Document:

Exhibit
      10.2

     

    SECURITIES
      PURCHASE AGREEMENT 

     

    This
      Securities
      Purchase Agreement (this
      “Agreement”)
      is
      made and entered into as of the ___
      day
      of February, 2007, between Streicher Mobile Fueling, Inc., a Florida corporation
      (the “Company”),
      and the
      investors listed on Exhibit
      A
      (each, a
“Purchaser”
and
      collectively, the “Purchasers”
and,
      together with the Company, the “Parties”)
      and
      is
      delivered and executed in connection with the Company’s sale of Units (as
      defined below).

     

    This
      Agreement sets forth the terms and conditions under which each Purchaser will
      purchase such number of Units as set forth opposite such Purchaser’s name on
Exhibit
      A
      (the
“Transaction”).
      The
      minimum purchase per investor is $100,000. 

     

    1. RECEIPT
      OF DOCUMENTS. Purchaser
      acknowledges receipt of a copy of: (a) this Agreement; (b) the Company’s Annual
      Report on Form 10-K for the year ended June 30, 2006 (the “10-K”);
      (c)
      the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30,
      2006 (the “10-Q”);
      (d)
      the Company’s proxy statement for its December 8, 2006 shareholders meeting (the
“Proxy”);
      (e)
      the Company’s Confidential Private Placement Memorandum dated February 1, 2007
      (the “PPM”);
      and
      (f) the form of Warrant (as defined below) (collectively, the “Documents”).
      The
      10-K, 10-Q and Proxy were furnished as Exhibits A, B, C, and D, respectively,
      to
      the PPM. Capitalized terms not defined herein shall have the meaning given
      to
      them in the PPM. 

     

    2. DESCRIPTION
      OF UNITS.

     

    (a) Each
      Unit
      is comprised of five (5) shares (“Shares”)
      of the
      Company’s $.01 par value common stock (“Common
      Stock”)
      and a
      warrant (“Warrant”)
      to
      purchase one (1) share of the common stock (the “Warrant
      Shares”).
      The
      price per Unit is expected to be approximately $7.625 per Unit (the
“Estimated
      Offering Price”)
      but
      that is only an estimate being used for purposes of describing the effect of
      the
      Offering in the PPM and this Agreement. The Estimated Offering Price is based
      upon an estimated market price of $1.50 per Share. The actual price paid for
      Units by investors (the “Final
      Purchase Price”)
      may be
      higher or lower. The Final Purchase Price of each Unit, comprised of five (5)
      Shares and One (1) Warrant, will be equal to the sum of (a) Nasdaq’s “Official
      Closing Price” for the Common Stock (the “Share
      Price”)
      on the
      trading day immediately preceding the date on which this Agreement is accepted
      by the Company multiplied times five (for the five Shares) plus (b) $0.125
      (for
      the one Warrant). The Warrants will be immediately exercisable at 125% of the
      Share Price and will remain exercisable for a period of up to four (4) years
      from the closing of the Transaction. The Warrants will terminate on the earlier
      of (i) the four (4) year anniversary of the Closing Date, or (ii) the week
      after
      the Company’s Common Stock trades at 200% of the exercise price for twenty (20)
      consecutive trading days. In addition, beginning one (1) year after issuance,
      if
      the Company’s Common Stock trades at 175% of the Warrant exercise price for
      twenty (20) consecutive trading days, then the Company may, upon 60 days notice,
      redeem some or all of the Warrants for $0.01 per underlying Warrant Share.
      

     

    
      
         

      

      
         

        
          

        

      

      
         

      

       

    

    3. OFFER.

     

    (a) Each
      Purchaser, by signing this Agreement, offers to purchase such
      number of Units, and for the aggregate purchase price, as set forth opposite
      such Purchaser’s name on Exhibit
      A
      (each
      such purchase price, an “Investment
      Amount”
and
      collectively the “Investment
      Amounts”).

     

    (b) The
      Company will accept all offers to purchase Units in the Offering on a single
      date (the “Pricing
      Date”)
      in
      order to ensure that all investors in the Offering receive the same Final
      Purchase Price. All Purchasers must subscribe or reaffirm their subscription
      at
      the Final Purchase Price on the Pricing Date. Notwithstanding the execution
      of
      this Agreement and the tender of all or a portion of the Final Purchase Price,
      any Purchaser who fails to reaffirm an offer on the Pricing Date will be deemed
      to have withdrawn that offer and will not be permitted to participate in the
      Offering. 

     

    (c) The
      Company shall have the right, in its sole and absolute discretion, to reject
      or
      accept any Purchaser’s offer to purchase Units pursuant to this Agreement. If
      the Company accepts Purchaser’s offer, the Company shall execute this Agreement
      and return a copy of the Agreement. If the Company rejects Purchaser’s offer,
      the Company shall return to Purchaser this Agreement, together with any payment
      made by Purchaser to the Company and interest earned on such
      payment.

     

    4. CLOSING.
      On
      the
      Pricing Date, the Company or the Placement Agent for the Transaction shall
      contact each Purchaser and ask them to complete and execute this Agreement
      on
      that date or, if an executed Agreement has already been submitted, to reaffirm
      any previous offer in writing on that date based on the Final Purchase Price.
      The actual purchase and sale of all Units (the “Closing”)
      shall
      then take place on or after the Pricing Date at such time (the “Closing
      Date”)
      and
      place as the Company and the Purchasers mutually agree, orally or in writing.
      Purchasers must tender the Investment Amounts on or before the Closing Date
      in
      order to participate in the Transaction. A Purchaser’s tender of the Investment
      Amounts shall not, without more, constitute an agreement by the Purchasers
      to
      close. 

     

    5. USE
      OF PROCEEDS; NO REFUNDS.
      The
      Investment Amounts shall be used by the Company: (a) to make a $932,500
      principal payment on the Company’s August 2003 Senior Secured Promissory Notes
      on February 28, 2007; and (b) for working capital. Upon execution and delivery
      of this Agreement by the Company to each Purchaser, the Investment Amounts
      shall
      not, under any circumstances, be refunded to such Purchaser.

     

    6.
      CONDITIONS
      PRECEDENT. Notwithstanding
      anything to the contrary contained in this Agreement, the obligations of the
      Company to close the Transaction shall be contingent upon the
      following:

     

    
      	 	
              (a)

            	
              the
                Company and each Purchaser executing this
                Agreement;

            

    

    

    
      	 	
              (b)

            	
              the
                Minimum Offering Amount being tendered by the Termination Date of
                February
                14, 2007, or as it may be extended by the Company one or more times
                for an
                aggregate of up to sixty (60) days;
                and

            

    

    

    
      	 	
              (c)

            	
              each
                Purchaser completing, to the Purchaser’s satisfaction, all business,
                legal, and accounting due diligence regarding the Company and the
                Offering.

            

    

    

    
      
         

      

      
        2

        
          

        

      

      
         

      

       

    

    7. COMPANY’S
      RIGHT TO CANCEL. The
      Company, in its sole discretion, may cancel this Agreement with respect to
      any
      or all Purchasers at
      any
      time prior to the Closing Date by delivery of written notice of cancellation
      to
      the affected Purchaser(s) and return of the Investment Amounts with accrued
      interest to all affected Purchasers.

    

    8. REGISTRATION
      OF SHARES.
      The
      Company agrees to use its best efforts to cause a registration statement on
      Form
      S-3 or similar form (“Registration
      Statement”)
      relating to the resale of the Shares acquired by purchasers in the Offering
      and
      the Warrant Shares underlying the Warrants and the Agent Warrants, to be filed
      with the Securities and Exchange Commission in accordance with the Registration
      Rights Agreement attached hereto as Exhibit B, the terms of which are
      incorporated by reference and made a part of this Agreement. Subject to the
      terms in Exhibit B, the Company further agrees to make all reasonable commercial
      efforts to cause the Registration Statement to be filed within 60 days following
      the Closing Date and to cause such Registration Statement to become effective
      within 120 days of the Closing Date. 

    

    9. REPRESENTATIONS
      AND WARRANTIES OF PURCHASER.
      Each
      Purchaser represents and warrants to the Company as follows:

    

    (a) Purchaser,
      either alone or through Purchaser’s representative, as that term is defined
      under Rule 501(h)
      of
      Regulation D
      (“Regulation
      D”)
      under
      the Securities Act (the
      “Purchaser’s
      Representative”),
      if
      any, has had an opportunity to ask questions of, and receive answers from,
      duly
      designated representatives
      of
      the
      Company concerning the terms and conditions of this Agreement and has been
      afforded an opportunity to examine such documents and other information which
      Purchaser or Purchaser’s Representative, if any, has requested for the purpose
      of answering any question Purchaser or Purchaser’s Representative, if any, may
      have concerning the business and affairs of the Company. 

     

    (b) Purchaser’s
      principal residence or domicile is located in the State or
      other
      jurisdiction set forth opposite such Purchaser’s name on Exhibit
      A.
      Purchaser has received and reviewed this Agreement and the Documents and
      acknowledges that the Company made available to Purchaser and Purchaser’s
      Representative, if any, at a reasonable time prior to the execution of this
      Agreement, the opportunity to ask questions and receive answers concerning
      the
      business and affairs of the Company and the terms and conditions of the sale
      of
      the Units
      as
      contemplated by this Agreement and to obtain any additional information (which
      the Company possesses or can acquire without unreasonable effort or expense)
      as
      may be necessary to verify the accuracy of information furnished to Purchaser
      or
      Purchaser’s Representative, if any. Purchaser (i)
      is
      able
      to bear the loss of its entire investment without any material adverse effect
      on
      its economic stability, and (ii)
      has,
      alone or together with Purchaser’s Representative, such knowledge and experience
      in financial and business matters that it is capable of evaluating the merits
      and risks of the investment to be made by Purchaser pursuant to this Agreement.
      

     

    (c) Purchaser
      and Purchaser’s Representative, if any, understand that the Units are being
      offered and sold only to “accredited investors” (as that term is defined under
      Rule 501(a) of Regulation D), and Purchaser represents that Purchaser is an
      accredited investor. Purchaser and Purchaser’s Representative, if any understand
      the Company is relying on Purchaser with respect to the accuracy of this
      representation. Purchaser has completed and returned a copy of Exhibit
      C,
      and
      Purchaser represents that the statements made therein are complete and
      accurate.

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

       

    

    (d) Purchaser
      and Purchaser’s Representative, if any, acknowledge that they were encouraged by
      the Company to request all additional information
      which
      might be material or important in order for Purchaser to make an informed
      investment decision with respect to the purchase of Units. 

     

    (e) The
      Units
      are
      being purchased for investment purposes only for such Purchaser’s own account
      and not with the view to, or for resale in connection with, any distribution
      or
      public offering. Purchaser and Purchaser’s Representative, if any, understand
      that the Units have not been registered under the Securities Act or any state
      securities
      laws
      by
      reason of their contemplated issuance in transactions exempt from the
      registration requirements of the Securities
      Act
      and
      applicable state securities laws, and that the reliance of the Company and
      others upon these exemptions is predicated in part upon the representation
      by
      Purchaser. 

     

    (f) Purchaser
      and Purchaser’s Representative, if any, have carefully read this Agreement, the
      Documents and the other information furnished to Purchaser by the Company in
      connection with this Agreement. 

     

    (g) Purchaser
      was not solicited to purchase the Units by any means of general solicitation,
      including, but not limited to, the following: (i)
      any
      advertisement, article, notice or other communication published in any
      newspaper, magazine, or similar media, or broadcast over television or radio;
      or
      (ii)
any
      meeting where attendees were invited by any general solicitation or general
      advertising. 

     

    (h) Purchaser
      and Purchaser’s Representative, if any, are aware that the Placement Agent for
      the Transaction, Philadelphia Brokerage Corporation, will receive as
      compensation for its efforts in advising the Company with respect to the
      Transaction (i) a cash commission equal to six percent (6%) of the aggregate
      Investment Amounts and (ii) warrants to purchase up to 160,000 Shares on terms
      substantially identical to the Warrants (the “Agent
      Warrants”).
      

     

    (i) Purchaser
      and Purchaser’s Representative, if any, hereby acknowledge that the Units,
      including the Shares and the Warrants, are and will be, when issued, “restricted
securities,”
      as that
      term is defined in Rule 144 of the rules and regulations promulgated under
      the
      Securities Act unless and until the Company is successful in causing the
      Registration Statement to become effective. Purchaser and Purchaser’s
      Representative,
      if any, are aware of the applicable limitations on the resale of the Shares
      and
      the Warrant Shares in the absence of a successful registration of those
      securities, including but not limited to Rule 144. Rule 144 only permits sales
      of “restricted securities” held for at least one year and in transactions which
      otherwise comply with the requirements of such Rule. Purchaser and Purchaser’s
      Representative, if any, also acknowledge that (1) the trading market for the
      Shares on the Nasdaq Stock Market is volatile, so that the trading volume and
      price of Shares are subject to substantial and unpredictable variations and
      (2)
      while the Company currently meets the public information requirements of Rule
      144, there is no guarantee that it will do so at any time in the future.

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

       

    

    (j) Purchaser
      and Purchaser’s Representative, if any, acknowledge and warrant that, in making
      this investment decision, they have made their own independent assessment of
      the
      merits and risks of an investment in the Units based on their examination and
      evaluation of the Company, its business, operations, financial condition, future
      prospects and the skills and qualifications of its officers, directors and
      employees. Purchaser and Purchaser’s Representative, if any, have consulted
      Purchaser’s own attorney, business or tax advisors for legal, business or tax
      advice concerning an investment in the Units and have not relied on the Company,
      the placement agent or their respective agents or representatives. 

     

    (k) Purchaser
      and Purchaser’s Representative, if any, represent and warrant that, except as
      set forth in this Agreement and in the Documents, no representations or
      warranties have been made to the Purchaser or Purchaser’s Representative, if
      any, by the Company or any agent, employee, representative or affiliate of
      the
      Company and that, in entering into this transaction and subscribing for Units,
      neither the Purchaser nor the Purchaser’s Representative, if any, is relying on
      any information other than that contained in this Agreement, the Documents,
      and
      other written information obtained from the Company in the course of the
      independent investigation by Purchaser or Purchaser’s Representative, if
      any.

     

    (l) 
      Purchaser and Purchaser’s Representative, if any, acknowledge that an investment
      in the Company involves substantial risks, including, without limitation, those
      described in the Documents, including but not limited to the PPM, the 10-K
      and
      the 10-Q. 

     

    10. INDEMNIFICATION
      BY PURCHASER.
      Purchaser agrees that it shall indemnify and hold harmless the Company and
      its
      officers, directors, employees, agents and professional advisors from and
      against any and all loss, damage, liability, or expense, including costs and
      reasonable attorneys’ fees, that any one or more of the foregoing may incur by
      reason of, or in connection with, any (i) misrepresentation, inaccurate
      statement or material omission or (ii) breach of any warranties or failure
      to
      fulfill any covenants, agreements or obligations, by Purchaser or Purchaser’s
      Representative, if any, in this Agreement.

    

    11. AUTHORIZATION.
      To the
      extent reasonably required by the Company to satisfy any applicable law or
      regulation, including without limitation the PATRIOT Act, Purchaser hereby
      authorizes (i) the Company and its officers, employees and agents to investigate
      Purchaser’s personal and business background including, without limitation,
      communication with any employer, former employer, business associate, government
      agency, bank or other credit reference, provided that the Company agrees to
      use
      any such information only to the extent required to comply with applicable
      law
      or regulation, and otherwise maintains the confidentiality of any such
      information not generally available to the public with at least the same care
      as
      the Company's own proprietary and confidential information, and causes each
      of
      its officers, employees and agents to do the same, and (ii) authorizes any
      person, organization or entity that may have any knowledge or information
      concerning Purchaser’s personal or business background to provide such
      information to the Company as the Company may reasonably request in connection
      with the foregoing.

    

    
      
         

      

      
        5

        
          

        

      

      
         

      

       

    

    12. NO
      BROKERS OR FINDERS.
      Other
      than the Company’s obligation to compensate Philadelphia Brokerage Corporation
      for its services as placement agent, no person, firm or corporation has or
      will
      have, as a result of any act or omission by such Purchaser, any right, interest
      or valid claim against Purchaser or the Company for any commission, fee or
      other
      compensation as a finder
      or
      broker, or in any similar capacity, in connection with the transactions
      contemplated by this Agreement.

    

    13. MISCELLANEOUS. 

     

    (a) This
      Agreement shall be governed by, and construed in accordance with, the laws
      of
      the State of Florida.
      The
      Parties submit to the exclusive jurisdiction of the courts located in Broward
      County, Florida, with respect to any dispute arising under this Agreement and
      the transactions contemplated hereby.

     

    (b) This
      Agreement contains the entire agreement between the Company and Purchaser with
      regard to the subject matter hereof and may not be modified or waived except
      in
      a writing signed by both the Company and all parties to each such agreement.
      

     

    (c) The
      headings of this Agreement are for convenience and reference only, and shall
      not
      limit or otherwise affect the interpretation of any term or provision hereof.
      

     

    (d) This
      Agreement and the rights, powers, and duties set forth herein shall, except
      as
      otherwise expressly provided, be binding upon and inure to the benefit of,
      the
      heirs, executors, administrators, legal representatives, successors, and assigns
      of the Parties. 

     

    (e) This
      Agreement and the rights and obligations hereunder shall not be assignable
      or
      transferable by the Purchaser or the Company without the prior written consent
      of the other Parties, except (i) in the case of the Company, by operation
      of law in connection with a merger, consolidation or sale of substantially
      all
      of its assets or (ii) in the case of a Purchaser, (1) to any Affiliates (as
      defined below) of the Purchaser or (2) to partners, members, beneficiaries
      or other equity interest holders of the Purchaser; provided,
      that in
      each case referred to in (1) and (2) above, the third party transferee
      would have been eligible to be an original purchaser of Units pursuant to this
      Agreement and executes a counterpart signature page hereto becoming a
“Purchaser” hereunder, subject to all of the rights and obligations of this
      Agreement. Subject to the preceding sentence, this Agreement shall be binding
      upon, inure to the benefit of and be enforceable by the Parties and their
      respective successors and assigns. “Person”
means
      an individual, corporation, partnership, association, trust or other entity
      or
      organization, including a government or political subdivision or agency or
      instrumentality thereof. “Affiliate”
means,
      with respect to any Person, any other Person who, directly or indirectly, owns
      or controls, is under common ownership or control with, or is owned or
      controlled by, such Person.

     

    (f) This
      Agreement is for the sole benefit of the Parties and their permitted assigns
      and
      nothing expressed or implied in this Agreement shall give or be construed to
      give to any Person, other than the Parties and such assigns, any legal or
      equitable rights hereunder. 

     

    (g) If
      any
      legal action or any arbitration or other proceeding is brought for the
      enforcement of this Agreement, or because of an alleged dispute, breach,
      default, or misrepresentation in connection with any of the provisions of this
      Agreement, the successful or prevailing party or parties shall be entitled
      to
      recover reasonable attorneys’ fees and other costs incurred in that action or
      proceeding, in addition to any other relief to which it may be entitled.

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

       

    

    (h) This
      Agreement shall be construed in accordance with its intent and without regard
      to
      any presumption or any other rule requiring construction against the party
      causing the same to be drafted. 

     

    (i) If
      any
      provision of this Agreement, or any portion of any provision, shall be deemed
      invalid
      or
      unenforceable for any reason whatsoever, such invalidity or unenforceability
      shall
      not
      affect the enforceability and validity of the remaining provisions.

     

    (j) This
      Agreement may be executed in two or more counterparts, each of which shall
      be
      deemed to be an original but all of which taken together shall constitute
      one agreement. Signatures to this Agreement may be transmitted by facsimile
      and such transmission shall be deemed to be an original. 

     

    [Signature
      page follows.]

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    In
      Witness Whereof,
      the
      Parties have caused this Agreement to be executed by their respective duly
      authorized officers or persons as of the date first set forth
      above.

     

    
      	 	Streicher Mobile
              Fueling,
              Inc. 
	 	 	 
	 	By: 	 
	 	 	Richard E. Gathright, 
	 	 	President and Chief Executive
              Officer 
	 	 	 

    

     

    
      	 	Purchasers 
	 	 
	 	 	 
	 	Print
              Name: 	 
	 	Address: 	 
	 	 	 
	 	Phone: 	 
	 	Fax: 	 
	 	SSN/EIN: 	 
	 	 	 
	 	 	 

    

     

    
      	 	 
	 	 	 
	 	Print
              Name: 	 
	 	Address: 	 
	 	 	 
	 	Phone: 	 
	 	Fax: 	 
	 	SSN/EIN: 	 

    

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

     

    
      	 	Purchasers
              (Continued)
	 	 
	 	 	 
	 	Print
              Name: 	 
	 	Address: 	 
	 	 	 
	 	Phone: 	 
	 	Fax: 	 
	 	SSN/EIN: 	 

    

     

    
      	 	 
	 	 	 
	 	Print
              Name: 	 
	 	Address: 	 
	 	 	 
	 	Phone: 	 
	 	Fax: 	 
	 	SSN/EIN: 	 

      	 	 
	 	 	 
	 	Print
              Name: 	 
	 	Address: 	 
	 	 	 
	 	Phone: 	 
	 	Fax: 	 
	 	SSN/EIN: 	 

    

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

     

    
      	 	Purchasers
              (Continued)
	 	 
	 	 	 
	 	Print
              Name: 	 
	 	Address: 	 
	 	 	 
	 	Phone: 	 
	 	Fax: 	 
	 	SSN/EIN: 	 

    

     

    
      	 	 
	 	 	 
	 	Print
              Name: 	 
	 	Address: 	 
	 	 	 
	 	Phone: 	 
	 	Fax: 	 
	 	SSN/EIN: 	 

    

     

    
      	 	 
	 	 	 
	 	Print
              Name: 	 
	 	Address: 	 
	 	 	 
	 	Phone: 	 
	 	Fax: 	 
	 	SSN/EIN: 	 

    

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

    ACCEPTED:

     

    
      	 	 	 	PHILADELPHIA BROKERAGE
              CORP. 
	 	 	 	 	 
