Document:

vhgi8kex103070212.htm

Exhibit 10.3

 

 

THIRD AMENDMENT TO NOTE PURCHASE AGREEMENT

 

This Third Amendment to Note Purchase Agreement (this “Third Amendment”), dated as of June 15, 2012, is between Lily Group Inc., an Indiana corporation (the “Borrower”), and Platinum Partners Credit Opportunities Master Fund LP, a Delaware limited partnership (the “Purchaser”).

 

Recitals

 

A. The Borrower and the Purchaser have entered into a Note Purchase Agreement, dated as of February 16, 2012, as amended by Amendment to Note Purchase Agreement, dated May 15, 2012 and amended by Second Amendment to Note Purchase Agreement (the “Second Amendment”), dated May 25, 2012 (as amended, modified, replaced or substituted, the “Note Purchase Agreement”), providing for the Purchaser’s purchase of a $13,000,000 promissory note from the Borrower. Defined terms used herein and not defined herein shall have the meanings set forth in the Note Purchase Agreement.

 

B. The Borrower has asked the Purchaser, and the Purchaser has agreed to amend the terms and conditions of the Note Purchase Agreement to extend the Termination Date to August 10, 2012, subject to and as more fully set forth in this Third Amendment.

 

Agreement

 

In consideration of the foregoing, the covenants and agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Borrower and the Purchaser agree as follows:

 

1.           Amendment to Note Purchase Agreement. Effective as of the Effective Date (as defined below) and upon the terms and subject to the conditions set forth in this Third Amendment:

 

(a) The definition of “Termination Date” contained in Section 1.1 of the Note Purchase Agreement is hereby amended by deleting “May 25, 2012” and replacing it with “August 10, 2012”.

 

(b) Section 4.1 of the Note Purchase Agreement is hereby amended by deleting “May 25, 2012” and replacing it with “August 10, 2012”.

 

2.           Other Agreements.

 

(a) Borrower agrees to pay $100,000 plus all outstanding legal fees to Purchaser on or before July 9, 2012.

 

(b) Borrower agrees to pay the $550,000 due under Section 2(a) of the Second Amendment to Purchaser on or before the Termination Date.

 

(c) As additional consideration for the extension of the Termination Date granted herein, Borrower agrees to pay to Purchaser (in addition to all other payments

 

 

  

  

  

 

under the Note, the Note Purchase Agreement and the other Note Documents) $250,000. Such amount shall be due upon the Termination Date or upon the acceleration of the Obligations as provided in the Note Purchase Agreement, shall be indebtedness of Borrower due and owing to Purchaser, and shall be evidenced by the Note, the Note Purchase Agreement and the other Note Documents. No interest shall be payable on such amount until an Event of Default shall have occurred, at which time interest on such amount shall bear interest at the Default Rate.

 

(d) Borrower shall cause one or more of its Affiliates to fund at least $500,000 on a subordinated basis (subordinated in all respects to the Obligations and the Note Documents (including the Security Documents)), to the Borrower for working capital purposes no later than July 9th, 2012 and an additional $125,000 on a subordinated basis (subordinated in all respects to the Obligations and the Note Documents (including the Security Documents)) to the Borrower for working capital purposes no later than July 20, 2012.

 

(e) Borrower shall deliver 10,000 tons of coal under its Coal Supply Agreement to Indianapolis Power and Light Company no later than July 29, 2012.

 

(f) All outstanding amounts owing to Purchaser shall bear interest until May 16 as set forth in Section 2.3(a), and, subject to 2.3(b), from May 16, 2012 until all the Obligations are paid in full at 18% per annum.

 

(g) Borrower shall have until August 10, 2012 to satisfy the obligations of Borrower under Subsections 8.13(c), 8.13(d), 8.13(e) and 8.13(f), but the failure to satisfy such obligations by such date shall constitute and Event of Default under the Note Purchase Agreement and the other Note Documents.

 

(h) The Borrower and the Purchaser agree that all of the Note Documents (including the Note) are hereby amended to reflect the amendments and other agreements set forth herein and that no further amendments to any Note Documents are required to reflect the foregoing.

 

(i) All references in any document to “Note Purchase Agreement” or any “Note Document” shall refer to the Note Purchase Agreement or any such Note Document, as amended pursuant to this Third Amendment.

 

3.           Conditions Precedent. The effectiveness of this Third Amendment (including

 

without limitation the amendment provided for in Section 1 hereof) is subject to the satisfaction of the following conditions (the date that all such conditions are satisfied, the “Effective Date”):

 

(a)           The Purchaser shall have received:

 

(i)           from the Borrower either (A) a counterpart of this Third

 

  

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Amendment signed on behalf of the Borrower or (B) written evidence satisfactory to the Purchaser (which may include telecopy transmission of a signed signature page of this Third Amendment) that such party has signed a counterpart of this Third Amendment; and

 

(ii)           such other documents, certificates and instruments as the

 

Purchaser or its counsel may have reasonably requested, such documents, certificates and instruments to be satisfactory to the Purchaser and its counsel in all respects in their sole discretion.

 

(b) The Purchaser shall have received all costs, fees and other amounts due and payable  and outstanding on or prior to the hereof, including reimbursement or payment of all out-of-pocket expenses (including, without limitation, reasonable fees, disbursements and other charges of counsel) required to be reimbursed or paid by the Borrower hereunder or under any Note Document, but limited for the purposes of this condition to $10,000.00. Such limitation is solely for the condition to the effectiveness of this Third Amendment  set forth in this Section 3(b) and shall not limit or otherwise modify Borrower’s  obligations under the Note Documents (including Section 11.3 of the Note Purchase  Agreement), to pay Purchaser’s costs and expenses, including any cost and expenses in  excess of the $10,000.

 

(c) The Borrower shall have received $375,000 on a subordinated basis (subordinated in all respects to the Obligations and the Note Documents (including the Security Documents) from one of its Affiliates for working capital purposes. Note this amount is in addition to the amount set forth in 2(c) above.

 

4.            Representations and Warranties. The Borrower hereby certifies to the Purchaser that as of the date of this Third Amendment and as of the Effective Date (taking into consideration the transactions contemplated by this Third Amendment) all of the Borrower’s representations and warranties contained in the Note Purchase Agreement and each of the Note Documents are true, accurate and complete, and no Default or Event of Default has occurred under the Note Purchase Agreement or any of the Note Documents. Without limiting the generality of the foregoing, the Borrower represents and warrants that (i) the execution and delivery of this Third Amendment has been authorized by all necessary action on the part of the Borrower, (ii) the person executing this Third Amendment on behalf of the Borrower is duly authorized to do so, and (iii) this Third Amendment constitutes the legal, valid, binding and enforceable obligation of the Borrower.

 

5.            Additional Documents. The Borrower shall execute and deliver, and shall cause to be executed and delivered, to the Purchaser at any time and from time to time such documents and instruments, including without limitation additional amendments to the Note Purchase Agreement and the Note Documents, as the Purchaser may reasonably request to confirm and carry out the transactions contemplated hereby or by any other Note Documents executed in connection herewith.

 

 

  

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6.            Continuation of the Note Purchase Agreement and Note Documents. Except as specified in this Third Amendment, the provisions of the Note Purchase Agreement and the Note Documents shall remain in full force and effect, and if there is a conflict between the terms of this Third Amendment and those of the Note Purchase Agreement or the Note Documents, the terms of this Third Amendment shall control. This Third Amendment is a Note Document.

