Document:

Gargus Advisory Services Agreement EX10.78

Contractor Name:  Robert Gargus    
Effective Date:  June 24, 2013 

Exhibit 10.78
ADVISORY SERVICES AGREEMENT

THIS ADVISORY SERVICES AGREEMENT is between Applied Micro Circuits Corporation, a Delaware corporation having its principal place of business at 215 Moffett Park Drive, Sunnyvale, CA 94089, and its subsidiaries, successors or assignees (“Client”), and the undersigned Robert Gargus, an individual residing at  (“Contractor”).
		
	A.
	Client and Contractor are parties to an Employment Letter Agreement dated September 14, 2005, as amended to date (the “Employment Agreement”).  

		
	B.
	By mutual agreement of Client and Contractor, Contractor resigned his employment with Client effective as of June 24, 2013.

		
	C.
	In connection with such resignation, Client and Contractor entered into a Separation Agreement dated effective as of the resignation date (“Separation Agreement”).

		
	D.
	At this time Client desires to procure from Contractor, and Contractor desires to provide to Client, certain advisory services as an independent contractor during the twelve month period following the Effective Date.

1.ENGAGEMENT OF SERVICES.  During the period commencing on the Effective Date and ending on the first anniversary thereof (the “Term”), Contractor shall perform the services specified in Exhibit A attached hereto and made a part hereof.  All such services and deliverables set forth in Exhibit A, as well as all tangible and intangible results of Contractor’s performance of services pursuant hereto, are herein referred to, individually and collectively, as the “Projects”.  The manner and means by which Contractor chooses to complete the Projects are in Contractor's sole discretion and control.  Contractor agrees to exercise the highest degree of professionalism, and to utilize his expertise and creative talents in completing such Projects.  In completing the Projects, Contractor agrees to provide his own equipment, tools and other materials at his own expense.  Client will make its facilities and equipment available to Contractor when necessary, in each case at mutually approved times.  Contractor shall perform the services necessary to complete the Projects in a timely and professional manner consistent with industry standards.  Contractor may not subcontract or otherwise delegate his obligations under this Agreement without Client's prior written consent.  
2.    COMPENSATION.  Client will pay Contractor a fee for services rendered under this Agreement as set forth in Exhibit A.  Contractor will be reimbursed for any 

 
reasonable expenses incurred in connection with the performance of services under this Agreement provided Contractor submits verification of such expenses as Client may require.  Client will reimburse Contractor for previously approved expenses within thirty (30) days of the date of Contractor’s invoice.
3.    INDEPENDENT CONTRACTOR RELATIONSHIP.  Contractor’s relationship with Client will be that of an independent contractor and nothing in this Agreement should be construed to create a partnership, joint venture, or employer-employee relationship.  Contractor is not the agent of Client and is not authorized to make any representation, contract, or commitment on behalf of Client.  Contractor will not be entitled to any of the benefits that Client may make available to its employees, such as group insurance, profit-sharing or retirement benefits, except as expressly set forth in the Separation Agreement.  Contractor will be solely responsible for all tax returns and payments required to be filed with or made to any federal, state or local tax authority with respect to Contractor’s performance of services and receipt of fees under this Agreement.  Client will regularly report amounts paid to Contractor by filing Form 1099-MISC with the Internal Revenue Service as required by law.  Because Contractor is an independent contractor, Client will not withhold or make payments for social security; make unemployment insurance or disability insurance contributions; or obtain worker’s compensation insurance on Contractor’s behalf.  Contractor agrees to accept exclusive liability for complying with all applicable state and federal laws governing self-employed individuals, including obligations such as payment of taxes, social security, disability and other contributions based on fees paid to Contractor under this Agreement.  Contractor hereby agrees to indemnify and defend Client against any and all such taxes or contributions, including penalties and interest.  
		
	4.
	TRADE SECRETS - INTELLECTUAL PROPERTY RIGHTS.

4.1    Proprietary Information.  Contractor agrees during the term of this Agreement and thereafter that he will take all steps reasonably necessary to hold Client’s Proprietary Information in trust and confidence, will not use Proprietary Information in any manner or for any purpose not expressly set forth in this Agreement, and will not disclose any such Proprietary Information to any third party without first obtaining Client’s express written consent on a case-by-case basis.  By way of illustration but not limitation “Proprietary Information” includes (a) trade secrets, inventions, ideas, processes, formulas, source and object codes, data, programs, other works of authorship, know-how, improvements, discoveries, developments, designs 

