Document:

a50465183ex10-3.htm

EXHIBIT 10.3

 

 

FOURTH AMENDMENT TO LEASE

This Fourth Amendment to Lease (“Amendment”) made and entered into this 25th day of June, 2012, by and between G&I VI 321/323 NORRISTOWN FE LLC, hereinafter referred to as “Landlord” and CLINFORCE, INC., hereinafter referred to as “Tenant”

WHEREAS, Landlord leases a total of 14,459 rentable square feet (“RSF”) of space commonly referred to as Suite 200 (4,739 RSF), Suite 205 (2,979 RSF), Suite 215 (3,436 RSF) and Suite 225 (3,305 RSF) (collectively, the “Original Premises”) located at 321 Norristown Road, Ambler, PA, 19002 (“Building”), to Tenant pursuant to that certain Lease dated August 7, 2006, as amended January 2, 2007; as amended September 23, 2008 and as amended October 30, 2008, hereinafter collectively referred to as “Lease,” the Original Premises being more particularly described therein; and

WHEREAS, Tenant desires to expand the size of the Original Premises by adding an additional 1,893 RSF of space (Suite 230) under the Lease;

WHEREAS, Landlord and Tenant wish to amend the Lease as follows;

NOW, THEREFORE, in consideration of these present and the agreement of each other, Landlord and Tenant agree that the Lease shall be and the same is hereby amended as follows:

1. Incorporation of Recitals. The recitals set forth above, the Lease referred to therein and the exhibits attached hereto are hereby incorporated herein by reference as if set forth in full in the body of this Amendment. Capitalized terms not otherwise defined herein shall have the meanings given to them in the Lease.

2. Lease of Additional Premise.

(a)      The Lease is hereby amended to provide that Landlord hereby demises and lets unto Tenant, and Tenant hereby leases and hires from Landlord, all that certain space on the second floor of the Building containing approximately 1,893 RSF of space (Suite 230) (the “Additional Premises”), as shown on Exhibit “A”, attached hereto and made a part hereof.

(b)      The term of the Lease for the Additional Premises shall commence on the date which is the earlier of(i) when Tenant, with Landlord’s prior consent, assumes possession of the Additional Premises for its Permitted Uses, or (ii) upon substantial completion of the improvements required to be made by Landlord to the Additional Premises under Article 2(c) below (“Additional Premises Commencement Date”). Substantial completion means that the initial improvements called for by this Amendment have been completed to the extent that the Additional Premises may be occupied by Tenant for its Permitted Use, subject only to completion of minor finishing, adjustment of equipment, and other minor construction aspects, and Landlord has procured a temporary or permanent certificate of occupancy permitting the occupancy of the Additional Premises, if required by law (hereafter, “substantial completion”). It is estimated that the Additional Premises Commencement Date will be July 1, 2012. It is the mutual intention of Landlord and Tenant that the Additional Premises shall be leased to and occupied by Tenant on and subject to all of the terms, covenants and conditions of the Lease except as otherwise expressly provided to the contrary in this Amendment, and to that end, Landlord and Tenant hereby agree that from and after the Additional Premises Commencement Date, the word “Premises”, as defined in the Lease, shall mean and include both the Original Premises and the Additional Premises, containing a total of 16,352 RSF, unless the context otherwise requires.

 

(c)         Landlord shall construct the Additional Premises in substantial conformity with the plan entitled “SK-3”, dated May 23,2012 and drawn by Charles Matsinger Associates (“Landlord’s Work”), which is attached hereto, made a part hereof and marked as Exhibit “B”. Landlord shall only be responsible for payment of a maximum cost of $2,129.62 for the Landlord’s Work (the “Landlord Allowance”). All costs of the Landlord’s Work in excess of the Landlord Allowance shall be borne by Tenant, and shall be paid to Landlord within ten (10) days of delivery of an invoice and reasonable documentation therefor.

 

  

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(d)         Upon completion of Landlord’s Work, Landlord and Tenant shall schedule a pre-occupancy inspection of the Additional Premises, at which time a punchlist of outstanding items, if any, shall be completed. Landlord shall use reasonable efforts to complete the items on the punchlist within thirty (30) days, or if the nature ofthe items requires additional time, within such additional time as is reasonable necessary.

(e)         The Additional Premises Commencement Date shall be confirmed by Landlord and Tenant by the execution of a Confirmation of Lease Term in the form attached hereto as Exhibit “C’. If Tenant fails to execute or object to the Confirmation of Lease Term within ten (10) business days of its delivery, Landlord’s determination of such dates shall be deemed accepted.

3. Term: The Lease term for the Additional Premises shall commence on the Additional Premises Commencement Date. The Additional Premises shall terminate on December 31, 2013, coterminously with the Original Premises.

4. Fixed Rent:

(a)            From and after the Additional Premises Commencement Date, Tenant shall pay to Landlord Fixed Rent for the Additional Premises (1,893 RSF) as follows:

 

  

	
TIME

	
PER

	
MONTHLY

	
ANNUAL

	
PERIOD.

	
RSF

	
INSTALLMENT

	
BASE RENT

	  
	
Additional Premises

	  	  	  
	
Commencement Date-

	  	  	  
	
12/31/13

	
$

	
17.50

	
$

	
2,760.63

	
$

	
33,127.50

 

(b)            Tenant shall pay to Landlord without notice or demand, and without set-off, except as specifically set forth in the Lease, the annual Fixed Rent payable in the monthly installments of Fixed Rent as set forth above, in advance on the first day of each calendar month during the Term by (i) check sent to and made payable to G&I VI Interchange Office LLC, Lockbox #6921, P0 Box 8500, Philadelphia, PA 19178-6921 (Please reference tenant name and payment description) or (ii) wire transfer of immediately available funds to the account at Wells Fargo Bank, N.A., G&I VI Interchange Office LLC, Account #200030594526, ABA #031000503 (please reference payment name and payment description); such transfer to be confirmed by Landlord’s accounting department upon written request by Tenant. All payments must include the following information: Building #D125 and Lease #___. The Lease number will be provided by Landlord within a reasonable period of time following the execution of this Amendment.

5. Additional Rent.

(a)      From and after the Additional Premises Commencement Date, Tenant’s Proportionate Share shall be 27.26%.

(b)      The Base Year for the Additional Premises is calendar year 2012.

(c)      The following language shall be added as the second paragraph to Article 4 of the Lease:

In calculating the Recognized Expenses as hereinbefore described, if for thirty (30) or more days during the preceding Lease Year less than ninety-five (95%) percent of the rentable area of the Building shall have been occupied by tenants, then the Recognized Expenses attributable to the Building shall be deemed for such Lease Year to be amounts equal to the Recognized Expenses which would normally be expected to be incurred had such occupancy of the Building been at least ninety-five (95%) percent throughout such year, as reasonably determined by Landlord (i.e., taking into account that certain expenses depend on occupancy (e.g., janitorial) and certain expenses do not (e.g., landscaping)). Furthermore, if Landlord shall not furnish any item or items of Recognized Expenses to any portions of the Building because such portions are not occupied or because such item is not required by the tenant of such portion of the Building, for the purposes of computing Recognized Expenses, an equitable adjustment shall be made so that the item of operating expense in question shall be shared only by tenants actually receiving the benefits thereof.

