faith with Purchaser to enter into 12 month consulting
      agreements with Purchaser with respect to the operation of the business of
      the
      Company following the Closing Date.

    

    7.    Conditions
      to Closing.

     

    7.1    Conditions
      Precedent to the Obligations of Purchaser.
      The
      obligation of Purchaser to consummate the purchase of the Membership Interests
      under this Agreement is subject to the fulfillment, as of the Closing, of each
      of the following conditions:

    

    (a) Performance
      of Obligations of Members.
      Members
      shall have performed and complied with all obligations and covenants required
      by
      this Agreement to be performed or complied with by Members prior to or at the
      Closing.

    

    (b) No
      Injunctions.
      On the
      Closing Date, there shall be no action threatened or pending, order, executive
      order, stay, decree, judgment, injunction, statute, rule or regulation that
      challenges or otherwise relates to the transactions contemplated by this
      Agreement or which may have a Material Adverse Effect on the Company or which
      may otherwise prohibit or make illegal the consummation of the transactions
      contemplated by this Agreement.

    

    (c) Deliveries
      by Members.
      Members
      shall have delivered to Purchaser the items set forth in Section
      3.2.

    

    (d) Consents.
      Members
      shall have received, on such terms as approved by Purchaser in its reasonable
      discretion, all consents, approvals, assignments, licenses, Permits, orders
      and
      other authorizations (including, without limitation, the approval and
      authorization of the board of directors of the Company) necessary to consummate
      the transactions contemplated by this Agreement including the sale and transfer
      of the Membership Interests, unless waived, in writing, by Purchaser.

    

    (e) No
      Material Adverse Change.
      There
      shall not have been any Material Adverse Change with respect to the Company
      or
      the Company Assets since May 31, 2008.

    

    7.2    Conditions
      Precedent to Obligations of Members.
      The
      obligation of Members to consummate the sale and transfer of the Membership
      Interests under this Agreement is subject to the fulfillment, as of the Closing
      Date, of each of the following conditions (any or all of which may be waived
      by
      Members in writing):

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    (a) Performance
      of Obligations of Purchaser.
      Purchaser shall have performed and complied with all obligations and covenants
      required by this Agreement to be performed or complied with by Purchaser prior
      to or at the Closing.

     

    (b) No
      Injunctions.
      On the
      Closing Date, there shall be no action threatened or pending order, executive
      order, stay, decree, judgment, injunction, statute, rule or regulation that
      challenges or otherwise relates to the transactions contemplated by the
      Agreement or which may otherwise prohibit or make illegal the consummation
      of
      the transactions contemplated by this Agreement.

    

    (c) Deliveries
      of Purchaser.
      Purchaser shall have delivered to Members the items set forth in Section
      3.4(a).

     

    8.    Indemnification

    .

    8.1    Indemnification
      of Purchaser 

    

    (a) Willful
      or Grossly Negligent Misrepresentation. For
      a
      period of five (5) years after the Closing Date, each of the Members hereby
      covenants and agrees, jointly and severally, to indemnify, defend and hold
      harmless the Company and Purchaser, its affiliates and subsidiaries and its
      officers, directors, shareholders, partners, principals, members, employees,
      attorneys, agents and representatives from and against any and all claims,
      losses, damages of any kind, liabilities, obligations, Actions, deficiencies,
      demands, costs, and expenses (whether or not arising out of third party Claims),
      including, without limitation, all interest, fines, penalties, amounts paid
      in
      settlement, costs of mitigation, reasonable attorneys’ fees, court costs and all
      amounts paid in investigation, defense or settlement of any of the foregoing
      (collectively, “Damages”)
      imposed upon, incurred or sustained by the Company or Purchaser arising out
      of
      or in connection with or as a result of or incident to any willful or grossly
      negligent misrepresentation by the Members of any of their representations
      and
      warranties made in this Agreement. The liability of the Members under this
      Section 8.1(a) shall be strictly limited to, in the aggregate, the amount of
      the
      Purchase Price, and the Members shall have no liability for any Damages
      exceeding such amount.

