Document:

EXHIBIT
        10.1

       

      

      SECURITIES
        PURCHASE AGREEMENT

       

      

       

      SECURITIES
        PURCHASE AGREEMENT (this “Agreement”),
        dated
        as of April 12, 2006, by and among Wi-Fi TV, Inc., a Nevada corporation,
        with
        headquarters located at 1280 Bison, Suite B9-597, Newport Beach, California
        92660 (the “Company”),
        and
        each of the purchasers set forth on the signature pages hereto (the
“Buyers”).

       

      WHEREAS:

       

      A.  The
        Company and the Buyers are executing and delivering this Agreement in reliance
        upon an 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.  Buyers
        desire to purchase and the Company desires to issue and sell, upon the terms
        and
        conditions set forth in this Agreement (i) 8% convertible notes of the Company,
        in the form attached hereto as Exhibit
        “A”,
        in the
        aggregate principal amount of One Million Dollars ($1,000,000) (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 “Notes”),
        convertible into shares of common stock, $0.001 par value per share, of the
        Company (the “Common
        Stock”),
        upon
        the terms and subject to the limitations and conditions set forth in such
        Notes
        and (ii) warrants, in the form attached hereto as Exhibit
        “B”,
        to
        purchase 105,000,000 shares of Common Stock (the “Warrants”);

       

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

       

      D.  Contemporaneous
        with the execution and delivery of this Agreement, the parties hereto are
        executing and delivering a Registration Rights Agreement, in the form attached
        hereto as Exhibit
        “C”
        (the
“Registration
        Rights Agreement”),
        pursuant to which the Company has agreed to provide certain registration
        rights
        under the 1933 Act, and applicable state securities laws.

       

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

       

      1.  PURCHASE
        AND SALE OF NOTES AND WARRANTS.

       

      a.  Purchase
        of Notes and Warrants.
        On the
        Closing Date (as defined below), the Company shall issue and sell to each
        Buyer
        and each Buyer severally agrees to purchase from the Company such principal
        amount of Notes and number of Warrants as is set forth immediately below
        such
        Buyer’s name on the signature pages hereto, which, together with the subsequent
        closings provided in Section 1(d) below, aggregate One Million Dollars
        ($1,000,000) principal amount of Notes and Warrants to purchase an aggregate
        of
        105,000,000 shares of Common Stock.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      b.  Form
        of Payment.
        On the
        Closing Date (as defined below), (i) each Buyer shall pay the purchase price
        for
        the Notes and the Warrants 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 Notes in the
        principal amount equal to the Purchase Price and the number of Warrants as
        is
        set forth immediately below such Buyer’s name on the signature pages hereto, and
        (ii) the Company shall deliver such Notes and Warrants duly executed on behalf
        of the Company, to such 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
        Notes and the Warrants pursuant to this Agreement (the “Closing
        Date”)
        shall
        be 12:00 noon, Eastern Daylight Time on April 12, 2006 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.

       

      d.  Subsequent
        Closings.
        On the
        final business day of each of the nine (9) months beginning in May 2006 and
        ending in January 2007 (each, a “Funding Date”), the Company shall issue and
        sell to the Buyers and the Buyers severally agree to purchase from the Company
        an aggregate of One Hundred Thousand Dollars ($100,000) principal amount
        of
        Notes. On each Funding Date, the Buyers will transfer an aggregate of $100,000
        by wire transfer of immediately available funds to the Company. In addition,
        on
        each Funding Date, an authorized officer of the Company shall deliver to
        the
        Buyers a closing certificate in form and substance reasonably satisfactory
        to
        the Buyers. Notwithstanding the foregoing, either the Company or a
        majority-in-interest of the Buyers may terminate their obligations under
        this
        Section 1(d) upon thirty (30) days prior written notice to the other
        party.

       

      2.  BUYERS’
        REPRESENTATIONS AND WARRANTIES.
        Each
        Buyer severally (and not jointly) represents and warrants to the Company
        solely
        as to such Buyer that:

       

      a.  Investment
        Purpose.
        As of
        the date hereof, the Buyer is purchasing the Notes and the shares of Common
        Stock issuable upon conversion of or otherwise pursuant to the Notes (including,
        without limitation, such additional shares of Common Stock, if any, as are
        issuable (i) on account of interest on the Notes, (ii) as a result of the
        events
        described in Sections 1.3 and 1.4(g) of the Notes and Section 2(c) of the
        Registration Rights Agreement 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
        the Warrants and the shares of Common Stock issuable upon exercise thereof
        (the
“Warrant
        Shares”
and,
        collectively with the Notes, Warrants and Conversion Shares, the “Securities”)
        for
        its own account and not with a present view towards the public sale or
        distribution thereof; 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.

       

      
        
          
          

        

        
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      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.

       

      d.  Information.
        The
        Buyer and its advisors, if any, have been, and for so long as the Notes and
        Warrants 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 Notes and Warrants 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.

       

      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) except as provided in the Registration Rights
        Agreement, 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 an opinion of counsel reasonably acceptable to the
        Company 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 an opinion of counsel reasonably
        acceptable to the Company 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, other than pursuant to the Registration
        Rights Agreement). 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. 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, within three (3) business days of delivery of the opinion to
        the
        Company, the Company shall pay to the Buyer liquidated damages of three percent
        (3%) of the outstanding amount of the Notes per month plus accrued and unpaid
        interest on the Notes, prorated for partial months, in cash or shares at
        the
        option of the Company (“Standard
        Liquidated Damages Amount”).
        If
        the Company elects to pay the Standard Liquidated Damages Amount in shares
        of
        Common Stock, such shares shall be issued at the Conversion Price at the
        time of
        payment.

       

      
        
          
          

        

        
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      g.  Legends.
        The
        Buyer understands that the Notes and the Warrants and, until such time as
        the
        Conversion Shares and Warrant Shares have been registered under the 1933
        Act as
        contemplated by the Registration Rights Agreement 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, the
        Conversion Shares and Warrant 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):

       

      “The
        securities represented by this certificate have not been registered under
        the
        Securities Act of 1933, as amended. The securities may not be sold, transferred
        or assigned in the absence of an effective registration statement for the
        securities under said Act, or an opinion of counsel, in form, substance and
        scope customary for opinions of counsel in comparable transactions, that
        registration is not required under said Act or unless sold pursuant to Rule
        144
        or Regulation S under said Act.”

       

      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 reasonably satisfactory to the Company
        and its counsel and 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 or (c) such holder provides the Company with reasonable assurances,
        for
        example, a seller’s representation letter and/or broker’s representation letter,
        that such Security can be sold pursuant to Rule 144 or Regulation S. 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.

       

      
        
          
          

        

        
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      h.  Authorization;
        Enforcement.
        This
        Agreement and the Registration Rights Agreement have been duly and validly
        authorized. This Agreement has been duly executed and delivered on behalf
        of the
        Buyer, and this Agreement constitutes, and upon execution and delivery by
        the
        Buyer of the Registration Rights Agreement, such agreement will constitute,
        valid and binding agreements of the Buyer enforceable in accordance with
        their
        terms.

       

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

       

      3.  REPRESENTATIONS
        AND WARRANTIES OF THE COMPANY.
        Subject
        to the terms set forth in the Disclosure Schedules furnished to the Buyer
        herewith, the Company represents and warrants to each Buyer, as of the date
        of
        this Agreement, that:

       

      a.  Organization
        and Qualification.
        The
        Company and each of its Subsidiaries (as defined below), if any, is a
        corporation duly organized, and, except as set forth on -Schedule 3(a), 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 Registration Rights Agreement, the Notes and
        the
        Warrants 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 Registration Rights Agreement,
        the Notes and the Warrants by the Company and the consummation by it of the
        transactions contemplated hereby and thereby (including without limitation,
        the
        issuance of the Notes and the Warrants and the issuance and reservation for
        issuance of the Conversion Shares and Warrant 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,
        except for the Stockholder Approval (as defined in Section 4(m)) 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 Registration Rights Agreement, the Notes
        and
        the Warrants, 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
        3,000,000,000 shares of Common Stock, of which 1,779,737,973 shares are issued
        and outstanding, no shares are reserved for issuance pursuant to the Company’s
        stock option plans, 1,289,800,000 shares are reserved for issuance pursuant
        to
        securities (other than the Notes and the Warrants) exercisable for, or
        convertible into or exchangeable for shares of Common Stock and 800,000,000
        shares shall be reserved for issuance upon conversion of the Notes and exercise
        of the Warrants (subject to (i) the Stockholder Approval (as defined in Section
        4(m) and (ii) adjustment pursuant to the Company’s covenant set forth in Section
        4(h) below); and (iii) 10,000,900 shares of preferred stock, of which 10,000,000
        shares are issued and outstanding. All of such outstanding shares of capital
        stock are, or upon issuance will be, duly authorized, validly issued, fully
        paid
        and nonassessable. 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. Except as disclosed in Schedule
        3(c),
        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 (except the Registration
        Rights Agreement) and (iii) 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 Notes, the Warrants, the Conversion Shares or Warrant Shares. The Company
        has furnished to the Buyer true and correct copies of the Company’s Articles of
        Incorporation as in effect on the date hereof (“Articles
        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 or Chief Financial Officer on behalf of
        the Company as of the Closing Date.

       

      d.  Issuance
        of Shares.
        Subject
        to Stockholder Approval (as defined in Section 4(m), the Conversion Shares
        and
        Warrant Shares are duly authorized and reserved for issuance and, upon
        conversion of the Notes and exercise of the Warrants in accordance with their
        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.

       

      
        
          
          

        

        
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      e.  Acknowledgment
        of Dilution.
        The
        Company understands and acknowledges the potentially dilutive effect to the
        Common Stock upon the issuance of the Conversion Shares and Warrant Shares
        upon
        conversion of the Note or exercise of the Warrants. The Company further
        acknowledges that its obligation to issue Conversion Shares and Warrant Shares
        upon conversion of the Notes or exercise of the Warrants in accordance with
        this
        Agreement, the Notes and the Warrants 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.
        Subject
        to Stockholder Approval (as defined in Section 4(m), the execution, delivery
        and
        performance of this Agreement, the Registration Rights Agreement, the Notes,
        the
        Security Agreement and the Warrants 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
        and Warrant Shares) will not (i) conflict with or result in a violation of
        any
        provision of the Articles 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 Articles of
        Incorporation, By-laws 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 a 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 Registration Rights
        Agreement, the Notes or the Warrants in accordance with the terms hereof
        or
        thereof or to issue and sell the Notes and Warrants in accordance with the
        terms
        hereof and to issue the Conversion Shares upon conversion of the Notes and
        the
        Warrant Shares upon exercise of the Warrants. Except as disclosed in
Schedule
        3(f),
        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 currently trades on
        the
        Pink Sheets, and after completion of its audit and filing its comprehensive
        Form
        10-KSB bringing it into compliance with its periodic reporting obligations
        with
        the SEC, it believes it will meet the listing requirements of the
        Over-the-Counter Bulletin Board (the “OTCBB”),
        will
        file with the NASD to have such shares relisted with the OTCBB, and intends
        that
        its Common Stock will not be delisted by the OTCBB in the foreseeable future.
        Except as disclosed herein or in the Disclosure Schedules furnished herewith,
        the Company and its Subsidiaries are unaware of any facts or circumstances
        which
        might give rise to any of the foregoing. 

       

      
        
          
          

        

        
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      g.  SEC
        Documents; Financial Statements.
        Except
        as disclosed in Schedule
        3(g),
        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”).
        The
        Company has delivered to each 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 (except (i) as may be otherwise indicated in
        such
        financial statements or the notes thereto, or (ii) in the case of unaudited
        interim statements, to the extent they may not include footnotes or may be
        condensed or summary statements) 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 December 31, 2004 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.

       

      
        
          
          

        

        
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      h.  Absence
        of Certain Changes.
        Since
        December 31, 2004, there has been no material adverse change and no material
        adverse development in the assets, liabilities, business, properties,
        operations, financial condition, results of operations or prospects of the
        Company or any of its Subsidiaries.

       

      i.  Absence
        of Litigation.
        Except
        as disclosed on Schedule
        3(i),
        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 or any of its Subsidiaries, 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, except
        as
        set forth in Schedule
        3(j)
        hereof,
        to the best of the Company’s knowledge, 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,
        except as set forth in Schedule
        3(j)
        hereof,
        to the best of the Company’s knowledge, 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 set forth 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. Except as set forth on Schedule
        3(l),
        none of
        the Company’s tax returns is presently being audited by any taxing
        authority.