	Date: 	 	 	By: 	 
	 	 	 	 	 
	 	 	 	Name: 	 
	 	 	 	 	 
	 	 	 	Title: 	 

    

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    EXHIBIT
      A

     

    Schedule
      of Purchasers

     

     

    
      	
              Name

            	 	
              State
                of Primary Domicile

            	 	
              Number
                of Units being Purchased

            	 	
              Aggregate
                Purchase Price to be Paid

            	 
	 	 	 	 	 	 	 	 	 	 	 

    

    

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    EXHIBIT
      B

     

    Registration
      Rights Agreement

     

    1. Registration
      Rights.
      This
      Exhibit B to the Securities Purchase Agreement dated February __, 2007, between
      Streicher Mobile Fueling, Inc., a Florida corporation (the “Company”)
      and
      the Purchasers listed on Exhibit
      A
      thereto
      (the “SPA”)
      constitutes the Company’s agreement with respect to the registration of the
      Shares and the Warrant Shares under the Securities Act. All capitalized terms
      used in this Exhibit
      B
      that are
      not defined herein have the same meaning as in the SPA. 

     

    (a) Demand
      Registration.
      Commencing on the Closing Date, the holders of at least sixty-six and two-thirds
      percent (662/3%)
      of the
      aggregate number of (i) Shares that were sold to Purchasers in the Transaction,
      (ii) Warrant Shares that are issuable upon exercise of the Warrants and (ii)
      Warrant Shares that are issuable upon exercise of the Agent Warrants
      (collectively, the “Registrable
      Securities”)
      shall
      have the right to request registration under the Securities Act for all or
      any
      portion of the Registrable Securities upon the terms and conditions set forth
      in
      this Section 1(a).
      Promptly after receipt of a request for registration pursuant to this
Section 1(a)
      the
      Company shall notify each registered holder of Shares, Warrants or Agent
      Warrants (a “Holder”)
      in
      writing of such request for registration except to the extent that such Holder’s
      Registrable Securities were included in the demand. Upon receipt of such notice
      from the Company (the “Company
      Notice”),
      the
      Holder or the Holder’s agent may give the Company a written request to register
      all or some of the Holder’s Shares in the Registration Statement described in
      the Company Notice (the “Demand
      Notice”),
      provided that such Demand Notice is given within ten (10) days after the date
      on
      which the Company Notice is given (with such request stating (i) the amount
      of Shares to be included and (ii) any other information reasonably
      requested by the Company to properly effect the registration of such Shares).
      The Company shall, as soon as practicable after the date on which the Company
      Notice is given, use its best efforts to file a Registration Statement with
      the
      Securities and Exchange Commission (the “SEC”)
      covering the Shares specified in the Demand Notice and in any written request
      from any other Purchaser received by the Company within ten (10) days of the
      date on which the Company Notice is given and will use its best efforts to
      cause
      the Registration Statement to become effective. No right to registration of
      Shares under this Section 1(a)
      shall be
      construed to limit any registration required under Section 1(b)
      hereof.
      The obligations of the Company under this Section 1(a)
      shall
      expire after the Company has afforded the Holders the opportunity to exercise
      registration rights under this Section 1(a)
      for one
      registration. 

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

       

    

    (b) Piggy-back
      Registration.
      If at
      any time commencing on the Issue Date and on or before the Expiration Date,
      the
      Company shall determine to prepare and file with the SEC a Registration
      Statement relating to an offering for its own account or the account of others
      under the Securities Act of any securities of the Company, 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 employee benefit plans, the
      Company shall send to the Holders written notice of such determination and
      if,
      within ten (10) days after receipt of such notice, any Holder shall so request
      in writing, the Company shall include in such Registration Statement all or
      any
      part of the Shares that such Holder 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 Registrable Securities which may be included in the Registration
      Statement because, in such underwriter(s)’ judgment, such limitation is
      necessary to effect an orderly 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 Holder has requested
      inclusion. Any exclusion of Registrable Securities shall be made pro rata among
      all Holders who have requested that Registrable Securities be included, in
      proportion to the number of Registrable Securities specified in their respective
      requests; 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 by right to inclusion of securities in such
      Registration Statement; 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, based on the number
      of
      securities for which registration is requested except to the extent such pro
      rata exclusion of such other securities is prohibited under any written
      agreement entered into by the Company with the holder of such other securities
      prior to the Issue Date, in which case such other securities shall be excluded,
      if at all, in accordance with the terms of such agreement. No right to
      registration of Shares under this Section 1(b)
      shall be
      construed to limit any registration required under Section 1(a)
      hereof.
      Holders of at least sixty-six and two-thirds percent (662/3%) of the Registrable
      Securities may waive the obligations of the Company under this Section
      1(b).

     

    (c)
      Obligations
      of the Company.
      In
      connection with the registration of the Shares, the Company shall:

     

    (i)
      prepare
      promptly and file with the SEC the Registration Statement provided in
Section 1(a)
      with
      respect to the Shares and thereafter to use its best efforts to cause such
      Registration Statement relating to the Shares to become effective as soon as
      possible after such filing, and keep the Registration Statement effective at
      all
      times until the earlier of (A) two (2) years from the Expiration Date or (B)
      the
      date that all of the Warrants have either been exercised, terminated or redeemed
      pursuant to their terms (the “Registration
      Period”);
      submit to the SEC, within three (3) Business Days after the Company learns
      that
      no review of the Registration Statement will be made by the staff of the SEC
      or
      the staff of the SEC has no further comments on the Registration Statement,
      as
      the case may be, a request for acceleration of the effectiveness of the
      Registration Statement to a time and date not later than forty-eight (48) hours
      after the submission of such request; notify the Holders of the effectiveness
      of
      the Registration Statement on the date the Registration Statement is declared
      effective; and, the Company represents and warrants to, and covenants and agrees
      with the Holders that the Registration Statement (including any amendments
      or
      supplements thereto and prospectuses contained therein, at the time it is first
      filed with the SEC, at the time it is ordered effective by the SEC and at all
      times during which it is required to be effective hereunder) and each such
      amendment and supplement at the time it is filed with the SEC and all times
      during which it is available for use in connection with the offer and sale
      of
      Shares shall not contain any untrue statement of a material fact or omit to
      state a material fact required to be stated therein, or necessary to make the
      statements therein, in light of the circumstances in which they were made,
      not
      misleading;

     

    
      
         

      

      
        14

        
          

        

      

      
         

      

       

    

    (ii)
      prepare
      and file with the SEC such amendments (including post-effective amendments)
      and
      supplements to the Registration Statement and the prospectus used in connection
      with the Registration Statement as may be necessary to keep the Registration
      Statement effective at all times during the Registration Period, and during
      the
      Registration Period, comply with the provisions of the Securities Act with
      respect to the disposition of all Shares covered by the Registration Statement
      until such time as all of such Shares have been disposed of in accordance with
      the intended methods of disposition by the Holders as set forth in the
      Registration Statement;

     

    (iii)
      furnish
      to the Holders (1) promptly after the same is prepared and publicly
      distributed, filed with the SEC or received by the Company, one copy of the
      Registration Statement and any amendment thereto, each preliminary prospectus
      and prospectus and each amendment or supplement thereto, 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 relating to such
      Registration Statement (other than any portion of any thereof which contains
      information for which the Company has sought confidential treatment) and
      (2) such number of copies of a prospectus, including a preliminary
      prospectus and all amendments and supplements thereto and such other documents,
      as any Holder reasonably may request in order to facilitate the disposition
      of
      the Shares;

     

    (iv)
      use
      best
      efforts to register and qualify the Shares covered by the Registration Statement
      under such securities or blue sky laws of such jurisdictions as the Holders
      of
      at least sixty-six and two-thirds percent (662/3%)
      of the
      Registrable Securities being offered reasonably request and use reasonable
      efforts to (1) 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 at
      all
      times until the end of the Registration Period, (2) take such other actions
      as may be necessary to maintain such registrations and qualifications in effect
      at all times during the Registration Period and (3) take all other actions
      reasonably necessary or advisable to qualify the Shares for sale in such
      jurisdictions; provided, however, that the Company shall not be required in
      connection therewith or as a condition thereto (1) to qualify to do
      business in any jurisdiction where it would not otherwise be required to qualify
      but for this Section 1(c)(iv),
      (2) to subject itself to general taxation in any such jurisdiction,
      (3) to file a general consent to service of process in any such
      jurisdiction or (4) to make any change in its Articles of Incorporation or
      Bylaws which the Board of Directors of the Company determines to be contrary
      to
      the best interests of the Company and its stockholders;

     

    (v)
      as
      promptly as practicable after becoming aware of such event or circumstance,
      notify the Holders of any event or circumstance of which the Company has
      knowledge, as a result of which the prospectus included in the Registration
      Statement, as then in effect, includes an untrue statement of a material fact
      or
      omits to state a material fact required to be stated therein or necessary to
      make the statements therein, in light of the circumstances under which they
      were
      made, not misleading, and use its reasonable best efforts promptly to prepare
      a
      supplement or amendment to the Registration Statement to correct such untrue
      statement or omission, file such supplement or amendment with the SEC at such
      time as shall permit the Holders to sell Shares pursuant to the Registration
      Statement as promptly as practicable, and deliver a number of copies of such
      supplement or amendment to any Holder as such Holder may reasonably
      request;

     

    
      
         

      

      
        15

        
          

        

      

      
         

      

       

    

    (vi)
      as
      promptly as practicable after becoming aware of such event, notify the Holders
      (or, in the event of an underwritten offering the managing underwriters) of
      the
      issuance by the SEC of any stop order or other suspension of effectiveness
      of
      the Registration Statement at the earliest possible time;

     

    (vii)
      permit
      one legal counsel designated by the Holders of at least sixty-six and two-thirds
      percent (662/3%)
      of the
      Registrable Securities being sold to review and comment on the Registration
      Statement and all amendments and supplements thereto a reasonable period of
      time
      prior to their filing with the SEC and to pay the reasonable fees and costs
      incurred by such counsel;

     

    (viii)
      make
      generally available to its security holders as soon as practical, but not later
      than ninety (90) days after the close of the period covered thereby, an earnings
      statement (in form complying with the provisions of Rule 158 under the
      Securities Act) covering a twelve (12) month period beginning not later than
      the
      first day of the Company’s fiscal quarter next following the effective date of
      the Registration Statement;

     

    (ix)
      during
      the period the Company is required to maintain effectiveness of the Registration
      Statement pursuant to Section 1(c)(i),
      the
      Company shall not bid for or purchase any Common Stock or other securities
      or
      any right to purchase Common Stock or other securities or attempt to induce
      any
      person to purchase any such security or right if such bid, purchase or attempt
      would in any way limit the right of the Holders to sell Shares by reason of
      the
      limitations set forth in Regulation M under the Securities Exchange Act of
      1934,
      as amended (the “Exchange
      Act”);
      and

     

    (x)
      take
      all
      other reasonable actions necessary to expedite and facilitate disposition by
      the
      Holders of the Shares pursuant to the Registration Statement.

     

    (d)
      Obligations
      of the Holders.
      In
      connection with the registration of the Shares, the Holders shall have the
      following obligations:

     

    (i)
      it
      shall
      be a condition precedent to the obligations of the Company to complete the
      registration pursuant hereto with respect to any Holder’s Shares that the Holder
      shall furnish to the Company such information regarding Holder, the Shares
      held
      by Holder and the intended method of disposition of the Shares held by Holder
      as
      shall be reasonably required to effect the registration of such Shares and
      shall
      execute such documents in connection with such registration as the Company
      may
      reasonably request. At least five (5) days prior to the first anticipated filing
      date of the Registration Statement, the Company shall notify the Holders of
      the
      information the Company requires from each Holder (the “Requested
      Information”)
      if any
      of such Holder’s Shares are eligible for inclusion in the Registration
      Statement. If at least two (2) Business Days prior to the filing date the
      Company has not received the Requested Information from any such Holder (at
      such
      time Holder becoming a “Non-Responsive
      Holder”),
      then
      the Company may file the Registration Statement without including the
      Non-Responsive Holder’s Shares but shall not be relieved of its obligation to
      file a Registration Statement with the SEC relating to the Shares of
      Non-Responsive Holder promptly after Non-Responsive Holder provides the
      Requested Information;

     

    
      
         

      

      
        16

        
          

        

      

      
         

      

       

    

    (ii)
      by
      purchasing or accepting an assignment of Units, Warrants or Shares, each Holder
      agrees to cooperate with the Company as reasonably requested by the Company
      in
      connection with the preparation and filing of the Registration Statement for
      the
      Registrable Securities, unless such Holder has notified the Company in writing
      of such Holder’s election to exclude all of Holder’s Shares from the
      Registration Statement;

     

    (iii)
      in
      the
      event Holders of at least sixty-six and two-thirds percent (662/3%)
      of the
      Registrable Securities being registered determine to engage the services of
      an
      underwriter, each Holder agrees to enter into and perform such Holder’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 Shares, unless such Holder has notified the Company in writing
      of
      the Holder’s election to exclude all of Holder’s Shares from the Registration
      Statement;

     

    (iv)
      each
      Holder agrees that, upon receipt of any notice from the Company of the happening
      of any event of the kind described in Section
      1(c)(v),
      Holder
      will immediately discontinue disposition of Shares pursuant to the Registration
      Statement covering such Shares until Holder’s receipt of the copies of the
      supplemented or amended prospectus contemplated by Section
      1(c)(v)
      and, if
      so directed by the Company, Holder 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 Holder’s possession of the prospectus covering
      such Shares current at the time of receipt of such notice; 

     

    (v)
      Holders
      may not participate in any underwritten registration hereunder unless the Holder
      (1) agrees to sell Holder’s Shares on the basis provided in any
      underwriting arrangements approved by the Holders entitled hereunder to approve
      such arrangements, (2) completes and executes all questionnaires, powers of
      attorney, indemnities, underwriting agreements and other documents reasonably
      required under the terms of such underwriting arrangements and (3) agrees
      to pay its pro rata share of all underwriting discounts and commissions and
      other fees and expenses of investment bankers and any manager or managers of
      such underwriting and legal expenses to the underwriters applicable with respect
      to its Shares, in each case to the extent not payable by the Company pursuant
      to
      the terms of this Agreement; and

     

    (vi)
      each
      Holder agrees to take all reasonable actions necessary to comply with the
      prospectus delivery requirements of the Securities Act applicable to its sales
      of Shares.

     

    
      
         

      

      
        17

        
          

        

      

      
         

      

       

    

    (e) Expenses
      of Registration.
      All
      costs and expenses, other than underwriting or brokerage discounts, commissions
      and other fees related to the distribution of the Registrable Securities,
      incurred in connection with registrations, filings or qualifications for sale
      of
      the Registrable Securities, including, without limitation, all registration,
      listing and qualifications fees, printers and accounting fees and the fees
      and
      disbursement of counsel for the Company shall be borne by the Company, provided,
      however, that the Company shall bear the fees and out-of-pocket expenses of
      the
      one legal counsel selected by the Holders pursuant to Section 1(c)(vii)
      hereof.

     

    (f) Indemnification.
      In the
      event any Shares are included in a Registration Statement under this
      Agreement:

     

    (i)
      To
      the
      extent permitted by law, the Company will indemnify and hold harmless the
      Holders, the directors, if any, of Holders, the officers, if any, of Holders,
      each person, if any, who controls Holders within the meaning of the Securities
      Act or the Exchange Act, any underwriter (as defined in the Securities Act)
      for
      Holders, the directors, if any, of such underwriter and the officers, if any,
      of
      such underwriter, and each person, if any, who controls any such underwriter
      within the meaning of the Securities Act or the Exchange Act (each, an
“Indemnified
      Person”),
      against any losses, claims, damages, liabilities or expenses (joint or several)
      incurred (collectively, “Claims”)
      to
      which any of them may become subject under the Securities Act, the Exchange
      Act
      or otherwise, insofar as such Claims (or actions or proceedings, whether
      commenced or threatened, in respect thereof) arise out of or are based upon
      any
      of the following statements, omissions or violations in the Registration
      Statement or any post-effective amendment thereof, or any prospectus included
      therein: (1) any untrue statement or alleged untrue statement of a material
      fact contained in the Registration Statement or any post-effective amendment
      thereof or the omission or alleged omission to state therein a material fact
      required to be stated therein or necessary to make the statements therein not
      misleading, (2) 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 (3) any violation or alleged violation by the
      Company of the Securities Act, the Exchange Act, any state securities law or
      any
      rule or regulation under the Securities Act, the Exchange Act or any state
      securities law (the matters in the foregoing clauses (1) through (3) being,
      collectively, “Violations.”)
      Subject to the restrictions set forth in Section 1(f)(iv)
      with
      respect to the number of legal counsel, the Company shall reimburse Holders
      and
      the other Indemnified Persons, promptly as such expenses are incurred and are
      due and payable, for any legal fees or other reasonable expenses incurred by
      them in connection with investigating or defending any such Claim.
      Notwithstanding anything to the contrary contained herein, the indemnification
      agreement contained in this Section 1(f)(i):
      (1) 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
      the
      Registration Statement, the prospectus or any such amendment thereof or
      supplement thereto, if such prospectus was timely made available by the Company
      pursuant to Section 1(c)(iii)
      hereof;
      (2) 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 in the
      prospectus, as then amended or supplemented, if such prospectus was timely
      made
      available by the Company pursuant to Section 1(c)(iii)
      hereof,
      and (3) shall not apply to amounts paid in settlement of any Claim if such
      settlement is effected without the prior written consent of the Company, which
      consent shall not be unreasonably withheld. Such indemnity shall remain in
      full
      force and effect regardless of any investigation made by or on behalf of the
      Indemnified Person and shall survive the transfer of the Shares by
      Holders.

     

    
      
         

      

      
        18

        
          

        

      

      
         

      

       

    

    (ii)
      In
      connection with any Registration Statement in which a Holder is participating,
      each Holder agrees to indemnify and hold harmless, to the same extent and in
      the
      same manner set forth in Section 1(f)(i),
      the
      Company, each of its directors, each of its officers who signs the Registration
      Statement, each person on, if any, who controls the Company within the meaning
      of the Securities Act or the Exchange Act, any underwriter and any other
      stockholder selling securities pursuant to the Registration Statement or any
      of
      its directors or officers or any person who controls such stockholder or
      underwriter within the meaning of the Securities Act or the Exchange Act
      (collectively and together with an Indemnified Person, an “Indemnified
      Party”),
      against any Claim to which any of them may become subject, under the Securities
      Act, the Exchange Act or otherwise, insofar as such Claim arises out of or
      is
      based upon any Violation, in each case to the extent (and only to the extent)
      that such Violation occurs in reliance upon and in conformity with written
      information furnished to the Company by such Holder expressly for use in
      connection with such Registration Statement, and such Holder will reimburse
      any
      legal or other expenses reasonably incurred by any Indemnified Party, promptly
      as such expenses are incurred and are due and payable, in connection with
      investigating or defending any such Claim; provided, however, that the indemnity
      agreement contained in this Section 1(f)(ii)
      shall
      not apply to amounts paid in settlement of any Claim if such settlement is
      effected without the prior written consent of the Holder, which consent shall
      not be unreasonably withheld; provided further, however, that the Holder shall
      be liable under this Section 1(f)(ii)
      for only
      that amount of a Claim as does not exceed the amount by which the net proceeds
      to the Holder from the sale of Shares pursuant to such Registration Statement
      exceeds the cost of such Shares to the Holder. 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 Shares by the
      Holder. Notwithstanding anything to the contrary contained herein, the
      indemnification agreement contained in this Section 1(f)(ii)
      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.

     

    (iii)
      The
      Company shall be entitled to receive indemnities from underwriters, selling
      brokers, dealer managers and similar securities industry professionals
      participating in any distribution, to the same extent as provided above, with
      respect to information so furnished in writing by such persons expressly for
      inclusion in the Registration Statement.

     

    
      
         

      

      
        19

        
          

        

      

      
         

      

       

    

    (iv)
      Promptly
      after receipt by an Indemnified Person or Indemnified Party under this
Section 1(f)
      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 1(f),
      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
      selected by the indemnifying party but reasonably acceptable to 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. In such event,
      the
      Company shall pay for only one separate legal counsel for the Holders; such
      legal counsel shall be selected by the Holders of at least sixty-six and
      two-thirds percent (662/3%)
      of the
      Registrable Securities included in the Registration Statement to which the
      Claim
      relates. 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
      1(f),
      except
      to the extent that the indemnifying party is prejudiced in its ability to defend
      such action. The indemnification required by Section
      1(f)
      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.

     

    2.
      The
      agreements, representations and warranties of the Company and the Holders set
      forth or provided in Section
      1
      shall
      survive the execution and delivery of the SPA and the exercise of any Warrant
      delivery of and payment for the Registrable Securities under the SPA and shall
      remain in full force and effect, regardless of any investigation made by or
      on
      behalf of the Company and the Holder.

     

    3. In
      the
      SPA, the Company agrees to make all reasonable commercial efforts to cause
      the
      Registration Statement to be filed within 60 days following the Closing Date
      and
      to cause such Registration Statement to become effective within 120 days of
      the
      Closing Date. Such obligation is subject to the receipt of a demand for such
      registration from the requisite number of Holders or from the Placement Agent
      as
      their agent hereunder. The Holders further agree that, so long as the Company
      proceeds in good faith, it shall not be liable for any financial penalty or
      monetary damages resulting from its failure to cause such filing or
      effectiveness to occur by the times specified.

