Document:

zurvita_8k-ex1001.htm

    EXHIBIT
10.1

     

    SECURITIES
PURCHASE AGREEMENT

     

    This
Securities Purchase Agreement (this “Agreement”) is dated
as of October 6, 2009 among Zurvita Holdings, Inc., a Delaware (the “Company”), and Vicis
Capital Master Fund (the “Purchaser”).

     

    WHEREAS,
subject to the terms and conditions set forth in this Agreement and pursuant to
Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”) and
Rule 506 promulgated thereunder, the Company desires to issue and sell to
Purchaser, and Purchaser desires to purchase from the Company, securities of the
Company as more fully described in this Agreement.

     

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

     

    ARTICLE
I

    DEFINITIONS

     

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

     

    “Affiliate” means any
Person that, directly or indirectly through one (1) or more intermediaries,
controls or is controlled by or is under common control with a Person, as such
terms are used in and construed under Rule 144 under the Securities
Act.  With respect to a Purchaser, any investment fund or managed
account that is managed on a discretionary basis by the same investment manager
as such Purchaser will be deemed to be an Affiliate of such
Purchaser.

     

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

     

    “Closing” means the
closing of the purchase and sale of the Securities pursuant to Section
2.1.

     

    “Closing Date” means
the Trading Day when all of the Transaction Documents have been executed and
delivered by the applicable parties thereto, and all conditions precedent to (i)
the Purchaser’s obligations to pay the Subscription Amount and (ii) the
Company’s obligations to deliver the Securities have been satisfied or
waived.

     

    “Commission” means the
U.S. Securities and Exchange Commission.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    “Common Stock” means
the common stock of the Company, par value $.0001 per share, and any other class
of securities into which such securities may hereafter be reclassified or
changed into.

     

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

     

    “Disclosure Schedules”
shall have the meaning ascribed to such term in Section 3.1.

     

    “Escrow Agent” means
Sichenzia Ross Friedman Ference LLP, with offices located at 61 Broadway, New
York, New York 10006.

     

    “Escrow
Agreement”  means the escrow agreement entered into prior to
the date hereof, by and among the Company, the Purchaser and the Escrow Agent
pursuant to which the Purchaser, shall deposit the Purchase Price with the
Escrow Agent to be applied to the transactions contemplated
hereunder.

     

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

     

    “Exempt Issuance”
means: (a) shares of Common Stock or options to purchase Common Stock issued to
employees, officers, directors or consultants of the Company pursuant to any
stock or option plan duly adopted by a majority of the non-employee members of
the Board of Directors of the Company or a majority of the members of a
committee of non-employee directors established for such purpose, (b) securities
issued upon the exercise or exchange of or conversion of any Securities issued
hereunder and/or other securities (including the stock rights set forth on Schedule 3.1(g))
exercisable or exchangeable for or convertible into shares of Common Stock
issued and outstanding on the date of this Agreement, provided that, unless set
forth on Schedule
3.1(g), such securities have not been amended since the date of this
Agreement to increase the number of such securities or to decrease the exercise,
exchange or conversion price of any such securities and (c) securities issued
pursuant to acquisitions or strategic transactions approved by a majority of the
directors, provided that any such issuance shall only be to a Person which is,
itself or through its subsidiaries, an operating company in a business
synergistic with the business of the Company, as determined by a majority of the
directors, and in which the Company receives benefits in addition to the
investment of funds, but shall not include a transaction in which the Company is
issuing securities primarily for the purpose of raising capital or to an entity
whose primary business is investing in securities.

     

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

     

    
      
        
        

      

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

     

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

     

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

     

    “Public Information
Failure” shall have the meaning ascribed to such term in Section 4.14
(b).

     

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

     

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

     

    “Required Minimum”
means, as of any date, one hundred and ten percent (110%) of the maximum
aggregate number of shares of Common Stock then issued or potentially issuable
in the future pursuant to the Transaction Documents, including any Underlying
Shares issuable upon exercise or conversion in full of all Series B Warrants and
Series B Convertible Preferred Stock (including a reasonable reserve for
Underlying Shares issuable as payment of dividends), ignoring any conversion or
exercise limits set forth therein.

     

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

     

    “Securities” means the
Series B Convertible Preferred Stock, the Series B Warrants, the Warrant Shares
and the Underlying Shares.

     

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

     

    “Series B Convertible
Preferred Stock” means the Series B Convertible Preferred Stock of the
Company and such designations, preferences and limitations as are set forth in
the Series B Designations.

     

    “Series B
Designations” means the Certificate of Designation, Preferences and
Rights of Series B Convertible Preferred Stock filed with the State of Delaware
on October 6, 2009.

     

    
      
        
        

      

      
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    “Series B Warrant”
means the Series B Common Stock Purchase Warrant, in the form of Exhibit A attached
hereto, delivered to the Purchaser at the Closing in accordance with Section 2.2(a)(v)
hereof.

     

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

     

    “Subsidiary” means any
subsidiary of the Company as set forth on Schedule
3.1(a).

     

    “Super
8-K”  means the Current Report on Form 8-K delivered to
Purchaser prior to the date hereof and to be filed by the Company within four
Business Days of the Closing date, along with the exhibits filed in connection
therewith.

     

    “Trading Day” means a
day on which the Common Stock is traded on a Trading Market.

     

    “Trading Market” means
the following markets or exchanges on which the Common Stock is listed or quoted
for trading on the date in question: the Nasdaq Capital Market, the NYSE Amex,
the New York Stock Exchange, the Nasdaq National Market, the OTC Bulletin Board,
or “Pink Sheets” published by Pink Sheets, LLC (or a similar organization or
agency succeeding to its functions of reporting prices).

     

    “Transaction
Documents” means this Agreement, the Series B Designations, the Series B
Warrants, the Escrow Agreement and any other documents or agreements executed in
connection with the transactions contemplated hereunder.

     

    “Underlying Shares”
means the shares of Common Stock issued and issuable upon conversion or
redemption of the Series B Convertible Preferred Stock and upon exercise of the
Series B Warrants.

     

    “VWAP” of a share of
Common Stock as of a particular date (the “Determination Date”) shall mean the
price determined by the first of the following clauses that applies: (a) if
shares of Common Stock are traded on a national securities exchange (an
“Exchange”), the weighted average of the closing sale price of a share of the
Common Stock of the Company on the last five (5) Trading Days prior to the
Determination Date reported on such Exchange as reported in The Wall Street
Journal (weighted with respect to the trading volume with respect to each such
day); (b) if shares of Common Stock are not traded on an Exchange but trade in
the over-the-counter market and such shares are quoted on the National
Association of Securities Dealers Automated Quotations System (“NASDAQ”), the
weighted average of the closing sale price of a share of the Common Stock of the
Company on the last five (5) Trading Days prior to the Determination Date
reported on NASDAQ as reported in The Wall Street Journal (weighted with respect
to the trading volume with respect to each such day); (c) if such shares are an
issue for which last sale prices are not reported on NASDAQ, the average of the
closing sale price, in each case on the last five (5) Trading Days (or if the
relevant price or quotation did not exist on any of such days, the relevant
price or

     

    
      
        
        

      

      
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    quotation
on the next preceding Business Day on which there was such a price or quotation)
prior to the Determination Date as reported by the Over the Counter Bulletin
Board (the “OTCBB”), or any other successor organization; (d) if no closing
sales price is reported for the Common Stock by the OTCBB or any other successor
organization for such day, the average of the closing sale price, in each case
on the last five (5) Trading Days (or if the relevant price or quotation did not
exist on any of such days, the relevant price or quotation on the next preceding
business day on which there was such a price or quotation) prior to the
Determination Date as reported by  the "pink sheets" by the Pink
Sheets, LLC, or any successor organization, (e) if no closing sales price is
reported for the Common Stock by the OTCBB or any other successor organization
for such day, then the average of the high and low bid and asked price of any of
the market makers for the Common Stock as reported on the OTCBB or in the “pink
sheets” by the Pink Sheets, LLC on the last five (5) Trading Days; or (e) in all
other cases, the fair market value of a share of Common Stock as determined by
an independent appraiser selected in good faith by the holder and reasonably
acceptable to the Company.

     

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

     

    ARTICLE
II

    PURCHASE
AND SALE

     

    2.1   Closing.  On
the Closing Date, upon the terms and subject to the conditions set forth herein,
concurrent with the execution and delivery of this Agreement by the parties
hereto, the Purchaser agrees to purchase, and the Company agrees to sell
2,000,000 shares of Series B Convertible Preferred Stock, each share having a
Stated Value of $1.00, along with the Series B Warrants (as referred to in Section 2.2(a)(iii)
below) for an aggregate purchase price of $2,000,000 (the “Purchase
Price”).  On the Closing Date, subject to the terms of this
Agreement, Purchaser shall cause the Purchase Price to be delivered to the
Company via wire transfer or a certified check in immediately available funds
and the Company shall deliver to the Purchaser the Series B Convertible
Preferred Stock and the Series B Warrants and the other items set forth in Section 2.2 issuable
at the Closing.  Upon satisfaction of the conditions set forth in
Sections 2.2
and 2.3, the
Closing shall occur at the offices of Sichenzia Ross Friedman Ference LLP, 61
Broadway, New York 10006, or such other location as the parties shall mutually
agree.

     

    2.2   Deliveries.

     

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

     

    (i)   this
Agreement duly executed by the Company;

     

    (ii)   a
certificate evidencing 2,000,000 shares of Series B Convertible Preferred
Stock;

     

    (iii)   a Series
B Warrant, in the name of the Purchaser, to purchase 8,000,000 shares of Common
Stock, with an exercise price equal to Twenty-Five Cents ($0.25), subject to
adjustment therein, with a term of exercise of seven (7) years;

     

    
      
        
        

      

      
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    (iv)   any
required consents or waivers;

     

    (v)   an
officer’s certificate and secretary’s certificate in form and substance
reasonably acceptable to the Purchaser;

     

    (vi)   the
Escrow Agreement duly executed by the Company;

     

    (vii)   the Release Notice
(as defined in the Escrow Agreement) duly executed by the Company;
and

     

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

     

    (i)     
this
Agreement duly executed by such Purchaser;

     

    (ii)   the
Escrow Agreement duly executed by the Purchaser;

     

    (iii)   the
Release Notice (as defined in the Escrow Agreement) for the delivery of the
Purchase Price duly executed by the Purchaser.

     

    2.3   Closing
Conditions.

     

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

     

    (i)     
the
accuracy in all material respects when made and on the Closing Date of the
representations and warranties of the Purchaser contained herein;

     

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

     

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

     

    (b)   The
obligations of the Purchaser hereunder in connection with the Closing are
subject to the following conditions being met:

     

    (i)     
the
accuracy in all material respects on the Closing Date of the representations and
warranties of the Company contained herein;

     

    
      
        
        

      

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

     

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

     

    (iv)   there
shall have been no Material Adverse Effect with respect to the Company since the
date of the balance sheet included in the Super 8-K (the “Balance
Sheet”).

     

    ARTICLE
III

    REPRESENTATIONS
AND WARRANTIES

     

    3.1   Representations and
Warranties of the Company.  Except as set forth under the
corresponding section of the disclosure schedules delivered to the Purchaser
concurrently herewith (the “Disclosure
Schedules”) which Disclosure Schedules shall be deemed a part hereof and
to qualify any representation or warranty otherwise made herein to the extent of
such disclosure, the Company hereby makes the representations and warranties set
forth below to Purchaser.