 

7.            Ratification and Reaffirmation of Obligations by Borrower. Borrower hereby (a) ratifies and confirms all of its Obligations under the Note Purchase Agreement and each of the other Note Documents, and acknowledges and agrees that such Obligations remain in full force and effect, and (b) ratifies, reaffirms and reapproves in favor of the Purchaser the terms and provisions of the Note Purchase Agreement and each of the other Note Documents, including its pledges and other grants of Liens and security interests pursuant to the Note Documents.

 

8.            Release and Indemnification.

 

(a) Borrower hereby fully, finally, and forever releases and discharges the Purchaser, and its successors, assigns, directors, officers, employees, agents and representatives, from any and all causes of action, claims, debts, demands and liabilities, of whatever kind or nature, in law or equity, of the Borrower, whether now known or unknown to Borrower in respect of (i) the Obligations under the Note Purchase Agreement and each of the other Note Documents or (ii) the actions or omissions of the Purchaser in any manner related to the Obligations under the Note Purchase Agreement and each of the other Note Documents; provided that this Section shall only apply to and be effective with respect to events or circumstances existing or occurring prior to and including the date of this Third Amendment.

 

(b) Without limiting Section 11.3 of the Note Purchase Agreement, the Borrower hereby agrees to indemnify, defend, and hold harmless the Purchaser and its successors, assigns, directors, officers, employees, agents and representatives (each an “Indemnified Party” and collectively the “Indemnified Parties”) from and against any and all accounts, covenants, agreements, obligations, claims, debts, liabilities, offsets, demands, costs, expenses, actions or causes of action of every nature, character and description, whether arising at law or equity or under statute, regulation or otherwise, and whether liquidated or unliquidated, contingent or noncontingent, known or unknown, suspected or unsuspected (“Claims”), arising from or made under any legal theory, which any of Indemnified Parties may incur as a direct or indirect consequence of or in relation to any acts or omissions of the Borrower arising from or relating to any of: (i) the Note Purchase Agreement; (ii) the Note Documents; (iii) this Third Amendment; or (iv) any documents executed by the Borrower in connection with this Third

 

 

  

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Amendment. Should any Indemnified Party incur any such Claims, or defense of or response to any Claims or demand related thereto, the amount thereof, including costs, expenses and attorneys’ fees, shall be added to the amounts due under the Note Documents, and shall be secured by any and all liens created under and pursuant to the Note Documents. This indemnity shall survive until the Obligations have been indefeasibly paid in full and the termination, release or discharge of the Borrower. To the extent permissible under applicable law, this indemnity shall not limit any other rights of indemnification, subrogation or assignment, whether explicit, implied, legal or equitable, that any Indemnified Party may have; provided that no Indemnified Party shall have the right to indemnification to the extent that a Claim arises out of the Indemnified Party’s gross negligence or willful misconduct.

 

9.           Miscellaneous.

 

(a) THIS THIRD AMENDMENT SHALL BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, INCLUDING SECTIONS 5.1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW AND RULE 327(B) OF THE NEW YORK CIVIL PRACTICE LAW AND RULES, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.

 

(b) This Third Amendment shall be subject to the rules of construction contained in the Note Purchase Agreement, including Sections 1.4 and 1.5 of the Note Purchase Agreement.

 

(c) This Third Amendment shall be binding upon and inure to the benefit of the parties hereto and their successors and permissible assigns.

 

(d) All representations and warranties made in this Third Amendment, the Note Purchase Agreement or any Note Document including any Note Document furnished in connection with this Third Amendment shall survive the execution and delivery of this Third Amendment and the other related Note Documents, and no investigation by the Purchaser or any closing shall affect the representations and warranties or the right of the Purchaser to rely upon them.

 

(e) This Third Amendment and all documents to be executed and delivered hereunder may be delivered in the form of a facsimile copy or other electronic means, subsequently confirmed by delivery of the originally executed document. This Third Amendment may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute one instrument.

 

(f) This Third Amendment, the Note Purchase Agreement, the other Note Documents, and all other instruments, documents and agreements executed and

 

 

  

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delivered in connection with Third Amendment, the Note Purchase Agreement and the other Note Documents, embody the final, entire agreement among the parties hereto with respect to the subject matter hereof. There are no oral agreements among the parties hereto. This Third Amendment may not be amended or modified orally, but only by a written agreement meeting the requirements of Section 11.5 of the Note Purchase Agreement.

 

(g) The section headings herein are for convenience only and shall not affectthe construction hereof.

 

(h) Other than as expressly stated herein, this Third Amendment and the amendments set forth herein do not constitute a waiver by the Purchaser of Borrower’s compliance with any covenants, or a waiver of any Defaults or Events of Default, under the Note Purchase Agreement or any of the Note Documents, and shall not entitle the Borrower to any similar or other amendments in the future. Without limiting the foregoing, except as specifically set forth herein, the Purchaser continues to reserve all rights and remedies available to the Purchaser under the Note Purchase Agreement and the Note Documents, under law (including Article 9 of the Uniform Commercial Code) and at equity.

 

 

  

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(i) In case any provision of or obligation under this Third Amendment shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.

 

[Signature Page Follows]

 

 

  

7Exhibit 4.1

SECURITIES PURCHASE AGREEMENT

 

This SECURITIES
PURCHASE AGREEMENT (the “Agreement”), dated as of June 19, 2012, by and between CLEAN WIND ENERGY TOWER, INC.,
a Nevada corporation, with headquarters located at 1997 Annapolis Exchange Parkway, Annapolis, MD 21401 (the “Company”),
and ASHER ENTERPRISES, INC., a Delaware corporation, with its address at 1 Linden Place, Suite 207, Great Neck, NY 11021
(the “Buyer”).

WHEREAS:

 

A.The
Company and the Buyer are executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by the rules and regulations as promulgated by the United States
Securities and Exchange Commission (the “SEC”) under the Securities Act of 1933, as amended (the “1933 Act”);

 

B.Buyer
desires to purchase and the Company desires to issue and sell, upon the terms and conditions set forth in this Agreement an 8% convertible note of the Company, in the form attached hereto as Exhibit
A, in the aggregate principal amount of $32,500.00 (together with any note(s) issued in replacement thereof or as a dividend thereon
or otherwise with respect thereto in accordance with the terms thereof, the “Note”), convertible into shares of common
stock, $0.0001 par value per share, of the Company (the “Common Stock”), upon the terms and subject to the limitations
and conditions set forth in such Note.

 

C.The
Buyer wishes to purchase, upon the terms and conditions stated in this Agreement, such principal amount of Note as is set forth
immediately below its name on the signature pages hereto; and

 

NOW
THEREFORE, the Company and the Buyer severally (and not jointly) hereby agree as follows:

 

1.Purchase and Sale of Note. 

 

a.Purchase of Note. On the Closing
Date (as defined below), the Company shall issue and sell to the Buyer and the Buyer agrees to purchase from the Company such
principal amount of Note as is set forth immediately below the Buyer’s name on the signature pages hereto.