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and techniques (hereinafter, “Inventions”); (b) unpublished information relating to business plans, budgets, financial statements, accounting matters, prices and costs, investments, licenses, suppliers, customers,  research, development, new products, marketing, sales and support; (c) information regarding the skills and compensation of Client’s directors, officers, employees and contractors; and (d) the terms and conditions of this Agreement and the Separation Agreement. Notwithstanding the other provisions of this Agreement, nothing received by Contractor will be considered to be Client Proprietary Information if (1) it has been published or is otherwise readily available to the public other than by a breach of this Agreement; (2) it has been rightfully received by Contractor from an unaffiliated third party without confidential limitations; or (3) it was known to Contractor prior to its first receipt from Client.
4.2    Third Party Information.  Contractor understands that Client has received and will in the future receive from third parties confidential or proprietary information (“Third Party Information”) subject to a duty on Client’s part to maintain the confidentiality of such information and use it only for certain limited purposes.  Contractor agrees to hold Third Party Information in confidence and not to disclose to anyone (other than Client personnel who need to know such information in connection with their work for Client) or to use, except in connection with Contractor’s work for Client, Third Party Information unless expressly authorized in writing by an officer of Client.
4.3    No Conflict of Interest.  Contractor agrees during the term of this Agreement not to accept work or enter into a contract or accept an obligation, inconsistent or incompatible with Contractor’s obligations under this Agreement or the scope of services rendered for Client.  Contractor further agrees not to disclose to Client, or bring onto Client’s premises, or induce Client to use any confidential information that belongs to anyone other than Client or Contractor.  
4.4    Ownership of Client Work Product and Inventions.  As used in this Agreement, the term “Work Product” means any Invention, whether or not patentable, and all related know-how, designs, mask works, trademarks, formulae, processes, manufacturing techniques, trade secrets, ideas, artwork, software or other copyrightable or patentable works.  Contractor agrees to disclose promptly in writing to Client, or any person designated by Client, all Work Product that is solely or jointly conceived, made, reduced to practice, or learned by Contractor in the course of any work performed for Client (“Client Work Product”).  Contractor agrees that any and all Inventions conceived, written, created or first reduced to practice in the performance of work under this Agreement shall be the sole and exclusive property of Client. 
4.5    Disclosure of Prior Work Product and Background Technology.  Contractor represents that any Work Product relating to Client’s business or any Project which Contractor has made, conceived or reduced to 

 
practice at the time of signing this Agreement and which had not previously been assigned to Client (“Prior Work Product”) has been disclosed in writing to Client during the course of his prior employment with Client.
4.6    Assignment of Client Work Product.  Contractor hereby irrevocably assigns to Client all right, title and interest worldwide in and to the Client Work Product and all applicable intellectual property rights related to the Client Work Product, including without limitation, copyrights, trademarks, trade secrets, patents, moral rights, contract and licensing rights (the “Proprietary Rights”).  As directed by Client, Contractor agrees to assign all of its right, title and interest in and to any Client Work Product to a Third Party, including without limitation the United States or any other government body or agency.  Except as set forth below, Contractor retains no rights to use the Client Work Product and agrees not to challenge the validity of Client’s ownership in the Client Work Product.  Contractor hereby grants to Client a non-exclusive, royalty-free, irrevocable and world-wide right, with rights to sublicense through multiple tiers of sublicensees, to distribute, reproduce, make derivative works of, publicly perform, and publicly display in any form or medium, whether now known or later developed, make, have made, use, sell, import and offer for sale any Prior Work Product incorporated or used in the Client Work Product for the purpose of developing and marketing Client products.
4.7    Waiver or Assignment of Other Rights.  If Contractor has any rights to the Client Work Product that cannot be assigned to Client, Contractor unconditionally and irrevocably waives the enforcement of such rights, and all claims and causes of action of any kind against Client with respect to such rights, and agrees, at Client’s request and expense, to consent to and join in any action to enforce such rights.  If Contractor has any right to the Client Work Product that cannot be assigned to Client or waived by Contractor, Contractor unconditionally and irrevocably grants to Client during the term of such rights, an exclusive, irrevocable, perpetual, worldwide, fully paid and royalty-free license, with rights to sublicense through multiple levels of sublicensees, to reproduce, create derivative works of, distribute, publicly perform and publicly display by all means now known or later developed, such rights.
4.8    Assistance.  Contractor agrees to cooperate with Client or its designee(s), both during and after the term of this Agreement, in the procurement and maintenance of Client's rights in Client Work Product and to execute, when requested, any other documents deemed necessary by Client to carry out the purposes of this Agreement.  
4.9    Enforcement of Proprietary Rights.  Contractor will assist Client in every proper way to obtain, and from time to time enforce, United States and foreign Proprietary Rights relating to Client Work Product in any and all countries.  To that end Contractor will execute, verify and deliver such documents and perform such other acts 

