Document:

BiCoastal Warrant May 2004

    EXHIBIT
      10.62

    

    THIS
      WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT
      BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS WARRANT
      AND
      THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD,
      OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
      REGISTRATION STATEMENT UNDER SAID ACT OR AN OPINION OF COUNSEL REASONABLY
      SATISFACTORY TO KAIRE HOLDINGS INCORPORATED THAT SUCH REGISTRATION IS NOT
      REQUIRED.

    

    
      	 	
              Right
                to Purchase 833,333 shares of Common Stock of Kaire Holdings Incorporated
                (subject to adjustment as provided
                herein)

            

    

    

    COMMON
      STOCK PURCHASE WARRANT (finder)

    No. 2004-F-APR-001      Issue
      Date: April 22, 2004

    KAIRE
      HOLDINGS INCORPORATED, a corporation organized under the laws of the State
      of
      Delaware (the “Company”), hereby certifies that, for value received, BI-COASTAL
      CONSULTING CORP., 25, Longview Court, Hillsborough, CA 94010, telecopier: (650)
      343-2506, or its assigns (the “Holder”), is entitled, subject to the terms set
      forth below, to purchase from the Company at any time after the Issue Date
      until
      5:00 p.m., E.S.T on the fifth anniversary of the Issue Date (the “Expiration
      Date”), up to 833,333 fully paid and nonassessable shares of the common stock of
      the Company (the “Common Stock”), $.001 par value per share at a per share
      purchase price of $0.17. The aforedescribed purchase price per share, as
      adjusted from time to time as herein provided, is referred to herein as the
      "Purchase Price." The number and character of such shares of Common Stock and
      the Purchase Price are subject to adjustment as provided herein. The Company
      may
      reduce the Purchase Price without the consent of the Holder. Capitalized terms
      used and not otherwise defined herein shall have the meanings set forth in
      that
      certain Subscription Agreement (the “Subscription
      Agreement”),
      dated
      May 5, 2004, entered into by the Company and the Subscribers of the Company’s
      Common Stock and Warrants similar to this Warrant.

    

    As
      used
      herein the following terms, unless the context otherwise requires, have the
      following respective meanings: 

     

    (a) The
      term
“Company” shall include Kaire Holdings Incorporated and any corporation which
      shall succeed or assume the obligations of Kaire Holdings Incorporated
      hereunder. 

     

    (b) The
      term
“Common Stock” includes (a) the Company's Common Stock, $.001 par value per
      share, as authorized on the date of the Subscription Agreement, and (b) any
      other securities into which or for which any of the securities described in
      (a) may be converted or exchanged pursuant to a plan of recapitalization,
      reorganization, merger, sale of assets or otherwise.

     

    (c) The
      term
“Other Securities” refers to any stock (other than Common Stock) and other
      securities of the Company or any other person (corporate or otherwise) which
      the
      holder of the Warrant at any time shall be entitled to receive, or shall have
      received, on the exercise of the Warrant, in lieu of or in addition to Common
      Stock, or which at any time shall be issuable or shall have been issued in
      exchange for or in replacement of Common Stock or Other Securities pursuant
      to
      Section 4 or otherwise. 

     

    
      
        
          1

          

          

          

          

          

          

        

         

      

      
         

        
          

        

      

      
         

      

    

    1. Exercise
      of Warrant.

     

    1.1. Number
      of Shares Issuable upon Exercise.
      From
      and after the Issue Date through and including the Expiration Date, the Holder
      hereof shall be entitled to receive, upon exercise of this Warrant in whole
      in
      accordance with the terms of subsection 1.2 or upon exercise of this
      Warrant in part in accordance with subsection 1.3, shares of Common
      Stock
      of the Company, subject to adjustment pursuant to Section 4.

     

    1.2. Full
      Exercise.
      This
      Warrant may be exercised in full by the Holder hereof by delivery of an original
      or facsimile copy of the form of subscription attached as Exhibit A
      hereto
      (the “Subscription Form") duly executed by such Holder and surrender of the
      original Warrant within seven (7) days of exercise, to the Company at its
      principal office or at the office of its Warrant Agent (as provided
      hereinafter), accompanied by payment, in cash, wire transfer or by certified
      or
      official bank check payable to the order of the Company, in the amount obtained
      by multiplying the number of shares of Common Stock for which this Warrant
      is
      then exercisable by the Purchase Price then in effect. 

     

    1.3. Partial
      Exercise.
      This
      Warrant may be exercised in part (but not for a fractional share) by surrender
      of this Warrant in the manner and at the place provided in subsection 1.2
      except that the amount payable by the Holder on such partial exercise shall
      be
      the amount obtained by multiplying (a) the number of whole shares of
      Common
      Stock designated by the Holder in the Subscription Form by (b) the Purchase
      Price then in effect. On any such partial exercise, the Company, at its expense,
      will forthwith issue and deliver to or upon the order of the Holder hereof
      a new
      Warrant of like tenor, in the name of the Holder hereof or as such Holder (upon
      payment by such Holder of any applicable transfer taxes) may request, the whole
      number of shares of Common Stock for which such Warrant may still be
      exercised.

     

    1.4. Fair
      Market Value.
      Fair
      Market Value of a share of Common Stock as of a particular date (the
      "Determination Date") shall mean: 

     

    (a) If
      the
      Company's Common Stock is traded on an exchange or is quoted on the National
      Association of Securities Dealers, Inc. Automated Quotation ("NASDAQ"), National
      Market System, the NASDAQ SmallCap Market or the American Stock Exchange, LLC,
      then the closing or last sale price, respectively, reported for the last
      business day immediately preceding the Determination Date;

     

    (b) If
      the
      Company's Common Stock is not traded on an exchange or on the NASDAQ National
      Market System, the NASDAQ SmallCap Market or the American Stock Exchange, Inc.,
      but is traded in the over-the-counter market, then the average of the closing
      bid and ask prices reported for the last business day immediately preceding
      the
      Determination Date;

     

    (c) Except
      as
      provided in clause (d) below, if the Company's Common Stock is not publicly
      traded, then as the Holder and the Company agree, or in the absence of such
      an
      agreement, by arbitration in accordance with the rules then standing of the
      American Arbitration Association, before a single arbitrator to be chosen from
      a
      panel of persons qualified by education and training to pass on the matter
      to be
      decided; or

     

    (d) If
      the
      Determination Date is the date of a liquidation, dissolution or winding up,
      or
      any event deemed to be a liquidation, dissolution or winding up pursuant to
      the
      Company's charter, then all amounts to be payable per share to holders of the
      Common Stock pursuant to the charter in the event of such liquidation,
      dissolution or winding up, plus all other amounts to be payable per share in
      respect of the Common Stock in liquidation under the charter, assuming for
      the
      purposes of this clause (d) that all of the shares of Common Stock then
      issuable upon exercise of all of the Warrants are outstanding at the
      Determination Date.

     

    2

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    1.5. Company
      Acknowledgment.
      The
      Company will, at the time of the exercise of the Warrant, upon the request
      of
      the Holder hereof acknowledge in writing its continuing obligation to afford
      to
      such Holder any rights to which such Holder shall continue to be entitled after
      such exercise in accordance with the provisions of this Warrant. If the Holder
      shall fail to make any such request, such failure shall not affect the
      continuing obligation of the Company to afford to such Holder any such
      rights.

     

    1.6. Trustee
      for Warrant Holders.
      In the
      event that a bank or trust company shall have been appointed as trustee for
      the
      Holder of the Warrants pursuant to Subsection 3.2, such bank or trust
      company shall have all the powers and duties of a warrant agent (as hereinafter
      described) and shall accept, in its own name for the account of the Company
      or
      such successor person as may be entitled thereto, all amounts otherwise payable
      to the Company or such successor, as the case may be, on exercise of this
      Warrant pursuant to this Section 1. 

     

      1.7 Delivery
      of Stock Certificates, etc. on Exercise.
      The
      Company agrees that the shares of Common Stock purchased upon exercise of this
      Warrant shall be deemed to be issued to the Holder hereof as the record owner
      of
      such shares as of the close of business on the date on which this Warrant shall
      have been surrendered and payment made for such shares as aforesaid. As soon
      as
      practicable after the exercise of this Warrant in full or in part, and in any
      event within five (5) days thereafter, the Company at its expense (including
      the
      payment by it of any applicable issue taxes) will cause to be issued in the
      name
      of and delivered to the Holder hereof, or as such Holder (upon payment by such
      Holder of any applicable transfer taxes) may direct in compliance with
      applicable securities laws, a certificate or certificates for the number of
      duly
      and validly issued, fully paid and nonassessable shares of Common Stock (or
      Other Securities) to which such Holder shall be entitled on such exercise,
      together with any other stock or other securities and property (including cash,
      where applicable) to which such Holder is entitled upon such exercise pursuant
      to Section 1 or otherwise. 

     

    2. Cashless
      Exercise.

     

    (a) If
      a
      Registration Statement as defined in the Subscription Agreement (“Registration
      Statement”) is effective and the Holder may sell its shares of Common Stock upon
      exercise hereof, this Warrant may be exercisable in whole or in part for cash
      only as set forth in Section 1 above. If no such Registration Statement is
      available, payment upon exercise may be made at the option of the Holder either
      in (i) cash, wire transfer or by certified or official bank check payable
      to the order of the Company equal to the applicable aggregate Purchase Price,
      (ii) by delivery of Common Stock issuable upon exercise of the Warrants in
      accordance with Section (b) below (“Cashless Exercise”) or
      (iii) by a combination of any of the foregoing methods, for the number
      of
      Common Stock specified in such form (as such exercise number shall be adjusted
      to reflect any adjustment in the total number of shares of Common Stock issuable
      to the holder per the terms of this Warrant) and the holder shall thereupon
      be
      entitled to receive the number of duly authorized, validly issued, fully paid
      and nonassessable shares of Common Stock (or Other Securities) determined as
      provided herein.

     

    (b) 
      If the
      Fair Market Value of one share of Common Stock is greater than the Purchase
      Price (at the date of calculation as set forth below) and no Registration
      Statement relating to the shares of Common Stock underlying this Warrant is
      effective, in lieu of exercising this Warrant for cash, the holder may elect
      to
      receive shares equal to the value (as determined below) of this Warrant (or
      the
      portion thereof being cancelled) by surrender of this Warrant at the principal
      office of the Company together with the properly endorsed Subscription Form
      in
      which event the Company shall issue to the holder a number of shares of Common
      Stock computed using the following formula:

     

    3

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    X=Y
      (A-B)

    A

    

    Where X= the
      number of shares of Common Stock to be issued to the holder

    

    
      	 	
              Y=

            	
              the
                number of shares of Common Stock purchasable under the Warrant or,
                if only
                a portion of the Warrant is being exercised, the portion of the Warrant
                being exercised (at the date of such
                calculation)

            

    

     

    
      	 	
              A=

            	
              the
                Fair Market Value of one share of the Company’s Common Stock (at the date
                of such calculation)

            

    

     

    
      	 	
              B=

            	
              Purchase
                Price (as adjusted to the date of such
                calculation)

            

    

     

    (c)  The
      Holder may employ the cashless exercise feature described above only during
      the
      pendency of a Non-Registration Event as described in Section 11 of the
      Subscription Agreement.

     

    (d)  For
      purposes of Rule 144 promulgated under the 1933 Act, it is intended, understood
      and acknowledged that the Commission currently has interpreted Rule 144 to
      mean
      that the Warrant Shares issued in a cashless exercise transaction shall be
      deemed to have been acquired by the Holder, and the holding period for the
      Warrant Shares shall be deemed to have commenced, on the date this Warrant
      was
      originally issued pursuant to the Subscription Agreement.

     

    3. Adjustment
      for Reorganization, Consolidation, Merger, etc.

     

    3.1. Reorganization,
      Consolidation, Merger, etc.
      In case
      at any time or from time to time, the Company shall (a) effect a
      reorganization, (b) consolidate with or merge into any other person
      or
      (c) transfer all or substantially all of its properties or assets to
      any
      other person under any plan or arrangement contemplating the dissolution of
      the
      Company, then, in each such case, as a condition to the consummation of such
      a
      transaction, proper and adequate provision shall be made by the Company whereby
      the Holder of this Warrant, on the exercise hereof as provided in
      Section 1, at any time after the consummation of such reorganization,
      consolidation or merger or the effective date of such dissolution, as the case
      may be, shall receive, in lieu of the Common Stock (or Other Securities)
      issuable on such exercise prior to such consummation or such effective date,
      the
      stock and other securities and property (including cash) to which such Holder
      would have been entitled upon such consummation or in connection with such
      dissolution, as the case may be, if such Holder had so exercised this Warrant,
      immediately prior thereto, all subject to further adjustment thereafter as
      provided in Section 4.

     

    3.2. Dissolution.
      In the
      event of any dissolution of the Company following the transfer of all or
      substantially all of its properties or assets, the Company, prior to such
      dissolution, shall at its expense deliver or cause to be delivered the stock
      and
      other securities and property (including cash, where applicable) receivable
      by
      the Holder of the Warrants after the effective date of such dissolution pursuant
      to this Section 3 to a bank or trust company (a "Trustee") having its
      principal office in New York, NY, as trustee for the Holder of the
      Warrants. 

     

    3.3. Continuation
      of Terms.
      Upon
      any reorganization, consolidation, merger or transfer (and any dissolution
      following any transfer) referred to in this Section 3, this Warrant
      shall
      continue in full force and effect and the terms hereof shall be applicable
      to
      the Other Securities and property receivable on the exercise of this Warrant
      after the consummation of such reorganization, consolidation or merger or the
      effective date of dissolution following any such transfer, as the case may
      be,
      and shall be binding upon the issuer of any Other Securities, including, in
      the
      case of any such transfer, the person acquiring all or substantially all of
      the
      properties or assets of the Company, whether or not such person shall have
      expressly assumed the terms of this Warrant as provided in Section 4.
      In
      the event this Warrant does not continue in full force and effect after the
      consummation of the transaction described in this Section 3, then only
      in
      such event will the Company's securities and property (including cash, where
      applicable) receivable by the Holder of the Warrants be delivered to the Trustee
      as contemplated by Section 3.2.

