Document:

Ironwood Gold Corp. - Exhibit 10.21 - Filed by newsfilecorp.com

SUBSCRIPTION AGREEMENT

              This
Securities Purchase Agreement (this “Agreement”) is dated as of March 21,
2014, between Ironwood Gold Corp., a Nevada corporation (the “Company”),
and each purchaser identified on the signature pages hereto (each, including its
successors and permitted assigns, a “Purchaser” and collectively, the
“Purchasers”).

              WHEREAS,
subject to the terms and conditions set forth in this Agreement and pursuant to
Section 4(2) of the Securities Act of 1933, as amended (the “Securities
Act”), and Rule 506 promulgated thereunder, the Company desires to issue and
sell to each Purchaser, and each Purchaser, severally and not jointly, desires
to purchase from the Company, securities of the Company as more fully described
in this Agreement. 

              NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement,
and for other good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the Company and each Purchaser agree as follows: 

ARTICLE I. 
DEFINITIONS

              1.1         
Definitions. In addition to the terms defined elsewhere in this
Agreement: (a) capitalized terms that are not otherwise defined herein have the
meanings given to such terms in the Notes (as defined herein), and (b) the
following terms have the meanings set forth in this Section 1.1: 

             
“Acquiring Person” shall have the meaning ascribed to such term in
Section 4.7.

             
“Action” shall have the meaning ascribed to such term in Section 3.1(j) .

              “Additional
Notes” shall have the meaning ascribed to such term in Section 2.4, which
Additional Notes shall be identical to the Notes except for the issue date,
principal amount and maturity date. The maturity date of the Additional Notes
will be twenty-four (24) months after the issue date of such Additional Notes.

              “Affiliate”
means any Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with a
Person, as such terms are used in and construed under Rule 405 under the
Securities Act.

             
“Board of Directors” means the board of directors of the Company.

              “Business
Day” means any day except any Saturday, any Sunday, any day which is a
federal legal holiday in the United States or any day on which banking
institutions in the State of New York are authorized or required by law or other
governmental action to close. 

              
“Closing” means the Initial Closing and Subsequent Closing, if any, of
the purchase and sale of the Securities pursuant to Section 2.1 or 2.4. 

              “Closing
Date” means each of the Initial Closing Date and the Subsequent Closing
Date, if any, and is the Trading Day on which all of the Transaction Documents
have been executed and delivered by the applicable parties thereto, and all
conditions precedent to (i) the Purchasers’ obligations to pay the Subscription
Amount at such Closing and (ii) the Company’s obligations to deliver the
Securities to be issued and sold at such Closing, in each case, have been
satisfied or waived, but in no event later than the
third Trading Day following the date hereof in the case of the Initial Closing
and not later than the tenth Trading Day after the Subsequent Closing Option
Date in the case of the Subsequent Closing Date. 

             
“Closing Form 8-K” shall have the meaning ascribed to such term in
Section 4.6.

             
“Commission” means the United States Securities and Exchange Commission.

              “Common
Stock” means the common stock of the Company, par value $0.001 per share,
and any other class of securities into which such securities may hereafter be
reclassified or changed. 

              “Common
Stock Equivalents” means any securities of the Company or the Subsidiaries
which would entitle the holder thereof to acquire at any time Common Stock,
including, without limitation, any debt, preferred stock, right, option, warrant
or other instrument that is at any time convertible into or exercisable or
exchangeable for, or otherwise entitles the holder thereof to receive, Common
Stock. 

              “Company
Counsel” means Jolie Kahn, Esq., 2 Liberty Place, 50 South 16th
Street, Suite 3401, Philadelphia, PA 19102, facsimile: (866) 705-3071. 

             
“Conversion Price” shall have the meaning ascribed to such term in the
Notes.

              “Disclosure
Schedules” means the Disclosure Schedules of the Company delivered
concurrently herewith. 

              
“Effective Date” means the earliest of the date that (a) a registration
statement has been declared effective by the Commission including therein all of
the Underlying Shares for public unrestricted resale, or (b) all of the
Underlying Shares have been sold pursuant to Rule 144 or may be sold pursuant to
Rule 144 without the requirement for the Company to be in compliance with the
current public information requirement under Rule 144 and without volume or
manner-of-sale restrictions; and Company counsel has delivered to such holders a
standing written unqualified opinion that resales may then be made by such
holders of the Underlying Shares pursuant to such registration statement or
exemption which opinion shall be in form and substance reasonably acceptable to
such holders. 

             
“Equity Line of Credit” shall have the meaning ascribed to such term in
Section 4.13.

              “Escrow
Agreement” means the escrow agreement to be employed in connection with the
sale of the Securities, a copy of which is annexed hereto as Exhibit C.

             
“Evaluation Date” shall have the meaning ascribed to such term in Section
3.1(r) .

    
          “Exchange Act” means
the Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder. 

    
         “Exchange Agreement”
means the exchange agreement described in Section 4.24, a copy of which is
annexed hereto as Exhibit I. 

      
       “Exempt Issuance” means the issuance
of (a) shares of Common Stock and options to officers, employees, or directors
of the Company prior to and after the Initial Closing Date up to the amounts and on the terms set forth
on Schedule 4.13, (b) securities upon the exercise or exchange of or
conversion of any Securities issued hereunder, including shares paid as interest
on the Notes pursuant to Section 2.a) of the Notes (subject to adjustment for
forward and reverse stock splits and the like that occur after the date hereof)
and/or other securities exercisable or exchangeable for or convertible into
shares of Common Stock issued and outstanding on the date of this Agreement,
provided that such securities and any term thereof have not been amended since
the date of this Agreement to increase the number of such securities or to
decrease the issue price, exercise price, exchange price or conversion price of
such securities and which securities and the principal terms thereof are set
forth on Schedule 3.1(g), and described in the Closing Form 8-K and the
other SEC Reports filed not later than ten (10) days before the Initial Closing
Date, (c) securities issued pursuant to acquisitions or strategic transactions
approved by a majority of the disinterested directors of the Company, provided
that any such issuance shall only be to a Person (or to the equityholders of a
Person) which is, itself or through its subsidiaries, an operating company or an
owner of an asset in a business synergistic with the business of the Company and
shall be intended to provide to the Company substantial additional benefits in
addition to the investment of funds, but shall not include a transaction in
which the Company is issuing securities primarily for the purpose of raising
capital or to an entity whose primary business is investing in securities, (d)
as set forth on Schedule 3.1(g), (e) Common Stock issuable pursuant to
the Exchange Agreement, and (f) securities issued or issuable pursuant to this
Agreement, the Notes or the Warrants, including, without limitation, Section
4.16, or upon exercise or conversion of any such securities. 

2

         “Exercise
Notice” shall have the meaning ascribed to such term in Section 2.4.

         “FCPA”
means the Foreign Corrupt Practices Act of 1977, as amended. 

     
    “Final Closing Date” shall mean the last
Subsequent Closing Date to occur if a Subsequent Closing occurs or, if there is
no Subsequent Closing, the Initial Closing Date. 

         “GAAP”
shall have the meaning ascribed to such term in Section 3.1(h) .

     
    “G&M” shall mean Grushko & Mittman, P.C.,
with offices located at 515 Rockaway Avenue, Valley Stream, New York 11581, Fax:
212-697-3575. 

        
“Indebtedness” shall have the meaning ascribed to such term in Section
3.1(z) . 

         “Initial
Closing” shall have the meaning ascribed to such term in Section 2.1. 

         “Initial
Closing Date” shall mean the date upon which the Initial Closing occurs.

         “Intellectual
Property Rights” shall have the meaning ascribed to such term in Section
3.1(o) .

         “Legend
Removal Date” shall have the meaning ascribed to such term in Section 4.1(c)
..

    
     “Liens” means a lien, charge, pledge,
security interest, encumbrance, right of first refusal, preemptive right or
other restriction. 

         “Lockup
Agreement” means the agreement annexed hereto in the form of Exhibit
E.

3

             
“Material Adverse Effect” shall have the meaning assigned to such term in
Section 3.1(b) .

             
“Material Permits” shall have the meaning ascribed to such term in
Section 3.1(m) .

             
“Maximum Rate” shall have the meaning ascribed to such term in Section
5.17. 

              “Mortgage
Documents” means the documents necessary to memorialize and perfect the
security interest to be granted to the Purchasers, forms of which are annexed
hereto as Exhibit G, together with such other documents, forms,
certificates, and payments necessary to effectuate the memorialization and
perfection of such security interest. 

              “Notes”
means the convertible notes due twenty-four (24) months after their respective
issue dates, in the form of Exhibit A hereto. The term Notes as employed
herein except for Sections 2.4, 2.5 and 2.6 and on the signature page hereto
shall also include Additional Notes, mutatis mutandem. 

             
“OFAC” shall have the meaning ascribed to such term in Section 3.1(ii) .

             
“Participation Maximum” shall have the meaning ascribed to such term in
Section 4.17(a) .

              “Person”
means an individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or subdivision thereof) or other entity
of any kind. 

             
“Pre-Notice” shall have the meaning ascribed to such term in Section
4.17.

              “Proceeding”
means an action, claim, suit, investigation or proceeding (including, without
limitation, an informal investigation or partial proceeding, such as a
deposition), whether commenced or threatened. 

             
“Pro-Rata Portion” shall have the meaning ascribed to such term in
Section 4.17. 

             
“Public Information Failure” shall have the meaning ascribed to such term
in Section 4.3(b) .

              “Public
Information Failure Payments” shall have the meaning ascribed to such term
in Section 4.3(b) . 

             
“Purchaser Party” shall have the meaning ascribed to such term in Section
4.10. 

             
“Required Approvals” shall have the meaning ascribed to such term in
Section 3.1(e) .

              “Required
Minimum” means, as of any date, the maximum aggregate number of shares of
Common Stock then issued or potentially issuable in the future pursuant to the
Transaction Documents, including any Underlying Shares issuable upon exercise in
full of all Warrants or conversion in full of all Notes, ignoring any conversion
or exercise limits set forth therein, and assuming that any previously
unconverted Notes will be held until the third anniversary of the Final Closing
Date. 

4

     
    “Rule 144” means Rule 144 promulgated by the
Commission pursuant to the Securities Act, as such Rule may be amended or
interpreted from time to time, or any similar rule or regulation hereafter
adopted by the Commission having substantially the same purpose and effect as
such Rule. 

         “SEC
Reports” shall have the meaning ascribed to such term in Section 3.1(h)
..

        
“Securities” means the Notes, the Warrants, and the Underlying Shares.

    
     “Securities Act” means the Securities Act
of 1933, as amended, and the rules and regulations promulgated thereunder. 

              “Short
Sales” means all “short sales” as defined in Rule 200 of Regulation SHO
under the Exchange Act (but shall not be deemed to include the location and/or
reservation of borrowable shares of Common Stock). 

              “Subscription
Amount” means, as to each Purchaser, the aggregate amount to be paid for the
Notes (including Additional Notes) and Warrants purchased hereunder as specified
below such Purchaser’s name on the signature page of this Agreement and next to
the heading “Subscription Amount,” in United States dollars and in immediately
available funds, or such other amount with respect to the Additional Notes. 

       
      “Subsequent Closing” shall have the
meaning ascribed to such term in Section 2.4. 

      
       “Subsequent Closing Date” shall have
the meaning ascribed to such term in Section 2.4 hereof.

              “Subsequent
Closing Escrow Agreement” shall have the meaning ascribed to such term in
Section 2.4 hereof. 

              “Subsequent
Closing Option Date” means the date that is twelve (12) months after the
Initial Closing Date. 

             
“Subsequent Financing” shall have the meaning ascribed to such term in
Section 4.17. 

             
“Subsequent Financing Notice” shall have the meaning ascribed to such
term in Section 4.17.

              “Subsidiary”
means with respect to any entity at any date, any direct or indirect
corporation, limited or general partnership, limited liability company, trust,
estate, association, joint venture or other business entity of which (A) more
than 30% of (i) the outstanding capital stock having (in the absence of
contingencies) ordinary voting power to elect a majority of the board of
directors or other managing body of such entity, (ii) in the case of a
partnership or limited liability company, the interest in the capital or profits
of such partnership or limited liability company or (iii) in the case of a
trust, estate, association, joint venture or other entity, the beneficial
interest in such trust, estate, association or other entity business is, at the
time of determination, owned or controlled directly or indirectly through one or
more intermediaries, by such entity, or (B) is under the actual control of the
Company. 

             
“Termination Date” shall have the meaning ascribed to such term in
Section 2.1.

5

    
         “Trading Day” means a
day on which the principal Trading Market is open for trading.

              “Trading
Market” means any of the following markets or exchanges on which the Common
Stock is listed or quoted for trading on the date in question: the NYSE MKT, the
Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select
Market, the New York Stock Exchange, the OTC Bulletin Board, the OTCQB or the
OTCQX (or any successors to any of the foregoing). 

              
“Transaction Documents” means this Agreement, the Notes, the Warrants,
the Lockup Agreement, Mortgage Documents, the Escrow Agreement, all exhibits and
schedules thereto and hereto and any other documents or agreements executed in
connection with the transactions contemplated hereunder. 

              “Transfer
Agent” means Holladay Stock Transfer, and any successor transfer agent of
the Company. 

              “Underlying
Shares” means the shares of Common Stock issued and issuable upon conversion
of the Notes and upon exercise of the Warrants and issued and issuable in lieu
of the cash payment of interest on the Notes in accordance with the terms of the
Notes and any other shares of Common Stock issued or issuable to a Purchaser in
connection with or pursuant to the Securities or Transaction Documents. 

              “Variable
Priced Equity Linked Instruments” shall have the meaning ascribed to such
term in Section 4.13. 

    
         “Variable Rate
Transaction” shall have the meaning ascribed to such term in Section
4.13.

              “VWAP”
means, for any date, the price determined by the first of the following clauses
that applies: (a) if the Common Stock is then listed or quoted on a Trading
Market, the daily volume weighted average price of the Common Stock for such
date (or the nearest preceding date) on the Trading Market on which the Common
Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading
Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b)
if the OTC Bulletin Board is not a Trading Market, the volume weighted average
price of the Common Stock for such date (or the nearest preceding date) on the
OTC Bulletin Board, (c) if the Common Stock is not then listed or quoted for
trading on the OTC Bulletin Board and if prices for the Common Stock are then
reported on the OTCQX, OTCQB or OTC Pink Marketplace maintained by the OTC
Markets Group, Inc. (or a similar organization or agency succeeding to its
functions of reporting prices), the volume weighted average price of the Common
Stock on the first such facility (or a similar organization or agency succeeding
to its functions of reporting prices), or (d) in all other cases, the fair
market value of a share of Common Stock as determined by an independent
appraiser selected in good faith by the Purchasers of a majority in interest of
the Securities then outstanding and reasonably acceptable to the Company, the
fees and expenses of which shall be paid by the Company. 

              “Warrants”
means, collectively, the Common Stock purchase warrants delivered to the
Purchasers at the Closing in accordance with Section 2.2(a) hereof, which
Warrants shall be exercisable immediately and have a term of exercise equal to 6
years, in the form of Exhibit B attached hereto. 

6

              “Warrant
Shares” means the shares of Common Stock issuable upon exercise of the
Warrants. 

ARTICLE II. 
PURCHASE AND SALE

              2.1         
Initial Closing. On the Initial Closing Date, upon the terms and subject
to the conditions set forth herein, substantially concurrent with the execution
and delivery of this Agreement by the parties hereto, the Company agrees to
sell, and the Purchasers, severally and not jointly, agree to purchase, an
aggregate of $1,000,000 of principal amount of Notes, for each Purchaser equal
to such Purchaser’s Subscription Amount as set forth on the signature page
hereto executed by such Purchaser, and Warrants as determined pursuant to
Section 2.2(a) (such purchase and sale being the “Initial Closing”. Each
Purchaser shall deliver to the Company such Purchaser’s Subscription Amount, and
the Company shall deliver to each Purchaser its respective Note and Warrants, as
determined pursuant to Section 2.2(a), and the Company and each Purchaser shall
deliver the other items set forth in Section 2.2 deliverable at the Closing.
Upon satisfaction of the covenants and conditions set forth in Sections 2.2 and
2.3, the Initial Closing shall occur at the offices of G&M or such other
location as the parties shall mutually agree. Notwithstanding anything herein to
the contrary, the Initial Closing Date shall occur on or before March 20, 2014
(“Termination Date”). If the Initial Closing is not held on or before the
Termination Date, the Company shall cause all subscription documents and funds
to be returned, without interest or deduction to each prospective Purchaser.

             
2.2          Deliveries.

             
(a)          On or prior to the
Initial Closing Date, the Company shall deliver or cause to be delivered to each
Purchaser the following:

             
(i)          this Agreement duly
executed by the Company; 

             
(ii)          a legal opinion of
Company Counsel, substantially in the form of Exhibit H attached
hereto;

              (iii)         
the Lockup Agreement duly executed and completed by each of the Persons
identified on Schedule 2.2(a)(ii), and by the Company; 

              (iv)         
a Note with a principal amount equal to such Purchaser’s Subscription Amount
registered in the name of such Purchaser; 

              (v)         
a Warrant registered in the name of such Purchaser to purchase up to a number of
shares of Common Stock equal to such Purchaser’s Subscription Amount divided by
$0.18, with an exercise price equal to $0.22 per share, subject to adjustment as
provided therein; 

              (vi)         
the Mortgage Documents, duly executed by the Company or its Subsidiaries; 

             
(vii)          the Escrow Agreement
duly executed by the Company; and

             
(viii)          the Exchange
Agreement duly executed by the Company. 

             
(b)          On or prior to the
Initial Closing Date, each Purchaser shall deliver or cause to be delivered to the Company the
following:

7

 

             
(i)          this Agreement duly
executed by such Purchaser; 

             
(ii)          such Purchaser’s
Subscription Amount by wire transfer or as otherwise permitted under the Escrow
Agreement, to the Escrow Agent, some of which will be credited against loans and
advances made to or for the benefit of the Company by a Purchaser prior to the
Closing Date in the amount as set forth on Schedule 2.2(b)(ii) hereto, the
aggregate amount of such loans and advances not exceeding $360,000; 

             
(iii)          the Escrow Agreement
duly executed by such Purchaser; and 

             
(iv)          the Exchange
Agreement duly executed by Purchaser parties thereto.

             
2.3          Initial Closing
Conditions.

             
(a)          The obligations of the
Company hereunder to effect the Initial Closing are subject to the following
conditions being met:

              (i)         
the accuracy in all material respects on the Initial Closing Date of the
representations and warranties of the Purchasers contained herein (unless as of
a specific date therein in which case they shall be accurate as of such date);

              (ii)         
all obligations, covenants and agreements of each Purchaser required to be
performed at or prior to the Initial Closing Date shall have been performed; and

              (iii)         
the delivery by each Purchaser of the items set forth in Section 2.2(b) of this
Agreement. 

              (b)         
The respective obligations of a Purchaser hereunder to effect the Initial
Closing, unless waived by such Purchaser, are subject to the following
conditions being met: 

              (i)         
the accuracy in all material respects (determined without regard to any
materiality, Material Adverse Effect or other similar qualifiers therein) on the
Closing Date of the representations and warranties of the Company contained
herein (unless as of a specific date therein in which case they shall be
accurate as of such date); 

              (ii)         
all obligations, covenants and agreements of the Company required to be
performed at or prior to the Closing Date shall have been performed;

              (iii)         
the Company shall have received executed signature pages to this Agreement with
an aggregate Subscription Amount of $1,000,000 prior to the Initial Closing;

              (iv)         
the delivery by the Company of the items set forth in Section 2.2(a) of this
Agreement;

              (v)         
there shall have been no Material Adverse Effect with respect to the Company
since the date hereof; and 

             
(vi)          from the date hereof
to the Initial Closing Date, trading in the Common Stock shall not have been suspended by
the Commission or the Company’s principal Trading Market, and, at any time prior
to the Initial Closing Date, trading in securities generally as reported by
Bloomberg L.P. shall not have been suspended or limited, or minimum prices shall
not have been established on securities whose trades are reported by such
service, or on any Trading Market, nor shall a banking moratorium have been
declared either by the United States or New York State authorities nor shall
there have occurred any material outbreak or escalation of hostilities or other
national or international calamity of such magnitude in its effect on, or any
material adverse change in, any financial market which, in each case, in the
reasonable judgment of such Purchaser, makes it impracticable or inadvisable to
purchase the Securities at the Initial Closing. 

8

              2.4         
Subsequent Closing Option. Each Purchaser shall have the option to
purchase and if such option is exercised, the Company shall sell to each
Purchaser exercising such option for the same relative purchase price of
additional Notes (“Additional Notes”) and Warrants equal to up to
one-half of the Note principal and Warrants purchased by such Purchaser on the
Initial Closing Date. To exercise the option provided for in this subsection
2.4, a Purchaser shall provide written notice of the exercise of the option to
the Company in the form of the completed signature page hereto (the “Exercise
Notice”) on or before the Subsequent Closing Option Date, which Exercise
Notice shall specify the Subsequent Closing Subscription Amount of such
Purchaser. In connection with the Subsequent Closing, the Escrow Agent,
Purchasers purchasing Securities at the Subsequent Closing and Company will
enter into an escrow agreement on substantially the same terms as contained in
the Escrow Agreement (the “Subsequent Closing Escrow Agreement”). Each
Purchaser shall be entitled to one closing of the purchase and sale of
Additional Notes and Warrants upon exercise of the option provided in this
subsection 2.4 (the “Subsequent Closing”) and the Subsequent Closing
shall occur at the offices of G&M or such other mutually acceptable location
promptly after the date the Exercise Notice is given and upon satisfaction of
all of the covenants and conditions set forth in Sections 2.5 and 2.6, but not
later than ten Trading Days thereafter (“Subsequent Closing Date”). 

             
2.5          Subsequent Closing
Deliveries. 

             
(a)          On or prior to the
Subsequent Closing Date, the Company shall deliver or cause to be delivered to
the Escrow Agent the following:

              (i)         
bring down legal opinions of Company Counsel to the legal opinion delivered at
the Initial Closing; 

             
(ii)          bring down officers’
certificate of the Company as to the obligations set forth in Section 2.6(b);

              (iii)         
an Additional Note in the principal amount equal to such Purchaser’s Subsequent
Closing Subscription Amount registered in the name of such Purchaser with the
Conversion Price therein equal to the Conversion Price then in effect with
respect to the Notes issued on the Initial Closing Date; and 

              (iv)         
a Warrant registered in the name of such Purchaser to purchase up to a number of
shares of Common Stock equal to such Purchaser’s Subsequent Closing Subscription
Amount divided by the Conversion Price in effect on such Subsequent Closing Date
with an exercise price equal to the then in effect Exercise Price of the
Warrants with the lower Exercise Price delivered at the Initial Closing, subject
to adjustment therein. 

9

              (b)         
On or prior to the Subsequent Closing Date, each Purchaser shall deliver or
cause to be delivered to the Escrow Agent, the following: 

              (i)         
the Subsequent Closing Escrow Agreement duly executed by such Purchaser; and

              (ii)         
to Escrow Agent, such Purchaser’s Subscription Amount by wire transfer to the
account specified in the Subsequent Closing Escrow Agreement. 

             
2.6          Subsequent Closing
Conditions. 

             
(a)          The obligations of the
Company hereunder in connection with the Subsequent Closing are subject to the
following conditions being met:

              (i)         
the accuracy in all material respects on the Subsequent Closing Date of the
representations and warranties of the Purchasers contained herein (unless as of
a specific date therein in which case they shall be accurate as of such date);

              (ii)         
all obligations, covenants and agreements of each Purchaser to be performed at
or prior to the Subsequent Closing Date shall have been performed; 

              (iii)         
the delivery by each Purchaser of the items set forth in Section 2.5(b) of this
Agreement; and 

              (iv)         
the Escrow Agent shall have received Subsequent Closing Subscription Amounts
from Purchasers in good funds in the amount designated in the Exercise Notice.