     

    4. This
      Exhibit
      B
      is
      incorporated by reference into the SPA and its terms made a part thereof.

     

    
      
         

      

      
        20

        
          

        

      

      
         

      

    

    EXHIBIT
      C

    

    Accredited
      Investor and NASD Affiliation

     

    Representations

     

    As
      provided by Rule 501(a) of Regulation D, my representation that I am or
      represent an accredited investor is based upon one of the following grounds
      that
      I am or represent (please check one):

     

    
      	 	o 	
              A
                private business development company as defined in Section 202(a)(22)
                of
                the Investment Advisors Act of
                1940;

            

    

     

    
      	 	o 	
              An
                organization described in Section 501(c)(3) of the Internal Revenue
                Code,
                corporation, Massachusetts or similar business trust, or partnership,
                not
                formed for the specific purpose of acquiring the securities offered,
                with
                total assets in excess of Five Million Dollars
                ($5,000,000);

            

    

     

    
      	 	o 	
              A
                director or executive officer of the
                Company;

            

    

     

    
      	 	o 	
              A
                natural person whose individual net worth, or joint net worth with
                that
                person’s spouse, exceeds One Million Dollars
                ($1,000,000);

            

    

     

    
      	 	o 	
              A
                natural person who has an individual income in excess of Two Hundred
                Thousand Dollars ($200,000) in each of the two (2) most recent years
                and
                has a reasonable expectation of reaching the same income level in
                the
                current year; 

            

    

     

    
      	 	o 	
              A
                natural person who has a joint income with that person’s spouse in excess
                of Three Hundred Thousand Dollars ($300,000) in each of the two (2)
                most
                recent years and has a reasonable expectation of reaching the same
                income
                level in the current year; 

            

    

     

    
      	 	o 	
              A
                trust, with total assets in excess of Five Million Dollars ($5,000,000),
                not formed for the specific purpose of acquiring the securities offered,
                whose purchase is directed by a sophisticated person as defined by
                Rule
                506(b)(2)(ii) of the Securities Act; or 

            

      	 	 	 

      	 	o 	An entity in which all of the equity
              owners
              are accredited investors. 

    

     

    AFFILIATION
      WITH A U. S. REGISTERED BROKER-DEALER:

     

    Are
      you
      associated with an NASD member firm? (Please check one)

     

    YES
      _______    NO
      _______

     

    
      
        
          Exhibit
            C
            to Securities Purchase Agreement

          Page
            1
of
            2

        

      

      
         

        
          

        

      

      
         

      

       

    

    (1)
      The
      NASD defines a “person associated with a member” or “associated person of a
      member” as being every sole proprietor, general or limited partner, officer,
      director or branch manager of any member, or any natural person occupying a
      similar status or performing similar functions, or any natural person engaged
      in
      the investment banking or securities business who is directly or indirectly
      controlling or controlled by such member (for example, any employee), whether
      or
      not any such person is registered or exempt from registration with the NASD.
      Thus, “person associated with a member” or “associated person of a member”
includes a sole proprietor, general or limited partner, officer, director or
      branch manager of an organization of any kind (whether a corporation,
      partnership or other business entity) which itself is either a “member” or a
“person associated with a member” or “associated person of a member.” In
      addition, an organization of any kind is a “person associated with a member” or
“associated person of a member” if its sole proprietor or any one of its general
      or limited partners, officers, directors or branch managers is a “member,”
“person associated with a member” or “associated person of a
      member.”

     

    (2)
      The
      NASD defines a “member” as being any individual, partnership, corporation or
      other legal entity that is a broker or dealer admitted to membership in the
      NASD.

     

    IF
      PURCHASER IS ASSOCIATED WITH AN NASD MEMBER FIRM, THE FOLLOWING ACKNOWLEDGMENT,
      OR A SUBSTANTIALLY IDENTICAL ACKNOWLEDGMENT, MUST BE SIGNED AND SUBMITTED BEFORE
      PURCHASER’S OFFER TO PURCHASE UNITS WILL BE ACCEPTED BY THE
      COMPANY:

     

    The
      undersigned NASD member firm acknowledges receipt of the notice required by
      Rule
      3050 of the NASD Conduct Rules or any successor rules or
      regulations.

     

    
      	Date: 	 	 	
            
	 	 	 	Name of NASD Member
              Firm 
	 	 	 	 	 
	 	 	 	By: 	 
	 	 	 	Name: 	 
	 	 	 	Title: 	 

    

     

    I
      hereby
      declare that the foregoing representations concerning my qualifications as
      an
      accredited investor and my affiliations, if any, with any NASD member firm,
      are
      accurate and complete>

     

    
      	 	INDIVIDUAL: 	 	 	ENTITY:
	 	 	 	 	 
	 	 	 	 	 
	 	Print
              Name: 	 	 	By: 	 
	 	Date: 	 	 	Name: 	 
	 	 	 	 	Title: 	 

    

     

    
      
        
          Exhibit
            C
            to Securities Purchase Agreement

          Page
            2
of
            2EXHIBIT
        4.1

      

      SECURITIES
        PURCHASE AGREEMENT

      

      SECURITIES
        PURCHASE AGREEMENT
        (the
        "Agreement"),
        dated
        as of February 15, 2007, by and among Nesco Industries, Inc., a Nevada
        corporation, with headquarters located at 305 Madison Ave., Suite 4510, New
        York, NY 10165 (the "Company"),
        and
        the investors listed on the Schedule of Buyers attached hereto (individually,
        a
        "Buyer"
        and
        collectively, the "Buyers").

      

      WHEREAS:

      

      A.
        The
        Company and each Buyer is executing and delivering this Agreement in reliance
        upon the exemption from securities registration afforded by Section 4(2)
        of the
        Securities Act of 1933, as amended (the "1933
        Act"),
        and
        Rule 506 of Regulation D ("Regulation D")
        as
        promulgated by the United States Securities and Exchange Commission (the
        "SEC")
        under
        the 1933 Act.

      

      B.
        The
        Company has authorized a new series of senior secured convertible notes of
        the
        Company, which notes shall be convertible into the Company's common stock,
        par
        value $0.001 per share (the "Common
        Stock"),
        in
        accordance with the terms of the Notes (as defined below).

      

      C.
        Each
        Buyer wishes to purchase, and the Company wishes to sell, upon the terms
        and
        conditions stated in this Agreement, (i) that aggregate principal amount
        of the
        Notes, in substantially the form attached hereto as Exhibit
        A
        (the
        "Notes"),
        set
        forth opposite such Buyer's name in column (3) on the Schedule of Buyers
        attached hereto (which aggregate amount for all Buyers shall be a minimum
        of
        $4,445,000 and a maximum of $5,000,000) (as converted into Common Stock,
        collectively, the "Conversion
        Shares"),
        and
        (ii) warrants, in substantially the form attached hereto as Exhibit
        B
        (the
        "Warrants"),
        to
        acquire that number of shares of Common Stock (the "Warrant
        Shares")
        set
        forth opposite such Buyer's name in column (4) on the Schedule of
        Buyers.

      

      D.
        Contemporaneously with the execution and delivery of this Agreement, the
        parties
        hereto are executing and delivering a Registration Rights Agreement,
        substantially in the form attached hereto as Exhibit
        C
        (the
        "Registration
        Rights Agreement"),
        pursuant to which the Company has agreed to provide certain registration
        rights
        with respect to the Conversion Shares and the Warrant Shares under the 1933
        Act
        and the rules and regulations promulgated thereunder, and applicable state
        securities laws.

      

      E.
        The
        Notes, the Conversion Shares, the Warrants and the Warrant Shares collectively
        are referred to herein as the "Securities".

      

      F.
        The
        Notes will rank senior to all future indebtedness of the Company, subject
        to
        Permitted Senior Indebtedness (as defined in the Notes) and will be secured
        by a
        perfected security interest in all of the assets of the Company and each
        of the
        Company's subsidiaries, as evidenced by the security agreement attached hereto
        as Exhibit
        D
        (the
        "Security
        Agreement"
        and,
        together with the Guaranty, attached hereto as Exhibit
        E,
        and any
        ancillary documents related thereto, collectively the "Security
        Documents").

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      G.
        To
        facilitate the Closing (as defined herein), each Buyer shall deposit into
        escrow
        its respective Purchase Price (as defined herein) with Gottbetter &
Partners, LLP (the “Escrow
        Agent”)
        pursuant to an Escrow Agreement, dated as of February 15, 2007, among the
        parties hereto.

      

      NOW,
        THEREFORE,
        the
        Company and each Buyer hereby agree as follows:

      

      1. PURCHASE
        AND SALE OF NOTES AND WARRANTS.

      

      (a) Purchase
        of Notes and Warrants.

      

      (b) Subject
        to the terms of this Agreement and the satisfaction (or waiver) of the
        conditions set forth in Sections 6 and 7 below, the Company shall issue and
        sell
        to each Buyer, and each Buyer severally, but not jointly, shall purchase
        from
        the Company, on the Closing Date (as defined below), (x) a principal amount
        of
        Notes as is set forth opposite such Buyer's name in column (3) on the Schedule
        of Buyers and (y) Warrants to acquire that number of Warrant Shares as is
        set
        forth opposite such Buyer's name in column (4) on the Schedule of Buyers
        (the
        "Closing").

      

      (i) Closing.
         The Closing shall take place at 10:00 a.m., New York City Time, at the
        offices of Gottbetter & Partners, LLP, 488 Madison Avenue, New York, NY
        10022, or at such other place or time as mutually agreed to by the parties
        on a
        date to be mutually agreed upon by the Company and the Buyers, which shall
        be no
        later than the second business day after the satisfaction (or waiver) of
        the
        last to be satisfied (or waived) of the conditions to the Closing set forth
        in
        Sections 6 and 7 below (other than conditions that by their terms are to
        be
        satisfied on the Closing Date). The date on which the Closing actually takes
        place is referred to as the "Closing
        Date."

       

      (ii) Purchase
        Price.
         The aggregate purchase price for the Notes and the Warrants to be
        purchased by each Buyer at the Closing (the "Purchase
        Price")
        shall
        be the amount set forth opposite such Buyer's name in column (5) of the Schedule
        of Buyers.  Each Buyer, except for GCM (as defined below) shall pay $0.9300
        for each $1.00 of principal amount of Notes and related Warrants to be purchased
        by such Buyer at the Closing. GCM shall pay $0.9349 for each $1.00 of principal
        amount of Notes and related Warrants to be purchased by GCM at the Closing.
        

      

      (c) Form
        of Payment.
         On the Closing Date, (i) upon receipt of the Joint Written Instructions
        (as defined in the Escrow Agreement), the Escrow Agent shall deliver each
        Buyer’s Purchase Price to the Company or designated third parties for the Notes
        and the Warrants to be issued and sold to such Buyer at the Closing by wire
        transfer of immediately available funds in accordance with such Joint Written
        Instructions, and (ii) the Company shall deliver to each Buyer (A) the
        Notes (in the principal amounts as such Buyer shall have requested prior
        to the
        Closing) which such Buyer is then purchasing and (B) the Warrants (in the
        amounts as such Buyer shall have requested prior to the Closing) which such
        Buyer is then purchasing, in each case duly executed on behalf of the Company
        and registered in the name of such Buyer or its permitted
        designee.

      

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

      (d) Second
        Closing.
        Subject
        to the terms and conditions of this Agreement, after the Closing and at any
        time
        on or prior to the date of the filing by the Company of the initial registration
        statement required to be filed by it under the Registration Rights Agreement,
        at
        a second closing (the “Second
        Closing”),
        the
        Company may issue and sell to one or more individuals and entities approved
        by
        the Company’s Board of Directors (each an “Additional
        Buyer”
and
        collectively, the “Additional
        Buyers”)
        an
        aggregate principal amount of Notes equal to $500,000 at the Purchase Price
        of
        $0.9300 for each $1.00 of principal amount of Notes and Warrants to acquire
        up
        to Fifty Three Million, Eight Hundred and Seventy Nine Thousand, Three Hundred
        and Ten (53,879,310) shares of Common Stock. All sales made at the Second
        Closing shall be made on the terms and conditions set forth in this Agreement.
        At the Second Closing the representations and warranties of the Company set
        forth in Section 3 hereof shall speak as of the Closing Date (and the Company
        shall have no obligation to update the representations and warranties and
        the
        Disclosure Schedules to the date of the Second Closing), and the representations
        and warranties of the Additional Buyers shall speak as of the date of the
        Second
        Closing. At the Second Closing, (i) each Additional Buyer and the Company
        shall
        execute a counterpart signature page hereto and to the Registration Rights
        Agreement, (ii) the Company shall cause the Schedule of Buyers hereto to
        be
        updated to reflect the purchases made by the Additional Buyers, (iii) each
        Additional Buyer shall become a “Buyer” hereunder and the Notes and Warrants
        purchased by such Additional Buyer shall be deemed “Notes” and “Warrants,”
respectively, for purposes of this Agreement and the other Transaction
        Documents, and (iv) subject to the terms and conditions hereof, the Company
        will deliver to each of the Additional Buyers purchasing Notes and Warrants
        at
        the Second Closing the applicable Notes and Warrants registered in the name
        of
        such Additional Buyer, against payment to the Company of the Purchase Price
        therefor in cash by wire transfer, check or other method acceptable to the
        Company. 

      

      
        
          2.
            BUYER'S
            REPRESENTATIONS AND WARRANTIES.

        

      

      

      As
        a
        material inducement to the Company to enter into this Agreement and sell
        the
        Notes and the Warrants hereunder, each Buyer represents and warrants to the
        Company with respect to only itself as of the date hereof that:

      

      (a) No
        Public Sale or Distribution.
         Such Buyer is (i) acquiring the Notes and the Warrants and (ii) upon
        conversion of the Notes and exercise of the Warrants will acquire the Conversion
        Shares issuable upon conversion of the Notes and the Warrant Shares issuable
        upon exercise of the Warrants, for its own account and with the present
        intention of holding such securities for the purposes of investment, and
        not
        with a view towards, or for resale in connection with, the public sale or
        distribution thereof, except pursuant to sales registered or exempt from
        registration under the 1933 Act; provided,
        however,
        that by
        making the representations herein, such Buyer does not agree to hold any
        of the
        Securities for any minimum or other specific term and reserves the right
        to
        dispose of the Securities at any time in accordance with or pursuant to a
        registration statement or an exemption from registration under the 1933 Act.
        Such Buyer does not presently have any agreement or understanding, directly
        or
        indirectly, with any Person to distribute any of the Securities.

      

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

      (b) Accredited
        Investor Status.
         Such Buyer is an "accredited investor" as that term is defined in Rule
        501(a) of Regulation D under the 1933 Act. Such Buyer is not a registered
        broker-dealer under Section 15 of the 1934 Act (as defined herein) or an
        entity
        engaged in the business of being a broker-dealer and is acquiring the Securities
        hereunder in the ordinary course of its business.

      

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

      

      (d) Information.
         Such Buyer and its advisors, if any, have been furnished with all
        materials relating to the business, finances and operations of the Company
        and
        materials relating to the offer and sale of the Securities which have been
        requested by such Buyer.  Such Buyer and its advisors, if any, have been
        afforded the opportunity to ask questions of the Company. Neither such inquiries
        nor any other due diligence investigations conducted by such Buyer or its
        advisors, if any, or its representatives shall modify, amend or affect such
        Buyer's right to rely on the Company's representations and warranties contained
        herein. Such Buyer understands that its investment in the Securities involves
        a
        high degree of risk. Such Buyer has sought such accounting, legal and tax
        advice
        as it has considered necessary to make an informed investment decision with
        respect to its acquisition of the Securities.

      

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

      

      (f) Transfer
        or Resale.
         Such Buyer understands that, except as provided for in the Registration
        Rights Agreement: (i) the Securities have not been and are not being registered
        under the 1933 Act or any state securities laws, and may not be offered for
        sale, sold, assigned or transferred unless (A) subsequently registered
        thereunder, (B) such Buyer shall have delivered to the Company an opinion
        of
        counsel, in a form reasonably acceptable to the Company, to the effect that
        such
        Securities to be sold, assigned or transferred may be sold, assigned or
        transferred (1) pursuant to an exemption from such registration, or (2) pursuant
        to Rule 144 or Rule 144A promulgated under the 1933 Act, as amended (or any
        successor rule thereto); (ii) any sale of the Securities made in reliance
        on
        Rule 144 or Rule 144A may be made only in accordance with the terms of Rule
        144
        or Rule 144A, respectively, and further, if neither Rule 144 nor Rule 144A
        is
        applicable, any resale of the Securities under circumstances in which the
        seller
        (or the Person (as defined in Section 3(s) below) through whom the sale is
        made)
        may be deemed to be an underwriter (as that term is defined in the 1933 Act)
        may
        require compliance with some other exemption under the 1933 Act or the rules
        and
        regulations of the SEC thereunder; and (iii) neither the Company nor any
        other
        Person is under any obligation to register the Securities under the 1933
        Act or
        any state securities laws or to comply with the terms and conditions of any
        exemption thereunder. The Securities may be pledged in connection with a
        bona
        fide margin account or other loan or financing arrangement secured by the
        Securities and such pledge of Securities shall not be deemed to be a transfer,
        sale or assignment of the Securities hereunder, and no Buyer effecting a
        pledge
        of Securities shall be required to provide the Company with any notice thereof
        or otherwise make any delivery to the Company pursuant to this Agreement
        or any
        other Transaction Document (as defined in Section 3(b)), including, without
        limitation, this Section 2(f).

      

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

      (g) Legends.
         Such Buyer understands that the certificates or other instruments
        representing the Notes and the Warrants and, until such time as the resale
        of
        the Conversion Shares and the Warrant Shares have been registered under the
        1933
        Act as contemplated by the Registration Rights Agreement, the stock certificates
        representing the Conversion Shares and the Warrant Shares, except as set
        forth
        below, shall bear any legend as required by federal law and the "blue sky"
        laws
        of any state and a restrictive legend in substantially the following form
        (and a
        stop-transfer order may be placed against transfer of such stock
        certificates):

      

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

      

      The
        legend set forth above shall be removed and the Company shall issue a
        certificate without such legend to the holder of the Securities upon which
        it is
        stamped, if, unless otherwise required by federal or state securities laws,
        (i)
        such Securities are transferred through a registered resale under the 1933
        Act,
        or (ii) in connection with a sale, assignment or other transfer, such holder
        provides the Company with an opinion of counsel, in a form reasonably acceptable
        to the Company, to the effect that (A) such sale, assignment or transfer
        of the
        Securities may be made without registration under the applicable requirements
        of
        the 1933 Act, or (B) that the Securities can be sold, assigned or transferred
        pursuant to Rule 144.

      

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

      (h) Authorization;
        Enforcement; Validity.
         Such Buyer has the requisite power and authority to enter into and perform
        its obligations under this Agreement and each of the other Transaction Documents
        (as defined below) to which it is a party. This Agreement and each of the
        other
        Transaction Documents (as defined below) has been duly and validly authorized,
        executed and delivered on behalf of such Buyer shall constitute the legal,
        valid
        and binding obligations of such Buyer enforceable against such Buyer in
        accordance with their respective terms, except as such enforceability may
        be
        limited by general principles of equity or to applicable bankruptcy, insolvency,
        reorganization, moratorium, liquidation and other similar laws relating to,
        or
        affecting generally, the enforcement of applicable creditors' rights and
        remedies.

      

      (i) No
        Conflicts.
         The execution, delivery and performance by such Buyer of this Agreement
        and the other Transaction Documents to which such Buyer is a party and the
        consummation by such Buyer of the transactions contemplated hereby and thereby
        will not (i) result in a violation of the organizational documents of such
        Buyer
        or (ii) conflict with, or constitute a default (or an event which with notice
        or
        lapse of time or both would become a default) under, or give to others any
        rights of termination, amendment, acceleration or cancellation of, any
        agreement, indenture or instrument to which such Buyer is a party, or (iii)
        result in a violation of any law, rule, regulation, order, judgment  or
        decree (including federal and state securities laws) applicable to such Buyer,
        except in the case of clauses (ii) and (iii) above, for such conflicts,
        defaults, rights or violations
        which would not, individually or in the aggregate, reasonably be expected
        to
        have a material adverse effect on the ability of such Buyer to perform its
        obligations hereunder.

      

      (j) Residency.
         Such Buyer is a resident of that jurisdiction specified below its address
        on the Schedule of Buyers.

      

      (k) Independent
        Investment Decision.
         Such Buyer has independently evaluated the merits of its decision to
        purchase the Securities pursuant to the Transaction Documents, and such Buyer
        confirms that it has not relied on the advice of any other Buyers’ business
        and/or legal counsel in making such decision.  

      

      (l) Certain
        Trading Activities.
         Such Buyer has not directly or indirectly, nor has any Person acting on
        behalf of or pursuant to any understanding with such Buyer, engaged in any
        transactions in the securities of the Company (including, without limitations,
        any Short Sales involving the Company's securities) since the time that such
        Buyer was first contacted by the Company regarding the transactions contemplated
        hereby. Such Buyer covenants that neither it nor any Person acting on its
        behalf
        or pursuant to any understanding with it will engage in any transactions
        in the
        securities of the Company (including Short Sales) prior to the time that
        the
        transactions contemplated by this Agreement are publicly disclosed. For the
        purpose of this Agreement,
        "Short Sales"
        include,
        without limitation, all "short sales" as defined in Rule 200 promulgated
        under
        Regulation SHO under the 1934 Act and all types of direct and indirect stock
        pledges, forward sale contracts, options, puts, calls, swaps and similar
        arrangements (including on a total return basis), and sales and other
        transactions through non-US broker dealers or foreign regulated
        brokers.

      

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

      (m) Limited
        Ownership.
         The purchase by such Buyer of the Securities issuable to it at the Closing
        will not result in such Buyer (individually or together with other Persons
        with
        whom such Buyer has identified, or will have identified, itself as part of
        a
        "group" in a public filing made with the SEC involving the Company's securities)
        acquiring, or obtaining the right to acquire, in excess of 19.999% of the
        outstanding shares of Common Stock or the voting power of the Company on
        a
        post-transaction basis that assumes that the Closing shall have occurred.
        Such
        Buyer does not presently intend to, alone or together with others, make a
        public
        filing with the SEC to disclose that it has (or that it together with such
        other
        Persons have) acquired, or obtained the right to acquire, as a result of
        the
        Closing (when added to any other securities of the Company that it or they
        then
        own
        or have the right to acquire), in excess of 19.999% of the outstanding shares
        of
        Common Stock or the voting power of the Company on a post transaction basis
        that
        assumes that the Closing shall have occurred.

      

      (n) General
        Solicitation.
         Such Buyer is not purchasing the Securities as a result of any
        advertisement, article, notice or other communication regarding the Securities
        published in any newspaper, magazine or similar media or broadcast over
        television or radio or presented at any seminar.

      

      (o) Organization;
        Authority.
         Such Buyer is an entity duly organized, validly existing and in good
        standing under the laws of the jurisdiction of its organization with the
        requisite corporate or partnership or other entity power and authority to
        enter
        into and to consummate the transactions contemplated by the Transaction
        Documents to which it shall be a party and otherwise to carry out its
        obligations thereunder.