     

    (a)   Subsidiaries.  All
of the direct and indirect subsidiaries of the Company are set forth on Schedule
3.1(a).  The Company owns, directly or indirectly, all of the
capital stock or other equity interests of each Subsidiary free and clear of any
Liens, and all the issued and outstanding shares of capital stock of each
Subsidiary are validly issued and are fully paid, non-assessable and free of
preemptive and similar rights to subscribe for or purchase
securities.  If the Company has no Subsidiaries, then all other
references in the Transaction Documents to the Subsidiaries or any of them will
be disregarded.

     

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

     

    
      
        
        

      

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

     

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

     

    (e)   Filings, Consents and
Approvals.  The Company is not required to obtain any consent,
waiver, authorization or order of, give any notice to, or make any filing or
registration with, any court or other federal, state, local or other
governmental authority or other Person in connection with the execution,
delivery and performance by the Company of the Transaction Documents, other than
the filing of Form D with the Commission and such filings as are required to be
made under applicable state securities laws  (the “Required
Approvals”).

     

    
      
        
        

      

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

     

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

     

    (h)   Financial
Statements.  The financial statements of the Company included
in the Super 8-K and provided to the Purchaser comply in all material respects
with the applicable accounting requirements and the rules and regulations of the
Commission.  Such financial statements have been prepared in
accordance with United States generally accepted accounting principles applied
on a consistent basis during the periods involved (“GAAP”), except as may be
otherwise specified in such financial statements or the notes thereto and except
that unaudited financial statements may not contain all footnotes required by
GAAP, and fairly present in all material respects the financial position of the
Company and its consolidated Subsidiaries as of and for the dates thereof and
the results of operations and cash flows for the periods then ended, subject, in
the case of unaudited statements, to normal, immaterial, year-end audit
adjustments.

     

    
      
        
        

      

      
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    (i)   Material
Changes.  Since the date of the latest financial statements
included within the Super 8-K, and delivered to the Purchaser (i) there has been
no event, occurrence or development that has had or that could reasonably be
expected to result in a Material Adverse Effect, (ii) the Company has not
incurred any material liabilities (contingent or otherwise) other than (A) trade
payables and accrued expenses incurred in the ordinary course of business
consistent with past practice and (B) liabilities not required to be reflected
in the Company’s financial statements pursuant to GAAP, (iii) the Company has
not materially altered its method of accounting, (iv) the Company has not
declared or made any dividend or distribution of cash or other property to its
stockholders or purchased, redeemed or made any agreements to purchase or redeem
any shares of its capital stock and (v) the Company has not issued any equity
securities to any officer, director or Affiliate, except pursuant to existing
Company stock option or stock grant plans.

     

    (j)   Litigation.  Except
as set forth on Schedule 3.1(j),
there is no action, suit, inquiry, notice of violation, proceeding or
investigation pending or, to the knowledge of the Company, threatened against or
affecting the Company, any Subsidiary or any of their respective properties
before or by any court, arbitrator, governmental or administrative agency or
regulatory authority (federal, state, county, local or foreign) (collectively,
an “Action”)
which (i) adversely affects or challenges the legality, validity or
enforceability of any of the Transaction Documents or the Securities or (ii)
could, if there were an unfavorable decision, have or reasonably be expected to
result in a Material Adverse Effect.  Neither the Company nor any
Subsidiary, nor, to the best of the knowledge of the Company, any director or
officer thereof, is or has been the subject of any Action involving a claim of
violation of or liability under federal or state securities laws or a claim of
breach of fiduciary duty.

     

    (k)   Labor
Relations.  No material labor dispute exists or, to the
knowledge of the Company, is imminent with respect to any of the employees of
the Company or any Subsidiary which could reasonably be expected to result in a
Material Adverse Effect. None of the Company’s or its Subsidiaries’ employees is
a member of a union that relates to such employee’s relationship with the
Company, and neither the Company nor any of its Subsidiaries is a party to a
collective bargaining agreement, and the Company and its Subsidiaries believe
that their relationships with their employees are good.  No executive
officer, to the knowledge of the Company, is, or is now expected to be, in
violation of any material term of any employment contract, confidentiality,
disclosure or proprietary information agreement or non-competition agreement, or
any other contract or agreement or any restrictive covenant, and, to the
knowledge of the Company, the continued employment of each such executive
officer does not subject the Company or any of its Subsidiaries to any liability
with respect to any of the foregoing matters.  To the knowledge of the
Company, the Company and its Subsidiaries are in compliance with all U.S.
federal, state, local and foreign laws and regulations relating to employment
and employment practices, terms and conditions of employment and wages and
hours, except where the failure to be in compliance could not, individually or
in the aggregate, reasonably be expected to have a Material Adverse
Effect.

     

    
      
        
        

      

      
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    (l)   Compliance.  Neither
the Company nor any Subsidiary (i) is in material default under or in violation
of (and no event has occurred that has not been waived that, with notice or
lapse of time or both, would result in a default by the Company or any
Subsidiary under), nor has the Company or any Subsidiary received notice of a
claim that it is in default under or that it is in violation of, any indenture,
loan or credit agreement or any other agreement or instrument to which it is a
party or by which it or any of its properties is bound (whether or not such
default or violation has been waived), (ii) is in violation of any order of any
court, arbitrator or governmental body, or (iii) to the knowledge of the
Company, is or has been in violation of any statute, rule or regulation of any
governmental authority, including without limitation all foreign, federal, state
and local laws applicable to its business and all such laws that affect the
environment, except in each case as could not have or reasonably be expected to
result in a Material Adverse Effect.

     

    (m)   Regulatory
Permits.  The Company and the Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to conduct their
respective businesses as described in the Super 8-K, except where the failure to
possess such permits could not have or reasonably be expected to result in a
Material Adverse Effect (“Material Permits”),
and neither the Company nor any Subsidiary has received any notice of
proceedings relating to the revocation or modification of any Material
Permit.

     

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

     

    (o)   Patents and
Trademarks.  The Company and the Subsidiaries have, or have
rights to use, all patents, patent applications, trademarks, trademark
applications, service marks, trade names, trade secrets, inventions, copyrights,
licenses and other intellectual property rights and similar rights necessary or
material for use in connection with their respective businesses as described in
the Super 8-K and which the failure to so have could have a Material Adverse
Effect (collectively, the “Intellectual Property
Rights”).  Neither the Company nor any Subsidiary has received
a notice (written or otherwise) that the Intellectual Property Rights used by
the Company or any Subsidiary violate or infringe upon the rights of any Person
unless such notice has been resolved without a Material Adverse Effect. To the
knowledge of the Company, all such Intellectual Property Rights are enforceable
and there is no existing infringement by another Person of any of the
Intellectual Property Rights.  The Company and its Subsidiaries have
taken reasonable security measures to protect the secrecy, confidentiality and
value of all of their intellectual properties, except where failure to do so
could not, individually or in the aggregate, reasonably be expecting to have a
Material Adverse Effect.

     

    
      
        
        

      

      
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    (p)   Insurance.   Except
as set forth on Schedule 3.1(p), the Company and the Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the businesses in which the
Company and the Subsidiaries are engaged, including, but not limited to,
directors and officers insurance coverage at least equal to the aggregate
Subscription Amount.  Neither the Company nor any Subsidiary has any
reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business without a
significant increase in cost.

     

    (q)   Transactions With Affiliates
and Employees.  Except as set forth in the Super 8-K and/or as
set forth on Schedule
3.1(q), none of the officers or directors of the Company or any
Subsidiary and, to the knowledge of the Company, none of the employees of the
Company or any Subsidiary is presently a party to any transaction with the
Company or any Subsidiary (other than for services as employees, officers and
directors), including any contract, agreement or other arrangement providing for
the furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the knowledge of the Company, any entity in
which any officer, director, or any such employee has a substantial interest or
is an officer, director, trustee or partner, other than (i) for payment of
salary or consulting fees for services rendered, (ii) reimbursement for expenses
incurred on behalf of the Company or a Subsidiary and (iii) for other employee
benefits, including stock option or stock grant agreements under any stock plans
of the Company.

     

    (r)   No Disagreements with
Auditors and Lawyers.  To the knowledge of the Company, there
are no material disagreements of any kind presently existing, or reasonably
anticipated by the Company to arise, between the Company and the auditors and
lawyers formerly or presently employed by the Company.

     

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

     

    (t)   Private
Placement.  Assuming the accuracy of the Purchaser’s
representations and warranties set forth in Section 3.2, no
registration under the Securities Act is required for the offer and sale of the
Securities by the Company to the Purchaser as contemplated hereby.

     

    
      
        
        

      

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

     

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

     

    (w)   Disclosure.  All
disclosure furnished by or on behalf of the Company to the Purchaser regarding
the Company, its business and the transactions contemplated hereby, including
the Disclosure Schedules to this Agreement, is true and correct and does not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.  The Company
acknowledges and agrees that Purchaser has not made any representations or
warranties with respect to the transactions contemplated hereby other than those
specifically set forth in Section 3.2
hereof.

     

    (x)   No Integrated
Offering. Assuming the accuracy of the Purchaser’s representations and
warranties set forth in Section 3.2, neither
the Company, nor any of its affiliates, nor any Person acting on its or their
behalf has, directly or indirectly, made any offers or sales of any security or
solicited any offers to buy any security, under circumstances that would cause
this offering of the Securities to be integrated with prior offerings by the
Company for purposes of the Securities Act.

     

    (y)   Solvency.  As
set forth in the financial statements, included in the Super 8-K, for the period
from January 25, 2008 through December 31, 2008, the auditors for Zurvita, Inc.
included a “going concern” note.  The Company does not intend to incur
debts beyond its ability to pay such debts as they mature (taking into account
the timing and amounts of cash to be payable on or in respect of its
debt).  The Company has no knowledge of any facts or circumstances
which lead it to believe that it will file for reorganization or liquidation
under the bankruptcy or reorganization laws of any jurisdiction within one (1)
year from the Closing Date.

     

    (z)   Schedule 3.1(z) sets
forth as of the dates thereof all outstanding secured and unsecured Indebtedness
of the Company or any Subsidiary, or for which the Company or any Subsidiary has
commitments.  For the purposes of this Agreement, “Indebtedness” shall
mean (a) any liabilities for borrowed money or amounts owed (other than trade
accounts payable incurred in the ordinary course of business) in excess of
$25,000, (b) all guaranties, endorsements and other contingent obligations in
respect of Indebtedness of others, whether or not the same are or should be
reflected in the Company’s balance sheet (or the notes thereto), except
guaranties by endorsement of negotiable instruments for deposit or collection or
similar transactions in the ordinary course of business; and (c) the present
value of any lease payments in excess of $25,000 due under leases required to be
capitalized in accordance with GAAP.  Neither the Company nor any
Subsidiary is in default with respect to any Indebtedness.