              (b)         
The respective obligations of a Purchaser hereunder in connection with the
Subsequent Closing are, unless waived by such Purchaser, subject to the
following conditions being met: 

              (i)         
the accuracy in all material respects (determined without regard to any
materiality, Material Adverse Effect or other similar qualifiers therein) on the
Subsequent Closing Date of the representations and warranties of the Company
contained herein (unless as of a specific date therein in which case they shall
be accurate as of such date); 

              (ii)         
all obligations, covenants and agreements of the Company under this Agreement
required to be performed at or prior to the Subsequent Closing Date shall have
been performed; 

              (iii)         
the delivery by the Company of the items set forth in Section 2.5(a) of this
Agreement; 

              (iv)         
there shall have been no Material Adverse Effect with respect to the Company or
the occurrence of an Event of Default (as defined in the Note) unless waived by
the Purchaser with respect to a Subsequent Closing, since the date hereof; 

             
(v)          from the date hereof
to the Subsequent Closing Date, trading in the Common Stock shall not have been
suspended by the Commission or the Company’s principal Trading Market, and, at any
time from the date of this Agreement and prior to the Subsequent Closing Date,
trading in securities generally as reported by Bloomberg L.P. shall not have
been suspended or limited, or minimum prices shall not have been established on
securities whose trades are reported by such service, or on any Trading Market,
nor shall a banking moratorium have been declared either by the United States or
New York State authorities nor shall there have occurred any material outbreak
or escalation of hostilities or other national or international calamity of such
magnitude in its effect on, or any material adverse change in, any financial
market which, in each case, in the reasonable judgment of such Purchaser, makes
it impracticable or inadvisable to purchase the Securities at the Subsequent
Closing; and 

10

              (vi)         
the Company shall have received Exercise Notices and the Escrow Agent shall have
received the Subscription Amounts designated on such Exercise Notices from such
Purchaser in good funds. 

ARTICLE III. 
REPRESENTATIONS AND
WARRANTIES

              3.1         
Representations and Warranties of the Company. Except as set forth in the
SEC Reports or the Disclosure Schedules, which Disclosure Schedules shall be
deemed a part hereof and shall qualify any representation made herein only to
the extent of the disclosure contained in the corresponding section of the
Disclosure Schedules, the Company hereby makes the following representations and
warranties to each Purchaser: 

              (a)         
Subsidiaries. All of the direct and indirect subsidiaries of the Company
and the Company’s ownership interests therein are set forth on Schedule
3.1(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, and
all of 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)         
Organization and Qualification. The Company and each of the Subsidiaries
is an entity duly incorporated or otherwise organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation or
organization, with the requisite power and authority to own and use its
properties and assets and to carry on its business as currently conducted.
Neither the Company nor any Subsidiary is in violation nor default of any of the
provisions of its respective certificate or articles of incorporation, bylaws or
other organizational or charter documents. Each of the Company and the
Subsidiaries is duly qualified to conduct business and is in good standing as a
foreign corporation or other entity in each jurisdiction in which the nature of
the business conducted or property owned by it makes such qualification
necessary, except where the failure to be so qualified or in good standing, as
the case may be, could not have or reasonably be expected to result in: (i) a
material adverse effect on the legality, validity or enforceability of any
Transaction Document, (ii) a material adverse effect on the results of
operations, assets, business, prospects or condition (financial or otherwise) of
the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse
effect on the Company’s ability to perform in any material respect on a timely
basis its obligations under any Transaction Document (any of (i), (ii) or (iii),
a “Material Adverse Effect”) and, no Proceeding has been instituted in
any such jurisdiction revoking, limiting or curtailing or seeking to revoke,
limit or curtail such power and authority or qualification. 

11

              (c)         
Authorization; Enforcement. The Company has the requisite corporate power
and authority to enter into and to consummate the transactions contemplated by
this Agreement and each of the other Transaction Documents and otherwise to
carry out its obligations hereunder and thereunder. The execution and delivery
of this Agreement and each of the other Transaction Documents by the Company and
the consummation by it of the transactions contemplated hereby and thereby have
been duly authorized by all necessary action on the part of the Company and no
further action is required by the Company, the Board of Directors or the
Company’s stockholders in connection herewith or therewith other than in
connection with the Required Approvals. This Agreement and each other
Transaction Document to which it is a party has been (or upon delivery will have
been) duly executed by the Company and, when delivered in accordance with the
terms hereof and thereof, will constitute the valid and binding obligation of
the Company enforceable against the Company in accordance with its terms,
except: (i) as limited by general equitable principles and applicable
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of creditors’ rights generally, (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief or other equitable remedies and (iii) insofar as indemnification and
contribution provisions may be limited by applicable law. 

              (d)         
No Conflicts. The execution, delivery and performance by the Company of
this Agreement and the other Transaction Documents, the issuance and sale of the
Securities and the consummation by it of the transactions contemplated hereby
and thereby to which it is a party do not and will not: (i) conflict with or
violate any provision of the Company’s or any Subsidiary’s certificate or
articles of incorporation, bylaws or other organizational or charter documents,
(ii) subject to Required Approvals, conflict with, or constitute a default (or
an event that with notice or lapse of time or both would become a default)
under, result in the creation of any Lien upon any of the properties or assets
of the Company or any Subsidiary, or give to others any rights of termination,
amendment, acceleration or cancellation (with or without notice, lapse of time
or both) of, any agreement, credit facility, debt or other instrument
(evidencing a Company or Subsidiary debt or otherwise) or other understanding to
which the Company or any Subsidiary is a party or by which any property or asset
of the Company or any Subsidiary is bound or affected, or (iii) subject to the
Required Approvals, conflict with or result in a violation of any law, rule,
regulation, order, judgment, injunction, decree or other restriction of any
court or governmental authority to which the Company or a Subsidiary is subject
(including federal and state securities laws and regulations), or by which any
property or asset of the Company or a Subsidiary is bound or affected; except in
the case of each of clauses (ii) and (iii), such as could not have or reasonably
be expected to result in a Material Adverse Effect. 

              (e)         
Filings, Consents and Approvals. The Company is not required to obtain
any consent, waiver, authorization or order of, give any notice to, or make any
filing or registration with, any court or other federal, state, local or other
governmental authority or other Person in connection with the execution,
delivery and performance by the Company of the Transaction Documents, other
than: (i) the filings required pursuant to Section 4.6 of this Agreement, (ii)
the filing of the Mortgage Documents and the payment of all sums in connection
therewith, (iii) the notice and/or application(s) to each applicable Trading
Market for the issuance and sale of the Notes and Warrant Shares and the listing
of the Underlying Shares for trading thereon in the time and manner required
thereby, and (iv) the filing of Form D with the Commission and such filings as
are required to be made under applicable state securities laws (collectively,
the “Required Approvals”). 

              (f)         
Issuance of the Securities. The Securities are duly authorized and, when
issued and paid for in accordance with the applicable Transaction Documents,
will be duly and validly issued, fully paid and nonassessable, free and clear of
all Liens imposed by the Company. The Company has reserved from its duly
authorized capital stock a number of shares of Common Stock for issuance of the
Underlying Shares at least equal to the Required Minimum on the date hereof.

12

              (g)         
Capitalization. The capitalization of the Company is as set forth in
Schedule 3.1(g) . The Company has not issued any capital stock since its most
recently filed periodic report under the Exchange Act except as described in the
Closing Form 8-K. No Person has any right of first refusal, preemptive right,
right of participation, or any similar right to participate in the transactions
contemplated by the Transaction Documents. Except as disclosed on Schedule
3.1(g), there are no outstanding options, warrants, scrip rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities, rights or obligations convertible into or exercisable or
exchangeable for, or giving any Person any right to subscribe for or acquire any
shares of Common Stock, or contracts, commitments, understandings or
arrangements by which the Company or any Subsidiary is or may become bound to
issue additional shares of Common Stock or Common Stock Equivalents. Except as
set forth on Schedule 3.1(g), the issuance and sale of the Securities
will not obligate the Company to issue shares of Common Stock or other
securities to any Person (other than the Purchasers) and will not result in a
right of any holder of Company securities to adjust the exercise, conversion,
exchange or reset price under any of such securities. All of the outstanding
shares of capital stock of the Company are duly authorized, validly issued,
fully paid and nonassessable, have been issued in material compliance with all
federal and state securities laws, and none of such outstanding shares was
issued in violation of any preemptive rights or similar rights to subscribe for
or purchase securities. No further approval or authorization of any stockholder,
the Board of Directors or others is required for the issuance and sale of the
Securities. There are no stockholders agreements, voting agreements or other
similar agreements with respect to the Company’s capital stock to which the
Company is a party or, to the knowledge of the Company, between or among any of
the Company’s stockholders. 

              (h)         
SEC Reports; Financial Statements. The Company has filed all reports,
schedules, forms, statements and other documents required to be filed by the
Company under the Securities Act and the Exchange Act, including pursuant to
Section 13(a) or 15(d) thereof, for the two years preceding the date hereof (or
such shorter period as the Company was required by law or regulation to file
such material) (the foregoing materials, including the exhibits thereto and
documents incorporated by reference therein, being collectively referred to
herein as the “SEC Reports”) on a timely basis or has received a valid
extension of such time of filing and has filed any such SEC Reports prior to the
expiration of any such extension. As of their respective dates, the SEC Reports
complied in all material respects with the requirements of the Securities Act
and the Exchange Act, as applicable, and none of the SEC Reports, when filed,
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. The financial statements of the Company included in the SEC Reports
comply in all material respects with applicable accounting requirements and the
rules and regulations of the Commission with respect thereto as in effect at the
time of filing. Such financial statements have been prepared in accordance with
United States generally accepted accounting principles applied on a consistent
basis during the periods involved (“GAAP”), except as may be otherwise
specified in such financial statements or the notes thereto and except that
unaudited financial statements may not contain all footnotes required by GAAP,
and fairly present in all material respects the financial position of the
Company and its consolidated Subsidiaries as of and for the dates thereof and
the results of operations and cash flows for the periods then ended, subject, in
the case of unaudited statements, to normal, immaterial, year-end audit
adjustments. 

13

              (i)         
Material Changes; Undisclosed Events, Liabilities or Developments. Since
the date of the latest audited financial statements included within the SEC
Reports, except as specifically disclosed in a subsequent SEC Report filed prior
to the date hereof or in the Closing Form 8-K: (i) there has been no event,
occurrence or development that has had or that could reasonably be expected to
result in a Material Adverse Effect, (ii) the Company has not incurred any
material liabilities (contingent or otherwise) other than (A) trade payables and
accrued expenses incurred in the ordinary course of business consistent with
past practice and (B) liabilities not required to be reflected in the Company’s
financial statements pursuant to GAAP or disclosed in filings made with the
Commission, (iii) the Company has not altered its method of accounting, (iv) the
Company has not declared or made any dividend or distribution of cash or other
property to its stockholders or purchased, redeemed or made any agreements to
purchase or redeem any shares of its capital stock and (v) the Company has not
issued any equity securities to any officer, director or Affiliate. The Company
does not have pending before the Commission any request for confidential
treatment of information. Except for the issuance of the Securities contemplated
by this Agreement or as set forth on Schedule 3.1(i), no event,
liability, fact, circumstance, occurrence or development has occurred or exists
or is reasonably expected to occur or exist with respect to the Company or its
Subsidiaries or their respective businesses, properties, operations, assets or
financial condition, that would be required to be disclosed by the Company under
applicable securities laws at the time this representation is made or deemed
made that has not been publicly disclosed at least two Trading Days prior to the
date that this representation is made. 

              (j)         
Litigation. Except as described in the SEC Reports, there is no action,
suit, inquiry, notice of violation, proceeding or investigation pending or, to
the knowledge of the Company, threatened against or affecting the Company, any
Subsidiary or any of their respective properties before or by any court,
arbitrator, governmental or administrative agency or regulatory authority
(federal, state, county, local or foreign) (collectively, an “Action”)
which (i) adversely affects or challenges the legality, validity or
enforceability of any of the Transaction Documents or the Securities or (ii)
could, if there were an unfavorable decision, have or reasonably be expected to
result in a Material Adverse Effect. Except as set forth in the SEC Reports,
since August 31, 2013, neither the Company nor any Subsidiary, nor any director
or officer thereof, is or has been the subject of any Action involving a claim
of violation of or liability under federal or state securities laws or a claim
of breach of fiduciary duty. There has not been, and to the knowledge of the
Company, there is not pending or contemplated, any investigation by the
Commission involving the Company or any current or former director or officer of
the Company. The Commission has not issued any stop order or other order
suspending the effectiveness of any registration statement filed by the Company
or any Subsidiary under the Exchange Act or the Securities Act.

              (k)         
Labor Relations. No labor dispute exists or, to the knowledge of the
Company, is imminent with respect to any of the employees of the Company, which
could reasonably be expected to result in a Material Adverse Effect. None of the
Company’s or its Subsidiaries’ employees is a member of a union that relates to
such employee’s relationship with the Company or such Subsidiary, and neither
the Company nor any of its Subsidiaries is a party to a collective bargaining
agreement, and the Company and its Subsidiaries believe that their relationships
with their employees are good. To the knowledge of the Company, no executive
officer of the Company or any Subsidiary, is, or is now expected to be, in
violation of any material term of any employment contract, confidentiality,
disclosure or proprietary information agreement or non-competition agreement, or
any other contract or agreement or any restrictive covenant in favor of any
third party, 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.

14

The Company and its Subsidiaries are in
compliance with all U.S. federal, state, local and foreign laws and regulations
relating to employment and employment practices, terms and conditions of
employment and wages and hours, except where the failure to be in compliance
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. 

              (l)         
Compliance. Neither the Company nor any Subsidiary: (i) is in default
under or in violation of (and no event has occurred that has not been waived
that, with notice or lapse of time or both, would result in a default by the
Company or any Subsidiary under), nor has the Company or any Subsidiary received
notice of a claim that it is in default under or that it is in violation of, any
indenture, loan or credit agreement or any other agreement or instrument to
which it is a party or by which it or any of its properties is bound (whether or
not such default or violation has been waived), (ii) is in violation of any
judgment, decree or order of any court, arbitrator or other governmental
authority or (iii) is or has been in violation of any statute, rule, ordinance
or regulation of any governmental authority, including without limitation all
foreign, federal, state and local laws relating to taxes, environmental
protection, occupational health and safety, product quality and safety and
employment and labor matters, except in each case as could not have or
reasonably be expected to result in a Material Adverse Effect.

              (m)         
Regulatory Permits. The Company and the Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to conduct their
respective businesses as described in the SEC Reports, except where the failure
to possess such permits could not reasonably be expected to result in a Material
Adverse Effect (“Material Permits”), and neither the Company nor any
Subsidiary has received any notice of proceedings relating to the revocation or
modification of any Material Permit. 

              (n)         
Title to Assets. Except as set forth on Schedule 3.1(n), the
Company and the Subsidiaries have good and marketable title in fee simple to all
real property (if any) owned by them and good and marketable title in all
personal property owned by them that is material to the business of the Company
and the Subsidiaries, in each case free and clear of all Liens, except for (i)
Liens as do not materially affect the value of such property and do not
materially interfere with the use made and proposed to be made of such property
by the Company and the Subsidiaries and (ii) Liens for the payment of federal,
state or other taxes, for which appropriate reserves have been made in
accordance with GAAP and, the payment of which is neither delinquent nor subject
to penalties. Any real property and facilities held under lease by the Company
and the Subsidiaries are held by them under valid, subsisting and enforceable
leases with which the Company and the Subsidiaries are in compliance. 

              (o)              Intellectual Property.

(i)       The term “Intellectual Property Rights”
      includes:

1.       the name of the Company and each Subsidiary, all
      fictional business names, trading names, registered and unregistered
      trademarks, service marks, and applications of the Company and each
      Subsidiary (collectively, “Marks'');

2.       all patents, patent applications, and inventions and
      discoveries that may be patentable of the Company and each Subsidiary
      (collectively, “Patents'');

15

3.       all copyrights in both published works and published
      works of the Company and each Subsidiary (collectively,
      “Copyrights”);

4.      all rights in mask works of the Company and each
      Subsidiary (collectively, “Rights in Mask Works''); and

5.       all know-how, trade secrets, confidential information,
      customer lists, software, technical information, data, process technology,
      plans, drawings, and blue prints (collectively, “Trade Secrets'');
      owned, used, or licensed by the Company and each Subsidiary as licensee or
      licensor.

(ii)       Agreements. There
are no outstanding and, to Company’s knowledge, no threatened disputes or
disagreements with respect to any agreements relating to any Intellectual
Property Rights to which the Company is a party or by which the Company is
bound. 

(iii)    
 Know-How Necessary for the Business. The Intellectual Property
Rights are all those necessary for the operation of the Company’s businesses as
it is currently conducted or as represented, in writing, to the Purchaser to be
conducted. The Company is the owner of all right, title, and interest in and to
each of the Intellectual Property Rights, free and clear of all liens, security
interests, charges, encumbrances, equities, and other adverse claims, and has
the right to use all of the Intellectual Property Rights. To the Company’s
knowledge, no employee of the Company has entered into any contract that
restricts or limits in any way the scope or type of work in which the employee
may be engaged or requires the employee to transfer, assign, or disclose
information concerning his work to anyone other than of the Company. 

(iv)       Patents. The
Company is the owner of all right, title and interest in and to each of the
Patents, free and clear of all Liens and other adverse claims. All of the issued
Patents are currently in compliance with formal legal requirements (including
payment of filing, examination, and maintenance fees and proofs of working or
use), are valid and enforceable, and are not subject to any maintenance fees or
taxes or actions falling due within ninety days after the Initial Closing Date.
No Patent has been or is now involved in any interference, reissue,
reexamination, or opposition proceeding. To the Company’s knowledge: (1) there
is no potentially interfering patent or patent application of any third party,
and (2) no Patent is infringed or has been challenged or threatened in any way.
To the Company’s knowledge, none of the products manufactured and sold, nor any
process or know-how used, by the Company infringes or is alleged to infringe any
patent or other proprietary right of any other Person. 

(v)        Trademarks.
The Company is the owner of all right, title, and interest in and to each of the
Marks, free and clear of all Liens and other adverse claims. All Marks that have
been registered with the United States Patent and Trademark Office are currently
in compliance with all formal legal requirements (including the timely
post-registration filing of affidavits of use and incontestability and renewal
applications), are valid and enforceable, and are not subject to any maintenance
fees or taxes or actions falling due within ninety days after the Initial
Closing Date. Except as set forth in Schedule 3.1(o), no Mark has been or is now
involved in any opposition, invalidation, or cancellation and, to the Company’s knowledge, no such action is
threatened with respect to any of the Marks. To the Company’s knowledge: (1)
there is no potentially interfering trademark or trademark application of any
third party, and (2) no Mark is infringed or has been challenged or threatened
in any way. To the Company’s knowledge, none of the Marks used by the Company
infringes or is alleged to infringe any trade name, trademark, or service mark
of any third party.

16

(vi)       Copyrights. The
Company is the owner of all right, title, and interest in and to each of the
Copyrights, free and clear of all Liens and other adverse claims. All the
Copyrights have been registered and are currently in compliance with formal
requirements, are valid and enforceable, and are not subject to any maintenance
fees or taxes or actions falling due within ninety days after the date of the
Initial Closing. No Copyright is infringed or, to the Company’s knowledge, has
been challenged or threatened in any way. To the Company’s knowledge, none of
the subject matter of any of the Copyrights infringes or is alleged to infringe
any copyright of any third party or is a derivative work based on the work of a
third party. All works encompassed by the Copyrights have been marked with the
proper copyright notice. 

(vii)     
Trade Secrets. With respect to each Trade Secret, the documentation
relating to such Trade Secret is current, accurate, and sufficient in detail and
content to identify and explain it and to allow its full and proper use without
reliance on the knowledge or memory of any individual. The Company has taken all
reasonable precautions to protect the secrecy, confidentiality, and value of its
Trade Secrets. The Company has good title and an absolute (but not necessarily
exclusive) right to use the Trade Secrets. The Trade Secrets are not part of the
public knowledge or literature, and, to the Company’s knowledge, have not been
used, divulged, or appropriated either for the benefit of any Person (other the
Company) or to the detriment of the Company. No Trade Secret is subject to any
adverse claim or has been challenged or threatened in any way. 

              (p)         
Insurance. The Company and the Subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the businesses in which the Company and
the Subsidiaries are engaged, including, but not limited to, directors and
officers insurance coverage at least equal to the aggregate Subscription Amount.
Neither the Company nor any 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 without a significant increase in cost. 

              (q)          Transactions
With Affiliates and Employees. Except as set forth in the SEC Reports, none
of the officers or directors of the Company or any Subsidiary and, to the
knowledge of the Company, none of the employees of the Company or any Subsidiary
is presently a party to any transaction with the Company or any Subsidiary
(other than for services as employees, officers and directors), including any
contract, agreement or other arrangement providing for the furnishing of
services to or by, providing for rental of real or personal property to or from,
providing for the borrowing of money from or lending of money to or otherwise
requiring payments to or from any officer, director or such employee or, to the
knowledge of the Company, any entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director, trustee,
stockholder, member or partner, in each case in excess of $100,000 other than
for: (i) payment of salary or consulting fees for services rendered, (ii)
reimbursement for expenses incurred on behalf of the Company and (iii) other
employee benefits, including stock option agreements under
any stock option plan of the Company except as disclosed on Schedule
3.1(g). 

17

              (r)         
Sarbanes-Oxley; Internal Accounting Controls. The Company and the
Subsidiaries are in material 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 applicable rules and regulations promulgated by the Commission
thereunder that are effective as of the date hereof and as of the Closing Date.
The Company and the 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 GAAP and to maintain asset accountability, (iii)
access to assets is permitted only in accordance with management’s general or
specific authorization, and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences. The Company and the Subsidiaries have
established disclosure controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) for the Company and the Subsidiaries and designed such
disclosure controls and procedures to ensure that information required to be
disclosed by the Company in the reports it files or submits under the Exchange
Act is recorded, processed, summarized and reported, within the time periods
specified in the Commission’s rules and forms. The Company’s certifying officers
have evaluated the effectiveness of the disclosure controls and procedures of
the Company and the Subsidiaries as of the end of the period covered by the most
recently filed periodic report under the Exchange Act (such date, the
“Evaluation Date”). The Company presented in its most recently filed
periodic report under the Exchange Act the conclusions of the certifying
officers about the effectiveness of the disclosure controls and procedures based
on their evaluations as of the Evaluation Date. Since the Evaluation Date, there
have been no changes in the internal control over financial reporting (as such
term is defined in the Exchange Act) of the Company and its Subsidiaries that
have materially affected, or is reasonably likely to materially affect, the
internal control over financial reporting of the Company and its Subsidiaries.

              (s)         
Certain Fees. Except as set forth on Schedule 3.1(s), no
brokerage, finder’s fees, commissions or due diligence fees are or will be
payable by the Company or any Subsidiary to any broker, financial advisor or
consultant, finder, placement agent, investment banker, bank or other Person
with respect to the transactions contemplated by the Transaction Documents. The
Purchasers shall have no obligation with respect to any such fees or with
respect to any claims made by or on behalf of other Persons for fees of a type
contemplated in this Section 3.1(s) that may be due in connection with the
transactions contemplated by the Transaction Documents.

              (t)         
Investment Company. The Company is not, and is not an Affiliate of, and
immediately after receipt of payment for the Securities, will not be or be an
Affiliate of, an “investment company” within the meaning of the Investment
Company Act of 1940, as amended. The Company shall conduct its business in a
manner so that it will not become an “investment company” subject to
registration under the Investment Company Act of 1940, as amended. 

              (u)         
Registration Rights. No Person has any right to cause the Company or any
Subsidiary to effect the registration under the Securities Act of any securities
of the Company or any Subsidiary. 

              (v)         
Reporting Company/Shell Company. The Company is a publicly-held company
subject to reporting obligations pursuant to Sections 12(g) and 13 of the
Exchange Act. Pursuant to the provisions of the Exchange Act, except as set
forth on Schedule 3.1(v), the Company has timely filed all reports and other
materials required to be filed by the Company thereunder with the SEC during the
preceding twelve months. As of the Closing Date, the Company is not a “shell
company” nor a former “shell company” as those terms are employed in Rule 144
under the Securities Act. The Company is, and has no reason to believe that it
will not in the foreseeable future continue to be in compliance with all such
listing and maintenance requirements. 

18

              (w)         
Application of Takeover Protections. The Company and the Board of
Directors will have taken as of the Closing Date 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 Company’s certificate of
incorporation (or similar charter documents) or the laws of its state of
incorporation that is or could become applicable to the Purchasers as a result
of the Purchasers and the Company fulfilling their obligations or exercising
their rights under the Transaction Documents, including without limitation as a
result of the Company’s issuance of the Securities and the Purchasers’ ownership
of the Securities. 