     

    4

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    3.4 Share
      Issuance.
      Until
      the Expiration Date, if the Company shall issue any Common Stock except for
      the
      Excepted Issuances (as defined in the Subscription Agreement), prior to the
      complete exercise of this Warrant for a consideration less than the Purchase
      Price that would be in effect at the time of such issue, then, and thereafter
      successively upon each such issue, the Purchase Price shall be reduced to such
      other lower issue price. For purposes of this adjustment, the issuance of any
      security or debt instrument of the Company carrying the right to convert such
      security or debt instrument into Common Stock or of any warrant, right or option
      to purchase Common Stock shall result in an adjustment to the Purchase Price
      upon the issuance of the above-described security, debt instrument, warrant,
      right, or option. The reduction of the Purchase Price described in this Section
      3.4 is in addition to the other rights of the Holder described in the
      Subscription Agreement.

     

    4. Extraordinary
      Events Regarding Common Stock.
      In the
      event that the Company shall (a) issue additional shares of the Common
      Stock as a dividend or other distribution on outstanding Common Stock,
      (b) subdivide its outstanding shares of Common Stock, or (c) combine
      its outstanding shares of the Common Stock into a smaller number of shares
      of
      the Common Stock, then, in each such event, the Purchase Price shall,
      simultaneously with the happening of such event, be adjusted by multiplying
      the
      then Purchase Price by a fraction, the numerator of which shall be the number
      of
      shares of Common Stock outstanding immediately prior to such event and the
      denominator of which shall be the number of shares of Common Stock outstanding
      immediately after such event, and the product so obtained shall thereafter
      be
      the Purchase Price then in effect. The Purchase Price, as so adjusted, shall
      be
      readjusted in the same manner upon the happening of any successive event or
      events described herein in this Section 4. The number of shares of Common
      Stock that the Holder of this Warrant shall thereafter, on the exercise hereof
      as provided in Section 1, be entitled to receive shall be adjusted to
      a
      number determined by multiplying the number of shares of Common Stock that
      would
      otherwise (but for the provisions of this Section 4) be issuable on
      such
      exercise by a fraction of which (a) the numerator is the Purchase Price
      that would otherwise (but for the provisions of this Section 4) be in
      effect, and (b) the denominator is the Purchase Price in effect on the
      date
      of such exercise.

     

    5. Certificate
      as to Adjustments.
      In each
      case of any adjustment or readjustment in the shares of Common Stock (or Other
      Securities) issuable on the exercise of the Warrants, the Company at its expense
      will promptly cause its Chief Financial Officer or other appropriate designee
      to
      compute such adjustment or readjustment in accordance with the terms of the
      Warrant and prepare a certificate setting forth such adjustment or readjustment
      and showing in detail the facts upon which such adjustment or readjustment
      is
      based, including a statement of (a) the consideration received or
      receivable by the Company for any additional shares of Common Stock (or Other
      Securities) issued or sold or deemed to have been issued or sold, (b) the
      number of shares of Common Stock (or Other Securities) outstanding or deemed
      to
      be outstanding, and (c) the Purchase Price and the number of shares
      of
      Common Stock to be received upon exercise of this Warrant, in effect immediately
      prior to such adjustment or readjustment and as adjusted or readjusted as
      provided in this Warrant. The Company will forthwith mail a copy of each such
      certificate to the Holder of the Warrant and any Warrant Agent of the Company
      (appointed pursuant to Section 11 hereof).

     

    5

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    6. Reservation
      of Stock, etc. Issuable on Exercise of Warrant; Financial
      Statements.
      The
      Company will at all times reserve and keep available, solely for issuance and
      delivery on the exercise of the Warrants, all shares of Common Stock (or Other
      Securities) from time to time issuable on the exercise of the Warrant. This
      Warrant entitles the Holder hereof to receive copies of all financial and other
      information distributed or required to be distributed to the holders of the
      Company's Common Stock. 

     

    7. Assignment;
      Exchange of Warrant.
      This
      Warrant has not been registered under the Securities Act of 1933, as amended
      (the “1933 Act”), or any applicable state securities laws, and has been issued
      to the Holder for investment and not with a view to the distribution of either
      the Warrant or the shares underlying the Warrant (“Warrant Shares”). Neither
      this Warrant nor any of the Warrant Shares or any other security issued or
      issuable upon exercise of this Warrant may be sold, transferred, pledged or
      hypothecated in the absence of an effective registration statement under the
      Act
      relating to such security or an opinion of counsel satisfactory to the Company
      that registration is not required under the Act. Each certificate for the
      Warrant, the Warrant Shares and any other security issued or issuable upon
      exercise of this Warrant shall contain a legend on the face thereof, in form
      and
      substance satisfactory to counsel for the Company, setting forth the
      restrictions on transfer contained in this Section.
      Subject
      to compliance with applicable securities laws, this Warrant, and the rights
      evidenced hereby, may be transferred by any registered holder hereof (a
      "Transferor"). On the surrender for exchange of this Warrant, with the
      Transferor's endorsement in the form of Exhibit B attached hereto (the
      “Transferor Endorsement Form") and together with an opinion of counsel
      reasonably satisfactory to the Company that the transfer of this Warrant will
      be
      in compliance with applicable securities laws, the Company at its expense,
      twice, only, but with payment by the Transferor of any applicable transfer
      taxes, will issue and deliver to or on the order of the Transferor thereof
      a new
      Warrant or Warrants of like tenor, in the name of the Transferor and/or the
      transferee(s) specified in such Transferor Endorsement Form (each a
      "Transferee"), calling in the aggregate on the face or faces thereof for the
      number of shares of Common Stock called for on the face or faces of the Warrant
      so surrendered by the Transferor. No such transfers shall result in a public
      distribution of the Warrant; and the Company shall only be responsible for
“blue
      sky” compliance expenses for resales under any registration statement filed in
      accordance with Section 11 of the Subscription Agreement for two (2) such
      transfers to two (2) applicable states of the United States only.

     

    8. Replacement
      of Warrant.
      On
      receipt of evidence reasonably satisfactory to the Company of the loss, theft,
      destruction or mutilation of this Warrant and, in the case of any such loss,
      theft or destruction of this Warrant, on delivery of an indemnity agreement
      or
      security reasonably satisfactory in form and amount to the Company or, in the
      case of any such mutilation, on surrender and cancellation of this Warrant,
      the
      Company at its expense, twice only, will execute and deliver, in lieu thereof,
      a
      new Warrant of like tenor.

     

    9. Registration
      Rights.
      The
      Holder of this Warrant has been granted certain registration rights by the
      Company. These registration rights are set forth in the Subscription Agreement.
      The terms of the Subscription Agreement are incorporated herein by this
      reference. Upon the occurrence of a Non-Registration Event, or in the event
      the
      Company is unable to issue Common Stock upon exercise of this Warrant that
      has
      been registered in a Registration Statement described in Section 11 of
      the Subscription Agreement, within the time periods described in the
      Subscription Agreement, which Registration Statement must be effective for
      the
      periods set forth in the Subscription Agreement, then upon written demand made
      by the Holder, the Company will pay to the Holder of this Warrant, in lieu
      of
      delivering Common Stock, a sum equal to the closing price of the Company's
      Common Stock on the principal market or exchange upon which the Common Stock
      is
      listed for trading on the trading date immediately preceding the date notice
      is
      given by the Holder, less the Purchase Price, for each share of Common Stock
      designated in such notice from the Holder.

     

    6

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    10. Maximum
      Exercise.
      The
      Holder shall not be entitled to exercise this Warrant on an exercise date in
      connection with that number of shares of Common Stock which would be in excess
      of the sum of (i) the number of shares of Common Stock beneficially
      owned
      by the Holder and its affiliates on an exercise date, and (ii) the number
      of shares of Common Stock issuable upon the exercise of this Warrant with
      respect to which the determination of this limitation is being made on an
      exercise date, which would result in beneficial ownership by the Holder and
      its
      affiliates of more than 9.99% of the outstanding shares of Common Stock on
      such
      date. For the purposes of the immediately preceding sentence, beneficial
      ownership shall be determined in accordance with Section 13(d) of
      the
      Securities Exchange Act of 1934, as amended, and Regulation 13d-3 thereunder.
      Subject to the foregoing, the Holder shall not be limited to aggregate exercises
      which would result in the issuance of more than 9.99%. The restriction described
      in this paragraph may be revoked upon sixty-one (61) days prior notice
      from
      the Holder to the Company. The Holder may allocate which of the equity of the
      Company deemed beneficially owned by the Subscriber shall be included in the
      9.99% amount described above and which shall be allocated to the excess above
      9.99%.

     

    11. Warrant
      Agent.
      The
      Company may, by written notice to the Holder of the Warrant, appoint an agent
      (a
“Warrant Agent”) for the purpose of issuing Common Stock (or Other Securities)
      on the exercise of this Warrant pursuant to Section 1, exchanging this
      Warrant pursuant to Section 7, and replacing this Warrant pursuant to
      Section 8, or any of the foregoing, and thereafter any such issuance,
      exchange or replacement, as the case may be, shall be made at such office by
      such Warrant Agent. 

     

    12. Transfer
      on the Company's Books.
      Until
      this Warrant is transferred on the books of the Company, the Company may treat
      the registered holder hereof as the absolute owner hereof for all purposes,
      notwithstanding any notice to the contrary. 

     

    13. 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: Kaire Holdings Incorporated,
      8135 Clybourn Avenue, Sun Valley, CA 91352, telecopier number: (818) 255-4997,
      with a copy by telecopier only to: Owen M. Naccarato, Esq., Naccarato &
      Associates, 19600 Fairchild, Suite 260, Irvine, CA 92614, telecopier: (949)
      851-9262, and (ii) if to the Holder, to the address and telecopier number listed
      on the first paragraph of this Warrant, with a copy by telecopier only to:
      Grushko & Mittman, P.C., 551 Fifth Avenue, Suite 1601, New York, New York
      10176, telecopier number: (212) 697-3575.

     

    14. Miscellaneous.
      This
      Warrant and any term hereof may be changed, waived, discharged or terminated
      only by an instrument in writing signed by the party against which enforcement
      of such change, waiver, discharge or termination is sought. This Warrant shall
      be construed and enforced in accordance with and governed by the laws of New
      York. Any dispute relating to this Warrant shall be adjudicated in New York
      County in the State of New York. The headings in this Warrant are for purposes
      of reference only, and shall not limit or otherwise affect any of the terms
      hereof. The invalidity or unenforceability of any provision hereof shall in
      no
      way affect the validity or enforceability of any other provision. 

     

     

    

     

     

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          7

          

          

          

          

          

          

        

         

      

      
         

        
          

        

      

      
         

      

    

    IN
      WITNESS WHEREOF, the Company has executed this Warrant as of the date first
      written above. 

     

    
      	 	
              KAIRE
                HOLDINGS INCORPORATED 

               

               

              /s/
                Steve Westlund

              By:        

              Name:
                Steve Westlund

              Title:
                CEO, Director

               

               

            
	
              Witness:

               

               

            	 	 

    

    

    
      
        
          8

          

          

          

          

          

          

        

         

      

      
         

        
          

        

      

      
         

      

    

    Exhibit A

    

    FORM
      OF
      SUBSCRIPTION

    (to
      be
      signed only on exercise of Warrant)

    

    TO:
      KAIRE
      HOLDINGS INCORPORATED 

    The
      undersigned, pursuant to the provisions set forth in the attached Warrant
      (No.____), hereby irrevocably elects to purchase (check applicable
      box):

    

    ___ ________
      shares of the Common Stock covered by such Warrant; or

    ___ the
      maximum number of shares of Common Stock covered by such Warrant pursuant to
      the
      cashless exercise procedure set forth in Section 2.

    

    The
      undersigned herewith makes payment of the full purchase price for such shares
      at
      the price per share provided for in such Warrant, which is $___________. Such
      payment takes the form of (check applicable box or boxes):

    

    ___ $__________
      in lawful money of the United States; and/or

    ___ the
      cancellation of such portion of the attached Warrant as is exercisable for
      a
      total of _______ shares of Common Stock (using a Fair Market Value of $_______
      per share for purposes of this calculation); and/or

    

    ___ the
      cancellation of such number of shares of Common Stock as is necessary, in
      accordance with the formula set forth in Section 2, to exercise this
      Warrant with respect to the maximum number of shares of Common Stock purchasable
      pursuant to the cashless exercise procedure set forth in
      Section 2.

    

    The
      undersigned requests that the certificates for such shares be issued in the
      name
      of, and delivered to _____________________________________________________
      whose
      address is _________________________________________________      

    ______________________________________        .

    

    The
      undersigned represents and warrants that all offers and sales by the undersigned
      of the securities issuable upon exercise of the within Warrant shall be made
      pursuant to registration of the Common Stock under the Securities Act of 1933,
      as amended (the "Securities Act"), or pursuant to an exemption from registration
      under the Securities Act.

    

    
      	
              Dated:___________________

            	
              (Signature
                must conform to name of holder as specified on the face of the
                Warrant)

               

              (Address)

            

    

    

    
      
        
          9

          

          

          

          

          

          

        

         

      

      
         

        
          

        

      

      
         

        
        

      

    

    Exhibit B

    

    

    FORM
      OF
      TRANSFEROR ENDORSEMENT

    (To
      be
      signed only on transfer of Warrant)

    For
      value
      received, the undersigned hereby sells, assigns, and transfers unto the
      person(s) named below under the heading "Transferees" the right represented
      by
      the within Warrant to purchase the percentage and number of shares of Common
      Stock of KAIRE HOLDINGS INCORPORATED to which the within Warrant relates
      specified under the headings "Percentage Transferred" and "Number Transferred,"
      respectively, opposite the name(s) of such person(s) and appoints each such
      person Attorney to transfer its respective right on the books of KAIRE HOLDINGS
      INCORPORATED with full power of substitution in the premises.