 

  

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(d) The management fee referenced in Article 4 of the Lease shall not exceed 5% of Rent.

6. Electricity Charges.

(a) Notwithstanding anything to the contrary contained in Article 5 of the Lease, Original Premises and Additional Premises heat and air-conditioning services will be provided on Saturdays between the hours of 8:00 a.m. and 1:00 p.m. (which are still considered a part of Working Hours) only upon the prior written request of Tenant.

(b) Landlord is hereby authorized to request and obtain, on behalf of Tenant, Tenant’s electric consumption data from the applicable utility provider.

7. Tenant Representations: Tenant hereby confirms that (i) the Lease is in full force and effect and Tenant is in possession of the Original Premises; (ii) there are no defaults by Landlord under the Lease and (iii) Tenant’s security deposit is $7,305.96.

8. Brokerage Commission Landlord and Tenant mutually represent and warrant to each other that they have not dealt, and will not deal, with any real estate broker or sales representative in connection with this proposed transaction except for Cresa. Each party agrees to indemnify, defend and hold harmless the other and their directors, officers and employees from and against all threatened or asserted claims, liabilities, costs and damages (including reasonable attorney’s fees and disbursements) which may occur as a result of a breach of this representation.

9. Rules and Regulations. At all times during the Term, Tenant, its employees, agents, invitees and licenses shall comply with all rules and regulations specified on Exhibit “D,” attached hereto and made a part hereof, together with all reasonable rules and regulations as Landlord may from time to time promulgate provided they do not materially increase the financial burdens of Tenant or take away any rights specifically provided to Tenant in the Lease. In the event of an inconsistency between the rules and regulations and the Lease, the provisions of the Lease shall control.

10. Binding Effect. Except as expressly amended hereby, the Lease remains in full force and effect in accordance with its terms. Tenant specifically acknowledges and agrees that Article 18 of the Lease concerning Confession of Judgment is and shalt remain in full force and effect in accordance with its terms.

  

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IN WITNESS WHEREOF, Landlord and Tenant have duly executed this agreement on the date first above written.

 

 

	  	  	
LANDLORD;

	  	  	
G&I VI 321/323 NORRISTOWN FE LLC

	
WITNESS:

	  	  
	  
	
/s/ J Alexander

	  	
By: /s/ Jean Marie Apruzzese

	  
	  	  	
Name: Jean Marie Apruzzese

	  	  	
Title: Vice President

	  
	  
	  
	  	  	
TENANT:

	  	  	
CLINFORCE, INC

	
ATTEST:

	  	  
	 	 	 
	  	  	
By: /s/ Tony Sims               6/20/12

	  	  	
Name: Tony Sims

	  	  	
Title: President

  

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EXHIBIT “C”

CONFIRMATION OF LEASE TERM

Tenant:   ClinForce, Inc.

Additional Premises:   Suite 230, 321 Norristown Rd., Ambler, PA

Square Footage of Additional Premises:   1,893 RSF

THIS MEMORANDUM is made as of the____day of _______________, 2012, between G&1 VI 32 1/323 NORRISTOWN FE LLC, a Delaware limited liability company, with an office at 220 East 42nd Street, New York, New York (“Landlord’) and CLINFORCE. INC. with its principal place of business at 4815 Emperor Blvd., Durham, NC 27713 (“Tenant”), who entered into a Fourth Amendment to Lease (“Amendment”) dated for reference purposes as of June __, 2012, covering certain Additional Premises located at Suite 230, 321 Norristown Rd., Ambler, PA. All capitalized terms, if not defined herein, shall be defined as they are defined in the Lease.

1.             The Parties to this Memorandum hereby agree that the date of_______________ , 2012 is the “Additional Premises Commencement Date” and the date December 31, 2013 is the expiration date of the Lease.

2.             Tenant hereby confirms the following:

(a)           That it has accepted possession of the Additional Premises pursuant to the terms of the Amendment;

(b)           That the improvements, including the Landlord’s Work, required to be furnished according to the Amendment by Landlord have been substantially completed;

(c)           That Landlord has fulfilled all of its duties of an inducement nature or is otherwise set forth in the Amendment;

(d)           That there are no offsets or credits against rentals, and the $7,305.96 Security Deposit has been paid as provided in the Lease;

(e)           That there is no default by Landlord or Tenant under the Lease and the Lease is in full force and effect.

3.                 Landlord hereby confirms to Tenant that its Building Number is D125 and its Lease Number is ______.  This information must accompany each Rent check or wire payment.

                4.             

	
Tenant's Notice Address is:

	 	
Tenant's Billing Address is:

	 
	
ClinForce, Inc.

	 	  	 	 
	
4815 Emperor Blvd.

	 	  	 	 
	
Durham, NC 27713

	 	  	 	 
	
Attn: Maria Phillips

	 	
Attn:

	 	 
	
Phone No.:

	  	 	
Phone No.:

	 	 
	
Fax No.:

	  	 	
Fax No.:

	 	 
	
E-mail:

	  	 	
E-mail:

	 	 

 

5.           This Memorandum, each and all of the provisions hereof, shall inure to the benefit, or bind, as the case may require, the parties hereto, and their respective successors and assigns, subject to the restrictions upon assignment and subletting contained in the Lease.

 

  

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6.           Landlord hereby advises Tenant that it contracts with Exigis LLC, as its third party insurance compliance manager. Landlord authorizes Tenant to provide information as requested by Exigis LLC on Landlord’s behalf. Tenant’s insurance broker is:

 

 

 

 

	  	 	 
	  	 	 
	  	 	 
	
Attn:

	 	 
	
Phone No.:

	 	 
	
E-mail:

	 	 

 

 

 

 

 

	
WITNESS:

	 	  	
LANDLORD:

	 
	  	 	  	
G&I VI 32 1/323 NORRISTOWN FE LLC

	 
	  	 
	  	 
	  	 
	
 

	 	  	
By:

	  	 
	  	 
	
WITNESS:

	 	  	TENANT:	 
	  	 	  	CLINFORCE, INC.	 
	  	 
	  	 
	  	 
	  	 
	
 

	 	  	
By:

	  	 

  

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EXHIBIT “D”

BUILDING RULES AND REGULATIONS

LAST REVISION: January 1. 2009

Landlord reserves the right to rescind any of these rules and make such other and further rules and regulations as in the judgment of Landlord shall from time to time be needed for the safety, protection, care and cleanliness of the Project, the operations thereof, the preservation of good order therein and the protection and comfort of its tenants, their agents, employees and invitees, which rules when made and notice thereof given to Tenant shall be binding upon him, her or it in a like manner as if originally prescribed.

	
1.

	
Sidewalks, entrances, passages, elevators, vestibules, stairways, corridors, halls, lobby and any other part of the Building shall not be obstructed or encumbered by any Tenant or used for any purpose other than ingress or egress to and from each tenant’s premises. Landlord shall have the right to control and operate the common portions of the Building and exterior facilities furnished for common use of the tenants (such as the eating, smoking, and parking areas) in such a manner as Landlord deems appropriate.

	
2.

	
No awnings or other projections shall be attached to the outside walls of the Building without the prior written consent of Landlord. All drapes, or window blinds, must be of a quality, type and design, color and attached in a manner approved by Landlord.