 

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b.
Form of Payment. On the Closing Date (as defined below), (i) the Buyer shall pay the purchase price for the Note to be
issued and sold to it at the Closing (as defined below) (the “Purchase Price”) by wire transfer of immediately available
funds to the Company, in accordance with the Company’s written wiring instructions, against delivery of the Note in the
principal amount equal to the Purchase Price as is set forth immediately below the Buyer’s name on the signature pages hereto,
and (ii) the Company shall deliver such duly executed Note on behalf of the Company, to the Buyer, against delivery of such Purchase
Price.

 

c.Closing
Date. Subject to the satisfaction (or written waiver) of the conditions thereto set forth in Section 6 and Section 7 below,
the date and time of the issuance and sale of the Note pursuant to this Agreement (the “Closing Date”) shall be 12:00
noon, Eastern Standard Time on or about June 21, 2012, or such other mutually agreed upon time. The closing of the transactions
contemplated by this Agreement (the “Closing”) shall occur on the Closing Date at such location as may be agreed to
by the parties.

2.Buyer’s Representations and Warranties.
The Buyer represents and warrants to the Company that:

 

a.Investment
Purpose. As of the date hereof, the Buyer is purchasing the Note and the shares of Common Stock issuable upon conversion of
or otherwise pursuant to the Note (including, without limitation, such additional shares of Common Stock, if any, as are issuable
(i) on account of interest on the Note, (ii) as a result of the events described in Sections 1.3 and 1.4(g) of the Note or (iii)
in payment of the Standard Liquidated Damages Amount (as defined in Section 2(f) below) pursuant to this Agreement, such shares
of Common Stock being collectively referred to herein as the “Conversion Shares” and, collectively with the Note,
the “Securities”) for its own account and not with a present view towards the public sale or distribution thereof,
except pursuant to sales registered or exempted from registration under the 1933 Act; provided, however, that by making
the representations herein, the Buyer does not agree to hold any of the Securities for any minimum or other specific term and
reserves the right to dispose of the Securities at any time in accordance with or pursuant to a registration statement or an exemption
under the 1933 Act.

 

b.Accredited
Investor Status. The Buyer is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D
(an “Accredited Investor”).

 

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

 

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d.Information.
The Buyer and its advisors, if any, have been, and for so long as the Note remain outstanding will continue to be, furnished
with all materials relating to the business, finances and operations of the Company and materials relating to the offer and sale
of the Securities which have been requested by the Buyer or its advisors. The Buyer and its advisors, if any, have been, and for
so long as the Note remain outstanding will continue to be, afforded the opportunity to ask questions of the Company. Notwithstanding
the foregoing, the Company has not disclosed to the Buyer any material nonpublic information and will not disclose such information
unless such information is disclosed to the public prior to or promptly following such disclosure to the Buyer. Neither such inquiries
nor any other due diligence investigation conducted by Buyer or any of its advisors or representatives shall modify, amend or
affect Buyer’s right to rely on the Company’s representations and warranties contained in Section 3 below. The Buyer
understands that its investment in the Securities involves a significant degree of risk. The Buyer is not aware of any facts that
may constitute a breach of any of the Company's representations and warranties made herein.

 

e.Governmental
Review. The Buyer understands that no United States federal or state agency or any other government or governmental agency
has passed upon or made any recommendation or endorsement of the Securities.

 

f.Transfer
or Re-sale. The Buyer understands that (i) the sale or re-sale of the Securities has not been and is not being registered
under the 1933 Act or any applicable state securities laws, and the Securities may not be transferred unless (a) the Securities
are sold pursuant to an effective registration statement under the 1933 Act, (b) the Buyer shall have delivered to the Company,
at the cost of the Buyer, an opinion of counsel that shall be in form, substance and scope customary for opinions of counsel in
comparable transactions to the effect that the Securities to be sold or transferred may be sold or transferred pursuant to an
exemption from such registration, which opinion shall be accepted by the Company, (c) the Securities are sold or transferred to
an “affiliate” (as defined in Rule 144 promulgated under the 1933 Act (or a successor rule) (“Rule 144”))
of the Buyer who agrees to sell or otherwise transfer the Securities only in accordance with this Section 2(f) and who is an Accredited
Investor, (d) the Securities are sold pursuant to Rule 144, or (e) the Securities are sold pursuant to Regulation S under the
1933 Act (or a successor rule) (“Regulation S”), and the Buyer shall have delivered to the Company, at the cost of
the Buyer, an opinion of counsel that shall be in form, substance and scope customary for opinions of counsel in corporate transactions,
which opinion shall be accepted by the Company; (ii) any sale of such Securities made in reliance on Rule 144 may be made only
in accordance with the terms of said Rule and further, if said Rule is not applicable, any re-sale of such Securities under circumstances
in which the seller (or the person through whom the sale is made) may be deemed to be an underwriter (as that term is defined
in the 1933 Act) may require compliance with some other exemption under the 1933 Act or the rules and regulations of the SEC thereunder;
and (iii) neither the Company nor any other person is under any obligation to register such Securities under the 1933 Act or any
state securities laws or to comply with the terms and conditions of any exemption thereunder (in each case). Notwithstanding the
foregoing or anything else contained herein to the contrary, the Securities may be pledged as collateral in connection with a
bona fide margin account or other lending arrangement.

 

 

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g.Legends. The Buyer understands that
the Note and, until such time as the Conversion Shares have been registered under the 1933 Act may be sold pursuant to Rule 144
or Regulation S without any restriction as to the number of securities as of a particular date that can then be immediately sold,
the Conversion Shares may bear a restrictive legend in substantially the following form (and a stop-transfer order may be placed
against transfer of the certificates for such Securities):

“NEITHER THE ISSUANCE
AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED
FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID
ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR
FINANCING ARRANGEMENT SECURED BY THE SECURITIES.”

The
legend set forth above shall be removed and the Company shall issue a certificate without such legend to the holder of any Security
upon which it is stamped, if, unless otherwise required by applicable state securities laws, (a) such Security is registered for
sale under an effective registration statement filed under the 1933 Act or otherwise may be sold pursuant to Rule 144 or Regulation
S without any restriction as to the number of securities as of a particular date that can then be immediately sold, or (b) such
holder provides the Company with an opinion of counsel, in form, substance and scope customary for opinions of counsel in comparable
transactions, to the effect that a public sale or transfer of such Security may be made without registration under the 1933 Act,
which opinion shall be accepted by the Company so that the sale or transfer is effected. The Buyer agrees to sell all Securities,
including those represented by a certificate(s) from which the legend has been removed, in compliance with applicable prospectus
delivery requirements, if any. In the event that the Company does not accept the opinion of counsel provided by the Buyer with
respect to the transfer of Securities pursuant to an exemption from registration, such as Rule 144 or Regulation S, at the Deadline,
it will be considered an Event of Default pursuant to Section 3.2 of the Note.

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h.Authorization;
Enforcement. This Agreement has been duly and validly authorized. This Agreement has been duly executed and delivered on behalf
of the Buyer, and this Agreement constitutes a valid and binding agreement of the Buyer enforceable in accordance with its terms.

 

i.Residency.
The Buyer is a resident of the jurisdiction set forth immediately below the Buyer’s name on the signature pages hereto. 