     

    

    
      	
              Transferees

            	
              Percentage
                Transferred

            	
              Number
                Transferred

            
	 	 	 
	 	 	 
	 	 	 

    

    

    

    
      	
              Dated:
                ______________, ___________

               

               

               

              Signed
                in the presence of:

               

              (Name)

               

               

              ACCEPTED
                AND AGREED:

              [TRANSFEREE]

               

               

              (Name)

            	
              (Signature
                must conform to name of holder as specified on the face of the
                warrant)

               

               

               

              (address)

               

              (address)

            

    

    

    
10Subscription Agreement May 2004

    EXHIBIT
      10.63

     

    SUBSCRIPTION
      AGREEMENT

     

     

    THIS
      SUBSCRIPTION AGREEMENT
      (this
      "Agreement"), dated as of April 22, 2004, by and among Kaire Holdings
      Incorporated, a Delaware corporation (the "Company"), and the subscribers
      identified on the signature pages hereto (each a “Subscriber” and collectively
“Subscribers” if more than one).

     

    WHEREAS,
      the
      Company and the Subscribers are executing and delivering this Agreement in
      reliance upon an exemption from securities registration afforded by the
      provisions of Section 4(2), Section 4(6) and/or Regulation D ("Regulation D")
      as
      promulgated by the United States Securities and Exchange Commission (the "SEC")
      under the Securities Act of 1933, as amended (the "1933 Act").

     

    WHEREAS,
      the
      parties desire that, upon the terms and subject to the conditions contained
      herein, the Company shall issue and sell to the Subscribers, as provided herein,
      and the Subscribers, in the aggregate, shall purchase up to $750,000 (the
      "Purchase Price") of principal amount of 8% promissory notes of the Company
      (“Note” or “Notes”) convertible into shares of the Company's common stock, $.001
      par value (the "Common Stock") at a per share conversion price equal to $0.09
      (“Conversion Price”); and share purchase warrants (the “Warrants”) to purchase
      shares of Common Stock (the “Warrant Shares”). The Conversion Price is subject
      to adjustment as described in the Note and this Agreement. The Notes, shares
      of
      Common Stock issuable upon conversion of the Notes (the “Shares”), the Warrants
      and the Warrant Shares are collectively referred to herein as the "Securities";
      and

     

    WHEREAS,
      the
      aggregate proceeds of the sale of the Notes and the Warrants contemplated hereby
      shall be held in escrow pursuant to the terms of a Funds Escrow Agreement to
      be
      executed by the parties (the "Escrow Agreement").

     

    NOW,
      THEREFORE,
      in
      consideration of the mutual covenants and other agreements contained in this
      Agreement the Company and the Subscribers hereby agree as follows:

     

    1. Closing.
      Subject
      to the satisfaction or waiver of the terms and conditions of this Agreement,
      on
      the Closing Date, each Subscriber shall purchase and the Company shall sell
      to
      each Subscriber a Note in the principal amount designated on the signature
      page
      hereto. The Closing Date shall be the date that subscriber funds representing
      the net amount due the Company from the Purchase Price of the Offering is
      transmitted by wire transfer or otherwise to or for the benefit of the
      Company.

     

    2. Escrow
      Arrangements; Form of Payment.
      Upon
      execution hereof by the parties and pursuant to the terms of the Escrow
      Agreement, each Subscriber agrees to make the deliveries required of such
      Subscriber as set forth in the Escrow Agreement annexed hereto as Exhibit
      A
      and the
      Company agrees to make the deliveries required of the Company as set forth
      in
      the Escrow Agreement.

     

    3. Warrants.
      On the
      Closing Date, the Company will issue Warrants to the Subscribers in the form
      of
Exhibit
      B
      hereto.
      Fifty (50) Warrants will be issued for each nine dollars ($9.00) of Purchase
      Price paid on the Closing Date (“Warrants”). The per Warrant Share exercise
      price to acquire a Warrant Share upon exercise of Warrant shall be one hundred
      and five percent (105%) of the closing price of the Common Stock as reported
      by
      Bloomberg L.P. for the OTC Bulletin Board (“Bulletin Board”) for the last
      trading day immediately preceding the Closing Date. The Warrants will be
      exercisable for five (5) years after the Closing Date.

     

    1

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    4. Subscriber's
      Representations and Warranties.
      Each
      Subscriber hereby represents and warrants to and agrees with the Company as
      to
      such Subscriber that:

     

    (a) Information
      on Company.
      The
      Subscriber has been furnished with or has obtained from the EDGAR Website of
      the
      Securities and Exchange Commission (the “Commission”) the Company's Form 10-KSB
      for the year ended December 31, 2003 as filed with the Commission, together
      with
      all subsequently filed Forms 10-QSB, 8-K, and filings made with the Commission
      available at the EDGAR website (hereinafter referred to collectively as the
      "Reports"). In addition, the Subscriber has received in writing from the Company
      such other information concerning its operations, financial condition and other
      matters as the Subscriber has requested in writing (such other information
      is
      collectively, the "Other Written Information"), and considered all factors
      the
      Subscriber deems material in deciding on the advisability of investing in the
      Securities. 

     

    (b) Information
      on Subscriber.
      The
      Subscriber is, and will be at the time of the conversion of the Notes and
      exercise of any of the Warrants, an "accredited investor", as such term is
      defined in Regulation D promulgated by the Commission under the Securities
      Act
      of 1933, as amended (the “1933 Act”), is experienced in investments and business
      matters, has made investments of a speculative nature and has purchased
      securities of United States publicly-owned companies in private placements
      in
      the past and, with its representatives, has such knowledge and experience in
      financial, tax and other business matters as to enable the Subscriber to utilize
      the information made available by the Company to evaluate the merits and risks
      of and to make an informed investment decision with respect to the proposed
      purchase, which represents a speculative investment. The Subscriber has the
      authority and is duly and legally qualified to purchase and own the Securities.
      The Subscriber is able to bear the risk of such investment for an indefinite
      period and to afford a complete loss thereof. The information set forth on
      the
      signature page hereto regarding the Subscriber is accurate.

     

    (c) Purchase
      of Notes and Warrants.
      On
      Closing Date, the Subscriber will purchase the Notes and Warrants as principal
      for its own account and not with a view to any distribution
      thereof.

     

    (d) Compliance
      with Securities Act.
      The
      Subscriber 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
      (based in part on the accuracy of the representations and warranties of
      Subscriber contained herein), 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. In any
      event, and subject to compliance with applicable securities laws, the Subscriber
      may enter into hedging transactions with third parties, which may in turn engage
      in short sales of the Securities in the course of hedging the position they
      assume and the Subscriber may also enter into short positions or other
      derivative transactions relating to the Securities, or interests in the
      Securities, and deliver the Securities, or interests in the Securities, to
      close
      out their short or other positions or otherwise settle short sales or other
      transactions, or loan or pledge the Securities, or interests in the Securities,
      to third parties that in turn may dispose of these Securities.

     

    (e) Shares
      Legend.
      The
      Shares and the Warrant Shares shall bear the following or similar
      legend:

     

    "THE
      SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED. THESE SHARES MAY NOT BE SOLD, OFFERED FOR
      SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
      STATEMENT UNDER SUCH SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAW
      OR AN
      OPINION OF COUNSEL REASONABLY SATISFACTORY TO KAIRE HOLDINGS INCORPORATED THAT
      SUCH REGISTRATION IS NOT REQUIRED."

     

    2

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (f) Warrants
      Legend.
      The
      Warrants shall bear the following 

     

    or
      similar legend:

     

    "THIS
      WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT
      BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS WARRANT
      AND
      THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD,
      OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
      REGISTRATION STATEMENT AS TO THIS WARRANT UNDER SAID ACT OR ANY APPLICABLE
      STATE
      SECURITIES LAW OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO KAIRE
      HOLDINGS INCORPORATED THAT SUCH REGISTRATION IS NOT REQUIRED."

    

    (g) Note
      Legend.
      The
      Note shall bear the following legend:

    

     

    "THIS
      NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN
      REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS NOTE AND THE
      COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE MAY NOT BE SOLD, OFFERED
      FOR
      SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
      STATEMENT AS TO THIS NOTE UNDER SAID ACT OR AN OPINION OF COUNSEL REASONABLY
      SATISFACTORY TO KAIRE HOLDINGS INCORPORATED THAT SUCH REGISTRATION IS NOT
      REQUIRED."

     

    (h) Communication
      of Offer.
      The
      offer to sell the Securities was directly communicated to the Subscriber by
      the
      Company. At no time was the Subscriber presented with or solicited by any
      leaflet, newspaper or magazine article, radio or television advertisement,
      or
      any other form of general advertising or solicited or invited to attend a
      promotional meeting otherwise than in connection and concurrently with such
      communicated offer.

     

    (i) Authority;
      Enforceability.
      This
      Agreement and other agreements delivered together with this Agreement or in
      connection herewith have been duly authorized, executed and delivered by the
      Subscriber and are valid and binding agreements enforceable in accordance with
      their terms, subject to bankruptcy, insolvency, fraudulent transfer,
      reorganization, moratorium and similar laws of general applicability relating
      to
      or affecting creditors' rights generally and to general principles of equity;
      and Subscriber has full corporate power and authority necessary to enter into
      this Agreement and such other agreements and to perform its obligations
      hereunder and under all other agreements entered into by the Subscriber relating
      hereto.

     

    3

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (j) Correctness
      of Representations.
      Each
      Subscriber represents as to such Subscriber that the foregoing representations
      and warranties are true and correct as of the date hereof and will be true
      and
      correct as of each closing date and unless a Subscriber otherwise notifies
      the
      Company prior to any closing date, shall be true and correct as of such closing
      dates. The foregoing representations and warranties shall survive the Closing
      Date for a period of three years.

     

    (k) Survival.
      The
      foregoing representations and warranties shall survive the Closing Date for
      a
      period of two years.

     

    5. Company
      Representations and Warranties.
      The
      Company represents and warrants to and agrees with each Subscriber
      that:

     

    (a) Due
      Incorporation.
      The
      Company and each of its subsidiaries is a corporation duly organized, validly
      existing and in good standing under the laws of the respective jurisdictions
      of
      their incorporation and have the requisite corporate power to own their
      properties and to carry on their business as now being conducted. The Company
      and each of its subsidiaries is duly qualified as a foreign corporation to
      do
      business and is in good standing in each jurisdiction where the nature of the
      business conducted or property owned by it makes such qualification necessary,
      other than those jurisdictions in which the failure to so qualify would not
      have
      a material adverse effect on the business, operations or financial condition
      of
      the Company.

     

    (b) Outstanding
      Stock.
      All
      issued and outstanding shares of capital stock of the Company and each of its
      subsidiaries has been duly authorized and validly issued and are fully paid
      and
      non-assessable.

     

    (c) Authority;
      Enforceability.
      This
      Agreement, the Notes, the Warrants, the Escrow Agreement and any other
      agreements delivered together with this Agreement or in connection herewith
      (collectively “Transaction Documents”) have been duly authorized, executed and
      delivered by the Company and are valid and binding agreements enforceable in
      accordance with their terms, subject to bankruptcy, insolvency, fraudulent
      transfer, reorganization, moratorium and similar laws of general applicability
      relating to or affecting creditors' rights generally and to general principles
      of equity. The Company has full corporate power and authority necessary to
      enter
      into and deliver the Transaction Documents and to perform its obligations
      thereunder.

     

    (d) Additional
      Issuances.
      There
      are no outstanding agreements or preemptive or similar rights affecting the
      Company's common stock or equity and no outstanding rights, warrants or options
      to acquire, or instruments convertible into or exchangeable for, or agreements
      or understandings with respect to the sale or issuance of any shares of common
      stock or equity of the Company or other equity interest in any of the
      subsidiaries of the Company except as described on Schedule
      5(d),
      or the
      Reports.

     

    (e) Consents.
      No
      consent, approval, authorization or order of any court, governmental agency
      or
      body or arbitrator having jurisdiction over the Company, or any of its
      affiliates, the American Stock Exchange, the National Association of Securities
      Dealers, Inc., Nasdaq SmallCap Market, Bulletin Board nor the Company's
      shareholders is required for the execution by the Company of the Transaction
      Documents and compliance and performance by the Company of its obligations
      under
      the Transaction Documents, including, without limitation, the issuance and
      sale
      of the Securities.

     

    (f) No
      Violation or Conflict.
      Assuming the representations and warranties of the Subscribers in Section 4
      are
      true and correct, except as described on the schedules hereto, neither the
      issuance and sale of the Securities nor the performance of the Company’s
      obligations under this Agreement and all other agreements entered into by the
      Company relating thereto by the Company will:

     

    4

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (i) violate,
      conflict with, result in a breach of, or constitute a default (or an event
      which
      with the giving of notice or the lapse of time or both would be reasonably
      likely to constitute a default) under (A) the articles or certificate of
      incorporation, charter or bylaws of the Company, (B) to the Company's knowledge,
      any decree, judgment, order, law, treaty, rule, regulation or determination
      applicable to the Company of any court, governmental agency or body, or
      arbitrator having jurisdiction over the Company or any of its subsidiaries
      or
      over the properties or assets of the Company or any of its affiliates, (C)
      the
      terms of any bond, debenture, note or any other evidence of indebtedness, or
      any
      agreement, stock option or other similar plan, indenture, lease, mortgage,
      deed
      of trust or other instrument to which the Company or any of its affiliates
      or
      subsidiaries is a party, by which the Company or any of its affiliates or
      subsidiaries is bound, or to which any of the properties of the Company or
      any
      of its affiliates or subsidiaries is subject, or (D) the terms of any "lock-up"
      or similar provision of any underwriting or similar agreement to which the
      Company, or any of its affiliates or subsidiaries is a party except the
      violation, conflict, breach, or default of which would not have a material
      adverse effect on the Company; or

     

    (ii) result
      in
      the creation or imposition of any lien, charge or encumbrance upon the
      Securities or any of the assets of the Company, its subsidiaries or any of
      its
      affiliates; or

     

    (iii) result
      in
      the activation of any anti-dilution rights or a reset or repricing of any debt
      or security instrument of any other creditor or equity holder of the Company,
      nor result in the acceleration of the due date of any obligation of the Company;
      or

     

    (iv) result
      in
      the activation of any piggy-back registration rights of any person or entity
      holding securities of the Company or having the right to receive securities
      of
      the Company.