    

    (b) Operational
      Liabilities. For
      a
      period of one (1) year after the Closing Date, each of the Members hereby
      covenants and agrees, jointly and severally, to indemnify, defend and hold
      harmless the Purchaser, its affiliates and subsidiaries and its officers,
      directors, shareholders, partners, principals, members, employees, attorneys,
      agents and representatives from and against any and all Damages imposed upon,
      incurred or sustained by the Purchaser arising out of or in connection with
      or
      as a result of or incident to any liabilities or obligations of the Company,
      other than the Assumed Company Liabilities, to the extent that such Damages
      are
      not covered by insurance, arising out of or related to (i) the operation of
      the
      Company’s business prior to the Closing Date; (ii) the ownership of the Company
      Assets prior to the Closing Date; (iii) taxes arising out of the conduct of
      the
      Company business prior to the Closing Date; (iv) any accrued but unpaid
      liabilities under the Company’s contracts set forth on Schedule
      C,
      all of
      which shall be terminated at or prior to the Closing Date (the “Terminated
      Contracts”), and any liabilities under the Terminated Contracts which may accrue
      through such date of termination; and (v) any liabilities under the Licensing
      Agreements that the Purchaser is unable to amend pursuant to Section 2.3(a)
      hereof.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    The
      liability of the Members under this Section 8.1(b) shall be strictly limited
      to,
      in the aggregate, the amount of $1,000,000, and the Members shall have no
      liability for any Damages exceeding such amount. In the event of any claim
      for
      indemnification under this Section 8.1(b), Purchaser shall first exercise its
      right of offset, pursuant to Section 8.8 to the extent available, prior to
      seeking reimbursement from the Members directly.

     

    8.2    Indemnification
      of Members.
      Purchaser hereby covenants and agrees to indemnify, defend and hold harmless
      the
      Members, and their respective agents and representatives from and against any
      and all Damages imposed upon, incurred or sustained by the Members arising
      out
      of or in connection with or as a result of or incident to:

    

    (a) any
      breach by Purchaser of any of its representations or warranties made in this
      Agreement;

    

    (c) any
      claims arising out of or related to the operation of the Company’s business
      after the Closing Date which claims are not otherwise indemnified pursuant
      to
      Section 8.1 (b) above. 

    

    8.3    Survival
      of Representations and Warranties, Etc.
      All of
      the representations and warranties, covenants and agreements made by each Party
      in this Agreement or in any Schedule, Exhibit, Disclosure Schedule, certificate,
      document, list or other writing delivered by any such Party pursuant hereto
      shall survive the consummation of the transactions contemplated herein. Each
      Party hereto shall be entitled to rely upon the representations and warranties,
      and covenants and agreements of the other Party set forth in this Agreement.
      The
      right to indemnification, payment of Damages or other remedy based on any
      representations, warranties, covenants and obligations will not be affected
      by
      any investigation conducted with respect to, or any knowledge acquired (or
      capable or being acquired) at any time, whether before or after the execution
      and delivery of this Agreement or the Closing, with respect to the accuracy
      or
      inaccuracy of or compliance with, any such representation, warranty, covenant
      or
      obligation. 

     

    8.4    Notice
      of Damages;
      Reimbursement.

    

    (a) A
      party
      seeking indemnity hereunder (the “Indemnified
      Party”)
      will
      give the party from whom indemnity is sought hereunder (the “Indemnitor”)
      notice
      (hereinafter, the “Indemnification
      Notice”)
      of any
      demands, claims, actions or causes of action (collectively, the “Claims”)
      asserted against the Indemnified Party.

    

    (b) The
      Indemnitor shall reimburse an Indemnified Party promptly after delivery of
      an
      Indemnification Notice certifying that the Indemnified Party has incurred
      damages after compliance with the terms of this Section
      8;
      provided,
      however,
      that the
      Indemnitor shall have the right to contest any such damages in good faith,
      and
further
      provided
      that no
      Indemnitor shall be liable for any special, consequential, incidental, indirect,
      or punitive damages of any kind whatsoever (collectively, “Special Damages”)
      unless a third party is claiming such Special Damages against the Indemnified
      Party, which claim is subject to indemnification by the Indemnitor
      hereunder.