     

    
      
        
        

      

      
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    (aa)   Tax Status. The
Company has timely filed all tax returns, reports, declarations, statements, and
other information required by law to be filed with or supplied to any taxing
authority with respect to the Taxes (as defined below) owed by the Company (the
“Tax
Returns”).  All Taxes due and payable on or before the Closing
have been paid or will be paid prior to the time they become
delinquent.  All Taxes that the Company is or was required by law to
withhold or collect have been duly withheld or collected and, to the extent
required, have been paid to the proper governmental entity.  The
Company has not been advised (a) that any of the Tax Returns have been or are
being examined or audited as of the date hereof, (b) that any such examination
or audit is currently threatened or contemplated, or (c) of any deficiency in
assessment or proposed judgment to its Taxes.  The Company has no
knowledge of any liability for any Taxes to be imposed upon its properties or
assets as of the date of this Agreement that are not adequately provided for on
the Balance Sheet.  The Company has delivered or made available to the
Purchaser true and complete copies of all federal income Tax Returns,
examination reports, and statements of deficiencies filed by, assessed against
or agreed to by the Company in the past three years.  The Company has
never been a member of a consolidated or affiliated group of corporations filing
a consolidated or combined income Tax Return, nor does the Company have any
liability for Taxes of any other person or entity.  The Company is not
a party to any tax allocation or sharing arrangement or tax indemnity
agreement.  For purposes of this Agreement, the term “Taxes”
shall mean all taxes, charges, fees, levies, or other similar assessments or
liabilities, including, without limitation, income, gross receipts, ad valorem,
premium, value-added, excise, real property, personal property, sales, use,
transfer, withholding, employment, payroll, and franchise taxes imposed by the
United States of America or any other governmental entity, and any interest,
fines, penalties, assessments, or additions to tax resulting from, attributable
to or incurred in connection with any tax or any contest or dispute
thereof.

     

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

     

    (cc)   Acknowledgment Regarding
Purchaser’s Purchase of Securities.  The Company acknowledges
and agrees that the Purchaser is acting solely in the capacity of an arm’s
length purchaser with respect to the Transaction Documents and the transactions
contemplated thereby.  The Company further acknowledges that Purchaser
is not acting as a financial advisor or fiduciary of the Company (or in any
similar capacity) with respect to the Transaction Documents and the transactions
contemplated thereby and any advice given by Purchaser or any of its
representatives or agents in connection with the Transaction Documents and the
transactions contemplated thereby is merely incidental to the Purchaser’s
purchase of the Securities.  The Company further represents to
Purchaser that the Company’s decision to enter into this Agreement and the other
Transaction Documents has been based solely on the independent evaluation of the
transactions contemplated hereby by the Company and its
representatives.

     

    
      
        
        

      

      
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    (dd)   Acknowledgement Regarding
Purchaser’s Trading Activity.  Anything in this Agreement or
elsewhere herein to the contrary notwithstanding, it is understood and
acknowledged by the Company (i) that Purchaser has not been asked to agree, nor
has Purchaser agreed, to desist from purchasing or selling, long and/or short,
securities of the Company, or “derivative” securities based on securities issued
by the Company or to hold the Securities for any specified term; (ii) that past
or future open market or other transactions by Purchaser, including Short Sales,
and specifically including, without limitation, Short Sales or “derivative”
transactions, before or after the closing of this or future private placement
transactions, may negatively impact the market price of the Company’s
publicly-traded securities; (iii) that Purchaser, and counter-parties in
“derivative” transactions to which Purchaser is a party, directly or indirectly,
presently may have a “short” position in the Common Stock, and (iv) that
Purchaser shall not be deemed to have any affiliation with or control over any
arm’s length counter-party in any “derivative” transaction.  The
Company further understands and acknowledges that (a)  Purchaser may
engage in hedging activities at various times during the period that the
Securities are outstanding, including, without limitation, during the periods
that the value of the Underlying Shares deliverable with respect to Securities
are being determined and (b) such hedging activities (if any) could reduce the
value of the existing stockholders' equity interests in the Company at and after
the time that the hedging activities are being conducted.  The Company
acknowledges that such aforementioned hedging activities do not constitute a
breach of any of the Transaction Documents.

     

    (ee)   Manipulation of
Price.  The Company has not, and to its knowledge no one acting
on its behalf has, (i) taken, directly or indirectly, any action designed to
cause or to result in the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of any of the
Securities, (ii) except in private transactions not involving a market maker,
sold, bid for, purchased, or paid any compensation for soliciting purchases of,
any of the securities of the Company  or (iii) paid or agreed to pay
to any person any compensation for soliciting another to purchase any other
securities of the Company, other than, in the case of clauses (ii) and (iii),
compensation paid to the Company’s placement agent in connection with the
placement of the Securities.

     

    3.2   Representations and
Warranties of the Purchaser.  Purchaser hereby represents and
warrants as of the date hereof and as of the Closing Date to the Company as
follows:

     

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

     

    
      
        
        

      

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

     

    (c)   Purchaser
Status.  At the time Purchaser was offered the Securities, it
was, and at the date hereof it is, and on each date on which it exercises any
Series B Warrants or converts any Series B Convertible Preferred Stock it will
be either: (i) an “accredited investor” as defined in Rule 501 under the
Securities Act or (ii) a “qualified institutional buyer” as defined in Rule 144A
(a) under the Securities Act.  Such Purchaser is not required to be
registered as a broker-dealer under Section 15 of the Exchange Act.

     

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

     

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

     

    (f)   Short Sales and
Confidentiality Prior To The Date Hereof.  Other than the
transaction contemplated hereunder, Purchaser has not directly or indirectly,
nor has any Person acting on behalf of or pursuant to any understanding with
Purchaser, executed any disposition, including Short Sales, in the securities of
the Company during the period commencing from the time that Purchaser first
received a term sheet (written or oral) from the Company or any other Person
setting forth the material terms of the transactions contemplated hereunder
until the date hereof (“Discussion
Time”).  Notwithstanding the foregoing, in the case of a
Purchaser that is a multi-managed investment vehicle whereby separate portfolio
managers manage separate portions of Purchaser's assets and the portfolio
managers have no direct knowledge of the investment decisions made by the
portfolio managers managing other portions of Purchaser's assets, the
representation set forth above shall only apply with respect to the portion of
assets managed by the portfolio manager that made the investment decision to
purchase the Securities covered by this Agreement.  Other than to
other Persons party to this Agreement, Purchaser has maintained the
confidentiality of all disclosures made to it in connection with this
transaction (including the existence and terms of this
transaction).

     

    
      
        
        

      

      
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    (g)   Risk
Factors.  Purchaser hereby agrees and acknowledges that it has
been informed of the following: (i) there are factors relating to the subsequent
transfer of any Securities acquired hereunder that could make the resale of such
Securities difficult; and (ii) there is no guarantee that Purchaser will realize
any gain from the purchase of the Securities.  The purchase of the
Securities involves a high degree of risk and is subject to many
uncertainties.  These risks and uncertainties may adversely affect the
Company’s business, operating results and financial condition.  In
such an event, the trading price for the Common Stock could decline
substantially and Purchaser could lose all or part of its
investment.

     

    (h)   Due
Diligence.  Purchaser hereby agrees and acknowledges that
Purchaser has reviewed the Super 8-K and has had an opportunity to meet with
representatives of the Company and to ask questions and receive answers to
Purchaser’s satisfaction regarding the Company’s proposed business and the
Company’s financial condition in order to assist Purchaser in evaluating the
merits and risks of purchasing the Securities.  All material documents
and information pertaining to the Company and the purchase of Securities
hereunder that have been requested by Purchaser have been made available to
Purchaser.

     

    (i)   Certain
Fees.  Purchaser has not employed any broker or finder or
incurred any liability for any brokerage or investment banking fees,
commissions, finders’ structuring fees, financial advisory fees or other similar
fees in connection with the Transaction Documents.

     

    ARTICLE
IV

    OTHER
AGREEMENTS OF THE PARTIES

     

    4.1   Transfer
Restrictions.

     

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

     

    
      
        
        

      

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

     

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

     

    (a)   The
Company acknowledges and agrees that Purchaser may from time to time pledge
pursuant to a bona fide margin agreement with a registered broker-dealer or
grant a security interest in some or all of the Securities to a financial
institution that is an “accredited investor” as defined in Rule 501(a) under the
Securities Act and who agrees to be bound by the provisions of this Agreement
and, if required under the terms of such arrangement, Purchaser may transfer
pledged or secured Securities to the pledgees or secured parties. Such a pledge
or transfer would not be subject to approval of the Company, provided, however,
the Company may require the Purchaser to provide to the Company an opinion of
counsel selected by the Purchaser and reasonably acceptable to the Company, the
form and substance of which opinion shall be reasonably satisfactory to the
Company to the effect that such transfer or pledge does not require registration
of such transferred or pledged Securities under the Securities
Act.  At Purchaser’s expense, the Company will execute and deliver
such reasonable documentation as a pledgee or secured party of Securities may
reasonably request in connection with a pledge or transfer of the
Securities.

     

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

     

    
      
        
        

      

      
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    4.3   Integration.  The
Company shall not sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in Section 2 of the Securities
Act) that would be integrated with the offer or sale of the Securities in a
manner that would require the registration under the Securities Act of the sale
of the Securities to the Purchaser.

     

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

     

    4.5   Use of
Proceeds.  Except as set forth on Schedule 4.5 attached
hereto, the Company shall use the net proceeds from the sale of the Securities
hereunder for working capital purposes and not for the satisfaction of any
portion of the Company’s debt (other than payment of trade payables in the
ordinary course of the Company’s business and prior practices, including
attorney’s and professional fees), to redeem any Common Stock or Common Stock
Equivalents or to settle any outstanding litigation.

     

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

     

    4.7   Indemnification of
Purchaser.  Subject to the provisions of this Section 4.7, the
Company will indemnify and hold Purchaser and its directors, officers,
shareholders, members, partners, employees and agents (and any other Persons
with a functionally equivalent role of a Person holding such titles
notwithstanding a lack of such title or any other title), each Person who
controls Purchaser (within the meaning of Section 15 of the Securities Act and
Section 20 of the Exchange Act), and the directors, officers, shareholders,
agents, members, partners or employees (and any other Persons with a
functionally equivalent role of a Person holding such titles notwithstanding a
lack of such title or any other title)

     

    
      
        
        

      

      
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    of such
controlling person (each, a “Purchaser Party”)
harmless from any and all losses, liabilities, obligations, claims,
contingencies, damages, costs and expenses, including all judgments, amounts
paid in settlements, court costs and reasonable attorneys’ fees and costs of
investigation that any such Purchaser Party may suffer or incur as a result of
or relating to (a) any breach of any of the representations, warranties,
covenants or agreements made by the Company in this Agreement or in the other
Transaction Documents or (b) any action instituted against Purchaser, or any of
its Affiliates, by any stockholder of the Company who is not an Affiliate of
such Purchaser, solely as a result of such Purchaser’s acquisition of the
Securities pursuant to this Agreement (unless such action is based upon a breach
of such Purchaser’s representations, warranties or covenants under the
Transaction Documents or any agreements or understandings such Purchaser may
have with any such stockholder or any violations by the Purchaser of state or
federal securities laws or any conduct by such Purchaser which constitutes
fraud, gross negligence, willful misconduct or malfeasance).  If any
action shall be brought against any Purchaser Party in respect of which
indemnity may be sought pursuant to this Agreement, such Purchaser Party shall
promptly notify the Company in writing, and the Company shall have the right to
assume the defense thereof with counsel of its own choosing reasonably
acceptable to the Purchaser Party.  Any Purchaser Party shall have the
right to employ separate counsel in any such action and participate in the
defense thereof, but the fees and expenses of such counsel shall be at the
expense of such Purchaser Party except to the extent that (i) the employment
thereof has been specifically authorized by the Company in writing, (ii) the
Company has failed after a reasonable period of time to assume such defense and
to employ counsel or (iii) in such action there is, in the reasonable opinion of
such separate counsel, a material conflict on any material issue between the
position of the Company and the position of such Purchaser Party, in which case
the Company shall be responsible for the reasonable fees and expenses of no more
than one (1) such separate counsel.  The Company will not be liable to
any Purchaser Party under this Agreement (i) for any settlement by a Purchaser
Party effected without the Company’s prior written consent, which shall not be
unreasonably withheld or delayed; or (ii) to the extent, but only to the extent
that a loss, claim, damage or liability is attributable to any Purchaser Party’s
breach of any of the representations, warranties, covenants or agreements made
by such Purchaser Party in this Agreement or in the other Transaction Documents,
except if such claim arises primarily from a breach of such Purchaser’s
representations, warranties or covenants under the Transaction Documents or any
agreements or understandings such Purchaser may have with any such stockholder
or any violations by the Purchaser of state or federal securities laws or any
conduct by such Purchaser which constitutes fraud, gross negligence, willful
misconduct or malfeasance.