       

      
        
          
          

        

        
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      m.  Certain
        Transactions.
        Except
        as set forth on Schedule
        3(m)
        and
        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 Buyers 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 Buyers’ Purchase of Securities.
        The
        Company acknowledges and agrees that the Buyers are 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 no
        Buyer
        is acting as a financial advisor or fiduciary of the Company (or in any similar
        capacity) with respect to this Agreement and the transactions contemplated
        hereby and any statement made by any Buyer or any of their 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 Buyers’ purchase of the Securities. The Company further represents to
        each 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.

       

      
        
          
          

        

        
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      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
        Buyers.
        The issuance of the Securities to the Buyers 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 December
        31,
        2004, 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)  Except
        as
        set forth in Schedule
        3(s),
        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.

       

      
        
          
          

        

        
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      (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)  Except
        as
        set forth in Schedule
        3(s),
        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. The Company
        has provided to Buyer true and correct copies of all policies relating to
        directors’ and officers’ liability coverage, errors and omissions coverage, and
        commercial general liability coverage.

       

      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.

       

      
        
          
          

        

        
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      x.  Solvency.
        Except
        as set forth in Schedule 3(x), the Company (after giving effect to the
        transactions contemplated by this Agreement) is 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)
        and currently the Company has no information that would lead it to reasonably
        conclude that the Company would not, after giving effect to the transaction
        contemplated by this Agreement, have the ability to, nor does it intend to
        take
        any action that would impair its ability to, pay its debts from time to time
        incurred in connection therewith as such debts mature. The Company did not
        receive a qualified opinion from its auditors with respect to its most recent
        fiscal year end and, after giving effect to the transactions contemplated
        by
        this Agreement, does not anticipate or know of any basis upon which its auditors
        might issue a qualified opinion in respect of its current fiscal
        year.

       

      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 materially breaches any of the representations or warranties set
        forth
        in this Section 3, and in addition to any other remedies available to the
        Buyers
        pursuant to this Agreement, the Company shall pay to the Buyer the Standard
        Liquidated Damages Amount in cash or in shares of Common Stock at the option
        of
        the Company, until such breach is cured. If the Company elects to pay the
        Standard Liquidated Damages Amounts in shares of Common Stock, such shares
        shall
        be issued at the Conversion Price at the time of payment.

       

      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 each Buyer promptly after such
        filing. The Company shall, on or before the Closing Date, take such action
        as
        the Company shall reasonably determine is necessary to qualify the Securities
        for sale to the Buyers 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 each Buyer on or prior to the Closing
        Date.

       

      c.  Reporting
        Status; Eligibility to Use Form S-3, SB-2 or Form S-1.
        The
        Company’s Common Stock is registered under Section 12(g) of the 1934 Act. The
        Company represents and warrants that it meets the requirements for the use
        of
        Form S-3 (or if the Company is not eligible for the use of Form S-3 as of
        the
        Filing Date (as defined in the Registration Rights Agreement), the Company
        may
        use the form of registration for which it is eligible at that time) for
        registration of the sale by the Buyer of the Registrable Securities (as defined
        in the Registration Rights Agreement). So long as the Buyer beneficially
        owns
        any of the Securities, the Company shall timely file all reports required
        to be
        filed with the SEC pursuant to the 1934 Act, and the Company shall not terminate
        its status as an issuer required to file reports under the 1934 Act even
        if the
        1934 Act or the rules and regulations thereunder would permit such termination.
        The Company further agrees to file all reports required to be filed by the
        Company with the SEC in a timely manner so as to become eligible, and thereafter
        to maintain its eligibility, for the use of Form S-3. The Company shall issue
        a
        press release describing the materials terms of the transaction contemplated
        hereby as soon as practicable following the Closing Date but in no event
        more
        than two (2) business days of the Closing Date, which press release shall
        be
        subject to prior review by the Buyers. The Company agrees that such press
        release shall not disclose the name of the Buyers unless expressly consented
        to
        in writing by the Buyers or unless required by applicable law or regulation,
        and
        then only to the extent of such requirement.

       

      
        
          
          

        

        
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      d.  Use
        of Proceeds.
        The
        Company shall use the proceeds from the sale of the Notes and the Warrants
        in
        the manner set forth in Schedule
        4(d)
        attached
        hereto and made a part hereof and shall not, directly or indirectly, use
        such
        proceeds for any loan to or investment in any other corporation, partnership,
        enterprise or other person (except in connection with its currently existing
        direct or indirect Subsidiaries).

       

      e.  Future
        Offerings.
        Subject
        to the exceptions described below, the Company will not, without the prior
        written consent of a majority-in-interest of the Buyers, not to be unreasonably
        withheld, negotiate or contract with any party to obtain additional equity
        financing (including debt financing with an equity component) that involves
        (A)
        the issuance of Common Stock at a discount to the market price of the Common
        Stock on the date of issuance (taking into account the value of any warrants
        or
        options to acquire Common Stock issued in connection therewith) or (B) the
        issuance of convertible securities that are convertible into an indeterminate
        number of shares of Common Stock or (C) the issuance of warrants during the
        period (the “Lock-up
        Period”)
        beginning on the Closing Date and ending one hundred and eighty (180) days
        from
        the Closing Date. In addition, subject to the exceptions described below,
        the
        Company will not conduct any equity financing (including debt with an equity
        component) (“Future
        Offerings”)
        during
        the period beginning on the Closing Date and ending two (2) years after the
        end
        of the Lock-up Period unless it shall have first delivered to each Buyer,
        at
        least twenty (20) business days prior to the closing of such Future Offering,
        written notice describing the proposed Future Offering, including the terms
        and
        conditions thereof and proposed definitive documentation to be entered into
        in
        connection therewith, and providing each Buyer an option during the fifteen
        (15)
        day period following delivery of such notice to purchase its pro rata share
        (based on the ratio that the aggregate principal amount of Notes purchased
        by it
        hereunder bears to the aggregate principal amount of Notes purchased hereunder)
        of the securities being offered in the Future Offering on the same terms
        as
        contemplated by such Future Offering (the limitations referred to in this
        sentence and the preceding sentence are collectively referred to as the
“Capital
        Raising Limitations”). 
        In the
        event the terms and conditions of a proposed Future Offering are amended
        in any
        respect after delivery of the notice to the Buyers concerning the proposed
        Future Offering, the Company shall deliver a new notice to each Buyer describing
        the amended terms and conditions of the proposed Future Offering and each
        Buyer
        thereafter shall have an option during the fifteen (15) day period following
        delivery of such new notice to purchase its pro rata share of the securities
        being offered on the same terms as contemplated by such proposed Future
        Offering, as amended. The foregoing sentence shall apply to successive
        amendments to the terms and conditions of any proposed Future Offering. The
        Capital Raising Limitations shall not apply to any transaction involving
        (i)
        issuances of securities in a firm commitment underwritten public offering
        (excluding a continuous offering pursuant to Rule 415 under the 1933 Act),
        (ii)
        issuances of securities as consideration for a merger, consolidation or purchase
        of assets, or in connection with any strategic partnership or joint venture
        (the
        primary purpose of which is not to raise equity capital), or in connection
        with
        the disposition or acquisition of a business, product or license by the Company
        or (iii) issuances of restricted securities at a discount to the market price
        of
        the Company’s Common Stock, provided that no registration rights are given to
        such purchaser. The Capital Raising Limitations also shall not apply to the
        issuance of securities upon exercise or conversion of the Company’s options,
        warrants or other convertible securities outstanding as of the date hereof
        or to
        the grant of additional options or warrants, or the issuance of additional
        securities, under any Company stock option or restricted stock plan approved
        by
        the shareholders of the Company. 

       

      
        
          
          

        

        
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      f.  Expenses.
        At the
        Closing, the Company shall reimburse Buyers 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, 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 Buyers for all fees and expenses immediately upon written notice by the
        Buyer or the submission of an invoice by the Buyer If the Company fails to
        reimburse the Buyer in full within three (3) business days of the written
        notice
        or submission of invoice by the Buyer, the Company shall pay interest on
        the
        total amount of fees to be reimbursed at a rate of 15% per annum.

       

      g.  Financial
        Information.
        The
        Company agrees to send the following reports to each Buyer until such 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.

       

      h.  Authorization
        and Reservation of Shares.
        Subject
        to the Stockholder Approval (as defined in Section 4(m), the Company shall
        at
        all times have authorized, and reserved for the purpose of issuance, a
        sufficient number of shares of Common Stock to provide for the full conversion
        or exercise of the outstanding Notes and Warrants and issuance of the Conversion
        Shares and Warrant Shares in connection therewith (based on the Conversion
        Price
        of the Notes or Exercise Price of the Warrants in effect from time to time)
        and
        as otherwise required by the Notes. The Company shall not reduce the number
        of
        shares of Common Stock reserved for issuance upon conversion of Notes and
        exercise of the Warrants without the consent of each Buyer. The Company shall
        at
        all times maintain the number of shares of Common Stock so reserved for issuance
        at an amount (“Reserved
        Amount”)
        equal
        to no less than two (2) times the number that is then actually issuable upon
        full conversion of the Notes and Additional Notes and upon exercise of the
        Warrants and the Additional Warrants (based on the Conversion Price of the
        Notes
        or the Exercise Price of the Warrants in effect from time to time). If at
        any
        time the number of shares of Common Stock authorized and reserved for issuance
        (“Authorized
        and Reserved Shares”)
        is
        below the Reserved Amount, the Company will promptly take all corporate action
        necessary to authorize and reserve a sufficient number of shares, including,
        without limitation, calling a special meeting of shareholders to authorize
        additional shares to meet the Company’s obligations under this Section 4(h), in
        the case of an insufficient number of authorized shares, obtain shareholder
        approval of an increase in such authorized number of shares, and voting the
        management shares of the Company in favor of an increase in the authorized
        shares of the Company to ensure that the number of authorized shares is
        sufficient to meet the Reserved Amount. If the Company fails to obtain such
        shareholder approval within thirty (30) days following the date on which
        the
        Reserved Amount exceeds the number ofAuthorized and Reserved Shares , the
        Company shall pay to the Borrower the Standard Liquidated Damages Amount,
        in
        cash or in shares of Common Stock at the option of the Buyer. If the Buyer
        elects to be paid the Standard Liquidated Damages Amount in shares of Common
        Stock, such shares shall be issued at the Conversion Price at the time of
        payment. In order to ensure that the Company has authorized a sufficient
        amount
        of shares to meet the Reserved Amount at all times, the Company must deliver
        to
        the Buyer at the end of every month a list detailing (1) the current amount
        of
        shares authorized by the Company and reserved for the Buyer; and (2) amount
        of
        shares issuable upon conversion of the Notes and upon exercise of the Warrants
        and as payment of interest accrued on the Notes for one year. If the Company
        fails to provide such list within five (5) business days of the end of each
        month, the Company shall pay the Standard Liquidated Damages Amount, in cash
        or
        in shares of Common Stock at the option of the Buyer, until the list is
        delivered. If the Buyer elects to be paid the Standard Liquidated Damages
        Amount
        in shares of Common Stock, such shares shall be issued at the Conversion
        Price
        at the time of payment.

       

      i.  Listing.
        The
        Company shall promptly secure the listing of the Conversion Shares and Warrant
        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 any 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 and Warrant Shares from time to time issuable
        upon conversion of the Notes or exercise of the Warrants. The Company shall
        use
        reasonable efforts to obtain and, so long as any 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
        shall use reasonable efforts to comply in all respects with the Company’s
        reporting, filing and other obligations under the bylaws or rules of the
        National Association of Securities Dealers (“NASD”)
        and
        such exchanges, as applicable. The Company shall promptly provide to each
        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.

       

      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

      

      j.  Corporate
        Existence.
        So long
        as a Buyer beneficially owns any Notes or Warrants, 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.

       

      k.  [Intentionally
        Omitted]

       

      l.  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.