3.Representations and Warranties of the Company.
The Company represents and warrants to the Buyer that:

 

a.Organization
and Qualification. The Company and each of its Subsidiaries (as defined below), if any, is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction in which it is incorporated, with full power and authority (corporate
and other) to own, lease, use and operate its properties and to carry on its business as and where now owned, leased, used, operated
and conducted. Schedule 3(a) sets forth a list of all of the Subsidiaries of the Company and the jurisdiction in which each is
incorporated. The Company and each of its Subsidiaries is duly qualified as a foreign corporation to do business and is in good
standing in every jurisdiction in which its ownership or use of property or the nature of the business conducted by it makes such
qualification necessary except where the failure to be so qualified or in good standing would not have a Material Adverse Effect.
“Material Adverse Effect” means any material adverse effect on the business, operations, assets, financial condition
or prospects of the Company or its Subsidiaries, if any, taken as a whole, or on the transactions contemplated hereby or by the
agreements or instruments to be entered into in connection herewith. “Subsidiaries” means any corporation or other
organization, whether incorporated or unincorporated, in which the Company owns, directly or indirectly, any equity or other ownership
interest.

 

b.Authorization;
Enforcement. (i) The Company has all requisite corporate power and authority to enter into and perform this Agreement, the
Note and to consummate the transactions contemplated hereby and thereby and to issue the Securities, in accordance with the terms
hereof and thereof, (ii) the execution and delivery of this Agreement, the Note by the Company and the consummation by it of the
transactions contemplated hereby and thereby (including without limitation, the issuance of the Note and the issuance and reservation
for issuance of the Conversion Shares issuable upon conversion or exercise thereof) have been duly authorized by the Company’s
Board of Directors and no further consent or authorization of the Company, its Board of Directors, or its shareholders is required,
(iii) this Agreement has been duly executed and delivered by the Company by its authorized representative, and such authorized
representative is the true and official representative with authority to sign this Agreement and the other documents executed
in connection herewith and bind the Company accordingly, and (iv) this Agreement constitutes, and upon execution and delivery
by the Company of the Note, each of such instruments will constitute, a legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its terms.

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c.Capitalization. As of the date hereof,
the authorized capital stock of the Company consists of: (i) 500,000,000 shares of Common Stock, $0.0001 par value per share, of
which 225,547,250 shares are issued and outstanding; and (ii) 10,000,000 shares of Preferred Stock, $0.0001 par value per share,
of which no shares are issued and outstanding; no shares are reserved for issuance pursuant to the Company’s stock option
plans, no shares are reserved for issuance pursuant to securities (other than the Note and two (2) prior convertible promissory
notes in favor of the Buyer: (a) prior convertible promissory note in favor of the Buyer dated April 10, 2012 in the amount of
$68,500.00 for which 16,223,001 shares of Common Stock are presently reserved and (b) prior convertible promissory note in favor
of the Buyer dated May 3, 2012 in the amount of $42,500.00 for which 9,770,115 shares of Common Stock are presently reserved and
shares reserved pursuant to the Original Issue Discount Secured Convertible Promissory Note issued to Hanover Holdings I, LLC)
exercisable for, or convertible into or exchangeable for shares of Common Stock and 18,000,000 shares are reserved for issuance
upon conversion of the Note. All of such outstanding shares of capital stock are, or upon issuance will be, duly authorized, validly
issued, fully paid and non-assessable. No shares of capital stock of the Company are subject to preemptive rights or any other
similar rights of the shareholders of the Company or any liens or encumbrances imposed through the actions or failure to act of
the Company. As of the effective date of this Agreement, (i) there are no outstanding options, warrants, scrip, rights to subscribe
for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever
relating to, or securities or rights convertible into or exchangeable for any shares of capital stock of the Company or any of
its Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares
of capital stock of the Company or any of its Subsidiaries, (ii) there are no agreements or arrangements under which the Company
or any of its Subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Act and (iii) except
for the Original Issue Discount Secured Convertible Promissory Note issued to Hanover Holdings I, LLC there are no anti-dilution
or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security
holders) that will be triggered by the issuance of the Note or the Conversion Shares. The Company has furnished to the Buyer true
and correct copies of the Company’s Certificate of Incorporation as in effect on the date hereof (“Certificate of Incorporation”),
the Company’s By-laws, as in effect on the date hereof (the “By-laws”), and the terms of all securities convertible
into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect thereto. The Company
shall provide the Buyer with a written update of this representation signed by the Company’s Chief Executive on behalf of
the Company as of the Closing Date.

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d.Issuance
of Shares. The Conversion Shares are duly authorized and reserved for issuance and, upon conversion of the Note in accordance
with its respective terms, will be validly issued, fully paid and non-assessable, and free from all taxes, liens, claims and encumbrances
with respect to the issue thereof and shall not be subject to preemptive rights or other similar rights of shareholders of the
Company and will not impose personal liability upon the holder thereof.

 

e.Acknowledgment
of Dilution. The Company understands and acknowledges the potentially dilutive effect to the Common Stock upon the issuance
of the Conversion Shares upon conversion of the Note. The Company further acknowledges that its obligation to issue Conversion
Shares upon conversion of the Note in accordance with this Agreement, the Note is absolute and unconditional regardless of the
dilutive effect that such issuance may have on the ownership interests of other shareholders of the Company.

 

f.No
Conflicts.The execution, delivery and performance of this Agreement, the Note by the Company and the consummation by the
Company of the transactions contemplated hereby and thereby (including, without limitation, the issuance and reservation for
issuance of the Conversion Shares) will not (i) conflict with or result in a violation of any provision of the Certificate of
Incorporation or By-laws, or (ii) violate or conflict with, or result in a breach of any provision of, or constitute a
default (or an event which with notice or lapse of time or both could become a default) under, or give to others any rights
of termination, amendment, acceleration or cancellation of, any agreement, indenture, patent, patent license or instrument to
which the Company or any of its Subsidiaries is a party, or (iii) result in a violation of any law, rule, regulation, order,
judgment or decree (including federal and state securities laws and regulations and regulations of any self-regulatory
organizations to which the Company or its securities are subject) applicable to the Company or any of its Subsidiaries or by
which any property or asset of the Company or any of its Subsidiaries is bound or affected (except for such conflicts,
defaults, terminations, amendments, accelerations, cancellations and violations as would not, individually or in the
aggregate, have a Material Adverse Effect). Neither the Company nor any of its Subsidiaries is in violation of its
Certificate of Incorporation, Bylaws or other organizational documents and neither the Company nor any of its Subsidiaries is
in default (and no event has occurred which with notice or lapse of time or both could put the Company or any of its
Subsidiaries in default) under, and neither the Company nor any of its Subsidiaries has taken any action or failed to take
any action that would give to others any rights of termination, amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which the Company or any of its Subsidiaries is a party or by which any property or assets of the
Company or any of its Subsidiaries is bound or affected, except for possible defaults as would not, individually or in the
aggregate, have a Material Adverse Effect. The businesses of the Company and its Subsidiaries, if any, are not being
conducted, and shall not be conducted so long as the Buyer owns any of the Securities, in violation of any law, ordinance or
regulation of any governmental entity. Except as specifically contemplated by this Agreement and as required under the 1933
Act and any applicable state securities laws, the Company is not required to obtain any consent, authorization or order of,
or make any filing or registration with, any court, governmental agency, regulatory agency, self regulatory organization
or stock market or any third party in order for it to execute, deliver or perform any of its obligations under this
Agreement, the Note in accordance with the terms hereof or thereof or to issue and sell the Note in accordance with the terms
hereof and to issue the Conversion Shares upon conversion of the Note. All consents, authorizations, orders, filings and
registrations which the Company is required to obtain pursuant to the preceding sentence have been obtained or effected on or
prior to the date hereof. The Company is not in violation of the listing requirements of the Over-the-Counter Bulletin Board
(the “OTCBB”) and does not reasonably anticipate that the Common Stock will be delisted by the OTCBB in the
foreseeable future. The Company and its Subsidiaries are unaware of any facts or circumstances which might give rise to any
of the foregoing.