     

    4.8   Reservation and Listing of
Securities.

     

    (a)   The
Company shall maintain a reserve from its duly authorized shares of Common Stock
for issuance pursuant to the Transaction Documents in such amount as may be
required to fulfill its obligations in full under the Transaction
Documents.

     

    (b)   If, on
any date, the number of authorized but unissued (and otherwise unreserved)
shares of Common Stock is less than the Required Minimum on such date, then the
Board of Directors of the Company shall use commercially reasonable efforts to
amend the Company’s certificate or articles of incorporation to increase the
number of authorized but unissued shares of Common Stock to at least the
Required Minimum at such time, as soon as possible and in any event not later
than the ninetieth (90th) day
after such date.

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    4.9   Participation in Future
Financing.

     

    (a)   From the
date hereof until the date that is the one (1) year anniversary of the Closing
Date, upon any issuance by the Company or any of its Subsidiaries of Common
Stock or Common Stock Equivalents (a “Subsequent
Financing”), Purchaser shall have the pro-rata right to participate in
the Subsequent Financing on the same terms, conditions and price provided for in
the Subsequent Financing.

     

    (b)   At least
ten (10) Trading Days prior to the closing of the Subsequent Financing, the
Company shall deliver to Purchaser a written notice of its intention to effect a
Subsequent Financing (“Pre-Notice”), which
Pre-Notice shall ask Purchaser if it wants to review the details of such
financing (such additional notice, a “Subsequent Financing
Notice”).  Upon the request of Purchaser, and only upon a
request by such Purchaser, for a Subsequent Financing Notice, the Company shall
promptly, but no later than one (1) Trading Day after such request, deliver a
Subsequent Financing Notice to Purchaser.  The Subsequent Financing
Notice shall describe in reasonable detail the proposed terms of such Subsequent
Financing, the amount of proceeds intended to be raised thereunder, the Person
or Persons through or with whom such Subsequent Financing is proposed to be
effected, and attached to which shall be a term sheet or similar document
relating thereto.

     

    (c)   If
Purchaser desires to participate in such Subsequent Financing, Purchaser must
provide written notice to the Company by not later than 5:30 p.m. (New York City
time) on the 10th Trading Day after Purchaser has received the Pre-Notice that
the Purchaser is willing to participate in the Subsequent Financing, the amount
of the Purchaser’s participation, and that the Purchaser has such funds ready,
willing, and available for investment on the terms set forth in the Subsequent
Financing Notice.  If the Company receives no notice from a Purchaser
as of such tenth (10th)
Trading Day, such Purchaser shall be deemed to have notified the Company that it
does not elect to participate.

     

    (d)   If by
5:30 p.m. (New York City time) on the tenth (10th)
Trading Day after the Purchaser has received the Pre-Notice, notifications by
Purchaser of its willingness to participate in the Subsequent Financing (or to
cause its designees to participate) is, in the aggregate, less than the total
amount of the Subsequent Financing, then the Company may effect the remaining
portion of such Subsequent Financing on the terms and with the Persons set forth
in the Subsequent Financing Notice.

     

    (e)   Notwithstanding
the foregoing, this Section 4.9 shall not
apply in respect of (i) an Exempt Issuance, and (ii) shares of Common Stock
issued solely in connection with dividends required to be paid under the terms
and conditions of the Series B Convertible Preferred Stock, if any.

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    4.10   Variable Rate
Transactions.  From the date hereof until the twelve (12) month
anniversary of the Closing Date, the Company shall be prohibited from effecting
or entering into an agreement to effect any Subsequent Financing involving a
“Variable Rate Transaction,”  The term “Variable Rate Transaction”
shall mean a transaction in which the Company issues or sells (i) any debt or
equity securities that are convertible into, exchangeable or exercisable for, or
include the right to receive additional shares of Common Stock either at a
conversion, exercise or exchange rate or other price that is based upon and/or
varies with the trading prices of or quotations in the public secondary market
for the shares  of Common Stock at any time after the initial issuance
of such debt or equity securities, or  (ii) enters into any agreement,
including, but not limited to, an equity line of credit, whereby the Company may
sell securities at a future determined price.

     

    4.11   Form D; Blue Sky
Filings.  The Company agrees to timely file a Form D with
respect to the Securities as required under Regulation D and to provide a copy
thereof, promptly upon request of Purchaser.  The Company shall take
such action as the Company shall reasonably determine is necessary in order to
obtain an exemption for, or to qualify the Securities for, sale to the Purchaser
at the Closing under applicable securities or “Blue Sky” laws of the states of
the United States, and shall provide evidence of such actions promptly upon
request of Purchaser.

     

    4.12   Short Sales and
Confidentiality After The Date Hereof.  The Purchaser covenants
that neither it nor any Affiliate acting on its behalf or pursuant to any
understanding with it will execute any Short Sales during the period commencing
at the Discussion Time and ending at the time that the transactions contemplated
by this Agreement are first publicly announced.  The Purchaser
covenants that until such time as the transactions contemplated by this
Agreement are publicly disclosed by the Company, such Purchaser will maintain
the confidentiality of all disclosures made to it in connection with this
transaction (including the existence and terms of this
transaction).  Notwithstanding the foregoing, Purchaser does not make
any representation, warranty or covenant hereby that it will not engage in Short
Sales in the securities of the Company after the time that the transactions
contemplated by this Agreement are first publicly announced.

     

    4.13   Securities Laws Disclosure
Publicity.  The Company shall, within 4 Business Days of the
Closing Date, file the Super 8-K with the Commission.  The Company and
each Purchaser shall consult with each other in issuing any other press releases
with respect to the transactions contemplated hereby, and neither the Company
nor any Purchaser shall issue any such press release nor otherwise make any such
public statement without the prior consent of the Company, with respect to any
press release of any Purchaser, or without the prior consent of the Purchaser,
with respect to any press release of the Company, which consent shall not
unreasonably be withheld or delayed, except if such disclosure is required by
law, in which case the disclosing party shall promptly provide the other party
with prior notice of such public statement or
communication.  Notwithstanding the foregoing, the Company shall not
publicly disclose the name of any Purchaser, or include the name of any
Purchaser in any filing with the Commission or any regulatory agency or Trading
Market, without the prior written consent of such Purchaser, except: (a) as
required by federal securities law in connection with (i) any registration
statement and (ii) the filing of final Transaction Documents (including
signature pages thereto) with the Commission and (b) to the extent such
disclosure is required by law or Trading Market regulations, in which case the
Company shall provide the Purchasers with prior notice of such disclosure
permitted under this clause (b).

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

    4.14   Furnishing of Information;
Public Information.

     

    (a)    Until the
earliest of the time that (i) Purchaser does not own any Securities or (ii) the
Series B Warrants have expired, the Company covenants to timely file (or obtain
extensions in respect thereof and file within the applicable grace period) all
reports required to be filed by the Company after the date hereof pursuant to
the Exchange Act.  As long Purchaser owns Securities, if the Company
is not required to file reports pursuant to the Exchange Act, it will prepare
and furnish to the Purchasers and make publicly available in accordance with
Rule 144(c) such information as is required for the Purchaser to sell the
Securities under Rule 144.  The Company further covenants that it will
take such further action as any holder of Securities may reasonably request, to
the extent required from time to time to enable such Person to sell such
Securities without registration under the Securities Act within the requirements
of the exemption provided by Rule 144.

     

    (b)    At any time
during the period commencing from the one year anniversary of the date hereof
and ending on the earlier of (i) at such time that all of the Securities may be
sold without the requirement for the Company to be in compliance with Rule
144(c)(1) and otherwise without restriction or limitation pursuant to Rule 144
and (ii) two years from the date hereof, if the Company shall fail for any
reason to satisfy the current public information requirement under Rule 144(c)
(a “Public Information
Failure”) then, in addition to such Purchaser’s other available remedies,
the Company shall pay to a Purchaser, in cash, as partial liquidated damages and
not as a penalty, by reason of any such delay in or reduction of its ability to
sell the Securities, an amount in cash equal to one percent (1%) of the
aggregate Purchase Price of such Purchaser’s Securities on the day of a Public
Information Failure and on every thirtieth (30th) day
(pro rated for periods totaling less than thirty days) thereafter until the
earlier of (a) the date such Public Information Failure is cured and (b) such
time that such public information is no longer required  for the Purchaser
to transfer the Underlying Shares pursuant to Rule 144.  The payments to
which a Purchaser shall be entitled pursuant to this Section are referred to
herein as “Public
Information Failure Payments.”  Public Information Failure Payments shall be paid
on the earlier of (i) the last day of the calendar month during which such
Public Information Failure Payments are incurred
and (ii) the fifth (5th)
Business Day after the event or failure giving rise to the Public Information
Failure Payments is
cured.  In the event the Company fails to make Public Information
Failure Payments in
a timely manner, such Public Information Failure Payments shall bear
interest at the rate of 1.0% per month (prorated for partial months) until paid
in full. Nothing herein shall limit such Purchaser’s right to pursue actual
damages for the Public Information Failure, and such Purchaser shall have the
right to pursue all remedies available to it at law or in equity including,
without limitation, a decree of specific performance and/or injunctive
relief.

     

    ARTICLE
V

    MISCELLANEOUS

     

    5.1   Fees and
Expenses.  Except as expressly set forth in the Transaction
Documents to the contrary, each party shall pay the fees and expenses of its
advisers, counsel, accountants and other experts, if any, and all other expenses
incurred by such party incident to the negotiation, preparation, execution,
delivery and performance of this Agreement.  The Company shall pay all
transfer agent fees, stamp taxes and other taxes and duties levied in connection
with the delivery of any Securities to the Purchaser.

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

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

     

    5.3   Notices.  Any
and all notices or other communications or deliveries required or permitted to
be provided hereunder shall be in writing and shall be deemed given and
effective on the earliest of (a) the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number set forth on
the signature pages attached hereto prior to 5:30 p.m. (New York City time) on a
Trading Day, (b) the next Trading Day after the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile number set
forth on the signature pages attached hereto on a day that is not a Trading Day
or later than 5:30 p.m. (New York City time) on any Trading Day, (c) the second
(2nd)
Trading Day following the date of mailing, if sent by U.S. nationally recognized
overnight courier service, or (d) upon actual receipt by the party to whom such
notice is required to be given.  The address for such notices and
communications shall be as set forth on the signature pages attached
hereto.