       

      m.  Stockholder
        Approval.
        At such
        time the Company is eligible, it shall use its best efforts to file a proxy
        statement or information statement with the SEC to obtain such approvals
        of the
        Company’s stockholders as may be required to issue all of the shares of Common
        Stock issuable upon conversion or exercise of, or otherwise with respect
        to, the
        Notes and the Warrants in accordance with Nevada law and any applicable rules
        or
        regulations of the Pink Sheets, LLC, OTCBB and Nasdaq, either through a reverse
        stock split of the Common Stock or an increase in authorized capital (the
        “Stockholder
        Approval”).

       

      n.  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 Buyers pursuant to this
        Agreement, the Company shall pay to the Buyers the Standard Liquidated Damages
        Amount, in cash or in shares of Common Stock at the option of the Company,
        until
        such breach is cured. If the Company elects to pay the Standard Liquidated
        Damages Amount in shares, such shares shall be issued at the Conversion Price
        at
        the time of payment.

       

      5.  TRANSFER
        AGENT INSTRUCTIONS.
        The
        Company shall issue irrevocable instructions to its transfer agent to issue
        certificates, registered in the name of each Buyer or its nominee, for the
        Conversion Shares and Warrant Shares in such amounts as specified from time
        to
        time by each Buyer to the Company upon conversion of the Notes or exercise
        of
        the Warrants in accordance with the terms thereof (the “Irrevocable
        Transfer Agent Instructions”).
        Prior
        to registration of the Conversion Shares and Warrant Shares under the 1933
        Act
        or the date on which the Conversion Shares and Warrant 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 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
        and
        Warrant Shares, prior to registration of the Conversion Shares and Warrant
        Shares under the 1933 Act or the date on which the Conversion Shares and
        Warrant
        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 Registration Rights 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 a
        Buyer provides the Company 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, for example, a seller’s representation letter
        and/or broker’s representation letter, that the Securities can be sold pursuant
        to Rule 144, the Company shall permit the transfer, and, in the case of the
        Conversion Shares and Warrant 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 such Buyer. The Company acknowledges
        that
        a breach by it of its obligations hereunder will cause irreparable harm to
        the
        Buyers, 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 Buyers 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 Notes and Warrants
        to
        a 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
        applicable Buyer shall have executed this Agreement and the Registration
        Rights
        Agreement, and delivered the same to the Company.

       

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

       

      c.  The
        representations and warranties of the applicable 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 applicable 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 applicable Buyer at or prior to the Closing Date. 

       

      
        
          
          

        

        
          17

          
            

          

        

        
          
          

        

      

      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 EACH BUYER’S OBLIGATION TO PURCHASE.
        The
        obligation of each Buyer hereunder to purchase the Notes and Warrants at
        the
        Closing is subject to the satisfaction, at or before the Closing Date of
        each of
        the following conditions, provided that these conditions are for such Buyer’s
        sole benefit and may be waived by such Buyer at any time in its sole
        discretion:

       

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

       

      b.  The
        Company shall have delivered to such Buyer duly executed Notes (in such
        denominations as the Buyer shall request) and Warrants 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 Buyers, shall have been delivered to and
        acknowledged in writing by the Company’s Transfer Agent.

       

      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 such Buyer including, but not limited to certificates
        with respect to the Company’s Articles 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.

       

      g.  The
        Conversion Shares and Warrant Shares shall have been authorized for quotation
        on
        The Pink Sheets and trading in the Common Stock on The Pink Sheets shall
        not
        have been suspended by the SEC or The Pink Sheets, LLC.

       

      
        
          
          

        

        
          18

          
            

          

        

        
          
          

        

      

      h.  The
        Buyer
        shall have received an opinion of the Company’s counsel, dated as of the Closing
        Date, in form, scope and substance reasonably satisfactory to the Buyer and
        in
        substantially the same form as Exhibit
        “D”
        attached
        hereto.

       

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

       

      b.  Counterparts;
        Signatures by Facsimile.
        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. This Agreement, once executed by a party, may
        be
        delivered to the other party hereto by facsimile transmission of a copy of
        this
        Agreement bearing the signature of the party so delivering this
        Agreement.

       

      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.

       

      
        
          
          

        

        
          19

          
            

          

        

        
          
          

        

      

      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 party to be charged with
        enforcement. 

       

      f.  Notices.
        Any
        notices required or permitted to be given under the terms of this Agreement
        shall be sent by certified or registered mail (return receipt requested)
        or
        delivered personally or by courier (including a recognized overnight delivery
        service) or by facsimile and shall be effective five days after being placed
        in
        the mail, if mailed by regular United States mail, or upon receipt, if delivered
        personally or by courier (including a recognized overnight delivery service)
        or
        by facsimile, in each case addressed to a party. The addresses for such
        communications shall be:

       

      If
        to the
        Company:

      

      Wi-Fi
        TV,
        Inc.

      1280
        Bison

      Suite
        B9-597

      Newport
        Beach, California 92660

      Attention:
        President

      Facsimile:
        949-760-3670

       

      With
        a
        copy to:

      

      August
        Law Group, P.C.

      The
        Atrium

      19200
        Von
        Karman Avenue

      Suite
        900

      Irvine,
        California 92612

      Attention:
        Kenneth S. August, Esq.

      Facsimile:
        949-752-7776

      

      

      If
        to a
        Buyer: To the address set forth immediately below such Buyer’s name on the
        signature pages hereto.

       

      
        
          
          

        

        
          20

          
            

          

        

        
          
          

        

      

      With
        a
        copy to:

      

      Ballard
        Spahr Andrews & Ingersoll, LLP

      1735
        Market Street

      51st
        Floor

      Philadelphia,
        Pennsylvania 19103

      Attention:
        Gerald J. Guarcini, Esq.

      Telephone:
        (215) 864-8625

      Facsimile:
        (215) 864-8999

      Email:
        guarcini@ballardspahr.com

       

      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 any 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), any Buyer may assign its rights hereunder to any person that
        purchases Securities in a private transaction from a 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 Sections 3, 4, 5 and 8 shall survive the closing hereunder
        notwithstanding any due diligence investigation conducted by or on behalf
        of the
        Buyers. The Company agrees to indemnify and hold harmless each of the Buyers
        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 Sections 3
        and 4
        hereof or any of its covenants and obligations under this Agreement or the
        Registration Rights Agreement, including advancement of expenses as they
        are
        incurred.

       

      j.  Publicity.
        The
        Company and each of the Buyers shall have the right to review a reasonable
        period of time before issuance of any press releases, SEC, OTCBB, Pink Sheets
        or
        NASD 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 each of the
        Buyers,
        to make any press release or SEC, OTCBB (or other applicable trading market)
        or
        NASD filings with respect to such transactions as is required by applicable
        law
        and regulations (although each of the Buyers 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.

       

      
        
          
          

        

        
          21

          
            

          

        

        
          
          

        

      

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

       

      m.  Remedies.
        The
        Company acknowledges that a breach by it of its obligations hereunder will
        cause
        irreparable harm to the Buyers 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 Buyers 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.

       

      

      

      

      [REMAINDER
        OF PAGE INTENTIONALLY LEFT BLANK]

       

       

      
        
          
          

        

        
          22

          
            

          

        

        
          
          

        

      

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

       

       

      WI-FI
        TV, INC.

      
        	 	 	 	 
	/s/ Alex
                Kanakaris	 	 	 
	
                
Alex
                Kanakaris	 	 	
              
	President	 	 	 

      

       

       

      AJW
        PARTNERS, LLC

      By:
        SMS
        Group, LLC

      
        
          	 	 	 	 
	/s/ Corey
                  S.
                  Ribotsky	 	 	 
	
                  
Corey
                  S. Ribotsky	 	 	
                
	Manager	 	 	 

        

       

      
        
          	RESIDENCE:	 	Delaware
	 	 	 
	ADDRESS:	 	
                  1044 Northern Boulevard

                  
                    Suite
                      302

                    Roslyn,
                      New York 11576

                    Facsimile:
                      (516) 739-7115

                    Telephone:
                      (516) 739-7110

                  

                
	 

        

      

       

       

      AGGREGATE
        SUBSCRIPTION AMOUNT:

      
        
          	 	
                  Aggregate
                    Principal Amount of Notes:

                	 	
                  $

                	
                  
                    11,100

                  

                	 
	 	
                  Number
                    of Warrants:

                	 	 	
                  
                    11,655,000

                  

                	 
	 	
                  Aggregate
                    Purchase Price:

                	 	
                  $

                	
                  
                    11,100

                  

                	 

        

      

       

       

      
        
          
          

        

        
          23

          
            

          

        

        
          
          

        

      

       

      NEW
        MILLENNIUM CAPITAL PARTNERS II, LLC

      By:
        First
        Street Manager II, LLC

       

      
        
          
            	 	 	 	 
	/s/ Corey
                    S.
                    Ribotsky 	 	 	 
	
                    
Corey
                    S. Ribotsky 	 	 	
                  
	Manager	 	 	 

          

          
 

        

        
          
            
              
                	RESIDENCE:	 	New
                        York
	 	 	 
	ADDRESS:	 	
                        
                          
                            1044
                              Northern Boulevard

                            Suite
                              302

                            Roslyn,
                              New York 11576

                            Facsimile: (516)
                              739-7115

                            Telephone: (516)
                              739-7110

                          

                        

                      
	 

              

            

            

          

        

      

      AGGREGATE
        SUBSCRIPTION AMOUNT:

      
         

        
          
            	 	
                    Aggregate
                      Principal Amount of Notes:

                  	 	
                    $

                  	
                    1,350

                  	 
	 	
                    Number
                      of Warrants:

                  	 	 	
                    1,417,500

                  	 
	 	
                    Aggregate
                      Purchase Price:

                  	 	
                    $

                  	
                    1,350

                  	 

          

      

      
        
          
          

        

        
          24

          
            

          

        

        
          
          

        

      

      AJW
        OFFSHORE, LTD.

      By:
        First
        Street Manager II, LLC

       

      
        
          	 	 	 	 
	/s/ Corey
                  S.
                  Ribotsky 	 	 	 
	
                  
Corey
                  S. Ribotsky 	 	 	
                
	Manager	 	 	 

        

        
 

      

      
        
          
            
              	RESIDENCE:	 	Cayman
                      Islands
	 	 	 
	ADDRESS:	 	
                      
                        P.O.
                          Box 32021 SMB

                        Grand
                          Cayman, Cayman Island, B.W.I. 

                      

                    
	 

            

          

          
 

        

      

      AGGREGATE
        SUBSCRIPTION AMOUNT:

       

      
        
          	 	
                  Aggregate
                    Principal Amount of Notes:

                	 	
                  $

                	
                  59,050

                	 
	 	
                  Number
                    of Warrants:

                	 	 	
                  62,002,500

                	 
	 	
                  Aggregate
                    Purchase Price:

                	 	
                  $

                	
                  59,050

                	 

        

      

      
        
          
          

        

        
          25

          
            

          

        

        
          
          

        

      

      AJW
        QUALIFIED PARTNERS, LLC

      By:
        AJW
        Manager, LLC

       

      
        	 	 	 	 
	/s/ Corey
                S.
                Ribotsky 	 	 	 
	
                
Corey
                S. Ribotsky 	 	 	
              
	Manager	 	 	 

      

       

       

      
        
          
            	RESIDENCE:	 	New
                    York
	 	 	 
	ADDRESS:	 	
                    
                      1044
                        Northern Boulevard

                      Suite
                        302

                      Roslyn,
                        New York 11576

                      Facsimile: (516)
                        739-7115

                      Telephone: (516)
                        739-7110

                    

                  
	 

          

        

         

      

      AGGREGATE
        SUBSCRIPTION AMOUNT:

      
        
          
            	 	
                    Aggregate
                      Principal Amount of Notes:

                  	 	
                    $

                  	
                    28,500

                  	 
	 	
                    Number
                      of Warrants:

                  	 	 	
                    29,925,000

                  	 
	 	
                    Aggregate
                      Purchase Price:

                  	 	
                    $

                  	
                    28,500

                  	 

          

        

         

      

      

      
        
           

        

        
          26EXHIBIT
      10.2

     

    

     

    THE
      SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”). THE SECURITIES MAY NOT BE SOLD,
      TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
      FOR THE SECURITIES UNDER SAID ACT, OR AN OPINION OF COUNSEL IN FORM, SUBSTANCE
      AND SCOPE CUSTOMARY FOR OPINIONS OF COUNSEL IN COMPARABLE TRANSACTIONS THAT
      REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR UNLESS SOLD PURSUANT TO RULE
      144
      OR REGULATION S UNDER SAID ACT.