      

      (p) Prohibited
        Transactions.
        Since
        the time the Buyer was first contracted by the Company regarding the
        transactions contemplated hereby, including during the last ten (10) days
        prior
        to the
        date
        hereof, neither such Buyer nor any Person acting on behalf of or pursuant
        to any understanding with such Buyer has, directly or indirectly, effected
        or agreed to effect any short sale, whether or not against the box, established
        any "put equivalent position" (as defined in Rule 16a-1(h) under the Exchange
        Act) with respect to the Common Stock, granted any other right (including,
        without limitation, any put or call option) with respect to the Common
        Stock or with respect to any security that includes, relates to or derived
        any significant part of its value from the Common Stock or otherwise sought
        to
        hedge its position in the Securities (but not including any actions
        to secure
        available shares to borrow in order to effect short sales or similar transactions
        in the future) (each, a "Prohibited
        Transaction").
        Prior
        to the
        termination of this Agreement such
        Buyer shall not, and shall cause
        any
        Person acting on behalf of or pursuant to any understanding with
        such Buyer
        not
        to, engage, directly or indirectly, in a Prohibited Transaction.
        Such Buyer
        acknowledges that the representations, warranties and covenants
        contained in
        this
        Section 2(p) are being made for the benefit of the Buyers as well as
        the Company.

      

      3. REPRESENTATIONS
        AND WARRANTIES OF THE COMPANY.

      

      As
        a
        material inducement to each Buyer to enter into this Agreement and purchase
        the
        Notes and the Warrants hereunder, the Company represents and warrants to
        each of
        the Buyers as of the date hereof that, except as set forth in the Disclosure
        Schedule attached hereto (the "Disclosure
        Schedule")
        or as
        disclosed in the SEC Documents (as defined below) (regardless of whether
        reference to the SEC Documents is included in each applicable representation
        and
        warranty):

      

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

      (a) Organization
        and Qualification.
         The Company and its "Subsidiaries"
        (which
        for purposes of this Agreement means any joint venture or any entity in which
        the Company, directly or indirectly, owns capital stock or holds an equity
        or
        similar interest) are entities duly organized and validly existing in good
        standing under the laws of the jurisdiction in which they are formed, and
        have
        the requisite power and authority to own their properties and to carry on
        their
        business as now being conducted. Except as set forth in Schedule 3(a), each
        of
        the Company and its Subsidiaries is duly qualified as a foreign entity to
        do
        business and is in good standing in every jurisdiction in which its ownership
        of
        property or the nature of the business conducted by it makes such qualification
        necessary, except to the extent that the failure to be so qualified or be
        in
        good standing would not have a Material Adverse Effect. As used in this
        Agreement, "Material
        Adverse Effect"
        means
        any material adverse effect on the business, properties, assets, operations,
        results of operations, condition (financial or otherwise) or prospects of
        the
        Company and its Subsidiaries, taken as a whole, or on the transactions
        contemplated hereby and the other Transaction Documents or by the agreements
        and
        instruments to be entered into in connection herewith or therewith, or on
        the
        authority or ability of the Company to perform its obligations under the
        Transaction Documents (as defined below). The Company has no Subsidiaries
        except as set forth on Schedule
        3(a).
        The
        Company owns, directly or indirectly, all of the capital stock or other equity
        interests of each Subsidiary free and clear of any liens (except as listed
        on
        Schedule 3(a)), and all the issued and outstanding shares of capital stock
        of
        each Subsidiary are validly issued and are fully paid, non-assessable and
        free
        of preemptive and similar rights to subscribe for or purchase
        securities.

      

      (b) Authorization;
        Enforcement; Validity.
         Except as set forth in Schedule
        3(b),
        the
        Company has the requisite power and authority to enter into and perform its
        obligations under this Agreement, the Notes, the Warrants, the Security
        Documents, the Registration Rights Agreement, the Irrevocable Transfer Agent
        Instructions (as defined in Section
        5(b)),
        and
        each of the other agreements entered into by the Company in connection with
        the
        transactions contemplated by this Agreement (collectively, the "Transaction
        Documents")
        and to
        issue the Securities in accordance with the terms hereof and thereof. The
        execution and delivery of this Agreement and the other Transaction Documents
        by
        the
        Company
        and the issuance of the Notes and the Warrants has been, and, following the
        Share Increase Authorization, the consummation by the Company of the
        transactions contemplated hereby and thereby, including, without limitation,
        the
        issuance of the Notes and the Warrants, the reservation for issuance and
        the
        issuance of the Conversion Shares issuable upon conversion of the Notes,
        the
        reservation for issuance and issuance of Warrant Shares issuable upon exercise
        of the Warrants and the granting of a security interest in the Collateral
        (as
        defined in the Security Documents), will be, duly authorized by the Company's
        Board of Directors and (other than (i) the filing of appropriate UCC financing
        statements with the appropriate states and other authorities pursuant to
        the
        Security Agreement, (ii) the filing of a Form D under Regulation D of the
        1933 Act and (iii) the filing with the SEC of one or more Registration
        Statements in accordance with the requirements of the Registration Rights
        Agreement) no further filing, consent, or authorization is required by the
        Company, its Board of Directors or its stockholders. This Agreement and each
        of
        the other Transaction Documents of even date herewith has been duly executed
        and
        delivered by the Company and shall constitute the legal, valid and binding
        obligation of the Company enforceable against the Company in accordance with
        its
        terms, except as such enforceability may be limited by general principles
        of
        equity or to applicable bankruptcy, insolvency, reorganization, moratorium,
        liquidation and other similar laws relating to, or affecting generally, the
        enforcement of applicable creditors' rights and remedies.

      

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

      (c) Issuance
        of Securities.
         The issuance of the Notes and the Warrants are duly authorized and are
        free from all taxes, liens and charges with respect to the issue thereof.
        Following of the Share Increase Authorization, a number of shares of Common
        Stock shall have been duly authorized and reserved for issuance which equals
        300% of the maximum number of shares Common Stock issuable upon conversion
        of
        the Notes and upon exercise of the Warrants. Upon conversion in accordance
        with
        the Notes or exercise in accordance with the Warrants, in each case following
        the Share Increase Authorization, the Conversion Shares and the Warrant Shares,
        respectively, will be validly issued, fully paid and nonassessable and free
        from
        all preemptive or similar rights, taxes, liens and charges with respect to
        the
        issue thereof, with the holders being entitled to all rights accorded to
        a
        holder of Common Stock.  Assuming the truth and accuracy of the Buyers’
representations and warranties in this Agreement, the offer to the Buyers
        and
        issuance by the Company of the Securities is exempt from registration under
        the
        1933 Act.

      

      (d) No
        Conflicts.
         The execution, delivery and performance of this Agreement and the other
        Transaction Documents by the Company and the consummation by the Company
        of the
        transactions contemplated hereby and thereby (including, without limitation,
        the
        issuance of the Notes and the Warrants, the granting of a security interest
        in
        the Collateral and, following receipt of the Share Increase Authorization,
        reservation for issuance and issuance of the Conversion Shares and the Warrant
        Shares) will not (i) result in a violation of the Articles of Incorporation
        of
        the Company or any of its Subsidiaries, any capital stock of the Company
        or
        bylaws of the Company or any of its Subsidiaries or (ii) except as set forth
        in
Schedule
        3(d),
        conflict with, or constitute a default (or an event which with notice or
        lapse
        of time or both would become a default) under, or give to others any rights
        of
        termination, amendment, acceleration or cancellation of, any agreement,
        indenture or instrument to which the Company or any of its Subsidiaries is
        a
        party, or (iii) assuming the truth and accuracy of the Buyers’ representations
        and warranties in this Agreement, result in a violation of any law, rule,
        regulation, order, judgment or decree (including federal and state securities
        laws and regulations and the rules and regulations of the Over-The-Counter
        Bulletin Board (the "Principal
        Market"))
        applicable to the Company or any of its Subsidiaries or by which any property
        or
        asset of the Company or any of its Subsidiaries is bound or affected, except,
        in
        the cases of clause (ii) and (iii) above, for such conflicts, defaults, rights
        or violations which would not, individually or in the aggregate, reasonably
        be
        expected to have a Material Adverse Effect.

      

      (e) Consents.
         Other than the Share Increase Authorization and the Reverse Stock Split,
        or as set forth in Schedule
        3(b)
        or
Schedule
        3(e)
        hereof,
        the Company is not required to obtain any consent, authorization or order
        of, or
        make any filing or registration with, any court, governmental agency or any
        regulatory or self-regulatory agency or any other Person in order for it
        to
        execute, deliver or perform any of its obligations under or contemplated
        by this
        Agreement or the other Transaction Documents, in each case in accordance
        with
        the terms hereof or thereof. Except for the Share Increase Authorization
        and the
        Reverse Stock Split, all consents, authorizations, orders, filings and
        registrations which the Company is required to obtain pursuant to the preceding
        sentence have been obtained or effected on or prior to the Closing Date,
        and the
        Company and its Subsidiaries are unaware of any facts or circumstances which
        might prevent the Company from obtaining or effecting any of the registration,
        application or filings pursuant to the preceding sentence. The Company is
        not in
        violation of the applicable trading requirements of the Principal Market
        and has
        no knowledge of any facts which would reasonably lead to suspension of the
        Common Stock from trading thereon in the foreseeable future. The issuance
        by the
        Company of the Securities shall not have the effect of suspending the Common
        Stock from trading on the Principal Market.

      

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

      (f) Acknowledgment
        Regarding Buyer's Purchase of Securities.
         The Company acknowledges and agrees that each Buyer is acting solely in
        the capacity of an arm's length purchaser with respect to this Agreement
        and the
        other Transaction Documents and the transactions contemplated hereby and
        thereby, and that no Buyer is (i) an officer or director of the Company,
        (ii) to
        the knowledge of the Company, an "affiliate" of the Company (as defined in
        Rule
        144, an "Affiliate")
        or
        (iii) to the knowledge of the Company, a "beneficial owner" of more than
        10% of
        the shares of Common Stock (as defined for purposes of Rule 13d-3 of the
        Securities Exchange Act of 1934, as amended (the "1934
        Act")).
        The
        Company further acknowledges that no Buyer is acting as a financial advisor
        or
        fiduciary of the Company (or in any similar capacity) with respect to this
        Agreement and the other Transaction Documents and the transactions contemplated
        hereby and thereby, and any advice given by a Buyer or any of its
        representatives or agents in connection with this Agreement and the other
        Transaction Documents and the transactions contemplated hereby and thereby
        is
        merely incidental to such Buyer's purchase of the Securities. The Company
        further represents to each Buyer that the Company’s decision to enter into the
        Transaction Documents has been based solely on the independent evaluation
        by the
        Company and its representatives. 

      

      (g) No
        General Solicitation.
         Neither the Company or any of its Subsidiaries or Affiliates, nor, to the
        Company’s knowledge, any Person acting on its or their behalf, has engaged in
        any form of general solicitation or general advertising (within the meaning
        of
        Regulation D) in connection with the offer or sale of the Securities.
The
        Company shall be responsible for the payment of any placement agent’s fees,
        financial advisory fees, consultancy fees or brokers’ commissions (other than
        for persons engaged by any Buyer or its investment advisor) relating to or
        arising out of the transactions contemplated hereby. The Company shall pay,
        and
        hold each Buyer harmless against, any liability, loss or expense (including,
        without limitation, reasonable attorney’s fees and out-of-pocket expenses)
        arising in connection with any such claim (including any claim from the
        Placement Agent (as defined below)). The Company acknowledges that it has
        engaged a consultant as set out in Schedule 3(g) (the “Consultant”)
        in
        connection with the sale of the Securities. Other than the Consultant, the
        Company has not engaged any placement agent, consultant or other agent in
        connection with the sale of the Securities.

      

      (h) No
        Integrated Offering.
         None of the Company, its Subsidiaries, their respective Affiliates or any
        Person acting on its or their behalf has, directly or indirectly, made any
        offers or sales of any security, or solicited any offers to buy any security,
        under circumstances that would require registration of any of the Securities
        under the 1933 Act or cause this offering of the Securities to be integrated
        with prior offerings by the Company for purposes of the 1933 Act or any
        applicable stockholder approval provisions, including,
        without limitation, under the rules and regulations of any exchange or automated
        quotation system on which any of the securities of the Company are listed
        or
        designated. None of the Company, its Subsidiaries, their Affiliates or any
        Person acting on its or their behalf will take any action or steps referred
        to
        in the preceding sentence that would require registration of any of the
        Securities under the 1933 Act or cause the offering of the Securities to
        be
        integrated with other offerings in a manner that would require such
        registration.

      

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

      (i) Dilutive
        Effect.
         The Company understands and acknowledges that the number of Conversion
        Shares issuable upon conversion of the Notes and the Warrant Shares issuable
        upon exercise of the Warrants will increase in certain circumstances. The
        Company further acknowledges that its obligation to issue Conversion Shares
        upon
        conversion of the Notes in accordance with this Agreement and the Notes and
        its
        obligation to issue the Warrant Shares upon exercise of the Warrants in
        accordance with this Agreement and the Warrant is, in each case, absolute
        and
        unconditional regardless of the dilutive effect that such issuance may have
        on
        the ownership interests of other stockholders of the Company.

      

      (j) Application
        of Takeover Protections; Rights Agreement.
         The Company and its board of directors have taken all necessary action, if
        any, in order to render inapplicable any control share acquisition, business
        combination, poison pill (including any distribution under a rights agreement)
        or other similar anti-takeover provision under the Articles of Incorporation
        or
        the laws of the jurisdiction of its formation which is or could become
        applicable to any Buyer as a result of the transactions contemplated by this
        Agreement, including, without limitation, the Company's issuance of the
        Securities and any Buyer's ownership of the Securities. The Company has not
        adopted a stockholder rights plan or similar arrangement relating to
        accumulations of beneficial ownership of Common Stock or a change in control
        of
        the Company.

      

      (k) SEC
        Documents; Financial Statements.
         Except as disclosed in Schedule
        3(k)
        and
        except as would not reasonably be expected to have a Material Adverse Effect,
        during the two (2) years prior to the date hereof, the Company has filed
        all
        reports, schedules, forms, statements and other documents required to be
        filed
        by it with the SEC pursuant to the reporting requirements of the 1934 Act
        (all
        of the foregoing filed prior to the date hereof and all exhibits included
        therein and financial statements, notes and schedules thereto and documents
        incorporated by reference therein being hereinafter referred to as the
        "SEC
        Documents"). The
        Company has delivered to the Buyers or their respective representatives true,
        correct and complete copies of the SEC Documents not available on the EDGAR
        system if such SEC Documents have been requested in writing by the Buyers.
         As of their respective filing dates, the SEC Documents, as they may have
        been subsequently amended by filings made by the Company with the SEC prior
        to
        the date hereof, complied in all material respects with the requirements
        of the
        1934 Act and the rules and regulations of the SEC promulgated thereunder
        applicable to the SEC Documents, and none of the SEC Documents, at the time
        they
        were filed with the SEC, as they may have been subsequently amended by filings
        made by the Company with the SEC prior to the date hereof, contained any
        untrue
        statement of a material fact or omitted to state a material fact required
        to be
        stated therein or necessary in order to make the statements therein, in the
        light of the circumstances under which they were made, not misleading. As
        of
        their respective filing dates, the financial statements of the Company included
        in the SEC Documents, as they may have been subsequently amended by filings
        made
        by the Company with the SEC prior to the date hereof, complied as to form
        in all
        material respects with applicable accounting requirements and the published
        rules and regulations of the SEC with respect thereto. Such financial statements
        were prepared in accordance with generally accepted accounting principles,
        consistently applied, during the periods involved (except (i) as may be
        otherwise indicated in such financial statements or the notes thereto, or
        (ii)
        in the case of unaudited interim statements, to the extent
        they may exclude footnotes or may be condensed or summary statements) and
        fairly
        present in all material respects the financial position of the Company as
        of the
        dates thereof and the results of its operations and cash flows for the periods
        then ended (subject, in the case of unaudited statements, to normal year-end
        audit adjustments).

      

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

      (l) Absence
        of Certain Changes.
        Except
        as disclosed in
        Schedule 3(l),
        since
        the date of the Company’s most recent audited financial statements contained in
        the SEC Documents, there has been no material adverse change and no material
        adverse development in the business, assets, properties, operations, condition
        (financial or otherwise), or results of operations of the Company. Except
        as
        disclosed in
        Schedule 3(l),
        since
        the date of the Company’s most recent audited financial statements contained in
        the SEC Documents, neither the Company nor any of its Subsidiaries has
        (i) declared or paid any dividends on its Common Stock, (ii) sold any
        assets, individually or in the aggregate, in excess of $100,000 outside of
        the
        ordinary course of business or (iii) had capital expenditures, individually
        or in the aggregate, in excess of $100,000. Except as set forth in Schedule
        3(l),
        neither
        the Company nor any of its Subsidiaries has taken any steps to seek protection
        pursuant to any bankruptcy law nor has the Company received any written notice
        from its creditors that its creditors intend to initiate involuntary bankruptcy
        proceedings. Each Buyer acknowledges the matters identified in the going
        concern
        opinion issued by the Company’s accountants on June 23, 2006.

      

      (m) [Reserved]

      

      (n) Conduct
        of Business; Regulatory Permits.
         Except as set for the in Schedule
        3(n),
        neither
        the Company nor any of its Subsidiaries (i) is in violation of any term of
        or in
        default under its Articles of Incorporation or Bylaws or their organizational
        charter or certificate of incorporation or bylaws, respectively, (ii) is
        in
        violation of any judgment, decree or order or any law, statute, ordinance,
        rule
        or regulation applicable to the Company or its Subsidiaries, or (iii) will
        conduct its business in violation of any of the foregoing except, in each
        case,
        for possible violations which would not, individually or in the aggregate,
        have
        a Material Adverse Effect. Without limiting the generality of the foregoing,
        the
        Company is not in violation of any of the rules, regulations or requirements
        of
        the Principal Market and has no knowledge of any facts or circumstances which
        would reasonably lead to suspension of the Common Stock from trading by the
        Principal Market in the foreseeable future. Except as set forth in Schedule
        3(n),
        during
        the two (2) years prior to the date hereof, (i) the Common Stock has been
        designated for quotation on the Principal Market, (ii) trading
        in the Common Stock has not been suspended by the SEC or quotation by the
        Principal Market and (iii) the Company has received no communication, written
        or
        oral, from the SEC or the Principal Market regarding the suspension of the
        Common Stock from quotation on the Principal Market.  The Company and its
        Subsidiaries possess all certificates, authorizations and permits issued
        by the
        appropriate regulatory authorities necessary to conduct their respective
        businesses, except where the failure to possess such certificates,
        authorizations or permits would not have, individually or in the aggregate,
        a
        Material Adverse Effect, and neither the Company nor any such Subsidiary
        has
        received any written notice of proceedings relating to the revocation or
        modification of any such certificate, authorization or permit.

      

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

      (o) Foreign
        Corrupt Practices.
         None of the Company, any of its Subsidiaries or, to the knowledge of the
        Company, any director, officer, agent, or employee, in the course of its
        actions
        for, or on behalf of, the Company or any of its Subsidiaries (i) used any
        corporate funds for any unlawful contribution, gift, entertainment or other
        unlawful expenses relating to political activity; (ii) made any direct or
        indirect unlawful payment to any foreign or domestic government official
        or
        employee from corporate funds of the Company or any its Subsidiaries; (iii)
        violated or is in violation of any provision of the U.S. Foreign Corrupt
        Practices Act of 1977, as amended; or (iv) made any unlawful bribe, rebate,
        payoff, influence payment, kickback or other unlawful payment to any foreign
        or
        domestic government official or employee.

      

      (p) Sarbanes-Oxley
        Act.
         The Company is in compliance with any and all applicable requirements of
        the Sarbanes-Oxley Act of 2002 that are effective as of the date hereof,
        and any
        and all rules and regulations promulgated by the SEC thereunder that are
        effective as of the date hereof and applicable to the Company.

      

      (q)  Transactions
        With Affiliates.
         Other than the transactions disclosed on Schedule
        3(q),
        none of
        the officers, directors or employees of the Company or any of its Subsidiaries
        is presently a party to any transaction with the Company or any of its
        Subsidiaries (other than for ordinary course services as employees, officers
        or
        directors), including any contract, agreement, loans or other arrangement
        providing for the furnishing of services to or by, providing for rental of
        real
        or personal property to or from, including obligations to pay back pay,
        salaries, bonuses, etc. or otherwise requiring payments to or from any such
        officer, director or employee or, to the knowledge of the Company or any
        of its
        Subsidiaries, any corporation, partnership, trust or other entity in which
        any
        such officer, director, or employee has a substantial interest or is an officer,
        director, trustee or partner.