     

    8.5    Resolution
      of Indemnification Notice.
      Any
      Indemnification Notice given to the Indemnitor will be resolved as
      follows:

    

    (a) Uncontested
      Claims.
      In the
      event that, within thirty (30) calendar days after an Indemnification Notice
      is
      received by the Indemnitor, the Indemnitor does not contest such indemnification
      in writing to the Indemnified Party as provided in Section
      8.6(b)
      (an
“Uncontested
      Claim”),
      the
      Indemnitor will be conclusively deemed to have consented, to the recovery by
      the
      Indemnified Party the full amount of Losses specified in the Indemnification
      Notice in accordance with this Section
      8,
      and,
      without further notice, to have stipulated to the entry of a final judgment
      for
      damages against the Indemnitor for such amount in any court having jurisdiction
      over the matter where venue is proper.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    (b) Contested
      Claims.
      In the
      event that the Indemnitor gives the Indemnified Party written notice contesting
      all or any portion of an Indemnification Notice (a “Contested
      Claim”)
      within
      the thirty (30)-day period specified in Section
      8.6(a),
      then:
      (i) such Contested Claim will be resolved by either (A) a written
      settlement agreement executed by the Indemnified Party and the Indemnitor after
      settlement discussions to take place over a maximum of twenty (20) days or
      (B) in the absence of such a written settlement agreement executed by the
      Indemnified Party and the Indemnitor within the twenty (20)-day period, by
      binding arbitration between the Indemnified Party and the Indemnitor in
      accordance with the terms and provisions of Section
      8.6(c);
      provided,
      that if
      such notice denies the validity of only part of such Claim, the Indemnitor
      will
      be conclusively deemed to have consented, to the recovery by the Indemnified
      Party the portion of the Losses that is uncontested, and, without further
      notice, to have stipulated to the entry of a final judgment for such damages
      against the Indemnitor for such amount in any court having jurisdiction over
      the
      matter where venue is proper.

    

    (c) Arbitration
      of Contested Claims.
      Each
      Party agrees that any Contested Claim will be submitted to mandatory, final
      and
      binding arbitration in the County of Los Angeles, California, in accordance
      with
      the with the International Arbitration Rules of the American Arbitration
      Association then in effect. Either the Indemnified Party or the Indemnitor
      may
      commence the arbitration process called for by this Agreement by filing a
      written demand for arbitration and giving a copy of such demand to each of
      the
      other parties to this Agreement. The Parties covenant that they will participate
      in the arbitration in good faith, and that they will share in its costs in
      accordance with subsection (i) below. The provisions of this Section
      8.5(c)
      may be
      enforced by any federal or state court in the County of Los Angeles, California
      having competent jurisdiction over the subject matter of the controversy, and
      the party seeking enforcement will be entitled to an award of all costs, fees
      and expenses, including reasonable attorneys’ fees, to be paid by the party
      against whom enforcement is ordered. 

    

    (i) Payment
      of Costs.
      The
      costs of arbitration (including the arbitrators’ fees) initially will be borne
      equally (50/50) between the petitioner(s) and respondent(s), and each Party
      will
      bear its own attorneys’ fees. The arbitrator may, at his or her discretion,
      reallocate some or all of costs of arbitration (including the arbitrator’s fees,
      but not including attorneys’ fees) of the prevailing party based upon the
      arbitrator’s determination, and only to the extent that the arbitrator finds,
      that the arbitration was commenced in bad faith by the initiating party.

    

    (ii) Burden
      of Proof.
      Except
      as may be otherwise expressly provided herein, for any Contested Claim submitted
      to arbitration, the burden of proof will be as it would be if the Claim were
      litigated in a judicial proceeding governed by Pennsylvania law
      exclusively.

    

    (iii) Award.
      Upon
      the conclusion of any arbitration proceedings hereunder, the arbitrator will
      render findings of fact and conclusions of law and a final written arbitration
      award setting forth the basis and reasons for any decision reached (the
“Final
      Award”)
      and
      will deliver the findings to the Indemnified Party and Indemnitor, together
      with
      a signed copy of the Final Award. The Final Award will constitute a conclusive
      determination of all issues in question, binding upon the Parties, and will
      include an affirmative statement to such effect. Judgment upon the award
      rendered by the arbitrator may be entered in any court having competent
      jurisdiction.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    (iv) Timing.
      The
      Parties and the arbitrator will conclude each arbitration pursuant to this
      Section
      8.6
      as
      promptly as possible for the Contested Claim being arbitrated.

    

    (v) Terms
      of Arbitration.
      The
      arbitrator chosen in accordance with these provisions will not have the power
      to
      alter, amend or otherwise affect the terms of these arbitration provisions
      or
      the provisions of this Agreement.

    

    (vi) Exclusive
      Remedy.
      Following the Closing Date, except for injunctive relief or as specifically
      otherwise provided in this Agreement, arbitration conducted in accordance with
      this Agreement will be the sole and exclusive means of resolution of any
      Contested Claim made pursuant to Section
      8.
      