     

    (g) The
      Securities.
      The
      Securities upon issuance:

     

    (i) are,
      or
      will be, free and clear of any security interests, liens, claims or other
      encumbrances, subject to restrictions upon transfer under the 1933 Act and
      any
      applicable state securities laws;

    

    (ii) have
      been, or will be, duly and validly authorized and on the date of conversion
      of
      the Notes, and upon exercise of the Warrants, the Shares and Warrant Shares,
      will be duly and validly issued, fully paid and nonassessable (and if registered
      pursuant to the 1933 Act, and if resold pursuant to an effective registration
      statement will be free trading and unrestricted, provided that each Subscriber
      complies with the prospectus delivery requirements of the 1933
      Act);

     

    (iii) will
      not
      have been issued or sold in violation of any preemptive or other similar rights
      of the holders of any securities of the Company except as described on the
      Disclosure Schedule; and

     

    (iv) will
      not
      subject the holders thereof to personal liability by reason of being such
      holders.

     

    (h) Litigation.
      There
      is no pending or, to the best knowledge of the Company, threatened action,
      suit,
      proceeding or investigation before any court, governmental agency or body,
      or
      arbitrator having jurisdiction over the Company, or any of its affiliates that
      would affect the execution by the Company or the performance by the Company
      of
      its obligations under this Agreement, and all other agreements entered into
      by
      the Company relating hereto. Except as disclosed in the Reports, there is no
      pending or, to the best knowledge of the Company, threatened action, suit,
      proceeding or investigation before any court, governmental agency or body,
      or
      arbitrator having jurisdiction over the Company, or any of its affiliates which
      litigation if adversely determined could have a material adverse effect on
      the
      Company.

     

    5

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (i) Reporting
      Company.
      The
      Company is a publicly-held company subject to reporting obligations pursuant
      to
      Sections 15(d) and 13 of the Securities Exchange Act of 1934, as amended (the
      "1934 Act") and has a class of common shares registered pursuant to Section
      12(g) of the 1934 Act. Pursuant to the provisions of the 1934 Act, the Company
      has timely filed all reports and other materials required to be filed thereunder
      with the Commission during the preceding twelve months.

     

    (j) No
      Market Manipulation.
      The
      Company has not taken, and will not take, directly or indirectly, any action
      designed to, or that might reasonably be expected to, cause or result in
      stabilization or manipulation of the price of the common stock of the Company
      to
      facilitate the sale or resale of the Securities or affect the price at which
      the
      Securities may be issued or resold.

     

    (k) Information
      Concerning Company.
      The
      Reports contain all material information relating to the Company and its
      operations and financial condition as of their respective dates which
      information is required to be disclosed therein. Since the date of the financial
      statements included in the Reports, and except as modified in the Other Written
      Information or in the Schedules hereto, there has been no material adverse
      change in the Company's business, financial condition or affairs not disclosed
      in the Reports. The Reports do not contain any untrue statement of a material
      fact or omit to state a material fact required to be stated therein or necessary
      to make the statements therein not misleading in light of the circumstances
      when
      made.

     

    (l) Stop
      Transfer.
      The
      Securities, when issued, will be restricted securities. The Company will not
      issue any stop transfer order or other order impeding the sale, resale or
      delivery of any of the Securities, except as may be required by any applicable
      federal or state securities laws and unless contemporaneous notice of such
      instruction is given to the Subscriber.

     

    (m) Defaults.
      The
      Company is not in violation of its Articles of Incorporation or ByLaws. The
      Company is (i) not in default under or in violation of any other material
      agreement or instrument to which it is a party or by which it or any of its
      properties are bound or affected, which default or violation would have a
      material adverse effect on the Company, (ii) not in default with respect to
      any
      order of any court, arbitrator or governmental body or subject to or party
      to
      any order of any court or governmental authority arising out of any action,
      suit
      or proceeding under any statute or other law respecting antitrust, monopoly,
      restraint of trade, unfair competition or similar matters, or (iii) to its
      knowledge in violation of any statute, rule or regulation of any governmental
      authority which violation would have a material adverse effect on the
      Company.

     

    (n) No
      Integrated Offering.
      Neither
      the Company, nor any of its affiliates, nor any person acting on its or their
      behalf, has directly or indirectly made any offers or sales of any security
      or
      solicited any offers to buy any security under circumstances that would cause
      the offer of the Securities pursuant to this Agreement to be integrated with
      prior offerings by the Company for purposes of the 1933 Act or any applicable
      stockholder approval provisions, including, without limitation, under the rules
      and regulations of the Bulletin Board. Nor will the Company or any of its
      affiliates or subsidiaries take any action or steps that would cause the offer
      of the Securities to be integrated with other offerings. The Company will not
      conduct any offering other than the transactions contemplated hereby that will
      be integrated with the offer or issuance of the Securities.

     

    6

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (o) No
      General Solicitation.
      Neither
      the Company, nor any of its affiliates, nor to its knowledge, any person acting
      on its or their behalf, has engaged in any form of general solicitation or
      general advertising (within the meaning of Regulation D under the 1933 Act)
      in
      connection with the offer or sale of the Securities.

     

    (p) Listing.
      The
      Company's common stock is quoted on the Bulletin Board. The Company has not
      received any oral or written notice that its common stock is not eligible nor
      will become ineligible for quotation on the Bulletin Board nor that its common
      stock does not meet all requirements for the continuation of such quotation
      and
      the Company satisfies and as of the Closing Date, the Company will satisfy
      all
      the requirements for the continued quotation of its common stock on the Bulletin
      Board.

     

    (q) No
      Undisclosed Liabilities.
      The
      Company has no liabilities or obligations which are material, individually
      or in
      the aggregate, which are not disclosed in the Reports and Other Written
      Information, other than those incurred in the ordinary course of the Company’s
      businesses since December 31, 2003 and which, individually or in the aggregate,
      would reasonably be expected to have a material adverse effect on the Company’s
      financial condition, other than as set forth in Schedule
      5(q).

     

    (r) No
      Undisclosed Events or Circumstances.
      Since
      December 31, 2003, no event or circumstance has occurred or exists with respect
      to the Company or its businesses, properties, operations or financial condition,
      that, under applicable law, rule or regulation, requires public disclosure
      or
      announcement prior to the date hereof by the Company but which has not been
      so
      publicly announced or disclosed in the Reports.

     

    (s)  Capitalization.
      The
      authorized and outstanding capital stock of the Company as of the date of this
      Agreement and the Closing Date are set forth on Schedule
      5(s).
      Except
      as set forth in the Reports and Other Written Information and Schedule
      5(d),
      there
      are no options, warrants, or rights to subscribe to securities, rights or
      obligations convertible into or exchangeable for or giving any right to
      subscribe for any shares of capital stock of the Company. All of the outstanding
      shares of Common Stock of the Company have been duly and validly authorized
      and
      issued and are fully paid and nonassessable.

     

    (t)  Dilution.
      The
      Company's executive officers and directors have studied and fully understand
      the
      nature of the Securities being sold hereby and recognize that they have a
      potential dilutive effect on the equity holdings of other holders of the
      Company’s equity or rights to receive equity of the Company. The board of
      directors of the Company has concluded, in its good faith business judgment,
      that such issuance is in the best interests of the Company. The Company
      specifically acknowledges that its obligation to issue the Shares upon
      conversion of the Note and exercise of the Warrants is binding upon the Company
      and enforceable, except as otherwise described in this Subscription Agreement
      or
      the Note, regardless of the dilution such issuance may have on the ownership
      interests of other shareholders of the Company or parties entitled to receive
      equity of the Company.

     

    (u)  No
      Disagreements with Accountants and Lawyers.
      There
      are no material disagreements of any kind presently existing, or reasonably
      anticipated by the Company to arise, between the accountants and lawyers
      formerly or presently employed by the Company, including but not limited to
      disputes or conflicts over payment owed to such accountants and
      lawyers.

     

    7

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (v)  Investment
      Company.
      The
      Company is not, and is not an Affiliate (as defined in Rule 405 under the 1933
      Act) of, an “investment company” within the meaning of the Investment Company
      Act of 1940, as amended.

     

    (w)  Correctness
      of Representations.
      The
      Company represents that the foregoing representations and warranties are true
      and correct as of the date hereof and will be true and correct as of each
      closing date, and unless the Company otherwise notifies the Subscribers prior
      to
      any closing date, shall be true and correct as of such closing dates. The
      foregoing representations and warranties shall survive the Closing Date for
      a
      period of three years.

     

    (x) Survival.
      The
      foregoing representations and warranties shall survive the Closing Date for
      a
      period of two years.

     

    6. Regulation
      D Offering.
      The
      offer and issuance of the Securities to the Subscribers is being made pursuant
      to the exemption from the registration provisions of the 1933 Act afforded
      by
      Section 4(2) or Section 4(6) of the 1933 Act and/or Rule 506 of Regulation
      D
      promulgated thereunder. On the Closing Date, the Company will provide an opinion
      reasonably acceptable to Subscriber from the Company's legal counsel opining
      on
      the availability of an exemption from registration under the 1933 Act as it
      relates to the offer and issuance of the Securities and other matters reasonably
      requested by Subscribers. A form of the legal opinion is annexed hereto as
      Exhibit
      C.
      The
      Company will provide, at the Company's expense, such other legal opinions in
      the
      future as are reasonably necessary for the resale of the Common Stock and
      exercise of the Warrants and resale of the Warrant Shares.

    

    7.1. Conversion
      of Note.

    

    (a) Upon
      the
      conversion of the Note or part thereof, the Company shall, at its own cost
      and
      expense, take all necessary action, including obtaining and delivering, an
      opinion of counsel to assure that the Company's transfer agent shall issue
      stock
      certificates in the name of Subscriber (or its nominee) or such other persons
      as
      designated by Subscriber and in such denominations to be specified at conversion
      representing the number of shares of common stock issuable upon such conversion.
      The Company warrants that no instructions other than these instructions have
      been or will be given to the transfer agent of the Company's Common Stock and
      that, unless waived by the Subscriber, the Shares will be free-trading, and
      freely transferable, and will not contain a legend restricting the resale or
      transferability of the Shares provided the Shares are being sold pursuant to
      an
      effective registration statement covering the Shares or are otherwise exempt
      from registration. 

    

    (b) Subscriber
      will give notice of its decision to exercise its right to convert the Note
      or
      part thereof by telecopying an executed and completed Notice of Conversion
      (a
      form of which is annexed to Exhibit
      A
      to the
      Note) to the Company via confirmed telecopier transmission or otherwise pursuant
      to Section 13(a) of this Agreement. The Subscriber will not be required to
      surrender the Note until the Note has been fully converted or satisfied. Each
      date on which a Notice of Conversion is telecopied to the Company in accordance
      with the provisions hereof shall be deemed a Conversion Date. The Company will
      itself or cause the Company’s transfer agent to transmit the Company's Common
      Stock certificates representing the Shares issuable upon conversion of the
      Note
      to the Subscriber via express courier for receipt by such Subscriber within
      three (3) business days after receipt by the Company of the Notice of Conversion
      (the "Delivery Date"). In the event the Shares are electronically transferable,
      then delivery of the Shares must
      be made
      by electronic transfer provided request for such electronic transfer has been
      made by the Subscriber. A Note representing the balance of the Note not so
      converted will be provided by the Company to the Subscriber if requested by
      Subscriber, provided the Subscriber delivers an original Note to the Company.
      To
      the extent that a Subscriber elects not to surrender a Note for reissuance
      upon
      partial payment or conversion, the Subscriber hereby indemnifies the Company
      against any and all loss or damage attributable to a third-party claim in an
      amount in excess of the actual amount then due under the Note.

     

    8

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
 

    (c) The
      Company understands that a delay in the delivery of the Shares in the form
      required pursuant to Section 7 hereof, or the Mandatory Redemption Amount
      described in Section 7.2 hereof, beyond the Delivery Date or Mandatory
      Redemption Payment Date (as hereinafter defined) could result in economic loss
      to the Subscriber. As compensation to the Subscriber for such loss, the Company
      agrees to pay to the Subscriber for late issuance of Shares in the form required
      pursuant to Section 7 hereof upon Conversion of the Note in the amount of $100
      per business day after the Delivery Date for each $10,000 of Note principal
      amount being converted, of the corresponding Shares which are not timely
      delivered. The Company shall pay any payments incurred under this Section in
      immediately available funds upon demand. Furthermore, in addition to any other
      remedies which may be available to the Subscriber, in the event that the Company
      fails for any reason to effect delivery of the Shares by the Delivery Date
      or
      make payment by the Mandatory Redemption Payment Date, the Subscriber will
      be
      entitled to revoke all or part of the relevant Notice of Conversion or rescind
      all or part of the notice of Mandatory Redemption by delivery of a notice to
      such effect to the Company whereupon the Company and the Subscriber shall each
      be restored to their respective positions immediately prior to the delivery
      of
      such notice, except that late payment charges described above shall be payable
      through the date notice of revocation or rescission is given to the
      Company.

    

    (d) Nothing
      contained herein or in any document referred to herein or delivered in
      connection herewith shall be deemed to establish or require the payment of
      a
      rate of interest or other charges in excess of the maximum permitted by
      applicable law. In the event that the rate of interest or dividends required
      to
      be paid or other charges hereunder exceed the maximum permitted by such law,
      any
      payments in excess of such maximum shall be credited against amounts owed by
      the
      Company to the Subscriber and thus refunded to the Company.