              (x)         
Disclosure. Except with respect to the material terms and conditions of
the transactions contemplated by the Transaction Documents, the Company confirms
that neither it nor any other Person acting on its behalf has provided any of
the Purchasers or their agents or counsel with any information that it believes
constitutes or might constitute material, non-public information. The Company
understands and confirms that the Purchasers will rely on the foregoing
representation in effecting transactions in securities of the Company. All of
the disclosure furnished by or on behalf of the Company to the Purchasers
regarding the Company and its Subsidiaries, their respective businesses and the
transactions contemplated hereby, including the Disclosure Schedules to this
Agreement, when taken together as a whole, is true and correct 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 therein, in light of the
circumstances under which they were made, not misleading. The press releases
disseminated by the Company during the twelve months preceding the date of this
Agreement taken as a whole do not 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 light of the circumstances under
which they were made and when made, not misleading. The Company acknowledges and
agrees that no Purchaser makes or has made any representations or warranties
with respect to the transactions contemplated hereby other than those
specifically set forth in Section 3.2 hereof. 

              (y)         
No Integrated Offering. Assuming the accuracy of the Purchasers’
representations and warranties set forth in Section 3.2, neither the Company,
nor any of its Affiliates, nor any Person acting on its or their behalf has,
directly or indirectly, made any offers or sales of any security or solicited
any offers to buy any security, under circumstances that would cause this
offering of the Securities to be integrated with prior offerings by the Company
for purposes of: (i) the Securities Act which would require the registration of
any such securities under the Securities Act, or (ii) any applicable shareholder
approval provisions of any Trading Market on which any of the securities of the
Company are listed or designated.

              (z)         
Solvency. Based on the consolidated financial condition of the Company as
of the Closing Date, and the Company’s good faith estimate of the fair market
value of its assets, after giving effect to the receipt by the Company of the
proceeds from the sale of the Securities hereunder: (i) the fair saleable value
of the Company’s assets exceeds the amount that will be required to be paid on
or in respect of the Company’s existing debts and other liabilities (including
known contingent liabilities) as they mature, (ii) the Company’s assets do
not constitute unreasonably small capital
to carry on its business as now conducted and as proposed to be conducted
including its capital needs taking into account the particular capital
requirements of the business conducted by the Company, consolidated and
projected capital requirements and capital availability thereof, and (iii) the
current cash flow of the Company, together with the proceeds the Company would
receive, were it to liquidate all of its assets, after taking into account all
anticipated uses of the cash, would be sufficient to pay all amounts on or in
respect of its liabilities when such amounts are required to be paid. The
Company does not intend to incur debts beyond its ability to pay such debts as
they mature (taking into account the timing and amounts of cash to be payable on
or in respect of its debt). The Company has no knowledge of any facts or
circumstances which lead it to believe that it will file for reorganization or
liquidation under the bankruptcy or reorganization laws of any jurisdiction
within one year from the Closing Date. Schedule 3.1(z) sets forth as of
the date hereof all outstanding secured and unsecured Indebtedness of the
Company or any Subsidiary, or for which the Company or any Subsidiary has
commitments. For the purposes of this Agreement, “Indebtedness” means (x)
any liabilities for borrowed money or amounts owed in excess of $100,000 in the
aggregate (other than trade accounts payable incurred in the ordinary course of
business), (y) all guaranties, endorsements and other contingent obligations in
respect of indebtedness of others, whether or not the same are or should be
reflected in the Company’s consolidated balance sheet (or the notes thereto),
except guaranties by endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business; and (z)
the present value of any lease payments in excess of $100,000 due under leases
required to be capitalized in accordance with GAAP. Neither the Company nor any
Subsidiary is in default with respect to any Indebtedness. 

19

              (aa)       
Tax Status. Except for matters that would not, individually or in the
aggregate, have or reasonably be expected to result in a Material Adverse
Effect, the Company and its Subsidiaries each (i) has made or filed all United
States federal, state and local income and all foreign income and franchise 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 and (iii) has set aside on its books provision
reasonably adequate for the payment of all material taxes for periods subsequent
to the periods to which such returns, reports or declarations apply. There are
no unpaid taxes in any material amount claimed to be due by the taxing authority
of any jurisdiction, and the officers of the Company or of any Subsidiary know
of no basis for any such claim. 

              (bb)       
Foreign Corrupt Practices. Neither the Company nor any Subsidiary, nor to
the knowledge of the Company or any Subsidiary, any agent or other person acting
on behalf of the Company or any Subsidiary, has: (i) directly or indirectly,
used any funds for unlawful contributions, gifts, entertainment or other
unlawful expenses related to foreign or domestic political activity, (ii) made
any unlawful payment to foreign or domestic government officials or employees or
to any foreign or domestic political parties or campaigns from corporate funds,
(iii) failed to disclose fully any contribution made by the Company or any
Subsidiary (or made by any person acting on its behalf of which the Company is
aware) which is in violation of law or (iv) violated in any material respect any
provision of FCPA. 

              (cc)       
Accountants. The Company’s accounting firm is set forth on Schedule
3.1(cc) of the Disclosure Schedules. To the knowledge and belief of the
Company, such accounting firm: (i) is a registered public accounting firm as
required by the Exchange Act and (ii) shall express its opinion with respect to
the financial statements to be included in the Company’s Annual Report for the
fiscal year ending August 31, 2014. 

20

              (dd)       
Acknowledgment Regarding Purchasers’ Purchase of Securities. The Company
acknowledges and agrees that each of the Purchasers is acting solely in the
capacity of an arm’s length purchaser with respect to the Transaction Documents
and the transactions contemplated thereby. The Company further acknowledges that
no Purchaser is acting as a financial advisor or fiduciary of the Company (or in
any similar capacity) with respect to the Transaction Documents and the
transactions contemplated thereby and any advice given by any Purchaser or any
of their respective representatives or agents in connection with the Transaction
Documents and the transactions contemplated thereby is merely incidental to the
Purchasers’ purchase of the Securities. The Company further represents to each
Purchaser that the Company’s decision to enter into this Agreement and the other
Transaction Documents has been based solely on the independent evaluation of the
transactions contemplated hereby by the Company and its representatives. 

              (ee)       
Acknowledgment Regarding Purchaser’s Trading Activity. Anything in this
Agreement or elsewhere herein to the contrary notwithstanding (except for
Sections 3.2(e) and 4.16 hereof), it is understood and acknowledged by the
Company that: (i) none of the Purchasers has been asked by the Company to agree,
nor has any Purchaser agreed, to desist from purchasing or selling, long and/or
short, securities of the Company, or “derivative” securities based on securities
issued by the Company or to hold the Securities for any specified term, (ii)
past or future open market or other transactions by any Purchaser, specifically
including, without limitation, Short Sales or “derivative” transactions, before
or after the closing of this or future private placement transactions, may
negatively impact the market price of the Company’s publicly-traded securities,
(iii) any Purchaser, and counter-parties in “derivative” transactions to which
any such Purchaser is a party, directly or indirectly, may presently have a
“short” position in the Common Stock and (iv) each Purchaser shall not be deemed
to have any affiliation with or control over any arm’s length counter-party in
any “derivative” transaction. The Company further understands and acknowledges
that (y) one or more Purchasers may engage in hedging activities at various
times during the period that the Securities are outstanding, including, without
limitation, during the periods that the value of the Underlying Shares
deliverable with respect to Securities are being determined, and (z) such
hedging activities (if any) could reduce the value of the existing stockholders'
equity interests in the Company at and after the time that the hedging
activities are being conducted. The Company acknowledges that such
aforementioned hedging activities do not constitute a breach of any of the
Transaction Documents, provided that such activities do not breach the
Investors’ representations made in Section 3.2 of this Agreement. There are no
disagreements of any kind presently existing, or reasonably anticipated by the
Company to arise, between the Company and the accountants and lawyers formerly
or presently employed by the Company and the Company is current with respect to
any fees owed to its accountants and lawyers which could affect the Company’s
ability to perform any of its obligations under any of the Transaction
Documents. 

              (ff)       
Regulation M Compliance. The Company has 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 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) sold, bid for, purchased, or paid any compensation for
soliciting purchases of, any of the Securities, or (iii) paid or agreed to pay
to any Person any compensation for soliciting another to purchase any other
securities of the Company. 

              (gg)       
Money Laundering. The operations of the Company and its Subsidiaries are
and have been conducted at all times in compliance with applicable financial
record-keeping and reporting requirements of the Currency and Foreign
Transactions Reporting Act of 1970, as amended, applicable money laundering
statutes and applicable rules and regulations thereunder (collectively, the
“Money Laundering Laws”), and no action, suit or proceeding by or before
any court or governmental agency, authority or body or any arbitrator involving
the Company or any Subsidiary with respect to the Money Laundering Laws is
pending or, to the knowledge of the Company or any Subsidiary, threatened. 

21

           (hh)       
Stock Option Plans. Each stock option granted by the Company under the
stock option plan was granted (i) in accordance with the terms of such stock
option plan and (ii) with an exercise price at least equal to the fair market
value of the Common Stock on the date such stock option would be considered
granted under GAAP and applicable law. No stock option granted under any stock
option plan has been backdated. The Company has not knowingly granted, and there
is no and has been no Company policy or practice to knowingly grant, stock
options prior to, or otherwise knowingly coordinate the grant of stock options
with, the release or other public announcement of material information regarding
the Company or its Subsidiaries or their financial results or prospects.

              (ii)       
Office of Foreign Assets Control. Neither the Company nor any Subsidiary
nor, to the Company's knowledge, any director, officer, agent, employee or
affiliate of the Company is currently subject to any U.S. sanctions administered
by the Office of Foreign Assets Control of the U.S. Treasury Department
(“OFAC”). 

              (jj)       
Private Placement. Assuming the accuracy of the Purchasers’
representations and warranties set forth in Section 3.2, no registration under
the Securities Act is required for the offer and sale of the Securities by the
Company to the Purchasers as contemplated hereby. The issuance and sale of the
Securities hereunder does not contravene the rules and regulations of the
Trading Market. 

              (kk)       
No General Solicitation. Neither the Company nor any person acting on
behalf of the Company has offered or sold any of the Securities by any form of
general solicitation or general advertising. The Company has offered the
Securities for sale only to the Purchasers and certain other “accredited
investors” within the meaning of Rule 501 under the Securities Act. 

              (ll)       
Indebtedness and Seniority. As of the date hereof, all Indebtedness and
Liens are as set forth on Schedule 3.1(ll). Except as set forth on
Schedule 3.1(ll), as of the Closing Date, no Indebtedness or other equity
of the Company is senior to the Notes in right of payment, whether with respect
to interest or upon liquidation or dissolution, or otherwise, other than
indebtedness secured by purchase money security interests (which is senior only
as to underlying assets covered thereby) and capital lease obligations (which is
senior only as to the property covered thereby). 

              (mm)       
Listing and Maintenance Requirements. The Common Stock is quoted on the
OTC Bulletin Board under the symbol IROG. The Company has not, in the
twenty-four (24) months preceding the date hereof, received notice from any
Trading Market on which the Common Stock is or has been listed or quoted to the
effect that the Company is not in compliance with the listing or maintenance
requirements of such Trading Market. 

             
(nn)        Survival. The
foregoing representations and warranties shall survive the Closing Date.

22

              3.2         
Representations and Warranties of the Purchasers. Each Purchaser, for
itself and for no other Purchaser, hereby represents and warrants as of the date
hereof and as of the Closing Date to the Company as follows (unless as of a
specific date therein): 

              (a)         
Organization; Authority. Such Purchaser is either an individual or an
entity duly incorporated or formed, validly existing and in good standing under
the laws of the jurisdiction of its incorporation or formation with full right,
corporate, partnership, limited liability company or similar power and authority
to enter into and to consummate the transactions contemplated by the Transaction
Documents and otherwise to carry out its obligations hereunder and thereunder.
The execution and delivery of the Transaction Documents and performance by such
Purchaser of the transactions contemplated by the Transaction Documents have
been duly authorized by all necessary corporate, partnership, limited liability
company or similar action, as applicable, on the part of such Purchaser. Each
Transaction Document to which it is a party has been duly executed by such
Purchaser, and when delivered by such Purchaser in accordance with the terms
hereof, will constitute the valid and legally binding obligation of such
Purchaser, enforceable against it in accordance with its terms, except: (i) as
limited by general equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors’ rights generally, (ii) as limited by laws relating to
the availability of specific performance, injunctive relief or other equitable
remedies and (iii) insofar as indemnification and contribution provisions may be
limited by applicable law. 

              (b)         
Understandings or Arrangements. Such Purchaser understands that the
Securities are “restricted securities” and have not been registered under the
Securities Act or any applicable state securities law and is acquiring the
Securities as principal for its own account and not with a view to or for
distributing or reselling such Securities or any part thereof in violation of
the Securities Act or any applicable state securities law, has no present
intention of distributing any of such Securities in violation of the Securities
Act or any applicable state securities law and has no direct or indirect
arrangement or understandings with any other persons to distribute or regarding
the distribution of such Securities in violation of the Securities Act or any
applicable state securities law (this representation and warranty not limiting
such Purchaser’s right to sell the Securities pursuant to a registration
statement or otherwise in compliance with applicable federal and state
securities laws). Such Purchaser is acquiring the Securities hereunder in the
ordinary course of its business. 

              (c)         
Purchaser Status. At the time such Purchaser was offered the Securities,
it was, and as of the date hereof it is, and on each date on which it exercises
any Warrants or converts any Notes it will be either: (i) an “accredited
investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under
the Securities Act or (ii) a “qualified institutional buyer” as defined in Rule
144A(a) under the Securities Act. Such Purchaser is not required to be
registered as a broker-dealer under Section 15 of the Exchange Act. Such
Purchaser has the authority and is duly and legally qualified to purchase and
own the Securities. Such Purchaser is able to bear the risk of such investment
for an indefinite period and to afford a complete loss thereof. Such Purchaser
has provided the information in the Accredited Investor Questionnaire attached
hereto as Exhibit D (the “Investor Questionnaire”).
The information set forth on the signature pages hereto and the Investor
Questionnaire regarding such Purchaser is true and complete in all respects.
Except as disclosed in the Investor Questionnaire, such Purchaser has had no
position, office or other material relationship within the past three years with
the Company or Persons (as defined below) known to such Purchaser to be
affiliates of the Company, and is not a member of the Financial Industry
Regulatory Authority or an “associated person” (as such term is defined under
the FINRA Membership and Registration Rules Section 1011). 

23

              (d)         
Experience of Such Purchaser. Such Purchaser, either alone or together
with its representatives, has such knowledge, sophistication and experience in
business and financial matters so as to be capable of evaluating the merits and
risks of the prospective investment in the Securities, and has so evaluated the
merits and risks of such investment. Such Purchaser is able to bear the economic
risk of an investment in the Securities and, at the present time, is able to
afford a complete loss of such investment. 

              (e)         
Information on Company. Such Purchaser has been furnished with or has had
access to the EDGAR Website of the Commission to the Company’s filings made with
the Commission during the period from the date that is two years preceding the
date hereof through the tenth business day preceding the Initial Closing Date in
which such Purchaser purchases Securities hereunder, including the Company’s
Annual Report on Form 10-K filed with the Commission on December 13, 2013
together with the Closing Form 8-K (hereinafter referred to collectively as the
“Reports”). Purchasers are not deemed to have any knowledge of any
information not included in the Reports unless such information is delivered in
the manner described in the next sentence. In addition, such Purchaser may have
received in writing from the Company such other information concerning its
operations, financial condition and other matters as such Purchaser has
requested, identified thereon as OTHER WRITTEN INFORMATION (such other
information is collectively, the “Other Written Information”), and
considered all factors such Purchaser deems material in deciding on the
advisability of investing in the Securities. Such Purchaser was afforded (i) the
opportunity to ask such questions as such Purchaser deemed necessary of, and to
receive answers from, representatives of the Company concerning the merits and
risks of acquiring the Securities; (ii) the right of access to information about
the Company and its financial condition, results of operations, business,
properties, management and prospects sufficient to enable such Purchaser to
evaluate the Securities; and (iii) the opportunity to obtain such additional
information that the Company possesses or can acquire without unreasonable
effort or expense that is necessary to make an informed investment decision with
respect to acquiring the Securities. 

              (f)         
Compliance with Securities Act; Reliance on Exemptions. Such Purchaser
understands and agrees that the Securities have not been registered under the
1933 Act or any applicable state securities laws, by reason of their issuance in
a transaction that does not require registration under the 1933 Act, and that
such Securities must be held indefinitely unless a subsequent disposition is
registered under the 1933 Act or any applicable state securities laws or is
exempt from such registration. Such Purchaser understands and agrees that the
Securities are being offered and sold to such Purchaser in reliance on specific
exemptions from the registration requirements of United States federal and state
securities laws and regulations and that the Company is relying in part upon the
truth and accuracy of, and such Purchaser’s compliance with, the
representations, warranties, agreements, acknowledgments and understandings of
such Purchaser set forth herein in order to determine the availability of such
exemptions and the eligibility of such Purchaser to acquire the Securities. 

              (g)         
Communication of Offer. Such Purchaser is not purchasing the Securities
as a result of any “general solicitation” or “general advertising,” as such
terms are defined in Regulation D, which includes, but is not limited to, any
advertisement, article, notice or other communication regarding the Securities
published in any newspaper, magazine or similar media or on the internet or
broadcast over television, radio or the internet or presented at any seminar or
any other general solicitation or general advertisement. 

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

24

              (i)         
No Conflicts. The execution, delivery and performance of this Agreement
and performance under the other Transaction Documents and the consummation by
such Purchaser of the transactions contemplated hereby and thereby or relating
hereto or thereto do not and will not (i) result in a violation of such
Purchaser’s charter documents, bylaws or other organizational documents, if
applicable, (ii) conflict with nor constitute a default (or an event which with
notice or lapse of time or both would become a default) under any agreement to
which such Purchaser is a party, nor (iii) result in a violation of any law,
rule, or regulation, or any order, judgment or decree of any court or
governmental agency applicable to such Purchaser or its properties (except for
such conflicts, defaults and violations as would not, individually or in the
aggregate, have a material adverse effect on such Purchaser). Such Purchaser is
not required to obtain any consent, authorization or order of, or make any
filing or registration with, any court or governmental agency in order for it to
execute, deliver or perform any of its obligations under this Agreement or
perform under the other Transaction Documents nor to purchase the Securities in
accordance with the terms hereof, provided that for purposes of the
representation made in this sentence, such Purchaser is assuming and relying
upon the accuracy of the relevant representations and agreements of the Company
herein. 

             
(j)          Survival. The
foregoing representations and warranties shall survive the Closing Date.

The Company acknowledges and agrees that the representations
contained in Section 3.2 shall not modify, amend or affect such Purchaser’s
right to rely on the Company’s representations and warranties contained in this
Agreement or any representations and warranties contained in any other
Transaction Document or any other document or instrument executed and/or
delivered in connection with this Agreement or the consummation of the
transaction contemplated hereby. 

ARTICLE IV. 
OTHER AGREEMENTS OF THE
PARTIES

              (a)         
Transfer Restrictions. The Securities may only be disposed of in
compliance with state and federal securities laws. In connection with any
transfer of Securities other than pursuant to an effective registration
statement or Rule 144, to the Company or to an Affiliate of a Purchaser or in
connection with a pledge as contemplated in Section 4.1(b), the Company may
require the transferor thereof to provide to the Company, at the Company’s
expense, an opinion of counsel selected by the transferor and reasonably
acceptable to the Company, the form and substance of which opinion shall be
reasonably satisfactory to the Company, to the effect that such transfer does
not require registration of such transferred Securities under the Securities
Act. As a condition of transfer, any such transferee shall agree in writing to
be bound by the terms of this Agreement and shall have the rights and
obligations of a Purchaser under this Agreement. 

              (b)         
The Purchasers agree to the imprinting, so long as is required by this Section
4.1, of a legend on any of the Securities in the following form: 

[NEITHER] THIS SECURITY [NOR THE
SECURITIES INTO WHICH THIS SECURITY IS [EXERCISABLE] [CONVERTIBLE]] HAS [NOT]
BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY. THIS SECURITY [AND THE SECURITIES ISSUABLE UPON [EXERCISE] [CONVERSION]
OF THIS SECURITY] MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT
WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT
IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT
OR OTHER LOAN SECURED BY SUCH SECURITIES. 

25

              The
Company acknowledges and agrees that a Purchaser may from time to time pledge
pursuant to a bona fide margin agreement with a registered broker-dealer or
grant a security interest in some or all of the Securities to a financial
institution that is an “accredited investor” as defined in Rule 501(a) under the
Securities Act and who agrees to be bound by the provisions of this Agreement
and, if required under the terms of such arrangement, such Purchaser may
transfer pledge or secure Securities to the pledgees or secured parties. Such a
pledge or transfer would not be subject to approval of the Company and no legal
opinion of legal counsel of the pledgee, secured party or pledgor shall be
required in connection therewith. Further, no notice shall be required of such
pledge. At the appropriate Purchaser’s expense, the Company will execute and
deliver such reasonable documentation as a pledgee or secured party of
Securities may reasonably request in connection with a pledge or transfer of the
Securities, including, if the Securities are subject to registration pursuant to
a registration statement, the preparation and filing of any required prospectus
supplement under Rule 424(b)(3) under the Securities Act or other applicable
provision of the Securities Act to appropriately amend the list of selling
stockholders thereunder. 

              (c)         
Certificates evidencing the Underlying Shares shall not contain any legend
(including the legend set forth in Section 4.1(b) hereof): (i) while a
registration statement covering the resale of such security is effective under
the Securities Act, (ii) following any sale of such Underlying Shares pursuant
to Rule 144, (iii) if such Underlying Shares are eligible for sale under Rule
144, without the requirement for the Company to be in compliance with the
current public information required under Rule 144 as to such Underlying Shares
and without volume or manner-of-sale restrictions or (iv) if such legend is not
required under applicable requirements of the Securities Act (including judicial
interpretations and pronouncements issued by the staff of the Commission). The
Company shall cause its counsel to issue a legal opinion to the Transfer Agent
promptly after the Effective Date if required by the Transfer Agent to effect
the removal of the legend hereunder. If all or any Notes are converted or any
portion of a Warrant is exercised at a time when there is an effective
registration statement to cover the resale of the Underlying Shares, or if such
Underlying Shares may be sold under Rule 144 or if such legend is not otherwise
required under applicable requirements of the Securities Act (including judicial
interpretations and pronouncements issued by the staff of the Commission) then
such Underlying Shares shall be issued free of all legends. The Company agrees
that following such time as such legend is no longer required under this Section
4.1(c), it will, no later than five Trading Days following the delivery by a
Purchaser to the Company or the Transfer Agent of a certificate representing
Underlying Shares, as applicable, issued with a restrictive legend (such fifth
Trading Day, the “Legend Removal Date”), deliver or cause to be delivered
to such Purchaser a certificate representing such shares that is free
from all restrictive and other legends (however, the Corporation shall use
reasonable best efforts to deliver such shares within three (3) Trading Days).
The Company may not make any notation on its records or give instructions to the
Transfer Agent that enlarge the restrictions on transfer set forth in this
Section 4. Certificates for Underlying Shares subject to legend removal
hereunder shall be transmitted by the Transfer Agent to the Purchaser by
crediting the account of the Purchaser’s prime broker with the Depository Trust
Company System as directed by such Purchaser. 

26

              (d)         
In addition to such Purchaser’s other available remedies, the Company shall pay
to a Purchaser, in cash, as partial liquidated damages and not as a penalty, for
each $1,000 of Underlying Shares (based on the higher of the actual purchase
price or VWAP of the Common Stock on the date such Securities are submitted to
the Transfer Agent) delivered for removal of the restrictive legend and subject
to Section 4.1(c), $10 per Trading Day for each Trading Day after the Legend
Removal Date (increasing to $20 per Trading Day after the fifth Trading Day)
until such certificate is delivered without a legend. Nothing herein shall limit
such Purchaser’s right to pursue actual damages for the Company’s failure to
deliver certificates representing any Securities as required by the Transaction
Documents, and such Purchaser shall have the right to pursue all remedies
available to it at law or in equity including, without limitation, a decree of
specific performance and/or injunctive relief. 

              (e)         
DWAC. In lieu of delivering physical certificates representing the
Unlegended Shares, upon request of a Purchaser, so long as the certificates
therefor do not bear a legend and the Purchaser is not obligated to return such
certificate for the placement of a legend thereon, the Company shall cause its
transfer agent to electronically transmit the Unlegended Shares by crediting the
account of Purchaser’s prime broker with the Depository Trust Company through
its Deposit Withdrawal At Custodian system, provided that the Company’s Common
Stock is DTC eligible and the Company’s transfer agent participates in the
Deposit Withdrawal at Custodian system. Such delivery must be made on or before
the Legend Removal Date. 