     

    8.6    Conditions
      of Indemnification of Third Party Claims
      The
      obligations and liabilities of an Indemnitor under this Section
      8
      with
      respect to damages resulting from Claims by persons not party to this Agreement
      shall be subject to the following terms and conditions:

    

    (a) Promptly
      after delivery of an Indemnification Notice in respect of a Claim and subject
      to
      subsection (c) of this Section
      8.6,
      if the
      Indemnitor shall acknowledge in writing to the Indemnified Party that the
      Indemnitor shall be obligated under the terms of its indemnity hereunder in
      connection with such Action, the Indemnitor may elect, by written notice to
      the
      Indemnified Party, to undertake the defense thereof with counsel reasonably
      satisfactory to the Indemnified Party, at the sole cost and expense of the
      Indemnitor; provided,
      that
      the
      Indemnitor shall not enter into a settlement agreement of such Claim without
      the
      Indemnified Party’s consent, which shall not be unreasonably withheld. If the
      Indemnitor chooses to defend any Claim, the Indemnified Party shall cooperate
      with all reasonable requests of the Indemnitor and shall make available to
      the
      Indemnitor any books, records or other documents within its control that are
      necessary or appropriate for such defense.

    

    (b) In
      the
      event that the Indemnitor, within a reasonable time after receipt of an
      Indemnification Notice, does not so elect to defend such Claim or, after
      undertaking the defense of such Claim, fails to continue the defense of such
      Claim, the Indemnified Party will have the right (upon further notice to the
      Indemnitor) to undertake the defense, compromise or settlement of such Claim
      for
      the account of the Indemnitor.

    

    (c) Anything
      in this Section
      8.6
      to the
      contrary notwithstanding, (i) if the Indemnified Party believes there is a
      reasonable probability that a Claim may materially and adversely affect the
      Indemnified Party, the Indemnified Party shall have the right to participate
      in
      the defense, compromise or settlement of such Claim; provided,
      that the
      Indemnitor shall not be liable for expenses of separate counsel of the
      Indemnified Party engaged for such purpose, unless the named parties to the
      Action regarding such Claim (including any impleaded parties) include both
      the
      Indemnitor and the Indemnified Party and the Indemnified Party has been advised
      in writing by counsel that there may be one or more legal defenses available
      to
      such Indemnified Party that are different from or additional to those available
      to the Indemnitor, in which event the Indemnified Party shall be entitled,
      at
      the indemnitor’s cost, risk and expense, to separate counsel of its own
      choosing, and (ii) no Person who has undertaken to defend a Claim under
Section
      8.6(a)
      hereof
      shall, without written consent of all Indemnified Parties, settle or compromise
      any Claim or consent to entry of any judgment which does not include as an
      unconditional term thereof the release by the claimant or the plaintiff of
      all
      Indemnified Parties from all liability arising from events which allegedly
      give
      rise to such Claim.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

       

    

    8.7    Cooperation.
      Notwithstanding anything to the contrary contained in this Section 8,
      the
      Parties shall cooperate with each other to maximize the availability of
      insurance coverage for Claims or actions by third parties which may be subject
      to indemnification pursuant to this Section 8.

     

    8.8    Right
      of Offset.
      Purchaser shall offset any Uncontested Claim against the Members, or any of
      the
      Members successors or assigns, against the Purchase Price Shares and Earn Shares
      (collectively, “Acquisition Stock”) allocated to the Members hereunder.
This
      offset remedy of Purchaser is not exclusive but is cumulative with all other
      remedies of Purchaser against the Members, and this offset remedy does not
      in
      any way limit the liability of the Members under this Agreement. Purchaser
      shall
      have no right to offset any Contested Claim until such disputed claim is
      resolved pursuant to Section 8.5(b) and (c) hereof; provided, however, that
      Purchaser may delay the issuance of any of the Acquisition Stock until such
      time
      as the disputed claim is resolved, at which time the Purchaser shall either
      offset the claim against the withheld Acquisition Stock, or promptly issue
      such
      withheld Acquisition Stock. In the event of an offset hereunder, the Acquisition
      Stock shall be offset based on the Purchase Price Per Share Denominator or
      Earn
      Out Share Denominator, as applicable, that would otherwise apply to the issuance
      of such Acquisition Stock to the Members on the respective Payment Date or
      Earn
      Out Date (i.e. if a $150,000 Uncontested Claim is being offset by Purchase
      Price
      Shares, and the five-day average closing trading price per share on the
      applicable Payment Date is less than $.15, then the Uncontested Claim would
      be
      offset by 1,000,000 Purchase Price Shares). 