    

    7.2. Mandatory
      Redemption at Subscriber’s Election.
      In the
      event the Company is prohibited from issuing Shares, or fails to timely deliver
      Shares on a Delivery Date, or upon the occurrence of any other Event of Default
      (as defined in the Note or in this Agreement) or for any reason other than
      pursuant to the limitations set forth in Section 7.3 hereof, then at the
      Subscriber's election, the Company must pay to the Subscriber ten (10) business
      days after request by the Subscriber or on the Delivery Date (if requested
      by
      the Subscriber) at the Subscriber’s election, a sum of money determined by (i)
      multiplying up to the outstanding principal amount of the Note designated by
      the
      Subscriber by 130%, or (ii) multiplying the number of Shares otherwise
      deliverable upon conversion of an amount of Note principal and/or interest
      designated by the Subscriber (with the date of giving of such designation being
      a Deemed Conversion Date) at the then Conversion Price that would be in effect
      on the Deemed Conversion Date by the highest closing price of the Common Stock
      on the principal market for the period commencing on the Deemed Conversion
      Date
      until the day prior to the receipt of the Mandatory Redemption Payment,
      whichever is greater, together with accrued but unpaid interest thereon
      ("Mandatory Redemption Payment"). The Mandatory Redemption Payment must be
      received by the Subscriber on the same date as the Company Shares otherwise
      deliverable or within ten (10) business days after request, whichever is sooner
      ("Mandatory Redemption Payment Date"). Upon receipt of the Mandatory Redemption
      Payment, the corresponding Note principal and interest will be deemed paid
      and
      no longer outstanding.

    

    7.3. Maximum
      Conversion.
      The
      Subscriber shall not be entitled to convert on a Conversion Date that amount
      of
      the Note in connection with that number of shares of Common Stock which would
      be
      in excess of the sum of (i) the number of shares of common stock beneficially
      owned by the Subscriber and its affiliates on a Conversion Date, and (ii) the
      number of shares of Common Stock issuable upon the conversion of the Note with
      respect to which the determination of this provision is being made on a
      Conversion Date, which would result in beneficial ownership by the Subscriber
      and its affiliates of more than 9.99% of the outstanding shares of common stock
      of the Company on such Conversion Date. For the purposes of the provision to
      the
      immediately preceding sentence, beneficial ownership shall be determined in
      accordance with Section 13(d) of the Securities Exchange Act of 1934, as
      amended, and Regulation 13d-3 thereunder. Subject to the foregoing, the
      Subscriber shall not be limited to aggregate conversions of only 9.99% and
      aggregate conversions by the Subscriber may exceed 9.99%. The Subscriber may
      void the conversion limitation described in this Section 7.3 upon and effective
      after 61 days prior written notice to the Company. The Subscriber may allocate
      which of the equity of the Company deemed beneficially owned by the Subscriber
      shall be included in the 9.99% amount described above and which shall be
      allocated to the excess above 9.99%.

     

    9

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
 

    7.4. Injunction
      - Posting of Bond.
      In the
      event a Subscriber shall elect to convert a Note or part thereof or exercise
      the
      Warrant in whole or in part, the Company may not refuse conversion or exercise
      based on any claim that such Subscriber or any one associated or affiliated
      with
      such Subscriber has been engaged in any violation of law, or for any other
      reason, unless, an injunction from a court, on notice, restraining and or
      enjoining conversion of all or part of said Note or exercise of all or part
      of
      said Warrant shall have been sought and obtained and the Company has posted
      a
      surety bond for the benefit of such Subscriber in the amount of 130% of the
      amount of the Note, or aggregate purchase price of the Warrant Shares which
      are
      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 Subscriber to the extent Subscriber obtains
      judgment.

    7.5. Buy-In.
      In
      addition to any other rights available to the Subscriber, if the Company fails
      to deliver to the Subscriber such shares issuable upon conversion of a Note
      by
      the Delivery Date and if ten (10) days after the Delivery Date the Subscriber
      purchases (in an open market transaction or otherwise) shares of Common Stock
      to
      deliver in satisfaction of a sale by such Subscriber of the Common Stock which
      the Subscriber anticipated receiving upon such conversion (a "Buy-In"), then
      the
      Company shall pay in cash to the Subscriber (in addition to any remedies
      available to or elected by the Subscriber) the amount by which (A) the
      Subscriber's total purchase price (including brokerage commissions, if any)
      for
      the shares of Common Stock so purchased exceeds (B) the aggregate principal
      and/or interest amount of the Note for which such conversion was not timely
      honored, 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
      the
      Subscriber purchases shares of Common Stock having a total purchase price of
      $11,000 to cover a Buy-In with respect to an attempted conversion of $10,000
      of
      note principal and/or interest, the Company shall be required to pay the
      Subscriber $1,000, plus interest. The Subscriber shall provide the Company
      written notice indicating the amounts payable to the Subscriber in respect
      of
      the Buy-In. The delivery date by which Common Stock must be delivered pursuant
      to this Section 7.5 shall be tolled for the amount of days that the Subscriber
      does not deliver information reasonably requested by the Company’s transfer
      agent.

    

    7.6 Adjustments.
      The
      Conversion Price and amount of Shares issuable upon conversion of the Notes
      and
      exercise of the Warrants shall be adjusted to offset the effect of stock splits,
      stock dividends, pro rata distributions of property or equity interests to
      the
      Company’s shareholders.

    

    7.7. Redemption.
      The
      Company may not redeem or call the Note without the consent of the holder of
      the
      Note.

     

    10

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    8. Legal
      Fee/Escrow Agent and Finder’s Fee. 

     

    (a) Legal
      Fee/Escrow Agent.
      The
      Company shall pay to Grushko & Mittman, P.C., a fee of $10,000 (“Legal
      Fees”) as reimbursement for services rendered in connection with this Agreement
      and the purchase and sale of the Notes and the Warrants (the “Offering”) and
      acting as Escrow Agent for the Offering. The Legal Fees will be payable out
      of
      funds held pursuant to the Escrow Agreement.

     

    (b) Finder’s
      Fee.
      The
      Company on the one hand, and each Subscriber (for himself only) on the other
      hand, agree to indemnify the other against and hold the other harmless from
      any
      and all liabilities to any persons claiming brokerage commissions or finder’s
      fees other than Bi-Coastal Consulting Corp. (“Finder”) on account of services
      purported to have been rendered on behalf of the indemnifying party in
      connection with this Agreement or the transactions contemplated hereby and
      arising out of such party’s actions. The Company agrees that it will pay the
      Finder a fee equal to 10% of the Purchase Price (“Finder’s Fees”). The Finder
      will also receive on the Closing Date ten (10) Warrants for each nine dollars
      ($9.00) of Purchase Price paid on the Closing Date (“Finder’s Warrants”). The
      Company represents that there are no other parties entitled to receive fees,
      commissions, or similar payments in connection with the Offering except the
      Finder. All the representations, covenants, warranties, undertakings, remedies,
      liquidated damages, indemnification, and other rights including but not limited
      to registration rights made or granted to or for the benefit of the Subscribers
      are hereby also made and granted to the Finder in respect of the Finder’s
      Warrants and Warrant Shares issuable upon exercise of the Finder’s Warrants.
      References to Warrants and Warrant Shares shall include Finder’s Warrants and
      Warrant Shares issuable upon exercise of the Finder’s Warrants.

     

    9. Covenants
      of the Company.
      The
      Company covenants and agrees with the Subscribers as follows:

     

    (a) Stop
      Orders.
      The
      Company will advise the Subscribers, promptly after it receives notice of
      issuance by the Commission, any state securities commission or any other
      regulatory authority of any stop order or of any order preventing or suspending
      any offering of any securities of the Company, or of the suspension of the
      qualification of the Common Stock of the Company for offering or sale in any
      jurisdiction, or the initiation of any proceeding for any such
      purpose.

     

    (b) Listing.
      The
      Company shall promptly secure the listing of the shares of Common Stock and
      the
      Warrant Shares upon each national securities exchange, or automated quotation
      system upon which they are or become eligible for listing (subject to official
      notice of issuance) and shall maintain such listing so long as any Warrants
      are
      outstanding. The Company will maintain the listing of its Common Stock on the
      American Stock Exchange, Nasdaq SmallCap Market, Nasdaq National Market System,
      Bulletin Board, or New York Stock Exchange (whichever of the foregoing is at
      the
      time the principal trading exchange or market for the Common Stock (the
“Principal Market”)), and will comply in all respects with the Company's
      reporting, filing and other obligations under the bylaws or rules of the
      Principal Market, as applicable. The Company will provide the Subscribers copies
      of all notices it receives notifying the Company of the threatened and actual
      delisting of the Common Stock from any Principal Market. As of the date of
      this
      Agreement and the Closing Date, the Bulletin Board is and will be the Principal
      Market.

     

    (c) Market
      Regulations.
      The
      Company shall notify the Commission, the Principal Market and applicable state
      authorities, in accordance with their requirements, of the transactions
      contemplated by this Agreement, and shall take all other necessary action and
      proceedings as may be required and permitted by applicable law, rule and
      regulation, for the legal and valid issuance of the Securities to the
      Subscribers and promptly provide copies thereof to Subscriber.

     

    11

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (d) Reporting
      Requirements.
      From
      the date of this Agreement and until the sooner of (i) two (2) years after
      the
      Closing Date, or (ii) until all the Shares and Warrant Shares have been resold
      or transferred by all the Subscribers pursuant to the Registration Statement
      or
      pursuant to Rule 144, without regard to volume limitation, the Company will
      (v)
      cause its Common Stock to continue to be registered under Section 12(b) or
      12(g)
      of the 1934 Act, (x) comply in all respects with its reporting and filing
      obligations under the 1934 Act, (y) comply with all reporting requirements
      that
      are applicable to an issuer with a class of shares registered pursuant to
      Section 12(b) or 12(g) of the 1934 Act, as applicable, and (z) comply with
      all
      requirements related to any registration statement filed pursuant to this
      Agreement. The Company will use its best efforts not to take any action or
      file
      any document (whether or not permitted by the 1933 Act or the 1934 Act or the
      rules thereunder) to terminate or suspend such registration or to terminate
      or
      suspend its reporting and filing obligations under said acts until two (2)
      years
      after the Closing Date. Until the earlier of the resale of the Common Stock
      and
      the Warrant Shares by each Subscriber or at least two (2) years after the
      Warrants have been exercised, the Company will use its best efforts to continue
      the listing or quotation of the Common Stock on the Principal Market or other
      market with the reasonable consent of Subscribers holding a majority of the
      Shares and Warrant Shares, and will comply in all respects with the Company's
      reporting, filing and other obligations under the bylaws or rules of the
      Principal Market. The Company agrees to file a Form D with respect to the
      Securities as required under Regulation D and to provide a copy thereof to
      each
      Subscriber promptly after such filing.

     

    (e) Use
      of
      Proceeds.
      The
      Company undertakes to use the proceeds of the Subscribers’ funds for working
      capital. The Purchase Price may not and will not be used for accrued and unpaid
      officer and director salaries, payment of financing related debt, redemption
      of
      outstanding redeemable notes or equity instruments of the Company nor non-trade
      obligations outstanding on the Initial Closing Date.

     

    (f) Reservation.
      The
      Company undertakes to reserve, pro rata on behalf of each holder of a Note
      or
      Warrant, from its authorized but unissued common stock, at all times that Notes
      or Warrants remain outstanding, a number of common shares equal to not less
      than
      150% of the amount of common shares necessary to allow each such holder at
      all
      times to be able to convert all such outstanding Notes, and one common share
      for
      each Warrant Share. Failure to have sufficient shares reserved pursuant to
      this
      Section 9(f) for three consecutive business days or ten days in the aggregate
      shall be an Event of Default under the Note.

     

    (g) Taxes.
      From
      the date of this Agreement and until the sooner of (i) two (2) years after
      the
      Closing Date, or (ii) until all the Shares and Warrant Shares have been resold
      or transferred by all the Subscribers pursuant to the Registration Statement
      or
      pursuant to Rule 144, without regard to volume limitations, the Company will
      promptly pay and discharge, or cause to be paid and discharged, when due and
      payable, all lawful taxes, assessments and governmental charges or levies
      imposed upon the income, profits, property or business of the Company; provided,
      however, that any such tax, assessment, charge or levy need not be paid if
      the
      validity thereof shall currently be contested in good faith by appropriate
      proceedings and if the Company shall have set aside on its books adequate
      reserves with respect thereto, and provided, further, that the Company will
      pay
      all such taxes, assessments, charges or levies forthwith upon the commencement
      of proceedings to foreclose any lien which may have attached as security
      therefore.

     

    (h) Insurance.
      From
      the date of this Agreement and until the sooner of (i) two (2) years after
      the
      Closing Date, or (ii) until all the Shares and Warrant Shares have been resold
      or transferred by all the Subscribers pursuant to the Registration Statement
      or
      pursuant to Rule 144, without regard to volume limitations, the Company will
      keep its assets which are of an insurable character insured by financially
      sound
      and reputable insurers against loss or damage by fire, explosion and other
      risks
      customarily insured against by companies in the Company’s line of business, in
      amounts sufficient to prevent the Company from becoming a co-insurer and not
      in
      any event less than one hundred percent (100%) of the insurable value of the
      property insured; and the Company will maintain, with financially sound and
      reputable insurers, insurance against other hazards and risks and liability
      to
      persons and property to the extent and in the manner customary for companies
      in
      similar businesses similarly situated and to the extent available on
      commercially reasonable terms.

     

    12

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (i) Books
      and Records.
      From the
      date of this Agreement and until the sooner of (i) two (2) years after the
      Closing Date, or (ii) until all the Shares and Warrant Shares have been resold
      or transferred by all the Subscribers pursuant to the Registration Statement
      or
      pursuant to Rule 144, without regard to volume limitations, the Company will
      keep true records and books of account in which full, true and correct entries
      will be made of all dealings or transactions in relation to its business and
      affairs in accordance with generally accepted accounting principles applied
      on a
      consistent basis.

     

    (j) Governmental
      Authorities.
      From the
      date of this Agreement and until the sooner of (i) two (2) years after the
      Closing Date, or (ii) until all the Shares and Warrant Shares have been resold
      or transferred by all the Subscribers pursuant to the Registration Statement
      or
      pursuant to Rule 144, without regard to volume limitations, the Company shall
      duly observe and conform in all material respects to all valid requirements
      of
      governmental authorities relating to the conduct of its business or to its
      properties or assets.

     

    (k) Intellectual
      Property.
      From
      the date of this Agreement and until the sooner of (i) two (2) years after
      the
      Closing Date, or (ii) until all the Shares and Warrant Shares have been resold
      or transferred by all the Subscribers pursuant to the Registration Statement
      or
      pursuant to Rule 144, without regard to volume limitations, the Company shall
      maintain in full force and effect its corporate existence, rights and franchises
      and all licenses and other rights to use intellectual property owned or
      possessed by it and reasonably deemed to be necessary to the conduct of its
      business.