              (f)         
Injunction. In the event a Purchaser shall request delivery of Unlegended
Shares as described in this Section 4.1 and the Company is required to deliver
such Unlegended Shares, the Company may not refuse to deliver Unlegended Shares
based on any claim that such Purchaser or anyone associated or affiliated with
such Purchaser has not complied with Purchaser’s obligations under the
Transaction Documents, or for any other reason, unless, an injunction or
temporary restraining order from a court, on notice, restraining and or
enjoining delivery of such Unlegended Shares shall have been sought and obtained
by the Company and the Company has posted a surety bond for the benefit of such
Purchaser in the amount of the greater of (i) 120% of the amount of the
aggregate purchase price of the Underlying Shares to be subject to the
injunction or temporary restraining order, or (ii) the VWAP of the Common Stock
on the trading day before the issue date of the injunction multiplied by the
number of Unlegended Shares to be subject to the injunction, which bond shall
remain in effect until the completion of arbitration/litigation of the dispute
and the proceeds of which shall be payable to such Purchaser to the extent
Purchaser obtains judgment in Purchaser’s favor. 

              (g)         
Buy-In. In addition to any other rights available to Purchaser, if the
Company fails to deliver to a Purchaser Unlegended Shares as required pursuant
to this Agreement and after the Legend Removal Date the Purchaser, or a broker
on the Purchaser’s behalf, purchases (in an open market transaction or
otherwise) shares of Common Stock to deliver in satisfaction of a sale by such
Purchaser of the shares of Common Stock which the Purchaser was entitled to
receive in unlegended form from the Company (a “Buy-In”), then the
Company shall promptly pay in cash to the Purchaser (in addition to any remedies
available to or elected by the Purchaser) the amount, if any, by which (A) the Purchaser’s
total purchase price (including brokerage commissions, if any) for the shares of
Common Stock so purchased exceeds (B) the aggregate purchase price of the shares
of Common Stock delivered to the Company for reissuance as Unlegended Shares
together with interest thereon at a rate of 15% per annum accruing until such
amount and any accrued interest thereon is paid in full (which amount shall be
paid as liquidated damages and not as a penalty). For example, if a Purchaser
purchases shares of Common Stock having a total purchase price of $11,000 to
cover a Buy-In with respect to $10,000 of purchase price of Shares delivered to
the Company for reissuance as Unlegended Shares, the Company shall be required
to pay the Purchaser $1,000, plus interest, if any. The Purchaser shall provide
the Company written notice indicating the amounts payable to the Purchaser in
respect of the Buy-In. 

27

              (h)         
Each Purchaser, severally and not jointly with the other Purchasers, agrees with
the Company that such Purchaser will sell any Securities pursuant to either the
registration requirements of the Securities Act, including any applicable
prospectus delivery requirements, or an exemption therefrom, and that if
Securities are sold pursuant to a Registration Statement, they will be sold in
compliance with the plan of distribution set forth therein, and acknowledges
that the removal of the restrictive legend from certificates representing
Securities as set forth in this Section 4.1 is predicated upon the Company’s
reliance upon this understanding. 

              4.1         
Acknowledgment of Dilution. The Company acknowledges that the issuance of
the Securities may result in dilution of the outstanding shares of Common Stock,
which dilution may be substantial under certain market conditions. The Company
further acknowledges that its obligations under the Transaction Documents,
including, without limitation, its obligation to issue the Underlying Shares
pursuant to the Transaction Documents, are unconditional and absolute and not
subject to any right of set off, counterclaim, delay or reduction, regardless of
the effect of any such dilution or any claim the Company may have against any
Purchaser and regardless of the dilutive effect that such issuance may have on
the ownership of the other stockholders of the Company. 

             
4.2          Furnishing of
Information; Public Information.

                               
(a)          Until the earliest of
the time that (i) no Purchaser owns Securities or (ii) the Warrants have
expired, the Company covenants to file all periodic reports with the Commission
pursuant to Section 15(d) of the Exchange Act or alternatively, if registered
under Section 12(b) or 12(g) of the 1934 Act, maintain the registration of the
Common Stock under Section 12(b) or 12(g) of the Exchange Act and to timely file
(or obtain extensions in respect thereof and file within the applicable grace
period) all reports required to be filed by the Company after the date hereof
pursuant to the Exchange Act even if the Company is not then subject to the
reporting requirements of the Exchange Act. 

                                (b)         
At any time commencing on the Initial Closing Date and ending at such time that
all of the Securities may be sold without the requirement for the Company to be
in compliance with Rule 144(c)(1) and otherwise without restriction or
limitation pursuant to Rule 144, if the Company shall fail for any reason to
satisfy the current public information requirement under Rule 144(c) (a “Public
Information Failure”) then, in addition to such Purchaser’s other available
remedies, the Company shall pay to a Purchaser, in cash, as partial liquidated
damages and not as a penalty, by reason of any such delay in or reduction of its
ability to sell the Securities, an amount in cash equal to two percent (2.0%) of
the aggregate principal amount of Notes and accrued interest held by such
Purchaser on the day of a Public Information Failure and on every thirtieth
(30th) day (pro-rated for periods totaling less than thirty days) thereafter
until the earlier of (a) the date such Public Information Failure is cured and
(b) such time that such public information is no longer required for the
Purchasers to transfer the Underlying Shares pursuant to Rule 144. The payments
to which a Purchaser shall be entitled pursuant to this Section 4.3(b) are
referred to herein as “Public Information Failure Payments.” Public Information Failure Payments shall be paid on the earlier of
(i) the last day of the calendar month during which such Public Information
Failure Payments are incurred and (ii) the third (3rd) Business Day after the
event or failure giving rise to the Public Information Failure Payments is
cured. In the event the Company fails to make Public Information Failure
Payments in a timely manner, such Public Information Failure Payments shall bear
interest at the rate of 1.5% per month (prorated for partial months) until paid
in full. Nothing herein shall limit such Purchaser’s right to pursue actual
damages for the Public Information Failure, and such Purchaser shall have the
right to pursue all remedies available to it at law or in equity including,
without limitation, a decree of specific performance and/or injunctive relief. 

28

              4.3         
Integration. The Company shall not sell, offer for sale or solicit offers
to buy or otherwise negotiate in respect of any security (as defined in Section
2 of the Securities Act) that would be integrated with the offer or sale of the
Securities in a manner that would require the registration under the Securities
Act of the sale of the Securities or that would be integrated with the offer or
sale of the Securities for purposes of the rules and regulations of any Trading
Market such that it would require shareholder approval prior to the closing of
such other transaction unless shareholder approval is obtained before the
closing of such subsequent transaction.

              4.4         
Conversion and Exercise Procedures. Each of the form of Notice of
Exercise included in the Warrants and the form of Notice of Conversion included
in the Notes set forth the totality of the procedures required of the Purchasers
in order to exercise the Warrants or convert the Notes. No additional legal
opinion, other information or instructions shall be required of the Purchasers
to exercise their Warrants or convert their Notes. The Company shall honor
exercises of the Warrants and conversions of the Notes and shall deliver
Underlying Shares in accordance with the terms, conditions and time periods set
forth in the Transaction Documents. 

              4.5         
Securities Laws Disclosure; Publicity. The Company shall, by 9:00 a.m.
(New York City time) on the fourth (4th) Trading Day immediately
following each Closing Date, issue a press release disclosing the material terms
of the transactions contemplated hereby, and shall file a Current Report on Form
8-K including the Transaction Documents as exhibits thereto (the “Closing
Form 8-K” mutatis mutandem) within one Business Day of the date
hereof. Such Closing Form 8-K shall include all of the disclosure required to be
included therein in connection with the acquisition of the Wilderness Way Resort
Adventure Resort Inc., a British Columbia corporation (“TWW”), and
consolidated audited financial statements of the Company and its subsidiaries
(including TWW), which acquisition shall have been accomplished prior to the
Initial Closing Date. A form of the Closing Form 8-K is annexed hereto as
Exhibit F. Such Exhibit F will be identical to the Closing Form
8-K which will be filed with the Commission except for the omission of
signatures thereto by the Company and auditors providing the financial
statements. From and after the issuance of such press release and filing of the
Closing Form 8-K, the Company represents to the Purchasers that it shall have
publicly disclosed all material, non-public information delivered to any of the
Purchasers by the Company or any of its Subsidiaries, or any of their respective
officers, directors, employees or agents in connection with the transactions
contemplated by the Transaction Documents. The Company and each Purchaser shall
consult with each other in issuing any other press releases with respect to the
transactions contemplated hereby, and neither the Company nor any Purchaser
shall issue any such press release nor otherwise make any such public statement
without the prior consent of the Company, with respect to any press release of
any Purchaser, or without the prior consent of each Purchaser, with respect to
any press release of the Company, which consent shall not unreasonably be
withheld or delayed, except if such disclosure is required by law, in which case
the disclosing party shall promptly provide the other party with prior notice of
such public statement or communication. Notwithstanding the foregoing, the
Company shall not publicly disclose the name of any Purchaser, or include the
name of any Purchaser in any filing with the Commission or any regulatory agency
or Trading Market unless the name of such Purchaser is already included in the
body of the Transaction Documents, without the prior written consent of
such Purchaser, except: (a) as required by federal securities law in connection
with the filing of final Transaction Documents with the Commission and (b) to
the extent such disclosure is required by law or Trading Market regulations, in
which case the Company shall provide the Purchasers with prior notice of such
disclosure permitted under this clause (b).

29

              4.6         
Shareholder Rights Plan. No claim will be made or enforced by the Company
or, with the consent of the Company, any other Person, that any Purchaser is an
“Acquiring Person” under any control share acquisition, business combination,
poison pill (including any distribution under a rights agreement) or similar
anti-takeover plan or arrangement in effect or hereafter adopted by the Company,
or that any Purchaser could be deemed to trigger the provisions of any such plan
or arrangement, by virtue of receiving Securities under the Transaction
Documents or under any other agreement between the Company and the Purchasers.

              4.7         
Non-Public Information. Except with respect to the material terms and
conditions of the transactions contemplated by the Transaction Documents, the
Company covenants and agrees that neither it, nor any other Person acting on its
behalf, will provide any Purchaser or its agents or counsel with any information
that the Company believes constitutes material non-public information, unless
prior thereto such Purchaser shall have entered into a written agreement with
the Company regarding the confidentiality and use of such information. The
Company understands and confirms that each Purchaser shall be relying on the
foregoing covenant in effecting transactions in securities of the Company. 

              4.8         
Use of Proceeds. Except as set forth on Schedule 4.9 attached
hereto, the Company shall use the net proceeds from the sale of the Securities
hereunder for working capital purposes and shall not use such proceeds: (a) for
the satisfaction of any portion of the Company’s debt (other than payment of
trade payables in the ordinary course of the Company’s business and prior
practices), (b) for the redemption of any Common Stock or Common Stock
Equivalents, (c) for the settlement of any outstanding litigation or (d) in
violation of FCPA or OFAC regulations. The proceeds of the offering will be
employed by the Company substantially for the purposes set forth on Schedule
4.9.

              4.9         
Indemnification of Purchasers. Subject to the provisions of this Section
4.10, the Company will indemnify and hold each Purchaser and its directors,
officers, shareholders, members, partners, employees and agents (and any other
Persons with a functionally equivalent role of a Person holding such titles
notwithstanding a lack of such title or any other title), each Person who
controls such Purchaser (within the meaning of Section 15 of the Securities Act
and Section 20 of the Exchange Act), and the directors, officers, shareholders,
agents, members, partners or employees (and any other Persons with a
functionally equivalent role of a Person holding such titles notwithstanding a
lack of such title or any other title) of such controlling persons (each, a
“Purchaser Party”) harmless from any and all losses, liabilities,
obligations, claims, contingencies, damages, costs and expenses, including all
judgments, amounts paid in settlements, court costs and reasonable attorneys’
fees and costs of investigation that any such Purchaser Party may suffer or
incur as a result of or relating to (a) any breach of any of the
representations, warranties, covenants or agreements made by the Company in this
Agreement or in the other Transaction Documents or (b) any action instituted
against Purchaser Parties in any capacity, or any of them or their respective
Affiliates, by any stockholder of the Company who is not an Affiliate of such
Purchaser Party, with respect to any of the transactions contemplated by the
Transaction Documents (unless such action is based upon a breach of such
Purchaser Party’s representations, warranties or covenants under the Transaction
Documents or any agreements or understandings such Purchaser Party may have with
any such stockholder or any violations by such Purchaser Party of state or
federal securities laws or any conduct by such Purchaser Party which constitutes
fraud, gross negligence, willful misconduct or malfeasance). If any action shall
be brought against any Purchaser Party in respect of which indemnity may be
sought pursuant to this Agreement, such Purchaser Party shall promptly notify
the Company in writing, and the Company shall have the right to assume the
defense thereof with counsel of its own choosing reasonably acceptable to the Purchaser
Party. Any Purchaser Party shall have the right to employ separate counsel in
any such action and participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such Purchaser Party except
to the extent that (i) the employment thereof has been specifically authorized
by the Company in writing, (ii) the Company has failed after a reasonable period
of time to assume such defense and to employ counsel or (iii) in such action
there is, in the reasonable opinion of counsel, a material conflict on any
material issue between the position of the Company and the position of such
Purchaser Party, in which case the Company shall be responsible for the
reasonable fees and expenses of no more than one such separate counsel. The
Company will not be liable to any Purchaser Party under this Agreement (y) for
any settlement by a Purchaser Party effected without the Company’s prior written
consent, which shall not be unreasonably withheld or delayed; or (z) to the
extent, but only to the extent that a loss, claim, damage or liability is
attributable to any Purchaser Party’s breach of its representations, warranties
or covenants under the Transaction Documents. The indemnification required by
this Section 4.10 shall be made by periodic payments of the amount thereof
during the course of the investigation or defense, as and when bills are
received or are incurred. The indemnity agreements contained herein shall be in
addition to any cause of action or similar right of any Purchaser Party against
the Company or others and any liabilities the Company may be subject to pursuant
to law. 

30

             
4.10        Reservation and Listing of
Securities. 

             
(a)          The Company shall
maintain a reserve from its duly authorized shares of Common Stock for issuance
pursuant to the Transaction Documents in such amount as may then be required to
fulfill its obligations in full under the Transaction Documents, but not less
than the Required Minimum. 

              (b)         
If, on any date, the number of authorized but unissued (and otherwise
unreserved) shares of Common Stock is less than the Required Minimum on such
date, then the Board of Directors shall amend the Company’s certificate or
articles of incorporation to increase the number of authorized but unissued
shares of Common Stock to at least the Required Minimum at such time, as soon as
possible and in any event not later than the 60th day after such
date. 

              (c)         
The Company shall, if applicable: (i) in the time and manner required by the
principal Trading Market, prepare and file with such Trading Market an
additional shares listing application covering a number of shares of Common
Stock at least equal to the Required Minimum on the date of such application,
(ii) take all steps necessary to cause such shares of Common Stock to be
approved for listing or quotation on such Trading Market as soon as possible
thereafter, (iii) provide to the Purchasers evidence of such listing or
quotation and (iv) maintain the listing or quotation of such Common Stock on any
date at least equal to the Required Minimum on such date on such Trading Market
or another Trading Market. 

              4.11        Form
D; Blue Sky Filings. The Company agrees to timely file a Form D with respect
to the Securities as required under Regulation D and to provide a copy thereof,
promptly upon request of any Purchaser. The Company shall 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 Purchasers at the
Closing under applicable securities or “Blue Sky” laws of the states of the
United States, and shall provide evidence of such actions promptly upon request
of any Purchaser.

              4.12       
Subsequent Equity Sales. From the date hereof until such time as the
Notes and Warrants are no longer outstanding, the Company will not, without the
consent of the Purchasers, enter into any Equity Line of Credit or similar
agreement, nor issue nor agree to issue any common stock, floating or Variable
Priced Equity Linked Instruments nor any of the foregoing or equity with price
reset rights (subject to adjustment for stock splits, distributions,
dividends, recapitalizations and the like) (collectively, the “Variable Rate
Transaction”). For purposes hereof, “Equity Line of Credit” shall
include any transaction involving a written agreement between the Company and an
investor or underwriter whereby the Company has the right to “put” its
securities to the investor or underwriter over an agreed period of time and at
an agreed price or price formula, and “Variable Priced Equity Linked
Instruments” shall include: (A) any debt or equity securities which are
convertible into, exercisable or exchangeable for, or carry the right to receive
additional shares of Common Stock either (1) at any conversion, exercise or
exchange rate or other price that is based upon and/or varies with the trading
prices of or quotations for Common Stock at any time after the initial issuance
of such debt or equity security, or (2) with a fixed conversion, exercise or
exchange price that is subject to being reset at some future date at any time
after the initial issuance of such debt or equity security due to a change in
the market price of the Company’s Common Stock since date of initial issuance,
and (B) any amortizing convertible security which amortizes prior to its
maturity date, where the Company is required or has the option to (or any
investor in such transaction has the option to require the Company to) make such
amortization payments in shares of Common Stock which are valued at a price that
is based upon and/or varies with the trading prices of or quotations for Common
Stock at any time after the initial issuance of such debt or equity security
(whether or not such payments in stock are subject to certain equity
conditions). For purposes of determining the total consideration for a
convertible instrument (including a right to purchase equity of the Company)
issued, subject to an original issue or similar discount or which principal
amount is directly or indirectly increased after issuance, the consideration
will be deemed to be the actual cash amount received by the Company in
consideration of the original issuance of such convertible instrument. Until
twenty-four (24) months after the Initial Closing Date, the Company will not
issue any Common Stock or Common Stock Equivalents to officers, directors,
employees, consultants and service providers of the Company except in the
amounts and on the terms set forth on Schedule 4.12. 

31

              4.13        Equal
Treatment of Purchasers. No consideration (including any modification of any
Transaction Document) shall be offered or paid to any Person to amend or consent
to a waiver or modification of any provision of any of this Agreement unless the
same consideration is also offered on a ratable basis to all of the parties to
this Agreement. For clarification purposes, this provision constitutes a
separate right granted to each Purchaser by the Company and negotiated
separately by each Purchaser, and is intended for the Company to treat the
Purchasers as a class and shall not in any way be construed as the Purchasers
acting in concert or as a group with respect to the purchase, disposition or
voting of Securities or otherwise.

              4.14       
Capital Changes. Except as described on Schedule 4.14 hereto,
until the one year anniversary of the Initial Closing Date, the Company shall
not undertake a reverse or forward stock split or reclassification of the Common
Stock without 10 days prior written notice to the Purchasers, unless such
reverse split is made in conjunction with the listing of the Common Stock on a
national securities exchange. 

              4.15       
Certain Transactions and Confidentiality. Each Purchaser, severally and
not jointly with the other Purchasers, covenants that neither it, nor any
Affiliate acting on its behalf or pursuant to any understanding with it will
execute any purchases or sales, including Short Sales, of any of the Company’s
securities during the period commencing with the execution of this Agreement and
ending at such time that the transactions contemplated by this Agreement are
first publicly announced pursuant to the initial press release or Closing Form
8-K as described in Section 4.6. Each Purchaser, severally and not jointly with
the other Purchasers, covenants that until such time as the transactions
contemplated by this Agreement are publicly disclosed by the Company pursuant to
the initial press release or Closing Form 8-K as described in Section 4.6, such
Purchaser will maintain the confidentiality of the existence and terms of this
transaction and the information included in the Transaction Documents and the
Disclosure Schedules. Notwithstanding the foregoing, and notwithstanding
anything contained in this Agreement to the contrary, the Company expressly acknowledges and agrees
that (i) no Purchaser makes any representation, warranty or covenant hereby that
it will not engage in effecting transactions in any securities of the Company
after the time that the transactions contemplated by this Agreement are first
publicly announced pursuant to the initial press release or Closing Form 8-K as
described in Section 4.6, (ii) no Purchaser shall be restricted or prohibited
from effecting any transactions in any securities of the Company in accordance
with applicable securities laws from and after the time that the transactions
contemplated by this Agreement are first publicly announced pursuant to the
press release or Closing Form 8-K, and (iii) no Purchaser shall have any duty of
confidentiality to the Company or its Subsidiaries after the filing of the
Closing Form 8-K. Notwithstanding the foregoing, in the case of a Purchaser that
is a multi-managed investment vehicle whereby separate portfolio managers manage
separate portions of such Purchaser’s assets and the portfolio managers have no
direct knowledge of the investment decisions made by the portfolio managers
managing other portions of such Purchaser’s assets, the covenant set forth above
shall only apply with respect to the portion of assets managed by the portfolio
manager that made the investment decision to purchase the Securities covered by
this Agreement.

32

             
4.16        Participation in Future
Financing.

             
(a)          From the date hereof
until the date that is the 24 month anniversary of the Initial Closing Date,
upon any proposed issuance by the Company or any of its Subsidiaries of Common
Stock, Common Stock Equivalents for cash consideration, Indebtedness or a
combination thereof, other than (i) a rights offering to all holders of Common
Stock (which may include extending such rights offering to holders of Notes) or
(ii) an Exempt Issuance, (a “Subsequent Financing”), the Purchasers shall
have the right to participate in up to an amount of the Subsequent Financing
equal to 50% of the Subsequent Financing (the “Participation Maximum”)
pro rata to each other in proportion to their Subscription Amounts on the same
terms, conditions and price provided for in the Subsequent Financing, unless the
Subsequent Financing is an underwritten public offering, in which case the
Company shall offer each Purchaser the right to participate in such public
offering when it is lawful for the Company to do so, but no Purchaser shall be
entitled to purchase any particular amount of such public offering. 

              (b)         
At least five Trading Days prior to the closing of the Subsequent Financing, the
Company shall deliver to each Purchaser a written notice of its intention to
effect a Subsequent Financing (“Pre-Notice”), which Pre-Notice shall ask
such Purchaser if it wants to review the details of such financing (such
additional notice, a “Subsequent Financing Notice”). Upon the request of
a Purchaser, and only upon a request by such Purchaser, for a Subsequent
Financing Notice, the Company shall promptly, but no later than one (1) Trading
Day after such request, deliver a Subsequent Financing Notice to such Purchaser.
The requesting Purchaser shall be deemed to have acknowledged that the
Subsequent Financing Notice may contain material non-public information. The
Subsequent Financing Notice shall describe in reasonable detail the proposed
terms of such Subsequent Financing, the amount of proceeds intended to be raised
thereunder and the Person or Persons through or with whom such Subsequent
Financing is proposed to be effected and shall include a term sheet or similar
document relating thereto as an attachment.

              (c)         
Any Purchaser desiring to participate in such Subsequent Financing must provide
written notice to the Company by not later than 5:30 p.m. (New York City time)
on the fifth (5th) Trading Day after all of the Purchasers have
received the Pre-Notice that the Purchaser is willing to participate in the
Subsequent Financing, the amount of such Purchaser’s participation, and
representing and warranting that such Purchaser has such funds ready, willing,
and available for investment on the terms set forth in the Subsequent Financing
Notice. If the Company receives no such notice from a Purchaser as of
such fifth (5th) Trading Day, such Purchaser shall be deemed to have
notified the Company that it does not elect to participate.

33

              (d)         
If by 5:30 p.m. (New York City time) on the fifth (5th ) Trading Day
after all of the Purchasers have received the Pre-Notice, notifications by the
Purchasers of their willingness to participate in the Subsequent Financing (or
to cause their designees to participate) is, in the aggregate, less than the
total amount of the Subsequent Financing, then the Company may affect the
remaining portion of such Subsequent Financing on the terms and with the Persons
set forth in the Subsequent Financing Notice.

              (e)         
If by 5:30 p.m. (New York City time) on the fifth (5th) Trading Day
after all of the Purchasers have received the Pre-Notice, the Company receives
responses to a Subsequent Financing Notice from Purchasers seeking to purchase
more than the aggregate amount of the Participation Maximum, each such Purchaser
shall have the right to purchase its Pro Rata Portion (as defined below) of the
Participation Maximum. “Pro Rata Portion” means the ratio of (x) the
principal amount of Notes purchased hereunder by a Purchaser participating under
this Section 4.17 and (y) the sum of the aggregate principal amounts of Notes
purchased hereunder by all Purchasers participating under this Section 4.17.

