Document:

Unassociated Document

    

THIS
  WARRANT AND THE SHARES ISSUABLE UPON THE EXERCISE OF THIS WARRANT HAVE NOT BEEN
  REGIS-TERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. EXCEPT AS OTHERWISE
  SET FORTH HEREIN OR IN A SECURITIES PURCHASE AGREEMENT DATED AS OF OCTOBER 31,
  2006, NEITHER THIS WARRANT NOR ANY OF SUCH SHARES MAY BE SOLD, TRANSFERRED OR
  ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRA-TION STATEMENT FOR SUCH SECURITIES
  UNDER SAID ACT OR, AN OPINION OF COUNSEL, IN FORM, SUBSTANCE AND SCOPE, CUSTOMARY
  FOR OPINIONS OF COUNSEL IN COMPARABLE TRANSACTIONS, THAT REGISTRATION IS NOT
  REQUIRED UNDER SUCH ACT OR UNLESS SOLD PURSUANT TO RULE 144 OR REGULATION S
  UNDER SUCH ACT.

     

    
      	 	
              Right to 

              Purchase 

              [_______] 

              Shares of 

              Common 

              Stock, par 

              value $.001 

              per share

            

    

     

    STOCK
      PURCHASE WARRANT

     

    THIS
      CERTIFIES THAT,
      for
      value received, [_______] or its registered assigns, is entitled to purchase
      from Veridicom
      International, Inc.,
      a
      Delaware corporation (the “Company”), at any time or from time to time during
      the period specified in Paragraph 2 hereof, [_______] fully paid and
      nonassessable shares of the Company’s Common Stock, par value $.001 per share
      (the “Common Stock”), at an exercise price per share equal to $.04 (the
“Exercise Price”). The term “Warrant Shares,” as used herein, refers to the
      shares of Common Stock purchasable hereunder. The Warrant Shares and the
      Exercise Price are subject to adjustment as provided in Paragraph 4 hereof.
      The
      term “Warrants” means this Warrant and the other warrants issued pursuant to
      that certain Securities Purchase Agreement, dated October 31, 2006, by and
      among the Company and the Buyers listed on the execution page thereof (the
      “Securities Purchase Agreement”). 

     

    This
      Warrant is subject to the following terms, provisions, and conditions:

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    1.  Manner
      of Exercise; Issuance of Certificates; Payment for Shares.

    Subject
      to the provisions hereof, this Warrant may be exercised by the holder hereof,
      in
      whole or in part, by the surrender of this Warrant, together with a completed
      exercise agreement in the form attached hereto (the “Exercise Agreement”), to
      the Company during normal business hours on any business day at the Company’s
      principal executive offices (or such other office or agency of the Company
      as it
      may designate by notice to the holder hereof), and upon (i) payment to the
      Company in cash, by certified or offi-cial bank check or by wire transfer for
      the account of the Company of the Exercise Price for the Warrant Shares
      specified in the Exercise Agreement or (ii) if the resale of the Warrant Shares
      by the holder is not then registered pursuant to an effective registration
      statement under the Securities Act of 1933, as amended (the “Securities Act”),
      delivery to the Company of a written notice of an election to effect a “Cashless
      Exercise” (as defined in Section 11(c) below) for the Warrant Shares specified
      in the Exercise Agreement. The Warrant Shares so purchased shall be deemed
      to be
      issued to the holder hereof or such holder’s designee, as the record owner of
      such shares, as of the close of business on the date on which this Warrant
      shall
      have been surrendered, the completed Exercise Agreement shall have been
      deliv-ered, and payment shall have been made for such shares as set forth above.
      Certifi-cates for the Warrant Shares so purchased, representing the aggregate
      number of shares specified in the Exercise Agreement, shall be delivered to
      the
      holder hereof within a reasonable time, not exceeding five (5) business days,
      after this Warrant shall have been so exercised. The certificates so delivered
      shall be in such denominations as may be requested by the holder hereof and
      shall be registered in the name of such holder or such other name as shall
      be
      designated by such holder. If this Warrant shall have been exercised only in
      part, then, unless this Warrant has expired, the Company shall, at its expense,
      at the time of delivery of such certificates, deliver to the holder a new
      Warrant representing the number of shares with respect to which this Warrant
      shall not then have been exercised. In addition to all other available remedies
      at law or in equity, if the Company fails to deliver certificates for the
      Warrant Shares within five (5) business days after this Warrant is exercised,
      then the Company shall pay to the holder in cash a penalty (the “Penalty”) equal
      to 2% of the number of Warrant Shares that the holder is entitled to multiplied
      by the Market Price (as hereinafter defined) for each day that the Company
      fails
      to deliver certificates for the Warrant Shares. For example, if the holder
      is
      entitled to 100,000 Warrant Shares and the Market Price is $2.00, then the
      Company shall pay to the holder $4,000 for each day that the Company fails
      to
      deliver certificates for the Warrant Shares. The Penalty shall be paid to the
      holder by the fifth day of the month following the month in which it has
      accrued.

     

    Notwithstanding
      anything in this Warrant to the contrary, in no event shall the holder of this
      Warrant be entitled to exercise a number of Warrants (or portions thereof)
      in
      excess of the number of Warrants (or portions thereof) upon exercise of which
      the sum of (i) the number of shares of Common Stock beneficially owned by the
      holder and its affiliates (other than shares of Common Stock which may be deemed
      beneficially owned through the ownership of the unexercised Warrants and the
      unexercised or unconverted portion of any other securities of the Company
      (including the Notes (as defined in the Securities Purchase Agreement)) subject
      to a limitation on conversion or exercise analogous to the limitation contained
      herein) and (ii) the number of shares of Common Stock issuable upon exercise
      of
      the Warrants (or portions thereof) with respect to which the determination
      described herein is being made, would result in beneficial ownership by the
      holder and its affiliates of more than 4.9% of the outstanding shares of Common
      Stock. For purposes of the immediately preceding sentence, beneficial ownership
      shall be determined in accordance with Section 13(d) of the Securities Exchange
      Act of 1934, as amended, and Regulation 13D-G thereunder, except as otherwise
      provided in clause (i) of the preceding sentence. Notwithstanding anything
      to
      the contrary contained herein, the limitation on exercise of this Warrant set
      forth herein may not be amended without (i) the written consent of the holder
      hereof and the Company and (ii) the approval of a majority of shareholders
      of
      the Company.

     

    
      
        
        

      

      
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    2.  Period
      of Exercise.  This
      Warrant is exercisable at any time or from time to time on or after the date
      on
      which this Warrant is issued and delivered pursuant to the terms of the
      Securities Purchase Agreement and before 6:00 p.m., New York, New York time
      on
      the seventh (7th)
      anniversary of the date of issuance (the “Exercise Period”).

     

    3.  Certain
      Agreements of the Company.
      The
      Company hereby covenants and agrees as follows:

     

    (a)  Shares
      to be Fully Paid.
      Subject
      to Stockholder Approval (as such term is defined in Section 4(n) of the
      Securities Purchase Agreement), all Warrant Shares will, upon issuance in
      accordance with the terms of this Warrant, be validly issued, fully paid, and
      nonassessable and free from all taxes, liens, and charges with respect to the
      issue thereof.

    (b)  Reservation
      of Shares.
      Subject
      to Stockholder Approval (as such term is defined in Section 4(o) of the
      Securities Purchase Agreement), during the Exercise Period, the Company shall
      at
      all times have authorized, and reserved for the purpose of issuance upon
      exercise of this Warrant, a suf-ficient number of shares of Common Stock to
      provide for the exercise of this Warrant.

     

    (c)  Listing.
      The
      Company shall promptly secure the listing of the shares of Common Stock issuable
      upon exercise of the Warrant upon each national securities exchange or automated
      quotation system, if any, upon which shares of Common Stock are then listed
      (subject to official notice of issuance upon exercise of this Warrant) and
      shall
      maintain, so long as any other shares of Common Stock shall be so listed, such
      listing of all shares of Common Stock from time to time issuable upon the
      exercise of this Warrant; and the Company shall so list on each national
      securities exchange or automated quotation system, as the case may be, and
      shall
      maintain such listing of, any other shares of capital stock of the Company
      issuable upon the exercise of this Warrant if and so long as any shares of
      the
      same class shall be listed on such national securities exchange or automated
      quotation system.

     

    (d)  Certain
      Actions Prohibited.
      The
      Company will not, by amendment of its charter or through any re-organi-zation,
      transfer of assets, consolidation, mer-ger, dissolution, issue or sale of
      securities, or any other voluntary action, avoid or seek to avoid the observance
      or performance of any of the terms to be observed or performed by it hereunder,
      but will at all times in good faith assist in the carrying out of all the
      provisions of this Warrant and in the taking of all such action as may
      reasonably be requested by the holder of this Warrant in order to protect the
      exercise privilege of the holder of this Warrant against dilu-tion or other
      impairment, consistent with the tenor and purpose of this Warrant. Without
      limiting the general-ity of the foregoing, the Company (i) will not increase
      the
      par value of any shares of Common Stock receivable upon the exercise of this
      Warrant above the Exercise Price then in effect, and (ii) will take all such
      actions as may be necessary or appropriate in order that the Company may validly
      and legally issue fully paid and nonassessable shares of Common Stock upon
      the
      exercise of this Warrant.

     

    (e)  Successors
      and Assigns.
      This
      Warrant will be binding upon any entity succeeding to the Company by merger,
      consolidation, or acquisition of all or sub-stantially all the Company’s
      assets.

     

    
      
        
        

      

      
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    4.  Antidilution
      Provisions. 
      During
      the Exercise Period, the Exercise Price and the number of Warrant Shares shall
      be subject to adjustment from time to time as provided in this Paragraph
      4.

     

    In
      the
      event that any adjustment of the Exercise Price as required herein results
      in a
      fraction of a cent, such Exercise Price shall be rounded up to the nearest
      cent.