     

    (l) Properties.
      From the
      date of this Agreement and until the sooner of (i) two (2) years after the
      Closing Date, or (ii) until all the Shares and Warrant Shares have been resold
      or transferred by all the Subscribers pursuant to the Registration Statement
      or
      pursuant to Rule 144, without regard to volume limitation, the Company will
      keep
      its properties in good repair, working order and condition, reasonable wear
      and
      tear excepted, and from time to time make all necessary and proper repairs,
      renewals, replacements, additions and improvements thereto; and the Company
      will
      at all times comply with each provision of all leases to which it is a party
      or
      under which it occupies property if the breach of such provision could
      reasonably be expected to have a material adverse effect.

     

    (m) Confidentiality/Public
      Announcement.
      From the
      date of this Agreement and until the sooner of (i) two (2) years after the
      Closing Date, or (ii) until all the Shares and Warrant Shares have been resold
      or transferred by all the Subscribers pursuant to the Registration Statement
      or
      pursuant to Rule 144, without regard to volume limitations, except as may be
      required in connection with a registration statement filed on behalf of the
      Subscribers pursuant to Section 11 of this Agreement or on Form 8-K, the Company
      agrees that it will not disclose publicly or privately the identity of the
      Subscribers unless expressly agreed to in writing by a Subscriber or only to
      the
      extent required by law and then only upon ten days prior notice to Subscriber.
      In any event and subject to the foregoing, the Company undertakes to file a
      form
      8-K or make a public announcement describing the Offering not later than the
      Closing Date. In the form 8-K or public announcement, the Company will
      specifically disclose the amount of common stock outstanding immediately after
      the Closing.

     

    13

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (n) Blackout.
      The
      Company undertakes and covenants that until the first to occur of (i) until
      one
      hundred and eighty (180) days after the Actual Effective Date during which
      such
      Registration Statement shall be current and available for use in connection
      with
      the unrestricted public resale of the Shares and Warrant Shares (“Exclusion
      Period”), or (ii) until all the Shares and Warrant Shares have been resold
      pursuant to such registration statement, the Company will not enter into any
      acquisition, merger, exchange or sale or other transaction that could have
      the
      effect of delaying the effectiveness of any pending registration statement
      or
      causing an already effective registration statement to no longer be effective
      or
      current.

     

    (o) S-8.
      The
      Company will not file a Form S-8 with the Commission during the Exclusion Period
      (as defined in Section 9(a) of the Agreement) without the consent of the
      Subscriber except in respect of employee benefit plans and past services
      rendered.

     

    10. Covenants
      of the Company and Subscriber Regarding Indemnification.

     

    (a) The
      Company agrees to indemnify, hold harmless, reimburse and defend the
      Subscribers, the Subscribers' officers, directors, agents, affiliates, control
      persons, and principal shareholders, against any claim, cost, expense,
      liability, obligation, loss or damage (including reasonable legal fees) of
      any
      nature, incurred by or imposed upon the Subscriber or any such person which
      results, arises out of or is based upon (i) any material misrepresentation
      by
      Company or breach of any warranty by Company in this Agreement or in any
      Exhibits or Schedules attached hereto, or other agreement delivered pursuant
      hereto; or (ii) after any applicable notice and/or cure periods, any breach
      or
      default in performance by the Company of any covenant or undertaking to be
      performed by the Company hereunder, or any other agreement entered into by
      the
      Company and Subscriber relating hereto.

     

    (b) Each
      Subscriber agrees to indemnify, hold harmless, reimburse and defend the Company
      and each of the Company’s officers, directors, agents, affiliates, control
      persons against any claim, cost, expense, liability, obligation, loss or damage
      (including reasonable legal fees) of any nature, incurred by or imposed upon
      the
      Company or any such person which results, arises out of or is based upon (i)
      any
      material misrepresentation by such Subscriber in this Agreement or in any
      Exhibits or Schedules attached hereto, or other agreement delivered pursuant
      hereto; or (ii) after any applicable notice and/or cure periods, any breach
      or
      default in performance by such Subscriber of any covenant or undertaking to
      be
      performed by such Subscriber hereunder, or any other agreement entered into
      by
      the Company and Subscribes relating hereto.

     

    (c) In
      no
      event shall the liability of any Subscriber or permitted successor hereunder
      or
      under any other agreement delivered in connection herewith be greater in amount
      than the dollar amount of the net proceeds received by such Subscriber upon
      the
      sale of Registrable Securities (as defined herein) giving rise to such
      indemnification obligation.

     

    (d) The
      procedures set forth in Section 11.6 shall apply to the indemnifications set
      forth in Sections 10(a) and 10(b) above.

     

    11.1. Registration
      Rights.
      The
      Company hereby grants the following registration rights to holders of the
      Securities.

     

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    (i) On
      one
      occasion, for a period commencing one hundred and twenty-one (121) days after
      the Closing Date, but not later than three years after the Closing Date
      (“Request Date”), the Company, upon a written request therefor from any record
      holder or holders of more than 50% of the Shares issued and issuable upon
      conversion of the Notes and Warrant Shares, shall prepare and file with the
      Commission a registration statement under the 1933 Act covering the Shares,
      and
      Warrant Shares (including the Warrant Shares issuable upon exercise of the
      Finder’s Warrants (collectively “Registrable Securities”) which are the subject
      of such request. For purposes of Sections 11.1(i) and 11.1(ii), Registrable
      Securities shall not include Securities which are registered for resale in
      an
      effective registration statement or included for registration in a pending
      registration statement, or which have been issued without further transfer
      restrictions after a sale or transfer pursuant to Rule 144 under the 1933 Act.
      In addition, upon the receipt of such request, the Company shall promptly give
      written notice to all other record holders of the Registrable Securities that
      such registration statement is to be filed and shall include in such
      registration statement Registrable Securities for which it has received written
      requests within 10 days after the Company gives such written notice. Such other
      requesting record holders shall be deemed to have exercised their demand
      registration right under this Section 11.1(i).

     

    (ii) If
      the
      Company at any time proposes to register any of its securities under the 1933
      Act for sale to the public, whether for its own account or for the account
      of
      other security holders or both, except with respect to registration statements
      on Forms S-4, S-8 or another form not available for registering the Registrable
      Securities for sale to the public, provided the Registrable Securities are
      not
      otherwise registered for resale by the Subscribers or Holder pursuant to an
      effective registration statement, each such time it will give at least 15 days'
      prior written notice to the record holder of the Registrable Securities of
      its
      intention so to do. Upon the written request of the holder, received by the
      Company within 10 days after the giving of any such notice by the Company,
      to
      register any of the Registrable Securities not previously registered, the
      Company will cause such Registrable Securities as to which registration shall
      have been so requested to be included with the securities to be covered by
      the
      registration statement proposed to be filed by the Company, all to the extent
      required to permit the sale or other disposition of the Registrable Securities
      so registered by the holder of such Registrable Securities (the "Seller").
      In
      the event that any registration pursuant to this Section 11.1(ii) shall be,
      in
      whole or in part, an underwritten public offering of common stock of the
      Company, the number of shares of Registrable Securities to be included in such
      an underwriting may be reduced by the managing underwriter if and to the extent
      that the Company and the underwriter shall reasonably be of the opinion that
      such inclusion would adversely affect the marketing of the securities to be
      sold
      by the Company therein; provided, however, that the Company shall notify the
      Seller in writing of any such reduction. Notwithstanding the foregoing
      provisions, or Section 11.4 hereof, the Company may withdraw or delay or suffer
      a delay of any registration statement referred to in this Section 11.1(ii)
      without thereby incurring any liability to the Seller.

     

    (iii) If,
      at
      the time any written request for registration is received by the Company
      pursuant to Section 11.1(i), the Company has determined to proceed with the
      actual preparation and filing of a registration statement under the 1933 Act
      in
      connection with the proposed offer and sale for cash of any of its securities
      for the Company's own account and the Company actually does file such other
      registration statement, such written request shall be deemed to have been given
      pursuant to Section 11.1(ii) rather than Section 11.1(i), and the rights of
      the
      holders of Registrable Securities covered by such written request shall be
      governed by Section 11.1(ii).

     

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    (iv) The
      Company shall file with the Commission not later than thirty (30) days after
      the
      Closing Date (the "Filing Date"), and cause to be declared effective within
      one
      hundred and twenty (120) days after the Closing Date (the “Effective Date”), a
      Form SB-2 registration statement (the “Registration Statement”) (or such other
      form that it is eligible to use) in order to register the Registrable Securities
      for resale and distribution under the 1933 Act. The Company will register not
      less than a number of shares of common stock in the aforedescribed registration
      statement that is equal to 200% of the Shares issuable upon conversion of the
      Notes and 100% of the Warrant Shares issuable upon exercise of the Warrants.
      The
      Registrable Securities shall be reserved and set aside exclusively for the
      benefit of each Subscriber, and not issued, employed or reserved for anyone
      other than each Subscriber. Such Registration Statement will immediately be
      amended or additional registration statements will be immediately filed by
      the
      Company as necessary to register additional shares of Common Stock to allow
      the
      public resale of all Common Stock included in and issuable by virtue of the
      Registrable Securities. No securities of the Company other than the Registrable
      Securities will be included in the registration statement described in this
      Section 11.1(iv) except as disclosed on Schedule 11.1, without the written
      consent of Subscriber. In the event the registration statement described in
      Section 11.1(iv) is declared effective within thirty (30) days of the Effective
      Date, then Liquidated Damages will not be payable for the thirty day period
      commencing on the Effective Date. It shall be deemed a Non-Registration Event
      if
      at any time after the Effective Date the Company has registered for unrestricted
      resale on behalf of the Subscriber fewer than 125% of the amount of Common
      Shares issuable upon full conversion of all sums due under the Notes and
      Warrants.

     

    11.2. Registration
      Procedures.
      If and
      whenever the Company is required by the provisions of Section 11.1(i), 11.1(ii),
      or (iv) to effect the registration of any shares of Registrable Securities
      under
      the 1933 Act, the Company will, as expeditiously as possible: 

     

    (a) subject
      to the timelines provided in this Agreement, prepare and file with the
      Commission a registration statement required by Section 11, with respect to
      such
      securities and use its best efforts to cause such registration statement to
      become and remain effective for the period of the distribution contemplated
      thereby (determined as herein provided), and promptly provide to the holders
      of
      Registrable Securities copies of all filings and Commission letters of comment
      including a notification by confirmed telecopier and overnight express delivery
      of the declaration of effectiveness of any Registration Statement within
      twenty-four (24) hours of such effectiveness;

     

    (b) prepare
      and file with the Commission such amendments and supplements to such
      registration statement and the prospectus used in connection therewith as may
      be
      necessary to keep such registration statement effective until such registration
      statement has been effective for a period of two (2) years, and comply with
      the
      provisions of the 1933 Act with respect to the disposition of all of the
      Registrable Securities covered by such registration statement in accordance
      with
      the Seller's intended method of disposition set forth in such registration
      statement for such period; 

     

    (c) furnish
      to the Seller, at the Company’s expense, such number of copies of the
      registration statement and the prospectus included therein (including each
      preliminary prospectus) as such persons reasonably may request in order to
      facilitate the public sale or their disposition of the securities covered by
      such registration statement; 

     

    (d) use
      its
      best efforts to register or qualify the Seller's Registrable Securities covered
      by such registration statement under the securities or "blue sky" laws of such
      jurisdictions as the Seller, provided, however, that the Company shall not
      for
      any such purpose be required to qualify generally to transact business as a
      foreign corporation in any jurisdiction where it is not so qualified or to
      consent to general service of process in any such jurisdiction; 

     

    (e) if
      applicable, list the Registrable Securities covered by such registration
      statement with any securities exchange on which the Common Stock of the Company
      is then listed; 

     

    (f) immediately
      notify the Seller when a prospectus relating thereto is required to be delivered
      under the 1933 Act, of the happening of any event of which the Company has
      knowledge as a result of which the prospectus contained in such registration
      statement, as then in effect, includes an untrue statement of a material fact
      or
      omits to state a material fact required to be stated therein or necessary to
      make the statements therein not misleading in light of the circumstances then
      existing; and

     

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    (g) provided
      same would not be in violation of the provision of Regulation FD under the
      1934
      Act, make available for inspection by the Seller, and any attorney, accountant
      or other agent retained by the Seller or underwriter, all publicly available,
      non-confidential financial and other records, pertinent corporate documents
      and
      properties of the Company, and cause the Company's officers, directors and
      employees to supply all publicly available, non-confidential information
      reasonably requested by the seller, attorney, accountant or agent in connection
      with such registration statement. 

     

    11.3. Provision
      of Documents.
      In
      connection with each registration described in this Section 11, the Seller
      will
      furnish to the Company in writing such information and representation letters
      with respect to itself and the proposed distribution by it as reasonably shall
      be necessary in order to assure compliance with federal and applicable state
      securities laws. 