	
3.

	
No showcases or other articles shall be put in front of or affixed to any part of the exterior of the Building, or placed in hallways or building vestibules without prior written consent of Landlord.

	
4.

	
Restrooms and other plumbing fixtures shall not be used for any purposes other than those for which they were constructed and no debris, rubbish, rags or other substances shall be thrown therein. Only standard toilet tissue may be flushed in commodes. All damage resulting from any misuse of these fixtures shall be the responsibility of the tenant who, or whose employees, agents, visitors, clients, or licensees shall have caused same.

	
5.

	
No tenant, without the prior consent of Landlord, which shall not be unreasonably withheld or delayed, shall mark, paint, drill into, bore, cut or string wires or in any way deface any part of the Premises or the Building of which they form a part except for the reasonable hanging of decorative or instructional materials on the walls of the Premises.

	
6.

	
Tenants shall not construct or maintain, use or operate in any part of the project any electrical device, wiring or other apparatus in connection with a loud speaker system or other sound/communication system which may be heard outside the Premises. Any such communication system to be installed within the Premises shall require prior written approval of Landlord.

  

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7.

	
No mopeds, skateboards, scooters or other vehicles and no animals, birds or other pets of any kind shall be brought into or kept in or about the Building other than a service animal performing a specified task.

	
8.

	
No tenant shall cause or permit any unusual or objectionable odors to be produced upon or permeate from its premises.

	
9.

	
No space in the Building shall be used for the manufacture of goods for sale in the ordinary course of business, or for sale at auction of merchandise, goods or property of any kind.

	
10.

	
No tenant, or employees of tenant, shall make any unseemly or disturbing noises or disturb or interfere with the occupants of this or neighboring buildings or residences by voice, musical instrument, radio, talking machines, or in any way. All passage through the Building’s hallways, elevators, and main lobby shall be conducted in a quiet, business­like manner. Skateboarding, rollerblading and rollerskating shall not be permitted in the Building or in the common areas of the Project.

	
11.

	
No tenant shall throw anything out of the doors, windows, or down corridors or stairs of the Building.

	
12.

	
Tenant shall not place, install or operate on the Premises or in any part of the Project, any engine, stove or machinery or conduct mechanical operations or cook thereon or therein (except for coffee machine, microwave oven, toasters and/or vending machine), or place or use in or about the Premises or Project any explosives, gasoline, kerosene oil, acids, caustics or any other flammable, explosive, or hazardous material without prior written consent of Landlord.

	
13.

	
No smoking is permitted in the Building, including but not limited to the Premises, rest rooms, hallways, elevators, stairs, lobby, exit and entrances vestibules, sidewalks, parking lot area except for the designated exterior smoking area. All cigarette ashes and butts are to be deposited in the containers provided for same, and not disposed of on sidewalks, parking lot areas, or toilets within the Building rest rooms.

	
14.

	
Tenants are not to install any additional locks or bolts of any kind upon any door or window of the Building without prior written consent of Landlord. Each tenant must, upon the termination of tenancy, return to the Landlord all keys for the Premises, either furnished to or otherwise procured by such tenant, and all security access cards to the Building.

	
15.

	
All doors to hallways and corridors shall be kept closed during business hours except as they may be used for ingress or egress.

	
16.

	
Tenant shall not use the name of the Building, Project or Landlord in any way in connection with his business except as the address thereof. Landlord shall also have the right to prohibit any advertising by tenant, which, in its sole opinion, tends to impair the reputation of the Building or its desirability as a building for offices, and upon written notice from Landlord, tenant shall refrain from or discontinue such advertising.

 

  

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17.

	
Tenants must be responsible for all security access cards issued to them, and to secure the return of same from any employee terminating employment with them.  Lost cards shall cost $35.00 per card to replace. No person/company other than Building tenants and/or their employees may have security access cards unless Landlord grants prior written approval.

	
18.

	
All deliveries by vendors, couriers, clients, employees or visitors to the Building which involve the use of a hand cart, hand truck, or other heavy equipment or device must be made via the Freight Elevator, if such Freight Elevator exists in the Building. Tenant shall be responsible to Landlord for any loss or damage resulting from any deliveries made by or for tenant to the Building. Tenant shall procure and deliver a certificate of insurance from tenant’s movers which certificate shall name Landlord as an additional insured.

	
19.

	
Landlord reserves the right to inspect all freight to be brought into the Building, and to exclude from the Building all freight or other material which violates any of these rules and regulations.

	
20.

	
Tenant will refer all contractors, contractor’s representatives and installation technicians, rendering any service on or to the premises for tenant, to Landlord for Landlord’s approval and supervision before performance of any contractual service or access to Building. This provision shall apply to all work performed in the Building including installation of telephones, telegraph equipment, electrical devices and attachments and installations of any nature affecting floors, walls, woodwork, trim, windows, ceilings, equipment or any other physical portion of the Building. Landlord reserves right to require that all agents of contractors/vendors sign in and out of the Building.

	
21.

	
Landlord reserves the right to exclude from the Building at all times any person who is not known or does not properly identify himself to Landlord’s management or security personnel.

	
22.

	
Landlord may require, at its sole option, all persons entering the Building after 6 PM or before 7 AM, Monday through Friday and at any time on Holidays, Saturdays and Sundays, to register at the time they enter and at the time they leave the Building.

	
23.

	
No space within the Building, or in the common areas such as the parking lot, may be used at any time for the purpose of lodging, sleeping, or for any immoral or illegal purposes.

	
24.

	
No employees or invitees of tenant shall use the hallways, stairs, lobby, or other common areas of the Building as lounging areas during “breaks” or during lunch periods.

  

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25.

	
No canvassing, soliciting or peddling is permitted in the Building or its common areas by tenants, their employees, or other persons.

	
26.

	
No mats, trash, or other objects shall be placed in the public corridors, hallways, stairs, or other common areas of the Building.

	
27.

	
Tenant must place all recyclable items of cans, bottles, plastic and office recyclable paper in appropriate containers provided by Landlord in each tenant’s space. Removal of these recyclable items will be by Landlord’s janitorial personnel.

	
28.

	
Landlord does not maintain suite finishes which are non-standard, such as kitchens, bathrooms, wallpaper, special lights, etc. However, should the need arise for repair of items not maintained by Landlord, Landlord at its sole option, may arrange for the work to be done at tenant’s expense.

	
29.

	
Drapes installed by tenant, which are visible from the exterior of the Building, must be cleaned by Tenant, at its own expense, at least once a year.

	
30.

	
No pictures, signage, advertising, decals, banners, etc. are permitted to be placed in or on windows in such a manner as they are visible from the exterior, without the prior written consent of Landlord.

	
31.

	
Tenant or tenant’s employees are prohibited at any time from eating or drinking in hallways, elevators, rest rooms, lobby or lobby vestibules.

	
32.

	
Tenant shall be responsible to Landlord for any acts of vandalism performed in the Building by its employees, agents, invitees or visitors.

	
33.

	
No tenant shall permit the visit to its Premises of persons in such numbers or under such conditions as to interfere with the use and enjoyment of the entrances, hallways, elevators, lobby or other public portions or facilities of the Building and exterior common areas by other tenants.

	
34.