     

    (a)  Adjustment
      of Exercise Price and Number of Shares upon Issuance of Common
      Stock.
      Except
      as otherwise provided in Paragraphs 4(c) and 4(e) hereof, if and whenever on
      or
      after the date of issuance of this Warrant, the Company issues or sells, or
      in
      accordance with Paragraph 4(b) hereof is deemed to have issued or sold, any
      shares of Common Stock for no consideration or for a consideration per share
      (before deduction of reasonable expenses or commissions or underwriting
      discounts or allowances in connection therewith) less than the Market Price
      on
      the date of issuance (a “Dilutive Issuance”), then immediately upon the Dilutive
      Issuance, the Exercise Price will be reduced to a price determined by
      multiplying the Exercise Price in effect immediately prior to the Dilutive
      Issuance by a fraction, (i) the numerator of which is an amount equal to the
      sum
      of (x) the number of shares of Common Stock actually outstanding immediately
      prior to the Dilutive Issuance, plus (y) the quotient of the aggregate
      consideration, calculated as set forth in Paragraph 4(b) hereof, received by
      the
      Company upon such Dilutive Issuance divided by the Market Price in effect
      immediately prior to the Dilutive Issuance, and (ii) the denominator of which
      is
      the total number of shares of Common Stock Deemed Outstanding (as defined below)
      immediately after the Dilutive Issuance. 

     

    (b)  Effect
      on Exercise Price of Certain Events.
      For
      purposes of determining the adjusted Exercise Price under Paragraph 4(a) hereof,
      the following will be applicable:

     

    (i)  Issuance
      of Rights or Options.
      If the
      Company in any manner issues or grants any warrants, rights or options, whether
      or not immediately exercisable, to subscribe for or to purchase Common Stock
      or
      other securities convertible into or exchangeable for Common Stock (“Convertible
      Securities”) (such warrants, rights and options to purchase Common Stock or
      Convertible Securities are hereinafter referred to as “Options”) and the price
      per share for which Common Stock is issuable upon the exercise of such Options
      is less than the Market Price on the date of issuance or grant of such Options,
      then the maximum total number of shares of Common Stock issuable upon the
      exercise of all such Options will, as of the date of the issuance or grant
      of
      such Options, be deemed to be outstanding and to have been issued and sold
      by
      the Company for such price per share. For purposes of the preceding sentence,
      the “price per share for which Common Stock is issuable upon the exercise of
      such Options” is determined by dividing (i) the total amount, if any, received
      or receivable by the Company as consideration for the issuance or granting
      of
      all such Options, plus the minimum aggregate amount of additional consideration,
      if any, payable to the Company upon the exercise of all such Options, plus,
      in
      the case of Convertible Securities issuable upon the exercise of such Options,
      the minimum aggregate amount of additional consideration payable upon the
      conversion or exchange thereof at the time such Convertible Securities first
      become convertible or exchangeable, by (ii) the maximum total number of shares
      of Common Stock issuable upon the exercise of all such Options (assuming full
      conversion of Convertible Securities, if applicable). No further adjustment
      to
      the Exercise Price will be made upon the actual issuance of such Common Stock
      upon the exercise of such Options or upon the conversion or exchange of
      Convertible Securities issuable upon exercise of such Options.

     

    
      
        
        

      

      
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    (ii)  Issuance
      of Convertible Securities.
      If the
      Company in any manner issues or sells any Convertible Securities, whether or
      not
      immediately convertible (other than where the same are issuable upon the
      exercise of Options) and the price per share for which Common Stock is issuable
      upon such conversion or exchange is less than the Market Price on the date
      of
      issuance, then the maximum total number of shares of Common Stock issuable
      upon
      the conversion or exchange of all such Convertible Securities will, as of the
      date of the issuance of such Convertible Securities, be deemed to be outstanding
      and to have been issued and sold by the Company for such price per share. For
      the purposes of the preceding sentence, the “price per share for which Common
      Stock is issuable upon such conversion or exchange” is determined by dividing
      (i) the total amount, if any, received or receivable by the Company as
      consideration for the issuance or sale of all such Convertible Securities,
      plus
      the minimum aggregate amount of additional consideration, if any, payable to
      the
      Company upon the conversion or exchange thereof at the time such Convertible
      Securities first become convertible or exchangeable, by (ii) the maximum total
      number of shares of Common Stock issuable upon the conversion or exchange of
      all
      such Convertible Securities. No further adjustment to the Exercise Price will
      be
      made upon the actual issuance of such Common Stock upon conversion or exchange
      of such Convertible Securities.

     

    (iii)  Change
      in Option Price or Conversion Rate.
      If there
      is a change at any time in (i) the amount of additional consideration payable
      to
      the Company upon the exercise of any Options; (ii) the amount of additional
      consideration, if any, payable to the Company upon the conversion or exchange
      of
      any Convertible Securities; or (iii) the rate at which any Convertible
      Securities are convertible into or exchangeable for Common Stock (other than
      under or by reason of provisions designed to protect against dilution), the
      Exercise Price in effect at the time of such change will be readjusted to the
      Exercise Price which would have been in effect at such time had such Options
      or
      Convertible Securities still outstanding provided for such changed additional
      consideration or changed conversion rate, as the case may be, at the time
      initially granted, issued or sold.

     

    (iv)  Treatment
      of Expired Options and Unexercised Convertible
      Securities.
      If, in
      any case, the total number of shares of Common Stock issuable upon exercise
      of
      any Option or upon conversion or exchange of any Convertible Securities is
      not,
      in fact, issued and the rights to exercise such Option or to convert or exchange
      such Convertible Securities shall have expired or terminated, the Exercise
      Price
      then in effect will be readjusted to the Exercise Price which would have been
      in
      effect at the time of such expiration or termination had such Option or
      Convertible Securities, to the extent outstanding immediately prior to such
      expiration or termination (other than in respect of the actual number of shares
      of Common Stock issued upon exercise or conversion thereof), never been
      issued.

     

    (v)  Calculation
      of Consideration Received.
      If any
      Common Stock, Options or Convertible Securities are issued, granted or sold
      for
      cash, the consideration received therefor for purposes of this Warrant will
      be
      the amount received by the Company therefor, before deduction of reasonable
      commissions, underwriting discounts or allowances or other reasonable expenses
      paid or incurred by the Company in connection with such issuance, grant or
      sale.
      In case any Common Stock, Options or Convertible Securities are issued or sold
      for a consideration part or all of which shall be other than cash, the amount
      of
      the consideration other than cash received by the Company will be the fair
      value
      of such consideration, except where such consideration consists of securities,
      in which case the amount of consideration received by the Company will be the
      Market Price thereof as of the date of receipt. In case any Common Stock,
      Options or Convertible Securities are issued in connection with any acquisition,
      merger or consolidation in which the Company is the surviving corporation,
      the
      amount of consideration therefor will be deemed to be the fair value of such
      portion of the net assets and business of the non-surviving corporation as
      is
      attributable to such Common Stock, Options or Convertible Securities, as the
      case may be. The fair value of any consideration other than cash or securities
      will be determined in good faith by the Board of Directors of the
      Company.

     

    
      
        
        

      

      
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    (vi)  Exceptions
      to Adjustment of Exercise Price.
      No
      adjustment to the Exercise Price will be made (i) upon the exercise of any
      warrants, options or convertible securities granted, issued and outstanding
      on
      the date of issuance of this Warrant; (ii) upon the grant or exercise of any
      stock or options which may hereafter be granted or exercised under any employee
      benefit plan, stock option plan or restricted stock plan of the Company now
      existing or to be implemented in the future, so long as the issuance of such
      stock or options is approved by a majority of the independent members of the
      Board of Directors of the Company or a majority of the members of a committee
      of
      independent directors established for such purpose; or (iii) upon the exercise
      of the Warrants.

     

    (c)  Subdivision
      or Combination of Common Stock.
      If the
      Company at any time subdivides (by any stock split, stock dividend,
      recapitalization, reorganization, reclassification or otherwise) the shares
      of
      Common Stock acquirable hereunder into a greater number of shares, then, after
      the date of record for effecting such subdivision, the Exercise Price in effect
      immediately prior to such subdivision will be proportionately reduced. If the
      Company at any time combines (by reverse stock split, recapitalization,
      reorganization, reclassification or otherwise) the shares of Common Stock
      acquirable hereunder into a smaller number of shares, then, after the date
      of
      record for effecting such combination, the Exercise Price in effect immediately
      prior to such combination will be proportionately increased.

     

    (d)  Adjustment
      in Number of Shares.
      Upon
      each adjustment of the Exercise Price pursuant to the provisions of this
      Paragraph 4, the number of shares of Common Stock issuable upon exercise of
      this
      Warrant shall be adjusted by multiplying a number equal to the Exercise Price
      in
      effect immediately prior to such adjustment by the number of shares of Common
      Stock issuable upon exercise of this Warrant immediately prior to such
      adjustment and dividing the product so obtained by the adjusted Exercise
      Price.

     

    (e)  Consolidation,
      Merger or Sale.
      In case
      of any consolidation of the Company with, or merger of the Company into any
      other corporation, or in case of any sale or conveyance of all or substantially
      all of the assets of the Company other than in connection with a plan of
      complete liquidation of the Company, then as a condition of such consolidation,
      merger or sale or conveyance, adequate provision will be made whereby the holder
      of this Warrant will have the right to acquire and receive upon exercise of
      this
      Warrant in lieu of the shares of Common Stock immediately theretofore acquirable
      upon the exercise of this Warrant, such shares of stock, securities or assets
      as
      may be issued or payable with respect to or in exchange for the number of shares
      of Common Stock immediately theretofore acquirable and receivable upon exercise
      of this Warrant had such consolidation, merger or sale or conveyance not taken
      place. In any such case, the Company will make appropriate provision to insure
      that the provisions of this Paragraph 4 hereof will thereafter be applicable
      as
      nearly as may be in relation to any shares of stock or securities thereafter
      deliverable upon the exercise of this Warrant. The Company will not effect
      any
      consolidation, merger or sale or conveyance unless prior to the consummation
      thereof, the successor corporation (if other than the Company) assumes by
      written instrument the obligations under this Paragraph 4 and the obligations
      to
      deliver to the holder of this Warrant such shares of stock, securities or assets
      as, in accordance with the foregoing provisions, the holder may be entitled
      to
      acquire.

     

    
      
        
        

      

      
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    (f)  Distribution
      of Assets.
      In case
      the Company shall declare or make any distribution of its assets (including
      cash) to holders of Common Stock as a partial liquidating dividend, by way
      of
      return of capital or otherwise, then, after the date of record for determining
      shareholders entitled to such distribution, but prior to the date of
      distribution, the holder of this Warrant shall be entitled upon exercise of
      this
      Warrant for the purchase of any or all of the shares of Common Stock subject
      hereto, to receive the amount of such assets which would have been payable
      to
      the holder had such holder been the holder of such shares of Common Stock on
      the
      record date for the determination of shareholders entitled to such
      distribution.