      

      (r) Equity
        Capitalization.
         As of immediately prior to Closing, the authorized capital stock of the
        Company consists of (i) 25,000,000 shares of Common Stock, of which as of
        the
        date hereof, 21,636,225 shares are issued and outstanding, and (ii) 1,000,000
        shares of Preferred Stock, of which as of the date hereof (A) 850,000 are
        classified as Series A Convertible Preferred Stock, of which as of the date
        hereof 67,000 are issued and outstanding and (B) 150,000 are classified as
        Series B Convertible Preferred Stock, of which as of the date hereof 120,575
        are
        issued and outstanding. All currently issued and outstanding shares of Common
        Stock have been, or upon issuance will be, validly issued and are fully paid
        and
        nonassessable. Except as disclosed herein or as disclosed in Schedule
        3(r):
        (i)
        none of the Company's capital stock is subject to preemptive rights or any
        other
        similar rights or any liens or encumbrances suffered or permitted by the
        Company; (ii) there are no outstanding options, warrants, scrip, rights to
        subscribe to, calls or commitments of any character whatsoever relating to,
        or
        securities or rights convertible into, or exercisable or exchangeable for,
        any
        capital stock of the Company or any of its Subsidiaries, or contracts,
        commitments, understandings or arrangements by which the Company or any of
        its
        Subsidiaries is or may become bound to issue
        additional capital stock of the Company or any of its Subsidiaries or options,
        warrants, scrip, rights to subscribe to, calls or commitments of any character
        whatsoever relating to, or securities or rights convertible into, or exercisable
        or exchangeable for, any capital stock of the Company or any of its
        Subsidiaries; (iii) there are no outstanding debt securities, notes, credit
        or
        loan agreements, credit facilities or other agreements, documents or instruments
        evidencing Indebtedness (as defined below) of the Company or any of its
        Subsidiaries or by which the Company or any of its Subsidiaries is or may
        become
        bound; (iv) there are no financing statements securing obligations in any
        material amounts, either singly or in the aggregate, filed in connection
        with
        the Company or any of its Subsidiaries; (v) there are no agreements or
        arrangements under which the Company or any of its Subsidiaries is obligated
        to
        register the sale of any of their securities under the 1933 Act (except pursuant
        to the Registration Rights Agreement); (vi) there are no outstanding securities
        or instruments of the Company or any of its Subsidiaries which contain any
        redemption or similar provisions, and there are no contracts, commitments,
        understandings or arrangements by which the Company or any of its Subsidiaries
        is or may become bound to purchase, repurchase, retire or redeem a security
        of
        the Company or any of its Subsidiaries; (vii) there are no securities or
        instruments containing anti-dilution or similar provisions or reset provisions
        that will be triggered by the issuance of the Securities; (viii) the Company
        does not have any stock appreciation rights or "phantom stock" plans or
        agreements or any similar plan or agreement; and (ix) the Company and its
        Subsidiaries have no liabilities or obligations required to be disclosed
        in the
        SEC Documents but not so disclosed in the SEC Documents, other than those
        which,
        individually or in the aggregate, do not or would not have a Material Adverse
        Effect. The Company has furnished to the Buyer true, correct and complete
        copies
        of the Company's Articles of Incorporation, as amended and as in effect on
        the
        date hereof (the "Articles
        of Incorporation"),
        and
        the Company's Bylaws, as amended and as in effect on the date hereof (the
        "Bylaws"),
        and
        the terms of all securities convertible into, or exercisable or exchangeable
        for, shares of Common Stock and the material rights of the holders thereof
        in
        respect thereto are disclosed in the SEC Documents.

      

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

      (s) Indebtedness
        and Other Contracts.
         Except as disclosed in Schedule
        3(s),
        neither
        the Company nor any of its Subsidiaries (i) has any outstanding Indebtedness
        (as
        defined below), (ii) is a party to any contract, agreement or instrument,
        the
        violation of which, or default under which, by the other party(ies) to such
        contract, agreement or instrument would result in a Material Adverse Effect,
        (iii) is in violation of any term of or in default under any contract, agreement
        or instrument relating to any Indebtedness, except where such violations
        and
        defaults would not result, individually or in the aggregate, in a Material
        Adverse Effect, or (iv) is a party to any contract, agreement or instrument
        relating to any Indebtedness, the performance of which, in the judgment of
        the
        Company's officers, has or is expected to have a Material Adverse Effect.
        Schedule
        3(s)
        provides
        a detailed description of the material terms of any such outstanding
        Indebtedness. The
        Indebtedness described on Schedule 3(s) is being settled, converted or paid
        as
        set forth on Schedule 3(s). For
        purposes of this Agreement:  (x) "Indebtedness"
        of
        any
        Person
        means, without duplication (A) all indebtedness for borrowed money, (B) all
        obligations issued, undertaken or assumed as the deferred purchase price
        of
        property or services including (without limitation) "Capital Leases" in
        accordance with generally accepted accounting principles (other than trade
        payables entered into in the ordinary course of business), (C) all reimbursement
        or payment obligations with respect to letters of credit, surety bonds and
        other
        similar instruments, (D) all obligations evidenced by notes, bonds, debentures
        or similar instruments, including obligations so evidenced incurred in
        connection with the acquisition of property, assets or businesses, (E) all
        indebtedness created or arising under any conditional sale or other title
        retention agreement, or incurred as financing, in either case with respect
        to
        any property or assets acquired with the proceeds of such indebtedness (even
        though the rights and remedies of the seller or bank under such agreement
        in the
        event of default are limited to repossession or sale of such property), (F)
        all
        monetary obligations under any leasing or similar arrangement which, in
        connection with generally accepted accounting principles, consistently applied
        for the periods covered thereby, is classified as a capital lease, (G) all
        indebtedness referred to in clauses (A) through (F) above secured by (or
        for
        which the holder of such Indebtedness has an existing right, contingent or
        otherwise, to be secured by) any mortgage, lien, pledge, charge, security
        interest or other encumbrance upon or in any property or assets (including
        accounts and contract rights) owned by any Person, even though the Person
        which
        owns such assets or property has not assumed or become liable for the payment
        of
        such indebtedness, and (H) all Contingent Obligations in respect of indebtedness
        or obligations of others of the kinds referred to in clauses (A) through
        (G)
        above; (y) "Contingent
        Obligation"
        means,
        as to any Person, any direct or indirect liability, contingent or otherwise,
        of
        that Person with respect to any indebtedness, lease, dividend or other
        obligation of another Person if the primary purpose or intent of the Person
        incurring such liability, or the primary effect thereof, is to provide assurance
        to the obligee of such liability that such liability will be paid or discharged,
        or that any agreements relating thereto will be complied with, or that the
        holders of such liability will be protected (in whole or in part) against
        loss
        with respect thereto; and (z) "Person"
        means
        an individual, a limited liability company, a partnership, a joint venture,
        a
        corporation, a trust, an unincorporated organization and a government or
        any
        department or agency thereof.

      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

      

      (t) Absence
        of Litigation.
         There is no action, suit, proceeding, inquiry or investigation before or
        by the Principal Market, any court, public board, government agency,
        self-regulatory organization or body pending or, to the knowledge of the
        Company, threatened against or affecting the Company or any of its Subsidiaries,
        the Common Stock or any of the Company's Subsidiaries or any of the Company's
        or
        its Subsidiaries' officers or directors, except as set forth in Schedule
        3(t).

      

      (u) Insurance.
         The Company and each of its Subsidiaries are insured by insurers of
        recognized financial responsibility against such losses and risks and in
        such
        amounts as management of the Company believes to be prudent and customary
        in the
        businesses in which the Company and its Subsidiaries are engaged. Neither
        the
        Company nor any such Subsidiary has, within the past two (2) years, been
        refused
        any insurance coverage sought or applied for and neither the Company nor
        any
        such Subsidiary has any reason to believe that it will not be able to renew
        its
        existing insurance coverage as and when such coverage expires or to obtain
        similar coverage from similar insurers as may be necessary to continue its
        business at a cost that would not have a Material Adverse Effect.

      

      (v) Employee
        Relations.

       

      (i)
         Neither the Company nor any of its Subsidiaries is a party to any
        collective bargaining agreement or employs any member of a union. The Company
        and its Subsidiaries believe that their relations with their employees are
        good.
        Except as disclosed in Schedule 3(v), no executive officer of the Company
        or any
        of its Subsidiaries (as defined in Rule 501(f) of the 1933 Act) has notified
        the
        Company or any such Subsidiary that such officer intends to leave the Company
        or
        any such Subsidiary or otherwise terminate such officer's employment with
        the
        Company or any such Subsidiary.  No executive officer of the Company or any
        of its Subsidiaries, to the knowledge of the Company or any such Subsidiary,
        is
        in violation of any material term of any employment contract, confidentiality,
        disclosure or proprietary information agreement, non-competition agreement,
        or
        any other contract or agreement or any restrictive covenant, and, the continued
        employment of each such executive officer does not, subject the Company or
        any
        of its Subsidiaries to any liability with respect to any of the foregoing
        matters.

      

      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

      

      (ii)
        The
        Company and its Subsidiaries are in compliance with all federal, state, local
        and foreign laws and regulations respecting labor, employment and employment
        practices and benefits, terms and conditions of employment and wages and
        hours,
        except where failure to be in compliance would not, either individually or
        in
        the aggregate, reasonably be expected to result in a Material Adverse
        Effect.

      

      (w) Title.
        Except
        as disclosed in Schedule
        3(w),
        the
        Company and its Subsidiaries have good and marketable title in fee simple
        to all
        real property owned by them and good and marketable title to all personal
        property owned by them which is, in each case, material to the business of
        the
        Company and its Subsidiaries, free and clear of all liens, encumbrances and
        defects except such as do not materially affect the value of such property
        and
        do not interfere with the use made and proposed to be made of such property
        by
        the Company and any of its Subsidiaries. Any real property and facilities
        held under lease by the Company and any of its Subsidiaries are held by them
        under valid, subsisting and enforceable leases with such exceptions as are
        not
        material and do not interfere with the use made and proposed to be made of
        such
        property and facilities by the Company and its Subsidiaries.

      

      (x) Intellectual
        Property Rights.
         The Company and its Subsidiaries own or possess adequate rights or
        licenses to use all trademarks, trade names, service marks, service mark
        registrations, service names, patents, patent rights, copyrights, inventions,
        licenses, approvals, governmental authorizations, trade secrets and other
        intellectual property rights necessary to conduct their respective businesses
        as
        now conducted ("Intellectual
        Property Rights").
        Except as set forth in Schedule
        3(x),
        none of
        the Company's Intellectual Property Rights have expired or terminated, or
        are
        expected to expire or terminate, within three years from the date of this
        Agreement. The Company does not have any knowledge of any infringement by
        the
        Company or its Subsidiaries of Intellectual Property Rights of others. There
        is
        no claim, action or proceeding being made or brought or, to the knowledge
        of the
        Company, being threatened, against the Company or any of its Subsidiaries
        regarding its Intellectual Property Rights. The Company is unaware of any
        facts
        or circumstances which might give rise to any of the foregoing infringements
        or
        claims, actions or proceedings. The Company and its Subsidiaries have taken
        reasonable security measures to protect the secrecy, confidentiality and
        value
        of all of their Intellectual Property Rights.

      

      
        
          
          

        

        
          16

          
            

          

        

        
          
          

        

      

      (y) Environmental
        Laws.
         The Company and its Subsidiaries (i) are in compliance with any and all
        Environmental Laws (as hereinafter defined), (ii) have received all permits,
        licenses or other approvals required of them under applicable Environmental
        Laws
        to conduct their respective businesses and (iii) are in compliance with all
        terms and conditions of any such permit, license or approval where, in each
        of
        the foregoing clauses (i), (ii) and (iii), the failure to so comply could
        be
        reasonably expected to have, individually or in the aggregate, a Material
        Adverse Effect. The term "Environmental
        Laws"
        means
        all federal, state, local or foreign laws relating to pollution or protection
        of
        human health or the environment (including, without limitation, ambient air,
        surface water, groundwater, land surface or subsurface strata), including,
        without limitation, laws relating to emissions, discharges, releases or
        threatened releases of chemicals, pollutants, contaminants, or toxic or
        hazardous substances or wastes (collectively, "Hazardous
        Materials")
        into
        the environment, or otherwise relating to the manufacture, processing,
        distribution, use, treatment, storage, disposal, transport or handling of
        Hazardous Materials, as well as all authorizations, codes, decrees, demands
        or
        demand letters, injunctions, judgments, licenses, notices or notice letters,
        orders, permits, plans or regulations issued, entered, promulgated or approved
        thereunder.

      

      (z) Subsidiary
        Rights.
         The Company or one of its Subsidiaries has the unrestricted right to vote,
        and (subject to limitations imposed by applicable law) to receive dividends
        and
        distributions on, all capital securities of its Subsidiaries currently owned
        by
        the Company or such Subsidiary.

      

      (aa) Investment
        Company.
         The Company is not, and is not an Affiliate of, an "investment company"
        within the meaning of the Investment Company Act of 1940, as
        amended.

      

      (bb) Tax
        Status.
         Except
        as
        disclosed on Schedule
        3(bb),
        the
        Company and each of its Subsidiaries (i) has made or filed all foreign, federal
        and state income and all other tax returns, reports and declarations required
        by
        any jurisdiction to which it is subject, (ii) has paid all taxes and other
        governmental assessments and charges that are material in amount, shown or
        determined to be due on such returns, reports and declarations, except those
        being contested in good faith and (iii) has set aside on its books provision
        reasonably adequate for the payment of all taxes for periods subsequent to
        the
        periods to which such returns, reports or declarations apply. Except as
        disclosed on Schedule
        3(bb),
        there
        are no unpaid taxes in any material amount claimed to be due by the taxing
        authority of any jurisdiction, and the officers of the Company know of no
        basis
        for any such claim. Except as disclosed on Schedule
        3(bb),
        no
        liens
        have been filed and no claims are being asserted by or against the Company
        or
        any of its Subsidiaries with respect to any taxes (other than liens for taxes
        not yet due and payable). Neither the Company nor it Subsidiaries has received
        notice of assessment or proposed assessment of any taxes of a material amount
        claimed to be owed by it or any other Person on its behalf. Except as disclosed
        on Schedule
        3(bb),
        neither
        the Company nor any Subsidiary is a party to any tax sharing or tax indemnity
        agreement or any other agreement of a similar nature that remains in effect.
        Except
        as
        disclosed on Schedule
        3(bb),
        each
        of
        the Company and its Subsidiaries has complied in all material respects with
        all
        applicable legal requirements relating to the payment and withholding of
        taxes
        and, within the time and in the manner prescribed by law, has withheld from
        wages, fees and other payments and paid over to the proper governmental or
        regulatory authorities all amounts required.

      

      
        
          
          

        

        
          17

          
            

          

        

        
          
          

        

      

      (cc) Internal
        Accounting and Disclosure Controls.
         The Company and each of its Subsidiaries maintain a system of internal
        accounting controls sufficient to provide reasonable assurance that (i)
        transactions are executed in accordance with management's general or specific
        authorizations, (ii) transactions are recorded as necessary to permit
        preparation of financial statements in conformity with generally accepted
        accounting principles and to maintain asset and liability accountability,
        (iii)
        access to assets or incurrence of liabilities is permitted only in accordance
        with management's general or specific authorization and (iv) the recorded
        accountability for assets and liabilities is compared with the existing assets
        and liabilities at reasonable intervals and appropriate
        action is taken with respect to any difference (the "Internal
        Accounting Controls").
        The
        Company maintains disclosure controls and procedures (as such term is defined
        in
        Rule 13a-14 under the 1934 Act) that are effective in ensuring that information
        required to be disclosed by the Company in the reports that it files or submits
        under the 1934 Act is recorded, processed, summarized and reported, within
        the
        time periods specified in the rules and forms of the SEC, including, without
        limitation, controls and procedures designed to ensure that information required
        to be disclosed by the Company in the reports that it files or submits under
        the
        1934 Act is accumulated and communicated to the Company's management, including
        its principal executive officer and its principal financial officer, as
        appropriate, to allow timely decisions regarding required
        disclosure.

      

      (dd) Off
        Balance Sheet Arrangements.
         There is no transaction, arrangement, or other relationship between the
        Company or any of its Subsidiaries and an unconsolidated or other off balance
        sheet entity that is required to be disclosed by the Company in its 1934
        Act
        filings and is not so disclosed or that otherwise would be reasonably likely
        to
        have a Material Adverse Effect.

      

      (ee) Ranking
        of Notes.
         Except as set forth on
        Schedule 3(ee),
        no
        Indebtedness of the Company is senior to or ranks
        pari
        passu
        with the
        Notes in right of payment, whether with respect of payment of redemptions,
        interest, damages or upon liquidation or dissolution or otherwise.

      

      (ff) Transfer
        Taxes.
         On the Closing Date, all stock transfer or other taxes (other than income
        or similar taxes) which are required to be paid in connection with the sale
        and
        transfer of the Securities to be sold to each Buyer hereunder will be, or
        will
        have been, fully paid or provided for by the Company, and all material laws
        imposing such taxes will be or will have been complied with.

      

      (gg) Manipulation
        of Price.
         The Company and its Subsidiaries have not, and to its knowledge no one
        acting on its behalf has, (i) taken, directly or indirectly, any action designed
        to cause or to result or that could reasonably be expected to cause or result
        in
        the stabilization or manipulation of the price of any security of the Company
        to
        facilitate the sale or resale of any of the Securities, (ii) other than the
        Consultant, sold, bid for, purchased, or paid any compensation for soliciting
        purchases of, any of the Securities, or (iii) other than the Consultant,
        paid or
        agreed to pay to any person any compensation for soliciting another to purchase
        any other securities of the Company.

      

      (hh) U.S.
        Real Property Holding Corporation.
         The Company is not, nor has ever been, a U.S. real property holding
        corporation within the meaning of Section 897 of the Internal Revenue Code
        of
        1986, as amended, and the Company shall so certify upon Buyer's
        request.

      

      
        
          
          

        

        
          18

          
            

          

        

        
          
          

        

      

      (ii) Disclosure.
         Except for the information set forth on the Disclosure Schedules, the
        projections provided by the Company and information provided by the Company’s
        customers, the Company confirms that neither it nor any other Person acting
        on
        its behalf has provided any of the Buyers or their agents or counsel with
        any
        information that constitutes or could reasonably be expected to constitute
        material, nonpublic information other than the existence of the transactions
        contemplated by this Agreement or the other Transaction Documents. The Company
        understands and confirms that each of the Buyers will rely on the foregoing
        representations in effecting transactions in the Securities. All disclosure
        provided to the Buyers regarding the Company, its business and the transactions
        contemplated by this Agreement and the other Transaction Documents, including
        the Schedules and Exhibits hereto and thereto, furnished by or on behalf
        of the
        Company is true and correct in all material respects and does not contain
        any
        untrue statement of a material fact or omit to state any material fact necessary
        in order to make the statements made herein or therein, in the light of the
        circumstances under which they were made, not misleading. Each press release
        issued by the Company or its Subsidiaries during the twelve (12) months
        preceding the date of this Agreement did not at the time of release contain
        any
        untrue statement of a material fact or omit to state a material fact required
        to
        be stated therein or necessary in order to make the statements therein, in
        the
        light of the circumstances under which they were made, not misleading. No
        event
        or circumstance has occurred or information exists with respect to the Company
        or any of its Subsidiaries or its or their business, assets, liabilities,
        properties, prospects, operations or condition (financial or otherwise),
        which,
        under applicable law, rule or regulation, requires public disclosure or
        announcement by the Company but which has not been so publicly announced
        or
        disclosed.

      

      (jj) Lien
        Searches.
        Prior
        to the date hereof, the Company has delivered or caused to be delivered to
        each
        Buyer certified copies of UCC financing statement search results listing
        any and
        all effective financing statements filed within five years prior to such
        date in
        any applicable jurisdiction that name the Company or any of its Subsidiaries
        (other than Converting Sciences, Inc.) as a debtor to perfect an interest
        in any
        of the assets thereof, together with copies of such financing statements
        and the
        results of searches for any effective tax liens and judgment liens filed
        against
        any such Person or its property in any applicable jurisdiction, which results,
        except as otherwise agreed to in writing by the Buyers, shall not show any
        such
        effective tax liens and judgment liens.

      

      4. COVENANTS.

      

      (a) Best
        Efforts.
         Each party shall use its best efforts timely to satisfy each of the
        conditions to be satisfied by it as provided in Sections 6 and 7 of this
        Agreement.

      

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

      

      
        
          
          

        

        
          19

          
            

          

        

        
          
          

        

      

      (c) Reporting
        Status.
         Until the date on which the Investors (as defined in the Registration
        Rights Agreement) shall have sold all the Conversion Shares and Warrant Shares
        and none of the Notes or Warrants is outstanding (the "Reporting
        Period"),
        the
        Company shall file all reports required to be filed with the SEC pursuant
        to the
        1934 Act, and the Company shall not terminate its status as an issuer required
        to file reports under the 1934 Act even if the 1934 Act or the rules and
        regulations thereunder would otherwise permit such termination.

      

      (d) Use
        of
        Proceeds.
         The Company will use the proceeds from the sale of the Securities as set
        forth on Schedule
        4(d).

      

      (e) Financial
        Information.
         The Company agrees to send the following to each Investor during the
        Reporting Period, unless the following are filed with the SEC through EDGAR
        and
        are available to the public through the EDGAR system, (i) within one (1)
        Business Day after the filing thereof with the SEC, a copy of its Annual
        Reports
        on Form 10-K or 10-KSB, any interim reports or any consolidated balance sheets,
        income statements, stockholders' equity statements and/or cash flow statements
        for any period other than annual, any Current Reports on Form 8-K and any
        registration statements (other than on Form S-8) or amendments filed pursuant
        to
        the 1933 Act, (ii) on the same day as the release thereof, facsimile or e-mailed
        copies of all press releases issued by the Company or any of its Subsidiaries,
        and (iii) copies of any notices and other information made available or given
        to
        the stockholders of the Company generally, contemporaneously with the making
        available or giving thereof to the stockholders. As used herein "Business
        Day"
        means any other day other than a Saturday, Sunday, or other day on which
        commercial banks in The City of New York are authorized or required by law
        to
        remain closed.

      

      (f) Listing.
        Upon
        the filing of a registration statement pursuant to Section 4(w), the Company
        shall promptly secure the listing or quotation of all of the Registrable
        Securities (as defined in the Registration Rights Agreement) upon each national
        securities exchange and automated quotation system, if any, upon which the
        Common Stock is then listed or quoted (subject to official notice of issuance)
        and shall maintain such listing of all Registrable Securities from time to
        time
        issuable under the terms of the Transaction Documents. The Company shall
        maintain the Common Stock’s authorization for
        quotation on the Principal Market. Neither the Company nor any of its
        Subsidiaries shall take any action which would be reasonably expected to
        result
        in the delisting or suspension of the Common Stock on the Principal Market.
         The Company shall pay all fees and expenses in connection with satisfying
        its obligations under this Section 4(f).

      

      (g) Fees.
         The Company shall pay (i) Gottbetter & Partners, LLP (“G&P”)
        $40,000 in legal fees plus reasonable expenses up to $500, (ii) Gottbetter
        Capital Master, Ltd. (a Buyer) ("GCM")
        or its
        designee(s) $10,000 for due diligence and all reasonable expenses up to $500
        incurred in connection with the transactions contemplated by the Transaction
        Documents (including all reasonable legal fees and disbursements in connection
        therewith, documentation and implementation of the transactions contemplated
        by
        the Transaction Documents and due diligence in connection therewith), and
        (iii)
        $5,000
        to
        Gottbetter Capital Finance, LLC which amounts shall be withheld by such Buyer
        from its Purchase Price at the Closing. The Company shall be responsible
        for the
        payment of any placement agent's fees, financial advisory fees, consultancy
        fees
        or broker's commissions (other than for Persons engaged by any Buyer) relating
        to or arising out of the transactions contemplated by the Transaction Documents
        including, without limitation, any fees or commission payable to the Consultant.
        The Company shall pay, and hold each Buyer harmless against, any liability,
        loss
        or expense (including, without limitation, reasonable attorney's fees and
        out-of-pocket expenses) arising in connection with any claim against a Buyer
        relating to any such payment. Except as otherwise set forth in the Transaction
        Documents, each party to this Agreement shall bear its own expenses in
        connection with the sale of the Securities to the Buyers.