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

     

    5.8   Governing
Law.  All questions concerning the construction, validity,
enforcement and interpretation of the Transaction Documents shall be governed by
and construed and enforced in accordance with the internal laws of the State of
Florida, without regard to the principles of conflicts of law
thereof.  Each party agrees that all legal proceedings concerning the
interpretations, enforcement and defense of the transactions contemplated by
this Agreement and any other Transaction Documents (whether brought against a
party hereto or its respective affiliates, directors, officers, shareholders,
employees or agents) shall be commenced exclusively in the state and federal
courts sitting in Hillsborough County, Florida.  Each party hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in Hillsborough County, Florida for the adjudication of any
dispute hereunder or in connection herewith or with any transaction contemplated
hereby or discussed herein (including with respect to the enforcement of any of
the Transaction Documents), and hereby irrevocably waives, and agrees not to
assert in any suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of any such court, that such suit, action or
proceeding is improper or is an inconvenient venue for such
proceeding.  Each party hereby irrevocably waives personal service of
process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof via registered or certified mail or
overnight delivery (with evidence of delivery) to such party at the address in
effect for notices to it under this Agreement and agrees that such service shall
constitute good and sufficient service of process and notice
thereof.  Nothing contained herein shall be deemed to limit in any way
any right to serve process in any other manner permitted by law.  The
parties hereby waive all rights to a trial by jury.  If either party
shall commence an action or proceeding to enforce any provisions of the
Transaction Documents, then the prevailing party in such action or proceeding
shall be reimbursed by the other party for its reasonable attorneys’ fees and
other costs and expenses incurred with the investigation, preparation and
prosecution of such action or proceeding.

     

    5.9   Survival.  The
representations, warranties, covenants and other agreements contained herein
shall survive the Closing and the delivery, exercise and/or conversion of the
Securities, as applicable for a period of two (2) years from the date of this
Agreement.

     

    5.10   Execution.  This
Agreement may be executed in two (2) or more counterparts, all of which when
taken together shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to the
other party, it being understood that both parties need not sign the same
counterpart.  In the event that any signature is delivered by
facsimile transmission or by e-mail delivery of a “.pdf” format data file, such
signature shall create a valid and binding obligation of the party executing (or
on whose behalf such signature is executed) with the same force and effect as if
such facsimile or “.pdf” signature page were an original thereof.

     

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

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

     

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

     

    5.13   Construction.  The
parties agree that each of them and/or their respective counsel has reviewed and
had an opportunity to revise the Transaction Documents and, therefore, the
normal rule of construction to the effect that any ambiguities are to be
resolved against the drafting party shall not be employed in the interpretation
of the Transaction Documents or any amendments hereto.

     

    (Remainder
of Page Intentionally Left Blank)

     (Signature
Pages Follow)

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

     

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

     

    
      	
              ZURVITA
      HOLDINGS, INC.

            	
              Address for Notice:

            
	 	 
	 	 
	 	 
	 	 
	
              By:
      /s/ Jay
      Shafer                                        
      

              Name: Jay
      Shafer

              Title:  
      Co-Chief Executive Officer

               

            	
              800
      Gessner

              Houston,
      Texas  77024

               

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

               

               

              Darrin
      M. Ocasio, Esq.

              Sichenzia
      Ross Friedman Ference LLP

              61
      Broadway, 32nd
      Floor

              New
      York, New York  10006

              Tel:
      (212) 930-9700

              Fax:
      (212) 930-9725

            	 
      

    

    

    (Remainder
of Page Intentionally Left Blank)

    (Signature Page For Purchaser
Follows)

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

     

    [PURCHASER
SIGNATURE PAGES TO SECURITIES

    PURCHASE
AGREEMENT]

    

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

     

    Name of
Purchaser:  Vicis Capital Master Fund

     

    Signature of Authorized Signatory of
Purchaser: 

     

    /s/
Christopher
Phillips                                                             

     

    Name of
Authorized Signatory:    Christopher Phillips

     

    Title of
Authorized Signatory:      Managing
Director

     

    Email
Address of Purchaser:        
cphillips@viciscapital.com

     

    Facsimile
Number of Purchaser:    (212) 909-4601

     

    Jurisdiction
of Organization of Purchaser: Cayman Islands

     

    Address
for Notice of Purchaser:

     

    Vicis
Capital Master Fund

    Attn:
Chris Phillips

    445 Park
Avenue, 16th Floor

    New York,
NY  10022

    

    

    

    Address
for Delivery of Securities for Purchaser (if not same as above):

    

    Vicis
Capital Master Fund

    Attn:
Keith Hughes

    445 Park
Avenue, 16th Floor

    New York,
NY  10022

     

    28zurvita_8k-ex1002.htm

    Exhibit
10.2

    CERTIFICATE
OF DESIGNATIONS,

    PREFERENCES
AND RIGHTS

    of

    SERIES
B CONVERTIBLE PREFERRED STOCK

    of

    ZURVITA
HOLDINGS, INC.

    

               Zurvita
Holdings, Inc. a corporation organized and existing under the laws of the State
of Delaware (“Corporation”), hereby
certifies that the Board of Directors of the Corporation (the “Board of Directors” or the
“Board”), pursuant to
authority of the Board of Directors as required by applicable corporate law, and
in accordance with the provisions of its certificate of incorporation and
bylaws, has and hereby authorizes a series of the Corporation’s previously
authorized Preferred Stock, par value $.0001 per share (the “Preferred Stock”), and hereby
states the designation and number of shares, and fixes the rights, preferences,
privileges, powers and restrictions thereof, as follows:

    

    Capitalized
terms used and not otherwise immediately defined are defined in Section 9
below.

    

    1.   Designation, Amount and Par
Value. The series of Preferred Stock shall be designated as its Series B
Convertible Preferred Stock (the “Series B Convertible
Preferred Stock”) and the number of shares so designated shall be
2,000,000.

     

    2.   Stated
Value.  The par value of each issued share of Series B
Convertible Preferred Stock shall be $.0001 per share, and the stated value of
each issued share of Series B Convertible Preferred Stock shall be deemed to be
$1.00 (the “Stated
Value”).

     

    3.   Voting.

     

    a.   Voting
Rights.  Except as otherwise provided herein or as otherwise
required by law, each holder of the shares of Series B Convertible Preferred
Stock shall have the right to the number of votes equal to the number of
Conversion Shares then issuable upon conversion of the Series B Convertible
Preferred Stock held by such Holder in all matters as to which shareholders are
required or permitted to vote, and with respect to such vote, such Holder shall
have full voting rights and powers equal to the voting rights and powers of the
holders of Common Stock, and shall be entitled, notwithstanding any provision in
these Articles as amended hereby, to vote, together with the holders of Common
Stock as a single class, with respect to any question upon which holders of
Common Stock have the right to vote; provided, however, as to any
Holder the right to vote such shares shall be limited to the number of shares
issuable to such Holder pursuant to Section 5(f) on the
record date for such vote.  To the extent permitted under applicable
corporate law, but subject to Section 3(b) below,
the Corporation’s shareholders may take action by the affirmative vote of a
majority of all shareholders of this Corporation entitled to vote on an
action.  Without limiting the generality of the foregoing the
Corporation may take any of the actions by the affirmative vote of the holders
of a majority of the Series B Convertible Preferred Stock and the Common Stock
and other voting Common Stock Equivalents, voting together as one class, with
each holder of Series B Convertible Preferred Stock having the number of votes
set forth above.

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    b.   Limitations on Corporate
Actions.  Notwithstanding anything to the contrary in Section 3(a) above,
as long as any shares of Series B Convertible Preferred Stock are outstanding,
the Corporation shall not, without the written consent or affirmative vote of
the holders of no-less than fifty one percent (51%) of the then-outstanding
Stated Value of the Series B Convertible Preferred Stock consenting or voting
(as the case may be) as a separate class from the Common Stock, the Corporation
shall not, either directly or by amendment, merger, consolidation or
otherwise:

     

    (i)   amend its
certificate or articles of incorporation in any manner that adversely affects
the rights of the Holders;

     

    (ii)   alter or
change adversely the voting or other powers, preferences, rights, privileges, or
restrictions of the Series B Convertible Preferred Stock contained herein or
alter or amend this Certificate of Designation;

     

    (iii)   increase
the authorized number of shares of Preferred Stock or  Series B
Convertible Preferred Stock or reinstate or issue any other series of preferred
stock;

     

    (iv)   redeem,
purchase or otherwise acquire directly or indirectly any Junior Securities or
any shares pari
passu with the
Series B Convertible Preferred Stock;

     

    (v)   directly
or indirectly pay or declare any dividend or make any distribution in respect
of, any Junior Securities, or set aside any monies for the purchase or
redemption (through a sinking fund or otherwise) of any Junior Securities or any
shares pari
passu with the
Series B Convertible Preferred Stock;

     

    (vi)   authorize
or create any class of stock ranking as to dividends, redemption or distribution
of assets upon a Liquidation (as defined in Section 4 below)
senior to or otherwise pari passu with the Series
B Convertible Preferred Stock; or

     

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

     

    4.   Liquidation, Dissolution, or
Winding-Down.

     

    a.   Payments to Holders of
Series B Convertible Preferred Stock.  Upon any liquidation,
dissolution or winding-down of the Corporation, whether voluntary or involuntary
(a “Liquidation”), the
holders of the shares of Series B Convertible Preferred Stock shall be paid in
cash, before any payment shall be paid to the holders of Common Stock, or any
other Junior Stock, an amount for each share of Series B Convertible Preferred
Stock held by such holder equal to the sum of the Stated Value thereof (such
applicable amount payable with respect to a share of Series B Convertible
Preferred Stock sometimes being referred to as the “Individual Series B Preferred
Liquidation Preference Payment” and with respect to all shares of Series
B Convertible Preferred Stock in the aggregate sometimes being referred to as
the “Aggregate Series B
Liquidation Preference Payment”).  If, upon such liquidation,
dissolution or winding-up of the Corporation, whether voluntary or involuntary,
the assets to be distributed among the holders of shares of Series B Convertible
Preferred Stock shall be insufficient to permit payment to the holders of Series
B Convertible Preferred Stock of an aggregate amount equal to the Aggregate
Series B Liquidation Preference Payment, then the entire assets of the
Corporation to be so distributed shall be distributed ratably among the holders
of Series B Convertible Preferred Stock (based on the Individual Series B
Preferred Liquidation Preference Payments due to the respective holders of
Series B Convertible Preferred Stock).

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    b.   Payments to Holders of
Junior Stock.  After the payment of all preferential amounts
required to be paid to the holders of the Series B Convertible Preferred Stock
and any other class or series of stock of the Corporation ranking on liquidation
senior to or on a parity with the Series B Convertible Preferred Stock, the
holders of shares of Junior Stock then outstanding shall be entitled to receive
the remaining assets of the Corporation available for distribution to its
stockholders as otherwise set forth in the Corporation’s certificate or articles
of incorporation.