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(including appearances as a witness) as Client may reasonably request for use in applying for, obtaining, perfecting, evidencing, sustaining and enforcing such Proprietary Rights and the assignment thereof.  In addition, Contractor will execute, verify and deliver assignments of such Proprietary Rights to Client or its designee.  Contractor’s obligation to assist Client with respect to Proprietary Rights relating to such Client Work Product in any and all countries shall continue beyond the termination of this Agreement, but Client shall compensate Contractor at a reasonable rate after such termination for the time actually spent by Contractor at Client’s request on such assistance.
4.10    Execution of Documents.  In the event Client is unable for any reason, after reasonable effort, to secure Contractor’s signature on any document needed in connection with the actions specified in the preceding Sections 4.8 and 4.9, Contractor hereby irrevocably designates and appoints Client and its duly authorized officers and agents as his agent and attorney in fact, which appointment is coupled with an interest, to act for and in his behalf to execute, verify and file any such documents and to do all other lawfully permitted acts to further the purposes of the preceding paragraph with the same legal force and effect as if executed by Contractor.  Contractor hereby waives and quitclaims to Client any and all claims, of any nature whatsoever, which Contractor now or may hereafter have for infringement of any Proprietary Rights assigned hereunder to Client.
5.    CONTRACTOR REPRESENTATIONS AND WARRANTIES.  Contractor hereby represents and warrants that (a) the Client Work Product will be an original work of Contractor and not require an assignment of rights of any third parties; (b) Contractor will not grant, directly or indirectly, any rights or interest and whatsoever in the Client Work Product to third parties; (c) Contractor has full right and power to enter into and perform this Agreement without the consent of any third party.  
6.    INDEMNIFICATION.  Contractor will indemnify and hold harmless Client, its officers, directors, employees, sublicensees, customers and agents from any and all claims, losses, liabilities, damages, expenses and costs (including attorneys’ fees and court costs) which result from a breach or alleged breach of any representation or warranty of Contractor (a “Claim”) set forth in Section 5 of this Agreement, provided that Client gives Contractor written notice of any such Claim and Contractor has the right to participate in the defense of any such Claim at its expense.  
		
	7.
	TERMINATION.

7.1    Termination by Client.  Client may terminate this Agreement prior to completion of the Term at its convenience and without any breach by Contractor (a “Termination without Cause”) upon fifteen (15) days’ prior written notice to Contractor.  In the event Client effects a 

 
Termination without Cause prior to completion  of the Term, subject to and conditioned upon Contractor executing and delivering Client’s standard form full general release agreement, the vesting of the RSU grant set forth in Section 6(ii) of Exhibit A will accelerate in full effective upon the termination date.  Client may also terminate this Agreement immediately in its sole discretion upon Contractor’s material breach of Section 4, Section 7.3, Section 8.3 and/or Section 8.4.  This Agreement shall automatically terminate on the first anniversary of the Effective Date.
7.2    Termination by Contractor.  Contractor may terminate this Agreement at any time that there is no uncompleted Project Assignment in effect upon fifteen (15) days’ prior written notice to Client.
7.3    Noninterference with Business.  During the term and for a period of two (2) years immediately following termination of this Agreement by either party, Contractor agrees (i) not to solicit or induce, directly or indirectly, any employee or independent contractor to terminate or breach an employment, contractual or other relationship with Client, and (ii) not to solicit or induce, directly or indirectly, or provide any information or assistance to any third party or parties with respect to, an Acquisition (defined below) or a Change in Control (defined below) of Client, except in compliance with the express prior written request of Client.  As used herein, “Acquisition” shall mean the merger, acquisition, stock purchase or sale of all or any substantial portion of the assets of Client, and “Change of Control” shall mean the removal of or failure to re-elect at least a majority of the current members of the Board of Directors of Client.
7.4    Return of Client Property.  Upon termination of the Agreement or earlier as requested by Client, Contractor will deliver to Client any and all drawings, notes, memoranda, specifications, devices (other than the devices expressly transferred to Contractor under the Separation Agreement), formulas, and documents, together with all copies thereof, and any other material containing or disclosing any Client Work Product, Third Party Information or Proprietary Information of Client.  Contractor further agrees that any property situated on Client's premises and owned by Client, including disks and other storage media, filing cabinets or other work areas, is subject to inspection by Client personnel at any time with or without notice.
		