	
Landlord’s employees shall not perform any work or do anything outside of their regular duties unless under special instructions from Landlord. Requests for such requirements must be submitted in writing to Landlord.

	
35.

	
Tenant agrees that neither tenant nor its agents, employees, licensees or invitees will interfere in any manner with the installation and/or maintenance of the heating, air conditioning and ventilation facilities and equipment.

	
36.

	
Landlord will not be responsible for lost or stolen personal property, equipment, money or jewelry from tenant’s area or common areas of the Project regardless of whether such loss occurs when area is locked against entry or not.

  

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37.

	
Landlord will not permit entrance to tenant’s Premises by use of pass key controlled by Landlord, to any person at any time without written permission of tenant, except employees, contractors or service personnel supervised or employed by Landlord.

	
38.

	
Tenant and its agents, emp1oyees and invitees shall observe and comply with the driving and parking signs and markers on the Building grounds and surrounding areas.

	
39.

	
Tenant and its employees, invitees, agents, etc. shall not enter other separate tenants’ hallways, restrooms or premises unless they have received prior approval from Landlord’s management.

 

	
40.

	
Tenant shall not use or permit the use of any portion of the Premises for outdoor storage.

 

 

13Exhibit 10.1

                          SECURITIES PURCHASE AGREEMENT

     This SECURITIES  PURCHASE AGREEMENT (the "Agreement"),  dated as of October
24, 2012, by and between LIBERTY COAL ENERGY CORP., a Nevada  corporation,  with
headquarters  located  at 99-18TH  Street - Suite  3000,  Denver,  CO 80202 (the
"Company"),  and ASHER  ENTERPRISES,  INC.,  a  Delaware  corporation,  with its
address at 1 Linden Place, Suite 207, Great Neck, NY 11021 (the "Buyer").

                                    WHEREAS:

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

B. Buyer desires to purchase and the Company desires to issue and sell, upon the
terms and conditions  set forth in this Agreement an 8% convertible  note of the
Company,  in the form attached  hereto as Exhibit A, in the aggregate  principal
amount of $32,500.00 (together with any note(s) issued in replacement thereof or
as a dividend  thereon or otherwise with respect  thereto in accordance with the
terms thereof, the "Note"),  convertible into shares of common stock, $0.001 par
value per share, of the Company (the "Common Stock"), upon the terms and subject
to the limitations and conditions set forth in such Note.

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

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

1. Purchase and Sale of Note.

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

b. Form of Payment.  On the Closing Date (as defined below), (i) the Buyer shall
pay the  purchase  price for the Note to be issued and sold to it at the Closing
(as  defined  below) (the  "Purchase  Price") by wire  transfer  of  immediately
available funds to the Company,  in accordance with the Company's written wiring
instructions,  against delivery of the Note in the principal amount equal to the
Purchase  Price  as is set  forth  immediately  below  the  Buyer's  name on the
signature  pages  hereto,  and (ii) the Company shall deliver such duly executed
Note on behalf of the Company,  to the Buyer,  against delivery of such Purchase
Price.
<PAGE>
c.  Closing  Date.  Subject  to the  satisfaction  (or  written  waiver)  of the
conditions thereto set forth in Section 6 and Section 7 below, the date and time
of the issuance and sale of the Note  pursuant to this  Agreement  (the "Closing
Date") shall be 12:00 noon,  Eastern Standard Time on or about October 26, 2012,
or such other  mutually  agreed  upon  time.  The  closing  of the  transactions
contemplated by this Agreement (the  "Closing")  shall occur on the Closing Date
at such location as may be agreed to by the parties.

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

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

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

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

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

                                       2
<PAGE>
Section 3 below.  The Buyer  understands  that its  investment in the Securities
involves a significant  degree of risk. The Buyer is not aware of any facts that
may constitute a breach of any of the Company's  representations  and warranties
made herein.

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

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

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

     "NEITHER  THE  ISSUANCE  AND  SALE OF THE  SECURITIES  REPRESENTED  BY THIS
     CERTIFICATE NOR THE SECURITIES INTO WHICH THESE  SECURITIES ARE EXERCISABLE
     HAVE  BEENREGISTERED  UNDER THE  SECURITIES  ACT OF 1933,  AS  AMENDED,  OR
     APPLICABLE  STATE  SECURITIES  LAWS.  THE SECURITIES MAY NOT BE OFFERED FOR
     SALE, SOLD,  TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE

                                       3
<PAGE>
     REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933,
     AS AMENDED,  OR (B) AN OPINION OF COUNSEL  (WHICH COUNSEL SHALL BE SELECTED
     BY THE HOLDER),  IN A GENERALLY  ACCEPTABLE FORM, THAT  REGISTRATION IS NOT
     REQUIRED  UNDER SAID ACT OR (II) UNLESS  SOLD  PURSUANT TO RULE 144 OR RULE
     144A UNDER SAID ACT.  NOTWITHSTANDING THE FOREGOING,  THE SECURITIES MAY BE
     PLEDGED  IN  CONNECTION  WITH A BONA FIDE  MARGIN  ACCOUNT OR OTHER LOAN OR
     FINANCING ARRANGEMENT SECURED BY THE SECURITIES."

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

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

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

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

                                       4
<PAGE>
a. Organization and Qualification.  The Company and each of its Subsidiaries (as
defined below), if any, is a corporation duly organized, validly existing and in
good standing under the laws of the  jurisdiction  in which it is  incorporated,
with full  power and  authority  (corporate  and other) to own,  lease,  use and
operate  its  properties  and to carry on its  business  as and where now owned,
leased, used, operated and conducted.  Schedule 3(a) sets forth a list of all of
the  Subsidiaries  of  the  Company  and  the  jurisdiction  in  which  each  is
incorporated.  The Company and each of its  Subsidiaries  is duly qualified as a
foreign corporation to do business and is in good standing in every jurisdiction
in  which  its  ownership  or use of  property  or the  nature  of the  business
conducted by it makes such  qualification  necessary except where the failure to
be so qualified or in good standing  would not have a Material  Adverse  Effect.
"Material  Adverse  Effect" means any material  adverse  effect on the business,
operations,  assets,  financial  condition  or  prospects  of the Company or its
Subsidiaries,  if any,  taken as a whole,  or on the  transactions  contemplated
hereby or by the  agreements  or  instruments  to be entered into in  connection
herewith.  "Subsidiaries"  means any corporation or other organization,  whether
incorporated  or  unincorporated,   in  which  the  Company  owns,  directly  or
indirectly, any equity or other ownership interest.