    	7

    	 

    

g.SEC
Documents; Financial Statements. The Company has timely filed all reports, schedules, forms, statements and other
documents required to be filed by it with the SEC pursuant to the reporting requirements of the Securities Exchange Act of
1934, as amended (the “1934 Act”) (all of the foregoing filed prior to the date hereof and all exhibits included
therein and financial statements and schedules thereto and documents (other than exhibits to such documents) incorporated by
reference therein, being hereinafter referred to herein as the “SEC Documents”). Upon written request the Company
will deliver to the Buyer true and complete copies of the SEC Documents, except for such exhibits and incorporated documents.
As of their respective dates, the SEC Documents complied in all material respects with the requirements of the 1934 Act and
the rules and regulations of the SEC promulgated thereunder applicable to the SEC Documents, and none of the SEC Documents,
at the time they were filed with the SEC, contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under
which they were made, not misleading. None of the statements made in any such SEC Documents is, or has been, required to be
amended or updated under applicable law (except for such statements as have been amended or updated in subsequent filings
prior the date hereof). As of their respective dates, the financial statements of the Company included in the SEC Documents
complied as to form in all material respects with applicable accounting requirements and the published rules and regulations
of the SEC with respect thereto. Such financial statements have been prepared in accordance with United States generally
accepted accounting principles, consistently applied, during the periods involved and fairly present in all material respects
the consolidated financial position of the Company and its consolidated Subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments). Except as set forth in the financial statements of the Company
included in the SEC Documents, the Company has no liabilities, contingent or otherwise, other than (i) liabilities incurred
in the ordinary course of business subsequent to March 31, 2012, and (ii) obligations under contracts and commitments
incurred in the ordinary course of business and not required under generally accepted accounting principles to be reflected
in such financial statements, which, individually or in the aggregate, are not material to the financial condition or
operating results of the Company. The Company is subject to the reporting requirements of the 1934 Act.

    	8

    	 

    
h.Absence of Certain Changes.
Since March 31, 2012, there has been no material adverse change and no material adverse development in the assets, liabilities,
business, properties, operations, financial condition, results of operations, prospects or 1934 Act reporting status of the Company
or any of its Subsidiaries.

 

i.Absence
of Litigation. There is no action, suit, claim, proceeding, inquiry or investigation before or by any court, public board,
government agency, self-regulatory organization or body pending or, to the knowledge of the Company or any of its Subsidiaries,
threatened against or affecting the Company or any of its Subsidiaries, or their officers or directors in their capacity as such,
that could have a Material Adverse Effect. Schedule 3(i) contains a complete list and summary description of any pending or, to
the knowledge of the Company, threatened proceeding against or affecting the Company or any of its Subsidiaries, without regard
to whether it would have a Material Adverse Effect. The Company and its Subsidiaries are unaware of any facts or circumstances
which might give rise to any of the foregoing.

 

j.Patents,
Copyrights, etc. The Company and each of its Subsidiaries owns or possesses the requisite licenses or rights to use all patents,
patent applications, patent rights, inventions, know-how, trade secrets, trademarks, trademark applications, service marks, service
names, trade names and copyrights (“Intellectual Property”) necessary to enable it to conduct its business as now operated
(and, as presently contemplated to be operated in the future); there is no claim or action by any person pertaining to, or proceeding
pending, or to the Company’s knowledge threatened, which challenges the right of the Company or of a Subsidiary with respect
to any Intellectual Property necessary to enable it to conduct its business as now operated (and, as presently contemplated to
be operated in the future); to the best of the Company’s knowledge, the Company’s or its Subsidiaries’ current
and intended products, services and processes do not infringe on any Intellectual Property or other rights held by any person;
and the Company is unaware of any facts or circumstances which might give rise to any of the foregoing. The Company and each of
its Subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality and value of their Intellectual
Property.

 

k.No Materially
Adverse Contracts, Etc. Neither the Company nor any of its Subsidiaries is subject to any charter, corporate or other legal
restriction, or any judgment, decree, order, rule or regulation which in the judgment of the Company’s officers has or is
expected in the future to have a Material Adverse Effect. Neither the Company nor any of its Subsidiaries is a party to any contract
or agreement which in the judgment of the Company’s officers has or is expected to have a Material Adverse Effect.

 

l.Tax
Status. Except as disclosed on Schedule 3(l), the Company and each of its Subsidiaries has made or filed all federal,
state and foreign income and all other tax returns, reports and declarations required by any jurisdiction to which it
is subject (unless and only to the extent that the Company and each of its Subsidiaries has set aside on its books provisions
reasonably adequate for the payment of all unpaid and unreported taxes) and has paid all taxes and other governmental
assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations,
except those being contested in good faith and has set aside on its books provisions reasonably adequate for the payment of
all taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid
taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company
know of no basis for any such claim. The Company has not executed a waiver with respect to the statute of limitations
relating to the assessment or collection of any foreign, federal, state or local tax. None of the Company’s tax returns
is presently being audited by any taxing authority.

    	9

    	 

    

m.Certain
Transactions. Except for arm’s length transactions pursuant to which the Company or any of its Subsidiaries makes payments
in the ordinary course of business upon terms no less favorable than the Company or any of its Subsidiaries could obtain from third
parties and other than the grant of stock options disclosed on Schedule 3(c), none of the officers, directors, or employees of
the Company is presently a party to any transaction with the Company or any of its Subsidiaries (other than for services as employees,
officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director
or such employee or, to the knowledge of the Company, any corporation, partnership, trust or other entity in which any officer,
director, or any such employee has a substantial interest or is an officer, director, trustee or partner.

 

n.Disclosure.
All information relating to or concerning the Company or any of its Subsidiaries set forth in this Agreement and provided to the
Buyer pursuant to Section 2(d) hereof and otherwise in connection with the transactions contemplated hereby is true and correct
in all material respects and the Company has not omitted to state any material fact necessary in order to make the statements made
herein or therein, in light of the circumstances under which they were made, not misleading. No event or circumstance has occurred
or exists with respect to the Company or any of its Subsidiaries or its or their business, properties, prospects, operations or
financial conditions, which, under applicable law, rule or regulation, requires public disclosure or announcement by the Company
but which has not been so publicly announced or disclosed (assuming for this purpose that the Company’s reports filed under
the 1934 Act are being incorporated into an effective registration statement filed by the Company under the 1933 Act).