       

      
        
          
          

        

        
          20

          
            

          

        

        
          
          

        

      

      

      (h) Pledge
        of Securities.
         The Company acknowledges and agrees that the Securities may be pledged by
        a Buyer in connection with a bona fide margin agreement or other loan or
        financing arrangement that is secured by the Securities.  The pledge of
        Securities shall not be deemed to be a transfer, sale or assignment of the
        Securities hereunder, and no Investor effecting a pledge of Securities shall
        be
        required to provide the Company with any notice thereof or otherwise make
        any
        delivery to the Company pursuant to this Agreement or any other Transaction
        Document, including, without limitation, Section 2(f) hereof; provided that
        an
        Investor and its pledgee shall be required to comply with the provisions
        of
        Section 2(f) hereof in order to effect a sale, transfer or assignment of
        Securities to such pledgee. The Company hereby agrees to execute and deliver
        such documentation as a pledgee of the Securities may reasonably request
        in
        connection with a pledge of the Securities to such pledgee by an
        Investor.

      

      (i) Disclosure
        of Transactions and Other Material Information.
         On or before 5:00 p.m., New York Time, on the fourth Business Day
        following the date of this Agreement, the Company shall file a Current Report
        on
        Form 8-K describing the terms of the transactions contemplated by the
        Transaction Documents in the form required by the 1934 Act and attaching
        the
        material Transaction Documents (including, without limitation, this Agreement,
        the form of each of the Notes, the form of Warrant, the Registration Rights
        Agreement and the Security Documents) as exhibits to such filing (including
        all
        attachments, the "8-K
        Filing").
        From
        and after the filing of the 8-K Filing with the SEC, no Buyer shall be in
        possession of any material,
        nonpublic information received from the Company, any of its Subsidiaries
        or any
        of their respective officers, directors, employees, stockholders,
        representatives or agents, that is not disclosed in the 8-K Filing. The Company
        shall not, and shall not cause any of its Subsidiaries and its and each of
        their
        respective officers, directors, employees and agents, to, provide any Buyer
        with
        any material, nonpublic information regarding the Company or any of its
        Subsidiaries from and after the filing of the 8-K Filing with the SEC without
        the express written consent of such Buyer.  In
        the
        event of a breach of the foregoing covenant by the Company, any of its
        Subsidiaries, or any of their respective officers, directors, employees and
        agents, in addition to any other remedy provided herein or in the Transaction
        Documents, a Buyer shall have the right to make a public disclosure, in the
        form
        of a press release, public advertisement or otherwise, of such
        material, nonpublic information without
        the prior approval by the Company, their Subsidiaries, or any of their
        respective officers, directors, employees or agents.
        No Buyer
        shall have any liability to the Company, its Subsidiaries, or any of its
        or
        their respective officers, directors, employees, stockholders or agents for
        any
        such disclosure.
        Subject
        to the foregoing, none of the Company, its Subsidiaries or any Buyer shall
        issue
        any press releases or any other public statements with respect to the
        transactions contemplated hereby without the approval of all of the Buyers;
        provided,
        however,
        that
        the Company shall be entitled, without the prior approval of any Buyer, to
        make
        any press release or other public disclosure with respect to such transactions
        (i) in substantial conformity with the 8-K Filing and contemporaneously
        therewith or (ii) as is required by the 1934 Act, the 1933 Act or any other
        applicable law and regulations (provided that in the case of clause (i) the
        Required Holders shall be consulted by the Company in connection with any
        such
        press release or other public disclosure prior to its release). Without the
        prior written consent of any applicable Buyer, the Company shall not disclose
        the name of any Buyer in any filing, announcement, release or otherwise.
         

      

      
        
          
          

        

        
          21

          
            

          

        

        
          
          

        

      

      (j) Restriction
        on Redemption and Cash Dividends.
         So long as any Notes are outstanding, the Company shall not, directly or
        indirectly, redeem, or declare or pay any cash dividend or distribution on,
        the
        Common Stock without the prior express written consent of the Required Holders
        (as defined in the Notes).

      

      (k) Additional
        Notes; Variable Securities; Dilutive Issuances.
         So long as any Buyer beneficially owns any Securities, the Company will
        not issue any Notes (other than to the Buyers as contemplated hereby) and
        the
        Company shall not issue any other securities that would cause a breach or
        default under the Notes. For so long as any Notes or Warrants remain
        outstanding, the Company shall not, in any manner, issue or sell any rights,
        warrants or options to subscribe for or purchase Common Stock or other
        securities directly or indirectly convertible into or exchangeable or
        exercisable for Common Stock at a price which varies or may vary with the
        market
        price of the Common Stock, including by way of one or more reset(s) to any
        fixed
        price unless the conversion, exchange or exercise price of any such security
        cannot be less than the then applicable Conversion Price (as defined in the
        Notes) with respect to the Common Stock into which any Note is convertible
        or
        the then applicable Exercise Price (as defined in the Warrants) with respect
        to
        the Common Stock into which any Warrant is exercisable. For so long as any
        Notes
        or Warrants remain outstanding, the Company shall not, in any manner, enter
        into
        or affect any Dilutive Issuance (as defined in the Notes) if the effect of
        such
        Dilutive Issuance is to cause the Company to be required to issue upon
        conversion of any Note or exercise of any Warrant any shares of Common Stock
        in
        excess of that number of shares of Common Stock which the Company has, following
        the Share Increase Authorization, authorized and reserved for purposes of
        such
        conversions or exercises or which the Company may issue upon conversion of
        the
        Notes and exercise of the Warrants without breaching the Company's obligations
        under the rules or regulations of the Principal Market.

      

      (l) Corporate
        Existence.
         So long as any Buyer beneficially owns any Securities, the Company shall
        not be party to any Fundamental Transaction (as defined in the Notes) unless
        the
        Company is in compliance with the applicable provisions governing Fundamental
        Transactions set forth in the Notes and the Warrants.

      

      (m) Reservation
        of Shares.
         Following the Share Increase Authorization, so long as any Buyer owns any
        Securities, the Company shall take all action necessary to at all times have
        authorized, and reserved for the purpose of issuance, no less than 300% of
        the
        number of shares of Common Stock issuable upon conversion of all of the Notes
        and issuable upon exercise of the Warrants then outstanding (without taking
        into
        account any limitations on the conversion of the Notes or exercise of the
        Warrants set forth in the Notes and Warrants, respectively).

      

      
        
          
          

        

        
          22

          
            

          

        

        
          
          

        

      

      (n) Conduct
        of Business.
         The business of the Company and its Subsidiaries shall not be conducted in
        violation of any law, ordinance or regulation of any government, or any
        department or agency thereof or governmental entity, except where such
        violations would not result, either individually or in the aggregate, in
        a
        Material Adverse Effect.

      

      (o) Additional
        Issuances of Securities.

      (i) For
        purposes of this Section 4(o), the following definitions shall
        apply.

      

      (1) "Convertible
        Securities"
        means
        any stock or securities (other than Options) convertible into or exercisable
        or
        exchangeable for shares of Common Stock.

      

      (2) "Options"
        means
        any rights, warrants or options to subscribe for or purchase shares of Common
        Stock or Convertible Securities.

      

      (3) "Common
        Stock Equivalents"
        means,
        collectively, Options and Convertible Securities.

      

      (4) "Excluded
        Offerings"
        mean
        any offerings or sales of stock or securities including, without limitation,
        Common Stock and Common Stock Equivalents (but not including any securities
        of
        the type restricted by Section 4(k)), at a price at least 16% above the
        initial "Conversion Price" under the Notes (the "Minimum Excluded Offering
        Price") and resulting in net proceeds to the Company in the aggregate of
        up to
        $7 million; provided that such an offering or sale shall not be
        considered an "Excluded Offering" if the amount of proceeds from such
        offfering that is to be used, in accordance with the terms thereof, (or that
        is
        actually used) for purposes other than to redeem outstanding principal under
        the
        Notes, when combined with the aggregate amount of proceeds from prior Excluded
        Offerings that has been used for purposes other than to redeem outstanding
        principal under the Notes, would exceed $3 million; provided further that
        no
        Excluded Offering shall include warrant coverage in excess of 50% and no
        such
        warrants shall have exercise prices below the Minimum Excluded Offering Price;
        and provided further that no debt security offered in any Excluded Offering
        shall mature prior to the Maturity Date (as defined in the Notes).

      

      (ii) From
        the
        date hereof until the earlier of (i) the Maturity Date (as defined in the
        Notes)
        and (ii) the satisfaction of the Notes (the "Trigger
        Date"),
        and
        except with respect to any transaction described in Schedule
        4(o)
        or with
        respect to any issuance pursuant to an employee or director stock incentive
        plan
        or with respect to an Excluded Offering, the Company will not, directly or
        indirectly, offer, sell, grant any option to purchase, or otherwise dispose
        of
        (or announce any offer, sale, grant or any option to purchase or other
        disposition of) any of its or its Subsidiaries' equity or equity equivalent
        securities, including without limitation any debt, preferred stock or other
        instrument or security that is, at any time during its life and under any
        circumstances, convertible into or exchangeable or exercisable for shares
        of
        Common Stock or Common Stock Equivalents (any such offer, sale, grant,
        disposition or announcement being referred to as a "Subsequent
        Placement"),
        unless the Company shall have first received the express written consent
        of the
        Required Holders and complied with Section 4(o)(iii).

      

      
        
          
          

        

        
          23

          
            

          

        

        
          
          

        

      

      (iii) Prior
        to
the
        Trigger Date, the Company will not, directly or indirectly, effect any
        Subsequent Placement unless the Company shall have first complied with this
        Section 4(o)(iii).

      

      (1) The
        Company shall deliver to each Buyer who still holds Notes a written notice
        (the "Offer
        Notice")
        of any
        proposed or intended issuance or sale or exchange (the "Offer")
        of the
        securities being offered (the "Offered
        Securities")
        in a
        Subsequent Placement, which Offer Notice shall (w) identify and describe
        the
        Offered Securities, (x) describe the price and other terms upon which they
        are to be issued, sold or exchanged, and the number or amount of the Offered
        Securities to be issued, sold or exchanged, (y) identify the persons or
        entities (if known) to which or with which the Offered Securities are to
        be
        offered, issued, sold or exchanged and (z) offer to issue and sell to or
        exchange with such Buyers all of the Offered Securities, allocated among
        such
        Buyers (a) based on such Buyer's pro rata portion of the aggregate principal
        amount of Notes purchased hereunder (the "Basic
        Amount"),
        and
        (b) with respect to each Buyer that elects to purchase its Basic Amount,
        any
        additional portion of the Offered Securities attributable to the Basic Amounts
        of other Buyers as such Buyer shall indicate it will purchase or acquire
        should
        the other Buyers subscribe for less than their Basic Amounts (the "Undersubscription
        Amount").

      

      (2) To
        accept
        an Offer, in whole or in part, such Buyer must deliver a written notice to
        the
        Company prior to the end of the tenth (10th
        )
        Business Day after such Buyer's receipt of the Offer Notice (the "Offer
        Period"),
        setting forth the portion of such Buyer's Basic Amount that such Buyer elects
        to
        purchase and, if such Buyer shall elect to purchase all of its Basic Amount,
        the
        Undersubscription Amount, if any, that such Buyer elects to purchase (in
        either
        case, the "Notice
        of Acceptance").
        If
        the Basic Amounts subscribed for by all Buyers are less than the total of
        all of
        the Basic Amounts, then each Buyer who has set forth an Undersubscription
        Amount
        in its Notice of Acceptance shall be entitled to purchase, in addition to
        the
        Basic Amounts subscribed for, the Undersubscription Amount it has subscribed
        for; provided,
        however,
        that if
        the Undersubscription Amounts subscribed for exceed the difference between
        the
        total of all the Basic Amounts and the Basic Amounts subscribed for (the
        "Available
        Undersubscription Amount"),
        each
        Buyer who has subscribed for any Undersubscription Amount shall be entitled
        to
        purchase only that portion of the Available Undersubscription Amount as the
        Basic Amount of such Buyer bears to the total Basic Amounts of all Buyers
        that
        have subscribed for Undersubscription Amounts, subject to rounding by the
        Company to the extent its deems reasonably necessary.

      

      
        
          
          

        

        
          24

          
            

          

        

        
          
          

        

      

      (3) The
        Company shall have thirty (30) Business Days from the expiration of the Offer
        Period above to offer, issue, sell or exchange all or any part of such Offered
        Securities as to which a Notice of Acceptance has not been given by the Buyers
        (the "Refused
        Securities"),
        but
        only to the offerees described in the Offer Notice (if so described therein)
        or
        any investor introduced to the Company by a placement agent described in
        the
        Offer Notice and only upon terms and conditions (including, without limitation,
        unit prices and interest rates) that are not more favorable to the acquiring
        person or persons or less favorable to the Company than those set forth in
        the
        Offer Notice.

      

      (4) In
        the
        event the Company shall propose to sell less than all the Refused Securities
        (any such sale to be in the manner and on the terms specified in Section
        4(o)(iii)(3) above), then each Buyer may, at its sole option and in its sole
        discretion, reduce the number or amount of the Offered Securities specified
        in
        its Notice of Acceptance to an amount that
        shall be
        not less than the number or amount of the Offered Securities that such Buyer
        elected to purchase pursuant to Section 4(o)(iii)(2) above multiplied by
        a
        fraction, (i) the numerator of which shall be the number or amount of Offered
        Securities the Company actually proposes to issue, sell or exchange (including
        Offered Securities to be issued or sold to Buyers pursuant to Section
        4(o)(iii)(3) above prior to such reduction) and (ii) the denominator of which
        shall be the original amount of the Offered Securities. In the event that
        any
        Buyer so elects to reduce the number or amount of Offered Securities specified
        in its Notice of Acceptance, the Company may not issue, sell or exchange
        more
        than the reduced number or amount of the Offered Securities unless and until
        such securities have again been offered to the Buyers in accordance with
        Section 4(o)(iii)(1) above.

      

      (5) Upon
        the
        closing of the issuance, sale or exchange of all or less than all of the
        Refused
        Securities, the Buyers shall acquire from the Company, and the Company shall
        issue to the Buyers, the number or amount of Offered Securities specified
        in the
        Notices of Acceptance, as reduced pursuant to Section 4(o)(iii)(3) above
        if the
        Buyers have so elected, upon the terms and conditions specified in the Offer.
        The purchase by the Buyers of any Offered Securities is subject in all cases
        to
        the preparation, execution and delivery by the Company and the Buyers of
        a
        purchase agreement relating to such Offered Securities must be reasonably
        satisfactory in form and substance to the Buyers and their respective counsel
        and to the Company and its counsel.

      

      (6) Any
        Offered Securities not acquired by the Buyers or other persons in accordance
        with Section 4(o)(iii)(3) above may not be issued, sold or exchanged until
        they
        are again offered to the Buyers under the procedures specified in this
        Agreement.

      

      
        
          
          

        

        
          25

          
            

          

        

        
          
          

        

      

      (iv) The
        restrictions contained in subsections (ii) and (iii) of this Section 4(o)
        shall
        not apply in connection with the issuance of any Excluded Securities (as
        defined
        in the Notes).

      

      (p) Additional
        Registration Statements.
         Until the Effective Date (as defined in the Registration Rights
        Agreement), the Company will not file a registration statement under the
        1933
        Act relating to securities that are not the Securities; provided,
        however,
        that
        the Company shall have the right to include the securities listed on
Schedule
        4(p).

      

      (q) No
        Short Position.
        For so
        long as the Notes remain outstanding, none of the Buyers or any of its
        Affiliates shall have an open short position in the Common Stock. 

      

      (r) Account
        Control Agreements.
         Upon an Event of Default (as defined in the Notes), the Company shall
        deliver to the Buyer(s) within five (5) Business Days following such Event
        of
        Default, a deposit account control agreement, in form and substance satisfactory
        to the Buyer(s), duly executed by the Company, the Buyer(s) and Citibank,
        N.A.
        (the "Depository
        Bank")
        with
        respect to the accounts of the Company and, if applicable, the accounts of
        its
        Subsidiaries maintained at the Depositary Bank.

      

      (s) Transactions
        With Affiliates.
        So long
        as any Note or Warrant is outstanding, the Company shall not, and shall cause
        each of its Subsidiaries not to, enter into, amend, modify or supplement,
        or
        permit any Subsidiary to enter into, amend, modify or supplement any agreement,
        transaction, commitment, or arrangement with any of its or any Subsidiary’s
        officers, directors, person who were officers or directors at any time during
        the previous two (2) years, stockholders who beneficially own five percent
        (5%)
        or more of the Common Stock, or Affiliates (as defined below), or with any
        individual related by blood, marriage, or adoption to any such individual
        or
        with any entity in which any such entity or individual owns a five percent
        (5%)
        or more beneficial interest (each a "Related
        Party"),
        except (a) for customary employment arrangements and benefit programs on
        reasonable terms, or (b) relating to the transactions described in Schedule
        4(s).
        For
        purposes of this Section 4(s) only, "Affiliate" means, with respect to any
        person or entity, another person or entity that, directly or indirectly,
        (i) has
        a ten percent (10%) or more equity interest in that person or entity, (ii)
        has
        ten percent (10%) or more common ownership with that person or entity, (iii)
        controls that person or entity, or (iv) shares common control with that
        person or entity. "Control" or "controls" for purposes hereof means that
        a
        person or entity has the power, direct or indirect, to conduct or govern
        the
        policies of another person or entity.

       

      (t) [Reserved]

       

      
        
          
          

        

        
          26

          
            

          

        

        
          
          

        

      

      (u) Share
        Increase Authorization and Reverse Stock Split.
        As
        soon
        as practicable following the Closing (as defined herein), the Company shall
        (i)
        mail an Information Statement to its stockholders, notifying such stockholders
        that the holders of shares representing a majority of the voting stock of
        the
        Company have given their written consent to resolutions adopted by the board
        of
        directors of the Company to, among other things, amend the Articles of
        Incorporation (as defined below) to increase the number of shares of Common
        Stock the Company is authorized to issue to 400,000,000, (ii) file an amendment
        to the Articles of Incorporation with the Secretary of State of the State
        of
        Nevada to effect, among other things, such increase in the authorized number
        of
        shares of Common Stock, (iii) hold an annual meeting of its stockholders,
        during
        which annual meeting the Company's stockholders shall, among other things,
        vote
        on a proposal (A) to enact a reverse stock split so that each 150 shares
        of
        issued and outstanding shares of the Company’s Common Stock shall be canceled
        and replaced by one new share of the Company’s Common Stock and (B) to further
        increase the number of shares of Common Stock that the Company is authorized
        to
        issue to at least such number as shall accommodate the issuance of the Notes
        and
        the Warrants, the reservation of shares of underlying Common Stock pursuant
        to
        the terms hereof and the reverse stock split described in clause (iii)(A)
        and
        (iv) to the extent such increase and reverse stock split have been approved
        by
        the Company’s shareholders, file a further amendment to the Articles of
        Incorporation with the Secretary of State of the State of Nevada to effect
        such
        increase in the authorized number of shares of Common Stock and the reverse
        stock split described in clause (iii)(A) (the actions set forth in clauses
        (i),
        (ii), (iii) and (iv) related to the increase of the Company’s authorized share
        capital shall, collectively, be referred to herein as the "Share
        Increase Authorization"
        and the
        actions set forth in clauses (iii) and (iv) related to the reverse stock
        split
        shall, collectively, be referred to herein as the “Reverse
        Stock Split”).

      

      (v) Collateral
        Agent.

       

      (i) Each
        Buyer hereby (a) appoints GCM, as the collateral agent hereunder and under
        the
        other Security Documents (in such capacity, the “Collateral
        Agent”),
        and
        (b) authorizes the Collateral Agent (and its officers, directors, employees
        and
        agents) to take such action on such Buyer’s behalf in accordance with the terms
        hereof and thereof. The Collateral Agent shall not have, by reason hereof
        or any
        of the other Security Documents, a fiduciary relationship in respect of any
        Buyer. Neither the Collateral Agent nor any of its officers, directors,
        employees and agents shall have any liability to any Buyer for any action
        taken
        or omitted to be taken in connection hereof or any other Security Document
        except to the extent caused by its own gross negligence or willful misconduct,
        and each Buyer agrees to defend, protect, indemnify and hold harmless the
        Collateral Agent and all of its officers, directors, employees and agents
        (collectively, the “Collateral
        Agent Indemnitees”)
        from
        and against any losses, damages, liabilities, obligations, penalties, actions,
        judgments, suits, fees, costs and expenses (including, without limitation,
        reasonable attorneys’ fees, costs and expenses) incurred by such Collateral
        Agent Indemnitee, whether direct, indirect or consequential, arising from
        or in
        connection with the performance by such Collateral Agent Indemnitee of the
        duties and obligations of Collateral Agent pursuant hereto or any of the
        Security Documents.

       

      (ii) The
        Collateral Agent shall be entitled to rely upon any written notices, statements,
        certificates, orders or other documents or any telephone message believed
        by it
        in good faith to be genuine and correct and to have been signed, sent or
        made by
        the proper Person, and with respect to all matters pertaining to this Agreement
        or any of the other Transaction Documents and its duties hereunder or
        thereunder, upon advice of counsel selected by it.