              (f)         
The Company must provide the Purchasers with a second Subsequent Financing
Notice, and the Purchasers will again have the right of participation set forth
above in this Section 4.17, if the Subsequent Financing subject to the initial
Subsequent Financing Notice is not consummated for any reason on the terms set
forth in such Subsequent Financing Notice within thirty (30) Trading Days after
the date of the initial Subsequent Financing Notice. 

              (g)         
The Company and each Purchaser agree that if any Purchaser elects to participate
in the Subsequent Financing, the transaction documents related to the Subsequent
Financing shall not include any term or provision whereby such Purchaser shall
be required to agree to any restrictions on trading as to any of the Securities
purchased hereunder (for avoidance of doubt, the securities purchased in the
Subsequent Financing shall not be considered securities purchased hereunder) or
be required to consent to any amendment to or termination of, or grant any
waiver, release or the like under or in connection with, this Agreement, without
the prior written consent of such Purchaser. 

              (h)         
Notwithstanding anything to the contrary in this Section 4.17 and unless
otherwise agreed to by such Purchaser, the Company shall either confirm in
writing to such Purchaser that the transaction with respect to the Subsequent
Financing has been abandoned or shall publicly disclose its intention to issue
the securities in the Subsequent Financing, in either case in such a manner such
that such Purchaser will not be in possession of any material, non-public
information, by the tenth (10th) Business Day following delivery of the
Subsequent Financing Notice. If by such tenth (10th) Business Day, no public
disclosure regarding a transaction with respect to the Subsequent Financing has
been made, and no notice regarding the abandonment of such transaction has been
received by such Purchaser, such transaction shall be deemed to have been
abandoned and such Purchaser shall not be deemed to be in possession of any
material, non-public information with respect to the Company or any of its
Subsidiaries. 

              4.18        Reimbursement.
If any Purchaser becomes involved in any capacity in any Proceeding by or
against any Person who is a stockholder of the Company (except as a result of
sales, pledges, margin sales and similar transactions by such Purchaser to or
with any current stockholder), solely as a result of such Purchaser’s
acquisition of the Securities under this Agreement, the Company will reimburse
such Purchaser for its reasonable legal and other expenses (including the cost
of any investigation preparation and travel in connection therewith) incurred in
connection therewith, as such expenses are incurred. The reimbursement
obligations of the Company under this paragraph shall be in addition to any
liability which the Company may otherwise have, shall extend upon the same terms
and conditions to any Affiliates of the Purchasers who are actually named in
such action, proceeding or investigation, and partners, directors, agents,
employees and controlling persons (if any), as the case may be, of the
Purchasers and any such Affiliate, and shall be binding upon and inure to the
benefit of any successors, assigns, heirs and personal representatives of the
Company, the Purchasers and any such Affiliate and any such Person. The Company
also agrees that neither the Purchasers nor any such Affiliates, partners,
directors, agents, employees or controlling persons shall have any liability to
the Company or any Person asserting claims on behalf of or in right of the
Company solely as a result of acquiring the Securities under this Agreement. 

34

              4.19       
Maintenance of Property. The Company shall keep all of its property,
which is necessary or useful to the conduct of its business, in good working
order and condition, ordinary wear and tear excepted. 

              4.20       
Preservation of Corporate Existence. The Company shall preserve and
maintain its corporate existence, rights, privileges and franchises in the
jurisdiction of its incorporation, and qualify and remain qualified, as a
foreign corporation in each jurisdiction in which such qualification is
necessary in view of its business or operations and where the failure to qualify
or remain qualified might reasonably have a Material Adverse Effect upon the
financial condition, business or operations of the Company taken as a whole.

             
4.21        Most Favored Nation
Provision. From the date hereof until the earlier of (i) such time as no
Purchaser holds any Securities and (ii) three (3) years after the Final Closing
Date in the event that the Company issues or sells any Common Stock, if a
Purchaser then holding outstanding Securities reasonably believes that any of
the terms and conditions appurtenant to such issuance or sale are more favorable
to such investors than are the terms and conditions granted to the Purchasers
hereunder, upon notice to the Company by such Purchaser within five Trading Days
after disclosure of such issuance or sale, the Company shall amend the terms of
this transaction as to such Purchaser only so as to give such Purchaser the
benefit of such more favorable terms or conditions. This Section 4.21 shall not
apply with respect to an Exempt Issuance. The Company shall provide each
Purchaser with notice of any such issuance or sale in the manner for disclosure
of Subsequent Financings set forth in Section 4.17. 

             
4.22        DTC Program. At all times
that Notes or Warrants are outstanding, the Company will employ as the transfer
agent for the Common Stock and Warrant Shares a participant in the Depository
Trust Company Automated Securities Transfer Program and cause the Common Stock
to be transferable pursuant to such program. 

             
4.23        Purchaser’s Exercise
Limitations. Except as otherwise set forth in the Exchange Agreement, the
Company shall not effect any exercise of the rights granted in Section 4.21 of
this Agreement, and a Purchaser shall not have the right to exercise any portion
of such rights granted in Section 4.21 to the extent that after giving effect to
such exercise, the Purchaser (together with the Purchaser’s Affiliates, and any
other Persons acting as a group together with the Purchaser or any of the
Purchaser’s Affiliates), would beneficially own in excess of the Beneficial
Ownership Limitation (as defined in the Note), applied in the manner set forth
in the Note. 

             
4.24        Exchange Agreement. The
Company and the Purchasers identified on Schedule 4.24 will enter into
the Exchange Agreement pursuant to which they will exchange outstanding
promissory notes, Common Stock purchase warrants and other outstanding
obligations of the Company for Common Stock as set forth on Schedule 4.24
and in the Exchange Agreement. 

35

ARTICLE V. 
MISCELLANEOUS

              5.1         
Termination. This Agreement may be terminated by any Purchaser, as to
such Purchaser’s obligations hereunder only and without any effect whatsoever on
the obligations between the Company and the other Purchasers, by written notice
to the other parties, if the Initial Closing has not been consummated on or
before January 31, 2014; provided, however, that such termination
will not affect the right of any party to sue for any breach by any other party
(or parties). 

              5.2         
Fees and Expenses. At the Initial Closing, the Company has agreed to pay
G&M for the legal fees in connection with the Initial Closing of some, but
not all, of the Purchasers in the amount of $25,000.00. Except as expressly set
forth in the Transaction Documents and on Schedule 3.1(s), each party
shall pay the fees and expenses of its advisers, counsel, accountants and other
experts, if any, and all other expenses incurred by such party incident to the
negotiation, preparation, execution, delivery and performance of this Agreement.
The Company shall pay all Transfer Agent fees (including, without limitation,
any fees required for same-day processing of any instruction letter delivered by
the Company and any conversion or exercise notice delivered by a Purchaser),
stamp taxes and other taxes and duties levied in connection with the delivery of
any Securities to the Purchasers. 

              5.3         
Entire Agreement. The Transaction Documents, together with the exhibits
and schedules thereto, contain the entire understanding of the parties with
respect to the subject matter hereof and thereof and supersede all prior
agreements and understandings, oral or written, with respect to such matters,
which the parties acknowledge have been merged into such documents, exhibits and
schedules. 

              5.4         
Notices. All notices, demands, requests, consents, approvals, and other
communications required or permitted hereunder shall be in writing and, unless
otherwise specified herein, shall be (i) personally served, (ii) deposited in
the mail, registered or certified, return receipt requested, postage prepaid,
(iii) delivered by reputable air courier service with charges prepaid, or (iv)
transmitted by hand delivery, telegram, or facsimile, addressed as set forth
below or to such other address as such party shall have specified most recently
by written notice. Any notice or other communication required or permitted to be
given hereunder shall be deemed effective (a) upon hand delivery or delivery by
facsimile, with accurate confirmation generated by the transmitting facsimile
machine, at the address or number designated below (if delivered on a business
day during normal business hours where such notice is to be received), or the
first business day following such delivery (if delivered other than on a
business day during normal business hours where such notice is to be received)
or (b) on the second business day following the date of mailing by express
courier service, fully prepaid, addressed to such address, or upon actual
receipt of such mailing, whichever shall first occur. The addresses for such
communications shall be: (i) if to the Company, to: Ironwood Gold Corp., Box
730-411-Brink Street, Ashcroft BC, V0K 1A0, Attn: Andrew McKinnon, Chief
Executive Officer, facsimile: (250) 453–0088, with a copy by fax only to (which
shall not constitute notice): Jolie Kahn, Esq., 2 Liberty Place, 50 South
16th Street, Suite 3401, Philadelphia, PA 19102, facsimile: (866)
705-3071, and (ii) if to the Purchasers, to: the addresses and fax numbers
indicated on the signature pages hereto, with an additional copy by fax only to
(which shall not constitute notice): Grushko & Mittman, P.C., 515 Rockaway
Avenue, Valley Stream, New York 11581, facsimile: (212) 697-3575. 

              5.5         
Amendments; Waivers. No provision of this Agreement may be waived,
modified, supplemented or amended except in a written instrument signed, in the
case of an amendment, by the Company and the Purchasers holding at least a
majority in interest of the component of the affected Securities then
outstanding or, in the case of a waiver, by the party against whom enforcement
of any such waived provision is sought. No waiver of any default with
respect to any provision, condition or requirement of this Agreement shall be
deemed to be a continuing waiver in the future or a waiver of any subsequent
default or a waiver of any other provision, condition or requirement hereof, nor
shall any delay or omission of any party to exercise any right hereunder in any
manner impair the exercise of any such right. 

36

              5.6         
Headings. The headings herein are for convenience only, do not constitute
a part of this Agreement and shall not be deemed to limit or affect any of the
provisions hereof. 

              5.7         
Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the parties and their successors and permitted assigns. The
Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of each Purchaser (other than by merger).
Following the Closing, any Purchaser may assign any or all of its rights under
this Agreement to any Person to whom such Purchaser assigns or transfers any
Securities, provided that such transferee agrees in writing to be bound, with
respect to the transferred Securities, by the provisions of the Transaction
Documents that apply to the “Purchasers.” 

              5.8         
No Third-Party Beneficiaries. This Agreement is intended for the benefit
of the parties hereto and their respective successors and permitted assigns and
is not for the benefit of, nor may any provision hereof be enforced by, any
other Person, except as otherwise set forth in Section 4.10. 

              5.9         
Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of the Transaction Documents shall be governed by
and construed and enforced in accordance with the internal laws of the State of
New York, without regard to the principles of conflicts of law thereof. Each
party agrees that all legal proceedings concerning the interpretations,
enforcement and defense of the transactions contemplated by this Agreement and
any other Transaction Documents (whether brought against a party hereto or its
respective affiliates, directors, officers, shareholders, partners, members,
employees or agents) shall be commenced exclusively in the state and federal
courts sitting in the City 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 (including with respect to the enforcement of any of the
Transaction Documents), and hereby irrevocably waives, and agrees not to assert
in any action, suit or proceeding, any claim that it is not personally subject
to the jurisdiction of any such court, that such suit, action or proceeding is
improper or is an inconvenient venue for such proceeding. 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 via
registered or certified mail or overnight delivery (with evidence of delivery)
to such party at the address in effect for 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 other manner permitted by law. If
either party shall commence an action or proceeding to enforce any provisions of
the Transaction Documents, then, in addition to the obligations of the Company
under Section 4.10, the prevailing party in such action, suit or proceeding
shall be reimbursed by the other party for its reasonable attorneys’ fees and
other costs and expenses incurred with the investigation, preparation and
prosecution of such action or proceeding. 

              5.10       
Survival. The representations and warranties contained herein shall
survive the Closing and the delivery of the Securities. 

              5.11       
Execution. This Agreement may be executed in two or more counterparts,
all of which when taken together shall be considered one and the same agreement
and shall become effective when counterparts have been signed by each party and
delivered to each other party, it being understood that the parties need not sign the same counterpart. In the event that
any signature is delivered by facsimile transmission or by e-mail delivery of a
“.pdf” format data file, such signature shall create a valid and binding
obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile or “.pdf”
signature page were an original thereof. 

37

              5.12       
Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated, and the parties hereto shall use
their commercially reasonable efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable. 

              5.13       
Rescission and Withdrawal Right. Notwithstanding anything to the contrary
contained in (and without limiting any similar provisions of) any of the other
Transaction Documents, whenever any Purchaser 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
Purchaser may, at any time prior to the Company’s performance of such
obligations, 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; provided,
however, that in the case of a rescission of a conversion of a Note or
exercise of a Warrant, the applicable Purchaser shall be required to return any
shares of Common Stock subject to any such rescinded conversion or exercise
notice concurrently with the return to such Purchaser of the aggregate exercise
price paid to the Company for such shares and the restoration of such
Purchaser’s right to acquire such shares pursuant to such Purchaser’s Warrant
(including, issuance of a replacement warrant certificate evidencing such
restored right). 

              5.14       
Replacement of Securities. If any certificate or instrument evidencing
any Securities is mutilated, lost, stolen or destroyed, the Company shall issue
or cause to be issued in exchange and substitution for and upon cancellation
thereof (in the case of mutilation), or in lieu of and substitution therefor, a
new certificate or instrument, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction. The applicant
for a new certificate or instrument under such circumstances shall also pay any
reasonable third-party costs (including customary indemnity) associated with the
issuance of such replacement Securities. 

              5.15       
Remedies. In addition to being entitled to exercise all rights provided
herein or granted by law, including recovery of damages, each of the Purchasers
and the Company will be entitled to specific performance under the Transaction
Documents. The parties agree that monetary damages may not be adequate
compensation for any loss incurred by reason of any breach of obligations
contained in the Transaction Documents and hereby agree to waive and not to
assert in any action for specific performance of any such obligation the defense
that a remedy at law would be adequate.

              5.16       
Payment Set Aside. To the extent that the Company makes a payment or
payments to any Purchaser pursuant to any Transaction Document or a Purchaser
enforces or exercises its rights 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, 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. 

38

              5.17       
Usury. To the extent it may lawfully do so, the Company hereby agrees not
to insist upon or plead or in any manner whatsoever claim, and will resist any
and all efforts to be compelled to take the benefit or advantage of, usury laws
wherever enacted, now or at any time hereafter in force, in connection with any
claim, action or proceeding that may be brought by any Purchaser in order to
enforce any right or remedy under any Transaction Document. Notwithstanding any
provision to the contrary contained in any Transaction Document, it is expressly
agreed and provided that the total liability of the Company under the
Transaction Documents for payments in the nature of interest shall not exceed
the maximum lawful rate authorized under applicable law (the “Maximum
Rate”), and, without limiting the foregoing, in no event shall any rate of
interest or default interest, or both of them, when aggregated with any other
sums in the nature of interest that the Company may be obligated to pay under
the Transaction Documents exceed such Maximum Rate. It is agreed that if the
maximum contract rate of interest allowed by law and applicable to the
Transaction Documents is increased or decreased by statute or any official
governmental action subsequent to the date hereof, the new maximum contract rate
of interest allowed by law will be the Maximum Rate applicable to the
Transaction Documents from the Closing Date thereof forward, unless such
application is precluded by applicable law. If under any circumstances
whatsoever, interest in excess of the Maximum Rate is paid by the Company to any
Purchaser with respect to indebtedness evidenced by the Transaction Documents,
such excess shall be applied by such Purchaser to the unpaid principal balance
of any such indebtedness or be refunded to the Company, the manner of handling
such excess to be at such Purchaser’s election. 

              5.18       
Independent Nature of Purchasers’ Obligations and Rights. The obligations
of each Purchaser under any Transaction Document are several and not joint with
the obligations of any other Purchaser, and no Purchaser shall be responsible in
any way for the performance or non-performance of the obligations of any other
Purchaser under any Transaction Document. Nothing contained herein or in any
other Transaction Document, and no action taken by any Purchaser pursuant hereto
or thereto, shall be deemed to constitute the Purchasers as a partnership, an
association, a joint venture or any other kind of entity, or create a
presumption that the Purchasers are in any way acting in concert or as a group
with respect to such obligations or the transactions contemplated by the
Transaction Documents. Each Purchaser shall be entitled to independently protect
and enforce its rights, including, without limitation, the rights arising out of
this Agreement or out of the other Transaction Documents, and it shall not be
necessary for any other Purchaser to be joined as an additional party in any
proceeding for such purpose. Each Purchaser has been represented by its own
separate legal counsel in its review and negotiation of the Transaction
Documents. For reasons of administrative convenience only, each Purchaser and
its respective counsel have chosen to communicate with the Company through
G&M. The Company has elected to provide all Purchasers with the same terms
and Transaction Documents for the convenience of the Company and not because it
was required or requested to do so by any of the Purchasers. It is expressly
understood and agreed that each provision contained in this Agreement and in
each other Transaction Document is between the Company and a Purchaser, solely,
and not between the Company and the Purchasers collectively and not between and
among the Purchasers. 

              5.19       
Liquidated Damages. The Company’s obligations to pay any partial
liquidated damages or other amounts owing under the Transaction Documents is a
continuing obligation of the Company and shall not terminate until all unpaid
partial liquidated damages and other amounts have been paid notwithstanding the
fact that the instrument or security pursuant to which such partial liquidated
damages or other amounts are due and payable shall have been canceled. 

39

              5.20       
Saturdays, Sundays, Holidays, etc. If the last or appointed day for the
taking of any action or the expiration of any right required or granted herein
shall not be a Business Day, then such action may be taken or such right may be
exercised on the next succeeding Business Day. 

              5.21       
Construction. The parties agree that each of them and/or their respective
counsel have reviewed and had an opportunity to revise the Transaction Documents
and, therefore, the normal rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall not be employed
in the interpretation of the Transaction Documents or any amendments thereto. In
addition, each and every reference to share prices and shares of Common Stock in
any Transaction Document shall be subject to adjustment for reverse and forward
stock splits, stock dividends, stock combinations and other similar transactions
of the Common Stock that occur after the date of this Agreement.

              5.22       
WAIVER OF JURY TRIAL. IN ANY ACTION, SUIT, OR PROCEEDING IN ANY
JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH
KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW,
HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES FOREVER
TRIAL BY JURY.

(Signature Pages Follow)

 

40

              IN
WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above. 

	IRONWOOD GOLD CORP. 	Address for Notice: 
	  	  
	  	Box 730-411-Brink Street 
	  	Ashcroft BC, V0K 1A0 
	  	Fax: Fax: (250) 453–0088
  

	By: /s/ Andrew McKinnon                                  
     
	     Name: Andrew McKinnon 
	     Title: Chief Executive Officer
  

With a copy to (which shall not constitute notice):

Jolie Kahn, Esq. 
2 Liberty Place 
50 South
16th Street, Suite 3401 
Philadelphia, PA 19102 
Fax: (866)
705-3071 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK 
SIGNATURE PAGE
FOR PURCHASER FOLLOWS] 

 

 

 

41

[PURCHASER SIGNATURE PAGE TO IRONWOOD GOLD
CORP. 
SUBSCRIPTION AGREEMENT] 

        
     IN WITNESS WHEREOF, the undersigned have caused this
Securities Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above. 

Name of Purchaser:  Alpha Capital Anstalt                                                                                    

Signature of Authorized Signatory of Purchaser:  
/s/ Konrad Ackermann                                                                             

Name of Authorized Signatory: Konrad Ackermann                                                                             

Title of Authorized Signatory:  Director                                                                                                             

Email Address of Authorized Signatory:
_____________________________________________

Facsimile Number of Authorized Signatory:  212 580 8244                                                                              

Address for Notice to Purchaser: 

 

Address for Delivery of Securities to Purchaser (if not same as
address for notice):

 

Aggregate Initial Closing Subscription Amount:
US$1,000,000                                       

Initial Closing Cash:
US$525,000                                      

Initial Closing Credit loans and advances set forth on
Schedule 2.2(b)(ii):
US$475,000                                          

Initial Closing Note principal amount:  $1,000,0000                                        

Initial Closing Warrants:  ________________________

 

EIN Number, if applicable, will be provided under separate
cover: ________________________

 

Date: 03/21/2014                                       

[SIGNATURE PAGES CONTINUE]

42

EXHIBITS 
AND 
SCHEDULES

	Exhibit A 	Note 
	Exhibit B 	Warrant 
	Exhibit C 	Escrow Agreement
    
	Exhibit D 	Investor Questionnaire 
	Exhibit E 	Lockup Agreement
    
	Exhibit F 	Form 8K 
	Exhibit G 	Mortgage
      Documents 
	Exhibit H 	Legal Opinion 
	Exhibit I 	Exchange
      Agreement 

	Schedule 2.2(a)(ii) 	Persons signing
      Lockup 
	Schedule 2.2(b)(ii) 	Funds advanced prior to Closing
    
	Schedule 3.1(a) 	Subsidiaries
  
	Schedule 3.1(g) 	Capitalization 
	Schedule 3.1(i) 	Non-disclosed
      Events 
	Schedule 3.1(n) 	Exception to title to assets
  
	Schedule 3.1(o) 	Marks 
	Schedule 3.1(s) 	Fees 
	Schedule 3.1(v) 	Unfiled reports
    
	Schedule 3.1(z) 	Indebtedness 
	Schedule 3.1(cc) 	Accountants

	Schedule 3.1(ll) 	Indebtedness and Liens 
	Schedule 4.9 	Use of Proceeds
    
	Schedule 4.12 	Exception to Issuance
      Prohibitions 
	Schedule 4.13 	Exempt Issuance
    
	Schedule 4.14 	Exception to Capital Change

	Schedule 4.24 	Purchasers
      Executing Exchange Agreement 

43 

Schedules to the Subscription Agreement

Schedule 2.2(a)(ii) 
Persons signing Lockup 

Andrew McKinnon 

Schedule 2.2(b)(ii) 
Funds advanced prior to Closing 

$510,000 

Schedule 3.1(a) 
Subsidiaries 

The Wilderness Way Adventure Resort, Inc., a British Columbia
corporation 

Schedule 3.1(g)
Capitalization 

CAPITALIZATION TABLE – PRE MONEY – FULLY DILUTED –
SHARES, OPTIONS AND WARRANTS 

Pre reverse split 400:1 

	
SHAREHOLDERS 

	# of shares 
pre PIPE
      

	Total 

	% of 
company 
pre
      PIPE 
	Post PIPE 
excluding
      
warrants 
and options 	Post PIPE 
excluding
      
warrants and 
options 
	Pubco (as of 3/13/14) 	38,389,201 	  	
2.2% combined

	  	  
	
      American Assay Lab (to be issued prior to closing) 
	2,231,800 	  	  	  
	Robert Reukl (to be issued prior to closing)
    	6,000,000 	  	  	  
	Edison Investment Research (to be issued
      prior to closing) 	5,568,000 	  	  	  
	Peter E. Walcott & Assc 	26,758,592 	  	  	  
	DR Financial (to be issued post closing) 	12,000,000 	  	  	  
	TWW (150,000,000 shares at closing) 	3,600,000,000 	  	90% 	  	           
                     58% 
	Alpha 	310,042,800 	  	7.75% 	  	  
	Sub Total 	4,000,990,393 	4,000,990,393 	100% 	4,000,990,393 	  
	  	  	  	  	  	  
	Convertible PIPE up to $1,000,000 @$0.18
      (post reverse price) 	2,222,222,400 	  	  	2,222,222,400 	35.7% 
	Warrants for PIPE @$.22 (post reverse price)
    	2,222,222,400 	  	  	  	  
	Options for Management 	400,000,000 	  	  	  	  
	Sub Total 	4,844,444,800 	4,844,444,800 	  	  	  
	Total 	  	8,845,435,193 	  	6,223,212,793 	           
                   100%

Schedule 3.1(i) 
Non-disclosed Events 

None. 

Schedule 3.1(n)
Exception to title to assets 

See Schedule 3.1(z) 

Schedule 3.1(o)
Marks 

None 

Schedule 3.1(s) 
Fees 

$25,000 to counsel for the Purchasers 

Schedule 3.1(v) 
Unfiled reports 

None. 