     

    (g)  Notice
      of Adjustment.
      Upon the
      occurrence of any event which requires any adjustment of the Exercise Price,
      then, and in each such case, the Company shall give notice thereof to the holder
      of this Warrant, which notice shall state the Exercise Price resulting from
      such
      adjustment and the increase or decrease in the number of Warrant Shares
      purchasable at such price upon exercise, setting forth in reasonable detail
      the
      method of calculation and the facts upon which such calculation is based. Such
      calculation shall be certified by the Chief Financial Officer of the
      Company.

     

    (h)  Minimum
      Adjustment of Exercise Price.
      No
      adjustment of the Exercise Price shall be made in an amount of less than 1%
      of
      the Exercise Price in effect at the time such adjustment is otherwise required
      to be made, but any such lesser adjustment shall be carried forward and shall
      be
      made at the time and together with the next subsequent adjustment which,
      together with any adjustments so carried forward, shall amount to not less
      than
      1% of such Exercise Price.

     

    (i)  No
      Fractional Shares.
      No
      fractional shares of Common Stock are to be issued upon the exercise of this
      Warrant, but the Company shall pay a cash adjustment in respect of any
      fractional share which would otherwise be issuable in an amount equal to the
      same fraction of the Market Price of a share of Common Stock on the date of
      such
      exercise.

     

    (j)  Other
      Notices.
      In case
      at any time:

     

    (i)  the
      Company shall declare any dividend upon the Common Stock payable in shares
      of
      stock of any class or make any other distribution (including dividends or
      distributions payable in cash out of retained earnings) to the holders of the
      Common Stock;

     

    (ii)  the
      Company shall offer for subscription pro rata to the holders of the Common
      Stock
      any additional shares of stock of any class or other rights;

     

    
      
        
        

      

      
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    (iii)  there
      shall be any capital reorganiza-tion of the Company, or reclassification of
      the
      Common Stock, or consolidation or merger of the Company with or into, or sale
      of
      all or substan-tially all its assets to, another corporation or entity;
      or

     

    (iv)  there
      shall be a voluntary or involun-tary dissolution, liquidation or winding up
      of
      the Company;

    then,
      in
      each such case, the Company shall give to the holder of this Warrant (a) notice
      of the date on which the books of the Company shall close or a record shall
      be
      taken for determining the holders of Common Stock entitled to receive any such
      divi-dend, distribution, or subscription rights or for determining the holders
      of Common Stock entitled to vote in respect of any such reorganization,
      reclassification, consolidation, merger, sale, dissolution, liquidation or
      winding-up and (b) in the case of any such reorganization, reclassification,
      consolidation, merger, sale, dissolution, liquidation or winding-up, notice
      of
      the date (or, if not then known, a reasonable approximation thereof by the
      Company) when the same shall take place. Such notice shall also specify the
      date
      on which the holders of Common Stock shall be entitled to receive such dividend,
      distribution, or subscription rights or to exchange their Common Stock for
      stock
      or other securities or property deliverable upon such reorganization,
      re-classification, consolidation, merger, sale, dissolution, liquidation, or
      winding-up, as the case may be. Such notice shall be given at least 30 days
      prior to the record date or the date on which the Company’s books are closed in
      respect thereto. Failure to give any such notice or any defect therein shall
      not
      affect the validity of the proceedings referred to in clauses (i), (ii), (iii)
      and (iv) above.

     

    (k)  Certain
      Events.
      If any
      event occurs of the type contemplated by the adjustment provisions of this
      Paragraph 4 but not expressly provided for by such provisions, the Company
      will
      give notice of such event as provided in Paragraph 4(g) hereof, and the
      Company’s Board of Directors will make an appropriate adjustment in the Exercise
      Price and the number of shares of Common Stock acquirable upon exercise of
      this
      Warrant so that the rights of the holder shall be neither enhanced nor
      diminished by such event.

     

    (l)  Certain
      Definitions. 

     

    (i)  “Common
      Stock Deemed Outstanding”
      shall
      mean the number of shares of Common Stock actually outstanding (not including
      shares of Common Stock held in the treasury of the Company), plus (x) pursuant
      to Paragraph 4(b)(i) hereof, the maximum total number of shares of Common Stock
      issuable upon the exercise of Options, as of the date of such issuance or grant
      of such Options, if any, and (y) pursuant to Paragraph 4(b)(ii) hereof, the
      maximum total number of shares of Common Stock issuable upon conversion or
      exchange of Convertible Securities, as of the date of issuance of such
      Convertible Securities, if any. 

     

    (ii)  “Market
      Price,”
      as of
      any date, (i) means the average of the last reported sale prices for the shares
      of Common Stock on the OTCBB for the five (5) Trading Days immediately preceding
      such date as reported by Bloomberg, or (ii) if the OTCBB is not the principal
      trading market for the shares of Common Stock, the average of the last reported
      sale prices on the principal trading market for the Common Stock during the
      same
      period as reported by Bloomberg, or (iii) if market value cannot be calculated
      as of such date on any of the foregoing bases, the Market Price shall be the
      fair market value as reasonably determined in good faith by (a) the Board of
      Directors of the Company or, at the option of a majority-in-interest of the
      holders of the outstanding Warrants by (b) an independent investment bank of
      nationally recognized standing in the valuation of businesses similar to the
      business of the corporation. The manner of determining the Market Price of
      the
      Common Stock set forth in the foregoing definition shall apply with respect
      to
      any other security in respect of which a determination as to market value must
      be made hereunder.

     

    
      
        
        

      

      
        -
          8 -

        
          

        

      

      
        
        

      

    

     

    (iii)  “Common
      Stock,”
      for
      purposes of this Paragraph 4, includes the Common Stock, par value $.001 per
      share, and any additional class of stock of the Company having no preference
      as
      to dividends or distributions on liquidation, provided that the shares
      purchasable pursuant to this Warrant shall include only shares of Common Stock,
      par value $.001 per share, in respect of which this Warrant is exercisable,
      or
      shares resulting from any subdivision or combination of such Common Stock,
      or in
      the case of any reorganization, reclassification, consolidation, merger, or
      sale
      of the character referred to in Paragraph 4(e) hereof, the stock or other
      securities or property provided for in such Paragraph.

     

    5.  Issue
      Tax.
      The
      issuance of certificates for Warrant Shares upon the exercise of this Warrant
      shall be made without charge to the holder of this Warrant or such shares for
      any issuance tax or other costs in respect thereof, provided that the Company
      shall not be required to pay any tax which may be payable in respect of any
      transfer involved in the issuance and delivery of any certificate in a name
      other than the holder of this Warrant.

     

    6.  No
      Rights or Liabilities as a Shareholder.
      This
      Warrant shall not entitle the holder hereof to any voting rights or other rights
      as a shareholder of the Company. No provision of this Warrant, in the absence
      of
      affirmative action by the holder hereof to purchase Warrant Shares, and no
      mere
      enumeration herein of the rights or privileges of the holder hereof, shall
      give
      rise to any liability of such holder for the Exercise Price or as a shareholder
      of the Company, whether such liability is asserted by the Company or by
      creditors of the Company.

     

    7.  Transfer,
      Exchange, and Replacement of Warrant.

     

    (a)  Restriction
      on Transfer.
      This
      Warrant and the rights granted to the holder hereof are transferable, in whole
      or in part, upon surrender of this Warrant, together with a properly executed
      assignment in the form attached hereto, at the office or agency of the Company
      referred to in Paragraph 7(e) below, pro-vided, however, that any transfer
      or assignment shall be subject to the conditions set forth in Paragraph 7(f)
      hereof and to the applicable provisions of the Securities Purchase Agreement.
      Until due presentment for registration of transfer on the books of the Company,
      the Company may treat the registered holder hereof as the owner and holder
      hereof for all purposes, and the Company shall not be affected by any notice
      to
      the con-trary. Notwithstanding anything to the contrary contained herein, the
      registration rights described in Paragraph 8 are assignable only in accordance
      with the provisions of that certain Registration Rights Agreement, dated
      October 31, 2006, by and among the Company and the other signatories thereto
      (the “Registration Rights Agreement”).

     

    (b)  Warrant
      Exchangeable for Different Denomina-tions.
      This
      Warrant is exchange-able, upon the surrender hereof by the holder hereof at
      the
      office or agency of the Company referred to in Paragraph 7(e) below, for new
      Warrants of like tenor representing in the aggregate the right to purchase
      the
      number of shares of Common Stock which may be purchased hereunder, each of
      such
      new Warrants to represent the right to purchase such number of shares as shall
      be designated by the holder hereof at the time of such surrender.

     

    
      
        
        

      

      
        -
          9 -

        
          

        

      

      
        
        

      

    

     

    (c)  Replacement
      of Warrant.
      Upon
      receipt of evi-dence reasonably satisfactory to the Company of the loss, theft,
      destruction, or mutilation of this Warrant and, in the case of any such loss,
      theft, or destruc-tion, upon delivery of an indemnity agreement reason-ably
      satisfactory in form and amount to the Company, or, in the case of any such
      mutilation, upon surrender and cancellation of this Warrant, the Company, at
      its
      expense, will execute and deliver, in lieu thereof, a new Warrant of like
      tenor.

     

    (d)  Cancellation;
      Payment of Expenses.
      Upon the
      surrender of this Warrant in connection with any trans-fer, exchange, or
      replacement as provided in this Paragraph 7, this Warrant shall be promptly
      canceled by the Company. The Company shall pay all taxes (other than securities
      transfer taxes) and all other expenses (other than legal expenses, if any,
      incurred by the holder or transferees) and charges payable in connection with
      the preparation, execution, and delivery of Warrants pursuant to this Paragraph
      7.

     

    (e)  Register.
      The
      Company shall maintain, at its principal executive offices (or such other office
      or agency of the Company as it may designate by notice to the holder hereof),
      a
      register for this Warrant, in which the Company shall record the name and
      address of the person in whose name this Warrant has been issued, as well as
      the
      name and address of each transferee and each prior owner of this
      Warrant.