 

o.Acknowledgment
Regarding Buyer’ Purchase of Securities. The Company acknowledges and agrees that the Buyer is acting solely in
the capacity of arm’s length purchasers with respect to this Agreement and the transactions contemplated hereby. The
Company further acknowledges that the Buyer is not acting as a financial advisor or fiduciary of the Company (or in any
similar capacity) with respect to this Agreement and the transactions contemplated hereby and any statement made by the Buyer
or any of its respective representatives or agents in connection with this Agreement and the transactions contemplated hereby
is not advice or a recommendation and is merely incidental to the Buyer’ purchase of the Securities. The Company
further represents to the Buyer that the Company’s decision to enter into this Agreement has been based solely on the
independent evaluation of the Company and its representatives.

    	10

    	 

    

p.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 in any security or solicited any offers to buy any security under circumstances that would
require registration under the 1933 Act of the issuance of the Securities to the Buyer. The issuance of the Securities to the Buyer
will not be integrated with any other issuance of the Company’s securities (past, current or future) for purposes of any
shareholder approval provisions applicable to the Company or its securities.

 

q.No Brokers.
The Company has taken no action which would give rise to any claim by any person for brokerage commissions, transaction fees or
similar payments relating to this Agreement or the transactions contemplated hereby.

 

r.Permits;
Compliance. The Company and each of its Subsidiaries is in possession of all franchises, grants, authorizations, licenses,
permits, easements, variances, exemptions, consents, certificates, approvals and orders necessary to own, lease and operate its
properties and to carry on its business as it is now being conducted (collectively, the “Company Permits”), and there
is no action pending or, to the knowledge of the Company, threatened regarding suspension or cancellation of any of the Company
Permits. Neither the Company nor any of its Subsidiaries is in conflict with, or in default or violation of, any of the Company
Permits, except for any such conflicts, defaults or violations which, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect. Since March 31, 2012, neither the Company nor any of its Subsidiaries has received
any notification with respect to possible conflicts, defaults or violations of applicable laws, except for notices relating to
possible conflicts, defaults or violations, which conflicts, defaults or violations would not have a Material Adverse Effect.

 

s.Environmental
Matters.

 

(i)There
are, to the Company’s knowledge, with respect to the Company or any of its Subsidiaries or any predecessor of the
Company, no past or present violations of Environmental Laws (as defined below), releases of any material into the
environment, actions, activities, circumstances, conditions, events, incidents, or contractual obligations which may give
rise to any common law environmental liability or any liability under the Comprehensive Environmental Response, Compensation
and Liability Act of 1980 or similar federal, state, local or foreign laws and neither the Company nor any of its
Subsidiaries has received any notice with respect to any of the foregoing, nor is any action pending or, to the
Company’s knowledge, threatened in connection with any of the foregoing. The term “Environmental Laws”
means all federal, state, local or foreign laws relating to pollution or protection of human health or the environment
(including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata), including,
without limitation, laws relating to emissions, discharges, releases or threatened releases of chemicals, pollutants
contaminants, or toxic or hazardous substances or wastes (collectively, “Hazardous Materials”) into
the environment, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials, as well as all authorizations, codes, decrees, demands or demand letters,
injunctions, judgments, licenses, notices or notice letters, orders, permits, plans or regulations issued, entered,
promulgated or approved thereunder.

    	11

    	 

    

(ii)Other than
those that are or were stored, used or disposed of in compliance with applicable law, no Hazardous Materials are contained on or
about any real property currently owned, leased or used by the Company or any of its Subsidiaries, and no Hazardous Materials were
released on or about any real property previously owned, leased or used by the Company or any of its Subsidiaries during the period
the property was owned, leased or used by the Company or any of its Subsidiaries, except in the normal course of the Company’s
or any of its Subsidiaries’ business.

 

(iii)There are
no underground storage tanks on or under any real property owned, leased or used by the Company or any of its Subsidiaries that
are not in compliance with applicable law.

 

t.Title
to Property. The Company and its Subsidiaries have good and marketable title in fee simple to all real property and good and
marketable title to all personal property owned by them which is material to the business of the Company and its Subsidiaries,
in each case free and clear of all liens, encumbrances and defects except such as are described in Schedule 3(t) or such as would
not have a Material Adverse Effect. Any real property and facilities held under lease by the Company and its Subsidiaries are held
by them under valid, subsisting and enforceable leases with such exceptions as would not have a Material Adverse Effect.

 

u.Insurance.
The Company and each of its Subsidiaries are insured by insurers of recognized financial responsibility against such losses and
risks and in such amounts as management of the Company believes to be prudent and customary in the businesses in which the Company
and its Subsidiaries are engaged. Neither the Company nor any such Subsidiary has any reason to believe that it will not be able
to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers
as may be necessary to continue its business at a cost that would not have a Material Adverse Effect. Upon written request the
Company will provide to the Buyer true and correct copies of all policies relating to directors’ and officers’ liability
coverage, errors and omissions coverage, and commercial general liability coverage.

    	12

    	 

    

v.Internal
Accounting Controls. The Company and each of its Subsidiaries maintain a system of internal accounting controls sufficient,
in the judgment of the Company’s board of directors, to provide reasonable assurance that (i) transactions are executed in
accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation
of financial statements in conformity with generally accepted accounting principles and to maintain asset accountability, (iii)
access to assets is permitted only in accordance with management’s general or specific authorization and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect
to any differences.

 

w.Foreign
Corrupt Practices. Neither the Company, nor any of its Subsidiaries, nor any director, officer, agent, employee or other person
acting on behalf of the Company or any Subsidiary has, in the course of his actions for, or on behalf of, the Company, used any
corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity; made
any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; violated
or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended, or made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment to any foreign or domestic government official or employee.

x.Solvency.The
Company (after giving effect to the transactions contemplated by this Agreement) is not solvent (i.e., its assets have a
fair market value in excess of the amount required to pay its probable liabilities on its existing debts as they become absolute
and matured). The Company did receive a qualified opinion from its auditors with respect to its most recent fiscal year end.

y.No Investment
Company. The Company is not, and upon the issuance and sale of the Securities as contemplated by this Agreement will not be
an “investment company” required to be registered under the Investment Company Act of 1940 (an “Investment Company”).
The Company is not controlled by an Investment Company.

z.Breach
of Representations and Warranties by the Company. If the Company breaches any of the representations or warranties set forth
in this Section 3, and in addition to any other remedies available to the Buyer pursuant to this Agreement, it will be considered
an Event of default under Section 3.4 of the Note.

 

4. COVENANTS.

 

a.Best
Efforts. The parties shall use their best efforts to satisfy timely each of the conditions described in Section 6 and 7 of
this Agreement.

 

b.Form
D; Blue Sky Laws. 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 the Buyer promptly after such filing. The Company shall, on or before the Closing Date, take
such action as the Company shall reasonably determine is necessary to qualify the Securities for sale to the Buyer at the
applicable closing pursuant to this Agreement under applicable securities or “blue sky” laws of the states of the
United States (or to obtain an exemption from such qualification), and shall provide evidence of any such action so taken to
the Buyer on or prior to the Closing Date.

    	13

    	 

    

c.Use of Proceeds. The Company shall use the proceeds
for general working capital purposes.

 

d.[INTENTIONALLY DELETED].