	8.
	ADDITIONAL COMPLIANCE COVENANTS AND CONSENTS

8.1    Government Contracts.  In the event that Contractor shall perform services under this Agreement in connection with any Government contract in which Client may be the prime contractor or subcontractor, Contractor agrees to abide by all laws, rules and regulations relating thereto.  To the extent that any such law, rule or regulation requires that a provision or clause be included in this Agreement, Contractor agrees that such provision or clause 

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shall be added to this Agreement and the same shall then become a part of this Agreement.  
8.2    Export Laws.  Contractor agrees not to export, directly or indirectly, any U.S. source technical data acquired from Client or any products utilizing such data to countries outside the United States, which export may be in violation of the United States export laws or regulations.
8.3    FCPA.  Contractor agrees to perform the Projects at all times in accordance with, and shall not violate nor permit any of its agents or representatives to violate, the terms or provisions of the Foreign Corrupt Practices Act of 1977 or any other applicable anti-bribery or anti-corruption law of the United States or any foreign jurisdiction.  
8.4    Non-Disparagement.   Contractor agrees that, from and after the Effective Date, he will not, directly or indirectly, in any capacity or manner, make, express, transmit, speak, write, verbalize or otherwise communicate in any way (or cause, further, assist, solicit, encourage, support or participate in any of the foregoing), any remark, comment, message, information, declaration, communication or other statement of any kind, whether verbal, in writing, electronically transferred or otherwise, that might reasonably be construed to be derogatory or critical of, or negative toward, the Company or any of its directors, officers, subsidiaries, employees, agents or representatives.  Notwithstanding the foregoing, nothing in this Section 8.4 or elsewhere in this Agreement shall prohibit Contractor from making any statement or disclosure required under the federal securities laws or other applicable laws; provided, however, that Contractor must provide written notice to Client at least two business days prior to making any such statement or disclosure required by or under the federal securities laws or other applicable laws that would otherwise be prohibited by the provisions of this Section 8.4.
		
	9.
	GENERAL PROVISIONS.

9.1    Governing Law.  This Agreement will be governed and construed in accordance with the laws of the State of California as applied to transactions taking place wholly within California between California residents.  Client and Contractor agree that any dispute between them arising directly or indirectly out of the matters described in this Agreement shall be resolved by final and binding arbitration pursuant to and in accordance with the Arbitration Agreement attached as Exhibit B to the Separation Agreement. 
9.2    Severability.  In case any one or more of the provisions contained in this Agreement shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect the other provisions of this Agreement, and this Agreement shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein.  

 
If moreover, any one or more of the provisions contained in this Agreement shall for any reason be held to be excessively broad as to duration, geographical scope, activity or subject, it shall be construed by limiting and reducing it, so as to be enforceable to the extent compatible with the applicable law as it shall then appear.
9.3    No Assignment.  This Agreement may not be assigned by Contractor without Client’s consent, and any such attempted assignment shall be void and of no effect.
9.4    Notices.  All notices, requests and other communications under this Agreement must be in writing, and must be mailed by registered or certified mail, postage prepaid and return receipt requested, or delivered by hand to the party to whom such notice is required or permitted to be given.  If mailed, any such notice will be considered to have been given three (3) business days after it was mailed, as evidenced by the postmark.  If delivered by hand, any such notice will be considered to have been given when received by the party to whom notice is given, as evidenced by written and dated receipt of the receiving party.  The mailing address for notice to either party will be the address shown in the opening paragraph of this Agreement.  Either party may change its mailing address by notice as provided by this section.
9.5    Legal Fees.  If any dispute arises between the parties with respect to the matters covered by this Agreement which leads to a proceeding to resolve such dispute, the prevailing party in such proceeding shall be entitled to receive its reasonable attorneys’ fees, expert witness fees and out-of-pocket costs incurred in connection with such proceeding, in addition to any other relief it may be awarded.
9.6    Injunctive Relief.  A breach of any of the promises or agreements contained in this Agreement may result in irreparable and continuing damage to Client for which there may be no adequate remedy at law, and Client is therefore entitled to seek injunctive relief as well as such other and further relief as may be appropriate.
9.7    Survival.  The following provisions  shall survive termination of this Agreement: Section 4, Section 5, Section 6, Section 7.3, Section 7.4, Section 8.4, and Section 9.
9.8    Waiver.  No waiver by either party of any breach of this Agreement shall be a waiver of any preceding or succeeding breach.  No waiver by either party of any right under this Agreement shall be construed as a waiver of any other right.  Neither party shall be required to give notice to enforce strict adherence to all terms of this Agreement.
9.9    No Implied Contracts or Commitments.  Contractor acknowledges and agrees that neither the entering into of this Agreement nor any of the terms or provisions hereof are intended to imply any long-