     

    (f)  Exercise
      or Transfer Without Registration.
      If, at
      the time of the surrender of this Warrant in connection with any exercise,
      transfer, or exchange of this Warrant, this Warrant (or, in the case of any
      exercise, the Warrant Shares issuable hereunder), shall not be registered under
      the Securities Act of 1933, as amended (the “Securities Act”) and under
      applicable state securities or blue sky laws, the Company may require, as a
      condition of allowing such exercise, transfer, or exchange, (i) that the holder
      or transferee of this Warrant, as the case may be, furnish to the Company a
      written opinion of counsel, which opinion and counsel are acceptable to the
      Company, to the effect that such exercise, transfer, or exchange may be made
      without registration under said Act and under applicable state securities or
      blue sky laws, (ii) that the holder or transferee execute and deliver to the
      Company an investment letter in form and substance acceptable to the Company
      and
      (iii) that the transferee be an “accredited investor” as defined in Rule 501(a)
      promulgated under the Securities Act; provided that no such opinion, letter
      or
      status as an “accredited investor” shall be required in connection with a
      transfer pursuant to Rule 144 under the Securities Act. The first holder of
      this
      Warrant, by taking and holding the same, represents to the Company that such
      holder is acquiring this Warrant for investment and not with a view to the
      distribution thereof. 

     

    8.  Registration
      Rights.
      The
      initial holder of this Warrant (and certain assignees thereof) is entitled
      to
      the benefit of such registration rights in respect of the Warrant Shares as
      are
      set forth in Section 2 of the Registration Rights Agreement.

     

    9.  Notices.

    All
      notices, requests, and other communications required or permitted to be given
      or
      delivered hereunder to the holder of this Warrant shall be in writing, and
      shall
      be personally delivered, or shall be sent by certified or registered mail or
      by
      recognized overnight mail courier, postage prepaid and addressed, to such holder
      at the address shown for such holder on the books of the Company, or at such
      other address as shall have been furnished to the Company by notice from such
      holder. All notices, requests, and other communications required or permitted
      to
      be given or delivered hereunder to the Company shall be in writing, and shall
      be
      personally delivered, or shall be sent by certified or registered mail or by
      recognized overnight mail courier, postage prepaid and addressed, to the office
      of the Company at 21 Water Street, Vancouver BC Canada V6B 1A1, Attention:
      Chief
      Executive Officer, or at such other address as shall have been furnished to
      the
      holder of this Warrant by notice from the Company. Any such notice, request,
      or
      other communication may be sent by facsimile, but shall in such case be
      subsequently confirmed by a writing personally delivered or sent by certified
      or
      registered mail or by recognized overnight mail courier as provided above.
      All
      notices, requests, and other communications shall be deemed to have been given
      either at the time of the receipt thereof by the person entitled to re-ceive
      such notice at the address of such person for purposes of this Paragraph 9,
      or,
      if mailed by registered or certified mail or with a recognized overnight mail
      courier upon deposit with the United States Post Office or such overnight mail
      courier, if postage is prepaid and the mailing is properly addressed, as the
      case may be.

     

    
      
        
        

      

      
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          10 -

        
          

        

      

      
        
        

      

    

     

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

     

    11.  Miscellaneous.

     

    (a)  Amendments.
      This
      Warrant and any provision hereof may only be amended by an instrument in writing
      signed by the Company and the holder hereof.

     

    (b)  Descriptive
      Headings.
      The
      descriptive headings of the several paragraphs of this Warrant are in-serted
      for
      purposes of reference only, and shall not affect the meaning or construction
      of
      any of the provisions hereof.

     

    (c)  Cashless
      Exercise.
      Notwithstanding anything to the contrary contained in this Warrant, if the
      resale of the Warrant Shares by the holder is not then registered pursuant
      to an
      effective registration statement under the Securities Act, this Warrant may
      be
      exercised by presentation and surrender of this Warrant to the Company at its
      principal executive offices with a written notice of the holder’s intention to
      effect a cashless exercise, including a calculation of the number of shares
      of
      Common Stock to be issued upon such exercise in accordance with the terms hereof
      (a “Cashless Exercise”). In the event of a Cashless Exercise, in lieu of paying
      the Exercise Price in cash, the holder shall surrender this Warrant for that
      number of shares of Common Stock determined by multiplying the number of Warrant
      Shares to which it would otherwise be entitled by a fraction, the numerator
      of
      which shall be the difference between the then current Market Price per share
      of
      the Common Stock and the Exercise Price, and the denominator of which shall
      be
      the then current Market Price per share of Common Stock. For example, if the
      holder is exercising 100,000 Warrants with a per Warrant exercise price of
      $0.75
      per share through a cashless exercise when the Common Stock’s current Market
      Price per share is $2.00 per share, then upon such Cashless Exercise the holder
      will receive 62,500 shares of Common Stock.

     

    
      
        
        

      

      
        -
          11 -

        
          

        

      

      
        
        

      

    

     

    (d)  Remedies.
      The
      Company acknowledges that a breach by it of its obligations hereunder will
      cause
      irreparable harm to the holder, by vitiating the intent and purpose of the
      transaction contemplated hereby. Accordingly, the Company acknowledges that
      the
      remedy at law for a breach of its obligations under this Warrant will be
      inadequate and agrees, in the event of a breach or threatened breach by the
      Company of the provisions of this Warrant, that the holder shall be entitled,
      in
      addition to all other available remedies at law or in equity, and in addition
      to
      the penalties assessable herein, to an injunction or injunctions restraining,
      preventing or curing any breach of this Warrant and to enforce specifically
      the
      terms and provisions thereof, without the necessity of showing economic loss
      and
      without any bond or other security being required.

    

    

    

    

    

    

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK]

     

    
      
        
        

      

      
        -
          12 -

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF,
      the
      Company has caused this Warrant to be signed by its duly authorized
      officer.

     

    
      	 	 	 
	 	VERIDICOM
              INTERNATIONAL, INC.
	 
 	 
 	 
 
	 	By:  	 
	 	
              
Paul
              Mann
	 	Chief
              Executive Officer 

    

    

    Dated
      as
      of October 31, 2006

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    FORM
      OF EXERCISE AGREEMENT

    

    Dated:
      ________ __, 200_

    

    To: ______________________

    

    

    The
      undersigned, pursuant to the provisions set forth in the within Warrant, hereby
      agrees to purchase ________ shares of Common Stock covered by such Warrant,
      and
      makes pay-ment herewith in full therefor at the price per share provided by
      such
      Warrant in cash or by certified or official bank check in the amount of, or,
      if
      the resale of such Common Stock by the undersigned is not currently registered
      pursuant to an effective registration statement under the Securities Act of
      1933, as amended, by surrender of securities issued by the Company (including
      a
      portion of the Warrant) having a market value (in the case of a portion of
      this
      Warrant, determined in accordance with Section 11(c) of the Warrant) equal
      to
      $_________. Please issue a certificate or certifi-cates for such shares of
      Common Stock in the name of and pay any cash for any fractional share
      to:

     

    
      	 	 	 
	 	Name:__________________________________
	 	 
	 	 
	 	Signature:
	 	Address:___________________________
	 	    _________________________
	 	 
	 	 
	 
 	 
Note: 	 
The
              above signature should correspond exactly with the name on the face
              of the
              within Warrant, if applicable.
	 	 	 
	 	
            
	 	 

 

     

    

    and,
      if
      said number of shares of Common Stock shall not be all the shares purchasable
      under the within Warrant, a new Warrant is to be issued in the name of said
      undersigned covering the balance of the shares purchasable thereunder less
      any
      frac-tion of a share paid in cash.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    FORM
      OF ASSIGNMENT

    

    

    FOR
      VALUE RECEIVED,
      the
      undersigned hereby sells, assigns, and transfers all the rights of the
      undersigned under the within Warrant, with respect to the number of shares
      of
      Common Stock covered thereby set forth hereinbelow, to:

    
 

    
      	Name of Assignee	Address	No of
              Shares

    

    

    

    

    ,
      and
      hereby irrevocably constitutes and appoints ___________________________________
      as agent and attorney-in-fact to trans-fer said Warrant on the books of the
      within-named corporation, with full power of substitution in the
      premises.

    

    Dated: ________
      __, 200_

     

    
       

      
        	 	 	 
	In
                the
                presence of:	Name:______________________________
	 	 
	 	 
	 	Signature:
	 	Title
                of Signing Officer or Agent (if any):
	 	    _________________________
	 	 
	 	        
                ___________________
	 	Address:    ______________________
	 	        
                ___________________
	 	 
	 
 	Note: 	
                The
                  above signature should correspond exactly with the name on the
                  face of the
                  within Warrant, if applicable.REGISTRATION
      RIGHTS AGREEMENT

     

    REGISTRATION
      RIGHTS AGREEMENT (this “Agreement”),
      dated
      as of October 31, 2006, by and among Veridicom International, Inc., a Delaware
      corporation with its headquarters located at 21 Water Street, Vancouver BC
      Canada V6B 1A1 (the “Company”),
      and
      each of the undersigned (together with their respective affiliates and any
      assignee or transferee of all of their respective rights hereunder, the
“Initial
      Investors”).
      

    

    WHEREAS:

     

A. In
  connection with the Securities Purchase Agreement by and among the parties hereto
  of even date herewith (the “Securities Purchase Agreement”), the
  Company has agreed, upon the terms and subject to the conditions contained therein,
  to issue and sell to the Initial Investors (i) secured
  convertible notes in the aggregate principal amount of up to Five Hundred Thousand
  Dollars ($500,000) (the “Notes”) that are convertible into shares
  of the Company’s common stock (the “Common Stock”), upon the
  terms and subject to the limitations and conditions set forth in such Notes
  and (ii) warrants
  (the “Warrants”) to acquire an aggregate of 10,000,000 shares of
  Common Stock, upon the terms and conditions and subject to the limitations and
  conditions set forth in the Warrants; and

     

    B. To
      induce
      the Initial Investors to execute and deliver the Securities 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 each of the Initial Investors hereby agree
      as follows:

     

    1. DEFINITIONS.

     

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

     

    (i) “Investors”
means
      the Initial Investors and any transferee or assignee who agrees to become bound
      by the provisions of this Agreement in accordance with Section 9
      hereof.