Schedule 3.1(z) 
Indebtedness 

	ACCOUNTS 
PAYABLE 	 	
	 	NOTES 
PAYABLE 	 	
	 	 	
	 	 	
	 	 	
	 	 	
	 	 	
	 
	August 31, 2012 	 	TOTAL 	 	 	 		 	 		 	 		 	 	Balance 	 	 	Balance 	 	 	Balance 	 
	American Assay
      Laboratories 	 	11,159 	 	Note Holder 	 	Origination 
Date 	 	 	Maturity 
Date 	 	 	Interest 
Rate 	 	 	August 31, 
2011 	 	 	August 31, 
2012 	 	 	August 31, 
2013 	 
	Brian R. Bond,
      Geologist 	 	16,976 	 	Alpha Capital
      Anstalt - Principal 	 	08/16 /11 	 	 	11/1 6/12 	 	 	10. 00 % 	 	 	550,000 	 	 	650,000 	 	 	700,000 	 
	Carlin Trend Mining
      Supplies and Service 	 	360 	 	Alpha Capital
      Anstalt - Interest 	 		 	 		 	 		 	 	2,260 	 	 	- 	 	 	143,036 	 
	  	 	  	 	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	DR Financial
      Services 	 	40,000 	 	 	 		 	 		 	 		 	 		 	 		 	 		 
	Edison Investment
      Research Ltd. 	 	27,840 	 	Asher Enterprises -
      Principal 	 	09/10 /12 	 	 	06/1 2/13 	 	 	8.0 0% 	 	 	- 	 	 	- 	 	 	39,800 	 
	Greenberg Traurig 	 	50,901 	 	Asher Enterprises -
      Interest 	 		 	 		 	 		 	 	- 	 	 	- 	 	 	5,775 	 

	Holladay Stock Transfer Inc.
    	 	595 	 	 	 		 	 		 	 		 	 		 	 		 	 		 
	  	 	  	 		 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	Kingsmere Mining Ltd 	 	20,000 	 	Asher Enterprises
      - Principal 	 	11/19 /12 	 	 	08/2 1/13 	 	 	8.00% 	 	 	- 	 	 	- 	 	 	29,000 	 
	Madsen & Associates, CPA's Inc 	 	2,075 	 	Asher Enterprises - Interest 	 		 	 		 	 		 	 	- 	 	 	- 	 	 	1,297 	 
	  	 	  	 	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	Marketwire 	 	435 	 	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	  	 	  	 	Asher 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	Peter E. Walcott & Associates Limited 	 	92,271 	 	Enterprises - Principal 	 	03/07 /13 	 	 	12/1 1/13 	 	 	8.00% 	 	 	- 	 	 	- 	 	 	32,500 	 
	Quesnel Bros. Diamond
      Drilling Ltd. 	 	46,729 	 	Asher Enterprises
      - Interest 	 		 	 		 	 		 	 	- 	 	 	- 	 	 	1,874 	 
	  	 	  	 	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	Randi Sinclair 	 	164 	 	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	Red Oak Communications, Inc 	 	15,861 	 	Asher Enterprises - Principal 	 	07/16 /13 	 	 	04/1 8/14 	 	 	8.00% 	 	 	- 	 	 	- 	 	 	7,000 	 
	RJ Reukl Geological Services
    	 	22,000 	 	Asher Enterprises - Interest 	 		 	 		 	 		 	 	- 	 	 	- 	 	 	71 	 
	  	 	  	 	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	Snowden Mining Industry
      Consultants 	 	16,337 	 	 	 		 	 		 	 		 	 	552,260 	 	 	650,000 	 	 	960,353 	 
	  	 	  	 	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	Vintage Filings 	 	7,008 	 	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	Weintraub
      Genshlea Chediak 	 	9,585 	 	 	 		 	 		 	 		 	 		 	 		 	 		 
	  	 	  	 	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	Total 	 	465,695 	 	 	 		 	 		 	 		 	 		 	 		 	 		 
	  	 	  	 	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	  	 	  	 	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	August 31, 2013 	 	TOTAL 	 	 	 		 	 		 	 		 	 		 	 		 	 		 
	  	 	  	 	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	American Assay Laboratories
    	 	11,159 	 	 	 		 	 		 	 		 	 		 	 		 	 		 
	  	 	  	 	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	Brian R. Bond, Geologist 	 	16,976 	 	 	 		 	 		 	 		 	 		 	 		 	 		 
	Carlin Trend Mining Supplies and
      Service 	 	360 	 	 	 		 	 		 	 		 	 		 	 		 	 		 
	  	 	  	 	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	DR Financial Services 	 	100,000 	 	 	 		 	 		 	 		 	 		 	 		 	 		 
	  	 	  	 	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	Edison Investment Research Ltd. 	 	27,8 0 	 	 	 		 	 		 	 		 	 		 	 		 	 		 
	Greenberg Traurig 	 	  	 	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 

		 	84,782 	 	 		 	 		 	 		 	 		 	 		 	 		 	 		 	 		 	 		 
	Holladay Stock Transfer Inc.
	 	2,835 	 	 		 	 		 	 		 	 		 	 		 	 		 	 		 	 		 	 		 
	  	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Kingsmere Mining Ltd 	 	20,000 	 	 		 	 		 	 		 	 		 	 		 	 		 	 		 	 		 	 		 
	  	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Marketwire 	 	36 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	  	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Newsfile Corp. 	 	3,407 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	  	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Peter E. Walcott & Associates
      Limited 	 	137,945 	 	 		 	 		 	 		 	 		 	 		 	 		 	 		 	 		 	 		 
	Quesnel Bros.
      Diamond Drilling Ltd. 	 	46,729 	 	 		 	 		 	 		 	 		 	 		 	 		 	 		 	 		 	 		 
	  	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Randi Sinclair 	 	164 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Red Oak Communications,
      Inc 	 	664 	 	 		 	 		 	 		 	 		 	 		 	 		 	 		 	 		 	 		 
	  	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	RJ Reukl Geological Services
	 	22,000 	 	 		 	 		 	 		 	 		 	 		 	 		 	 		 	 		 	 		 
	  	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Sadler Gibb & Associates
      LLC 	 	12,000 	 	 		 	 		 	 		 	 		 	 		 	 		 	 		 	 		 	 		 
	  	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Snowden Mining Industry
      Consultants 	 	97,472 	 	 		 	 		 	 		 	 		 	 		 	 		 	 		 	 		 	 		 
	  	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Vintage Filings 	 	6,781 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Weintraub Genshlea Chediak 	 	9,585 	 	 		 	 		 	 		 	 		 	 		 	 		 	 		 	 		 	 		 
	  	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total 	 	767,258 	 	 		 	 		 	 		 	 		 	 		 	 		 	 		 	 		 	 		 
	  	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	November 30, 2013 	 	TOTAL 	 	 		 	 		 	 		 	 		 	 		 	 		 	 		 	 		 	 		 
	American Assay Laboratories 	 	216,246 	 	 		 	 		 	 		 	 		 	 		 	 		 	 		 	 		 	 		 
	Brian R. Bond,
      Geologist 	 		 	 		 	 		 	 		 	 		 	 		 	 		 	 		 	 		 	 		 
	Carlin Trend Mining Supplies
      and Service 	 	360 	 	 		 	 		 	 		 	 		 	 		 	 		 	 		 	 		 	 		 
	  	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	DR Financial Services 	 	115,000 	 	 		 	 		 	 		 	 		 	 		 	 		 	 		 	 		 	 		 

	Edison Investment
      Research Ltd. 	 		 	 		 	 		 	 		 	 		 	 		 	 		 	 		 	 		 	 		 
	  	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Greenberg Traurig 	 	84,680 	 	 		 	 		 	 		 	 		 	 		 	 		 	 		 	 		 	 		 
	Holladay Stock Transfer Inc.
	 		 	 		 	 		 	 		 	 		 	 		 	 		 	 		 	 		 	 		 
	  	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Kingsmere Mining Ltd 	 	20,000 	 	 		 	 		 	 		 	 		 	 		 	 		 	 		 	 		 	 		 
	  	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Marketwire 	 	36 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Newsfile Corp. 	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Peter E. Walcott & Associates
      Limited 	 		 	 		 	 		 	 		 	 		 	 		 	 		 	 		 	 		 	 		 
	Quesnel Bros.
      Diamond Drilling Ltd. 	 	46,729 	 	 		 	 		 	 		 	 		 	 		 	 		 	 		 	 		 	 		 
	  	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Randi Sinclair 	 	164 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Red Oak Communications,
      Inc 	 	664 	 	 		 	 		 	 		 	 		 	 		 	 		 	 		 	 		 	 		 
	RJ Reukl Geological
      Services Sadler Gibb & Associates LLC 	 		 	 		 	 		 	 		 	 		 	 		 	 		 	 		 	 		 	 		 
	  	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Snowden Mining
      Industry Consultants 	 	97,472 	 	 		 	 		 	 		 	 		 	 		 	 		 	 		 	 		 	 		 
	  	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Vintage Filings 	 	6,781 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Weintraub Genshlea Chediak 	 	9,585 	 	 		 	 		 	 		 	 		 	 		 	 		 	 		 	 		 	 		 
	  	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total 	 	597,717 	 	 		 	 		 	 		 	 		 	 		 	 		 	 		 	 		 	 		 

Two mortgages on Wilderness Way property. 

Schedule 3.1(cc) 
Accountants 

Sadler Gibb & Associates 

Schedule 3.1(ll)
Indebtedness and Liens 

See Schedule 3.1(z) 

Schedule 4.9. 
Use of Proceeds

Working Capital 

Schedule 4.12 
Exception to Issuance Prohibitions 

Options to be issued to officers and directors of IROG – 1
million options (post-split) – 750,000 to Andrew McKinnon per his employment
agreement and 250,00 to other management. A plan for an additional 1 million
options (post-split) pursuant to a plan to be approved by the Company’s
shareholders at the same time as the 1:400 reverse stock split. All shares
issued under this Schedule 4.12 must be priced at or above $0.18 per share. 

Schedule 4.13 
Exempt Issuance 

None, except as set forth in Schedule 4.12. 

Schedule 4.14 
Exception to Capital Change 

None except for 1:400 reverse stock split. 

Schedule 4.24 
Purchasers Executing Exchange Agreement

Alpha Capital AnstaltIronwood Gold Corp. - Exhibit 10.22 - Filed by newsfilecorp.com

NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS
SECURITY IS CONVERTIBLE HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO
AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO
THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY
ACCEPTABLE TO BORROWER. THIS SECURITY AND THE SECURITIES ISSUABLE UPON
CONVERSION OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL
INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE
SECURITIES ACT OR OTHER LOAN SECURED BY SUCH SECURITIES. 

Original Issue Date: March 21, 2014 
Original
Conversion Price (subject to adjustment herein): $0.18 

$1,000,000 

SECURED CONVERTIBLE NOTE 
DUE March 21, 2016

             THIS
CONVERTIBLE NOTE is one of a series of duly authorized and validly issued Notes
of Ironwood Gold Corp., a Nevada corporation, (the “Borrower”), having
its principal place of business at Box 730 411 Brink Street, Ashcroft, BC V0K
1A0, due March 21, 2016 (this note, the “Note” and, collectively
with the other notes of such series, the “Notes”). 

             FOR
VALUE RECEIVED, Borrower promises to pay to Alpha Capital Anstalt or its
registered assigns (the “Holder”), or shall have paid pursuant to the
terms hereunder, the principal sum of $1,000,000 on March 21, 2016
(the “Maturity Date”) or such earlier date as this Note is required or
permitted to be repaid as provided hereunder, and to pay interest to the Holder
on the aggregate unconverted and then outstanding principal amount of this Note
in accordance with the provisions hereof. 

             
The Holder of this Note has been granted a security interest in assets of the
Borrower. 

            
This Note is subject to the following additional provisions: 

             Section
1.         Definitions. For
the purposes hereof, in addition to the terms defined elsewhere in this Note,
(a) capitalized terms not otherwise defined herein shall have the meanings set
forth in the Purchase Agreement and (b) the following terms shall have the
following meanings: 

            
“Alternate Consideration” shall have the meaning set forth in Section
5(e). 

             “Bankruptcy
Event” means any of the following events: (a) Borrower or any Subsidiary
thereof commences a case or other proceeding under any bankruptcy,
reorganization, arrangement, adjustment of debt, relief of debtors, dissolution,
insolvency or liquidation or similar law of any jurisdiction relating to
Borrower or any Subsidiary thereof, (b) there is commenced against Borrower or
any Subsidiary thereof any such case or proceeding that is not dismissed within 60 days after
commencement, (c) Borrower or any Subsidiary thereof is adjudicated insolvent or
bankrupt or any order of relief or other order approving any such case or
proceeding is entered, (d) Borrower or any Subsidiary thereof suffers any
appointment of any custodian or the like for it or any substantial part of its
property that is not discharged or stayed within 60 calendar days after such
appointment, (e) Borrower or any Subsidiary thereof makes a general assignment
for the benefit of creditors, (f) Borrower or any Subsidiary thereof calls a
meeting of its creditors with a view to arranging a composition, adjustment or
restructuring of its debts or (g) Borrower or any Subsidiary thereof, by any act
or failure to act, expressly indicates its consent to, approval of or
acquiescence in any of the foregoing or takes any corporate or other action for
the purpose of effecting any of the foregoing. 

1

            
“Base Conversion Price” shall have the meaning set forth in Section 5(b).

            
“Beneficial Ownership Limitation” shall have the meaning set forth in
Section 4(d). 

             “Business
Day” means any day except any Saturday, any Sunday, any day which is a
federal legal holiday in the United States or any day on which banking
institutions in the State of New York are authorized or required by law or other
governmental action to close. 

            
“Buy-In” shall have the meaning set forth in Section 4(c)(v). 

             “Change
of Control Transaction” means, other than by means of conversion or exercise
of the Notes and the Securities issued together with the Notes, the occurrence
after the date hereof of any of (a) an acquisition after the date hereof by an
individual or legal entity or “group” (as described in Rule 13d-5(b)(1)
promulgated under the Exchange Act) of effective control (whether through legal
or beneficial ownership of capital stock of Borrower, by contract or otherwise)
of in excess of 50% of the voting securities of Borrower, (b) Borrower merges
into or consolidates with any other Person, or any Person merges into or
consolidates with Borrower and, after giving effect to such transaction, the
stockholders of Borrower immediately prior to such transaction own less than 50%
of the aggregate voting power of Borrower or the successor entity of such
transaction, (c) Borrower sells or transfers all or substantially all of its
assets to another Person and the stockholders of Borrower immediately prior to
such transaction own less than 50% of the aggregate voting power of the
acquiring entity immediately after the transaction, (d) a replacement at one
time or within a three year period of more than one-half of the members of the
Board of Directors which is not approved by a majority of those individuals who
are members of the Board of Directors on the Original Issue Date (or by those
individuals who are serving as members of the Board of Directors on any date
whose nomination to the Board of Directors was approved by a majority of the
members of the Board of Directors who are members on the date hereof), or (e)
the execution by Borrower of an agreement to which Borrower is a party or by
which it is bound, providing for any of the events set forth in clauses (a)
through (d) above. 

            
“Conversion” shall have the meaning ascribed to such term in Section 4.

            
“Conversion Date” shall have the meaning set forth in Section 4(a). 

            
“Conversion Price” shall have the meaning set forth in Section 4(b). 

             “Conversion
Shares” means, collectively, the shares of Common Stock issuable upon
conversion of this Note in accordance with the terms hereof. 

            
“Dilutive Issuance” shall have the meaning set forth in Section 5(b).

2

            
“Dilutive Issuance Notice” shall have the meaning set forth in Section
5(b). 

             “Equity
Conditions” means, during the period in question, (a) Borrower shall have
duly honored all conversions scheduled to occur or occurring by virtue of one or
more Notices of Conversion of the applicable Holder on or prior to the dates so
requested or required, if any, (b) Borrower shall have paid all liquidated
damages and other amounts owing to the applicable Holder in respect of this Note
and the other Transaction Documents, (c)(i) there is an effective registration
statement pursuant to which the Holders are permitted to utilize the prospectus
thereunder to resell all of the Underlying Shares (and Borrower believes, in
good faith, that such effectiveness will continue uninterrupted for the
foreseeable future), or (ii) all of the Underlying Shares (and shares issuable
in lieu of cash payments of interest) may be resold pursuant to Rule 144 without
volume or manner-of-sale restrictions or current public information requirements
as determined by the counsel to Borrower as set forth in a written opinion
letter to such effect, addressed and acceptable to the Transfer Agent and the
affected Holders, (d) the Common Stock is trading on a Trading Market and all of
the shares issuable pursuant to the Transaction Documents are listed or quoted
for trading on such Trading Market (and Borrower believes, in good faith, that
trading of the Common Stock on a Trading Market will continue uninterrupted for
the foreseeable future), (e) there is a sufficient number of authorized, but
unissued and otherwise unreserved, shares of Common Stock for the issuance of
all of the shares then issuable pursuant to the Transaction Documents, (f) an
Event of Default has not occurred, whether or not such Event of Default has been
cured, (g) there is no existing Event of Default and no existing event which,
with the passage of time or the giving of notice, would constitute an Event of
Default, (h) the issuance of the shares in question to the applicable Holder
would not exceed the Beneficial Ownership Limitation, (i) there has been no
public announcement of a pending or proposed Fundamental Transaction or Change
of Control Transaction that has not been consummated, (j) the applicable Holder
is not in possession of any information provided by Borrower that constitutes,
or may constitute, material non-public information, and (k) for each Trading Day
during a period of 5 consecutive Trading Days prior to the Mandatory Conversion
Notice Date, the daily VWAP for the Common Stock on the principal Trading Market
is equal to or greater than the then in effect Conversion Price. 

            
“Event of Default” shall have the meaning set forth in Section 8(a). 

            
“Fundamental Transaction” shall have the meaning set forth in Section
5(e). 

            
“Interest Conversion Price” shall have the meaning set forth in Section
2(a). 

            
“Interest Payment Date” shall have the meaning set forth in Section 2(a).

            
“Interest Share Amount” shall have the meaning set forth in Section 2(a).

             
“Mandatory Default Amount” means the sum of (a) the greater of (i) the
outstanding principal amount of this Note divided by the Conversion Price on the
date the Mandatory Default Amount is either (A) demanded (if demand or notice is
required to create an Event of Default) or otherwise due or (B) paid in full,
whichever has a lower Conversion Price, multiplied by the VWAP on the date the
Mandatory Default Amount is either (x) demanded or otherwise due or (y) paid in
full, whichever has a higher VWAP, or (ii) 115% of the outstanding principal
amount of this Note and (b) all other amounts, costs, expenses and liquidated
damages due in respect of this Note. 

3

            
“New York Courts” shall have the meaning set forth in Section 9(d). 

            
“Note Register” shall have the meaning set forth in Section 2(c). 

            
“Notice of Conversion” shall have the meaning set forth in Section 4(a).

             “Original
Issue Date” means the date of the first issuance of the Notes, regardless of
any transfers of any Note and regardless of the number of instruments which may
be issued to evidence such Notes. 

            
“Other Holders” means holders of Other Notes. 

             “Other
Notes” means Notes nearly identical to this Note issued to other Holders
pursuant to the Purchase Agreement. 

             “Permitted
Indebtedness” means (v) (A) Mortgage No. CA3349164 in favour of Kokanee
Mortgage MIC Ltd.; (B) Assignment of Rents No. CA3349165 in favour of Kokanee
Mortgage MIC Ltd.; (C) Mortgage No. CA3349298 in favour of Pioneer West Mortgage
Investment Corporation; and (D) Assignment of Rents No. Ca3349299 in favour of
Pioneer West Mortgage Investment Corporation, (w) trade payables in the ordinary
course of business, (x) any liabilities for borrowed money or amounts owed not
in excess of $100,000 in the aggregate (other than trade accounts payable
incurred in the ordinary course of business), (y) all guaranties, endorsements
and other contingent obligations in respect of indebtedness of others, whether
or not the same are or should be reflected in the Company’s consolidated balance
sheet (or the notes thereto) not affecting more than $100,000 in the aggregate,
except guaranties by endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business; and (z)
the present value of any lease payments not in excess of $100,000 due under
leases required to be capitalized in accordance with GAAP. Neither the Company
nor any Subsidiary is in default with respect to any Indebtedness. 

             “Permitted
Lien” means the individual and collective reference to the following: (a)
Liens for taxes, assessments and other governmental charges or levies not yet
due or Liens for taxes, assessments and other governmental charges or levies
being contested in good faith and by appropriate proceedings for which adequate
reserves (in the good faith judgment of the management of Borrower) have been
established in accordance with GAAP, (b) Liens imposed by law which were
incurred in the ordinary course of Borrower’s business, such as carriers’,
warehousemen’s and mechanics’ Liens, statutory landlords’ Liens, and other
similar Liens arising in the ordinary course of Borrower’s business, and which
(x) do not individually or in the aggregate materially detract from the value of
such property or assets or materially impair the use thereof in the operation of
the business of Borrower and its consolidated Subsidiaries or (y) are being
contested in good faith by appropriate proceedings, which proceedings have the
effect of preventing for the foreseeable future the forfeiture or sale of the
property or asset subject to such Lien, and (c) Liens incurred in connection
with Permitted Indebtedness under clauses (a), (b) thereunder, and Liens
incurred in connection with Permitted Indebtedness under clause (c) thereunder,
provided that such Liens are not secured by assets of Borrower or its
Subsidiaries other than the assets so acquired or leased. 

             “Purchase
Agreement” means the Securities Purchase Agreement, dated as of March 21,
2014 among Borrower and the original Holders, as amended, modified or
supplemented from time to time in accordance with its terms. 

4

             “Securities
Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder. 

            
“Share Delivery Date” shall have the meaning set forth in Section
4(c)(ii). 

            
“Successor Entity” shall have the meaning set forth in Section 5(e). 

            
“Threshold Period” shall have the meaning set forth in Section 6(b). 

            
“Trading Day” means a day on which the principal Trading Market is open
for trading. 

             “Trading
Market” means any of the following markets or exchanges on which the Common
Stock is listed or quoted for trading on the date in question: the NYSE MKT, the
Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select
Market, the New York Stock Exchange, the OTC Bulletin Board, the OTCQB or the
OTCQX (or any successors to any of the foregoing). 

             “Underlying
Shares” means all of the Conversion Shares and all of the Warrant Shares
issuable upon exercise of the Warrants issued pursuant to the Purchase
Agreement. 

             “VWAP”
means, for any date, the price determined by the first of the following clauses
that applies: (a) if the Common Stock is then listed or quoted on a Trading
Market, the daily volume weighted average price of the Common Stock for such
date (or the nearest preceding date) on the Trading Market on which the Common
Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading
Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b)
if the OTC Bulletin Board is not a Trading Market, the volume weighted average
price of the Common Stock for such date (or the nearest preceding date) on the
OTC Bulletin Board, (c) if the Common Stock is not then listed or quoted for
trading on the OTC Bulletin Board and if prices for the Common Stock are then
reported on the OTCQX, OTCQB or OTC Pink Marketplace maintained by the OTC
Markets Group, Inc. (or a similar organization or agency succeeding to its
functions of reporting prices), the volume weighted average price of the Common
Stock on the first such facility (or a similar organization or agency succeeding
to its functions of reporting prices), or (d) in all other cases, the fair
market value of a share of Common Stock as determined by an independent
appraiser selected in good faith by the Purchasers of a majority in interest of
the Securities then outstanding and reasonably acceptable to Borrower, the fees
and expenses of which shall be paid by Borrower. 

Section
2.         Interest. 

                             
a)         Interest in Cash or in
Kind. Holders shall be entitled to receive, and Borrower shall pay,
cumulative interest on the outstanding principal amount of this Note compounded
annually at the annual rate of 8% (all subject to increase as set forth in this
Note), payable quarterly on March 31, June 30, September 30, and December
31, beginning on the second such date after the Original Issue Date and on each
Conversion Date (with respect only to Note principal being converted) (each such
date, an “Interest Payment Date”) (if any Interest Payment Date is not a
Trading Day, the applicable payment shall be due on the next succeeding Trading
Day) in cash only, through six months after the Original Issue Date. Subsequent
to six (6) months after the Original Issue Date, such interest may be paid, at
the option of Borrower, in cash, in duly authorized, validly issued, fully paid
and non-assessable shares of Common Stock as set forth in this Section 2(a), or
a combination thereof in each case as provided in the next sentence (the amount
to be paid in shares of Common Stock, the “Interest Share Amount”). The
Common Stock to be paid in satisfaction of the Interest Share Amount shall be
valued solely for such purpose at the lower of (A) the Conversion Price in effect on
the Interest Payment Date, or (B) 90% of the VWAPs for the 10 consecutive
Trading Days ending on the Trading Day that is immediately prior to the Interest
Payment Date (the “Interest Conversion Price”). The Holders shall have
the same rights and remedies with respect to the delivery of any such shares as
if such shares were being issued pursuant to Section 6. Borrower may not pay
interest by delivery of Common Stock without the consent of the Holder in the
event that the Equity Conditions are not in effect on each day from the relevant
Interest Payment Date through the date the Interest Share Amount is delivered to
the Holder. Borrower must notify the Holder not less than ten (10) Trading Days
prior to an Interest Payment Date if it intends to pay interest due on such
Interest Payment Date by delivery of an Interest Share Amount. If Borrower fails
to provide such notice, the Holder may elect to receive the Interest Share
Amount in lieu of cash by notifying Borrower any time prior to the relevant
Interest Payment Date. Borrower may not pay any Interest Share Amount in excess
of the Beneficial Ownership Limitation, unless waived by Holder pursuant to
Section 4(d) hereof which waiver may not be effective with respect to the
Interest Share Amount prior to one year after the issue date of this Note. 