    

     

    CALLABLE
      SECURED CONVERTIBLE NOTE

    
      
        
          	
                  Newport
                    Beach, California

                	 
	
                  April
                    12, 2006

                	
                  $59,050

                

        

         

      

    

    FOR
      VALUE RECEIVED,
      WI-FI TV, INC.,
      a
      Nevada corporation (hereinafter called the “Borrower”),
      hereby promises to pay to the order of AJW Offshore, LTD or registered assigns
      (the “Holder”)
      the
      sum of $59,050,
      on
      April 12, 2009 (the “Maturity
      Date”),
      and
      to pay interest on the unpaid principal balance hereof at the rate of eight
      percent (8%) (the “Interest
      Rate”)
      per
      annum from April 12, 2006 (the “Issue
      Date”)
      until
      the same becomes due and payable, whether at maturity or upon acceleration
      or by
      prepayment or otherwise; provided, however, that on the last business day of
      each month after the Issue Date (each, a “Determination
      Date”),
      if
      the Average Daily Price of the common stock, $.001 par value per share, of
      the
      Borrower (the “Common
      Stock”)
      as
      reported by a reliable reporting service mutually acceptable to and hereafter
      designated by the Holder (the “Reporting
      Service”)
      for
      each day of the month ending on the applicable Determination Date exceeds 125%
      of the Average Daily Price (as defined below) of the Common Stock as reported
      by
      the Reporting Service for the five (5) business days immediately prior to the
      Issue Date (the “Initial
      Market Price”),
      the
      Interest Rate for such month shall automatically be reduced to zero percent
      (0.0%). “Average
      Daily Price”
means,
      for any security as of any date, the price based on the daily volume weighted
      average price (“VWAP”)
      of the
      Common Stock on the principal trading market for such security as reported
      by
      Bloomberg, L.P. using the VWAP function. If the Average Daily Price cannot
      be
      calculated for such security on such date in the manner provided above, the
      Average Daily Price shall be the fair market value as mutually determined by
      the
      Borrower and the holders of a majority in interest of the Notes being converted
      for which the calculation of the Average Daily Price is required in order to
      determine the Conversion Price of such Notes. Any amount of principal or
      interest on this Note which is not paid when due shall bear interest at the
      rate
      of fifteen percent (15%) per annum from the due date thereof until the same
      is
      paid (“Default
      Interest”).
      Interest shall commence accruing on the Issue Date, shall be computed on the
      basis of a 365-day year and the actual number of days elapsed and shall be
      payable monthly in arrears. All payments due hereunder (to the extent not
      converted into Common Stock in accordance with the terms hereof) shall be made
      in lawful money of the United States of America. All payments shall be made
      at
      such address as the Holder shall hereafter give to the Borrower by written
      notice made in accordance with the provisions of this Note. Whenever any amount
      expressed to be due by the terms of this Note is due on any day which is not
      a
      business day, the same shall instead be due on the next succeeding day which
      is
      a business day and, in the case of any interest payment date which is not the
      date on which this Note is paid in full, the extension of the due date thereof
      shall not be taken into account for purposes of determining the amount of
      interest due on such date. As used in this Note, the term “business day” shall
      mean any day other than a Saturday, Sunday or a day on which commercial banks
      in
      the city of New York, New York are authorized or required by law or executive
      order to remain closed. Each capitalized term used herein, and not otherwise
      defined, shall have the meaning ascribed thereto in that certain Securities
      Purchase Agreement dated April 12, 2006, pursuant to which this Note was
      originally issued (the “Purchase
      Agreement”).

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    This
      Note
      is 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 Borrower and will not impose personal liability upon the
      holder thereof. The obligations of the Borrower under this Note shall be secured
      by that certain Security Agreement dated by and between the Borrower and the
      Holder of even date herewith.

     

    The
      following terms shall apply to this Note:

     

     

    ARTICLE
      I. CONVERSION
      RIGHTS

     

    1.1  Conversion
      Right.
      The
      Holder shall have the right from time to time, and at any time on or prior
      to
      the earlier of (i) the Maturity Date and (ii) the date of payment of the Default
      Amount (as defined in Article III) pursuant to Section 1.6(a) or Article III,
      the Optional Prepayment Amount (as defined in Section 5.1 or any payments
      pursuant to Section 1.7, each in respect of the remaining outstanding principal
      amount of this Note to convert all or any part of the outstanding and unpaid
      principal amount of this Note into fully paid and non-assessable shares of
      Common Stock, as such Common Stock exists on the Issue Date, or any shares
      of
      capital stock or other securities of the Borrower into which such Common Stock
      shall hereafter be changed or reclassified at the conversion price (the
“Conversion
      Price”)
      determined as provided herein (a “Conversion”);
      provided,
      however,
      that in
      no event shall the Holder be entitled to convert any portion of this Note in
      excess of that portion of this Note upon conversion of which the sum of (1)
      the
      number of shares of Common Stock beneficially owned by the Holder and its
      affiliates (other than shares of Common Stock which may be deemed beneficially
      owned through the ownership of the unconverted portion of the Notes or the
      unexercised or unconverted portion of any other security of the Borrower
      (including, without limitation, the warrants issued by the Borrower pursuant
      to
      the Purchase Agreement) subject to a limitation on conversion or exercise
      analogous to the limitations contained herein) and (2) the number of shares
      of
      Common Stock issuable upon the conversion of the portion of this Note with
      respect to which the determination of this proviso is being made, would result
      in beneficial ownership by the Holder and its affiliates of more than 4.9%
      of
      the outstanding shares of Common Stock; and provided further
      that the
      Holder shall not be entitled to convert any portion of this Note during any
      month immediately succeeding a Determination Date on which the Borrower
      exercises its prepayment option pursuant to Section 5.2 of this Note. For
      purposes of the proviso 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 Regulations 13D-G thereunder, except
      as
      otherwise provided in clause (1) of such proviso. The number of shares of Common
      Stock to be issued upon each conversion of this Note shall be determined by
      dividing the Conversion Amount (as defined below) by the applicable Conversion
      Price then in effect on the date specified in the notice of conversion, in
      the
      form attached hereto as Exhibit A (the “Notice
      of Conversion”),
      delivered to the Borrower by the Holder in accordance with Section 1.4 below;
      provided that the Notice of Conversion is submitted by facsimile (or by other
      means resulting in, or reasonably expected to result in, notice) to the Borrower
      before 6:00 p.m., New York, New York time on such conversion date (the
“Conversion
      Date”).
      The
      term “Conversion
      Amount”
means,
      with respect to any conversion of this Note, the sum of (1) the principal amount
      of this Note to be converted in such conversion plus
      (2)
      accrued and unpaid interest, if any, on such principal amount at the interest
      rates provided in this Note to the Conversion Date plus
      (3)
      Default Interest, if any, on the amounts referred to in the immediately
      preceding clauses (1) and/or (2) plus
      (4) at
      the Holder’s option, any amounts owed to the Holder pursuant to Sections 1.3 and
      1.4(g) hereof or pursuant to Section 2(c) of that certain Registration Rights
      Agreement, dated as of April 12, 2006, executed in connection with the initial
      issuance of this Note and the other Notes issued on the Issue Date (the
“Registration
      Rights Agreement”).

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    1.2  Conversion
      Price.

     

    (a)  Calculation
      of Conversion Price.
      The
      Conversion Price shall be the lesser of (i) the Variable Conversion Price (as
      defined herein) and (ii) the Fixed Conversion Price (as defined herein)
      (subject, in each case, to equitable adjustments for stock splits, stock
      dividends or rights offerings by the Borrower relating to the Borrower’s
      securities or the securities of any subsidiary of the Borrower, combinations,
      recapitalization, reclassifications, extraordinary distributions and similar
      events). The “Variable
      Conversion Price”
shall
      mean the Applicable Percentage (as defined herein) multiplied by the Market
      Price (as defined herein). “Market
      Price”
means
      the average of the lowest three (3) Trading Prices (as defined below) for the
      Common Stock during the twenty (20) Trading Day period ending one Trading Day
      prior to the date the Conversion Notice is sent by the Holder to the Borrower
      via facsimile (the “Conversion
      Date”).
      “Trading
      Price”
means,
      for any security as of any date, the intraday trading price on the
      Over-the-Counter Bulletin Board (the “OTCBB”)
      as
      reported by a reliable reporting service mutually acceptable to and hereafter
      designated by Holders of a majority in interest of the Notes and the Borrower
      or, if the OTCBB is not the principal trading market for such security, the
      intraday trading price of such security on the principal securities exchange
      or
      trading market where such security is listed or traded or, if no intraday
      trading price of such security is available in any of the foregoing manners,
      the
      average of the intraday trading prices of any market makers for such security
      that are listed in the “pink sheets” by the National Quotation Bureau, Inc. If
      the Trading Price cannot be calculated for such security on such date in the
      manner provided above, the Trading Price shall be the fair market value as
      mutually determined by the Borrower and the holders of a majority in interest
      of
      the Notes being converted for which the calculation of the Trading Price is
      required in order to determine the Conversion Price of such Notes. “Trading
      Day”
shall
      mean any day on which the Common Stock is traded for any period on the OTCBB,
      or
      on the principal securities exchange or other securities market on which the
      Common Stock is then being traded. “Applicable
      Percentage”
shall
      mean 25.0%. The “Fixed
      Conversion Price”
shall
      mean $.005.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    (b)  Conversion
      Price During Major Announcements.
      Notwithstanding
      anything contained in Section 1.2(a) to the contrary, in the event the Borrower
      (i) makes a public announcement that it intends to consolidate or merge with
      any
      other corporation (other than a merger in which the Borrower is the surviving
      or
      continuing corporation and its capital stock is unchanged) or sell or transfer
      all or substantially all of the assets of the Borrower or (ii) any person,
      group
      or entity (including the Borrower) publicly announces a tender offer to purchase
      50% or more of the Borrower’s Common Stock (or any other takeover scheme) (the
      date of the announcement referred to in clause (i) or (ii) is hereinafter
      referred to as the “Announcement
      Date”),
      then
      the Conversion Price shall, effective upon the Announcement Date and continuing
      through the Adjusted Conversion Price Termination Date (as defined below),
      be
      equal to the lower of (x) the Conversion Price which would have been applicable
      for a Conversion occurring on the Announcement Date and (y) the Conversion
      Price
      that would otherwise be in effect. From and after the Adjusted Conversion Price
      Termination Date, the Conversion Price shall be determined as set forth in
      this
      Section 1.2(a). For purposes hereof, “Adjusted
      Conversion Price Termination Date”
shall
      mean, with respect to any proposed transaction or tender offer (or takeover
      scheme) for which a public announcement as contemplated by this Section 1.2(b)
      has been made, the date upon which the Borrower (in the case of clause (i)
      above) or the person, group or entity (in the case of clause (ii) above)
      consummates or publicly announces the termination or abandonment of the proposed
      transaction or tender offer (or takeover scheme) which caused this Section
      1.2(b) to become operative.