     

    11.4. Non-Registration
      Events.
      The
      Company and the Subscribers agree that the Seller will suffer damages if any
      registration statement required under Section 11.1(iv) above is not filed by
      the
      Filing Date and not declared effective by the Commission by the Effective Date,
      and any registration statement required under Section 11.1(i) or 11.1(ii) is
      not
      filed within 60 days after written request and declared effective by the
      Commission within 120 days after such request, and maintained in the manner
      and
      within the time periods contemplated by Section 11 hereof, and it would not
      be
      feasible to ascertain the extent of such damages with precision. Accordingly,
      if
      (i) the registration statement on Form SB-2 or such other form described in
      Section 11.1(iv) is not filed on or before the Filing Date or is not declared
      effective on or before the sooner of the Effective Date, or within three (3)
      business days of receipt by the Company of a written or oral communication
      from
      the Commission that the Registration Statement will not be reviewed or that
      the
      Commission has no further comments, (ii) if the registration statement described
      in Sections 11.1(i) or 11.1(ii) is not filed within 60 days after such written
      request, or is not declared effective within 120 days after such written
      request, or (iii) any registration statement described in Sections 11.1(i),
      11.1(ii) or 11.1(iv) is filed and declared effective but shall thereafter cease
      to be effective (without being succeeded immediately by an additional
      registration statement filed and declared effective) for a period of time which
      shall exceed 30 days in the aggregate per year or more than 20 consecutive
      days
      (defined as a period of 365 days commencing on the date the Registration
      Statement is declared effective) (each such event referred to in clauses (i),
      (ii) and (iii) of this Section 11.4 is referred to herein as a "Non-Registration
      Event"), then the Company shall deliver to the holder of Registrable Securities,
      as Liquidated Damages, an amount equal to two percent (2%) for each thirty
      days
      or part thereof of the Purchase Price of the Notes remaining unconverted and
      purchase price of Shares issued upon conversion of the Notes and actually paid
      “Purchase Price” (as defined in the Warrants) of Warrant Shares for the
      Registrable Securities owned of record by such holder as of and during the
      pendency of such Non-Registration Event which are subject to such
      Non-Registration Event. Payments to be made pursuant to this Section 11.4 shall
      be payable in cash and due and payable within ten (10) business days after
      the
      end of each thirty (30) day period or part thereof.

     

    11.5. Expenses.
      All
      expenses incurred by the Company in complying with Section 11, including,
      without limitation, all registration and filing fees, printing expenses, fees
      and disbursements of counsel and independent public accountants for the Company,
      fees and expenses (including reasonable counsel fees) incurred in connection
      with complying with state securities or "blue sky" laws, fees of the National
      Association of Securities Dealers, Inc., transfer taxes, fees of transfer agents
      and registrars, costs of insurance and fee of one counsel for all Sellers are
      called "Registration Expenses". All underwriting discounts and selling
      commissions applicable to the sale of Registrable Securities, including any
      fees
      and disbursements of any additional counsel to the Seller, are called "Selling
      Expenses". The Company will pay all Registration Expenses in connection with
      the
      registration statement under Section 11. Selling Expenses in connection with
      each registration statement under Section 11 shall be borne by the Seller and
      may be apportioned among the Sellers in proportion to the number of shares
      sold
      by the Seller relative to the number of shares sold under such registration
      statement or as all Sellers thereunder may agree.

     

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    11.6. Indemnification
      and Contribution.

     

    (a) In
      the
      event of a registration of any Registrable Securities under the 1933 Act
      pursuant to Section 11, the Company will, to the extent permitted by law,
      indemnify and hold harmless the Seller, each officer of the Seller, each
      director of the Seller, each underwriter of such Registrable Securities
      thereunder and each other person, if any, who controls such Seller or
      underwriter within the meaning of the 1933 Act, against any losses, claims,
      damages or liabilities, joint or several, to which the Seller, or such
      underwriter or controlling person may become subject under the 1933 Act or
      otherwise, insofar as such losses, claims, damages or liabilities (or actions
      in
      respect thereof) arise out of or are based upon any untrue statement or alleged
      untrue statement of any material fact contained in any registration statement
      under which such Registrable Securities was registered under the 1933 Act
      pursuant to Section 11, any preliminary prospectus or final prospectus contained
      therein, or any amendment or supplement thereof, or arise out of or are based
      upon the omission or alleged omission to state therein a material fact required
      to be stated therein or necessary to make the statements therein not misleading
      in light of the circumstances when made, and will subject to the provisions
      of
      Section 11.6(c) reimburse the Seller, each such underwriter and each such
      controlling person for any legal or other expenses reasonably incurred by them
      in connection with investigating or defending any such loss, claim, damage,
      liability or action; provided, however, that the Company shall not be liable
      to
      the Seller to the extent that any such damages arise out of or are based upon
      an
      untrue statement or omission made in any preliminary prospectus if (i) the
      Seller failed to send or deliver a copy of the final prospectus delivered by
      the
      Company to the Seller with or prior to the delivery of written confirmation
      of
      the sale by the Seller to the person asserting the claim from which such damages
      arise, (ii) the final prospectus would have corrected such untrue statement
      or
      alleged untrue statement or such omission or alleged omission, or (iii) to
      the
      extent that any such loss, claim, damage or liability arises out of or is based
      upon an untrue statement or alleged untrue statement or omission or alleged
      omission so made in conformity with information furnished by any such Seller,
      or
      any such controlling person in writing specifically for use in such registration
      statement or prospectus. 

     

    (b) In
      the
      event of a registration of any of the Registrable Securities under the 1933
      Act
      pursuant to Section 11, each Seller severally but not jointly will, to the
      extent permitted by law, indemnify and hold harmless the Company, and each
      person, if any, who controls the Company within the meaning of the 1933 Act,
      each officer of the Company who signs the registration statement, each director
      of the Company, each underwriter and each person who controls any underwriter
      within the meaning of the 1933 Act, against all losses, claims, damages or
      liabilities, joint or several, to which the Company or such officer, director,
      underwriter or controlling person may become subject under the 1933 Act or
      otherwise, insofar as such losses, claims, damages or liabilities (or actions
      in
      respect thereof) arise out of or are based upon any untrue statement or alleged
      untrue statement of any material fact contained in the registration statement
      under which such Registrable Securities were registered under the 1933 Act
      pursuant to Section 11, any preliminary prospectus or final prospectus contained
      therein, or any amendment or supplement thereof, or arise out of or are based
      upon the omission or alleged omission to state therein a material fact required
      to be stated therein or necessary to make the statements therein not misleading,
      and will reimburse the Company and each such officer, director, underwriter
      and
      controlling person for any legal or other expenses reasonably incurred by them
      in connection with investigating or defending any such loss, claim, damage,
      liability or action, provided, however, that the Seller will be liable hereunder
      in any such case if and only to the extent that any such loss, claim, damage
      or
      liability arises out of or is based upon an untrue statement or alleged untrue
      statement or omission or alleged omission made in reliance upon and in
      conformity with information pertaining to such Seller, as such, furnished in
      writing to the Company by such Seller specifically for use in such registration
      statement or prospectus, and provided, further, however, that the liability
      of
      the Seller hereunder shall be limited to the gross proceeds received by the
      Seller from the sale of Registrable Securities covered by such registration
      statement.

     

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    (c) Promptly
      after receipt by an indemnified party hereunder of notice of the commencement
      of
      any action, such indemnified party shall, if a claim in respect thereof is
      to be
      made against the indemnifying party hereunder, notify the indemnifying party
      in
      writing thereof, but the omission so to notify the indemnifying party shall
      not
      relieve it from any liability which it may have to such indemnified party other
      than under this Section 11.6(c) and shall only relieve it from any liability
      which it may have to such indemnified party under this Section 11.6(c), except
      and only if and to the extent the indemnifying party is prejudiced by such
      omission. In case any such action shall be brought against any indemnified
      party
      and it shall notify the indemnifying party of the commencement thereof, the
      indemnifying party shall be entitled to participate in and, to the extent it
      shall wish, to assume and undertake the defense thereof with counsel
      satisfactory to such indemnified party, and, after notice from the indemnifying
      party to such indemnified party of its election so to assume and undertake
      the
      defense thereof, the indemnifying party shall not be liable to such indemnified
      party under this Section 11.6(c) for any legal expenses subsequently incurred
      by
      such indemnified party in connection with the defense thereof other than
      reasonable costs of investigation and of liaison with counsel so selected,
      provided, however, that, if the defendants in any such action include both
      the
      indemnified party and the indemnifying party and the indemnified party shall
      have reasonably concluded that there may be reasonable defenses available to
      it
      which are different from or additional to those available to the indemnifying
      party or if the interests of the indemnified party reasonably may be deemed
      to
      conflict with the interests of the indemnifying party, the indemnified parties,
      as a group, shall have the right to select one separate counsel and to assume
      such legal defenses and otherwise to participate in the defense of such action,
      with the reasonable expenses and fees of such separate counsel and other
      expenses related to such participation to be reimbursed by the indemnifying
      party as incurred. 

     

    (d) In
      order
      to provide for just and equitable contribution in the event of joint liability
      under the 1933 Act in any case in which either (i) a Seller, or any controlling
      person of a Seller, makes a claim for indemnification pursuant to this Section
      11.6 but it is judicially determined (by the entry of a final judgment or decree
      by a court of competent jurisdiction and the expiration of time to appeal or
      the
      denial of the last right of appeal) that such indemnification may not be
      enforced in such case notwithstanding the fact that this Section 11.6 provides
      for indemnification in such case, or (ii) contribution under the 1933 Act may
      be
      required on the part of the Seller or controlling person of the Seller in
      circumstances for which indemnification is not provided under this Section
      11.6;
      then, and in each such case, the Company and the Seller will contribute to
      the
      aggregate losses, claims, damages or liabilities to which they may be subject
      (after contribution from others) in such proportion so that the Seller is
      responsible only for the portion represented by the percentage that the public
      offering price of its securities offered by the registration statement bears
      to
      the public offering price of all securities offered by such registration
      statement, provided, however, that, in any such case, (y) the Seller will not
      be
      required to contribute any amount in excess of the public offering price of
      all
      such securities offered by it pursuant to such registration statement; and
      (z)
      no person or entity guilty of fraudulent misrepresentation (within the meaning
      of Section 10(f) of the 1933 Act) will be entitled to contribution from any
      person or entity who was not guilty of such fraudulent
      misrepresentation.

     

    11.7. Delivery
      of Unlegended Shares.
      

     

    (a) Within
      three (3) business days (such third business day, the “Unlegended Shares
      Delivery Date”) after the business day on which the Company has received (i) a
      notice that Registrable Securities have been sold either pursuant to the
      Registration Statement or Rule 144 under the 1933 Act, (ii) a representation
      that the prospectus delivery requirements, or the requirements of Rule 144,
      as
      applicable, have been satisfied, and (iii) the original share certificates
      representing the shares of Common Stock that have been sold, the Company at
      its
      expense, (y) shall deliver, and shall cause legal counsel selected by the
      Company to deliver, to its transfer agent (with copies to Subscriber) an
      appropriate instruction and opinion of such counsel, for the delivery of shares
      of Common Stock without any legends including the legends set forth in Sections
      4(e) and 4(g) above, issuable pursuant to any effective and current registration
      statement described in Section 11 of this Agreement or pursuant to Rule 144
      under the 1933 Act (the “Unlegended Shares”); and (z) cause the transmission of
      the certificates representing the Unlegended Shares together with a legended
      certificate representing the balance of the unsold shares of Common Stock,
      if
      any, to the Subscriber at the address specified in the notice of sale, via
      express courier, by electronic transfer or otherwise on or before the Unlegended
      Shares Delivery Date.

     

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                    (b) In
      lieu
      of delivering physical certificates representing the Unlegended Shares, if
      the
      Company’s transfer agent is participating in the Depository Trust Company
      (“DTC”) Fast Automated Securities Transfer program, upon request of a
      Subscriber, so long as the certificates therefore do not bear a legend and
      the
      Subscriber 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 Subscriber’s prime
      Broker with DTC through its Deposit Withdrawal Agent Commission system. Such
      delivery must be made on or before the Unlegended Shares Delivery
      Date.

     

    (c) The
      Company understands that a delay in the delivery of the Unlegended Shares
      pursuant to Section 11 hereof beyond the Unlegended Shares Delivery Date could
      result in economic loss to a Subscriber. As compensation to a Subscriber for
      such loss, the Company agrees to pay late payment fees (as liquidated damages
      and not as a penalty) to the Subscriber for late delivery of Unlegended Shares
      in the amount of $100 per business day after the Delivery Date for each $10,000
      of purchase price of the Unlegended Shares subject to the delivery default.
      If
      during any 360 day period, the Company fails to deliver Unlegended Shares as
      required by this Section 11.7 for an aggregate of thirty (30) days, then each
      Subscriber or assignee holding Securities subject to such default may, at its
      option, require the Company to purchase all or any portion of the Shares and
      Warrant Shares subject to such default at a price per share equal to 130% of
      the
      Purchase Price of such Shares and Warrant Shares. The Company shall pay any
      payments incurred under this Section in immediately available funds upon demand.
      

     

    (d) In
      addition to any other rights available to a Subscriber, if the Company fails
      to
      deliver to a Subscriber Unlegended Shares within ten (10) calendar days after
      the Unlegended Shares Delivery Date and the Subscriber purchases (in an open
      market transaction or otherwise) shares of common stock to deliver in
      satisfaction of a sale by such Subscriber of the shares of Common Stock which
      the Subscriber anticipated receiving from the Company (a "Buy-In"), then the
      Company shall pay in cash to the Subscriber (in addition to any remedies
      available to or elected by the Subscriber) the amount by which (A) the
      Subscriber'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 Subscriber 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 of Common Stock delivered to the Company for reissuance as
      Unlegended Shares, the Company shall be required to pay the Subscriber $1,000,
      plus interest. The Subscriber shall provide the Company written notice
      indicating the amounts payable to the Subscriber in respect of the
      Buy-In.