5

                             
b)         Payment Grace Period.
The Borrower shall have a ten (10) calendar day grace period to pay monetary
amounts due under this Note. Unless this Note specifically requires prior notice
or demand for a payment no notice will be required to be given and the grace
period shall commence from the date such monetary payment is due. 

                            
c)         Conversion Privileges.
The Conversion Rights set forth in Section 4 shall remain in full force and
effect immediately from the date hereof and until the Note is paid in full
regardless of the occurrence of an Event of Default. This Note shall be payable
in full on the Maturity Date, unless previously converted into Common Stock in
accordance with Section 4 hereof. 

                            
d)         Application of
Payments. Interest on this Note shall be calculated on the basis of a
360-day year and the actual number of days elapsed. Payments made in connection
with this Note shall be applied first to amounts due hereunder other than
principal and interest, thereafter to interest and finally to principal. 

                            
e)         Pari Passu. Except as
otherwise set forth herein, all payments made on this Note and the Other Notes
and all actions taken by the Borrower with respect to this Note and the Other
Notes, including but not limited to Mandatory Conversion, shall be made and
taken pari passu with respect to this Note and the Other Notes.
Notwithstanding anything to the contrary contained herein or in the Transaction
Documents, it shall not be considered non-pari passu for a Holder or Other
Holder to elect to receive interest paid in shares of Common Stock or for the
Borrower to actually pay interest in shares of Common Stock to such electing
Holder or Other Holder. 

                             
f)         Manner and Place of
Payment. Principal and interest on this Note and other payments in
connection with this Note shall be payable at the Holder’s offices as designated
above in lawful money of the United States of America in immediately available
funds without set-off, deduction or counterclaim. Upon assignment of the
interest of Holder in this Note, Borrower shall instead make its payment
pursuant to the assignee’s instructions upon receipt of written notice thereof.
Except as set forth herein, this Note may not be prepaid or mandatorily
converted without the consent of the Holder. 

Section
3.         Registration of
Transfers and Exchanges. 

             a)        
Different Denominations. This Note is exchangeable for an equal aggregate
principal amount of Notes of different authorized denominations, as requested by
the Holder surrendering the same. No service charge will be payable for such
registration of transfer or exchange. 

6

             b)        
Investment Representations. This Note has been issued subject to certain
investment representations of the original Holder set forth in the Purchase
Agreement and may be transferred or exchanged only in compliance with the
Purchase Agreement and applicable federal and state securities laws and
regulations. 

             c)        
Reliance on Note Register. Prior to due presentment for transfer to
Borrower of this Note, Borrower and any agent of Borrower may treat the Person
in whose name this Note is duly registered on the Note Register as the owner
hereof for the purpose of receiving payment as herein provided and for all other
purposes, whether or not this Note is overdue, and neither Borrower nor any such
agent shall be affected by notice to the contrary. 

Section
4.         Conversion. 

             a)        
Voluntary Conversion. At any time after the Original Issue Date until
this Note is no longer outstanding, this Note shall be convertible, in whole or
in part, into shares of Common Stock at the option of the Holder, at any time
and from time to time (subject to the conversion limitations set forth in
Section 4(d) hereof). The Holder shall effect conversions by delivering to
Borrower a Notice of Conversion, the form of which is attached hereto as
Annex A (each, a “Notice of Conversion”), specifying therein the
principal amount of this Note to be converted and the date on which such
conversion shall be effected (such date, the “Conversion Date”).
If no Conversion Date is specified in a Notice of Conversion, the Conversion
Date shall be the date that such Notice of Conversion is deemed delivered
hereunder. To effect conversions hereunder, the Holder shall not be required to
physically surrender this Note to Borrower unless the entire principal amount of
this Note has been so converted. Conversions hereunder shall have the effect of
lowering the outstanding principal amount of this Note in an amount equal to the
applicable conversion. The Holder and Borrower shall maintain records showing
the principal amount(s) converted and the date of such conversion(s). Borrower
may deliver an objection to any Notice of Conversion within one (1) Business Day
of delivery of such Notice of Conversion. In the event of any dispute or
discrepancy, the records of the Holder shall be controlling and determinative in
the absence of manifest error. The Holder, and any assignee by acceptance of
this Note, acknowledge and agree that, by reason of the provisions of this
paragraph, following conversion of a portion of this Note, the unpaid and
unconverted principal amount of this Note may be less than the amount stated on
the face hereof. 

             b)        
Conversion Price. The conversion price for the principal and interest in
connection with voluntary conversions by the Holder shall equal $0.18,
subject to adjustment herein (the “Conversion Price”). 

            
c)         Mechanics of
Conversion. 

             i.        
Conversion Shares Issuable Upon Conversion of Principal Amount. The
number of Conversion Shares issuable upon a conversion hereunder shall be
determined by the quotient obtained by dividing (x) the outstanding principal
amount of this Note to be converted plus interest elected by the Holder to be
converted by (y) the Conversion Price. 

             ii.        
Delivery of Certificate Upon Conversion. Not later than three (3) Trading
Days after each Conversion Date (the “Share Delivery Date”), Borrower
shall deliver, or cause to be delivered, to the Holder a certificate or
certificates representing the Conversion Shares which, on or after the earlier
of (i) the six month anniversary of the Original Issue Date or (ii) the
Effective Date, shall be free of restrictive legends and trading restrictions
(other than those which may then be required by the Purchase Agreement)
representing the number of Conversion Shares being acquired upon the conversion
of this Note. On or after the earlier of (i) the six month anniversary of the
Original Issue Date or (ii) the Effective Date, Borrower shall use its best
efforts to deliver any certificate or certificates required to be delivered by
Borrower under this Section 4(c) electronically through the Depository Trust
Company or another established clearing corporation performing similar
functions. 

7

             iii.        
Failure to Deliver Certificates. If, in the case of any Notice of
Conversion, such certificate or certificates are not delivered to or as directed
by the applicable Holder by the Share Delivery Date, the Holder shall be
entitled to elect by written notice to Borrower at any time on or before its
receipt of such certificate or certificates, to rescind such Conversion, in
which event Borrower shall promptly return to the Holder any original Note
delivered to Borrower and the Holder shall promptly return to Borrower the
Common Stock certificates issued to such Holder pursuant to the rescinded
Conversion Notice. 

             iv.        
Obligation Absolute; Partial Liquidated Damages. Borrower’s obligations to issue
and deliver the Conversion Shares upon conversion of this Note in accordance
with the terms hereof are absolute and unconditional, irrespective of any action
or inaction by the Holder to enforce the same, any waiver or consent with
respect to any provision hereof, the recovery of any judgment against any Person
or any action to enforce the same, or any setoff, counterclaim, recoupment,
limitation or termination, or any breach or alleged breach by the Holder or any
other Person of any obligation to Borrower or any violation or alleged violation
of law by the Holder or any other Person, and irrespective of any other
circumstance which might otherwise limit such obligation of Borrower to the
Holder in connection with the issuance of such Conversion Shares;
provided, however, that such delivery shall not operate as a
waiver by Borrower of any such action Borrower may have against the Holder. In
the event the Holder of this Note shall elect to convert any or all of the
outstanding principal amount hereof, Borrower may not refuse conversion based on
any claim that the Holder or anyone associated or affiliated with the Holder has
been engaged in any violation of law, agreement or for any other reason, unless
an injunction from a court, on notice to Holder, restraining and or enjoining
conversion of all or part of this Note shall have been sought and obtained, and
Borrower posts a surety bond for the benefit of the Holder in the amount of 125%
of the outstanding principal amount of this Note, which is subject to the
injunction, which bond shall remain in effect until the completion of
arbitration/litigation of the underlying dispute and the proceeds of which shall
be payable to the Holder to the extent it obtains judgment. In the absence of
such injunction, Borrower shall issue Conversion Shares or, if applicable, cash,
upon a properly noticed conversion. If Borrower fails for any reason to deliver
to the Holder such certificate or certificates pursuant to Section 4(c)(ii) by
the Share Delivery Date, Borrower shall pay to the Holder, in cash, as
liquidated damages and not as a penalty, for each $1,000 of principal amount
being converted, $10 per Trading Day (increasing to $20 per Trading Day on the
fifth (5th) Trading Day after such liquidated damages being to
accrue) for each Trading Day after such Share Delivery Date until such
certificates are delivered or Holder rescinds such conversion. Nothing herein
shall limit a Holder’s right to pursue actual damages or declare an Event of
Default pursuant to Section 8 hereof for Borrower’s failure to deliver
Conversion Shares within the period specified herein and the Holder shall have
the right to pursue all remedies available to it hereunder, at law or in equity
including, without limitation, a decree of specific performance and/or injunctive
relief. The exercise of any such rights shall not prohibit the Holder from
seeking to enforce damages pursuant to any other Section hereof or under
applicable law. 

8

             v.        
Compensation for Buy-In on Failure to Timely Deliver Certificates Upon
Conversion. In addition to any other rights available to the Holder, if
Borrower fails for any reason to deliver to the Holder such certificate or
certificates by the Share Delivery Date pursuant to Section 4(c)(ii), and if
after such Share Delivery Date the Holder is required by its brokerage firm to
purchase (in an open market transaction or otherwise), or the Holder or Holder’s
brokerage firm otherwise purchases, shares of Common Stock to deliver in
satisfaction of a sale by the Holder of the Conversion Shares which the Holder
was entitled to receive upon the conversion relating to such Share Delivery Date
(a “Buy-In”), then Borrower shall (A) pay in cash to the Holder (in
addition to any other remedies available to or elected by the Holder) the
amount, if any, by which (x) the Holder’s total purchase price (including any
brokerage commissions) for the Common Stock so purchased exceeds (y) the product
of (1) the aggregate number of shares of Common Stock that the Holder was
entitled to receive from the conversion at issue multiplied by (2) the actual
sale price at which the sell order giving rise to such purchase obligation was
executed (including any brokerage commissions) and (B) at the option of the
Holder, either reissue (if surrendered) this Note in a principal amount equal to
the principal amount of the attempted conversion (in which case such conversion
shall be deemed rescinded) or deliver to the Holder the number of shares of
Common Stock that would have been issued if Borrower had timely complied with
its delivery requirements under Section 4(c)(ii). For example, if the Holder
purchases Common Stock having a total purchase price of $11,000 to cover a
Buy-In with respect to an attempted conversion of this Note with respect to
which the actual sale price of the Conversion Shares (including any brokerage
commissions) giving rise to such purchase obligation was a total of $10,000
under clause (A) of the immediately preceding sentence, Borrower shall be
required to pay the Holder $1,000. The Holder shall provide Borrower written
notice indicating the amounts payable to the Holder in respect of the Buy-In
and, upon request of Borrower, evidence of the amount of such loss. Nothing
herein shall limit a Holder’s right to pursue any other remedies available to it
hereunder, at law or in equity including, without limitation, a decree of
specific performance and/or injunctive relief with respect to Borrower’s failure
to timely deliver certificates representing shares of Common Stock upon
conversion of this Note as required pursuant to the terms hereof. 

             vi.        
Reservation of Shares Issuable Upon Conversion. Borrower covenants that
it will at all times reserve and keep available out of its authorized and
unissued shares of Common Stock for the sole purpose of issuance upon conversion
of this Note as herein provided, free from preemptive rights or any other actual
contingent purchase rights of Persons other than the Holder (and the other
holders of the Notes), not less than such aggregate number of shares of the
Common Stock as shall (subject to the terms and conditions set forth in the
Purchase Agreement) be issuable (taking into account the adjustments and
restrictions of Section 5) upon the conversion of the then outstanding principal
amount of this Note and interest which has accrued and would accrue on such
principal amount, assuming such principal amount was not converted through the
Maturity Date. Borrower covenants that all shares of Common Stock that shall be
so issuable shall, upon issue, be duly authorized, validly issued, fully paid
and nonassessable. 

9

             vii.        
Fractional Shares. No fractional shares or scrip representing fractional
shares shall be issued upon the conversion of this Note. As to any fraction of a
share which the Holder would otherwise be entitled to purchase upon such
conversion, Borrower shall at its election, either pay a cash adjustment in
respect of such final fraction in an amount equal to such fraction multiplied by
the Conversion Price or round up to the next whole share. 

             viii.        
Transfer Taxes and Expenses. The issuance of certificates for shares of
the Common Stock on conversion of this Note shall be made without charge to the
Holder hereof for any documentary stamp or similar taxes that may be payable in
respect of the issue or delivery of such certificates, provided that, Borrower
shall not be required to pay any tax that may be payable in respect of any
transfer involved in the issuance and delivery of any such certificate upon
conversion in a name other than that of the Holder of this Note so converted and
Borrower shall not be required to issue or deliver such certificates unless or
until the Person or Persons requesting the issuance thereof shall have paid to
Borrower the amount of such tax or shall have established to the satisfaction of
Borrower that such tax has been paid. Borrower shall pay all Transfer Agent fees
required for same-day processing of any Notice of Conversion. 

             d)        
Holder’s Conversion Limitations. Borrower shall not effect any conversion
of this Note, and a Holder shall not have the right to convert any portion of
this Note, to the extent that after giving effect to the conversion set forth on
the applicable Notice of Conversion, the Holder (together with the Holder’s
Affiliates, and any Persons acting as a group together with the Holder or any of
the Holder’s Affiliates) would beneficially own in excess of the Beneficial
Ownership Limitation (as defined below). For purposes of the foregoing sentence,
the number of shares of Common Stock beneficially owned by the Holder and its
Affiliates shall include the number of shares of Common Stock issuable upon
conversion of this Note with respect to which such determination is being made,
but shall exclude the number of shares of Common Stock which are issuable upon
(i) conversion of the remaining, unconverted principal amount of this Note
beneficially owned by the Holder or any of its Affiliates and (ii) exercise or
conversion of the unexercised or unconverted portion of any other securities of
Borrower subject to a limitation on conversion or exercise analogous to the
limitation contained herein (including, without limitation, any other Notes or
the Warrants) beneficially owned by the Holder or any of its Affiliates. Except
as set forth in the preceding sentence, for purposes of this Section 4(d),
beneficial ownership shall be calculated in accordance with Section 13(d) of the
Exchange Act and the rules and regulations promulgated thereunder. To the extent
that the limitation contained in this Section 4(d) applies, the determination of
whether this Note is convertible (in relation to other securities owned by the
Holder together with any Affiliates) and of which principal amount of this Note
is convertible shall be in the sole discretion of the Holder, and the submission
of a Notice of Conversion shall be deemed to be the Holder’s determination of
whether this Note may be converted (in relation to other securities owned by the
Holder together with any Affiliates) and which principal amount of this Note is
convertible, in each case subject to the Beneficial Ownership Limitation. To
ensure compliance with this restriction, the Holder will be deemed to represent
to Borrower each time it delivers a Notice of Conversion that such Notice of
Conversion has not violated the restrictions set forth in this paragraph and
Borrower shall have no obligation to verify or confirm the accuracy of such
determination. In addition, a determination as to any group status as
contemplated above shall be determined in accordance with Section 13(d) of the
Exchange Act and the rules and regulations promulgated thereunder. For purposes
of this Section 4(d), in determining the number of outstanding shares of Common
Stock, the Holder may rely on the number of outstanding shares of Common Stock
as stated in the most recent of the following: (i) Borrower’s most recent
periodic or annual report filed with the Commission, as the case may be, (ii) a more recent public
announcement by Borrower, or (iii) a more recent written notice by Borrower or
Borrower’s transfer agent setting forth the number of shares of Common Stock
outstanding. Upon the written or oral request of a Holder, Borrower shall within
two Trading Days confirm orally and in writing to the Holder the number of
shares of Common Stock then outstanding. In any case, the number of outstanding
shares of Common Stock shall be determined after giving effect to the conversion
or exercise of securities of Borrower, including this Note, by the Holder or its
Affiliates since the date as of which such number of outstanding shares of
Common Stock was reported. The “Beneficial Ownership Limitation” shall be
9.99% of the number of shares of the Common Stock outstanding immediately after
giving effect to the issuance of shares of Common Stock issuable upon conversion
of this Note held by the Holder. The Holder may decrease the Beneficial
Ownership Limitation at any time and the Holder, upon not less than 61 days’
prior notice to Borrower, may increase the Beneficial Ownership Limitation
provisions of this Section 4(d), provided that the Beneficial Ownership
Limitation in no event exceeds 9.99% of the number of shares of the Common Stock
outstanding immediately after giving effect to the issuance of shares of Common
Stock upon conversion of this Note held by the Holder and the Beneficial
Ownership Limitation provisions of this Section 4(d) shall continue to apply.
Any such increase will not be effective until the 61st day after such
notice is delivered to Borrower. The Beneficial Ownership Limitation provisions
of this paragraph shall be construed and implemented in a manner otherwise than
in strict conformity with the terms of this Section 4(d) to correct this
paragraph (or any portion hereof) which may be defective or inconsistent with
the intended Beneficial Ownership Limitation contained herein or to make changes
or supplements necessary or desirable to properly give effect to such
limitation. The limitations contained in this paragraph shall apply to a
successor holder of this Note. 

10

Section
5.         Certain
Adjustments. 

             a)        
Stock Dividends and Stock Splits. If Borrower, at any time while this
Note is outstanding: (i) pays a stock dividend or otherwise makes a distribution
or distributions payable in shares of Common Stock on shares of Common Stock or
any Common Stock Equivalents (which, for avoidance of doubt, shall not include
any shares of Common Stock issued by Borrower upon conversion of the Notes),
(ii) subdivides outstanding shares of Common Stock into a larger number of
shares, (iii) combines (including by way of a reverse stock split) outstanding
shares of Common Stock into a smaller number of shares or (iv) issues, in the
event of a reclassification of shares of the Common Stock, any shares of capital
stock of Borrower, then the Conversion Price shall be multiplied by a fraction
of which the numerator shall be the number of shares of Common Stock (excluding
any treasury shares of Borrower) outstanding immediately before such event, and
of which the denominator shall be the number of shares of Common Stock
outstanding immediately after such event. Any adjustment made pursuant to this
Section shall become effective immediately after the record date for the
determination of stockholders entitled to receive such dividend or distribution
and shall become effective immediately after the effective date in the case of a
subdivision, combination or re-classification. 

             b)        
Subsequent Equity Sales. If, at any time while this Note is outstanding,
Borrower or any Subsidiary, as applicable, sells or grants any option to
purchase or sells or grants any right to reprice, or otherwise disposes of or
issues (or announces any sale, grant or any option to purchase or other
disposition), any Common Stock or Common Stock Equivalents entitling any Person
to acquire shares of Common Stock at an effective price per share that is lower
than the then Conversion Price (such lower price, the “Base Conversion
Price” and such issuances, collectively, a “Dilutive Issuance”) (if
the holder of the Common Stock or Common Stock Equivalents so issued shall at
any time, whether by operation of purchase price adjustments, reset provisions,
floating conversion, exercise or exchange prices or otherwise, or due to
warrants, options or rights per share which are
issued in connection with such issuance, be entitled to receive shares of Common
Stock at an effective price per share that is lower than the Conversion Price,
such issuance shall be deemed to have occurred for less than the Conversion
Price on such date of the Dilutive Issuance), then the Conversion Price shall be
reduced to equal the Base Conversion Price. Such adjustment shall be made
whenever such Common Stock or Common Stock Equivalents are issued.
Notwithstanding the foregoing, no adjustment will be made under this Section
5(b) in respect of an Exempt Issuance. If Borrower enters into a Variable Rate
Transaction, despite the prohibition set forth in the Purchase Agreement,
Borrower shall be deemed to have issued Common Stock or Common Stock Equivalents
at the lowest possible conversion price at which such securities may be
converted or exercised. Borrower shall notify the Holder in writing, no later
than the Trading Day following the issuance of any Common Stock or Common Stock
Equivalents subject to this Section 5(b), indicating therein the applicable
issuance price, or applicable reset price, exchange price, conversion price and
other pricing terms (such notice, the “Dilutive Issuance Notice”). For
purposes of clarification, whether or not Borrower provides a Dilutive Issuance
Notice pursuant to this Section 5(b), upon the occurrence of any Dilutive
Issuance, the Holder is entitled to receive a number of Conversion Shares based
upon the Base Conversion Price on or after the date of such Dilutive Issuance,
regardless of whether the Holder accurately refers to the Base Conversion Price
in the Notice of Conversion. 

11

             c)        
Subsequent Rights Offerings. In addition to any adjustments pursuant to
Section 5(a) above, if at any time Borrower grants, issues or sells any Common
Stock Equivalents or rights to purchase stock, warrants, securities or other
property pro rata to the record holders of any class of shares of Common Stock
(the “Purchase Rights”), then the Holder will be entitled to acquire,
upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights
which the Holder could have acquired if the Holder had held the number of shares
of Common Stock acquirable upon complete conversion of this Note (without regard
to any limitations on exercise hereof, including without limitation, the
Beneficial Ownership Limitation) immediately before the date on which a record
is taken for the grant, issuance or sale of such Purchase Rights, or, if no such
record is taken, the date as of which the record holders of shares of Common
Stock are to be determined for the grant, issue or sale of such Purchase Rights
(provided, however, to the extent that the Holder’s right to participate in any
such Purchase Right would result in the Holder exceeding the Beneficial
Ownership Limitation, then the Holder shall not be entitled to participate in
such Purchase Right to such extent (or beneficial ownership of such shares of
Common Stock as a result of such Purchase Right to such extent) and such
Purchase Right to such extent shall be held in abeyance for the Holder until
such time, if ever, as its right thereto would not result in the Holder
exceeding the Beneficial Ownership Limitation). 

             d)        
Pro Rata Distributions. During such time as this Note is outstanding, if
Borrower shall declare or make any dividend or other distribution of its assets
(or rights to acquire its assets) to holders of shares of Common Stock, by way
of return of capital or otherwise (including, without limitation, any
distribution of cash, stock or other securities, property or options by way of a
dividend, spin off, reclassification, corporate rearrangement, scheme of
arrangement or other similar transaction) (a “Distribution”), at any time
after the issuance of this Note, then, in each such case, the Holder shall be
entitled to participate in such Distribution to the same extent that the Holder
would have participated therein if the Holder had held the number of shares of
Common Stock acquirable upon complete exercise of this Note (without regard to
any limitations on exercise hereof, including without limitation, the Beneficial
Ownership Limitation) immediately before the date of which a record is taken for
such Distribution, or, if no such record is taken, the date as of which the
record holders of shares of Common Stock are to be determined for the
participation in such Distribution (provided, however, to the
extent that the Holder's right to participate in any such Distribution would
result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder
shall not be entitled to participate in such Distribution to such extent (or in
the beneficial ownership of any shares of Common Stock as a result of such
Distribution to such extent) and the portion of such Distribution shall be held
in abeyance for the benefit of the Holder until such time, if ever, as its right
thereto would not result in the Holder exceeding the Beneficial Ownership
Limitation). 