    

    9.    Miscellaneous
      Provisions.

     

    9.1    Amendment
      and Waiver.
      This
      Agreement may be amended, modified and supplemented only by written agreement
      of
      each of the Parties hereto. By an instrument in writing, either Party may waive
      compliance by the other Party with any term or provision of this Agreement
      that
      such other Party was or is obligated to comply with or perform.

     

    9.2    Notices.
      All
      notices, requests, demands and other communications which are required or may
      be
      given under this Agreement shall be in writing and shall be deemed to have
      been
      duly given when received if personally delivered; the day after it is sent,
      if
      sent for next day delivery to a domestic address by recognized overnight
      delivery service (e.g.,
      Federal Express); upon receipt, if sent by certified or registered mail, return
      receipt requested; and upon confirmed transmission if sent by telecopier. In
      each case notice shall be sent to:

     

    
      	
            	If
              to Members:	
              To
                the Addresses set forth on Schedule A 

            

      	 	 	 

      	 	If to
              Purchaser:	Platinum
              Studios, Inc

      	 	 	
              11400
                W. Olympic Blvd., 14th Floor

              Los
                Angeles, CA 90064

              Attention:
                Brian Altounian

              Facsimile:
                (310) 887-3943

            

      	 	 	 

      	 	with a copy to:	
              Helene
                Pretsky, General Counsel

              Platinum
                Studios, Inc.

              11400
                W. Olympic Blvd., 14th Floor

              Los
                Angeles, CA 90064

              Facsimile:
                (310) 887-3943

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    or
      to
      such other person or address as any Party hereto shall furnish to the other
      Party hereto in writing pursuant to this Section
      9.2.
      

     

    9.3    Assignment
      This
      Agreement shall be binding upon and inure to the benefit of the Parties hereto
      and their respective successors and permitted assigns. This Agreement may not
      be
      assigned by either Party hereto without the prior written consent of the other;
      provided
      however,
      that
      Purchaser may assign its rights and obligations under this Agreement to any
      Person who acquires all or substantially all of the assets, stock or business
      of
      Purchaser (whether by sale, merger or otherwise) without the consent of Members
      or if such assignee assumes all obligations of Purchaser hereunder.

     

    9.4    Governing
      Law
      This
      Agreement shall be governed by the law of the State of California regardless
      of
      the laws that might otherwise govern applicable conflicts of laws.

     

    9.5    Consent
      and Jurisdiction.
      Each
      Party hereto irrevocably and unconditionally (a) agrees that any Action arising
      out of this Agreement may be brought in the state and federal courts for the
      State of California; (b) consents to the jurisdiction or any such court in
      any
      such Action; and (c) waives any objection which such Party may have to the
      laying of venue of any such Action in any such court.

    

    9.6    Attorney
      Fees
      If any
      Party to this Agreement brings an action to enforce its rights under this
      Agreement, the prevailing Party shall be entitled to recover its costs and
      expenses, including without limitation, reasonable attorneys’ fees, incurred in
      connection with such action, including any appeal of such action.

     

    9.7    Invalidity
      In the
      event that any one or more of the provisions contained in this Agreement or
      in
      any other instrument referred to herein, shall, for any reason, be held to
      be
      invalid, illegal or unenforceable in any respect, then to the maximum extent
      permitted by law, such invalidity, illegality or unenforceability shall not
      affect any other provision of this Agreement or any other such
      instrument.

     

    9.8    Counterparts;
      Facsimile
      This
      Agreement may be signed and delivered either originally or by facsimile, and
      in
      one or more counterparts, each of which shall be deemed an original, but all
      of
      which together shall constitute one and the same instrument.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    9.9    Headings
      The
      section headings contained in this Agreement are for reference purposes only
      and
      shall not affect in any way the meaning or interpretation of this
      Agreement.

     

    9.10    Interpretation
      When a
      reference is made in this Agreement to a Section, Exhibit or Schedule, such
      reference shall be to a Section, Exhibit or Schedule of this Agreement unless
      otherwise indicated. The table of contents and headings contained in this
      Agreement are for reference purposes only and shall not affect in any way the
      meaning or interpretation of this Agreement. Whenever the words “included,”
      “includes”
or
      “including”
are
      used in this Agreement, they shall be deemed to be followed by the phrase
“without
      limitation.”