     

    1.3  Authorized
      Shares.
      Subject
      to the Stockholder Approval (as defined in the Purchase Agreement), the Borrower
      covenants that during the period the conversion right exists, the Borrower
      will
      reserve from its authorized and unissued Common Stock a sufficient number of
      shares, free from preemptive rights, to provide for the issuance of Common
      Stock
      upon the full conversion of this Note and the other Notes issued pursuant to
      the
      Purchase Agreement. The Borrower is required at all times to have authorized
      and
      reserved two times the number of shares that is actually issuable upon full
      conversion of the Notes (based on the Conversion Price of the Notes or the
      Exercise Price of the Warrants in effect from time to time) (the “Reserved
      Amount”).
      The
      Reserved Amount shall be increased from time to time in accordance with the
      Borrower’s obligations pursuant to Section 4(h) of the Purchase Agreement. The
      Borrower represents that upon issuance, such shares will be duly and validly
      issued, fully paid and non-assessable. In addition, if the Borrower shall issue
      any securities or make any change to its capital structure which would change
      the number of shares of Common Stock into which the Notes shall be convertible
      at the then current Conversion Price, the Borrower shall at the same time make
      proper provision so that thereafter there shall be a sufficient number of shares
      of Common Stock authorized and reserved, free from preemptive rights, for
      conversion of the outstanding Notes. The Borrower (i) acknowledges that it
      has
      irrevocably instructed its transfer agent to issue certificates for the Common
      Stock issuable upon conversion of this Note, and (ii) agrees that its
      issuance of this Note shall constitute full authority to its officers and agents
      who are charged with the duty of executing stock certificates to execute and
      issue the necessary certificates for shares of Common Stock in accordance with
      the terms and conditions of this Note.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    If,
      at
      any time a Holder of this Note submits a Notice of Conversion, and the Borrower
      does not have sufficient authorized but unissued shares of Common Stock
      available to effect such conversion in accordance with the provisions of this
      Article I (a “Conversion
      Default”),
      subject to Section 4.8, the Borrower shall issue to the Holder all of the shares
      of Common Stock which are then available to effect such conversion. The portion
      of this Note which the Holder included in its Conversion Notice and which
      exceeds the amount which is then convertible into available shares of Common
      Stock (the “Excess
      Amount”)
      shall,
      notwithstanding anything to the contrary contained herein, not be convertible
      into Common Stock in accordance with the terms hereof until (and at the Holder’s
      option at any time after) the date additional shares of Common Stock are
      authorized by the Borrower to permit such conversion, at which time the
      Conversion Price in respect thereof shall be the lesser of (i) the Conversion
      Price on the Conversion Default Date (as defined below) and (ii) the Conversion
      Price on the Conversion Date thereafter elected by the Holder in respect
      thereof. In addition, the Borrower shall pay to the Holder payments
      (“Conversion
      Default Payments”)
      for a
      Conversion Default in the amount of (x) the sum
      of
      (1) the
      then outstanding principal amount of this Note plus
      (2)
      accrued and unpaid interest on the unpaid principal amount of this Note through
      the Authorization Date (as defined below) plus
      (3)
      Default Interest, if any, on the amounts referred to in clauses (1) and/or
      (2),
multiplied
      by
      (y) .24,
multiplied
      by
      (z)
      (N/365), where N = the number of days from the day the holder submits a Notice
      of Conversion giving rise to a Conversion Default (the “Conversion
      Default Date”)
      to the
      date (the “Authorization
      Date”)
      that
      the Borrower authorizes a sufficient number of shares of Common Stock to effect
      conversion of the full outstanding principal balance of this Note. The Borrower
      shall use its best efforts to authorize a sufficient number of shares of Common
      Stock as soon as practicable following the earlier of (i) such time that the
      Holder notifies the Borrower or that the Borrower otherwise becomes aware that
      there are or likely will be insufficient authorized and unissued shares to
      allow
      full conversion thereof and (ii) a Conversion Default. The Borrower shall send
      notice to the Holder of the authorization of additional shares of Common Stock,
      the Authorization Date and the amount of Holder’s accrued Conversion Default
      Payments. The accrued Conversion Default Payments for each calendar month shall
      be paid in cash or shall be convertible into Common Stock (at such time as
      there
      are sufficient authorized shares of Common Stock) at the applicable Conversion
      Price, at the Borrower’s option, as follows:

     

    (a)  In
      the
      event Holder elects to take such payment in cash, cash payment shall be made
      to
      Holder by the fifth (5th)
      day of
      the month following the month in which it has accrued; and

     

    (b)  In
      the
      event Holder elects to take such payment in Common Stock, the Holder may convert
      such payment amount into Common Stock at the Conversion Price (as in effect
      at
      the time of conversion) at any time after the fifth day of the month following
      the month in which it has accrued in accordance with the terms of this Article
      I
      (so long as there is then a sufficient number of authorized shares of Common
      Stock).

     

    The
      Holder’s election shall be made in writing to the Borrower at any time prior to
      6:00 p.m., New York, New York time, on the third day of the month following
      the
      month in which Conversion Default payments have accrued. If no election is
      made,
      the Holder shall be deemed to have elected to receive cash. Nothing herein
      shall
      limit the Holder’s right to pursue actual damages (to the extent in excess of
      the Conversion Default Payments) for the Borrower’s failure to maintain a
      sufficient number of authorized shares of Common Stock, and each holder shall
      have the right to pursue all remedies available at law or in equity (including
      degree of specific performance and/or injunctive relief).

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    1.4  Method
      of Conversion.

     

    (a)  Mechanics
      of Conversion.
      Subject
      to Section 1.1, this Note may be converted by the Holder in whole or in part
      at
      any time from time to time after the Issue Date, by (A) submitting to the
      Borrower a Notice of Conversion (by facsimile or other reasonable means of
      communication dispatched on the Conversion Date prior to 6:00 p.m., New York,
      New York time) and (B) subject to Section 1.4(b), surrendering this Note at
      the principal office of the Borrower. 

     

    (b)  Surrender
      of Note Upon Conversion.
      Notwithstanding
      anything to the contrary set forth herein, upon conversion of this Note in
      accordance with the terms hereof, the Holder shall not be required to physically
      surrender this Note to the Borrower unless the entire unpaid principal amount
      of
      this Note is so converted. The Holder and the Borrower shall maintain records
      showing the principal amount so converted and the dates of such conversions
      or
      shall use such other method, reasonably satisfactory to the Holder and the
      Borrower, so as not to require physical surrender of this Note upon each such
      conversion. In the event of any dispute or discrepancy, such records of the
      Borrower shall be controlling and determinative in the absence of manifest
      error. Notwithstanding the foregoing, if any portion of this Note is converted
      as aforesaid, the Holder may not transfer this Note unless the Holder first
      physically surrenders this Note to the Borrower, whereupon the Borrower will
      forthwith issue and deliver upon the order of the Holder a new Note of like
      tenor, registered as the Holder (upon payment by the Holder of any applicable
      transfer taxes) may request, representing in the aggregate the remaining unpaid
      principal amount of this Note. The Holder and any assignee, by acceptance of
      this Note, acknowledge and agree that, by reason of the provisions of this
      paragraph, following conversion of a portion of this Note, the unpaid and
      unconverted principal amount of this Note represented by this Note may be less
      than the amount stated on the face hereof.

     

    (c)  Payment
      of Taxes.
      The
      Borrower shall not be required to pay any tax which may be payable in respect
      of
      any transfer involved in the issue and delivery of shares of Common Stock or
      other securities or property on conversion of this Note in a name other than
      that of the Holder (or in street name), and the Borrower shall not be required
      to issue or deliver any such shares or other securities or property unless
      and
      until the person or persons (other than the Holder or the custodian in whose
      street name such shares are to be held for the Holder’s account) requesting the
      issuance thereof shall have paid to the Borrower the amount of any such tax
      or
      shall have established to the satisfaction of the Borrower that such tax has
      been paid.

     

    (d)  Delivery
      of Common Stock Upon Conversion.
      Upon
      receipt by the Borrower from the Holder of a facsimile transmission (or other
      reasonable means of communication) of a Notice of Conversion meeting the
      requirements for conversion as provided in this Section 1.4, the Borrower shall
      issue and deliver or cause to be issued and delivered to or upon the order
      of
      the Holder certificates for the Common Stock issuable upon such conversion
      within two (2) business days after such receipt (and, solely in the case of
      conversion of the entire unpaid principal amount hereof, surrender of this
      Note)
      (such second business day being hereinafter referred to as the “Deadline”)
      in
      accordance with the terms hereof and the Purchase Agreement (including, without
      limitation, in accordance with the requirements of Section 2(g) of the Purchase
      Agreement that certificates for shares of Common Stock issued on or after the
      effective date of the Registration Statement upon conversion of this Note shall
      not bear any restrictive legend).

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    (e)  Obligation
      of Borrower to Deliver Common Stock.
      Upon
      receipt by the Borrower of a Notice of Conversion, the Holder shall be deemed
      to
      be the holder of record of the Common Stock issuable upon such conversion,
      the
      outstanding principal amount and the amount of accrued and unpaid interest
      on
      this Note shall be reduced to reflect such conversion, and, unless the Borrower
      defaults on its obligations under this Article I, all rights with respect to
      the
      portion of this Note being so converted shall forthwith terminate except the
      right to receive the Common Stock or other securities, cash or other assets,
      as
      herein provided, on such conversion. If the Holder shall have given a Notice
      of
      Conversion as provided herein, the Borrower’s obligation to issue and deliver
      the certificates for Common Stock shall be absolute and unconditional,
      irrespective of the absence of any action by the Holder to enforce the same,
      any
      waiver or consent with respect to any provision thereof, the recovery of any
      judgment against any person or any action to enforce the same, any failure
      or
      delay in the enforcement of any other obligation of the Borrower to the holder
      of record, or any setoff, counterclaim, recoupment, limitation or termination,
      or any breach or alleged breach by the Holder of any obligation to the Borrower,
      and irrespective of any other circumstance which might otherwise limit such
      obligation of the Borrower to the Holder in connection with such conversion.
      The
      Conversion Date specified in the Notice of Conversion shall be the Conversion
      Date so long as the Notice of Conversion is received by the Borrower before
      6:00
      p.m., New York, New York time, on such date.

     

    (f)  Delivery
      of Common Stock by Electronic Transfer.
      In
      lieu
      of delivering physical certificates representing the Common Stock issuable
      upon
      conversion, provided the Borrower’s transfer agent is participating in The
      Depository Trust Company (“DTC”)
      Fast
      Automated Securities Transfer (“FAST”)
      program, upon request of the Holder and its compliance with the provisions
      contained in Section 1.1 and in this Section 1.4, the Borrower shall use its
      best efforts to cause its transfer agent to electronically transmit the Common
      Stock issuable upon conversion to the Holder by crediting the account of
      Holder’s Prime Broker with DTC through its Deposit Withdrawal Agent Commission
      (“DWAC”)
      system.

     

    (g)  Failure
      to Deliver Common Stock Prior to Deadline.
      Without
      in any way limiting the Holder’s right to pursue other remedies, including
      actual damages and/or equitable relief, the parties agree that if delivery
      of
      the Common Stock issuable upon conversion of this Note is more than two (2)
      days
      after the Deadline (other than a failure due to the circumstances described
      in
      Section 1.3 above, which failure shall be governed by such Section and
      circumstances reasonably beyond Borrower’s control) the Borrower shall pay to
      the Holder $2,000 per day in cash, for each day beyond the Deadline that the
      Borrower fails to deliver such Common Stock. Such cash amount shall be paid
      to
      Holder by the fifth day of the month following the month in which it has accrued
      or, at the option of the Holder (by written notice to the Borrower by the first
      day of the month following the month in which it has accrued), shall be added
      to
      the principal amount of this Note, in which event interest shall accrue thereon
      in accordance with the terms of this Note and such additional principal amount
      shall be convertible into Common Stock in accordance with the terms of this
      Note.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    1.5  Concerning
      the Shares.
      The
      shares of Common Stock issuable upon conversion of this Note may not be sold
      or
      transferred unless (i) such shares are sold pursuant to an effective
      registration statement under the Act or (ii) the Borrower or its transfer agent
      shall have been furnished with an opinion of counsel reasonably satisfactory
      to
      Borrower and its counsel (which opinion shall be in form, substance and scope
      customary for opinions of counsel in comparable transactions) to the effect
      that
      the shares to be sold or transferred may be sold or transferred pursuant to
      an
      exemption from such registration or (iii) such shares are sold or
      transferred pursuant to Rule 144 under the Act (or a successor rule)
      (“Rule
      144”)
      or
      (iv) such shares are transferred to an “affiliate” (as defined in Rule 144) of
      the Borrower who agrees to sell or otherwise transfer the shares only in
      accordance with this Section 1.5 and who is an Accredited Investor (as defined
      in the Purchase Agreement). Except as otherwise provided in the Purchase
      Agreement (and subject to the removal provisions set forth below), until such
      time as the shares of Common Stock issuable upon conversion of this Note have
      been registered under the Act as contemplated by the Registration Rights
      Agreement or otherwise 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, each certificate for shares of Common Stock issuable upon
      conversion of this Note that has not been so included in an effective
      registration statement or that has not been sold pursuant to an effective
      registration statement or an exemption that permits removal of the legend,
      shall
      bear a legend substantially in the following form, as appropriate:

     

    “THE
      SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED. THE SECURITIES MAY NOT BE SOLD, TRANSFERRED
      OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE
      SECURITIES UNDER SAID ACT, OR AN OPINION OF COUNSEL IN FORM, SUBSTANCE AND
      SCOPE
      CUSTOMARY FOR OPINIONS OF COUNSEL IN COMPARABLE TRANSACTIONS, THAT REGISTRATION
      IS NOT REQUIRED UNDER SAID ACT UNLESS SOLD PURSUANT TO RULE 144 OR REGULATION
      S
      UNDER SAID ACT.”