     

    (ii) “register,”
      “registered,”
and
      “registration”
refer
      to a registration effected by preparing and filing a Registration Statement
      or
      Statements 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
      by
      the United States Securities and Exchange Commission (the “SEC”).

     

    (iii) “Registrable
      Securities”
means
      the Conversion Shares issued or issuable upon conversion or otherwise pursuant
      to the Notes and Additional Notes (as defined in the Securities Purchase
      Agreement) including, without limitation, Damages Shares (as defined in the
      Notes) issued or issuable pursuant to the Notes, shares of Common Stock issued
      or issuable in payment of the Standard Liquidated Damages Amount (as defined
      in
      the Securities Purchase Agreement), shares issued or issuable in respect of
      interest or in redemption of the Notes in accordance with the terms thereof)
      and
      any shares of capital stock issued or issuable as a dividend on or in exchange
      for or otherwise with respect to any of the foregoing.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (iv) “Registration
      Statement”
means
      a
      registration statement of the Company under the 1933 Act.

     

    b. Capitalized
      terms used herein and not otherwise defined herein shall have the respective
      meanings set forth in the Securities Purchase Agreement or the Convertible
      Note.

     

    2. REGISTRATION.

     

    a. Mandatory
      Registration.
      The
      Company shall prepare, and, on or prior to thirty (30) days from the date of
      obtaining Stockholder Approval (as defined in the Securities Purchase Agreement)
      (the “Filing
      Date”),
      file
      with the SEC a Registration Statement on Form SB-2 (or, if Form SB-2 is not
      then
      available, on such form of Registration Statement as is then available to effect
      a registration of the Registrable Securities, subject to the consent of the
      Initial Investors, which consent will not be unreasonably withheld) covering
      the
      resale of the Registrable Securities underlying the Notes issued or issuable
      pursuant to the Securities Purchase Agreement, which Registration Statement,
      to
      the extent allowable under the 1933 Act and the rules and regulations
      promulgated thereunder (including Rule 416), shall state that such Registration
      Statement also covers such indeterminate number of additional shares of Common
      Stock as may become issuable upon conversion of or otherwise pursuant to the
      Notes to prevent dilution resulting from stock splits, stock dividends or
      similar transactions. The number of shares of Common Stock initially included
      in
      such Registration Statement shall be no less than an amount equal to the sum
      of
      the number of Conversion Shares that are then issuable upon conversion of the
      Notes (based on the Variable Conversion Price as would then be in effect and
      assuming the Variable Conversion Price is the Conversion Price at such time),
      without regard to any limitation on the Investor’s ability to convert the Notes.
      The Company acknowledges that the number of shares initially included in the
      Registration Statement represents a good faith estimate of the maximum number
      of
      shares issuable upon conversion of the Notes. 

     

    b. Underwritten
      Offering.
      If any
      offering pursuant to a Registration Statement pursuant to Section 2(a) hereof
      involves an underwritten offering, the Investors who hold a majority in interest
      of the Registrable Securities subject to such underwritten offering, with the
      consent of a majority-in-interest of the Initial Investors, shall have the
      right
      to select one legal counsel and an investment banker or bankers and manager
      or
      managers to administer the offering, which investment banker or bankers or
      manager or managers shall be reasonably satisfactory to the
      Company.

     

    c. Payments
      by the Company.
      The
      Company shall use its best efforts to obtain effectiveness of the Registration
      Statement as soon as practicable. If (i) the
      Registration Statement(s) covering the Registrable Securities required to be
      filed by the Company pursuant to Section 2(a) hereof is not filed by the Filing
      Date or declared effective by the SEC on or prior to one hundred and five (105)
      days from the date of obtaining Stockholder Approval (as defined in the
      Securities Purchase Agreement) (the “Effectiveness
      Deadline”),
      or
(ii) after
      the Registration Statement has been declared effective by the SEC, sales of
      all
      of the Registrable Securities cannot be made pursuant to the Registration
      Statement, or (iii) the
      Common Stock is not listed or included for quotation on the Nasdaq National
      Market (“Nasdaq”),
      the
      Nasdaq SmallCap Market (“Nasdaq
      SmallCap”),
      the
      New York Stock Exchange (the “NYSE”)
      or the
      American Stock Exchange (the “AMEX”)
      after
      being so listed or included for quotation, or (iv) the
      Common Stock ceases to be traded on the Over-the-Counter Bulletin Board (the
      “OTCBB”)
      or on
      the Pinksheets (“Pinksheets”)
      or any
      equivalent replacement exchange prior to being listed or included for quotation
      on one of the aforementioned markets, then the Company will make payments to
      the
      Investors in such amounts and at such times as shall be determined pursuant
      to
      this Section 2(c) as partial relief for the damages to the Investors by reason
      of any such delay in or reduction of their ability to sell the Registrable
      Securities (which remedy shall not be exclusive of any other remedies available
      at law or in equity). The Company shall pay to each holder of the Notes or
      Registrable Securities an amount equal to the then outstanding principal amount
      of the Notes (and, in the case of holders of Registrable Securities, the
      principal amount of Notes from which such Registrable Securities were converted)
      (“Outstanding
      Principal Amount”),
      multiplied by the Applicable Percentage (as defined below) times the sum of:
      (i)
      the number of months (prorated for partial months) after the Filing Date or
      the
      end of the Effectiveness Deadline and prior to the date the Registration
      Statement is declared effective by the SEC, provided, however, that there shall
      be excluded from such period any delays which are solely attributable to changes
      required by the Investors in the Registration Statement with respect to
      information relating to the Investors, including, without limitation, changes
      to
      the plan of distribution, or to the failure of the Investors to conduct their
      review of the Registration Statement pursuant to Section 3(h) below in a
      reasonably prompt manner; (ii) the number of months (prorated for partial
      months) that sales of all of the Registrable Securities cannot be made pursuant
      to the Registration Statement after the Registration Statement has been declared
      effective (including, without limitation, when sales cannot be made by reason
      of
      the Company’s failure to properly supplement or amend the prospectus included
      therein in accordance with the terms of this Agreement, but excluding any days
      during an Allowed Delay (as defined in Section 3(f)); and (iii) the number
      of
      months (prorated for partial months) that the Common Stock is not listed or
      included for quotation on the OTCBB, Pinksheets, Nasdaq, Nasdaq SmallCap, NYSE
      or AMEX or that trading thereon is halted after the Registration Statement
      has
      been declared effective. The term “Applicable
      Percentage”
means
      two hundredths (.015). (For example, if the Registration Statement becomes
      effective one (1) month after the end of the Effectiveness Deadline, the Company
      would pay $5,000 for each $250,000 of Outstanding Principal Amount. If
      thereafter, sales could not be made pursuant to the Registration Statement
      for
      an additional period of one (1) month, the Company would pay an additional
      $5,000 for each $250,000 of Outstanding Principal Amount.) Such amounts shall
      be
      paid in cash or, at the Company’s option, in shares of Common Stock priced at
      the Conversion Price (as defined in the Notes) on such payment date.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    d. Piggy-Back
      Registrations.
      Subject
      to the last sentence of this Section 2(d), if at any time prior to the
      expiration of the Registration Period (as hereinafter defined) the Company
      shall
      determine to file with the SEC a Registration Statement relating to an offering
      for its own account or the account of others under the 1933 Act of any of its
      equity securities (other than on Form S-4 or Form S-8 or their then equivalents
      relating to equity securities to be issued solely in connection with any
      acquisition of any entity or business or equity securities issuable in
      connection with stock option or other bona fide,
      employee benefit plans), the Company shall send to each Investor who is entitled
      to registration rights under this Section 2(d) written notice of such
      determination and, if within fifteen (15) days after the effective date of
      such
      notice, such Investor shall so request in writing, the Company shall include
      in
      such Registration Statement all or any part of the Registrable Securities such
      Investor requests to be registered, except that if, in connection with any
      underwritten public offering for the account of the Company the managing
      underwriter(s) thereof shall impose a limitation on the number of shares of
      Common Stock which may be included in the Registration Statement because, in
      such underwriter(s)’ judgment, marketing or other factors dictate such
      limitation is necessary to facilitate public distribution, then the Company
      shall be obligated to include in such Registration Statement only such limited
      portion of the Registrable Securities with respect to which such Investor has
      requested inclusion hereunder as the underwriter shall permit. Any exclusion
      of
      Registrable Securities shall be made pro rata among the Investors seeking to
      include Registrable Securities in proportion to the number of Registrable
      Securities sought to be included by such Investors; provided,
      however,
      that
      the Company shall not exclude any Registrable Securities unless the Company
      has
      first excluded all outstanding securities, the holders of which are not entitled
      to inclusion of such securities in such Registration Statement or are not
      entitled to pro rata inclusion with the Registrable Securities; and provided,
      further,
      however,
      that,
      after giving effect to the immediately preceding proviso, any exclusion of
      Registrable Securities shall be made pro rata with holders of other securities
      having the right to include such securities in the Registration Statement other
      than holders of securities entitled to inclusion of their securities in such
      Registration Statement by reason of demand registration rights. No right to
      registration of Registrable Securities under this Section 2(d) shall be
      construed to limit any registration required under Section 2(a) hereof. If
      an
      offering in connection with which an Investor is entitled to registration under
      this Section 2(d) is an underwritten offering, then each Investor whose
      Registrable Securities are included in such Registration Statement shall, unless
      otherwise agreed by the Company, offer and sell such Registrable Securities
      in
      an underwritten offering using the same underwriter or underwriters and, subject
      to the provisions of this Agreement, on the same terms and conditions as other
      shares of Common Stock included in such underwritten offering. Notwithstanding
      anything to the contrary set forth herein, the registration rights of the
      Investors pursuant to this Section 2(d) shall only be available in the event
      the
      Company fails to timely file, obtain effectiveness or maintain effectiveness
      of
      any Registration Statement to be filed pursuant to Section 2(a) in accordance
      with the terms of this Agreement.