     

    5.   Conversion.  The
holders of Series B Convertible Preferred Stock shall have
the  conversion rights as follows.

     

    a.   Right to
Convert.  Each share of Series B Convertible Preferred Stock
shall be convertible, at the option of the holder thereof, at any time after the
Original Issue Date (subject to the limitations set forth in Section 5.f. below),
and without the payment of additional consideration by the holder thereof, into
such number of fully-paid and nonassessable shares of Common Stock as is
determined by dividing the Stated Value per share, by the Series B Conversion
Price in effect at the time of conversion.  The “Series B Conversion
Price” shall
be twenty-five cents ($0.25); provided, however, that the Series B Conversion
Price, and the rate at which shares of Series B Convertible Preferred Stock may
be converted into shares of Common Stock, shall be subject to adjustment as
provided in Section
6 below. Shares of Series B Convertible Preferred Stock converted into
Common Stock or redeemed in accordance with the terms hereof shall be canceled
and shall not be reissued.

     

    b.   Holders
shall effect conversions by providing the Corporation with the form of
conversion notice attached hereto as Annex A (a “Notice of
Conversion”).  Each Notice of Conversion shall specify the
number of shares of Series B Convertible Preferred Stock to be converted, the
number of shares of Series B Convertible Preferred Stock owned prior to the
conversion at issue, the number of shares of Series B Convertible Preferred
Stock owned subsequent to the conversion at issue and the date on which such
conversion is to be effected, which date may not be prior to the date the
applicable Holder delivers by facsimile such Notice of Conversion to the
Corporation (such date, the “Conversion
Date”).  If no Conversion Date is specified in a Notice of
Conversion, the Conversion Date shall be the date that such Notice of Conversion
to the Corporation is deemed delivered hereunder.  To effect
conversions of shares of Series B Convertible Preferred Stock, a Holder shall
not be required to surrender the certificate(s) representing such shares of
Series B Convertible Preferred Stock to the Corporation unless all of the shares
of Series B Convertible Preferred Stock represented thereby are so converted, in
which case such Holder shall deliver the certificate representing such shares of
Series B Convertible Preferred Stock promptly following the Conversion Date at
issue. Certificates representing the Series B Convertible Preferred Stock shall
have the following legend:

     

    THE
HOLDER AND ANY ASSIGNEE OR TRANSFEREE, BY ACCEPTANCE OF THIS STOCK CERTIFICATE,
ACKNOWLEDGE AND AGREE THAT, PURSUANT TO SECTION 5.B. OF THE CERTIFICATE OF
DESIGNATIONS, PREFERENCES AND RIGHTS OF THE SERIES B CONVERTIBLE PREFERRED
STOCK, THE NUMBER OF SHARES REFLECTED ON THE FACE OF THIS CERTIFICATE MAY NOT BE
THE ACTUAL NUMBER OF SHARES HELD BY THE HOLDER OR ASSIGNEE.  PLEASE
INQUIRE WITH THE CORPORATION AS TO THE ACTUAL NUMBER OF SHARES EVIDENCED BY THIS
CERTIFICATE.

     

    
      
        
        

      

      
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    c.   Fractional
Shares.  No fractional shares of Common Stock shall be issued
upon conversion of the Series B Convertible Preferred Stock.  In lieu
of any fractional shares to which the holder would otherwise be entitled, the
Corporation shall pay cash equal to such fraction multiplied by the fair market
value of a share of Common Stock as determined in good faith by the Board of
Directors, or round-up to the next whole number of shares, at the Corporation’s
option.  Whether or not fractional shares would be issuable upon such
conversion shall be determined on the basis of the total number of shares of
Series B Convertible Preferred Stock the holder is at the time converting into
Common Stock and the aggregate number of shares of Common Stock issuable upon
such conversion.

     

    d.   Mechanics of
Conversion.

     

    i.   Delivery of Certificate Upon
Conversion.  Not later than five (5) Trading Days after each
Conversion Date (the “Share
Delivery Date”), the Corporation shall deliver, or cause to be delivered,
to the converting Holder a certificate or certificates representing the number
of shares of Common Stock being acquired upon the conversion of shares of Series
B Convertible Preferred Stock.  If in the case of any Notice of
Conversion such certificate or certificates are not delivered to or as directed
by the applicable Holder by the fifth (5th)
Trading Day after the Conversion Date, the applicable Holder shall be entitled
to elect by written notice to the Corporation at any time on or before its
receipt of such certificate or certificates, to rescind such Conversion Notice
by written notice to the Corporation, in which event the Corporation shall
promptly return to such Holder any original Series B Convertible Preferred Stock
certificate delivered to the Corporation and such Holder shall promptly return
any Common Stock certificates representing the shares of Series B Convertible
Preferred Stock tendered for conversion to the Corporation.

     

    ii.   Obligation Absolute;
Damages.  The Corporation’s obligation to issue and deliver the
Conversion Shares upon conversion of Series B Convertible Preferred Stock in
accordance with the terms hereof are absolute and unconditional, irrespective of
any action or inaction by a Holder to enforce the same, any waiver or consent
with respect to any provision hereof, the recovery of any judgment against any
Person or any action to enforce the same, or any setoff, counterclaim,
recoupment, limitation or termination, or any breach or alleged breach by such
Holder or any other Person of any obligation to the Corporation; provided, however, that such
delivery shall not operate as a waiver by the Corporation of any such action
that the Corporation may have against such Holder.  If the Corporation
fails to deliver to a Holder such certificate or certificates pursuant to this
Section on the fifth (5th)
Trading Day after the Share Delivery Date applicable to such conversion, the
Corporation shall pay to such Holder, in cash, as liquidated damages and not as
a penalty, for each $1,000 of Stated Value of Series B Convertible Preferred
Stock being converted, $10 per Trading Day (increasing to $20 per Trading Day on
the tenth (10th)
Trading Day after the Share Deliver Date) for each Trading Day after such fifth
(5th)
Trading Day after the Share Delivery Date until such certificates are
delivered.

     

    e.   Reservation of Shares
Issuable Upon Conversion. The Corporation covenants that it will at all
times reserve and keep available out of its authorized and unissued shares of
Common Stock for the sole purpose of issuance upon conversion of the Series B
Convertible Preferred Stock, free from preemptive rights or any other actual
contingent purchase rights of Persons other than the Holders of the Series B
Convertible Preferred Stock, not less than such aggregate number of shares of
the Common Stock as shall (subject to the terms and conditions in the Securities
Purchase Agreement) be issuable  upon the conversion of all
outstanding shares of Series B Convertible Preferred Stock.  The
Corporation covenants that all shares of Common Stock that shall be so issuable
shall, upon issue, be duly authorized, validly issued, fully paid and
nonassessable.

     

    
      
        
        

      

      
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    f.   Beneficial Ownership
Limitation.  The Corporation shall not effect any conversion of
the Series B Convertible Preferred Stock, and a Holder shall not have the right
to convert any portion of the Series B Convertible Preferred Stock, to the
extent that, after giving effect to the conversion set forth on the applicable
Notice of Conversion, such Holder (together with such Holder’s Affiliates, and
any other person or entity acting as a group together with such Holder or any of
such Holder’s Affiliates) would beneficially own in excess of the Beneficial
Ownership Limitation (as defined below). For purposes of the foregoing sentence,
the number of shares of Common Stock beneficially owned by such Holder and its
Affiliates shall include the number of shares of Common Stock issuable upon
conversion of the Series B Convertible Preferred Stock with respect to which
such determination is being made, but shall exclude the number of shares of
Common Stock which are issuable upon (A) conversion of the remaining,
unconverted Stated Value of Series B Convertible Preferred Stock beneficially
owned by such Holder or any of its Affiliates and (B) exercise or conversion of
the unexercised or unconverted portion of any other securities of the
Corporation subject to a limitation on conversion or exercise analogous to the
limitation contained herein beneficially owned by such Holder or any of its
Affiliates.  Except as set forth in the preceding sentence, for
purposes of this Section 5(f),
beneficial ownership shall be calculated in accordance with Section 13(d) of the
Exchange Act and the rules and regulations promulgated thereunder.  To
the extent that the limitation contained in this Section applies, the
determination of whether the Series B Convertible Preferred Stock is convertible
(in relation to other securities owned by such Holder together with any
Affiliates) and of how many shares of Series B Convertible Preferred Stock are
convertible shall be in the sole discretion of such Holder, and the submission
of a Notice of Conversion shall be deemed to be such Holder’s determination of
whether the shares of Series B Convertible Preferred Stock may be converted (in
relation to other securities owned by such Holder together with any Affiliates)
and how many shares of the Series B Convertible Preferred Stock are convertible,
in each case subject to such aggregate percentage limitations.  To
ensure compliance with this restriction, each Holder will be deemed to represent
to the Corporation each time it delivers a Notice of Conversion that such Notice
of Conversion has not violated the restrictions set forth in this paragraph and
the Corporation shall have no obligation to verify or confirm the accuracy of
such determination.  In addition, a determination as to any group
status as contemplated above shall be determined in accordance with Section
13(d) of the Exchange Act and the rules and regulations promulgated
thereunder.  For purposes of this Section, in determining the number
of outstanding shares of Common Stock, a Holder may rely on the number of
outstanding shares of Common Stock as stated in the most recent of the
following: (A) the Corporation’s most recent Form 10-Q or Form 10-K, as the case
may be, (B) a more recent public announcement by the Corporation or (C) a more
recent notice by the Corporation or the Corporation’s transfer agent setting
forth the number of shares of Common Stock outstanding. Upon the written or oral
request of a Holder, the Corporation shall within two (2) Trading Days confirm
orally and in writing to such Holder the number of shares of Common Stock then
outstanding.  In any case, the number of outstanding shares of Common
Stock shall be determined after giving effect to the conversion or exercise of
securities of the Corporation, including the Series B Convertible Preferred
Stock, by such Holder or its Affiliates since the date as of which such number
of outstanding shares of Common Stock was reported.  The “Beneficial Ownership
Limitation” shall be 4.99% of the number of shares of the Common Stock
outstanding immediately after giving effect to the issuance of shares of Common
Stock issuable upon conversion of Series B Convertible Preferred Stock held by
the applicable Holder.  The Beneficial Ownership Limitation provisions
of this Section may be waived by such Holder, at the election of such Holder,
upon not less than sixty one (61) days’ prior notice to the Corporation, to
change the Beneficial Ownership Limitation to 9.99% of the number of shares of
the Common Stock outstanding immediately after giving effect to the issuance of
shares of Common Stock upon conversion of Series B Convertible Preferred Stock
held by the applicable Holder and the provisions of this Section shall continue
to apply.  Upon such a change by a Holder of the Beneficial Ownership
Limitation from such 4.99% limitation to such 9.99% limitation, the Beneficial
Ownership Limitation shall not be further waived by such Holder. The limitations
contained in this paragraph shall apply to a successor holder of Series B
Convertible Preferred Stock.

     

    6.   Certain
Adjustments.

     

    a)   Stock Dividends and Stock
Splits.  If the Corporation, at any time while this Series B
Convertible Preferred Stock is outstanding: (A) pays a stock dividend or
otherwise makes a distribution or distributions payable in shares of Common
Stock on shares of Common Stock or any other Common Stock Equivalents (which,
for avoidance of doubt, shall not include any shares of Common Stock issued by
the Corporation upon conversion of, or payment of a dividend on, this Series B
Convertible Preferred Stock); (B) subdivides outstanding shares of Common Stock
into a larger number of shares; (C) combines (including by way of a reverse
stock split) outstanding shares of Common Stock into a smaller number of shares;
or (D) issues, in the event of a reclassification of shares of the Common Stock,
any shares of capital stock of the Corporation, then the Series B Conversion
Price shall be multiplied by a fraction of which the numerator shall be the
number of shares of Common Stock (excluding any treasury shares of the
Corporation) outstanding immediately before such event and of which the
denominator shall be the number of shares of Common Stock outstanding
immediately after such event. Any adjustment made pursuant to this Section 6(a) shall
become effective immediately after the record date for the determination of
stockholders entitled to receive such dividend or distribution and shall become
effective immediately after the effective date in the case of a subdivision,
combination or re-classification.