     

    The
      legend set forth above shall be removed and the Borrower shall issue to the
      Holder a new certificate therefor free of any transfer legend if (i) the
      Borrower or its transfer agent shall have received an opinion of counsel
      reasonably satisfactory to Borrower and its 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 Common Stock may be made without
      registration under the Act and the shares are so sold or transferred, (ii)
      such
      Holder provides the Borrower or its transfer agent with reasonable assurances
      that the Common Stock issuable upon conversion of this Note (to the extent
      such
      securities are deemed to have been acquired on the same date) can be sold
      pursuant to Rule 144 or (iii) in the case of the Common Stock issuable upon
      conversion of this Note, such security is registered for sale by the Holder
      under an effective registration statement filed under the Act or otherwise
      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. Nothing
      in
      this Note shall (i) limit the Borrower’s obligation under the Registration
      Rights Agreement or (ii) affect in any way the Holder’s obligations to comply
      with applicable prospectus delivery requirements upon the resale of the
      securities referred to herein.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    1.6  Effect
      of Certain Events.

     

    (a)  Effect
      of Merger, Consolidation, Etc.
      At the
      option of the Holder, the sale, conveyance or disposition of all or
      substantially all of the assets of the Borrower, the effectuation by the
      Borrower of a transaction or series of related transactions in which more than
      50% of the voting power of the Borrower is disposed of, or the consolidation,
      merger or other business combination of the Borrower with or into any other
      Person (as defined below) or Persons when the Borrower is not the survivor
      shall
      either: (i) be deemed to be an Event of Default (as defined in Article III)
      pursuant to which the Borrower shall be required to pay to the Holder upon
      the
      consummation of and as a condition to such transaction an amount equal to the
      Default Amount (as defined in Article III) or (ii) be treated pursuant to
      Section 1.6(b) hereof. “Person”
shall
      mean any individual, corporation, limited liability company, partnership,
      association, trust or other entity or organization.

     

    (b)  Adjustment
      Due to Merger, Consolidation, Etc.
      If,
      at
      any time when this Note is issued and outstanding and prior to conversion of
      all
      of the Notes, there shall be any merger, consolidation, exchange of shares,
      recapitalization, reorganization, or other similar event, as a result of which
      shares of Common Stock of the Borrower shall be changed into the same or a
      different number of shares of another class or classes of stock or securities
      of
      the Borrower or another entity, or in case of any sale or conveyance of all
      or
      substantially all of the assets of the Borrower other than in connection with
      a
      plan of complete liquidation of the Borrower, then the Holder of this Note
      shall
      thereafter have the right to receive upon conversion of this Note, upon the
      basis and upon the terms and conditions specified herein and in lieu of the
      shares of Common Stock immediately theretofore issuable upon conversion, such
      stock, securities or assets which the Holder would have been entitled to receive
      in such transaction had this Note been converted in full immediately prior
      to
      such transaction (without regard to any limitations on conversion set forth
      herein), and in any such case appropriate provisions shall be made with respect
      to the rights and interests of the Holder of this Note to the end that the
      provisions hereof (including, without limitation, provisions for adjustment
      of
      the Conversion Price and of the number of shares issuable upon conversion of
      the
      Note) shall thereafter be applicable, as nearly as may be practicable in
      relation to any securities or assets thereafter deliverable upon the conversion
      hereof. The Borrower shall not effect any transaction described in this Section
      1.6(b) unless (a) it first gives, to the extent practicable, thirty (30) days
      prior written notice (but in any event at least fifteen (15) days prior written
      notice) of the record date of the special meeting of shareholders to approve,
      or
      if there is no such record date, the consummation of, such merger,
      consolidation, exchange of shares, recapitalization, reorganization or other
      similar event or sale of assets (during which time the Holder shall be entitled
      to convert this Note) and (b) the resulting successor or acquiring entity (if
      not the Borrower) assumes by written instrument the obligations of this Section
      1.6(b). The above provisions shall similarly apply to successive consolidations,
      mergers, sales, transfers or share exchanges.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    (c)  Adjustment
      Due to Distribution.
      If
      the
      Borrower shall declare or make any distribution of its assets (or rights to
      acquire its assets) to holders of Common Stock as a dividend, stock repurchase,
      by way of return of capital or otherwise (including any dividend or distribution
      to the Borrower’s shareholders in cash or shares (or rights to acquire shares)
      of capital stock of a subsidiary (i.e., a spin-off)) (a “Distribution”),
      then
      the Holder of this Note shall be entitled, upon any conversion of this Note
      after the date of record for determining shareholders entitled to such
      Distribution, to receive the amount of such assets which would have been payable
      to the Holder with respect to the shares of Common Stock issuable upon such
      conversion had such Holder been the holder of such shares of Common Stock on
      the
      record date for the determination of shareholders entitled to such
      Distribution.

     

    (d)  Adjustment
      Due to Dilutive Issuance.
      If, at
      any time when any Notes are issued and outstanding, the Borrower issues or
      sells, or in accordance with this Section 1.6(d) hereof is deemed to have issued
      or sold, any shares of Common Stock for no consideration or for a consideration
      per share (before deduction of reasonable expenses or commissions or
      underwriting discounts or allowances in connection therewith) less than the
      Fixed Conversion Price in effect on the date of such issuance (or deemed
      issuance) of such shares of Common Stock (a “Dilutive
      Issuance”),
      then
      immediately upon the Dilutive Issuance, the Fixed Conversion Price will be
      reduced to the amount of the consideration per share received by the Borrower
      in
      such Dilutive Issuance; provided
      that
      only one adjustment will be made for each Dilutive Issuance.

     

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

     

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

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    (e)  Purchase
      Rights.
      If,
      at
      any time when any Notes are issued and outstanding, the Borrower issues any
      convertible securities or rights to purchase stock, warrants, securities or
      other property (the “Purchase
      Rights”)
      pro
      rata to the record holders of any class of Common Stock, then the Holder of
      this
      Note will be entitled to acquire, upon the terms applicable to such Purchase
      Rights, the aggregate Purchase Rights which such Holder could have acquired
      if
      such Holder had held the number of shares of Common Stock acquirable upon
      complete conversion of this Note (without regard to any limitations on
      conversion contained herein) immediately before the date on which a record
      is
      taken for the grant, issuance or sale of such Purchase Rights or, if no such
      record is taken, the date as of which the record holders of Common Stock are
      to
      be determined for the grant, issue or sale of such Purchase Rights.

     

    (f)  Notice
      of Adjustments.
      Upon
      the
      occurrence of each adjustment or readjustment of the Conversion Price as a
      result of the events described in this Section 1.6, the Borrower, at its
      expense, shall promptly compute such adjustment or readjustment and prepare
      and
      furnish to the Holder of a certificate setting forth such adjustment or
      readjustment and showing in detail the facts upon which such adjustment or
      readjustment is based. The Borrower shall, upon the written request at any
      time
      of the Holder, furnish to such Holder a like certificate setting forth (i)
      such
      adjustment or readjustment, (ii) the Conversion Price at the time in effect
      and
      (iii) the number of shares of Common Stock and the amount, if any, of other
      securities or property which at the time would be received upon conversion
      of
      the Note.

     

    1.7  Trading
      Market Limitations.
      Unless
      permitted by the applicable rules and regulations of the principal securities
      market on which the Common Stock is then listed or traded, in no event shall
      the
      Borrower issue upon conversion of or otherwise pursuant to this Note and the
      other Notes issued pursuant to the Purchase Agreement more than the maximum
      number of shares of Common Stock that the Borrower can issue pursuant to any
      rule of the principal United States securities market on which the Common Stock
      is then traded (the “Maximum
      Share Amount”),
      which
      shall be 19.99% of the total shares outstanding on the Closing Date (as defined
      in the Purchase Agreement), subject to equitable adjustment from time to time
      for stock splits, stock dividends, combinations, capital reorganizations and
      similar events relating to the Common Stock occurring after the date hereof.
      Once the Maximum Share Amount has been issued (the date of which is hereinafter
      referred to as the “Maximum
      Conversion Date”),
      if
      the Borrower fails to eliminate any prohibitions under applicable law or the
      rules or regulations of any stock exchange, interdealer quotation system or
      other self-regulatory organization with jurisdiction over the Borrower or any
      of
      its securities on the Borrower’s ability to issue shares of Common Stock in
      excess of the Maximum Share Amount (a “Trading
      Market Prepayment Event”),
      in
      lieu of any further right to convert this Note, and in full satisfaction of
      the
      Borrower’s obligations under this Note, the Borrower shall pay to the Holder,
      within fifteen (15) business days of the Maximum Conversion Date (the
“Trading
      Market Prepayment Date”),
      an
      amount equal to 130% times
      the
sum
      of (a)
      the then outstanding principal amount of this Note immediately following the
      Maximum Conversion Date, plus
      (b)
      accrued and unpaid interest on the unpaid principal amount of this Note to
      the
      Trading Market Prepayment Date, plus
      (c)
      Default Interest, if any, on the amounts referred to in clause (a) and/or (b)
      above, plus
      (d) any
      optional amounts that may be added thereto at the Maximum Conversion Date by
      the
      Holder in accordance with the terms hereof (the then outstanding principal
      amount of this Note immediately following the Maximum Conversion Date,
plus
      the
      amounts referred to in clauses (b), (c) and (d) above shall collectively be
      referred to as the “Remaining
      Convertible Amount”).
      With
      respect to each Holder of Notes, the Maximum Share Amount shall refer to such
      Holder’s pro rata
      share
      thereof determined in accordance with Section 4.8 below. In the event that
      the
      sum of (x) the aggregate number of shares of Common Stock issued upon conversion
      of this Note and the other Notes issued pursuant to the Purchase Agreement
      plus
      (y) the
      aggregate number of shares of Common Stock that remain issuable upon conversion
      of this Note and the other Notes issued pursuant to the Purchase Agreement,
      represents at least one hundred percent (100%) of the Maximum Share Amount
      (the
“Triggering
      Event”),
      the
      Borrower will use its best efforts to seek and obtain Shareholder Approval
      (or
      obtain such other relief as will allow conversions hereunder in excess of the
      Maximum Share Amount) as soon as practicable following the Triggering Event
      and
      before the Maximum Conversion Date. As used herein, “Shareholder
      Approval”
means
      approval by the shareholders of the Borrower to authorize the issuance of the
      full number of shares of Common Stock which would be issuable upon full
      conversion of the then outstanding Notes but for the Maximum Share
      Amount.

     

    
      
        
        

      

      
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    1.8  Status
      as Shareholder.
      Upon
      submission of a Notice of Conversion by a Holder, (i) the shares covered thereby
      (other than the shares, if any, which cannot be issued because their issuance
      would exceed such Holder’s allocated portion of the Reserved Amount or Maximum
      Share Amount) shall be deemed converted into shares of Common Stock and (ii)
      the
      Holder’s rights as a Holder of such converted portion of this Note shall cease
      and terminate, excepting only the right to receive certificates for such shares
      of Common Stock and to any remedies provided herein or otherwise available
      at
      law or in equity to such Holder because of a failure by the Borrower to comply
      with the terms of this Note. Notwithstanding the foregoing, if a Holder has
      not
      received certificates for all shares of Common Stock prior to the tenth (10th)
      business day after the expiration of the Deadline with respect to a conversion
      of any portion of this Note for any reason, then (unless the Holder otherwise
      elects to retain its status as a holder of Common Stock by so notifying the
      Borrower) the Holder shall regain the rights of a Holder of this Note with
      respect to such unconverted portions of this Note and the Borrower shall, as
      soon as practicable, return such unconverted Note to the Holder or, if the
      Note
      has not been surrendered, adjust its records to reflect that such portion of
      this Note has not been converted. In all cases, the Holder shall retain all
      of
      its rights and remedies (including, without limitation, (i) the right to receive
      Conversion Default Payments pursuant to Section 1.3 to the extent required
      thereby for such Conversion Default and any subsequent Conversion Default and
      (ii) the right to have the Conversion Price with respect to subsequent
      conversions determined in accordance with Section 1.3) for the Borrower’s
      failure to convert this Note.