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term consulting arrangement with Client or any promise or commitment by Client or any of its subsidiaries to hire Contractor as an employee, upon completion of any of the Projects or at all.  Any such subsequent employment relationship, if any, would be conditioned upon and subject to a separate written agreement duly executed by Client (or its subsidiary, as applicable) and Contractor.
9.10    Entire Agreement.  This Agreement is the final, complete and exclusive agreement of the parties with respect to the subject matter hereof and supersedes and merges all prior discussions between them.  No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement, will be effective unless in writing and signed by the party to be charged.  The terms of this Agreement will govern all Projects and services undertaken by Contractor for Client.  
IN WITNESS WHEREOF, the parties have caused this Advisory Services Agreement to be executed as indicated below.

 
CLIENT:
APPLIED MICRO CIRCUITS CORPORATION
By:    _____________________________________
Name:    _____________________________________
Title:    _____________________________________

CONTRACTOR:
ROBERT GARGUS
_____/s/ Robert Gargus_________________________
Signature
 

4.

   

EXHIBIT A

PROJECT ASSIGNMENT

1.    Contractor’s principal Client contact:
	
	
	Name:   Paramesh Gopi

	Title:     Chief Executive Officer

		
	2. 
	Services: Contractor will serve Client as a financial, accounting and regulatory compliance consultant during the term of this Agreement. 

3.    Approximate time to be devoted to Client under this Agreement:

Effective Date to December 31, 2013: Five (5) hours per week
January 1, 2014 to Expiration of Term:  Three (3) hours per week
		
	4.
	No-Conflict:

Contractor shall promptly disclose all material business activities/engagements of Contractor relating to companies actually or prospectively engaged in Client Business. Contractor shall not accept any non-Client related activities and engagements that are in competition or conflict with any Client Business that exists on the Effective Date.  As used herein, “Client Business” means the development, marketing or sale of semiconductor products for server on a chip, embedded computing or connectivity applications.  Subject to the foregoing, Client will not unreasonably withhold its consent for Contractor to serve on the Board of Directors of or otherwise provide services (as a consultant or employee) to third party companies engaged in Client Business.  
5.    Scope of Work; Description of Projects:
During the Term, Contractor shall use commercially reasonable efforts to:
(i)    At Client’s request, advise and assist Client with respect to SEC Corp Fin and PCAOB compliance, investigation and disclosure matters.
(ii)    At Client’s request, advise and assist CEO and Controller with respect to accounting and audit matters and Audit Committee presentation and disclosure matters.
(iii)    At Client’s request, assist the CEO and CFO in streamlining APM finance department functions, strengthening the finance business team and improving finance department performance.
(iv)    At Client’s request, assist Client with respect to 1934 Act report preparation and filing.
(v)     At Client’s request, assist CEO and CFO with investor relations matters.
(vi)    At Client’s request, perform such other services as shall be mutually agreed upon by Contractor and Client during the remainder of the Term.
		
	6.
	Compensation package:

(i)    Vesting continuation during the Term of all time-based restricted stock unit (“RSU”) awards previously granted to Contractor during the term of his employment, in accordance with the terms and conditions of the applicable grant agreements and equity incentive plans, conditional on Contractor’s performance of services under this Agreement as of such vesting date and provided this Agreement is not terminated by either party prior to each such vesting date.
(ii)     Equity grant of  Five Thousand (5,000) RSUs, which shall vest 100% on the first 

5.

anniversary of the Effective Date, conditional on Contractor’s performance of services under this Agreement through such date and provided this Agreement is not terminated by either party prior to such date (except as provided in Section 7.1 of the Agreement).Converted by EDGARwiz

Confidential

SERIES D PREFERRED STOCK 

INVESTMENT AGREEMENT

IMPORTANT NOTICE

Before investing in Probe’s Offering, investors need to have read Probe’s Offering documents and the related information and should know significant risks associated with making an investment in Probe which are more fully detailed in Probe’s Offering documents.

Probe can provide no assurance and no guarantee is hereby expressed or implied regarding achievement of all, or any of, Probe’s financial projections or business objectives.

THIS IS NEITHER AN OFFER TO SELL NOR AN OFFER TO BUY SECURITIES.  THE OFFERING IS MADE ONLY BY THE OFFERING DOCUMENTS.  ALL DOCUMENTS RELATED TO CORTXT’S OFFERING MUST BE READ IN CONJUNCTION WITH THE OFFERING DOCUMENTS IN ORDER TO UNDERSTAND FULLY ALL OF THE IMPLICATION AND RISKS OF THE OFFERING OF SECURITIES TO WHICH IT RELATES.  A COPY OF THE OFFERING DOCUMENTS MUST BE MADE AVAILABLE TO YOU IN CONNECTION WITH THIS OFFERING.