     

    
      
        
        

      

      
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    b)   Subsequent Equity
Sales.  If, at any time while the Series B Convertible
Preferred Stock is outstanding, the Corporation or any Subsidiary, as
applicable, sells, grants or otherwise issues (or announces any sale, grant or
other issuance related to the foregoing) any Common Stock or Common Stock
Equivalents entitling any Person to acquire shares of Common Stock at an
effective price per share that is lower than the then Conversion Price (such
lower price, the “Base
Conversion Price” and such issuances collectively, a “Dilutive Issuance”) (if the
holder of the Common Stock or Common Stock Equivalents so issued shall at any
time, whether by operation of purchase price adjustments, reset provisions,
floating conversion, exercise or exchange prices or otherwise, or due to
warrants, options or rights per share which are issued in connection with such
issuance, be entitled to receive shares of Common Stock at an effective price
per share that is lower than the Conversion Price, such issuance shall be deemed
to have occurred for less than the Conversion Price on such date of the Dilutive
Issuance), then the Conversion Price shall be reduced to equal the Base
Conversion Price. Notwithstanding the foregoing, no adjustment will be made
under this Section
6(b) in connection with an Exempt Issuance.  The Corporation
shall notify the Holders in writing, no later than the third (3rd)
Business Day following the issuance of any Common Stock or Common Stock
Equivalents subject to this Section 6(b),
indicating therein the applicable issuance price, or applicable reset price,
exchange price, conversion price and other pricing terms (such notice, the
“Dilutive Issuance
Notice”).  For purposes of clarification, whether or not the
Corporation provides a Dilutive Issuance Notice pursuant to this Section 6(b), upon
the occurrence of any Dilutive Issuance, the Holders are entitled to receive a
number of Conversion Shares based upon the Base Conversion Price on or after the
date of such Dilutive Issuance, regardless of whether a Holder accurately refers
to the Base Conversion Price in the Notice of Conversion.

     

    c)   Subsequent Rights
Offerings.  If the Company, at any time while the Series B
Convertible Preferred Stock is outstanding, shall issue rights, options or
warrants to all holders of Common Stock (and not to Holders) entitling them to
subscribe for or purchase shares of Common Stock at a price per share less than
the VWAP as of the record date mentioned below, then the Conversion Price shall
be multiplied by a fraction, of which the denominator shall be the number of
shares of the Common Stock outstanding on the date of issuance of such rights or
warrants plus the number of additional shares of Common Stock offered for
subscription or purchase, and of which the numerator shall be the number of
shares of the Common Stock outstanding on the date of issuance of such rights,
options or warrants plus the number of shares which the aggregate offering price
of the total number of shares so offered (assuming receipt by the Company in
full of all consideration payable upon exercise of such rights, options or
warrants) would purchase at such VWAP.  Such adjustment shall be made
whenever such rights, options or warrants are issued, and shall become effective
immediately after the record date for the determination of stockholders entitled
to receive such rights, options or warrants.

     

    d)   Pro Rata
Distributions.  If the Corporation, at any time while the
Series B Convertible Preferred Stock is outstanding, distributes to all holders
of Common Stock (and not to Holders) evidences of its indebtedness or assets
(including cash and cash dividends) (other than stock dividends, which shall be
subject to Section
6(a)) then, in each such case, the Conversion Price shall be adjusted by
multiplying such Conversion Price in effect immediately prior to the record date
fixed for determination of stockholders entitled to receive such distribution by
a fraction of which the denominator shall be the VWAP determined as of the
record date mentioned above, and of which the numerator shall be such VWAP on
such record date less the then fair market value at such record date of the
portion of such assets, evidence of indebtedness or rights or warrants so
distributed applicable to one outstanding share of the Common Stock as
determined by the Board of Directors of the Corporation in good
faith.  In either case the adjustments shall be described in a
statement delivered to the Holders describing the portion of assets or evidences
of indebtedness so distributed or such subscription rights applicable to one
share of Common Stock.  Such adjustment shall be made whenever any
such distribution is made and shall become effective immediately after the
record date mentioned above.

     

    
      
        
        

      

      
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    e)   Fundamental
Transaction.  If, at any time while the Series B Convertible
Preferred Stock is outstanding, (i) the Corporation effects any merger or
consolidation of the Corporation with or into another Person, (ii) the
Corporation effects any sale of all or substantially all of its assets in one
transaction or a series of related transactions, (iii) any tender offer or
exchange offer (whether by the Corporation or another Person) is completed
pursuant to which holders of Common Stock are permitted to tender or exchange
their shares for other securities, cash or property, or (iv) the Corporation
effects any reclassification of the Common Stock or any compulsory share
exchange pursuant to which the Common Stock is effectively converted into or
exchanged for other securities, cash or property (in any such case, a “Fundamental Transaction”),
then, upon any subsequent conversion of this Series B Convertible Preferred
Stock, the Holders shall have the right to receive, for each Conversion Share
that would have been issuable upon such conversion immediately prior to the
occurrence of such Fundamental Transaction, the same kind and amount of
securities, cash or property as it would have been entitled to receive upon the
occurrence of such Fundamental Transaction if it had been, immediately prior to
such Fundamental Transaction, the holder of one share of Common Stock (the
“Alternate
Consideration”).  For purposes of any such conversion, the
determination of the Conversion Price shall be appropriately adjusted to apply
to such Alternate Consideration based on the amount of Alternate Consideration
issuable in respect of one share of Common Stock in such Fundamental
Transaction, and the Corporation shall apportion the Conversion Price among the
Alternate Consideration in a reasonable manner reflecting the relative value of
any different components of the Alternate Consideration.  If holders
of Common Stock are given any choice as to the securities, cash or property to
be received in a Fundamental Transaction, then the Holders shall be given the
same choice as to the Alternate Consideration it receives upon any conversion of
this Series B Convertible Preferred Stock following such Fundamental
Transaction. To the extent necessary to effectuate the foregoing provisions, any
successor to the Corporation or surviving entity in such Fundamental Transaction
shall file a new Certificate of Designation with the same terms and conditions
and issue to the Holders new preferred stock consistent with the foregoing
provisions and evidencing the Holders’ right to convert such preferred stock
into Alternate Consideration.  The terms of any agreement pursuant to
which a Fundamental Transaction is effected shall include terms requiring any
such successor or surviving entity to comply with the provisions of this Section 6(e) and
insuring that this Series B Convertible Preferred Stock (or any such replacement
security) will be similarly adjusted upon any subsequent transaction analogous
to a Fundamental Transaction.

     

    f)   Calculations.  All
calculations under this Section 6 shall be
made to the nearest cent or the nearest 1/100th of a share, as the case may
be.  For purposes of this Section 6, the number
of shares of Common Stock deemed to be issued and outstanding as of a given date
shall be the sum of the number of shares of Common Stock (excluding any treasury
shares of the Corporation) issued and outstanding.

     

    g)   Notice to the
Holders.

    

    i.          Adjustment to Conversion
Price.  Whenever the Conversion Price is adjusted pursuant to
any provision of this Section 6, the
Corporation shall promptly mail to each Holder a notice setting forth the
Conversion Price after such adjustment and setting forth a brief statement of
the facts requiring such adjustment.

    

    ii.          Notice to Allow Conversion
by Holder.  If (A) the Corporation shall declare a dividend (or
any other distribution in whatever form) on the Common Stock, (B) the
Corporation shall declare a special nonrecurring cash dividend on or a
redemption of the Common Stock, (C) the Corporation shall authorize the granting
to all holders of the Common Stock of rights or warrants to subscribe for or
purchase any shares of capital stock of any class or of any rights, (D) the
approval of any stockholders of the Corporation shall be required in connection
with any reclassification of the Common Stock, any consolidation or merger to
which the Corporation is a party, any sale or transfer of all or substantially
all of the assets of the Corporation, of any compulsory share exchange whereby
the Common Stock is converted into other securities, cash or property or (E) the
Corporation shall authorize the voluntary or involuntary dissolution,
liquidation or winding up of the affairs of the Corporation, then, in each case,
the Corporation shall cause to be filed at each office or agency maintained for
the purpose of conversion of this Series B Convertible Preferred Stock, and
shall cause to be delivered to each Holder at its last address as it shall
appear upon the stock books of the Corporation, at least ten (10) calendar days
prior to the applicable record or effective date hereinafter specified, a notice
stating (x) the date on which a record is to be taken for the purpose of such
dividend,
distribution, redemption, rights or warrants, or if a record is not to be taken,
the date as of which the holders of the Common Stock of record to be entitled to
such dividend, distributions, redemption, rights or warrants are to be
determined or (y) the date on which such reclassification, consolidation,
merger, sale, transfer or share exchange is expected to become effective or
close, and the date as of which it is expected that holders of the Common Stock
of record shall be entitled to exchange their shares of the Common Stock for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer or share exchange, provided that the
failure to deliver such notice or any defect therein or in the delivery thereof
shall not affect the validity of the corporate action required to be specified
in such notice. The Holder is entitled to convert the Series B Convertible (or
any part hereof) during the ten (10) day period commencing on the date of such
notice through the effective date of the event triggering such
notice.

     

    
      
        
        

      

      
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    7.   Redemption Upon Triggering
Events.

     

    a)    “Triggering Event”
means any one or more of the following events (whatever the reason and whether
it shall be voluntary or involuntary or effected by operation of law or pursuant
to any judgment, decree or order of any court, or any order, rule or regulation
of any administrative or governmental body):

    

    i.           [A]
the Corporation merges into or consolidates with any other Person, or any Person
merges into or consolidates with the Corporation and, after giving effect to
such transaction, the shareholders of the Corporation immediately prior to such
transaction own less than sixty six percent (66%) of the aggregate voting power
of the Corporation or the successor entity of such transaction, or [B] the
Corporation sells or transfers all or substantially all of its assets to another
Person and the shareholders of the Corporation immediately prior to such
transaction own less than sixty six percent (66%) of the aggregate voting power
of the acquiring entity immediately after the transaction, or [C] the execution
by the Corporation of an agreement to which the Corporation is a party or by
which it is bound, providing for any of the events set forth in clauses [A]
through [B] herein;

    

    ii.   the Corporation
shall fail to have available a sufficient number of authorized and unreserved
shares of Common Stock to issue to such Holder upon a conversion
hereunder;

    

    iii.   unless specifically
addressed elsewhere in this Certificate of Designations as a Triggering Event,
the Corporation shall fail to observe or perform any other covenant, agreement
or warranty contained in this Certificate of Designations, and such failure or
breach shall not, if subject to the possibility of a cure by the Corporation,
have been cured within twenty (20) calendar days after the date on which written
notice of such failure or breach shall have been delivered;

    

    iv.   there shall have
occurred a Bankruptcy Event; or

     

    v.    any monetary
judgment, writ or similar final process shall be entered or filed against the
Corporation, any Subsidiary or any of their respective property or other assets
for greater than $100,000, and such judgment, writ or similar final process
shall remain unvacated, unbonded or unstayed for a period of thirty (30)
calendar days.