     

    
      
        
        

      

      
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    ARTICLE
      II. CERTAIN
      COVENANTS

     

    2.1  Distributions
      on Capital Stock.
      So long
      as the Borrower shall have any obligation under this Note, the Borrower shall
      not without the Holder’s written consent (a) pay, declare or set apart for such
      payment, any dividend or other distribution (whether in cash, property or other
      securities) on shares of capital stock other than dividends on shares of Common
      Stock solely in the form of additional shares of Common Stock or (b) directly
      or
      indirectly or through any subsidiary make any other payment or distribution
      in
      respect of its capital stock except for distributions pursuant to any
      shareholders’ rights plan which is approved by a majority of the Borrower’s
      disinterested directors.

     

    2.2  Restriction
      on Stock Repurchases.
      So long
      as the Borrower shall have any obligation under this Note, the Borrower shall
      not without the Holder’s written consent redeem, repurchase or otherwise acquire
      (whether for cash or in exchange for property or other securities or otherwise)
      in any one transaction or series of related transactions any shares of capital
      stock of the Borrower or any warrants, rights or options to purchase or acquire
      any such shares.

     

    2.3  Borrowings.
      So long
      as the Borrower shall have any obligation under this Note, the Borrower shall
      not, without the Holder’s written consent, create, incur, assume or suffer to
      exist any liability for borrowed money, except (a) borrowings in existence
      or
      committed on the date hereof and of which the Borrower has informed Holder
      in
      writing prior to the date hereof, (b) indebtedness to trade creditors or
      financial institutions incurred in the ordinary course of business or (c)
      borrowings, the proceeds of which shall be used to repay this Note.

     

    2.4  Sale
      of Assets.
      So long
      as the Borrower shall have any obligation under this Note, the Borrower shall
      not, without the Holder’s written consent, sell, lease or otherwise dispose of
      any significant portion of its assets outside the ordinary course of business.
      Any consent to the disposition of any assets may be conditioned on a specified
      use of the proceeds of disposition.

     

    2.5  Advances
      and Loans.
      So long
      as the Borrower shall have any obligation under this Note, the Borrower shall
      not, without the Holder’s written consent, lend money, give credit or make
      advances to any person, firm, joint venture or corporation, including, without
      limitation, officers, directors, employees, subsidiaries and affiliates of
      the
      Borrower, except loans, credits or advances (a) in existence or committed on
      the
      date hereof and which the Borrower has informed Holder in writing prior to
      the
      date hereof, (b) made in the ordinary course of business or (c) not in excess
      of
      $50,000.

     

    2.6  Contingent
      Liabilities.
      So long
      as the Borrower shall have any obligation under this Note, the Borrower shall
      not, without the Holder’s written consent, which shall not be unreasonably
      withheld, assume, guarantee, endorse, contingently agree to purchase or
      otherwise become liable upon the obligation of any person, firm, partnership,
      joint venture or corporation, except by the endorsement of negotiable
      instruments for deposit or collection and except assumptions, guarantees,
      endorsements and contingencies (a) in existence or committed on the date hereof
      and which the Borrower has informed Holder in writing prior to the date hereof,
      and (b) similar transactions in the ordinary course of business. 

     

    
      
        
        

      

      
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    ARTICLE
      III. EVENTS
      OF DEFAULT

     

    If
      any of
      the following events of default (each, an “Event
      of Default”)
      shall
      occur:

     

    3.1  Failure
      to Pay Principal or Interest.
      The
      Borrower fails to pay the principal hereof or interest thereon when due on
      this
      Note, whether at maturity, upon a Trading Market Prepayment Event pursuant
      to
      Section 1.7, upon acceleration or otherwise;

     

    3.2  Conversion
      and the Shares.
      The
      Borrower fails to issue shares of Common Stock to the Holder (or announces
      or
      threatens that it will not honor its obligation to do so) upon exercise by
      the
      Holder of the conversion rights of the Holder in accordance with the terms
      of
      this Note (for a period of at least sixty (60) days, if such failure is solely
      as a result of the circumstances governed by Section 1.3 and the Borrower is
      using its best efforts to authorize a sufficient number of shares of Common
      Stock as soon as practicable), fails to transfer or cause its transfer agent
      to
      transfer (electronically or in certificated form) any certificate for shares
      of
      Common Stock issued to the Holder upon conversion of or otherwise pursuant
      to
      this Note as and when required by this Note or the Registration Rights
      Agreement, or fails to remove any restrictive legend (or to withdraw any stop
      transfer instructions in respect thereof) on any certificate for any shares
      of
      Common Stock issued to the Holder upon conversion of or otherwise pursuant
      to
      this Note as and when required by this Note or the Registration Rights Agreement
      (or makes any announcement, statement or threat that it does not intend to
      honor
      the obligations described in this paragraph) and any such failure shall continue
      uncured (or any announcement, statement or threat not to honor its obligations
      shall not be rescinded in writing) for ten (10) days after the Borrower shall
      have been notified thereof in writing by the Holder;

     

    3.3  Failure
      to Timely File Registration or Effect Registration.
      The
      Borrower fails to file the Registration Statement within sixty (60) days
      following the Closing Date (as defined in the Purchase Agreement) or obtain
      effectiveness with the Securities and Exchange Commission of the Registration
      Statement within one hundred twenty (120) days following the Investor demand
      (as
      set forth in the Registration Rights Agreement) or such Registration Statement
      lapses in effect (or sales cannot otherwise be made thereunder effective,
      whether by reason of the Borrower’s failure to amend or supplement the
      prospectus included therein in accordance with the Registration Rights Agreement
      or otherwise) for more than twenty (20) consecutive days or forty (40) days
      in
      any twelve month period after the Registration Statement becomes
      effective;

     

    3.4  Breach
      of Covenants.
      The
      Borrower breaches any material covenant or other material term or condition
      contained in Sections 1.3, 1.6 or 1.7 of this Note, or Sections 4(c), 4(e),
      4(h), 4(i), 4(j) or 5 of the Purchase Agreement and such breach continues for
      a
      period of ten (10) days after written notice thereof to the Borrower from the
      Holder;

     

    3.5  Breach
      of Representations and Warranties.
      Any
      representation or warranty of the Borrower made herein or in any agreement,
      statement or certificate given in writing pursuant hereto or in connection
      herewith (including, without limitation, the Purchase Agreement and the
      Registration Rights Agreement), shall be false or misleading in any material
      respect when made and the breach of which has (or with the passage of time
      will
      have) a material adverse effect on the rights of the Holder with respect to
      this
      Note, the Purchase Agreement or the Registration Rights Agreement;

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    3.6  Receiver
      or Trustee.
      The
      Borrower or any subsidiary of the Borrower shall make an assignment for the
      benefit of creditors, or apply for or consent to the appointment of a receiver
      or trustee for it or for a substantial part of its property or business, or
      such
      a receiver or trustee shall otherwise be appointed;

     

    3.7  Judgments.
      Any
      money judgment, writ or similar process shall be entered or filed against the
      Borrower or any subsidiary of the Borrower or any of its property or other
      assets for more than $50,000, and shall remain unvacated, unbonded or unstayed
      for a period of twenty (20) days unless otherwise consented to by the Holder,
      which consent will not be unreasonably withheld;

     

    3.8  Bankruptcy.
      Bankruptcy, insolvency, reorganization or liquidation proceedings or other
      proceedings for relief under any bankruptcy law or any law for the relief of
      debtors shall be instituted by or against the Borrower or any subsidiary of
      the
      Borrower;

     

    3.9  Delisting
      of Common Stock.
      The
      Borrower shall fail to maintain the listing of the Common Stock on at least
      one
      of the OTCBB or an equivalent replacement exchange, the Nasdaq National Market,
      the Nasdaq SmallCap Market, the New York Stock Exchange, or the American Stock
      Exchange; or

     

    3.10  Default
      Under Other Notes.
      An Event
      of Default has occurred and is continuing under any of the other Notes issued
      pursuant to the Purchase Agreement,

     

    then,
      upon the occurrence and during the continuation of any Event of Default
      specified in Section 3.1, 3.2, 3.3, 3.4, 3.5, 3.7, 3.9, or 3.10, at the option
      of the Holders of a majority of the aggregate principal amount of the
      outstanding Notes issued pursuant to the Purchase Agreement exercisable through
      the delivery of written notice to the Borrower by such Holders (the
“Default
      Notice”),
      and
      upon the occurrence of an Event of Default specified in Section 3.6 or 3.8,
      the
      Notes shall become immediately due and payable and the Borrower shall pay to
      the
      Holder, in full satisfaction of its obligations hereunder, an amount equal
      to
      the greater of (i) 130% times
      the
sum
      of (w)
      the then outstanding principal amount of this Note plus
      (x)
      accrued and unpaid interest on the unpaid principal amount of this Note to
      the
      date of payment (the “Mandatory
      Prepayment Date”)
      plus
      (y)
      Default Interest, if any, on the amounts referred to in clauses (w) and/or
      (x)
plus
      (z) any
      amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof or
      pursuant to Section 2(c) of the Registration Rights Agreement (the then
      outstanding principal amount of this Note to the date of payment plus
      the
      amounts referred to in clauses (x), (y) and (z) shall collectively be known
      as
      the “Default
      Sum”)
      or
      (ii) the “parity value” of the Default Sum to be prepaid, where parity value
      means (a) the highest number of shares of Common Stock issuable upon conversion
      of or otherwise pursuant to such Default Sum in accordance with Article I,
      treating the Trading Day immediately preceding the Mandatory Prepayment Date
      as
      the “Conversion Date” for purposes of determining the lowest applicable
      Conversion Price, unless the Default Event arises as a result of a breach in
      respect of a specific Conversion Date in which case such Conversion Date shall
      be the Conversion Date), multiplied
      by
      (b) the
      highest Closing Price for the Common Stock during the period beginning on the
      date of first occurrence of the Event of Default and ending one day prior to
      the
      Mandatory Prepayment Date (the “Default
      Amount”)
      and
      all other amounts payable hereunder shall immediately become due and payable,
      all without demand, presentment or notice, all of which hereby are expressly
      waived, together with all costs, including, without limitation, legal fees
      and
      expenses, of collection, and the Holder shall be entitled to exercise all other
      rights and remedies available at law or in equity. If the Borrower fails to
      pay
      the Default Amount within five (5) business days of written notice that such
      amount is due and payable, then the Holder shall have the right at any time,
      so
      long as the Borrower remains in default (and so long and to the extent that
      there are sufficient authorized shares), to require the Borrower, upon written
      notice, to immediately issue, in lieu of the Default Amount, the number of
      shares of Common Stock of the Borrower equal to the Default Amount divided
      by
      the Conversion Price then in effect.

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

     

    ARTICLE
      IV. MISCELLANEOUS

     

    4.1  Failure
      or Indulgence Not Waiver.
      No
      failure or delay on the part of the Holder in the exercise of any power, right
      or privilege hereunder shall operate as a waiver thereof, nor shall any single
      or partial exercise of any such power, right or privilege preclude other or
      further exercise thereof or of any other right, power or privileges. All rights
      and remedies existing hereunder are cumulative to, and not exclusive of, any
      rights or remedies otherwise available.

     

    4.2  Notices.
      Any
      notice herein required or permitted to be given shall be in writing and may
      be
      personally served or delivered by courier or sent by United States mail and
      shall be deemed to have been given upon receipt if personally served (which
      shall include telephone line facsimile transmission) or sent by courier or
      three
      (3) days after being deposited in the United States mail, certified, with
      postage pre-paid and properly addressed, if sent by mail. For the purposes
      hereof, the address of the Holder shall be as shown on the records of the
      Borrower; and the address of the Borrower shall be 1280 Bison, Suite B9-597,
      Newport Beach, California 92660, facsimile number: (949) 760-5470. Both the
      Holder and the Borrower may change the address for service by service of written
      notice to the other as herein provided.

     

    4.3  Amendments.
      This
      Note and any provision hereof may only be amended by an instrument in writing
      signed by the Borrower and the Holder. The term “Note” and all reference
      thereto, as used throughout this instrument, shall mean this instrument (and
      the
      other Notes issued pursuant to the Purchase Agreement) as originally executed,
      or if later amended or supplemented, then as so amended or
      supplemented.