12

             e)        
Fundamental Transaction. If, at any time while this Note is outstanding,
(i) Borrower, directly or indirectly, in one or more related transactions
effects any merger or consolidation of Borrower with or into another Person,
(ii) Borrower, directly or indirectly, effects any sale, lease, license,
assignment, transfer, conveyance or other disposition of all or substantially
all of its assets in one or a series of related transactions, (iii) any, direct
or indirect, purchase offer, tender offer or exchange offer (whether by Borrower
or another Person) is completed pursuant to which holders of Common Stock are
permitted to sell, tender or exchange their shares for other securities, cash or
property and has been accepted by the holders of 50% or more of the outstanding
Common Stock, (iv) Borrower, directly or indirectly, in one or more related
transactions effects any reclassification, reorganization or recapitalization of
the Common Stock or any compulsory share exchange pursuant to which the Common
Stock is effectively converted into or exchanged for other securities, cash or
property, (v) Borrower, directly or indirectly, in one or more related
transactions consummates a stock or share purchase agreement or other business
combination (including, without limitation, a reorganization, recapitalization,
spin-off or scheme of arrangement) with another Person whereby such other Person
acquires more than 50% of the outstanding shares of Common Stock (not including
any shares of Common Stock held by the other Person or other Persons making or
party to, or associated or affiliated with the other Persons making or party to,
such stock or share purchase agreement or other business combination) (each a
“Fundamental Transaction”), then, upon any subsequent conversion of this
Note, the Holder shall have the right to receive, for each Conversion Share that
would have been issuable upon such conversion immediately prior to the
occurrence of such Fundamental Transaction (without regard to any limitation in
Section 4(d) and Section 4(e) on the conversion of this Note), the number of
shares of Common Stock of the successor or acquiring corporation or of Borrower,
if it is the surviving corporation, and any additional consideration (the
“Alternate Consideration”) receivable as a result of such Fundamental
Transaction by a holder of the number of shares of Common Stock for which this
Note is convertible immediately prior to such Fundamental Transaction (without
regard to any limitation in Section 4(d) and Section 4(e) on the conversion of
this Note). For purposes of any such conversion, the determination of the
Conversion Price shall be appropriately adjusted to apply to such Alternate
Consideration based on the amount of Alternate Consideration issuable in respect
of one (1) share of Common Stock in such Fundamental Transaction, and Borrower
shall apportion the Conversion Price among the Alternate Consideration in a
reasonable manner reflecting the relative value of any different components of
the Alternate Consideration. If holders of Common Stock are given any choice as
to the securities, cash or property to be received in a Fundamental Transaction,
then the Holder shall be given the same choice as to the Alternate Consideration
it receives upon any conversion of this Note following such Fundamental
Transaction. Borrower shall cause any successor entity in a Fundamental
Transaction in which Borrower is not the survivor (the “Successor
Entity”) to assume in writing all of the obligations of Borrower under this
Note and the other Transaction Documents (as defined in the Purchase Agreement)
in accordance with the provisions of this Section 5(e) pursuant to written
agreements in form and substance reasonably satisfactory to the Holder and
approved by the Holder (without unreasonable delay) prior to such Fundamental
Transaction and shall, at the option of the holder of this Note, deliver to the
Holder in exchange for this Note a security of the Successor Entity evidenced by
a written instrument substantially similar in form and substance to this Note
which is convertible for a corresponding number of shares of capital stock of
such Successor Entity (or its parent entity) equivalent to the
shares of Common Stock acquirable and receivable upon conversion of this Note
(without regard to any limitations on the conversion of this Note) prior to such
Fundamental Transaction, and with a conversion price which applies the
conversion price hereunder to such shares of capital stock (but taking into
account the relative value of the shares of Common Stock pursuant to such
Fundamental Transaction and the value of such shares of capital stock, such
number of shares of capital stock and such conversion price being for the
purpose of protecting the economic value of this Note immediately prior to the
consummation of such Fundamental Transaction), and which is reasonably
satisfactory in form and substance to the Holder. Upon the occurrence of any
such Fundamental Transaction, the Successor Entity shall succeed to, and be
substituted for (so that from and after the date of such Fundamental
Transaction, the provisions of this Note and the other Transaction Documents
referring to the “Company” shall refer instead to the Successor Entity), and may
exercise every right and power of Borrower and shall assume all of the
obligations of Borrower under this Note and the other Transaction Documents with
the same effect as if such Successor Entity had been named as Borrower herein. 

13

             f)        
Calculations. All calculations under this Section 5 shall be made to the
nearest cent or the nearest 1/100th of a share, as the case may be. For purposes
of this Section 5, the number of shares of Common Stock deemed to be issued and
outstanding as of a given date shall be the sum of the number of shares of
Common Stock (excluding any treasury shares of Borrower) issued and outstanding.

            
g)         Notice to the Holder.

             i.        
Adjustment to Conversion Price. Whenever the Conversion Price is adjusted
pursuant to any provision of this Section 5, Borrower shall promptly deliver to
each Holder a notice setting forth the Conversion Price after such adjustment
and setting forth a brief statement of the facts requiring such adjustment. 

             ii.        
Notice to Allow Conversion by Holder. If (A) Borrower shall declare a
dividend (or any other distribution in whatever form) on the Common Stock, (B)
Borrower shall declare a special nonrecurring cash dividend on or a redemption
of the Common Stock, (C) Borrower shall authorize the granting to all holders of
the Common Stock of rights or warrants to subscribe for or purchase any shares
of capital stock of any class or of any rights, (D) the approval of any
stockholders of Borrower shall be required in connection with any
reclassification of the Common Stock, any consolidation or merger to which
Borrower is a party, any sale or transfer of all or substantially all of the
assets of Borrower, or any compulsory share exchange whereby the Common Stock is
converted into other securities, cash or property or (E) Borrower shall
authorize the voluntary or involuntary dissolution, liquidation or winding up of
the affairs of Borrower, then, in each case, Borrower shall cause to be filed at
each office or agency maintained for the purpose of conversion of this Note, and
shall cause to be delivered to the Holder at its last address as it shall appear
upon the Note Register, at least twenty (20) calendar days prior to the
applicable record or effective date hereinafter specified, a notice stating (x)
the date on which a record is to be taken for the purpose of such dividend,
distribution, redemption, rights or warrants, or if a record is not to be taken,
the date as of which the holders of the Common Stock of record to be entitled to
such dividend, distributions, redemption, rights or warrants are to be
determined or (y) the date on which such reclassification, consolidation,
merger, sale, transfer or share exchange is expected to become effective or
close, and the date as of which it is expected that holders of the Common Stock
of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger, sale, transfer or
share exchange, provided that the failure to deliver such notice or any defect
therein or in the delivery thereof shall not affect the validity of the
corporate action required to be specified in such notice. To the extent that any
notice provided hereunder constitutes, or contains, material, non-public
information regarding Borrower or any of the Subsidiaries, Borrower shall
simultaneously file such notice with the Commission pursuant to a Current Report
on Form 8-K. The Holder shall remain entitled to convert this Note during the
20-day period commencing on the date of such notice through the effective date
of the event triggering such notice except as may otherwise be expressly set
forth herein. 

14

             Section
6.         Redemption. Except
as otherwise provided herein, Borrower shall have no right to require the Holder
to surrender the Note for redemption, nor convert any part or all of this Note
without the consent of the Holder except with respect to the interest hereon
pursuant to Section 2(a) hereof.

             Section
7.         Negative
Covenants. As long as any portion of this Note remains outstanding, unless
the holders of at least 51% in principal amount of the then outstanding Notes
shall have otherwise given prior written consent, Borrower shall not, and shall
not permit any of the Subsidiaries to, directly or indirectly: 

             a)        
other than Permitted Indebtedness, enter into, create, incur, assume, guarantee
or suffer to exist any indebtedness for borrowed money of any kind, including,
but not limited to, a guarantee, on or with respect to any of its property or
assets now owned or hereafter acquired or any interest therein or any income or
profits therefrom;

             b)        
other than Permitted Liens, enter into, create, incur, assume or suffer to exist
any Liens of any kind, on or with respect to any of its property or assets now
owned or hereafter acquired or any interest therein or any income or profits
therefrom; 

             c)        
amend its charter documents, including, without limitation, its certificate of
incorporation and bylaws, in any manner that materially and adversely affects
any rights of the Holder; 

             d)        
repay, repurchase or offer to repay, repurchase or otherwise acquire more than a
de minimis number of shares of its Common Stock or Common Stock
Equivalents other than as to the Conversion Shares or Warrant Shares as
permitted or required under the Transaction Documents; 

             e)        
redeem, defease, repurchase, repay or make any payments in respect of, by the
payment of cash or cash equivalents (in whole or in part, whether by way of open
market purchases, tender offers, private transactions or otherwise), all or any
portion of any Indebtedness (other than the Notes if on a pro-rata basis),
whether by way of payment in respect of principal of (or premium, if any) or
interest on, such Indebtedness; 

            
f)         pay cash dividends or
distributions on any equity securities of Borrower; 

             g)        
enter into any transaction with any Affiliate of Borrower which would be
required to be disclosed in any public filing with the Commission, unless such
transaction is made on an arm’s-length basis and expressly approved by a
majority of the disinterested directors of Borrower (even if less than a quorum
otherwise required for board approval); 

15

             h)             any material damage to, or loss, theft
or destruction of, any Collateral, whether or not insured, or any strike,
lockout, labor dispute, embargo, condemnation, or other casualty which causes,
for more than fifteen (15) consecutive days, the cessation or substantial
curtailment of revenue producing activities at any facility of Borrower or any
Subsidiary, if any such event or circumstance could have a Material Adverse
Effect; or 

             i)         enter into any
agreement with respect to any of the foregoing. 

    
        Section
8.         Events of Default.

             a)        
“Event of Default” means, wherever used herein, any of the following
events (whatever the reason for such event and whether such event shall be
voluntary or involuntary or effected by operation of law or pursuant to any
judgment, decree or order of any court, or any order, rule or regulation of any
administrative or governmental body): 

             i.        
any default in the payment of (A) the principal amount of any Note or (B)
liquidated damages and other amounts owing to a Holder on any Note, as and when
the same shall become due and payable (whether on a Conversion Date or the
Maturity Date or by acceleration or otherwise) which default, solely in the case
of a default under clause (B) above, is not cured within 7 Trading Days after
Borrower has become or should have become aware of such default; 

             ii.        
Borrower shall fail to observe or perform any other covenant or agreement
contained in the Notes (other than a breach by Borrower of its obligations to
deliver shares of Common Stock to the Holder upon conversion, which breach is
addressed in clause (x) below) which failure is not cured, if possible to cure,
within the earlier to occur of (A) 5 Trading Days after notice of such failure
sent by the Holder or by any Other Holder to Borrower and (B) 10 Trading Days
after Borrower has become or should have become aware of such failure; 

             iii.        
a default or event of default (subject to any grace or cure period provided in
the applicable agreement, document or instrument) shall occur under (A) any of
the Transaction Documents, including but not limited to failure to strictly
comply with the provisions of the Warrants, or (B) any other material agreement,
lease, document or instrument to which Borrower or any Subsidiary is obligated
(and not covered by clause (vi) below); 

             iv.        
any representation or warranty made in this Note, any other Transaction
Documents, any written statement pursuant hereto or thereto or any other report,
financial statement or certificate made or delivered to the Holder or any Other
Holder shall be untrue or incorrect in any material respect as of the date when
made or deemed made; 

             v.        
Borrower or any Subsidiary (as such term is defined in Rule 1-02(w) of
Regulation S-X) shall be subject to a Bankruptcy Event; 

             vi.        
Borrower or any Subsidiary shall default on any of its obligations under any
mortgage, credit agreement or other facility, indenture agreement, factoring
agreement or other instrument under which there may be issued, or by which there
may be secured or evidenced, any indebtedness for borrowed money or money due
under any long term leasing or factoring
arrangement that (a) involves an obligation greater than $250,000, whether such
indebtedness now exists or shall hereafter be created, and (b) results in such
indebtedness becoming or being declared due and payable prior to the date on
which it would otherwise become due and payable; 

16

             vii.        
Borrower shall be a party to any Change of Control Transaction or Fundamental
Transaction or shall agree to sell or dispose of all or in excess of 40% of its
assets in one transaction or a series of related transactions (whether or not
such sale would constitute a Change of Control Transaction); 

             viii.        
Borrower does not meet the current public information requirements under Rule
144; 

             ix.        
Borrower shall fail for any reason to deliver certificates to a Holder prior to
the fifth Trading Day (or if not DTC eligible, the seventh Trading Day) after a
Conversion Date pursuant to Section 4(c) or Borrower shall provide at any time
notice to the Holder, including by way of public announcement, of Borrower’s
intention to not honor requests for conversions of any Notes in accordance with
the terms hereof; 

             x.        
any Person shall breach any agreement delivered to the initial Holders pursuant
to Section 2.2 or 2.5 of the Purchase Agreement; 

             xi.        
any monetary judgment, writ or similar final process shall be entered or filed
against Borrower, any subsidiary or any of their respective property or other
assets for more than $100,000, and such judgment, writ or similar final process
shall remain unvacated, unbonded or unstayed for a period of 90 calendar days;

            
xii.         any dissolution,
liquidation or winding up by Borrower or a material Subsidiary of a substantial
portion of their business; 

            
xiii.         cessation of operations by
Borrower or a material Subsidiary; 

            
xiv.         The failure by Borrower or
any material Subsidiary to maintain any material intellectual property rights,
personal, real property, equipment, leases or other assets which are necessary
to conduct its business (whether now or in the future) and such breach is not
cured with twenty (20) days after written notice to the Borrower from the
Holder; 

            
xv.         An event resulting in the
Common Stock no longer being listed or quoted on a Trading Market, or
notification from a Trading Market that the Borrower is not in compliance with
the conditions for such continued quotation and such non-compliance continues
for twenty (20) Trading Days following such notification; 

            
xvi.         a Commission or judicial
stop trade order or suspension from its Principal Trading Market; 

            
xvii.         the restatement after the
date hereof of any financial statements filed by the Borrower with the
Commission for any date or period from two years prior to the Original Issue
Date and until this Note is no longer outstanding, if the result of such
restatement would, by comparison to the unrestated financial statements, have
constituted a Material Adverse Effect. For the avoidance of doubt, any
restatement related to new accounting pronouncements shall not constitute a
default under this Section; 

17

            
xviii.         the Borrower effectuates
a reverse split of its Common Stock without ten (10) days prior written notice
to the Holder; 

            
xix.         a failure by Borrower to
notify Holder of any material event of which Borrower is obligated to notify
Holder pursuant to the terms of this Note or any other Transaction Document;

             
xx.         a default by the Borrower of
a material term, covenant, warranty or undertaking of any other agreement to
which the Borrower and Holder are parties, or the occurrence of an event of
default under any such other agreement to which Borrower and Holder are parties
which is not cured after any required notice and/or cure period; 

            
xxi.         the occurrence of an Event
of Default under any Other Note; or 

            
xxii.         any provision of any
Transaction Document shall at any time for any reason (other than pursuant to
the express terms thereof) cease to be valid and binding on or enforceable
against the parties thereto, or the validity or enforceability thereof shall be
contested by any party thereto, or a proceeding shall be commenced by Borrower
or any Subsidiary or any governmental authority having jurisdiction over any of
them, seeking to establish the invalidity or unenforceability thereof, or
Borrower or any Subsidiary shall deny in writing that it has any liability or
obligation purported to be created under any Transaction Document (including,
without limitation, the Security Documents and the Subsidiary Guaranties); 

             b)        
Remedies Upon Event of Default, Fundamental Transaction and Change of
Control Transaction. If any Event of Default or a Fundamental Transaction
or a Change of Control Transaction occurs, the outstanding principal amount of
this Note, liquidated damages and other amounts owing in respect thereof through
the date of acceleration, shall become, at the Holder’s election, immediately
due and payable in cash at the Mandatory Default Amount. Commencing on the
Maturity Date and also five (5) days after the occurrence of any Event of
Default interest on this Note shall accrue at an interest rate equal to the
lesser of 15% per annum or the maximum rate permitted under applicable law. Upon
the payment in full of the Mandatory Default Amount, the Holder shall promptly
surrender this Note to or as directed by Borrower. In connection with such
acceleration described herein, the Holder need not provide, and Borrower hereby
waives, any presentment, demand, protest or other notice of any kind, and the
Holder may immediately and without expiration of any grace period enforce any
and all of its rights and remedies hereunder and all other remedies available to
it under applicable law. Such acceleration may be rescinded and annulled by
Holder at any time prior to payment hereunder and the Holder shall have all
rights as a holder of the Note until such time, if any, as the Holder receives
full payment pursuant to this Section 8(b). No such rescission or annulment
shall affect any subsequent Event of Default or impair any right consequent
thereon. 

    
        Section
9.         Miscellaneous.

             a)        
Notices. All notices, demands, requests, consents, approvals, and other
communications required or permitted hereunder shall be in writing and, unless
otherwise specified herein, shall be (i) personally served, (ii) deposited in
the mail, registered or certified, return receipt requested, postage prepaid,
(iii) delivered by reputable air courier service with charges prepaid, or (iv)
transmitted by hand delivery, telegram, or facsimile, addressed as set forth
below or to such other address as such party shall have specified most recently
by written notice. Any notice or other communication required or permitted to be
given hereunder shall be deemed effective (a) upon hand delivery
or delivery by facsimile, with accurate confirmation generated by the
transmitting facsimile machine, at the address or number designated below (if
delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received) or (b) on the second business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The addresses for
such communications shall be: (i) if to Borrower, to: Ironwood Gold Corp., Box
730-411-Brink Street, Ashcroft BC, V0K 1A0, Attn: Andrew McKinnon, Chief
Executive Officer, facsimile: (250) 453–0088, with a copy by fax only to (which
shall not constitute notice): Jolie Kahn, Esq., 2 Liberty Place, 50 South
16th Street, Suite 3401, Philadelphia, PA 19102, facsimile: (866)
705-3071, and (ii) if to the Holder, to: the address and fax number indicated on
the front page of this Note, with an additional copy by fax only to (which shall
not constitute notice): Grushko & Mittman, P.C., 515 Rockaway Avenue, Valley
Stream, New York 11581, facsimile: (212) 697-3575. 

18

             b)        
Absolute Obligation. Except as expressly provided herein, no provision of
this Note shall alter or impair the obligation of Borrower, which is absolute
and unconditional, to pay the principal of, liquidated damages and accrued
interest, as applicable, on this Note at the time, place, and rate, and in the
coin or currency, herein prescribed. This Note is a direct debt obligation of
Borrower. This Note ranks pari passu with all other Notes now or
hereafter issued under the terms set forth herein.

             c)        
Lost or Mutilated Note. If this Note shall be mutilated, lost, stolen or
destroyed, Borrower shall execute and deliver, in exchange and substitution for
and upon cancellation of a mutilated Note, or in lieu of or in substitution for
a lost, stolen or destroyed Note, a new Note for the principal amount of this
Note so mutilated, lost, stolen or destroyed, but only upon receipt of evidence
of such loss, theft or destruction of such Note, and of the ownership hereof,
reasonably satisfactory to Borrower. 

             d)        
Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Note shall be governed by and construed
and enforced in accordance with the internal laws of the State of New York,
without regard to the principles of conflict of laws thereof. Each party agrees
that all legal proceedings concerning the interpretation, enforcement and
defense of the transactions contemplated by any of the Transaction Documents
(whether brought against a party hereto or its respective Affiliates, directors,
officers, shareholders, employees or agents) shall be commenced in the state and
federal courts sitting in the City of New York, Borough of Manhattan (the
“New York Courts”). Each party hereto hereby irrevocably submits to the
exclusive jurisdiction of the New York Courts for the adjudication of any
dispute hereunder or in connection herewith or with any transaction contemplated
hereby or discussed herein (including with respect to the enforcement of any of
the Transaction Documents), 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 such New York Courts, or such New York Courts are
improper or inconvenient venue for such proceeding. 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 via
registered or certified mail or overnight delivery (with evidence of delivery)
to such party at the address in effect for notices to it under this Note 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 other manner permitted by applicable law. Each
party hereto hereby irrevocably waives, to the fullest extent permitted by
applicable law, any and all right to trial by jury in any legal proceeding arising
out of or relating to this Note or the transactions contemplated hereby. If any
party shall commence an action or proceeding to enforce any provisions of this
Note, then the prevailing party in such action or proceeding shall be reimbursed
by the other party for its attorneys fees and other costs and expenses incurred
in the investigation, preparation and prosecution of such action or proceeding.
This Note shall be deemed an unconditional obligation of Borrower for the
payment of money and, without limitation to any other remedies of Holder, may be
enforced against Borrower by summary proceeding pursuant to New York Civil
Procedure Law and Rules Section 3213 or any similar rule or statute in the
jurisdiction where enforcement is sought. For purposes of such rule or statute,
any other document or agreement to which Holder and Borrower are parties or
which Borrower delivered to Holder, which may be convenient or necessary to
determine Holder’s rights hereunder or Borrower’s obligations to Holder are
deemed a part of this Note, whether or not such other document or agreement was
delivered together herewith or was executed apart from this Note. 

19

             e)        
Waiver. Any waiver by Borrower or the Holder of a breach of any provision
of this Note shall not operate as or be construed to be a waiver of any other
breach of such provision or of any breach of any other provision of this Note.
The failure of Borrower or the Holder to insist upon strict adherence to any
term of this Note on one or more occasions shall not be considered a waiver or
deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Note on any other occasion. Any waiver by
Borrower or the Holder must be in writing. 

             f)        
Severability. If any provision of this Note is invalid, illegal or
unenforceable, the balance of this Note shall remain in effect, and if any
provision is inapplicable to any Person or circumstance, it shall nevertheless
remain applicable to all other Persons and circumstances. 

             g)        
Usury. If it shall be found that any interest or other amount deemed
interest due hereunder violates the applicable law governing usury, the
applicable rate of interest due hereunder shall automatically be lowered to
equal the maximum rate of interest permitted under applicable law. Borrower
covenants (to the extent that it may lawfully do so) that it shall not at any
time insist upon, plead, or in any manner whatsoever claim or take the benefit
or advantage of, any stay, extension or usury law or other law which would
prohibit or forgive Borrower from paying all or any portion of the principal of
or interest on this Note as contemplated herein, wherever enacted, now or at any
time hereafter in force, or which may affect the covenants or the performance of
this Note, and Borrower (to the extent it may lawfully do so) hereby expressly
waives all benefits or advantage of any such law, and covenants that it will
not, by resort to any such law, hinder, delay or impede the execution of any
power herein granted to the Holder, but will suffer and permit the execution of
every such as though no such law has been enacted. 

             h)        
Next Business Day. Whenever any payment or other obligation hereunder
shall be due on a day other than a Business Day, such payment shall be made on
the next succeeding Business Day. 

             i)        
Headings. The headings contained herein are for convenience only, do not
constitute a part of this Note and shall not be deemed to limit or affect any of
the provisions hereof. 

             j)        
Amendment. Unless otherwise provided for hereunder, this Note may not be
modified or amended or the provisions hereof waived without the written consent
of Borrower and the Holder. 

20

             k)        
Facsimile Signature. In the event that the Borrower’s signature is
delivered by facsimile transmission, PDF, electronic signature or other similar
electronic means, such signature shall create a valid and binding obligation of
the Borrower with the same force and effect as if such signature page were an
original thereof. 

********************* 

(Signature Pages Follow) 

 

 

21

             IN
WITNESS WHEREOF, Borrower has caused this Note to be signed in its name by
an authorized officer as of the 21st day of March, 2014. 

IRONWOOD GOLD CORP. 

 

By:  
___________________________________
        
Name:
         Title:

WITNESS: 

 

______________________________________ 

22

ANNEX A 

NOTICE OF CONVERSION 

       
     The undersigned hereby elects to convert principal
under the Convertible Note due March 21, 2016 of Ironwood Gold Corp., a
Nevada corporation (the “Company”), into shares of common stock (the
“Common Stock”), of Borrower according to the conditions hereof, as of
the date written below. If shares of Common Stock are to be issued in the name
of a person other than the undersigned, the undersigned will pay all transfer
taxes payable with respect thereto and is delivering herewith such certificates
and opinions as reasonably requested by Borrower in accordance therewith. No fee
will be charged to the holder for any conversion, except for such transfer
taxes, if any. 

             By
the delivery of this Notice of Conversion the undersigned represents and
warrants to Borrower that its ownership of the Common Stock does not exceed the
amounts specified under Section 4 of this Note, as determined in accordance with
Section 13(d) of the Exchange Act. 

             The
undersigned agrees to comply with the prospectus delivery requirements under the
applicable securities laws in connection with any transfer of the aforesaid
shares of Common Stock. 

Conversion calculations: 

Date to Effect Conversion:
____________________________

Principal Amount of Note to be
Converted: $__________________

Number of shares of Common Stock to be
issued: ______________

Signature:
_________________________________________

Name:
____________________________________________

Address for Delivery of Common Stock
Certificates:  ____________

_____________________________________________________

_____________________________________________________

Or 

DWAC Instructions:
_________________________________

Broker No:_____________
Account No:
_______________

23

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00228-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00228-of-00352.parquet"}]]