     

    e. Eligibility
      for Form S-3, SB-2 or S-1; Conversion to Form S-3.
      The
      Company represents and warrants that it meets the requirements for the use
      of
      Form S-3, SB-2 or S-1 for registration of the sale by the Initial Investors
      and
      any other Investors of the Registrable Securities. The Company agrees to file
      all reports required to be filed by the Company with the SEC in a timely manner
      so as to remain eligible or become eligible, as the case may be, and thereafter
      to maintain its eligibility, for the use of Form S-3. If the Company is not
      currently eligible to use Form S-3, not later than fifteen (15) business days
      after the Company first meets the registration eligibility and transaction
      requirements for the use of Form S-3 (or any successor form) for registration
      of
      the offer and sale by the Initial Investors and any other Investors of
      Registrable Securities, the Company shall file a Registration Statement on
      Form
      S-3 (or such successor form) with respect to the Registrable Securities covered
      by the Registration Statement on Form SB-2 or Form S-1, whichever is applicable,
      filed pursuant to Section 2(a) (and include in such Registration Statement
      on
      Form S-3 the information required by Rule 429 under the 1933 Act) or convert
      the
      Registration Statement on Form SB-2 or Form S-1, whichever is applicable, filed
      pursuant to Section 2(a) to a Form S-3 pursuant to Rule 429 under the 1933
      Act
      and cause such Registration Statement (or such amendment) to be declared
      effective no later than thirty (30) days after filing. In the event of a breach
      by the Company of the provisions of this Section 2(e), the Company will be
      required to make payments pursuant to Section 2(c) hereof.

     

    
      
         

      

      
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    3. OBLIGATIONS
      OF THE COMPANY. 

     

    In
      connection with the registration of the Registrable Securities, the Company
      shall have the following obligations:

     

    a. The
      Company shall prepare promptly, and file with the SEC not later than the Filing
      Date, a Registration Statement with respect to the number of Registrable
      Securities provided in Section 2(a), and thereafter use its best efforts to
      cause such Registration Statement relating to Registrable Securities to become
      effective as soon as possible after such filing but in no event later than
      one
      the Effectiveness Deadline, and keep the Registration Statement effective
      pursuant to Rule 415 at all times until such date as is the earlier of (i)
      the
      date on which all of the Registrable Securities have been sold and (ii) the
      date
      on which the Registrable Securities (in the opinion of counsel to the Initial
      Investors) may be immediately sold to the public without registration or
      restriction (including, without limitation, as to volume by each holder thereof)
      under the 1933 Act (the “Registration
      Period”),
      which
      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 not misleading.

     

    b. The
      Company shall prepare and file with the SEC such amendments (including
      post-effective amendments) and supplements to the Registration Statements and
      the prospectus used in connection with the Registration Statements as may be
      necessary to keep the Registration Statements 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 Statements until such time as all of such
      Registrable Securities have been disposed of in accordance with the intended
      methods of disposition by the seller or sellers thereof as set forth in the
      Registration Statements. In the event the number of shares available under
      a
      Registration Statement filed pursuant to this Agreement is insufficient to
      cover
      all of the Registrable Securities issued or issuable upon conversion of the
      Notes, the Company shall amend the Registration Statement, or file a new
      Registration Statement (on the short form available therefor, if applicable),
      or
      both, so as to cover all of the Registrable Securities, in each case, as soon
      as
      practicable, but in any event within fifteen (15) days after the necessity
      therefor arises (based on the market price of the Common Stock and other
      relevant factors on which the Company reasonably elects to rely). The Company
      shall use its best efforts to cause such amendment and/or new Registration
      Statement to become effective as soon as practicable following the filing
      thereof, but in any event within thirty (30) days after the date on which the
      Company reasonably first determines (or reasonably should have determined)
      the
      need therefor. The provisions of Section 2(c) above shall be applicable with
      respect to such obligation, with the one hundred and five (105) days running
      from the day the Company reasonably first determines (or reasonably should
      have
      determined) the need therefor.

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    c. The
      Company shall furnish to each Investor whose Registrable Securities are included
      in a Registration Statement and its legal counsel (i) promptly
      (but in no event more than two (2) business days) after the same is prepared
      and
      publicly distributed, filed with the SEC, or received by the Company, one copy
      of each Registration Statement and any amendment thereto, each preliminary
      prospectus and prospectus and each amendment or supplement thereto, and, in
      the
      case of the Registration Statement referred to in Section 2(a), each letter
      written by or on behalf of the Company to the SEC or the staff of the SEC,
      and
      each item of correspondence from the SEC or the staff of the SEC, in each case
      relating to such Registration Statement (other than any portion of any thereof
      which contains information for which the Company has sought confidential
      treatment), and (ii) promptly
      (but in no event more than two (2) business days) after the Registration
      Statement is declared effective by the SEC, such number of copies of a
      prospectus, including a preliminary prospectus, and all amendments and
      supplements thereto and such other documents as such Investor may reasonably
      request in order to facilitate the disposition of the Registrable Securities
      owned by such Investor. The Company will immediately notify each Investor by
      facsimile of the effectiveness of each Registration Statement or any
      post-effective amendment. The Company will promptly respond to any and all
      comments received from the SEC (which comments shall promptly be made available
      to the Investors upon request), with a view towards causing each Registration
      Statement or any amendment thereto to be declared effective by the SEC as soon
      as practicable, shall promptly file an acceleration request as soon as
      practicable (but in no event more than two (2) business days) following the
      resolution or clearance of all SEC comments or, if applicable, following
      notification by the SEC that any such Registration Statement or any amendment
      thereto will not be subject to review and shall, if required by SEC Rules,
      promptly file with the SEC a final prospectus as soon as practicable (but in
      no
      event more than two (2) business days) following receipt by the Company from
      the
      SEC of an order declaring the Registration Statement effective. In the event
      of
      a breach by the Company of the provisions of this Section 3(c), the Company
      will
      be required to make payments pursuant to Section 2(c) hereof.

     

    d. The
      Company shall use reasonable efforts to (i) register
      and qualify the Registrable Securities covered by the Registration Statements
      under such other securities or “blue sky” laws of such jurisdictions in the
      United States as the Investors who hold a majority in interest of the
      Registrable Securities being offered reasonably request, (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 (a) qualify
      to do business in any jurisdiction where it would not otherwise be required
      to
      qualify but for this Section 3(d), (b) subject
      itself to general taxation in any such jurisdiction, (c) file
      a general consent to service of process in any such jurisdiction, (d) provide
      any undertakings that cause the Company undue expense or burden, or (e) make
      any change in its charter or bylaws, which in each case the Board of Directors
      of the Company determines to be contrary to the best interests of the Company
      and its shareholders.

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    e. In
      the
      event Investors who hold a majority-in-interest of the Registrable Securities
      being offered in the offering (with the approval of a majority-in-interest
      of
      the Initial Investors) select underwriters for the offering, the Company shall
      enter into and perform its obligations under an underwriting agreement, in
      usual
      and customary form, including, without limitation, customary indemnification
      and
      contribution obligations, with the underwriters of such offering.

     

    f. As
      promptly as practicable after becoming aware of such event, the Company shall
      notify each Investor of the happening of any event, of which the Company has
      knowledge, 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
      omission to state a material fact required to be stated therein or necessary
      to
      make the statements therein not misleading, and use its best efforts promptly
      to
      prepare a supplement or amendment to any Registration Statement to correct
      such
      untrue statement or omission, and deliver such number of copies of such
      supplement or amendment to each Investor as such Investor may reasonably
      request; provided that, for not more than ten (10) consecutive trading days
      (or
      a total of not more than twenty (20) trading days in any twelve (12) month
      period), the Company may delay the disclosure of material non-public information
      concerning the Company (as well as prospectus or Registration Statement
      updating) the disclosure of which at the time is not, in the good faith opinion
      of the Company, in the best interests of the Company (an “Allowed
      Delay”);
      provided, further, that the Company shall promptly (i) notify
      the Investors in writing of the existence of (but in no event, without the
      prior
      written consent of an Investor, shall the Company disclose to such investor
      any
      of the facts or circumstances regarding) material non-public information giving
      rise to an Allowed Delay and (ii) advise
      the Investors in writing to cease all sales under such Registration Statement
      until the end of the Allowed Delay. Upon expiration of the Allowed Delay, the
      Company shall again be bound by the first sentence of this Section 3(f) with
      respect to the information giving rise thereto.

     

    g. The
      Company shall use its best efforts to prevent the issuance of any stop order
      or
      other suspension of effectiveness of any Registration Statement, and, if such
      an
      order is issued, to obtain the withdrawal of such order at the earliest possible
      moment and to notify each Investor who holds Registrable Securities being sold
      (or, in the event of an underwritten offering, the managing underwriters) of
      the
      issuance of such order and the resolution thereof.

     

    h. The
      Company shall permit a single firm of counsel designated by the Initial
      Investors to review such Registration Statement and all amendments and
      supplements thereto (as well as all requests for acceleration or effectiveness
      thereof) a reasonable period of time prior to their filing with the SEC, and
      not
      file any document in a form to which such counsel reasonably objects and will
      not request acceleration of such Registration Statement without prior notice
      to
      such counsel. The sections of such Registration Statement covering information
      with respect to the Investors, the Investor’s beneficial ownership of securities
      of the Company or the Investors intended method of disposition of Registrable
      Securities shall conform to the information provided to the Company by each
      of
      the Investors.

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    i. The
      Company shall make generally available to its security holders as soon as
      practicable, but not later than one hundred and five (105) days after the close
      of the period covered thereby, an earnings statement (in form complying with
      the
      provisions of Rule 158 under the 1933 Act) covering a twelve-month period
      beginning not later than the first day of the Company’s fiscal quarter next
      following the effective date of the Registration Statement.

     

    j. At
      the
      request of any Investor, the Company shall furnish, on the date that Registrable
      Securities are delivered to an underwriter, if any, for sale in connection
      with
      any Registration Statement or, if such securities are not being sold by an
      underwriter, on the date of effectiveness thereof (i) an
      opinion, dated as of such date, from counsel representing the Company for
      purposes of such Registration Statement, in form, scope and substance as is
      customarily given in an underwritten public offering, addressed to the
      underwriters, if any, and the Investors and (ii) a
      letter, dated such date, from the Company’s independent certified public
      accountants in form and substance as is customarily given by independent
      certified public accountants to underwriters in an underwritten public offering,
      addressed to the underwriters, if any, and the Investors.