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

c.  Capitalization.  As of the date hereof,  the authorized capital stock of the
Company consists of: (i) 1,500,000,000  shares of Common Stock, $0.001 par value
per share,  of which  316,287,267  shares are issued and  outstanding;  and (ii)
there are no authorized  shares of Preferred  Stock;  no shares are reserved for
issuance  pursuant to the  Company's  stock option  plans,  except as previously
disclosed  to the  Buyer  no  shares  are  reserved  for  issuance  pursuant  to
securities  (other than the Note and a prior  convertible  promissory note dated
September 13, 2012 in the amount of $37,500.00  for which  10,500,000  shares of
Common Stock are presently  reserved)  exercisable  for, or convertible  into or
exchangeable  for shares of Common Stock and 14,300,000  shares are reserved for
issuance upon conversion of the Note. All of such outstanding  shares of capital
stock are, or upon issuance will be, duly authorized, validly issued, fully paid
and  non-assessable.  No shares of capital  stock of the  Company are subject to
preemptive rights or any other similar rights of the shareholders of the Company
or any liens or  encumbrances  imposed  through the actions or failure to act of
the  Company.  As of the  effective  date of this  Agreement,  (i)  there are no

                                       5
<PAGE>
outstanding  options,  warrants,  scrip,  rights to subscribe for, puts,  calls,
rights of first refusal, agreements, understandings, claims or other commitments
or rights of any  character  whatsoever  relating  to, or  securities  or rights
convertible  into or exchangeable for any shares of capital stock of the Company
or any of its  Subsidiaries,  or arrangements by which the Company or any of its
Subsidiaries is or may become bound to issue additional  shares of capital stock
of the  Company  or any of its  Subsidiaries,  (ii) there are no  agreements  or
arrangements  under which the Company or any of its Subsidiaries is obligated to
register the sale of any of its or their securities under the 1933 Act and (iii)
there are no anti-  dilution or price  adjustment  provisions  contained  in any
security issued by the Company (or in any agreement providing rights to security
holders)  that will be triggered  by the issuance of the Note or the  Conversion
Shares.  The Company has  furnished to the Buyer true and correct  copies of the
Company's  Certificate  of  Incorporation  as  in  effect  on  the  date  hereof
("Certificate of  Incorporation"),  the Company's  By-laws,  as in effect on the
date hereof (the "By-laws"), and the terms of all securities convertible into or
exercisable  for Common  Stock of the  Company  and the  material  rights of the
holders thereof in respect  thereto.  The Company shall provide the Buyer with a
written update of this representation signed by the Company's Chief Executive on
behalf of the Company as of the Closing Date.

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

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

f. No Conflicts. The execution,  delivery and performance of this Agreement, the
Note by the Company  and the  consummation  by the  Company of the  transactions
contemplated hereby and thereby (including, without limitation, the issuance and
reservation for issuance of the Conversion Shares) will not (i) conflict with or
result in a violation of any provision of the  Certificate of  Incorporation  or
By-laws,  or (ii)  violate  or  conflict  with,  or  result  in a breach  of any
provision of, or constitute a default (or an event which with notice or lapse of
time or both  could  become a  default)  under,  or give to others any rights of
termination,   amendment,   acceleration  or  cancellation  of,  any  agreement,
indenture,  patent,  patent license or instrument to which the Company or any of
its  Subsidiaries  is a party,  or (iii) result in a violation of any law, rule,
regulation,  order,  judgment or decree (including  federal and state securities
laws and  regulations and regulations of any  self-regulatory  organizations  to
which the Company or its  securities  are subject)  applicable to the Company or
any of its  Subsidiaries or by which any property or asset of the Company or any
of its Subsidiaries is bound or affected  (except for such conflicts,  defaults,
terminations,  amendments, accelerations,  cancellations and violations as would

                                       6
<PAGE>
not, individually or in the aggregate,  have a Material Adverse Effect). Neither
the Company nor any of its  Subsidiaries  is in violation of its  Certificate of
Incorporation, By-laws or other organizational documents and neither the Company
nor any of its  Subsidiaries is in default (and no event has occurred which with
notice or lapse of time or both could put the Company or any of its Subsidiaries
in default) under, and neither the Company nor any of its Subsidiaries has taken
any action or failed to take any action  that would give to others any rights of
termination,   amendment,   acceleration  or  cancellation  of,  any  agreement,
indenture or  instrument  to which the Company or any of its  Subsidiaries  is a
party  or by  which  any  property  or  assets  of  the  Company  or  any of its
Subsidiaries  is bound or affected,  except for possible  defaults as would not,
individually or in the aggregate, have a Material Adverse Effect. The businesses
of the Company and its Subsidiaries,  if any, are not being conducted, and shall
not be conducted so long as the Buyer owns any of the  Securities,  in violation
of any law,  ordinance  or  regulation  of any  governmental  entity.  Except as
specifically  contemplated  by this Agreement and as required under the 1933 Act
and any applicable  state securities laws, the Company is not required to obtain
any consent, authorization or order of, or make any filing or registration with,
any court,  governmental agency, regulatory agency, self regulatory organization
or stock  market  or any  third  party in order for it to  execute,  deliver  or
perform any of its obligations under this Agreement, the Note in accordance with
the terms hereof or thereof or to issue and sell the Note in accordance with the
terms hereof and to issue the Conversion Shares upon conversion of the Note. All
consents, authorizations, orders, filings and registrations which the Company is
required to obtain  pursuant to the  preceding  sentence  have been  obtained or
effected on or prior to the date hereof.  The Company is not in violation of the
listing  requirements of the Over-the-  Counter Bulletin Board (the "OTCQB") and
does not  reasonably  anticipate  that the Common  Stock will be delisted by the
OTCQB in the foreseeable future. The Company and its Subsidiaries are unaware of
any facts or circumstances which might give rise to any of the foregoing.

g. SEC  Documents;  Financial  Statements.  The  Company  has  timely  filed all
reports,  schedules,  forms, statements and other documents required to be filed
by it with the SEC  pursuant to the  reporting  requirements  of the  Securities
Exchange Act of 1934,  as amended (the "1934 Act") (all of the  foregoing  filed
prior to the  date  hereof  and all  exhibits  included  therein  and  financial
statements  and  schedules  thereto and  documents  (other than exhibits to such
documents)  incorporated by reference  therein,  being  hereinafter  referred to
herein as the "SEC Documents"). Upon written request the Company will deliver to
the  Buyer  true and  complete  copies  of the SEC  Documents,  except  for such
exhibits and  incorporated  documents.  As of their  respective  dates,  the SEC
Documents  complied in all material  respects with the  requirements of the 1934
Act and the rules and regulations of the SEC promulgated  thereunder  applicable
to the SEC Documents, and none of the SEC Documents, at the time they were filed
with the SEC,  contained  any untrue  statement of a material fact or omitted to
state a material  fact  required to be stated  therein or  necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading.  None of the statements made in any such SEC Documents is,
or has been,  required to be amended or updated under applicable law (except for
such statements as have been amended or updated in subsequent  filings prior the
date hereof).  As of their  respective  dates,  the financial  statements of the
Company  included  in the SEC  Documents  complied  as to  form in all  material
respects with  applicable  accounting  requirements  and the published rules and
regulations of the SEC with respect thereto. Such financial statements have been

                                       7
<PAGE>
prepared  in  accordance  with  United  States  generally  accepted   accounting
principles, consistently applied, during the periods involved and fairly present
in all material respects the consolidated  financial position of the Company and
its  consolidated  Subsidiaries  as of the dates  thereof  and the  consolidated
results of their  operations and cash flows for the periods then ended (subject,
in the case of unaudited  statements,  to normal  year-end  audit  adjustments).
Except as set forth in the financial  statements of the Company  included in the
SEC Documents,  the Company has no liabilities,  contingent or otherwise,  other
than (i) liabilities  incurred in the ordinary course of business  subsequent to
June 30, 2012, and (ii) obligations under contracts and commitments  incurred in
the  ordinary  course of business  and not  required  under  generally  accepted
accounting  principles  to be reflected  in such  financial  statements,  which,
individually or in the aggregate, are not material to the financial condition or
operating  results of the  Company.  The  Company  is  subject to the  reporting
requirements of the 1934 Act.

h. Absence of Certain  Changes.  Since June 30, 2012, there has been no material
adverse change and no material adverse  development in the assets,  liabilities,
business,  properties,  operations,  financial condition, results of operations,
prospects  or  1934  Act  reporting   status  of  the  Company  or  any  of  its
Subsidiaries.