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Confidential

SERIES D PREFERRED STOCK INVESTMENT AGREEMENT

This Series D Preferred Stock Investment Agreement (this “Agreement”) is made as of the ___________ __, 2013, by and among Probe Manufacturing, Inc. (the “Company”), a Nevada corporation, and the Purchaser(s) listed in the signature page hereof (the “Purchaser”).

RECITALS:

WHEREAS, the Company and the Investor 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”); and

WHEREAS, Subject to the terms and conditions of this Agreement, (i) each Purchaser agrees to purchase at the applicable Closing and the Company agrees to sell and issue to each Purchaser at such Closing that number of shares of Series D Preferred Stock set forth opposite such Purchaser’s name on Schedule 1, at a price per share equal to the Purchase Price and (ii) each Purchaser and the Company agree to be bound by the obligations set forth herein and to grant to the other parties hereto the rights set forth in this Agreement.

NO THREFORE, the Company and the Investor hereby agree as follows:

1.

PURCHASE AND SALE OF SERIES D PREFERRED STOCK.

1.1

Sale and Issuance of Series D Preferred Stock.

1.1.1

The Company’s board of directors shall adopt a resolution approving the terms and sale of the Series D Preferred Stock pursuant to the terms of this Agreement and the Company shall file a Certificate of Designation stating the voting powers, designations, preferences, limitations, restrictions and relative rights of the class or series in accordance with the terms of this Agreement with the Secretary of State of the State of Nevada on or before the Initial Closing (as defined below).

1.1.2

Subject to the terms and conditions of this Agreement, each investor listed as a “Purchaser” on Schedule 1 hereto (each “Purchaser” and together the “Purchasers”) agrees to purchase at the applicable Closing (as defined below) and the Company agrees to sell and issue to each Purchaser at such Closing that number of shares of Series D Preferred Stock of the Company (“Series D Preferred Stock”)set forth opposite such Purchaser’s name on Schedule 1, at a purchase price per share equal to the Purchase Price.  The minimum investment made by each Purchaser shall be $100,000 with a maximum investment of $500,000.  The Company will offer up to $1,000,000 of the Series D Preferred Stock with an over-allotment not to exceed $500,000 for a total of $1,500,000 on a best efforts basis.

1.1.3   The Purchase Price shall be $100.00 per share of Series D Preferred Stock.

1.2

Closing; Delivery.

1.2.1

Theinitial purchase and sale of the shares of Series D Preferred Stock hereunder shall take place remotely via the exchange of documents and signatures on the Agreement Date 

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Confidential

or the subsequent date on which one or more Purchasers execute counterpart signature pages to this Agreement and deliver the Purchase Price to the Company (which date is referred to herein as the “Initial Closing”).

1.2.2

At any time and from time to time during the sixty (60) day period immediately following the Initial Closing (the “Additional Closing Period”), the Company may, at one or more additional closings (each an “Additional Closing” and together with the Initial Closing, each, a “Closing”), without obtaining the signature, consent or permission of any of the Purchasers in the Initial Closing or any prior Additional Closing, offer and sell to other investors (the “New Purchasers”), at a per share purchase price equal to the Purchase Price, up to that number of shares of Series D Preferred Stock that is equal to that number of shares of Series D Preferred Stock equal to the quotient of (x) Total Series D Investment Amount divided by (y) the Purchase Price, rounded up to the next whole share (the “Total Shares Authorized for Sale”) less the number of shares of Series D Preferred Stock actually issued and sold by the Company at the Initial Closing and any prior Additional Closings.  New Purchasers may include persons or entities who are already Purchasers under this Agreement.  The Company and each of the New Purchasers purchasing shares of Series D Preferred Stock at each Additional Closing will execute counterpart signature pages to this Agreement and each New Purchaser will, upon delivery by such New Purchaser and acceptance by the Company of such New Purchaser’s signature page and delivery of the Purchase Price by such New Purchaser to the Company, become a party to, and bound by, this Agreement to the same extent as if such New Purchaser had been a Purchaser at the Initial Closing and each such New Purchaser shall be deemed to be a Purchaser for all purposes under this Agreement as of the date of the applicable Additional Closing.