     

    b)           Upon
the occurrence of a Triggering Event, each Holder shall (in addition to all
other rights it may have hereunder or under applicable law) have the right,
exercisable at the sole option of such Holder, to require the Corporation to
redeem all of the Series B Convertible Preferred Stock then held by such Holder
for a redemption price equal to the Stated Value of the Series B Convertible
Preferred Stock (the “Triggering Redemption
Amount”). The Triggering Redemption Amount shall be due and payable
within five Trading Days of the date on which the notice for the payment
therefor is provided by a Holder (the “Triggering Redemption Payment
Date”).  If the Corporation fails to pay in full the Triggering
Redemption Amount hereunder on the date such amount is due in accordance with
this Section, the Corporation will pay interest thereon at a rate equal to the
lesser of eighteen percent (18%) per annum or the maximum rate permitted by
applicable law, accruing daily from such date until the Triggering Redemption
Amount, plus all such interest thereon, is paid in full.  For purposes
of this Section, a share of Series B Convertible Preferred Stock is outstanding
until such date as the applicable Holder has been paid the Triggering Redemption
Amount in cash.

    
       

      
        
          
          

        

        
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    8.   Redemption Rights of the
Company.  Shares of the Series B Convertible Preferred Stock
shall be redeemable, in whole or in part, at the option of the Corporation, by
resolution of its Board of Directors at any time after the Original Issue Date
and before the first (1st)
anniversary of the Original Issue Date (the “Redemption Expiration Date”)
at a price equal to one hundred and ten percent (110%) of the Stated Value
(subject to adjustment as set forth herein).  The Company may provide
written notice to all holders of record of shares of Series B Convertible
Preferred Stock specifying the time (the “Redemption Date”) and place of
such redemption (the “Redemption Notice”), at their
respective addresses as the same shall appear on the stock books of the
Corporation, but no failure on the part of the shareholder to receive such
notice and no defect in the wording of the notice shall affect the validity of
the proceedings adopted with respect to the redemption of any such
shares.  The Redemption Notice shall be given not less than ten (10)
nor more than sixty (60) days prior to the Redemption Date, and in no event
shall the Redemption Date be after 11:59 p.m., Eastern Prevailing Time, on the
Redemption Expiration Date.  After the Corporation has furnished its
Redemption Notice, each holder of shares of Series B. Convertible Preferred
Stock called for redemption may, on or before the close of the last business day
preceding the designated redemption date, convert such shares into shares of
common stock of the Corporation in accordance with the conversion privileges set
forth herein.

     

    9.   Definitions. As used
herein, the following terms shall have the following meanings:

     

    a.   “Affiliate” means any Person
that, directly or indirectly through one (1) or more intermediaries, controls or
is controlled by or is under common control with a Person, as such terms are
used in and construed under Rule 144 under the Securities Act.  With
respect to a Holder, any investment fund or managed account that is managed on a
discretionary basis by the same investment manager as such Holder will be deemed
to be an Affiliate of such Holder.

     

    b.   “Bankruptcy Event” means any of
the following events: (a) the Corporation or any Significant Subsidiary (as such
term is defined in Rule 1-02(w) of Regulation S-X) thereof commences a case or
other proceeding under any bankruptcy, reorganization, arrangement, adjustment
of debt, relief of debtors, dissolution, insolvency or liquidation or similar
law of any jurisdiction relating to the Corporation or any Significant
Subsidiary thereof; (b) there is commenced against the Corporation or any
Significant Subsidiary thereof any such case or proceeding that is not dismissed
within sixty (60) days after commencement; (c) the Corporation or any
Significant Subsidiary thereof is adjudicated.

     

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

     

    d.   “Common Stock” means the
Corporation’s common stock, par value $.0001 per share.

     

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

     

    f.   “Conversion Shares” means,
collectively, the shares of Common Stock issuable upon conversion of the shares
of Series B Convertible Preferred Stock in accordance with the terms
hereof.

     

    
      
        
          
          

        

        
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    g.   “Exempt Issuance” means: (i)
shares of Common Stock or options to purchase Common Stock issued to employees,
officers, directors or consultants of the Company pursuant to any stock or
option plan duly adopted by a majority of the non-employee members of the Board
of Directors of the Company or a majority of the members of a committee of
non-employee directors established for such purpose, (ii) shares of Common Stock
issued upon exercise on conversion of Series B Convertible Preferred Stock and
the Series B Warrants, (iii) shares of Common Stock issued upon the exercise or
conversion of Common Stock Equivalents outstanding on the date hereof and
disclosed in the disclosure schedules attached to the Securities Purchase
Agreement, provided that, unless set forth in such disclosure schedules, such
securities have not been amended since the date of these designations to
increase the number of such securities or to decrease the exercise, exchange or
conversion price of any such securities; (iv) shares of Common Stock issued or
issuable by reason of a dividend, stock split, split-up or other distribution on
shares of Common Stock that is covered by Section 6(a) above;
and (v) securities issued pursuant to acquisitions or strategic transactions
approved by a majority of the directors, provided that any such issuance shall
only be to a Person which is, itself or through its subsidiaries, an operating
company in a business synergistic with the business of the Company, as
determined by a majority of the directors, and in which the Company receives
benefits in addition to the investment of funds, but shall not include a
transaction in which the Company is issuing securities primarily for the purpose
of raising capital or to an entity whose primary business is investing in
securities.

     

    h.   “Holder” means a holder of
Series B Convertible Preferred Stock.

     

    i.   “Junior Stock” means the Common
Stock and all other securities of the Corporation, including Common Stock
Equivalents of the Corporation other than those securities which are explicitly
senior or pari
passu to the
Series B Convertible Preferred Stock in dividend rights or liquidation
preference.

     

    j.   “Original Issue Date” the date
the Corporation initially issues the shares of Series B Convertible Preferred
Stock, regardless of the number of times transfer of such share is made on the
stock records maintained by or for the Corporation and regardless of the number
of certificates which may be issued to evidence such share.

     

    k.   “Person” shall mean any
individual, partnership, firm, corporation, association, trust, unincorporated
organization or other entity, as well as any syndicate or group that would be
deemed to be a person under Section 13(d)(3) of the Securities Exchange Act of
1934, as amended.

     

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

     

    m.   “Rule 144” means Rule 144
promulgated by the SEC under the Securities Act.

     

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

     

    o.   “Securities Purchase Agreement”
means the Securities Purchase Agreement dated on or about July 30, 2009, by and
between the Corporation, and each of the purchasers of Series B Convertible
Preferred Stock of the Corporation a party thereto.

     

    p.   “Subsidiary” shall mean any
corporation, association, partnership, limited liability company or other
business entity of which more than fifty percent (50%) of the total voting power
is, at the time, owned or controlled, directly or indirectly, by the Corporation
or one or more of the other Subsidiaries of the Corporation or a combination
thereof.

     

    q.   “Trading Day” means a day on
which the Common Stock is traded on a Trading Market.

     

    
      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

         

      

    

    r.   “Trading Market” means the
following exchanges on which the Common Stock is listed for trading on the date
in question: the New York Stock Exchange, the Nasdaq Capital Market or the
Nasdaq Global Market, the NYSE Amex, the OTCBB, or Pink Sheets.

    
       

    

    s.   “VWAP” of a share of Common
Stock as of a particular date (the “Determination Date”) shall
mean the price determined by the first of the following clauses that applies:
(a) if shares of Common Stock are traded on a national securities exchange (an
“Exchange”), the
weighted average of the closing sale price of a share of the Common Stock of the
Company on the last five (5) Trading Days prior to the Determination Date
reported on such Exchange as reported in The Wall Street Journal (weighted with
respect to the trading volume with respect to each such day); (b) if shares of
Common Stock are not traded on an Exchange but trade in the over-the-counter
market and such shares are quoted on the National Association of Securities
Dealers Automated Quotations System (“NASDAQ”), the weighted average
of the closing  sale price of a share of the Common Stock of the
Company on the last five (5) Trading Days prior to the Determination Date
reported on NASDAQ as reported in The Wall Street Journal (weighted with respect
to the trading volume with respect to each such day); (c) if such shares are an
issue for which last sale prices are not reported on NASDAQ, the average of the
closing sale price, in each case on the last five (5) Trading Days (or if the
relevant price or quotation did not exist on any of such days, the relevant
price or quotation on the next preceding Business Day on which there was such a
price or quotation) prior to the Determination Date as reported by the Over the
Counter Bulletin Board (the “OTCBB”), or any other
successor organization; (d) if no closing sales price is reported for the Common
Stock by the OTCBB or any other successor organization for such day, the average
of the closing sale price, in each case on the last five (5) Trading Days (or if
the relevant price or quotation did not exist on any of such days, the relevant
price or quotation on the next preceding business day on which there was such a
price or quotation) prior to the Determination Date as reported
by  the “pink sheets” by the Pink Sheets, LLC, or any successor
organization, (e) if no closing sales price is reported for the Common Stock by
the OTCBB or any other successor organization for such day, then the average of
the high and low bid and asked price of any of the market makers for the Common
Stock as  reported on the OTCBB or in the “pink sheets” by the Pink
Sheets, LLC on the last five (5) Trading Days; or (e) in all other cases, the
fair market value of a share of Common Stock as determined by an independent
appraiser selected in good faith by the holder and reasonably acceptable to the
Company.

     

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    IN
WITNESS WHEREOF, this Certificate of Designations has been executed by a duly
authorized officer of the Corporation on this 6th day of October,
2009.

     

     

    
      
        	 	ZURVITA
      HOLDINGS, INC.	 
	 	 	 	 
	
                 

              	
                By:
      

              	/s/
      Jay Shafer 	 
	 	 	Jay
      Shafer	 
	 	 	Co-
      Chief Executive Officer	 
	 	 	 	 

      

    

    (Signature
Page to Series B Preferred Certificate of Designations)

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    
ANNEX
A

     

    NOTICE OF
CONVERSION

     

    (TO BE
EXECUTED BY THE REGISTERED HOLDER IN ORDER TO CONVERT SHARES

    OF SERIES
B PREFERRED STOCK)

     

    The
undersigned hereby elects to convert the number of shares of Series B
Convertible Preferred Stock indicated below into shares of common stock, $.0001
par value per share (the “Common Stock”), of
Zurvita Holdings, Inc., a Delaware corporation (the “Corporation”),
according to the conditions hereof, as of the date written below.  If
shares of Common Stock are to be issued in the name of a Person other than the
undersigned, the undersigned will pay all transfer taxes payable with respect
thereto and is delivering herewith such certificates and opinions as may be
required by the Corporation in accordance with the Purchase
Agreement.  No fee will be charged to the Holders for any conversion,
except for any such transfer taxes.

     

    Conversion
calculations:

     

    Date to
Effect Conversion:
_______________________________________________________________________________________

     

    Number of
shares of Preferred Stock owned prior to Conversion:
___________________________________________________________

     

    Number of
shares of Series B Convertible Preferred Stock to be Converted:
___________________________________________________

     

    Stated
Value of shares of  Series B Convertible Preferred Stock to be
Converted: _______________________________________________

     

    Applicable
Conversion Price:
_____________________________________________________________________________________

     

    Number of
shares of Preferred Stock subsequent to Conversion:
___________________________________________________________

     

     

    
    

     

    
      	 	
              [HOLDER]

            
	 	 
	 	_____________________________________________ 
	 	
              Name:

            
	 	
              Title:

            

    

     

    
       

      
        
          
          

        

        
          13

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