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

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

                                       8
<PAGE>
k. No  Materially  Adverse  Contracts,  Etc.  Neither the Company nor any of its
Subsidiaries is subject to any charter, corporate or other legal restriction, or
any judgment,  decree,  order,  rule or regulation  which in the judgment of the
Company's  officers has or is expected in the future to have a Material  Adverse
Effect.  Neither  the  Company  nor any of its  Subsidiaries  is a party  to any
contract or agreement which in the judgment of the Company's  officers has or is
expected to have a Material Adverse Effect.

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

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

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

                                       9
<PAGE>
o.  Acknowledgment   Regarding  Buyer'  Purchase  of  Securities.   The  Company
acknowledges and agrees that the Buyer is acting solely in the capacity of arm's
length   purchasers  with  respect  to  this  Agreement  and  the   transactions
contemplated  hereby.  The Company  further  acknowledges  that the Buyer is not
acting as a  financial  advisor or  fiduciary  of the Company (or in any similar
capacity)  with  respect to this  Agreement  and the  transactions  contemplated
hereby  and  any  statement   made  by  the  Buyer  or  any  of  its  respective
representatives or agents in connection with this Agreement and the transactions
contemplated  hereby is not advice or a recommendation  and is merely incidental
to the Buyer' purchase of the Securities.  The Company further represents to the
Buyer that the  Company's  decision to enter into this  Agreement has been based
solely on the independent evaluation of the Company and its representatives.

p. No Integrated  Offering.  The Company has entered into, and will close within
30 days of this offering, an unit offering,  consisting of preferred convertible
to common shares and attached  warrants,  through a private equity  placement of
$9,196,500.00.  This placement will require a registration or  registrations  of
the preferred  shares,  the underlying  common of those preferred shares and the
common shares underlying the warrants.  The Company does not intend to integrate
this Securities  Purchase  Agreement with any other offerings.  The Company does
not control the actions of any  regulatory  agency who attempts to integrate any
offerings.

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

r.  Permits;  Compliance.  The  Company  and  each  of  its  Subsidiaries  is in
possession  of  all  franchises,  grants,  authorizations,   licenses,  permits,
easements, variances, exemptions,  consents, certificates,  approvals and orders
necessary to own,  lease and operate its properties and to carry on its business
as it is now being conducted (collectively, the "Company Permits"), and there is
no action  pending or, to the  knowledge  of the Company,  threatened  regarding
suspension or  cancellation of any of the Company  Permits.  Neither the Company
nor any of its  Subsidiaries is in conflict with, or in default or violation of,
any of  the  Company  Permits,  except  for  any  such  conflicts,  defaults  or
violations  which,  individually  or in the  aggregate,  would not reasonably be
expected to have a Material  Adverse  Effect.  Since June 30, 2012,  neither the
Company nor any of its Subsidiaries  has received any notification  with respect
to possible  conflicts,  defaults or violations of applicable  laws,  except for
notices relating to possible conflicts, defaults or violations, which conflicts,
defaults or violations would not have a Material Adverse Effect.

s. Environmental Matters.

     (i) There are, to the Company's  knowledge,  with respect to the Company or
any of its  Subsidiaries or any  predecessor of the Company,  no past or present
violations of  Environmental  Laws (as defined below),  releases of any material

                                       10
<PAGE>
into the environment,  actions, activities,  circumstances,  conditions, events,
incidents,  or  contractual  obligations  which may give rise to any  common law
environmental  liability or any liability under the Comprehensive  Environmental
Response,  Compensation  and  Liability Act of 1980 or similar  federal,  state,
local or foreign  laws and neither the Company nor any of its  Subsidiaries  has
received  any notice  with  respect to any of the  foregoing,  nor is any action
pending or, to the Company's knowledge, threatened in connection with any of the
foregoing.  The term  "Environmental  Laws" means all federal,  state,  local or
foreign  laws  relating  to  pollution  or  protection  of human  health  or the
environment  (including,   without  limitation,   ambient  air,  surface  water,
groundwater,  land surface or subsurface strata), including, without limitation,
laws  relating to  emissions,  discharges,  releases or  threatened  releases of
chemicals,  pollutants contaminants,  or toxic or hazardous substances or wastes
(collectively,   "Hazardous  Materials")  into  the  environment,  or  otherwise
relating to the manufacture,  processing, distribution, use, treatment, storage,
disposal,  transport  or  handling  of  Hazardous  Materials,  as  well  as  all
authorizations,   codes,  decrees,  demands  or  demand  letters,   injunctions,
judgments,  licenses,  notices  or notice  letters,  orders,  permits,  plans or
regulations issued, entered, promulgated or approved thereunder.

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

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

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

u.  Insurance.  The  Company  and each of its  Subsidiaries  are not  insured by
insurers of recognized  financial  responsibility  against such losses and risks
and in such  amounts as  management  of the  Company  believes to be prudent and
customary  in the  businesses  in which the  Company  and its  Subsidiaries  are
engaged.  The  Company  intends to acquire  Directors  and  Officers  Insurance,
operating  insurance and appropriate Labor and Industries  insurance policies as
are necessary to prosecute on its business plan within the next 90 days. Neither

                                       11
<PAGE>
the Company nor any such  Subsidiary  has any reason to believe that it will not
be able to renew its  existing  insurance  coverage  as and when  such  coverage
expires or to obtain similar  coverage from similar insurers as may be necessary
to  continue  its  business  at a cost that  would not have a  Material  Adverse
Effect.

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

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

x. Solvency.  The Company (after giving effect to the transactions  contemplated
by this  Agreement)  is solvent  (i.e.,  its assets have a fair market  value in
excess of the amount  required to pay its probable  liabilities  on its existing
debts as they become  absolute  and matured)  and  currently  the Company has no
information  that would lead it to  reasonably  conclude  that the Company would
not, after giving effect to the transaction contemplated by this Agreement, have
the  ability  to,  nor does it intend to take any action  that would  impair its
ability to, pay its debts from time to time incurred in connection  therewith as
such debts  mature.  The Company did not  receive a qualified  opinion  from its
auditors  with  respect to its most  recent  fiscal year end and,  after  giving
effect to the transactions  contemplated by this Agreement,  does not anticipate
or know of any basis upon which its auditors might issue a qualified  opinion in
respect of its current fiscal year.

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

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

                                       12
<PAGE>
4. COVENANTS.

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

b.  Form D; Blue Sky Laws.  Unless  the  Company  believes  it exempt  from such
filings,  the Company  agrees to file a Form D with respect to the Securities as
required under  Regulation D and to provide a copy thereof to the Buyer promptly
after such filing.  The Company shall,  on or before the Closing Date, take such
action as the Company  shall  reasonably  determine  is necessary to qualify the
Securities  for sale to the Buyer at the  applicable  closing  pursuant  to this
Agreement  under  applicable  securities or "blue sky" laws of the states of the
United  States (or to obtain an exemption  from such  qualification),  and shall
provide  evidence  of any such  action  so taken to the Buyer on or prior to the
Closing Date.