1.2.3

Promptly following each Closing, if required by the Company’s governing documents, the Company shall deliver to each Purchaser participating in such Closing a certificate representing the shares of Series D Preferred Stock being purchased by such Purchaser at such Closing against payment of the Purchase Price therefor by check payable to the Company, by wire transfer to a bank account designated by the Company, by cancellation or conversion of indebtedness of the Company to Purchaser or by any combination of such methods.

1.3

Special Dividend. The Series D Preferred will be paid a special monthly divided at the rate of 17.5% per annum or at the option of the Purchaser such special may accrue such special dividends.  If the Company does not pay the special dividend within five (5) business days from the end of the calendar month for which the payment of such dividend to owed, the Company will pay the investor a penalty of 3.5%. Any unpaid or accrued special dividends will be paid upon a liquidation or redemption. For any other dividends or distributions, participation with Common Stock will be on an as-converted basis.

1.4

Conversion Rights.  The Purchaser may elect to convert the Series D Preferred Stock purchased hereunder, in his sole discretion, at any time after a one year (1) year holding period (the Holding Period”), by sending the Company a notice to convert.  The conversion rate shall equal to the greater of $0.08 or a 20% discount to the average of the three (3) lowest closing market prices of the common stock during the ten (10) trading day period prior to conversion. This Warrant is exercisable during the period commencing on the next day after the Holding Period, in whole or from time to time in part, at the option of the Purchaser, upon submitting to the Company a duly completed Notice of Conversion in the form attached hereto.

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Confidential

1.4.1  Each conversion of the Series D Preferred Stock shall be deemed to have been effected immediately prior to the close of business on the day on a duly completed Notice of Conversion is received by the Company.  

1.4.2  Within fifteen (15) business days after a duly completed Notice of Conversion is received by the Company, the Company at its expense will use its best efforts to cause to be issued in the name of, and delivered to the Purchaser a certificate or certificates for the number of full Common Stock Shares to which such Purchaser shall be entitled upon such conversion, which shall be rounded up to the nearest whole share in lieu of any fractional share to which such Purchaser would otherwise be entitled.

1.5

Common Stock Warrant(s). Investor shall receive one (1) warrant to purchase 50,000 shares of common stock for every $100,000 invested in the offering at a price per share equal to $0.10 per share and one (1) warrant to purchase 50,000 shares of common stock at a price per share equal to $0.20 (the “Warrants”).  The Warrants will be valid for a period of 5 years from the date of the Closing. The amount and price per share shall be subject to adjustments for stock dividends, splits, combinations and similar events.  The Warrants are governed by the terms of the Series F & G Common Stock Purchase Agreements.

1.6

Security Interest.  The Purchasers hereunder will have their investment secured by all assets, including but not limited to the equipment, accounts receivables and inventory of the Company and its subsidiaries.  Upon any default of this 

2.

REPRESENTATIONS AND WARRANTIES OF THE COMPANY.  The Company hereby represents and warrants to each Purchaser that, except as set forth on the Disclosure Schedule attached as Exhibit B to this Agreement (the “Disclosure Schedule”), if any, which exceptions shall be deemed to be part of the representations and warranties made hereunder, the following representations are true and complete as of the date of the Agreement Date, except as otherwise indicated.  

2.1

Organization, Good Standing, Corporate Power and Qualification.The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada and has all corporate power and corporate authority required (a) to carry on its business as presently conducted and as presently proposed to be conducted and (b) to execute, deliver and perform its obligations under this Agreement.  The Company is duly qualified to transact business as a foreign corporation and is in good standing under the laws of each jurisdiction in which the failure to so qualify or be in good standing would have a material adverse effect on the business, assets (including intangible assets), liabilities, financial condition, property, or results of operations of the Company.

2.2

Capitalization.The authorized capital of the Company consists, immediately prior to the Closing (unless otherwise noted), of the following.

2.2.1

200,000,000 shares of the common stock of the Company, $0.001 par value per share (the “Common Stock”), (a) 20,331,906 shares of which are issued and outstanding immediately prior to the Closing.  All of the outstanding shares of Common Stock are duly authorized, validly issued, fully paid and nonassessable and were issued in material compliance with all applicable federal and state securities laws.  

2.2.2

10,000,000 shares of the preferred stock of the Company, $0.001 par value per share (the “Preferred Stock”), 15,000 of which will be designated as Series D Preferred Stock, none of which are issued and outstanding immediately prior to the Closing.  

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2.2.3

2,000,000shares of Common Stock are subject to issuance to officers, directors, employees and consultants of the Company pursuant to the Company’s Equity Incentive Plan duly adopted by the Board of Directors of the Company (the “Board”) and approved by the Company stockholders (the “Stock Plan”).  Of such shares of Common Stock reserved under the Stock Plan, options to purchase 1,500,000 shares have been granted and are currently outstanding, and 313,362shares of Common Stock remain available for issuance to officers, directors, employees and consultants pursuant to the Stock Plan.