     

    4.4  Assignability.
      This
      Note shall be binding upon the Borrower and its successors and assigns, and
      shall inure to be the benefit of the Holder and its successors and assigns.
      Each
      transferee of this Note must be an “accredited investor” (as defined in Rule
      501(a) of the 1933 Act). Notwithstanding anything in this Note to the contrary,
      this Note may be pledged as collateral in connection with a bona fide
      margin
      account or other lending arrangement.

     

    4.5  Cost
      of Collection.
      If
      default is made in the payment of this Note, the Borrower shall pay the Holder
      hereof costs of collection, including reasonable attorneys’ fees.

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

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

     

    4.7  Certain
      Amounts.
      Whenever
      pursuant to this Note the Borrower is required to pay an amount in excess of
      the
      outstanding principal amount (or the portion thereof required to be paid at
      that
      time) plus accrued and unpaid interest plus Default Interest on such interest,
      the Borrower and the Holder agree that the actual damages to the Holder from
      the
      receipt of cash payment on this Note may be difficult to determine and the
      amount to be so paid by the Borrower represents stipulated damages and not
      a
      penalty and is intended to compensate the Holder in part for loss of the
      opportunity to convert this Note and to earn a return from the sale of shares
      of
      Common Stock acquired upon conversion of this Note at a price in excess of
      the
      price paid for such shares pursuant to this Note. The Borrower and the Holder
      hereby agree that such amount of stipulated damages is not plainly
      disproportionate to the possible loss to the Holder from the receipt of a cash
      payment without the opportunity to convert this Note into shares of Common
      Stock.

     

    4.8  Allocations
      of Maximum Share Amount and Reserved Amount.
      The
      Maximum Share Amount and Reserved Amount shall be allocated pro rata among
      the
      Holders of Notes based on the principal amount of such Notes issued to each
      Holder. Each increase to the Maximum Share Amount and Reserved Amount shall
      be
      allocated pro rata among the Holders of Notes based on the principal amount
      of
      such Notes held by each Holder at the time of the increase in the Maximum Share
      Amount or Reserved Amount. In the event a Holder shall sell or otherwise
      transfer any of such Holder’s Notes, each transferee shall be allocated a pro
      rata portion of such transferor’s Maximum Share Amount and Reserved Amount. Any
      portion of the Maximum Share Amount or Reserved Amount which remains allocated
      to any person or entity which does not hold any Notes shall be allocated to
      the
      remaining Holders of Notes, pro rata based on the principal amount of such
      Notes
      then held by such Holders.

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    4.9  Damages
      Shares.
      The
      shares of Common Stock that may be issuable to the Holder pursuant to Sections
      1.3 and 1.4(g) hereof and pursuant to Section 2(c) of the Registration Rights
      Agreement (“Damages
      Shares”)
      shall
      be treated as Common Stock issuable upon conversion of this Note for all
      purposes hereof and shall be subject to all of the limitations and afforded
      all
      of the rights of the other shares of Common Stock issuable hereunder, including
      without limitation, the right to be included in the Registration Statement
      filed
      pursuant to the Registration Rights Agreement. For purposes of calculating
      interest payable on the outstanding principal amount hereof, except as otherwise
      provided herein, amounts convertible into Damages Shares (“Damages
      Amounts”)
      shall
      not bear interest but must be converted prior to the conversion of any
      outstanding principal amount hereof, until the outstanding Damages Amounts
      is
      zero.

     

    4.10  Denominations.
      At the
      request of the Holder, upon surrender of this Note, the Borrower shall promptly
      issue new Notes in the aggregate outstanding principal amount hereof, in the
      form hereof, in such denominations of at least $50,000 as the Holder shall
      request.

     

    4.11  Purchase
      Agreement.
      By its
      acceptance of this Note, each Holder agrees to be bound by the applicable terms
      of the Purchase Agreement.

     

    4.12  Notice
      of Corporate Events.
      Except
      as otherwise provided below, the Holder of this Note shall have no rights as
      a
      Holder of Common Stock unless and only to the extent that it converts this
      Note
      into Common Stock. The Borrower shall provide the Holder with prior notification
      of any meeting of the Borrower’s shareholders (and copies of proxy materials and
      other information sent to shareholders). In the event of any taking by the
      Borrower of a record of its shareholders for the purpose of determining
      shareholders who are entitled to receive payment of any dividend or other
      distribution, any right to subscribe for, purchase or otherwise acquire
      (including by way of merger, consolidation, reclassification or
      recapitalization) any share of any class or any other securities or property,
      or
      to receive any other right, or for the purpose of determining shareholders
      who
      are entitled to vote in connection with any proposed sale, lease or conveyance
      of all or substantially all of the assets of the Borrower or any proposed
      liquidation, dissolution or winding up of the Borrower, the Borrower shall
      mail
      a notice to the Holder, at least twenty (20) days prior to the record date
      specified therein (or thirty (30) days prior to the consummation of the
      transaction or event, whichever is earlier), of the date on which any such
      record is to be taken for the purpose of such dividend, distribution, right
      or
      other event, and a brief statement regarding the amount and character of such
      dividend, distribution, right or other event to the extent known at such time.
      The Borrower shall make a public announcement of any event requiring
      notification to the Holder hereunder substantially simultaneously with the
      notification to the Holder in accordance with the terms of this Section
      4.12.

     

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

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

     

    ARTICLE
      V. CALL
      OPTION

     

    5.1  Call
      Option.
      Notwithstanding anything to the contrary contained in this Article V, so long
      as
(i) no
      Event of Default or Trading Market Prepayment Event shall have occurred and
      be
      continuing, (ii) the
      Borrower has a sufficient number of authorized shares of Common Stock reserved
      for issuance upon full conversion of the Notes, then at any time after the
      Issue
      Date, and (iii) the
      Common Stock is trading at or below $.09 per share, the Borrower shall have
      the
      right, exercisable on not less than ten (10) Trading Days prior written notice
      to the Holders of the Notes (which notice may not be sent to the Holders of
      the
      Notes until the Borrower is permitted to prepay the Notes pursuant to this
      Section 5.1), to prepay all of the outstanding Notes in accordance with this
      Section 5.1. Any notice of prepayment hereunder (an “Optional
      Prepayment”)
      shall
      be delivered to the Holders of the Notes at their registered addresses appearing
      on the books and records of the Borrower and shall state (1) that the Borrower
      is exercising its right to prepay all of the Notes issued on the Issue Date
      and
      (2) the date of prepayment (the “Optional
      Prepayment Notice”).
      On
      the date fixed for prepayment (the “Optional
      Prepayment Date”),
      the
      Borrower shall make payment of the Optional Prepayment Amount (as defined below)
      to or upon the order of the Holders as specified by the Holders in writing
      to
      the Borrower at least one (1) business day prior to the Optional Prepayment
      Date. If the Borrower exercises its right to prepay the Notes, the Borrower
      shall make payment to the holders of an amount in cash (the “Optional
      Prepayment Amount”)
      equal
      to either (i) 125% (for prepayments occurring within thirty (30) days of
      the Issue Date), (ii) 130% for prepayments occurring between thirty-one
      (31) and ninety (90) days of the Issue Date, or (iii) 150% (for prepayments
      occurring after the ninetieth (90th)
      day
      following the Issue Date), multiplied by the sum of (w) the then outstanding
      principal amount of this Note plus
      (x) accrued and unpaid interest on the unpaid principal amount of this Note
      to the Optional Prepayment Date plus
      (y)
      Default Interest, if any, on the amounts referred to in clauses (w) and (x)
      plus
      (z) any
      amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof or
      pursuant to Section 2(c) of the Registration Rights Agreement (the then
      outstanding principal amount of this Note to the date of payment plus
      the
      amounts referred to in clauses (x), (y) and (z) shall collectively be known
      as
      the “Optional
      Prepayment Sum”).
      Notwithstanding notice of an Optional Prepayment, the Holders shall at all
      times
      prior to the Optional Prepayment Date maintain the right to convert all or
      any
      portion of the Notes in accordance with Article I and any portion of Notes
      so
      converted after receipt of an Optional Prepayment Notice and prior to the
      Optional Prepayment Date set forth in such notice and payment of the aggregate
      Optional Prepayment Amount shall be deducted from the principal amount of Notes
      which are otherwise subject to prepayment pursuant to such notice. If the
      Borrower delivers an Optional Prepayment Notice and fails to pay the Optional
      Prepayment Amount due to the Holders of the Notes within two (2) business days
      following the Optional Prepayment Date, the Borrower shall forever forfeit
      its
      right to redeem the Notes pursuant to this Section 5.1.

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    5.2  Partial
      Call Option.
      Notwithstanding anything to the contrary contained in this Article V, in the
      event that the Average Daily Price of the Common Stock, as reported by the
      Reporting Service, for each day of the month ending on any Determination Date
      is
      below the Initial Market Price, the Borrower may, at its option, prepay a
      portion of the outstanding principal amount of the Notes equal to 104% of the
      principal amount hereof divided by thirty-six (36) plus one month’s interest.
      The term “Initial
      Market Price”
      means
      shall mean the volume weighted average price of the Common Stock for the five
      (5) Trading Days immediately preceding the Closing which is
      $.005.

     

    

     

    

     

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK]

     

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF,
      Borrower has caused this Note to be signed in its name by its duly authorized
      officer this 12th
      day of
      April, 2006.

     

    
      	 	 	 
	 	WI-FI
              TV,
              INC.
	 
 	 
 	 
 
	 	By:  	/s/ Alex
              Kanakaris
	 	
              
Alex
              Kanakaris
	 	President

    

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

    

     

    EXHIBIT
      A

     

    NOTICE
      OF CONVERSION

    (To
      be
      Executed by the Registered Holder

    in
      order
      to Convert the Notes)

     

    The
      undersigned hereby irrevocably elects to convert $__________ principal amount
      of
      the Note (defined below) into shares of common stock, par value $.001 per share
      (“Common
      Stock”),
      of
      Wi-Fi TV, Inc., a Nevada corporation (the “Borrower”)
      according to the conditions of the convertible Notes of the Borrower dated
      as of
      April 12, 2006 (the “Notes”),
      as of
      the date written below. If securities are to be issued in the name of a person
      other than the undersigned, the undersigned will pay all transfer taxes payable
      with respect thereto and is delivering herewith such certificates. No fee will
      be charged to the Holder for any conversion, except for transfer taxes, if
      any.
      A copy of each Note is attached hereto (or evidence of loss, theft or
      destruction thereof).

     

    The
      Borrower shall electronically transmit the Common Stock issuable pursuant to
      this Notice of Conversion to the account of the undersigned or its nominee
      with
      DTC through its Deposit Withdrawal Agent Commission system (“DWAC
      Transfer”).

     

    Name
      of
      DTC Prime
      Broker:______________________________________________________

    Account
      Number:_____________________________________________________________

     

    In
      lieu
      of receiving shares of Common Stock issuable pursuant to this Notice of
      Conversion by way of a DWAC Transfer, the undersigned hereby requests that
      the
      Borrower issue a certificate or certificates for the number of shares of Common
      Stock set forth below (which numbers are based on the Holder’s calculation
      attached hereto) in the name(s) specified immediately below or, if additional
      space is necessary, on an attachment hereto:

     

    Name:______________________________________________________________________

    Address:____________________________________________________________________

     

    The
      undersigned represents and warrants that all offers and sales by the undersigned
      of the securities issuable to the undersigned upon conversion of the Notes
      shall
      be made pursuant to registration of the securities under the Securities Act
      of
      1933, as amended (the “Act”),
      or
      pursuant to an exemption from registration under the Act.

     

    Date
      of
      Conversion:___________________________

    Applicable
      Conversion Price:____________________

    Number
      of
      Shares of Common Stock to be Issued Pursuant to

    Conversion
      of the Notes:______________

    Signature:___________________________________

    Name:______________________________________

    Address:____________________________________

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

    The
      Borrower shall issue and deliver shares of Common Stock to an overnight courier
      not later than three business days following receipt of the original Note(s)
      to
      be converted, and shall make payments pursuant to the Notes for the number
      of
      business days such issuance and delivery is late.

     

    
      
        
        

      

      
        23

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