 

e.Expenses. At the Closing, the Company shall reimburse
Buyer for expenses incurred by them in connection with the negotiation, preparation, execution, delivery and performance of this
Agreement and the other agreements to be executed in connection herewith (“Documents”), including, without limitation,
reasonable attorneys’ and consultants’ fees and expenses, transfer agent fees, fees for stock quotation services, fees
relating to any amendments or modifications of the Documents or any consents or waivers of provisions in the Documents, fees for
the preparation of opinions of counsel, escrow fees, and costs of restructuring the transactions contemplated by the Documents.
When possible, the Company must pay these fees directly, otherwise the Company must make immediate payment for reimbursement to
the Buyer for all fees and expenses immediately upon written notice by the Buyer or the submission of an invoice by the Buyer.
The Company’s obligation with respect to this transaction is to reimburse Buyer’ expenses shall be $2,500.

 

f.Financial Information. Upon written request the Company
agrees to send or make available the following reports to the Buyer until the Buyer transfers, assigns, or sells all of the Securities:
(i) within ten (10) days after the filing with the SEC, a copy of its Annual Report on Form 10-K its Quarterly Reports on Form
10-Q and any Current Reports on Form 8-K; (ii) within one (1) day after release, copies of all press releases issued by the Company
or any of its Subsidiaries; and (iii) contemporaneously with the making available or giving to the shareholders of the Company,
copies of any notices or other information the Company makes available or gives to such shareholders.

 

g.[INTENTIONALLY DELETED] 

 

h.Listing. The
Company shall promptly secure the listing of the Conversion Shares upon each national securities exchange or
automated quotation system, if any, upon which shares of Common Stock are then listed (subject to official notice of
issuance) and, so long as the Buyer owns any of the Securities, shall maintain, so long as any other shares of Common Stock
shall be so listed, such listing of all Conversion Shares from time to time issuable upon conversion of the Note. The Company
will obtain and, so long as the Buyer owns any of the Securities, maintain the listing and trading of its Common Stock on the
OTCBB or any equivalent replacement exchange, the Nasdaq National Market (“Nasdaq”), the Nasdaq SmallCap Market
(“Nasdaq SmallCap”), the New York Stock Exchange (“NYSE”), or the American Stock Exchange
(“AMEX”) and will comply in all respects with the Company’s reporting, filing and other obligations under
the bylaws or rules of the Financial Industry Regulatory Authority (“FINRA”) and such exchanges, as applicable.
The Company shall promptly provide to the Buyer copies of any notices it receives from the OTCBB and any other exchanges or
quotation systems on which the Common Stock is then listed regarding the continued eligibility of the Common Stock for
listing on such exchanges and quotation systems.

    	14

    	 

    

i.Corporate Existence. So long as the Buyer beneficially
owns any Note, the Company shall maintain its corporate existence and shall not sell all or substantially all of the Company’s
assets, except in the event of a merger or consolidation or sale of all or substantially all of the Company’s assets, where
the surviving or successor entity in such transaction (i) assumes the Company’s obligations hereunder and under the agreements
and instruments entered into in connection herewith and (ii) is a publicly traded corporation whose Common Stock is listed for
trading on the OTCBB, Nasdaq, Nasdaq SmallCap, NYSE or AMEX.

 

j.No Integration. The Company shall not make any offers
or sales of any security (other than the Securities) under circumstances that would require registration of the Securities being
offered or sold hereunder under the 1933 Act or cause the offering of the Securities to be integrated with any other offering of
securities by the Company for the purpose of any stockholder approval provision applicable to the Company or its securities.

 

k.Breach of Covenants. If the Company breaches any of
the covenants set forth in this Section 4, and in addition to any other remedies available to the Buyer pursuant to this Agreement,
it will be considered an event of default under Section 3.4 of the Note.

 

l.Failure to Comply with the 1934 Act. So long as the
Buyer beneficially owns the Note, the Company shall comply with the reporting requirements of the 1934 Act; and the Company shall
continue to be subject to the reporting requirements of the 1934 Act.

 

m.Trading Activities. Neither the Buyer nor its affiliates
has an open short position in the common stock of the Company and the Buyer agree that it shall not, and that it will cause its
affiliates not to, engage in any short sales of or hedging transactions with respect to the common stock of the Company.

    	15

    	 

    

5.Transfer Agent Instructions. The Company shall
issue irrevocable instructions to its transfer agent to issue certificates, registered in the name of the Buyer or its
nominee, for the Conversion Shares in such amounts as specified from time to time by the Buyer to the Company upon conversion
of the Note in accordance with the terms thereof (the “Irrevocable Transfer Agent Instructions”). In the event
that the Borrower proposes to replace its transfer agent, the Borrower shall provide, prior to the effective date of such
replacement, a fully executed Irrevocable Transfer Agent Instructions in a form as initially delivered pursuant to the
Purchase Agreement (including but not limited to the provision to irrevocably reserve shares of Common Stock in the Reserved
Amount) signed by the successor transfer agent to Borrower and the Borrower. Prior to registration of the Conversion Shares
under the 1933 Act or the date on which the Conversion Shares may be sold pursuant to Rule 144 without any restriction as to
the number of Securities as of a particular date that can then be immediately sold, all such certificates shall bear the
restrictive legend specified in Section 2(g) of this Agreement. The Company warrants that: (i) no instruction other than the
Irrevocable Transfer Agent Instructions referred to in this Section 5, and stop transfer instructions to give effect to
Section 2(f) hereof (in the case of the Conversion Shares, prior to registration of the Conversion Shares under the 1933 Act
or the date on which the Conversion Shares may be sold pursuant to Rule 144 without any restriction as to the number of
Securities as of a particular date that can then be immediately sold), will be given by the Company to its transfer agent and
that the Securities shall otherwise be freely transferable on the books and records of the Company as and to the extent
provided in this Agreement and the Note; (ii) it will not direct its transfer agent not to transfer or delay, impair, and/or
hinder its transfer agent in transferring (or issuing)(electronically or in certificated form) any certificate for Conversion
Shares to be issued to the Buyer upon conversion of or otherwise pursuant to the Note as and when required by the Note and
this Agreement; and (iii) it will not fail to remove (or directs its transfer agent not to remove or impairs, delays, and/or
hinders its transfer agent from removing) any restrictive legend (or to withdraw any stop transfer instructions in
respect thereof) on any certificate for any Conversion Shares issued to the Buyer upon conversion of or otherwise pursuant to
the Note as and when required by the Note and this Agreement. Nothing in this Section shall affect in any way the
Buyer’s obligations and agreement set forth in Section 2(g) hereof to comply with all applicable prospectus delivery
requirements, if any, upon re-sale of the Securities. If the Buyer provides the Company, at the cost of the Buyer, with (i)
an opinion of counsel in form, substance and scope customary for opinions in comparable transactions, to the effect that a
public sale or transfer of such Securities may be made without registration under the 1933 Act and such sale or transfer is
effected or (ii) the Buyer provides reasonable assurances that the Securities can be sold pursuant to Rule 144, the Company
shall permit the transfer, and, in the case of the Conversion Shares, promptly instruct its transfer agent to issue one or
more certificates, free from restrictive legend, in such name and in such denominations as specified by the Buyer. The
Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Buyer, by vitiating
the intent and purpose of the transactions contemplated hereby. Accordingly, the Company acknowledges that the remedy at law
for a breach of its obligations under this Section 5 may be inadequate and agrees, in the event of a breach or threatened
breach by the Company of the provisions of this Section, that the Buyer shall be entitled, in addition to all other available
remedies, to an injunction restraining any breach and requiring immediate transfer, without the necessity of showing economic
loss and without any bond or other security being required.