     

    k. The
      Company shall make available for inspection by (i) any
      Investor, (ii) any
      underwriter participating in any disposition pursuant to a Registration
      Statement, (iii) one
      firm of attorneys and one firm of accountants or other agents retained by the
      Initial Investors, (iv) one
      firm of attorneys and one firm of accountants or other agents retained by all
      other Investors, and (v) one
      firm of attorneys retained by all such underwriters (collectively, the
“Inspectors”)
      all
      pertinent financial and other records, and pertinent corporate documents and
      properties of the Company, including without limitation, records of conversions
      by other holders of convertible securities issued by the Company and the
      issuance of stock to such holders pursuant to the conversions (collectively,
      the
“Records”),
      as
      shall be reasonably deemed necessary by each Inspector to enable each Inspector
      to exercise its due diligence responsibility, and cause the Company’s officers,
      directors and employees to supply all information which any Inspector may
      reasonably request for purposes of such due diligence; provided,
      however,
      that
      each Inspector shall hold in confidence and shall not make any disclosure
      (except to an Investor) of any Record or other information which the Company
      determines in good faith to be confidential, and of which determination the
      Inspectors are so notified, unless (a) the
      disclosure of such Records is necessary to avoid or correct a misstatement
      or
      omission in any Registration Statement, (b) the
      release of such Records is ordered pursuant to a subpoena or other order from
      a
      court or government body of competent jurisdiction, or (c) the
      information in such Records has been made generally available to the public
      other than by disclosure in violation of this or any other agreement. The
      Company shall not be required to disclose any confidential information in such
      Records to any Inspector until and unless such Inspector shall have entered
      into
      confidentiality agreements (in form and substance satisfactory to the Company)
      with the Company with respect thereto, substantially in the form of this Section
      3(k). Each Investor agrees that it shall, upon learning that disclosure of
      such
      Records is sought in or by a court or governmental body of competent
      jurisdiction or through other means, give prompt notice to the Company and
      allow
      the Company, at its expense, to undertake appropriate action to prevent
      disclosure of, or to obtain a protective order for, the Records deemed
      confidential. Nothing herein (or in any other confidentiality agreement between
      the Company and any Investor) shall be deemed to limit the Investor’s ability to
      sell Registrable Securities in a manner which is otherwise consistent with
      applicable laws and regulations. 

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    l. The
      Company shall hold in confidence and not make any disclosure of information
      concerning an Investor provided to the Company unless (i) disclosure
      of such information is necessary to comply with federal or state securities
      laws, (ii) the
      disclosure of such information is necessary to avoid or correct a misstatement
      or omission in any Registration Statement, (iii) the
      release of such information is ordered pursuant to a subpoena or other order
      from a court or governmental body of competent jurisdiction, or (iv) such
      information has been made generally available to the public other than by
      disclosure in violation of this or any other agreement. The Company agrees
      that
      it shall, upon learning that disclosure of such information concerning an
      Investor is sought in or by a court or governmental body of competent
      jurisdiction or through other means, give prompt notice to such Investor prior
      to making such disclosure, and allow the Investor, at its expense, to undertake
      appropriate action to prevent disclosure of, or to obtain a protective order
      for, such information.

     

    m. The
      Company shall (i) cause
      all the Registrable Securities covered by the Registration Statement to be
      listed on each national 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) to
      the extent the securities of the same class or series are not then listed on
      a
      national securities exchange, secure the designation and quotation, of all
      the
      Registrable Securities covered by the Registration Statement on Nasdaq or,
      if
      not eligible for Nasdaq, on Nasdaq SmallCap or, if not eligible for Nasdaq
      or
      Nasdaq SmallCap, on the OTCBB and, without limiting the generality of the
      foregoing, to arrange for at least two market makers to register with the
      National Association of Securities Dealers, Inc. (“NASD”)
      as
      such with respect to such Registrable Securities.

     

    n. The
      Company shall provide a transfer agent and registrar, which may be a single
      entity, for the Registrable Securities not later than the effective date of
      the
      Registration Statement.

     

    o. The
      Company shall cooperate with the Investors who hold Registrable Securities
      being
      offered and the managing underwriter or underwriters, if any, to facilitate
      the
      timely preparation and delivery of certificates (not bearing any restrictive
      legends) representing Registrable Securities to be offered pursuant to a
      Registration Statement and enable such certificates to be in such denominations
      or amounts, as the case may be, as the managing underwriter or underwriters,
      if
      any, or the Investors may reasonably request and registered in such names as
      the
      managing underwriter or underwriters, if any, or the Investors may request,
      and,
      within three (3) business days after a Registration Statement which includes
      Registrable Securities is ordered effective by the SEC, the Company shall
      deliver, and shall cause legal counsel selected by the Company to deliver,
      to
      the transfer agent for the Registrable Securities (with copies to the Investors
      whose Registrable Securities are included in such Registration Statement) an
      instruction in the form attached hereto as Exhibit
      1
      and an
      opinion of such counsel in the form attached hereto as Exhibit 2.

     

    p. At
      the
      request of the holders of a majority-in-interest of the Registrable Securities,
      the Company shall prepare and file with the SEC such amendments (including
      post-effective amendments) and supplements to a Registration Statement and
      any
      prospectus used in connection with the Registration Statement as may be
      necessary in order to change the plan of distribution set forth in such
      Registration Statement.

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    q. From
      and
      after the date of this Agreement, the Company shall not, and shall not agree
      to,
      allow the holders of any securities of the Company to include any of their
      securities, in excess of 1,000,000 shares of Common Stock, in any Registration
      Statement under Section 2(a) hereof or any amendment or supplement thereto
      under
      Section 3(b) hereof without the consent of the holders of a majority-in-interest
      of the Registrable Securities.

     

    r. The
      Company shall take all other reasonable actions necessary to expedite and
      facilitate disposition by the Investors of Registrable Securities pursuant
      to a
      Registration Statement.

     

    4. OBLIGATIONS
      OF THE INVESTORS.

     

    In
      connection with the registration of the Registrable Securities, the Investors
      shall have the following obligations:

     

    a. It
      shall
      be a condition precedent to the obligations of the Company to complete the
      registration pursuant to this Agreement with respect to the Registrable
      Securities of a particular Investor that such 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. At least three (3) business days prior
      to
      the first anticipated filing date of the Registration Statement, the Company
      shall notify each Investor of the information the Company requires from each
      such Investor. 

     

    b. Each
      Investor, by such Investor’s acceptance of the Registrable Securities, agrees to
      cooperate with the Company as reasonably requested by the Company in connection
      with the preparation and filing of the Registration Statements hereunder, unless
      such Investor has notified the Company in writing of such Investor’s election to
      exclude all of such Investor’s Registrable Securities from the Registration
      Statements.

     

    c. In
      the
      event Investors holding a majority-in-interest of the Registrable Securities
      being registered (with the approval of the Initial Investors) determine to
      engage the services of an underwriter, each Investor agrees to enter into and
      perform such Investor’s obligations under an underwriting agreement, in usual
      and customary form, including, without limitation, customary indemnification
      and
      contribution obligations, with the managing underwriter of such offering and
      take such other actions as are reasonably required in order to expedite or
      facilitate the disposition of the Registrable Securities, unless such Investor
      has notified the Company in writing of such Investor’s election to exclude all
      of such Investor’s Registrable Securities from such Registration
      Statement.

     

    d. Each
      Investor agrees that, upon receipt of any notice from the Company of the
      happening of any event of the kind described in Section 3(f) or 3(g), such
      Investor will immediately discontinue disposition of Registrable Securities
      pursuant to the Registration Statement covering such Registrable Securities
      until such Investor’s receipt of the copies of the supplemented or amended
      prospectus contemplated by Section 3(f) or 3(g) and, if so directed by the
      Company, such Investor shall deliver to the Company (at the expense of the
      Company) or destroy (and deliver to the Company a certificate of destruction)
      all copies in such Investor’s possession, of the prospectus covering such
      Registrable Securities current at the time of receipt of such
      notice.

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    e. No
      Investor may participate in any underwritten registration hereunder unless
      such
      Investor (i) agrees
      to sell such Investor’s Registrable Securities on the basis provided in any
      underwriting arrangements in usual and customary form entered into by the
      Company, (ii) completes
      and executes all questionnaires, powers of attorney, indemnities, underwriting
      agreements and other documents reasonably required under the terms of such
      underwriting arrangements, and (iii) agrees
      to pay its pro rata share of all underwriting discounts and commissions and
      any
      expenses in excess of those payable by the Company pursuant to Section 5
      below.

     

    5. EXPENSES
      OF REGISTRATION.

     

    All
      reasonable expenses, other than underwriting discounts and commissions, incurred
      in connection with registrations, filings or qualifications pursuant to Sections
      2 and 3, including, without limitation, all registration, listing and
      qualification fees, printers and accounting fees, the fees and disbursements
      of
      counsel for the Company, and the reasonable fees and disbursements of one
      counsel selected by the Initial Investors pursuant to Sections 2(b) and 3(h)
      hereof shall be borne by the Company.

     

    6. INDEMNIFICATION.
      

     

    In
      the
      event any Registrable Securities are included in a Registration Statement under
      this Agreement:

     

    a. To
      the
      extent permitted by law, the Company will indemnify, hold harmless and defend
      (i) each
      Investor who holds such Registrable Securities, (ii) the
      directors, officers, partners, employees, agents and each person who controls
      any Investor within the meaning of the 1933 Act or the Securities Exchange
      Act
      of 1934, as amended (the “1934
      Act”),
      if
      any, (iii) any
      underwriter (as defined in the 1933 Act) for the Investors, and (iv) the
      directors, officers, partners, employees and each person who controls any such
      underwriter within the meaning of the 1933 Act or the 1934 Act, if any (each,
      an
“Indemnified
      Person”),
      against any joint or several losses, claims, damages, liabilities or expenses
      (collectively, together with actions, proceedings or inquiries by any regulatory
      or self-regulatory organization, whether commenced or threatened, in respect
      thereof, “Claims”)
      to
      which any of them may become subject insofar as such Claims arise out of or
      are
      based upon: (i) any untrue statement or alleged untrue statement of a material
      fact in a Registration Statement or the omission or alleged omission to state
      therein a material fact required to be stated or necessary to make the
      statements therein not misleading; (ii) any untrue statement or alleged untrue
      statement of a material fact contained in any preliminary prospectus if used
      prior to the effective date of such Registration Statement, or 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; or (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 (the matters in the foregoing clauses
      (i)
      through (iii) being, collectively, “Violations”).
      Subject to the restrictions set forth in Section 6(c) with respect to the number
      of legal counsel, the Company shall reimburse the Indemnified Person, promptly
      as such expenses are incurred and are due and payable, for any reasonable 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 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 any Indemnified Person or underwriter
      for
      such Indemnified Person expressly for use in connection with the preparation
      of
      such 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) hereof; (ii) 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; and (iii) with respect to
      any
      preliminary prospectus, shall not inure to the benefit of any Indemnified Person
      if the untrue statement or omission of material fact contained in the
      preliminary prospectus was corrected on a timely basis in the prospectus, as
      then amended or supplemented, such corrected prospectus was timely made
      available by the Company pursuant to Section 3(c) hereof, 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. 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 Investors pursuant to Section 9.