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

d. Right of First Refusal. Unless it shall have first delivered to the Buyer, at
least  seventy two (72) hours prior to the closing of such Future  Offering  (as
defined  herein),  written  notice  describing  the  proposed  Future  Offering,
including the terms and conditions thereof and proposed definitive documentation
to be entered into in  connection  therewith,  and providing the Buyer an option
during the  seventy two (72) hour  period  following  delivery of such notice to
purchase the securities  being offered in the Future  Offering on the same terms
as  contemplated by such Future  Offering (the  limitations  referred to in this
sentence and the preceding  sentence are collectively  referred to as the "Right
of First Refusal") (and subject to the exceptions  described below), the Company
will not conduct any equity financing  (including debt with an equity component)
("Future  Offerings") during the period beginning on the Closing Date and ending
twelve  (12)  months  following  the  Closing  Date.  In the event the terms and
conditions  of a proposed  Future  Offering  are  amended in any  respect  after
delivery of the notice to the Buyer concerning the proposed Future Offering, the
Company shall deliver a new notice to the Buyer describing the amended terms and
conditions of the proposed Future Offering and the Buyer  thereafter  shall have
an option during the seventy two (72) hour period following delivery of such new
notice to purchase  its pro rata share of the  securities  being  offered on the
same terms as  contemplated by such proposed Future  Offering,  as amended.  The
foregoing  sentence  shall  apply to  successive  amendments  to the  terms  and
conditions of any proposed Future Offering. The Right of First Refusal shall not
apply  to any  transaction  involving  (i)  issuances  of  securities  in a firm
commitment   underwritten  public  offering  (excluding  a  continuous  offering
pursuant  to Rule 415 under the 1933 Act) or (ii)  issuances  of  securities  as
consideration  for  a  merger,  consolidation  or  purchase  of  assets,  or  in
connection with any strategic  partnership or joint venture (the primary purpose
of which is not to raise equity capital),  or in connection with the disposition
or  acquisition of a business,  product or license by the Company.  The Right of
First Refusal also shall not apply to the issuance of  securities  upon exercise
or conversion of the Company's options, warrants or other convertible securities
outstanding  as of the date  hereof or to the  grant of  additional  options  or
warrants,  or the issuance of  additional  securities,  under any Company  stock
option or restricted stock plan approved by the shareholders of the Company. The
Right of First refusal shall be limited to like transactions  (i.e.  convertible
debentures) that do not exceed $100,000.00 in the aggregate.

                                       13
<PAGE>
e.  Expenses.  At the Closing,  the Company shall  reimburse  Buyer for expenses
incurred by them in connection  with the  negotiation,  preparation,  execution,
delivery  and  performance  of this  Agreement  and the other  agreements  to be
executed in connection herewith  ("Documents"),  including,  without limitation,
reasonable  attorneys' and consultants' fees and expenses,  transfer agent fees,
fees  for  stock  quotation  services,   fees  relating  to  any  amendments  or
modifications  of the  Documents or any consents or waivers of provisions in the
Documents,  fees for the  preparation  of opinions of counsel,  escrow fees, and
costs of  restructuring  the  transactions  contemplated by the Documents.  When
possible,  the Company must pay these fees directly,  otherwise the Company must
make immediate  payment for reimbursement to the Buyer for all fees and expenses
immediately  upon written notice by the Buyer or the submission of an invoice by
the Buyer.  The  Company's  obligation  with respect to this  transaction  is to
reimburse Buyer' expenses shall be $2,500.

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

g. [INTENTIONALLY DELETED]

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

i. Corporate  Existence.  So long as the Buyer  beneficially  owns any Note, the
Company  shall  maintain  its  corporate  existence  and  shall  not sell all or
substantially  all of the Company's  assets,  except in the event of a merger or
consolidation or sale of all or substantially all of the Company's assets, where

                                       14
<PAGE>
the surviving or successor  entity in such transaction (i) assumes the Company's
obligations  hereunder and under the agreements and instruments  entered into in
connection herewith and (ii) is a publicly traded corporation whose Common Stock
is listed for trading on the OTCQB, Nasdaq, Nasdaq SmallCap, NYSE or AMEX.

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

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

l. Failure to Comply with the 1934 Act. So long as the Buyer  beneficially  owns
the Note, the Company shall comply with the Section 13 reporting requirements of
the 1934 Act;  and the Company  shall  continue  to be subject to the  reporting
requirements of Section 13 of the 1934 Act.

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

5. Transfer Agent Instructions. The Company shall issue irrevocable instructions
to its transfer agent to issue certificates, registered in the name of the Buyer
or its nominee, for the Conversion Shares in such amounts as specified from time
to time by the Buyer to the Company upon  conversion  of the Note in  accordance
with the terms thereof (the "Irrevocable Transfer Agent  Instructions").  In the
event that the  Borrower  proposes to replace its transfer  agent,  the Borrower
shall provide, prior to the effective date of such replacement, a fully executed
Irrevocable  Transfer  Agent  Instructions  in a  form  as  initially  delivered
pursuant to the Purchase  Agreement  (including but not limited to the provision
to irrevocably  reserve shares of Common Stock in the Reserved Amount) signed by
the successor transfer agent to Borrower and the Borrower. Prior to registration
of the Conversion  Shares under the 1933 Act or the date on which the Conversion
Shares may be sold pursuant to Rule 144 without any restriction as to the number
of Securities as of a particular  date that can then be  immediately  sold,  all
such certificates shall bear the restrictive legend specified in Section 2(g) of
this  Agreement.  The Company  warrants that: (i) no instruction  other than the
Irrevocable Transfer Agent Instructions  referred to in this Section 5, and stop
transfer  instructions to give effect to Section 2(f) hereof (in the case of the
Conversion Shares, prior to registration of the Conversion Shares under the 1933
Act or the date on which the Conversion  Shares may be sold pursuant to Rule 144
without any  restriction as to the number of Securities as of a particular  date
that can then be immediately sold), will be given by the Company to its transfer
agent and that the  Securities  shall  otherwise be freely  transferable  on the