    	16

    	 

    

6.Conditions to the Company’s Obligation to Sell.
The obligation of the Company hereunder to issue and sell the Note to the Buyer at the Closing is subject to the satisfaction,
at or before the Closing Date of each of the following conditions thereto, provided that these conditions are for the Company’s
sole benefit and may be waived by the Company at any time in its sole discretion:

 

a.The Buyer shall have executed this Agreement and delivered
the same to the Company.

 

b.The Buyer shall have delivered the Purchase Price in accordance
with Section 1(b) above.

 

c.The representations and warranties of the Buyer shall be true
and correct in all material respects as of the date when made and as of the Closing Date as though made at that time (except for
representations and warranties that speak as of a specific date), and the Buyer shall have performed, satisfied and complied in
all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied
with by the Buyer at or prior to the Closing Date.

 

d.No litigation, statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by or in any court or governmental authority
of competent jurisdiction or any self-regulatory organization having authority over the matters contemplated hereby which prohibits
the consummation of any of the transactions contemplated by this Agreement.

 

7.Conditions to The Buyer’s Obligation to Purchase.
The obligation of the Buyer hereunder to purchase the Note at the Closing is subject to the satisfaction, at or before the Closing
Date of each of the following conditions, provided that these conditions are for the Buyer’s sole benefit and may be waived
by the Buyer at any time in its sole discretion:

 

a.The Company shall have executed this Agreement and delivered
the same to the Buyer.

 

b.The Company shall have delivered to the Buyer the duly executed
Note (in such denominations as the Buyer shall request) in accordance with Section 1(b) above.

 

c.The Irrevocable Transfer Agent Instructions, in form and
substance satisfactory to a majority-in-interest of the Buyer, shall have been delivered to and acknowledged in writing by the
Company’s Transfer Agent.

    	17

    	 	

    
 

d.The representations and warranties
of the Company shall be true and correct in all material respects as of the date when made and as of the Closing Date as though
made at such time (except for representations and warranties that speak as of a specific date) and the Company shall have performed,
satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be
performed, satisfied or complied with by the Company at or prior to the Closing Date. The Buyer shall have received a certificate
or certificates, executed by the chief executive officer of the Company, dated as of the Closing Date, to the foregoing effect
and as to such other matters as may be reasonably requested by the Buyer including, but not limited to certificates with respect
to the Company’s Certificate of Incorporation, By-laws and Board of Directors’ resolutions relating to the transactions
contemplated hereby.

 

e.No litigation, statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by or in any court or governmental authority
of competent jurisdiction or any self-regulatory organization having authority over the matters contemplated hereby which prohibits
the consummation of any of the transactions contemplated by this Agreement.

 

f.No event shall have occurred which could reasonably be expected
to have a Material Adverse Effect on the Company including but not limited to a change in the 1934 Act reporting status of the
Company or the failure of the Company to be timely in its 1934 Act reporting obligations.

 

g.The Conversion Shares shall have been authorized for quotation
on the OTCBB and trading in the Common Stock on the OTCBB shall not have been suspended by the SEC or the OTCBB.

 

h.The Buyer shall have received an officer’s
certificate described in Section 3(c) above, dated as of the Closing Date.

 

8.Governing Law; Miscellaneous.

 

a.Governing
Law. 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 and county of Nassau. The parties to this Agreement hereby irrevocably waive any objection to jurisdiction and venue of
any action instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon forum
non conveniens. The Company and Buyer 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. Each party hereby irrevocably waives personal service
of process and consents to process being served in any suit, action or proceeding in connection with this Agreement or any
other Transaction Document by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of
delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall
constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in
any way any right to serve process in any other manner permitted by law.

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b.Counterparts.
This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which shall constitute
one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other
party.

 

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

 

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

 

e.Entire
Agreement; Amendments. This Agreement and the instruments referenced herein contain the entire understanding of the parties
with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company
nor the Buyer makes any representation, warranty, covenant or undertaking with respect to such matters. No provision of this Agreement
may be waived or amended other than by an instrument in writing signed by the majority in interest of the Buyer.

 

f.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:

 

    	19

    	 	

    

If to the Company, to:

CLEAN WIND ENERGY TOWER, INC.

1997 Annapolis Exchange Parkway

Annapolis, MD 21401

Attn: RONALD W. PICKETT, Chief Executive Officer

facsimile: [enter fax number]

 

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

Fleming PLLC

Attn: Stephen M. Fleming

 49 Front Street, Suite
206 

Rockville Centre, NY 11570

facsimile(516) 977-1209

If to the Buyer:

ASHER ENTERPRISES, INC.

1 Linden Pl., Suite 207

 Great Neck, NY. 11021

Attn: Curt Kramer, President

facsimile: 516-498-9894

 

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

Naidich Wurman Birnbaum & Maday LLP

80 Cuttermill Road, Suite 410

Great Neck, NY 11021

Attn: Bernard S. Feldman, Esq.

facsimile: 516-466-3555

    	20

    	 	

    

Each party shall provide notice
to the other party of any change in address.

 

g.Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties and their successors and assigns. Neither the Company nor the Buyer shall assign this
Agreement or any rights or obligations hereunder without the prior written consent of the other. Notwithstanding the foregoing,
subject to Section 2(f), the Buyer may assign its rights hereunder to any person that purchases Securities in a private transaction
from the Buyer or to any of its “affiliates,” as that term is defined under the 1934 Act, without the consent of the
Company.

 

h.Third Party Beneficiaries. This Agreement is intended
for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor
may any provision hereof be enforced by, any other person.

 

i.Survival. The representations and warranties of the
Company and the agreements and covenants set forth in this Agreement shall survive the closing hereunder notwithstanding any due
diligence investigation conducted by or on behalf of the Buyer. The Company agrees to indemnify and hold harmless the Buyer and
all their officers, directors, employees and agents for loss or damage arising as a result of or related to any breach or alleged
breach by the Company of any of its representations, warranties and covenants set forth in this Agreement or any of its covenants
and obligations under this Agreement, including advancement of expenses as they are incurred.

 

j.Publicity. The Company, and the Buyer shall have the
right to review a reasonable period of time before issuance of any press releases, SEC, OTCBB or FINRA filings, or any other public
statements with respect to the transactions contemplated hereby; provided, however, that the Company shall be entitled,
without the prior approval of the Buyer, to make any press release or SEC, OTCBB (or other applicable trading market) or FINRA
filings with respect to such transactions as is required by applicable law and regulations (although the Buyer shall be consulted
by the Company in connection with any such press release prior to its release and shall be provided with a copy thereof and be
given an opportunity to comment thereon).

 

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

 

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

    	21

    	 	

    

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

 

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

 

 

CLEAN WIND ENERGY TOWER, INC.

 

By: /s/ Ronald W. Pickett

        RONALD W. PICKETT

        Chief Executive Officer

 

 

ASHER ENTERPRISES, INC.

 

 

By: /s/ Curt Kramer

Name: Curt Kramer

Title: President

 

1 Linden Pl., Suite 207 Great Neck, NY. 11021

 

  

AGGREGATE SUBSCRIPTION AMOUNT:

 

	Aggregate Principal Amount of Note:	$32,500.00
	Aggregate Purchase Price:	$32,500.00

 

    	22

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