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    b. In
      connection with any Registration Statement in which an Investor is
      participating, each such Investor agrees severally and not jointly to indemnify,
      hold harmless and defend, to the same extent and in the same manner set forth
      in
      Section 6(a), the Company, each of its directors, each of its officers who
      signs
      the Registration Statement, each person, if any, who controls the Company within
      the meaning of the 1933 Act or the 1934 Act, any underwriter and any other
      shareholder selling securities pursuant to the Registration Statement or any
      of
      its directors or officers or any person who controls such shareholder or
      underwriter within the meaning of the 1933 Act or the 1934 Act (collectively
      and
      together with an Indemnified Person, an “Indemnified
      Party”),
      against any Claim to which any of them may become subject, under the 1933 Act,
      the 1934 Act or otherwise, insofar as such Claim arises out of or is based
      upon
      any Violation by such Investor, in each case to the extent (and only to the
      extent) that such Violation occurs in reliance upon and in conformity with
      written information furnished to the Company by such Investor expressly for
      use
      in connection with such Registration Statement; and subject to Section 6(c)
      such
      Investor will reimburse any legal or other expenses (promptly as such expenses
      are incurred and are due and payable) 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) shall not apply to
      amounts paid in settlement of any Claim if such settlement is effected without
      the prior written consent of such Investor, which consent shall not be
      unreasonably withheld; provided,
      further,
      however,
      that
      the Investor shall be liable under this Agreement (including this Section 6(b)
      and Section 7) for only that amount as does not exceed the net proceeds to
      such
      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 Investors
      pursuant to Section 9. Notwithstanding anything to the contrary contained
      herein, the indemnification agreement contained in this Section 6(b) with
      respect to any preliminary prospectus shall not inure to the benefit of any
      Indemnified Party if the untrue statement or omission of material fact contained
      in the preliminary prospectus was corrected on a timely basis in the prospectus,
      as then amended or supplemented.

     

    c. Promptly
      after receipt by an Indemnified Person or Indemnified Party under this Section
      6
      of notice of the commencement of any action (including any governmental action),
      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 indemnifying
      party shall pay for only one separate legal counsel for the Indemnified Persons
      or the Indemnified Parties, as applicable, and such legal counsel shall be
      selected by Investors holding a majority-in-interest of the Registrable
      Securities included in the Registration Statement to which the Claim relates
      (with the approval of a majority-in-interest of the Initial Investors), if
      the
      Investors are entitled to indemnification hereunder, or the Company, if the
      Company is entitled to indemnification hereunder, as applicable. 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 actually prejudiced in
      its
      ability to defend such action. 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 such expense, loss, damage or liability is
      incurred and is due and payable.

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    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
      contribution shall be made under circumstances where the maker would not have
      been liable for indemnification under the fault standards set forth in Section
      6, (ii) 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 such fraudulent
      misrepresentation, and (iii)contribution
      (together with any indemnification or other obligations under this Agreement)
      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
      UNDER THE 1934 ACT.

     

    With
      a
      view to making available to the Investors 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 investors to sell securities of the Company to the public
      without registration (“Rule
      144”),
      the
      Company agrees 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 (it being understood that nothing herein shall
      limit the Company’s obligations under Section 4(c) of the Securities Purchase
      Agreement) and the filing of such reports and other documents is required for
      the applicable provisions of Rule 144; and

     

    c. furnish
      to each Investor so long as such Investor owns Registrable Securities, promptly
      upon request, (i) a
      written statement by the Company that it has complied with the reporting
      requirements 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 Investors to
      sell
      such securities pursuant to Rule 144 without registration.

     

    9. ASSIGNMENT
      OF REGISTRATION RIGHTS.

     

    The
      rights under this Agreement shall be automatically assignable by the Investors
      to any transferee of all or any portion of Registrable Securities if:
      (i) the Investor agrees in writing with the transferee or assignee to
      assign such rights, and a copy of such agreement is furnished to the Company
      within a reasonable time after such assignment, (ii) the Company is, within
      a reasonable time after such transfer or assignment, furnished with written
      notice of (a) the
      name and address of such transferee or assignee, and (b) the
      securities with respect to which such registration rights are being transferred
      or assigned, (iii) following such transfer or assignment, the further
      disposition of such securities by the transferee or assignee is restricted
      under
      the 1933 Act and applicable state securities laws, (iv) at or before the time
      the Company receives the written notice contemplated by clause (ii) of this
      sentence, the transferee or assignee agrees in writing with the Company to
      be
      bound by all of the provisions contained herein, (v) such transfer shall have
      been made in accordance with the applicable requirements of the Securities
      Purchase Agreement, and (vi) such transferee shall be an “accredited
      investor”
as
      that
      term defined in Rule 501 of Regulation D promulgated under the 1933
      Act.

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    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 written consent of the Company, each of the Initial
      Investors (to the extent such Initial Investor still owns Registrable
      Securities) and Investors who hold a majority interest of the Registrable
      Securities. Any amendment or waiver effected in accordance with this Section
      10
      shall be binding upon each Investor and the Company.

     

    11. MISCELLANEOUS.

     

    a. A
      person
      or entity is deemed to be a holder of Registrable Securities whenever such
      person or entity owns of record such Registrable Securities. If the Company
      receives conflicting instructions, notices or elections from two or more persons
      or entities 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 required or permitted to be given under the terms hereof shall be sent
      by certified or registered mail (return receipt requested) or delivered
      personally or by courier (including a recognized overnight delivery service)
      or
      by facsimile and shall be effective five days after being placed in the mail,
      if
      mailed by regular United States mail, or upon receipt, if delivered personally
      or by courier (including a recognized overnight delivery service) or by
      facsimile, in each case addressed to a party. The addresses for such
      communications shall be:

     

    If
      to the
      Company:

     

    Veridicom
      International, Inc.

    21
      Water
      Street 

    Vancouver
      BC Canada V6B 1A1

    Attention:
      Chief Executive Officer

    Telephone:
      604-696-0633

    Facsimile:
      604-696-0634

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    With
      a
      copy to:

     

    Sichenzia
      Ross Friedman Ference LLP

    1065
      Avenue of the Americas

    New
      York,
      NY 10018

    Attention:
      Marc Ross, Esq.

    Telephone:
      (212) 930-9700

    Facsimile:
      (212) 930-9725

     

    If
      to an
      Investor: to the address set forth immediately below such Investor’s name on the
      signature pages to the Securities Purchase Agreement. 

     

    With
      a
      copy to:

     

    Ballard
      Spahr Andrews & Ingersoll, LLP

    1735
      Market Street

    51st
      Floor

    Philadelphia,
      Pennsylvania 19103

    Attention:
      Gerald J. Guarcini, Esq.

    Telephone:
      215-865-8625

    Facsimile:
      215-864-8999

     

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

     

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

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

     

    f. This
      Agreement, the Notes and the Securities Purchase Agreement (including all
      schedules and exhibits thereto) 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 Securities
      Purchase Agreement supersede all prior agreements and understandings among
      the
      parties hereto with respect to the subject matter hereof and
      thereof.

     

    g. Subject
      to the requirements of Section 9 hereof, this Agreement shall be binding upon
      and inure to the benefit of the parties and their successors and
      assigns.

     

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

     

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

     

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

     

    k. Except
      as
      otherwise provided herein, all consents and other determinations to be made
      by
      the Investors pursuant to this Agreement shall be made by Investors holding
      a
      majority of the Registrable Securities, determined as if the all of the Notes
      then outstanding have been converted into for Registrable
      Securities.

     

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

    l. The
      Company acknowledges that a breach by it of its obligations hereunder will
      cause
      irreparable harm to each Investor by vitiating the intent and purpose of the
      transactions contemplated hereby. Accordingly, the Company acknowledges that
      the
      remedy at law for breach of its obligations under this Agreement will be
      inadequate and agrees, in the event of a breach or threatened breach by the
      Company of any of the provisions under this Agreement, that each Investor shall
      be entitled, in addition to all other available remedies in law or in equity,
      and in addition to the penalties assessable herein, to an injunction or
      injunctions restraining, preventing or curing any breach of this Agreement
      and
      to enforce specifically the terms and provisions hereof, without the necessity
      of showing economic loss and without any bond or other security being
      required.

     

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

     

    

     

    

     

    

     

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK]

     

     

     

     

     

     

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

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

     

    VERIDICOM
      INTERNATIONAL, INC.

     

    

    By: 
      /s/
      Paul Mann    

    Paul
      Mann

    President
      and Chief Executive Officer 

    

    

    AJW
      PARTNERS, LLC

     

    By:
      SMS
      Group, LLC

     

    /s/
      Corey S. Ribotsky     

    Corey
      S.
      Ribotsky

     

    Manager
      

     

    AJW
      OFFSHORE, LTD.

    By:
      First
      Street Manager II, LLC

    

    /s/
      Corey S. Ribotsky     

    Corey
      S.
      Ribotsky

    Manager

    

    

    AJW
      QUALIFIED PARTNERS, LLC

     

    By:
      AJW
      Manager, LLC

     

    /s/
      Corey S. Ribotsky     

    Corey
      S.
      Ribotsky

    Manager

    

    

    NEW
      MILLENNIUM CAPITAL PARTNERS II, LLC

     

    By:
      First
      Street Manager II, LLC

     

    /s/
      Corey S. Ribotsky     

    Corey
      S.
      Ribotsky

    Manager

    

    
      
         

      

      
        17

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