     

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    12. (a) Favored
      Nations Provision.
      Except
      in connection with (i) employee stock options or compensation plans, (ii) as
      full or partial consideration in connection with any merger, consolidation
      or
      purchase of substantially all of the securities or assets of any corporation
      or
      other entity, or (iii) as has been described in the Reports or Other Written
      Information filed or delivered to the Subscribers prior to the Closing Date
      (collectively “Excepted Issuances”), if at any time the Note is outstanding the
      Company shall offer, issue or agree to issue any common stock or securities
      convertible into or exercisable for shares of common stock (or modify any of
      the
      foregoing which may be outstanding at any time prior to the Closing Date) to
      any
      person or entity at a price per share or conversion or exercise price per share
      which shall be less than the Conversion Price of the Notes, without the consent
      of each Subscriber holding Notes or Shares, then the Company shall issue, for
      each such occasion, additional shares of Common Stock to each Subscriber and
      Finder so that the average per share purchase price of the shares of Common
      Stock issued to the Subscriber (of only the Common Stock or Warrant Shares
      still
      owned by the Subscriber) is equal to such other lower price per share and the
      Conversion Price and Warrant exercise price shall be reduced to such other
      lower
      amount. The delivery to the Subscriber of the additional shares of Common Stock
      shall be not later than the closing date of the transaction giving rise to
      the
      requirement to issue additional shares of Common Stock. The Subscriber is
      granted the registration rights described in Section 11 hereof in relation
      to
      such additional shares of Common Stock except that the Filing Date and Effective
      Date vis-à-vis such additional common shares shall be, respectively, the
      sixtieth (60th)
      and one
      hundred and twentieth (120th)
      date
      after the closing date giving rise to the requirement to issue the additional
      shares of Common Stock. For purposes of the issuance and adjustment described
      in
      this paragraph, the issuance of any security of the Company carrying the right
      to convert such security into shares of Common Stock or of any warrant, right
      or
      option to purchase Common Stock shall result in the issuance of the additional
      shares of Common Stock upon the issuance of such convertible security, warrant,
      right or option and again upon any subsequent issuances of shares of Common
      Stock upon exercise of such conversion or purchase rights if such issuance
      is at
      a price lower than the then Conversion Price. The rights of the Subscriber
      set
      forth in this Section 12 are in addition to any other rights the Subscriber
      has
      pursuant to this Agreement and any other agreement referred to or entered into
      in connection herewith.

     

    (b) Right
      of First Refusal.
      During
      the Exclusion Period, the Subscribers shall be given not less than five (5)
      business days prior written notice of any proposed sale by the Company of its
      common stock or other securities or debt obligations, except in connection
      with
      the Excepted Issuances. The Subscribers shall have the right during the five
      (5)
      business days following the notice to purchase such offered common stock, debt
      or other securities in accordance with the terms and conditions set forth in
      the
      notice of sale in the same proportion to each other as their purchase of Notes
      in the Offering. In the event such terms and conditions are modified during
      the
      notice period, the Subscribers shall be given prompt notice of such modification
      and shall have the right during the original notice period or for a period
      of
      five (5) business days following the notice of modification, whichever is
      longer, to exercise such right.

     

    (c) Maximum
      Exercise of Rights.
      In the
      event the exercise of the rights described in Sections 12(a) or 12(b) would
      result in the issuance of an amount of common stock of the Company that would
      exceed the maximum amount that may be issued to a Subscriber as described in
      Section 7.3 of this Agreement, then the purchase and/or issuance of such other
      Common Stock or Common Stock equivalents of the Company to such Subscriber
      will
      be deferred in whole or in part until such time as such Subscriber is able
      to
      beneficially own such Common Stock or Common Stock equivalents without exceeding
      the maximum amount set forth in Section 7.3. The determination of when such
      Common Stock or Common Stock equivalents may be issued shall be made by each
      Subscriber as to only such Subscriber.

     

    13. 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 the Company, to: Kaire Holdings Incorporated,
      8135 Clybourn Avenue, Sun Valley, CA 91352, telecopier number: (818) 255-4997,
      with a copy by telecopier only to: Owen M. Naccarato, Esq., Naccarato &
      Associates, 19600 Fairchild, Suite 260, Irvine, CA 92614, telecopier: (949)
      851-9262, (ii) if to the Subscriber, to: the address and telecopier number
      indicated on the signature page hereto, with a copy by telecopier only to:
      Grushko & Mittman, P.C., 551 Fifth Avenue, Suite 1601, New York, New York
      10176, telecopier number: (212) 697-3575, and (iii) if to the Finder, to:
      Bi-Coastal Consulting Corp., 25, Longview Court, Hillsborough, CA 94010,
      telecopier: (650) 343-2506.

     

    21

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (b) Closing.
      The
      consummation of the transactions contemplated herein (“Closing”) shall take
      place at the offices of Grushko & Mittman, P.C., 551 Fifth Avenue, Suite
      1601, New York, New York 10176, upon the satisfaction of all conditions to
      Closing set forth in this Agreement.

     

    (c) Entire
      Agreement; Assignment.
      This
      Agreement and other documents delivered in connection herewith represent the
      entire agreement between the parties hereto with respect to the subject matter
      hereof and may be amended only by a writing executed by both parties. Neither
      the Company nor the Subscribers have relied on any representations not contained
      or referred to in this Agreement and the documents delivered herewith. No right
      or obligation of either party shall be assigned by that party without prior
      notice to and the written consent of the other party. 

     

    (d) Counterparts.
      This
      Agreement may be executed in any number of counterparts, each of which when
      so
      executed shall be deemed to be an original and, all of which taken together
      shall constitute one and the same Agreement. In the event that any signature
      is
      delivered by facsimile transmission, such signature shall create a valid binding
      obligation of the party executing (or on whose behalf such signature is
      executed) the same with the same force and effect as if such facsimile signature
      were the original thereof.

     

    (e) Law
      Governing this Agreement.
      This
      Agreement shall be governed by and construed in accordance with the laws of
      the
      State of New York without regard to principles of conflicts of laws. Any action
      brought by either party against the other concerning the transactions
      contemplated by this Agreement shall be brought only in the state courts of
      New
      York or in the federal courts located in the state of New York. The
      parties and the individuals executing this Agreement and other agreements
      referred to herein or delivered in connection herewith on behalf of the Company
      agree to submit to the jurisdiction of such courts and waive trial by
      jury.
      The
      prevailing party shall be entitled to recover from the other party its
      reasonable attorney's fees and costs. In the event that any provision of this
      Agreement or any other agreement delivered in connection herewith is invalid
      or
      unenforceable under any applicable statute or rule of law, then such provision
      shall be deemed inoperative to the extent that it may conflict therewith and
      shall be deemed modified to conform with such statute or rule of law. Any such
      provision which may prove invalid or unenforceable under any law shall not
      affect the validity or enforceability of any other provision of any
      agreement.

     

    22

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (f) Specific
      Enforcement, Consent to Jurisdiction.
      The
      Company and Subscriber acknowledge and agree that irreparable damage would
      occur
      in the event that any of the provisions of this Agreement were not performed
      in
      accordance with their specific terms or were otherwise breached. It is
      accordingly agreed that the parties shall be entitled to an injunction or
      injunctions to prevent or cure breaches of the provisions of this Agreement
      and
      to enforce specifically the terms and provisions hereof or thereof, this being
      in addition to any other remedy to which any of them may be entitled by law
      or
      equity. Subject to Section 13(e) hereof, each of the Company and Subscriber
      hereby waives, and agrees not to assert in any such suit, action or proceeding,
      any claim that it is not personally subject to the jurisdiction of such court,
      that the suit, action or proceeding is brought in an inconvenient forum or
      that
      the venue of the suit, action or proceeding is improper. Nothing in this Section
      shall affect or limit any right to serve process in any other manner permitted
      by law.

     

    (g) Independent
      Nature of Subscribers.  
      The Company acknowledges that the obligations of each Subscriber under the
      Transaction Documents are several and not joint with the obligations of any
      other Subscriber, and no Subscriber shall be responsible in any way for the
      performance of the obligations of any other Subscriber under the Transaction
      Documents.  The Company acknowledges that the decision of each Subscriber
      to purchase Securities has been made by such Subscriber independently of any
      other Subscriber and independently of any information, materials, statements
      or
      opinions as to the business, affairs, operations, assets, properties,
      liabilities, results of operations, condition (financial or otherwise) or
      prospects of the Company which may have been made or given by any other
      Subscriber or by any agent or employee of any other Subscriber, and no
      Subscriber or any of its agents or employees shall have any liability to any
      Subscriber (or any other person) relating to or arising from any such
      information, materials, statements or opinions.  The Company acknowledges
      that nothing contained in any Transaction Document, and no action taken by
      any
      Subscriber pursuant hereto or thereto (including, but not limited to, the (i)
      inclusion of a Subscriber in the SB-2 Registration Statement and (ii) review
      by,
      and consent to, such Registration Statement by a Subscriber) shall be deemed
      to
      constitute the Subscribers as a partnership, an association, a joint venture
      or
      any other kind of entity, or create a presumption that the Subscribers are
      in
      any way acting in concert or as a group with respect to such obligations or
      the
      transactions contemplated by the Transaction Documents.  The Company
      acknowledges that each Subscriber shall be entitled to independently protect
      and
      enforce its rights, including without limitation, the rights arising out
      of the Transaction Documents, and it shall not be necessary for
      any
      other Subscriber to be joined as an additional party in any proceeding for
      such
      purpose.  The Company acknowledges that it has elected to provide all
      Subscribers with the same terms and Transaction Documents for the convenience
      of
      the Company and not because Company was required or requested to do so by the
      Subscribers.  The Company acknowledges that such procedure with respect
      to
      the Transaction Documents in no way creates a presumption that the Subscribers
      are in any way acting in concert or as a group with respect to the Transaction
      Documents or the transactions contemplated thereby.

    

    (h) Equitable
      Adjustment.
      The
      Securities and the purchase prices of Securities shall be equitably adjusted
      to
      offset the effect of stock splits, stock dividends, and distributions of
      property or equity interests of the Company to its shareholders.

    

    

    [THIS
      SPACE INTENTIONALLY LEFT BLANK]

    

    23

    
      
        
          

          

          

        

         

      

      
         

        
          

        

      

      
         

        
        

      

    

     

    SIGNATURE
      PAGE TO SUBSCRIPTION AGREEMENT (A)

     

    

     

    Please
      acknowledge your acceptance of the foregoing Subscription Agreement by signing
      and returning a copy to the undersigned whereupon it shall become a binding
      agreement between us.

    

    KAIRE
      HOLDINGS INCORPORATED

    A
      Delaware Corporation

    

    

    /s/
      Steve
      Westlund 

    By:_________________________________

    Name:
      Steve Westlund

    Title:
      CEO Director

    

    Dated:
      April 22, 2004

    

    

    

    
      	
              SUBSCRIBER

            	
              PURCHASE
                PRICE

            	
              WARRANTS
                ISSUABLE ON CLOSING DATE

            
	
               

               

               

               

              /s/
                Konard Ackerman

              _________________________________________

              (Signature)

              ALPHA
                CAPITAL AKTIENGESELLSCHAFT

              Pradafant
                7

              9490
                Furstentums

              Vaduz,
                Lichtenstein

              Fax:
                011-42-32323196

            	
              $350,000.00

            	
              1,944,444

            

    

     

    24

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    SIGNATURE
      PAGE TO SUBSCRIPTION AGREEMENT (B)

     

    

     

    Please
      acknowledge your acceptance of the foregoing Subscription Agreement by signing
      and returning a copy to the undersigned whereupon it shall become a binding
      agreement between us.

    

    KAIRE
      HOLDINGS INCORPORATED

    A
      Delaware Corporation

    

    

    /s/
      Steve
      Westlund

    By:_________________________________

    Name:
      Steve Westlund

    Title:
      CEO, Director

    

    Dated:
      April 22, 2004

    

    

    

    
      	
              SUBSCRIBER

            	
              PURCHASE
                PRICE

            	
              WARRANTS
                ISSUABLE ON CLOSING DATE

            
	
               

               

               

               

              /s/
                Peter
                T. Benz 

              _________________________________________

              (Signature)

              LONGVIEW
                FUND LP

              600
                Montgomery Street, 44th
                Floor

              San
                Francisco, CA 94111

              Attn:
                S. Michael Rudolph

              Fax:
                (415) 981-5300

            	
              $100,000.00

            	
              555,556

            

    

    

     

    25

    
 

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    SIGNATURE
      PAGE TO SUBSCRIPTION AGREEMENT (C)

     

    

     

    Please
      acknowledge your acceptance of the foregoing Subscription Agreement by signing
      and returning a copy to the undersigned whereupon it shall become a binding
      agreement between us.

    

    KAIRE
      HOLDINGS INCORPORATED

    A
      Delaware Corporation

    

    

    /s/
      Steve
      Westlund

    By:_________________________________

    Name:
      Steve Westlund

    Title:
      CEO, Director

    

    Dated:
      April 22, 2004

    

    

    

    
      	
              SUBSCRIBER

            	
              PURCHASE
                PRICE

            	
              WARRANTS
                ISSUABLE ON CLOSING DATE

            
	
               

               

               

               

              /s/
                Jonathan P. Knight, PhD

              _________________________________________

              (Signature)

              GAMMA
                OPPORTUNITY CAPITAL PARTNERS, LP

              1325
                Howard Avenue #422

              Burlingame,
                CA 94010

              Attn:
                S. Michael Rudolph

              Fax:
                (650) 343-2506

            	
              $200,000.00

            	
              1,111,111

            

    

    

     

    26

    
 

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    SIGNATURE
      PAGE TO SUBSCRIPTION AGREEMENT (D)

     

    

     

    Please
      acknowledge your acceptance of the foregoing Subscription Agreement by signing
      and returning a copy to the undersigned whereupon it shall become a binding
      agreement between us.

    

    KAIRE
      HOLDINGS INCORPORATED

    A
      Delaware Corporation

    

    N/A

    

    By:_________________________________

    Name:
      

    Title:
      

    

    Dated:
      April _____, 2004

    

    

    

    
      	
              SUBSCRIBER

            	
              PURCHASE
                PRICE

            	
              WARRANTS
                ISSUABLE ON CLOSING DATE

            
	
               

               

              [DID
                NOT PARTICIPATE]

               

               

              _________________________________________

              (Signature)

              ELLIS
                INTERNATIONAL LTD.

              53rd
                Street Urbanizacion Obarrio

              Swiss
                Tower, 16th
                Floor, Panama

              Republic
                of Panama

              Fax:
                (516) 887-8990

            	
              $100,000.00

            	
              555,556

            

    

    

    

    27

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    LIST
      OF EXHIBITS AND SCHEDULES

     

    

     

    Exhibit
      A  Form
      of
      Escrow Agreement

     

    Exhibit
      B  Form
      of
      Warrant

     

    Exhibit
      C  Form
      of
      Legal Opinion

     

    Schedule
      5(d)  Additional
      Issuances

     

    Schedule
      5(q)  Undisclosed
      Liabilities

     

    Schedule
      5(s)  Capitalization

     

    Schedule
      11.1  Other
      Securities to be Registered

     

     

    28

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