       

      
        
          
          

        

        
          27

          
            

          

        

        
          
          

        

      

      (iii) The
        Collateral Agent (i) may resign from the performance of all its functions
        and
        duties hereunder and under the Notes and the Security Documents at any time
        by
        giving at least ten (10) Business Days prior written notice to the Company
        and
        each holder of the Notes and (ii) the Collateral Agent shall immediately
        resign
        if GCM, or one of its affiliates, is no longer a holder of the Notes. Such
        resignation shall take effect upon the acceptance by a successor Collateral
        Agent of appointment as provided below. Upon any such notice of resignation,
        the
        holders of a majority of the outstanding principal under the Notes shall
        appoint
        a successor Collateral Agent. Upon the acceptance of the appointment as
        Collateral Agent, such successor Collateral Agent shall succeed to and become
        vested with all the rights, powers, privileges and duties of the retiring
        Collateral Agent, and the retiring Collateral Agent shall be discharged from
        its
        duties and obligations under this Agreement, the Notes and the other Security
        Documents. After any Collateral Agent’s resignation hereunder, the provisions of
        this Section 4(w) shall inure to its benefit. If a successor Collateral Agent
        shall not have been so appointed within said ten (10) Business Day period,
        the
        retiring Collateral Agent shall then appoint a successor Collateral Agent
        who
        shall serve until such time, if any, as the holders of a majority of the
        outstanding principal under the Notes appoint a successor Collateral Agent
        as
        provided above.

      

      (w) Appointment
        of Directors Upon Continuing Default.
        If (i)
        any Event of Default (as defined in the Notes) remains uncured for thirty
        (30)
        consecutive days or more, the Required Holders, taken together, may, at their
        option, recommend one nominee for the Company’s Board of Directors, (ii) any
        Event of Default remains uncured for thirty (30) consecutive days or more
        following the recommended nomination pursuant to clause (i), the Required
        Holders, taken together, may, at their option, recommend a second nominee
        for
        the Company’s Board of Directors, and (iii) any Event of Default remains uncured
        for thirty (30) consecutive days or more following the recommended nomination
        pursuant to clause (ii), the Required Holders, taken together, may, at their
        option, recommend (on one or more occasions thereafter anytime that the Required
        Holders do not equal one less than a majority of the Company’s directors until
        cured) an additional number or numbers of nominees to the Company’s Board of
        Directors, such that the Buyer’s nominees shall number one less than a majority
        of the Company’s Board of Directors (each such nominee referred to singularly as
        a "Buyer’s
        Nominee"
        and
        collectively as the "Buyer’s
        Nominees").
        The
        Company agrees that its Board of Directors, or the Nominating Committee of
        the
        Board, as applicable, shall promptly increase the size of the Board of Directors
        as necessary to appoint as members of the Company’s Board of Directors the
        number of Buyer’s Nominees required pursuant to the immediately preceding
        sentence. After such appointment, the Company and its Board of Directors
        shall
        use their reasonable best efforts to obtain stockholder ratification of the
        appointment of the Buyer’s Nominees at the next stockholder
        meeting.

      

      (x) The
        Company shall dissolve Converting Sciences, Inc. and assume all of its
        liabilities, obligations and assets within 60 days of the Closing
        Date.

      

      5. REGISTER.

      

      (a) 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 each holder of
        Securities), or shall cause its transfer agent to maintain, a register for
        the
        Notes and the Warrants in which the Company or the transfer agent shall record
        the name and address of the Person in whose name the Notes and the Warrants
        have
        been issued (including the name and address of each transferee), the principal
        amount of Notes held by such Person, the number of Conversion Shares issuable
        upon conversion of the Notes and the number of Warrant Shares issuable upon
        exercise of the Warrants held by such Person. The Company or the transfer
        agent
        shall make the register available at all times during business hours for
        inspection of any Buyer or its legal representatives following reasonable
        written notice of not less than two Business Days.

      

      
        
          
          

        

        
          28

          
            

          

        

        
          
          

        

      

      (b) Transfer
        Agent Instructions.
         The Company shall issue irrevocable instructions to its transfer agent,
        and any subsequent transfer agent, to issue certificates or credit shares
        to the
        applicable balance accounts at The Depository Trust Company ("DTC"),
        registered in the name of each Buyer or its respective nominee(s), for the
        Conversion Shares and the Warrant Shares issued at the Closing or upon
        conversion of the Notes or exercise of the Warrants in such amounts as specified
        from time to time by each Buyer to the Company upon conversion of the Notes
        or
        exercise of the Warrants in the form of Exhibit
        F
        attached
        hereto (the "Irrevocable
        Transfer Agent Instructions").
        Except as otherwise required in the Transaction Documents, the Company warrants
        that no instruction other than the Irrevocable Transfer Agent Instructions
        referred to in this Section 5(b), and stop transfer instructions to give
        effect
        to Section 2(g) hereof, will be given by the Company to its transfer agent
        relating to the Securities, and that the Securities shall otherwise be freely
        transferable on the books and records of the Company as and to the extent
        provided in this Agreement and the other Transaction Documents. If a Buyer
        effects a sale, assignment or transfer of the Securities in accordance with
        Section 2(f), the Company shall permit the transfer and shall promptly instruct
        its transfer agent to issue one or more certificates or credit shares to
        the
        applicable balance accounts at DTC in such name and in such denominations
        as
        specified by such Buyer to effect such sale, transfer or assignment. In the
        event that such sale, assignment or transfer involves Conversion Shares or
        Warrant Shares sold, assigned or transferred pursuant to an effective
        registration statement or pursuant to Rule 144, the transfer agent shall
        issue
        such Securities to the Buyer, assignee or transferee, as the case may be,
        without any restrictive legend. The Company acknowledges that a breach by
        it of
        its obligations hereunder will cause irreparable harm to a Buyer.
 Accordingly, the Company acknowledges that the remedy at law for a breach
        of its obligations under this Section 5(b) will be inadequate and agrees,
        in the
        event of a breach or threatened breach by the Company of the provisions of
        this
        Section 5(b), that a Buyer shall be entitled, in addition to all other available
        remedies, to an order and/or injunction restraining any breach and requiring
        immediate issuance and transfer, without the necessity of showing economic
        loss
        and without any bond or other security being required.

      

      6. CONDITIONS
        TO THE COMPANY'S OBLIGATION TO SELL.

      

      (a) The
        obligation of the Company hereunder to issue and sell the Notes and the related
        Warrants to each Buyer and to otherwise cause the transactions contemplated
        by
        this Agreement to be consummated is subject to the satisfaction, at or before
        the Closing Date, of each of the following conditions, provided that these
        conditions are for the Company's sole benefit and may be waived by the Company
        at any time in its sole discretion by providing each Buyer with prior written
        notice thereof:

      

      (i) Such
        Buyer and each other Buyer shall have executed each of the Transaction Documents
        to which it is a party and delivered the same to the Company.

      

      (ii) Such
        Buyer and each other Buyer shall have delivered to the Company the Purchase
        Price (less, in the case of GCM, any amounts withheld in satisfaction of
        the
        Company's obligations pursuant to Section 4(g)(ii)) for the Notes and the
        related Warrants being purchased by such
        Buyer at the Closing by wire transfer of immediately available funds pursuant
        to
        the wire instructions provided by the Company.

      

      
        
          
          

        

        
          29

          
            

          

        

        
          
          

        

      

      (iii) The
        representations and warranties of each Buyer shall be true and correct with
        respect to those matters that are qualified by material adverse effect or
        by any
        other materiality standard and shall be true and correct in all material
        respects with respect to all matters that are not so qualified, in each case
        as
        of the date hereof and as of the Closing Date as though made at that time
        (except to the extent any such representation or warranty expressly speaks
        as of
        an earlier date, in which case such representation and warranty shall be
        true
        and correct or true and correct in all material respects, as applicable,
        as of
        such earlier date), and each Buyer shall have performed, satisfied and complied
        in all material respects with the covenants, agreements and conditions required
        by the Transaction Documents to be performed, satisfied or complied with
        by such
        Buyer at or prior to the Closing Date.

      

      (iv) The
        Company shall have received from each Buyer a certificate executed by an
        executive officer of such Buyer, in his or her capacity as such, confirming
        that
        the conditions set forth in Section 7(a) have been satisfied.

      

      (v) The
        Company shall have obtained all governmental, regulatory or third party consents
        and approvals, if any, necessary for the sale of the Securities.

      

      (vi) No
        temporary restraining order, preliminary or permanent injunction or other
        order
        preventing the consummation of the transaction contemplated by this Agreement
        shall have been issued by any court of competent jurisdiction or other
        government body and remain in effect, and there shall not be any legal
        requirement enacted or deemed applicable to the transactions contemplated
        hereby
        that makes the consummation of such transactions illegal.

      

      (vii) Each
        Buyer shall have delivered to the Company such other documents relating to
        the
        transactions contemplated by this Agreement as the Company or its counsel
        may
        reasonably request.

      

      (b) The
        obligation of the Company hereunder to issue and sell the Notes and the related
        Warrants to each Buyer and to otherwise cause the transactions contemplated
        by
        this Agreement to be consummated at the Second Closing is subject to the
        satisfaction, at or before the date of the Second Closing (the “Second
        Closing Date”),
        of
        each of the following conditions, provided that these conditions are for
        the
        Company's sole benefit and may be waived by the Company at any time in its
        sole
        discretion by providing each Buyer with prior written notice
        thereof:

      

      (i) Such
        Buyer and each other Buyer shall have executed each of the Transaction Documents
        to which it is a party and delivered the same to the Company.

      

      
        
          
          

        

        
          30

          
            

          

        

        
          
          

        

      

      (ii) Such
        Buyer and each other Buyer shall have delivered to the Company the Purchase
        Price for the Notes and the related Warrants being purchased by such Buyer
        at
        the Closing by wire transfer of immediately available funds pursuant to the
        wire
        instructions provided by the Company.

      

      (iii) The
        representations and warranties of each Buyer shall be true and correct with
        respect to those matters that are qualified by material adverse effect or
        by any
        other materiality standard and shall be true and correct in all material
        respects with respect to all matters that are not so qualified, in each case
        as
        of the date hereof and as of the Second Closing Date as though made at that
        time
        (except to the extent any such representation or warranty expressly speaks
        as of
        an earlier date, in which case such representation and warranty shall be
        true
        and correct or true and correct in all material respects, as applicable,
        as of
        such earlier date), and each Buyer shall have performed, satisfied and complied
        in all material respects with the covenants, agreements and conditions required
        by the Transaction Documents to be performed, satisfied or complied with
        by such
        Buyer at or prior to the Second Closing Date.

      

      (iv) The
        Company shall have received from each Buyer a certificate executed by an
        executive officer of such Buyer, in his or her capacity as such, confirming
        that
        the conditions set forth in Section 7(b) have been satisfied.

      

      (v) The
        Company shall have obtained all governmental, regulatory or third party consents
        and approvals, if any, necessary for the sale of the Securities.

      

      (vi) No
        temporary restraining order, preliminary or permanent injunction or other
        order
        preventing the consummation of the transaction contemplated by this Agreement
        shall have been issued by any court of competent jurisdiction or other
        government body and remain in effect, and there shall not be any legal
        requirement enacted or deemed applicable to the transactions contemplated
        hereby
        that makes the consummation of such transactions illegal.

      

      (vii) Each
        Buyer shall have delivered to the Company such other documents relating to
        the
        transactions contemplated by this Agreement as the Company or its counsel
        may
        reasonably request.

      

      7. CONDITIONS
        TO EACH BUYER'S OBLIGATION TO PURCHASE.

      

      (a) The
        obligation of each Buyer hereunder to purchase the Notes and the related
        Warrants at the Closing is subject to the satisfaction, at or before the
        Closing
        Date, of each of the following conditions, provided that these conditions
        are
        for each Buyer's sole benefit and may be waived by such Buyer at any time
        in its
        sole discretion by providing the Company with prior written notice
        thereof:

      

      (i) The
        Company shall have executed and delivered to such Buyer (A) each of the
        Transaction Documents, (B) the Notes (in such principal amounts as such Buyer
        shall request) being purchased by such Buyer at the Closing pursuant to this
        Agreement, and (C) the Warrants (in such amounts as such Buyer shall
        request) being purchased by such Buyer at the Closing pursuant to this
        Agreement.

      

      
        
          
          

        

        
          31

          
            

          

        

        
          
          

        

      

      (ii) Such
        Buyer shall have received the opinion of Barack Ferrazzano Kirschbaum Perlman
        & Nagelberg LLP, the Company's outside counsel, dated as of the Closing
        Date, in substantially the form of Exhibit
        G
        attached
        hereto and a letter stating that the Company is in good standing with its
        attorneys.

      

      (iii) The
        Company shall have delivered to such Buyer a true copy of the Irrevocable
        Transfer Agent Instructions, in the form of Exhibit F
        attached
        hereto, which instructions shall have been delivered to and acknowledged
        in
        writing by the Company's transfer agent.

      

      (iv) The
        Company shall have delivered to such Buyer a true copy of certificate evidencing
        the formation and good standing of the Company and each of its Subsidiaries
        in
        such entity's jurisdiction of formation issued by the Secretary of State
        (or
        comparable office) of such jurisdiction, as of a date within 10 days of the
        Closing Date.

      

      (v) The
        Company shall have delivered to such Buyer a certified copy of the Articles
        of
        Incorporation as certified by the Secretary of State of the State of Nevada
        within ten (10) days of the Closing Date.

      

      (vi) The
        Company shall have delivered to such Buyer a true copy of certificate evidencing
        the Company's qualification as a foreign corporation and good standing issued
        by
        the Secretary of State (or comparable office) of each jurisdiction in which
        the
        Company conducts business, as of a date within 10 days of the Closing
        Date.

      

      (vii) The
        Company shall have delivered to such Buyer a certificate, executed by the
        Chief
        Executive Officer of the Company and dated as of the Closing Date, as to
        (i) the
        resolutions consistent with Section 3(b) as adopted by the Company's Board
        of
        Directors in a form reasonably acceptable to such Buyer, (ii) the Articles
        of
        Incorporation and (iii) the Bylaws, each as in effect at the Closing, in
        the
        form attached hereto as Exhibit H.

      

      (viii) The
        representations and warranties of the Company shall be true and correct in
        all
        material respects (other than representations and warranties that are already
        qualified by materiality or Material Adverse Effect which shall be true and
        correct in all respects) as of the date when made and as of the Closing Date
        as
        though made at that time (except for representations and warranties that
        speak
        as of a specific date) and the Company shall have performed, satisfied and
        complied in all respects with the covenants, agreements and conditions required
        by the Transaction Documents to be performed, satisfied or complied with
        by the
        Company at or prior to the Closing Date. Such Buyer shall have received a
        certificate, executed by the Chief Executive Officer of the Company, dated
        as of
        the Closing Date, to the foregoing effect and as to such other matters as
        may be
        reasonably requested by such Buyer.

      

      
        
          
          

        

        
          32

          
            

          

        

        
          
          

        

      

      (ix) The
        Company shall have delivered to such Buyer a letter from the Company's transfer
        agent certifying the number of shares of Common Stock outstanding as of a
        date
        within five days of the Closing Date.

      

      (x) The
        Common Stock (I) shall be designated for quotation on the Principal Market
        and
        (II) shall not have been suspended, as of the Closing Date, by the SEC or
        the
        Principal Market from quotation on the Principal Market nor shall suspension
        by
        the SEC or the Principal Market have been threatened in writing, as of the
        Closing Date, by either the SEC or the Principal Market.

      

      (xi) The
        Company shall have obtained all governmental, regulatory or third party consents
        and approvals, if any, necessary for the sale of the Securities.

      

      (xii) Prior
        to
        the Closing, the Company shall have delivered or caused to be delivered to
        each
        Buyer (A) true copies of UCC search results, listing all effective financing
        statements which name as debtor the Company or any of its Subsidiaries (other
        than Converting Sciences, Inc.) filed in the prior five years to perfect
        an
        interest in any assets thereof, together with copies of such financing
        statements, none of which, except as otherwise agreed in writing by the Buyers,
        shall cover any of the Collateral (as defined in the Security Documents)
        and the
        results of searches for any tax lien and judgment lien filed against such
        Person
        or its property, which results, except as otherwise agreed to in writing
        by the
        Buyers shall not show any such Liens (as defined in the Security Documents);
        and
        (B) a perfection opinion in form and substance satisfactory to the
        Buyers.

      

      (xiii) The
        Company shall have provided to the Buyer an acknowledgement, to the satisfaction
        of the Buyer, from the Company’s certified public accountant as to its ability
        to provide all consents required in order to file a registration statement
        in
        connection with this transaction and that the Company is in good standing
        with
        its auditors.

      

      (xiv) The
        Company shall have delivered to such Buyer such other documents relating
        to the
        transactions contemplated by this Agreement as such Buyer or its counsel
        may
        reasonably request including but not limited to the Lock-Up Agreements with
        Matthew Harriton, Richard Harriton and Chicago Investments, Inc. (the
“Lock-up
        Agreements”)
        and
        the Joint Written Instructions as defined in the Escrow Agreement.

      

      (xv) As
        a
        condition to closing, on the Closing Date, the Company shall deliver or cause
        to
        be delivered to each Buyer written voting agreements duly executed by Richard
        Harriton, Matthew Harriton and Chicago Investments, Inc. and such additional
        shareholders to vote all Common Stock over which such Persons have voting
        control as of the record date for the meeting of shareholders of the Company
        in
        favor of the Share Increase Authorization and the Reverse Stock Split, amounting
        to, in the aggregate, at least 50% of the issued and outstanding Common Stock
        as
        of such record date.

      

      
        
          
          

        

        
          33

          
            

          

        

        
          
          

        

      

      (b) The
        obligation of each Buyer hereunder to purchase the Notes and the related
        Warrants at the Second Closing is subject to the satisfaction, at or before
        the
        Second Closing Date, of each of the following conditions, provided that these
        conditions are for each Buyer's sole benefit and may be waived by such Buyer
        at
        any time in its sole discretion by providing the Company with prior written
        notice thereof:

      

      (i) The
        Company shall have executed and delivered to such Buyer (A) each of the
        Transaction Documents, (B) the Notes (in such principal amounts as such Buyer
        shall request) being purchased by such Buyer at the Closing pursuant to this
        Agreement, and (C) the Warrants (in such amounts as such Buyer shall
        request) being purchased by such Buyer at the Closing pursuant to this
        Agreement.

      

      (ii) Such
        Buyer shall have received the opinion of Barack Ferrazzano Kirschbaum Perlman
        & Nagelberg LLP, the Company's outside counsel, dated as of the Second
        Closing Date, in substantially the form of Exhibit
        G
        attached
        hereto and a letter stating that the Company is in good standing with its
        attorneys.

      

      (iii) The
        Company shall have delivered to such Buyer a true copy of the Irrevocable
        Transfer Agent Instructions, in the form of Exhibit F
        attached
        hereto, which instructions shall have been delivered to and acknowledged
        in
        writing by the Company's transfer agent.

      

      (iv) The
        Company shall have delivered to such Buyer a true copy of certificate evidencing
        the formation and good standing of the Company and each of its Subsidiaries
        in
        such entity's jurisdiction of formation issued by the Secretary of State
        (or
        comparable office) of such jurisdiction, as of a date within 10 days of the
        Second Closing Date.

      

      (v) The
        Company shall have delivered to such Buyer a certificate, executed by the
        Chief
        Executive Officer of the Company and dated as of the Second Closing Date,
        as to
        (i) the resolutions consistent with Section 3(b) as adopted by the Company's
        Board of Directors in a form reasonably acceptable to such Buyer, (ii) the
        Article of Incorporation and (iii) the Bylaws, each as in effect at the Closing,
        in the form attached hereto as Exhibit H
        .

      

      (vi) The
        representations and warranties of the Company shall be true and correct in
        all
        material respects (other than representations and warranties that are already
        qualified by materiality or Material Adverse Effect which shall be true and
        correct in all respects) as of the date when made and as of the Closing Date
        as
        though made at that time (except for representations and warranties that
        speak
        as of a specific date) and the Company shall have performed, satisfied and
        complied in all respects with the covenants, agreements and conditions required
        by the Transaction Documents to be performed, satisfied or complied with
        by the
        Company at or prior to the Second Closing Date. Such Buyer shall have received
        a
        certificate, executed by the Chief Executive Officer of the Company, dated
        as of
        the Second Closing Date, to the foregoing effect and as to such other matters
        as
        may be reasonably requested by such Buyer.

      

      
        
          
          

        

        
          34

          
            

          

        

        
          
          

        

      

      (vii) The
        Common Stock (I) shall be designated for quotation on the Principal Market
        and
        (II) shall not have been suspended, as of the Second Closing Date, by the
        SEC or
        the Principal Market from quotation on the Principal Market nor shall suspension
        by the SEC or the Principal Market have been threatened in writing, as of
        the
        Second Closing Date, by either the SEC or the Principal Market.

      

      (viii) The
        Company shall have obtained all governmental, regulatory or third party consents
        and approvals, if any, necessary for the sale of the Securities.

      

      (ix) The
        Company shall have provided to the Buyer an acknowledgement, to the satisfaction
        of the Buyer, from the Company’s certified public accountant as to its ability
        to provide all consents required in order to file a registration statement
        in
        connection with this transaction and that the Company is in good standing
        with
        its auditors.

      

      (x) The
        Company shall have delivered to such Buyer such other documents relating
        to the
        transactions contemplated by this Agreement as such Buyer or its counsel
        may
        reasonably request including but not limited to the Lock-Up
        Agreements.

      

      8. TERMINATION.
         

      

      This
        Agreement may be terminated prior to the Closing Date:

      

      (i)
         By
        mutual
        written consent of the Company and each Buyer.

      

      (ii) By
        either
        the Company or any Buyer if the Closing Date shall not have occurred on or
        prior
        to February 15, 2007 (the "End
        Date").

      

      (iii) By
        the
        Company upon a breach of any representation, warranty, covenant or agreement
        on
        the part of any Buyer set forth in this Agreement such that, if such breach
        were
        occurring or continuing on the Closing Date, the conditions set forth in
        Section
        6(iii) would not be satisfied and which breach cannot be or has not been
        cured
        prior to the earlier to occur of (i) two (2) days following written notice
        thereof to the breaching party or (ii) the End Date.

      

      (iv) By
        any
        Buyer upon a breach of any representation, warranty, covenant or agreement
        on
        the part of the Company set forth in this Agreement such that, if such breach
        were occurring or continuing on the Closing Date, the conditions set forth
        in
        Section 7(vi) would not be satisfied and which breach cannot be or has not
        been
        cured prior to the earlier to occur of (i) two (2) days following written
        notice
        thereof to the Company or (ii) the End Date.