     

    9.11    Third
      Parties
      Except
      for the indemnity provisions of Section 8,
      which
      are also for the benefit of the Parties identified therein, nothing in this
      Agreement, whether express or implied, is intended to: (a) confer any rights
      or
      remedies on any Person other than Members and Purchaser, and their respective
      successors and permitted assignees; (b) relieve or discharge the obligation
      or
      liability of any third party; or (c) give any third party any right of
      subrogation or action against Members or Purchaser.

     

    9.12    Exhibits
      and Schedules.
      All
      Exhibits and Schedules referred to herein are intended to be and hereby are
      specifically made a part of this Agreement.

     

    9.13    Entire
      Agreement.
      This
      Agreement (together with all Exhibits and Schedules referred to herein or
      attached hereto) embodies the entire agreement and understanding of the Parties
      hereto in respect of the subject matter contained herein. This Agreement
      supersedes all prior agreements and understandings between the Parties hereto
      with respect to such subject matter.

    

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK]

     

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    IN
      WITNESS WHEREOF, the Parties, acting through their duly authorized
      representative, to the extent applicable, have executed this Membership
      Acquisition Agreement as of the day and year first above written.

    

    “Purchaser”

    

    PLATINUM
      STUDIOS, INC

    

    

    By: 
      _________________________________________

    Brian
      Altounian, President

    

    

    “Members”

    

    

    _____________________________________________

    William
      Lidwell

    

    _____________________________________________

    Gary
      Hamel

    

    _____________________________________________

    David
      Learned

    

    

    EXTREME
      HOLDINGS, INC.

    

    

    By: 
      __________________________________________

    Regis
      Maher, Co-President

    

    

    ALMARMAL,
      LLC

    

    

    By: 
      __________________________________________

    Erica
      Coleman, President

    

    

    ________________________________________________

    Kristine
      Wasilewski

    

    

    [SIGNATURE
      PAGE TO MEMBERSHIP ACQUISITION AGREEMENT]

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    ______________________________________________

    Richard
      Ellard

    

    

    ______________________________________________

    David
      Palumbo

    

    

    ______________________________________________

    Robert
      Kingslyn

    

    

    ______________________________________________

    Gary
      Gilbert

    

    

    ______________________________________________

    Gary
      Gilbert II

    

    

    ______________________________________________

    Robert
      W.
      Gilbert

    

    

    ______________________________________________

    James
      H.
      Barker III

    

    

    [SIGNATURE
      PAGE TO MEMBERSHIP ACQUISITION AGREEMENT]

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBITS

    

    
      	
              Exhibits
                A-1 thru A-5

            	
              Covenants
                Not to Compete

            
	 	 
	
              Exhibit
                B

            	
              Lock-Up
                Agreement

            
	 	 
	
              Exhibit
                C

            	
              Investment
                Representations

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    SCHEDULE
      C

    

    TERMINATED
      CONTRACTS

    

    

    All
      WOWIO
      contracts in existence prior to the Closing other than the Material
      Contracts

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    SCHEDULE
      D

    

    ASSUMED
      COMPANY LIABILITIES

    

    

    1.    All
      going-forward (post-closing) liabilities of the Company under the Material
      Contracts to the extent such liabilities arise out of facts or events occurring
      after the Closing.

    

    2.    Up
      to a
      maximum of $300,000 in Royalties accrued and payable to Publishers under
      Licensing Agreements for the calendar quarter ended June 30, 2008. 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    SCHEDULE
      G

    

    MATERIAL
      CONTRACTS

    

    

    Agreement
      between WOWIO, LLC and CyrusOne in existence as of the Closing
      Date.

    

    Agreement
      between WOWIO, LLC and Salesforce.com in existence as of the Closing
      Date

    

    Agreement
      between WOWIO, LLC and Administaff in existence as of the Closing
      Date

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    SCHEDULE
      4.8

    

    LIST
      OF INTELLECTUAL PROPERTY

    

    

    TRADEMARKS

    

    USPTO
      Registration No. 3,277,651 “WOWIO”

    

    

    PATENTS

    

    United
      States Patent Application No. 11/464,154

    

    

    DOMAIN
      NAMES

    

    PROJECTTEXTBOOK.COM

     

    WOWIOCHRISTIAN.COM

     

    WOWIOCOMICS.COM

    

    WOWIODEMO.COM

    

    WOWIO.COM

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    SCHEDULE
      4.13

    

    PERMITS

    

    

    NONE

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