                                       15
<PAGE>
books and records of the Company as and to the extent provided in this Agreement
and the Note;  (ii) it will not direct its  transfer  agent not to  transfer  or
delay,   impair,   and/or  hinder  its  transfer  agent  in   transferring   (or
issuing)(electronically  or in certificated form) any certificate for Conversion
Shares to be issued to the Buyer upon conversion of or otherwise pursuant to the
Note as and when required by the Note and this Agreement;  and (iii) it will not
fail to remove (or directs its transfer agent not to remove or impairs,  delays,
and/or hinders its transfer agent from removing) any  restrictive  legend (or to
withdraw any stop transfer  instructions in respect  thereof) on any certificate
for any  Conversion  Shares issued to the Buyer upon  conversion of or otherwise
pursuant  to the Note as and  when  required  by the  Note  and this  Agreement.
Nothing in this  Section  shall  affect in any way the Buyer's  obligations  and
agreement  set  forth in  Section  2(g)  hereof to  comply  with all  applicable
prospectus delivery requirements, if any, upon re-sale of the Securities. If the
Buyer  provides  the Company,  at the cost of the Buyer,  with (i) an opinion of
counsel in form,  substance  and scope  customary  for  opinions  in  comparable
transactions,  to the effect that a public  sale or transfer of such  Securities
may be made without registration under the 1933 Act and such sale or transfer is
effected or (ii) the Buyer provides  reasonable  assurances  that the Securities
can be sold pursuant to Rule 144, the Company shall permit the transfer, and, in
the case of the Conversion Shares, promptly instruct its transfer agent to issue
one or more certificates, free from restrictive legend, in such name and in such
denominations as specified by the Buyer. The Company  acknowledges that a breach
by it of its obligations  hereunder will cause irreparable harm to the Buyer, by
vitiating  the  intent  and  purpose of the  transactions  contemplated  hereby.
Accordingly, the Company acknowledges that the remedy at law for a breach of its
obligations under this Section 5 may be inadequate and agrees, in the event of a
breach or  threatened  breach by the Company of the  provisions of this Section,
that the Buyer shall be entitled,  in addition to all other available  remedies,
to an  injunction  restraining  any breach  and  requiring  immediate  transfer,
without the  necessity  of showing  economic  loss and without any bond or other
security being required.

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

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

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

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

                                       16
<PAGE>
d. No litigation, statute, rule, regulation,  executive order, decree, ruling or
injunction  shall have been enacted,  entered,  promulgated or endorsed by or in
any  court  or   governmental   authority  of  competent   jurisdiction  or  any
self-regulatory  organization  having  authority  over the matters  contemplated
hereby which prohibits the consummation of any of the transactions  contemplated
by this Agreement.

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

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

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

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

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

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

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

                                       17
<PAGE>
g.The  Conversion  Shares shall have been  authorized for quotation on the OTCQB
and trading in the Common  Stock on the OTCQB shall not have been  suspended  by
the SEC or the OTCQB.

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

8. Governing Law; Miscellaneous.

a.  Governing  Law.  This  Agreement  shall  be  governed  by and  construed  in
accordance  with the laws of the State of New York without  regard to principles
of  conflicts  of laws.  Any action  brought by either  party  against the other
concerning the transactions contemplated by this Agreement shall be brought only
in the state  courts of New York or in the federal  courts  located in the state
and county of Nassau. The parties to this Agreement hereby irrevocably waive any
objection to jurisdiction and venue of any action instituted hereunder and shall
not  assert any  defense  based on lack of  jurisdiction  or venue or based upon
FORUM NON CONVENIENS.  The Company and Buyer waive trial by jury. The prevailing
party  shall  be  entitled  to  recover  from the  other  party  its  reasonable
attorney's  fees and costs. In the event that any provision of this Agreement or
any other agreement delivered in connection herewith is invalid or unenforceable
under any applicable statute or rule of law, then such provision shall be deemed
inoperative  to the extent that it may  conflict  therewith  and shall be deemed
modified to conform with such statute or rule of law. Any such  provision  which
may prove invalid or  unenforceable  under any law shall not affect the validity
or  enforceability  of any other  provision of any agreement.  Each party hereby
irrevocably  waives  personal  service of process and consents to process  being
served in any suit,  action or proceeding in connection  with this  Agreement or
any other  Transaction  Document  by mailing a copy  thereof via  registered  or
certified  mail or overnight  delivery (with evidence of delivery) to such party
at the address in effect for notices to it under this  Agreement and agrees that
such service shall constitute good and sufficient  service of process and notice
thereof.  Nothing contained herein shall be deemed to limit in any way any right
to serve process in any other manner permitted by law.

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

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

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

                                       18
<PAGE>
e. Entire Agreement;  Amendments.  This Agreement and the instruments referenced
herein  contain  the entire  understanding  of the parties  with  respect to the
matters covered herein and therein and, except as specifically  set forth herein
or  therein,  neither  the  Company  nor the  Buyer  makes  any  representation,
warranty,  covenant or undertaking with respect to such matters. No provision of
this  Agreement  may be waived or amended other than by an instrument in writing
signed by the majority in interest of the Buyer.

f. Notices.  All notices,  demands,  requests,  consents,  approvals,  and other
communications  required or permitted  hereunder shall be in writing and, unless
otherwise  specified herein,  shall be (i) personally served,  (ii) deposited in
the mail,  registered or certified,  return receipt requested,  postage prepaid,
(iii) delivered by reputable air courier service with charges  prepaid,  or (iv)
transmitted by hand  delivery,  telegram,  or facsimile,  addressed as set forth
below or to such other address as such party shall have  specified most recently
by written notice. Any notice or other communication required or permitted to be
given hereunder shall be deemed  effective (a) upon hand delivery or delivery by
facsimile,  with accurate confirmation  generated by the transmitting  facsimile
machine,  at the address or number  designated below (if delivered on a business
day during normal  business  hours where such notice is to be received),  or the
first  business  day  following  such  delivery  (if  delivered  other than on a
business day during normal  business  hours where such notice is to be received)
or (b) on the  second  business  day  following  the date of  mailing by express
courier  service,  fully  prepaid,  addressed  to such  address,  or upon actual
receipt of such  mailing,  whichever  shall first occur.  The addresses for such
communications shall be:

     If to the Company, to:

     LIBERTY COAL ENERGY CORP.
     99-18TH Street - Suite 3000
     Denver, CO 80202
     Attn: ROBERT MALASEK, Chief Financial Officer
     facsimile: 530-548-7369

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

     Raines Feldman, LLP - att: Jason J Belice
     9720 Wilshire Boulevard, Fith Floor
     Beverly Hills, CA 90212
     Tel. 424-239-2521
     Fax. 424-777-4149

     If to the Buyer:

     ASHER ENTERPRISES, INC.
     1 Linden Pl., Suite 207
     Great Neck, NY. 11021
     Attn: Curt Kramer, President
     facsimile: 516-498-9894

                                       19
<PAGE>
     With a copy by fax only to (which copy shall not constitute notice):

     Naidich Wurman Birnbaum & Maday LLP
     80 Cuttermill Road, Suite 410
     Great Neck, NY 11021
     Attn: Bernard S. Feldman, Esq.
     facsimile: 516-466-3555

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

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

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

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

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

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

                                       20
<PAGE>
l. No Strict Construction. The language used in this Agreement will be deemed to
be the language  chosen by the parties to express  their mutual  intent,  and no
rules of strict construction will be applied against any party.

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

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

LIBERTY COAL ENERGY CORP.

By: /s/ Robert Malasek
    -----------------------------------------------
    Robert Malasek
    Chief Financial Officer

ASHER ENTERPRISES, INC.

By: /s/ Curt Kramer
    -----------------------------------------------
Name:  Curt Kramer
Title: President
       1 Linden Pl., Suite 207
       Great Neck, NY 11021

AGGREGATE SUBSCRIPTION AMOUNT:

Aggregate Principal Amount of Note:          $32,500.00

Aggregate Purchase Price:                    $32,500.00

2952(2) 10-24-12
rmalasek@gmail.com
egmorrow@earthlink.net
j.greig@catwalkcapital.com

                                       21

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