      

      If
        this
        Agreement is terminated pursuant to this Section 8, the Company shall remain
        obligated to reimburse the non-breaching Buyers for the expenses described
        in
        Section 4(g) above.

      

      
        
          
          

        

        
          35

          
            

          

        

        
          
          

        

      

      9. MISCELLANEOUS.

      

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

      

      (b) Counterparts.
         This Agreement may be executed in two or more identical counterparts, all
        of which shall be considered one and the same agreement and shall become
        effective when counterparts have been signed by each party and delivered
        to the
        other party; provided that a facsimile signature shall be considered due
        execution and shall be binding upon the signatory thereto with the same force
        and effect as if the signature were an original, not a facsimile
        signature.

      

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

      

      (d) Severability.
         If any provision of this Agreement shall be invalid or unenforceable in
        any jurisdiction, such invalidity or unenforceability shall not affect the
        validity or enforceability of the remainder of this Agreement in that
        jurisdiction or the validity or enforceability of any provision of this
        Agreement in any other jurisdiction.

      

      
        
          
          

        

        
          36

          
            

          

        

        
          
          

        

      

      (e) Entire
        Agreement; Amendments.
         This Agreement and the other Transaction Documents supersede all other
        prior oral or written agreements between the Buyers, the Company, their
        Affiliates and Persons acting on their behalf with respect to the matters
        discussed herein, and this Agreement, the other Transaction Documents and
        the
        instruments referenced herein and therein contain the entire understanding
        of
        the parties with respect to the matters covered herein and therein and, except
        as specifically set forth herein or therein, neither the Company nor any
        Buyer
        makes any representation, warranty, covenant or undertaking with respect
        to such
        matters.  No provision of this Agreement may be amended other than by an
        instrument in writing signed by the Company and the Required Holders, and
        any
        amendment to this Agreement made in conformity with the provisions of this
        Section 9(e) shall be binding on all Buyers and holders of securities, as
        applicable.  No provision hereof may be waived other than by an instrument
        in writing signed by the party against whom enforcement is sought.  No such
        amendment shall be effective to the extent that it applies to less than all
        of
        the holders of the applicable Securities then outstanding.  No
        consideration shall be offered or paid to any Person to amend or consent
        to a
        waiver or modification of any provision of any of the Transaction Documents
        unless the same consideration also is offered to all of the parties to the
        Transaction Documents, holders of Notes or holders of the Warrants, as the
        case
        may be.  The Company has not, directly or indirectly, made any agreements
        with any Buyers relating to the terms or conditions of the transactions
        contemplated by the Transaction Documents except as set forth in the Transaction
        Documents.

      

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

      

      If
        to the
        Company:

      Nesco
        Industries, Inc.

      305
        Madison Ave., Suite 4510

      New
        York,
        NY 10165

      Telephone:    
        (212) 986-0886

      Facsimile:       (212)
        808-0113

      Attention:       Matthew
        Harriton, President

      

      Copy
        to
        (for informational purposes only):

      

      If
        before
        June 30, 2007:

      

      Barack
        Ferrazzano Kirschbaum Perlman

      &
        Nagelberg LLP

      333
        W.
        Wacker, Suite 2700

      Chicago,
        Illinois 60606

      Telephone:    
        312-984-3100

      Facsimile:       312-984-3150

      Attention:       Sarah
        M.
        Bernstein

      

      
        
          
          

        

        
          37

          
            

          

        

        
          
          

        

      

      If
        after
        June 30, 2007:

      

      Barack
        Ferrazzano Kirschbaum Perlman

      &
        Nagelberg LLP

      200
        W.
        Madison, Suite 3900

      Chicago,
        Illinois 60606

      Telephone:      
        312-984-3100

      Facsimile:        
        312-984-3150

      Attention:        
        Sarah
        M.
        Bernstein

      

      If
        to the
        Transfer Agent:        Interwest
        Transfer Co. Inc.

      1981
        Murray Holladay Rd # 100

      Holladay,
        UT

      Telephone:       801-272-9294

      Attention:        
        Gayle
        Terry

      

      

      If
        to a
        Buyer, to its address and facsimile number set forth on the Schedule of Buyers,
        with copies to such Buyer's representatives as set forth on the Schedule
        of
        Buyers, with a copy (for informational purposes only) to:

      

      Gottbetter
        & Partners, LLP

      488
        Madison Avenue, 12th
        Floor

      New
        York,
        New York 10022

      Telephone:     (212)
        400-6900

      Facsimile:       (212)
        400-6901

      Attention:      
        Jason
        M.
        Rimland, Esq.

      

      or
        to
        such other address and/or facsimile number and/or to the attention of such
        other
        Person as the recipient party has specified by written notice given to each
        other party five (5) days prior to the effectiveness of such change. Written
        confirmation of receipt (A) given by the recipient of such notice, consent,
        waiver or other communication, (B) mechanically or electronically generated
        by
        the sender's facsimile machine containing the time, date, recipient facsimile
        number and an image of the first page of such transmission or (C)
        provided by an overnight courier service shall be rebuttable evidence of
        personal service, receipt by facsimile or receipt from an overnight courier
        service in accordance with clause (i), (ii) or (iii) above,
        respectively.

      

      (g) Successors
        and Assigns.
         This Agreement shall be binding upon and inure to the benefit of the
        parties and their respective successors and assigns, including any purchasers
        of
        the Notes or the Warrants. The Company shall not assign this Agreement or
        any
        rights or obligations hereunder without the prior written consent of the
        Required Holders (unless the Company is in compliance with the applicable
        provisions governing Fundamental Transactions set forth in the Notes and
        the
        Warrants). A Buyer may assign some or all of its rights hereunder without
        the
        consent of the Company, in which event such assignee shall be deemed to be
        a
        Buyer hereunder with respect to such assigned rights; provided that such
        assignee agrees in writing to be bound by all of the provisions contained
        herein.

      

      (h) No
        Third Party Beneficiaries.
         This Agreement is intended for the benefit of the parties hereto and their
        respective permitted successors and assigns, and is not for the benefit of,
        nor
        may any provision hereof be enforced by, any other Person.

      

      
        
          
          

        

        
          38

          
            

          

        

        
          
          

        

      

      (i) Survival.
        Unless
        this Agreement is terminated under Section 8, the representations and warranties
        of the Company and the Buyers contained in Sections 2 and 3 and the agreements
        and the covenants set forth in Sections 4, 5 and 9 shall survive (i) for
        a
        period of thirty (30) months, for all such representations, warranties,
        covenants and agreements relating to obligations of the Company or the Buyers
        with respect to the Warrants or the Warrant Shares and (ii) until the Trigger
        Date for all other representations, warranties, covenants and agreements.
        Each
        Buyer shall be responsible for its own representations, warranties, agreements
        and covenants hereunder.

      

      (j) Further
        Assurances.
         Each party shall do and perform, or cause to be done and performed, all
        such further acts and things, and shall execute and deliver all such other
        agreements, certificates, instruments and documents, as any 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) Indemnification.
         In consideration of each Buyer's execution and delivery of the Transaction
        Documents and acquiring the Securities thereunder and in addition to all
        of the
        Company's other obligations under the Transaction Documents, the Company
        shall
        defend, protect, indemnify and hold harmless each Buyer and all of their
        stockholders, partners, members, officers, directors , employees and direct
        or
        indirect investors and any of the foregoing Persons' agents or other
        representatives (including, without limitation, those retained in connection
        with the transactions contemplated by this Agreement) (collectively, the
        "Indemnitees")
        from
        and against any and all actions, causes of action, suits, claims, losses,
        costs,
        penalties, fees, liabilities and damages, and expenses in connection therewith,
        and including reasonable attorneys' fees and disbursements (the "Indemnified
        Liabilities"),
        incurred by any Indemnitee as a result of, or arising out of, or relating
        to (a)
        any misrepresentation or breach
        of
        any representation or warranty made by the Company in the Transaction Documents
        or any other certificate, instrument or document contemplated hereby or thereby,
        (b) any breach of any covenant, agreement or obligation of the Company contained
        in the Transaction Documents or any other certificate, instrument or document
        contemplated hereby or thereby or (c) any cause of action, suit or claim
        brought
        or made against such Indemnitee by a third party (including for these purposes
        a
        derivative action brought on behalf of the Company) and arising out of or
        resulting from (i) the execution, delivery, performance or enforcement of
        the
        Transaction Documents or any other certificate, instrument or document
        contemplated hereby or thereby, (ii) any transaction financed or to be financed
        in whole or in part, directly or indirectly, with the proceeds of the issuance
        of the Securities, (iii) any disclosure made by such Buyer pursuant to Section
        4(i), or (iv) the status of such Buyer or holder of the Securities as an
        investor in the Company pursuant to the transactions contemplated by the
        Transaction Documents. To the extent that the foregoing undertaking by the
        Company may be unenforceable for any reason, the Company shall make the maximum
        contribution to the payment and satisfaction of each of the Indemnified
        Liabilities which is permissible under applicable law. Except as otherwise
        set
        forth herein, the mechanics and procedures with respect to the rights and
        obligations under this Section 9(k) shall be the same as those set forth
        in
        Section 6 of the Registration Rights Agreement.

      

      
        
          
          

        

        
          39

          
            

          

        

        
          
          

        

      

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

      

      (m) Remedies.
         Each Buyer and each holder of the Securities shall have all rights and
        remedies set forth in the Transaction Documents and all rights and remedies
        which such holders have been granted at any time under any other agreement
        or
        contract and all of the rights which such holders have under any law. Any
        Person
        having any rights under any provision of this Agreement shall be entitled
        to
        enforce such rights specifically (without posting a bond or other security),
        to
        recover damages by reason of any breach of any provision of this Agreement
        and
        to exercise all other rights granted by law. Furthermore, the Company recognizes
        that in the event that it fails to perform, observe, or discharge any or
        all of
        its obligations under the Transaction Documents, any remedy at law may prove
        to
        be inadequate relief to the Buyers. The Company therefore agrees that the
        Buyers
        shall be entitled to seek temporary and permanent injunctive relief in any
        such
        case without the necessity of proving actual damages and without posting
        a bond
        or other security.

      

      (n) Rescission
        and Withdrawal Right.
        Notwithstanding anything to the contrary contained in (and without limiting
        any
        similar provisions of) the Transaction Documents, whenever any Buyer exercises
        a
        right, election, demand or option under a Transaction Document and the Company
        does not timely perform its related obligations within the periods therein
        provided, then such Buyer may rescind or withdraw, in its sole discretion
        from
        time to time upon written notice to the Company, any relevant notice, demand
        or
        election in whole or in part without prejudice to its future actions and
        rights.

      

      (o) Payment
        Set Aside.
         To the extent that the Company makes a payment or payments to the Buyers
        hereunder or pursuant to any of the other Transaction Documents or the Buyers
        enforce or exercise their rights hereunder or thereunder, and such payment
        or
        payments or the proceeds of such enforcement or exercise or any part thereof
        are
        subsequently invalidated, declared to be fraudulent or preferential, set
        aside,
        recovered from, disgorged by or are required to be refunded, repaid or otherwise
        restored to the Company, a trustee, receiver or any other Person under any
        law
        (including, without limitation, any bankruptcy law, foreign, state or federal
        law, common law or equitable cause of action), then to the extent of any
        such
        restoration the obligation or part thereof originally
        intended to be satisfied shall be revived and continued in full force and
        effect
        as if such payment had not been made or such enforcement or setoff had not
        occurred.

      

      (p) Independent
        Nature of Buyers' Obligations and Rights.
         The obligations of each Buyer under any Transaction Document are several
        and not joint with the obligations of any other Buyer, and no Buyer shall
        be
        responsible in any way for the performance of the obligations of any other
        Buyer
        under any Transaction Document. Nothing contained herein or in any other
        Transaction Document, and no action taken by any Buyer pursuant hereto or
        thereto, shall be deemed to constitute the Buyers as a partnership, an
        association, a joint venture or any other kind of entity, or create a
        presumption that the Buyers are in any way acting in concert or as a group
        with
        respect to such obligations or the transactions contemplated by the Transaction
        Documents and the Company acknowledges that to its knowledge the Buyers are
        not
        acting in concert or as a group, and the Company will not assert any such
        claim,
        with respect to such obligations or the transactions contemplated by the
        Transaction Documents.  Each Buyer confirms that it has independently
        participated in the negotiation of the transaction contemplated hereby with
        the
        advice of its own counsel and advisors. Each Buyer shall be entitled to
        independently protect and enforce its rights, including, without limitation,
        the
        rights arising out of this Agreement or out of any other Transaction Documents,
        and it shall not be necessary for any other Buyer to be joined as an additional
        party in any proceeding for such purpose.

      

      
        
          
          

        

        
          40

          
            

          

        

        
          
          

        

      

      (q) Litigation
        Expenses.
        In the
        event of any judgment of a court or arbitration body on any dispute hereunder
        or
        in connection herewith or with any transaction contemplated hereby or discussed
        herein that is not appealed within thirty (30) days of such judgment, the
        prevailing party in such judgment may recover its reasonable expenses in
        obtaining such judgment (including without limitation amounts paid in
        settlement, interest, court costs, costs of investigators, fees and expenses
        of
        attorneys, accountants, financial advisors and other experts, and other expenses
        of litigation), provided that if such prevailing party prevails on several
        motions in the judgment and does not prevail on others, it shall be in the
        discretion of a court or arbitration body to determine what percentage of
        such
        reasonable expenses the prevailing party is entitled to receive.

      

      

      [Signature
        Page Follows]

      
 

       

      
 

      
        
          
          

        

        
          41

          
            

          

        

        
          
          

        

      

       

      IN
        WITNESS WHEREOF,
        each
        Buyer and the Company have caused their respective signature page to this
        Securities Purchase Agreement to be duly executed as of the date first written
        above.

       

      
        	 	 	 
	 	
                COMPANY:
NESCO
                INDUSTRIES, INC.
	 
 	 
 	 
 
	 	By:  	/s/ Matthew Harriton
	 	
                

                Name: Matthew
                  Harriton

                Title:
                   President

              
	 	 

      

      
        
          
          

        

        
          42

          
            

          

        

        
          
          

        

      

      IN
        WITNESS WHEREOF,
        each
        Buyer and the Company have caused their respective signature page to this
        Securities Purchase Agreement to be duly executed as of the date first written
        above.

       

      

        
          	 	
                  BUYERS:

                	 
	 	
                  GOTTBETTER
                    CAPITAL MASTER, LTD.

                	 
	 	 	 
	 	 	 
	 	
                  By:      
                     /s/
                    Adam S.
                    Gottbetter                    
                    

                
	 	
                  Name:  
                    Adam
                    S. Gottbetter 

                
	 	
                  Title:    
                    Director

                
	
                   

                	 	 
	 	
                  BRIDGEPOINTE
                    MASTER FUND LTD.

                	 
	 	 	 
	 	 	 
	 	
                  By:      
                    /s/
                    Eric S.
                    Swartz                     
                           

                
	 	
                  Name:  Eric
                    S. Swartz

                
	 	
                  Title:   
                    Director

                
	 	 	 
	 	
                  HARBORVIEW
                    MASTER FUND LP

                	 
	 	 	 
	 	 	 
	 	
                  By:    
                      /s/
                    Navigator Management Ltd.      

                
	 	
                  Name: 
                    Navigator
                    Management Ltd.

                
	 	
                  Title:   
                    Authorized
                    Signatory

                
	 	 	 
	 	
                  J.
                    ROEBLING FUND LP

                	 
	 	 	 
	 	 	 
	 	
                  By:      
                    /s/
                    David
                    Vynerib                         
                    

                
	 	
                  Name: 
                    David
                    Vynerib

                
	 	
                  Title:   
                    Managing Member

                	 
	 	 	 
	 	
                  LYNN
                    NOVEMBER

                	 
	 	 	 
	 	 	 
	 	
                  By:      
                    /s/
                    Lynn
                    November                        
                    

                
	 	
                  Name:  Lynn
                    November

                
	 	 	 
	 	
                  ALVIN
                    BLOCK

                	 
	 	 	 
	 	 	 
	 	
                  By:      /s/
                    Alvin
                    Block                               
                    

                	 
	 	
                  Name:  Alvin
                    Block

                	 

        

      

       

      

      
        
          
          

        

        
          43

          
            

          

        

        
          
          

        

      

       

      SCHEDULE
        OF BUYERS

       

      
        	
                (1)

              	
                 

              	
                (2)

              	
                 

              	
                (3)

              	
                 

              	
                (4)

              	
                 

              	
                (5)

              	
                 

              	
                (6)

              
	
                Buyer

              	
                 

              	
                Address
                  and

                Facsimile
                  Number

              	
                 

              	
                Aggregate

                Principal
                  of Note

              	
                 

              	
                Aggregate

                Number
                  of

                Warrant

                Shares

              	
                 

              	
                Purchase

                Price

              	
                 

              	
                Legal
                  Representative’s

                Address
                  and

                Facsimile
                  Number

              
	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                Gottbetter
                  Capital Master, Ltd.

              	 	
                488
                  Madison Avenue

                12th
                  Floor

                New
                  York, NY 10022

                Facsimile:
                  212.400.6999

              	 	
                $1,075,268.80

              	 	
                114,758,912

              	 	
                $1,005,00

              	 	
                Jason
                  M. Rimland, Esq.

                Gottbetter
                  & Partners, LLP

                488
                  Madison Avenue

                12th
                  Floor

                New
                  York, NY 10022

                Facsimile:
                  212.400.6901

              
	 	 	 	 	 	 	 	 	 	 	 
	
                BridgePointe
                  Master Fund Ltd.

              	 	
                1125
                  Sanctuary Parkway

                Suite
                  275

                Alpharetta,
                  GA 30004

                Facsimile:
                  770.777.5844

              	 	
                $1,500,000

              	 	
                161,637,931

              	 	
                $1,395,000

              	 	
                P.
                  Bradford Hathorn, Esq.

                Roswell
                  Capital Partners, LLC

                1125
                  Sanctuary Parkway, Suite 275

                Alpharetta,
                  GA 30004

                Facsimile:
                  770-777-5844

              
	 	 	 	 	 	 	 	 	 	 	 
	
                Harborview
                  Master Fund LP

              	 	
                Harbor
                  House

                Waterfront
                  Drive

                Road
                  Town, Tortola

                British
                  Virgin Islands

              	 	
                $806,451.61

              	 	
                86,902,113

              	 	
                $750,000

              	 	
                Samuel
                  M. Kreiger

                Krieger
                  & Prager LLP

                39
                  Broadway, Suite 920

                New
                  York, NY 10006

                Fax:
                  (212) 363-2999

              
	 	 	 	 	 	 	 	 	 	 	 
	
                J.
                  Roebling Fund LP

              	 	
                780
                  Third Avenue

                43rd
                  Floor

                New
                  York, NY 10017

              	 	
                $268,817.20

              	 	
                28,967,371

              	 	
                $250,000

              	 	
                N/A

              
	 	 	 	 	 	 	 	 	 	 	 
	
                Lynn
                  November

              	 	
                27-2
                  Mitchell Road

                Westhampton
                  Beach

                New
                  York, NY 11978

              	 	
                $268,817.20

              	 	
                28,967,371

              	 	
                $250,000

              	 	
                N/A

              
	 	 	 	 	 	 	 	 	 	 	 
	
                Alvin
                  Block

              	 	
                One
                  Commerce Square

                2005
                  Market Street

                7th
                  Floor

                Philadelphia,
                  PA 19103

              	 	
                $537,634.41

              	 	
                57,934,742

              	 	
                $500,000

              	 	
                N/A

              
	 	 	 	 	 	 	 	 	 	 	 
	
                Total:

              	 	 	 	
                $4,456,989.22

              	 	
                479,168,440

              	 	
                $4,150,000

              	 	 

      

      

       

      
        
          
          

        

        
          44

          
            

          

        

        
          
          

        

      

       

      
        	
                EXHIBITS

              	 
	
                Exhibit
                  A

              	
                Form
                  of Notes

              
	
                Exhibit
                  B

              	
                Form
                  of Warrants

              
	
                Exhibit
                  C

              	
                Registration
                  Rights Agreement

              
	
                Exhibit
                  D

              	
                Form
                  of Security Agreement

              
	
                Exhibit
                  E

              	
                Guaranty

              
	
                Exhibit
                  F

              	
                Irrevocable
                  Transfer Agent Instructions

              
	
                Exhibit
                  G

              	
                Form
                  of Opinion Letter

              
	
                Exhibit
                  H

              	
                Form
                  of Resolutions, Articles of Incorporation and By-Laws

              
	 	 
	
                SCHEDULES

              	 
	
                Schedule
                  3(a)

              	
                Subsidiaries

              
	
                Schedule
                  3(b)

              	
                Authorization,
                  Enforcement, Validity

              
	
                Schedule
                  3(d)

              	
                No
                  Conflicts

              
	
                Schedule
                  3(e)

              	
                Consents

              
	
                Schedule
                  3(g)

              	
                Consultant

              
	
                Schedule
                  3(k)

              	
                SEC
                  Documents; Financial Statements

              
	
                Schedule
                  3(l)

              	
                Absence
                  of Certain Changes

              
	
                Schedule
                  3(n)

              	
                Conduct
                  of Business; Regulatory Permits

              
	
                Schedule
                  3(q)

              	
                Transactions
                  with Affiliates

              
	
                Schedule
                  3(r)

              	
                Equity
                  Capitalization

              
	
                Schedule
                  3(s)

              	
                Indebtedness
                  and Other Contracts

              
	
                Schedule
                  3(t)

              	
                Absence
                  of Litigation

              
	
                Schedule
                  3(v)

              	
                Employee
                  Relations

              
	
                Schedule
                  3(w)

              	
                Title

              
	
                Schedule
                  3(x)

              	
                Intellectual
                  Property Rights

              
	
                Schedule
                  3(bb)

              	
                Tax
                  Status

              
	
                Schedule
                  3(ee)

              	
                Ranking
                  of Notes

              
	
                Schedule
                  4(d)

              	
                Use
                  of Proceeds

              
	
                Schedule
                  4(o)

              	
                Additional
                  Issuances of Securities

              
	
                Schedule
                  4(p)

              	
                Additional
                  Registration Statements

              

      

      

      

      

      
        
          
          

        

        
          45

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00117-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00117-of-00352.parquet"}]]