2.2.4

There are no outstanding preemptive rights, options, warrants, conversion privileges or rights (including but not limited to rights of first refusal or similar rights), orally or in writing, to purchase or acquire any securities from the Company including, without limitation, any shares of Common Stock, or Preferred Stock, or any securities convertible into or exchangeable or exercisable for shares of Common Stock or Preferred Stock, except for (a) the conversion privileges of the Shares to be issued under this Agreement pursuant to the terms of the Certificate of Designation, (b), and (c) the securities and rights described in Section 2.2.3 of this Agreement.  

2.3

Subsidiaries.  The Company currently does not own or control, directly or indirectly, any interest in any other corporation, partnership, trust, joint venture, limited liability company, association, or other business entity, other than a 100% controlling interest in Trident Manufacturing, Inc., a Utah corporation.  The Company is not a participant in any joint venture, partnership or similar arrangement.

2.4

Authorization.All corporate action has been taken, or will be taken prior to the applicable Closing, on the part of the Board and stockholders that is necessary for the authorization, execution and delivery of this Agreement by the Company and the performance by the Company of the obligations to be performed by the Company as of the date hereof under this Agreement.  This Agreement, when executed and delivered by the Company, shall constitute the valid and legally binding obligation of the Company, enforceable against the Company in accordance with its terms except (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, or other laws of general application relating to or affecting the enforcement of creditors’ rights generally, or (b) as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies.

2.5

Valid Issuance of Shares.  The shares of Series D Preferred Stock, when issued, sold and delivered in accordance with the terms and for the consideration set forth in this Agreement, will be duly authorized, validly issued, fully paid and nonassessable and free of restrictions on transfer other than restrictions on transfer under this Agreement, applicable state and federal securities laws and liens or encumbrances created by or imposed by a Purchaser.  Based in part on the accuracy of the representations of the Purchasers in Section 3 of this Agreement and subject to filings pursuant to Regulation D of the Securities Act of 1933, as amended (the “Securities Act”), and applicable state securities laws, the offer, sale and issuance of the shares of Series D Preferred Stock to be issued pursuant to and in conformity with the terms of this Agreement and the issuance of the Common Stock, if any, to be issued upon conversion thereof for no additional consideration and pursuant to the Restated Charter, will be issued in compliance with all applicable federal and state securities laws.  The Common Stock issuable upon conversion of the shares of Series D Preferred Stock has been duly reserved for issuance, and upon issuance in accordance with the terms of the Restated Charter, will be duly authorized, validly issued, fully paid and nonassessable and free of restrictions on transfer other than restrictions on transfer under this Agreement, applicable federal and state securities laws and liens or encumbrances created by or imposed by a Purchaser.  Based in part upon the representations of the Purchasers in Section 3 of this Agreement, and subject to filings pursuant to Regulation D of the Securities Act and applicable state securities laws, the Common Stock 

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issuable upon conversion of the shares of Series D Preferred Stock will be issued in compliance with all applicable federal and state securities laws.

2.6

Litigation.There is no pending action, suit, proceeding, arbitration, mediation, complaint, claim, charge or investigation before any court, arbitrator, mediator or governmental body or, to the Company’s knowledge, currently threatened in writing (a) against the Company or (b) against any consultant, officer, director or key employee of the Company arising out of his or her consulting, employment or board relationship with the Company or that could otherwise materially impact the Company.  

2.7

Intellectual Property.  The Company owns or possesses sufficient legal rights to all Intellectual Property (as defined below) that is necessary to the conduct of the Company’s business as now conducted and as presently proposed to be conducted (the “Company Intellectual Property”) without any violation or infringement (or in the case of third-party patents, patent applications, trademarks, trademark applications, service marks, or service mark applications, without any violation or infringement known to the Company) of the rights of others. No product or service marketed or sold (or proposed to be marketed or sold) by the Company violates or will violate any license or infringes or will infringe any rights to any patents, patent applications, trademarks, trademark applications, service marks, trade names, copyrights, trade secrets, licenses, domain names, mask works, information and proprietary rights and processes (collectively, “Intellectual Property”) of any other party, except that with respect to third-party patents, patent applications, trademarks, trademark applications, service marks, or service mark applications the foregoing representation is made to the Company’s knowledge only.  Other than with respect to commercially available software products under standard end-user object code license agreements, there is no outstanding option, license, agreement, claim, encumbrance or shared ownership interest of any kind relating to the Company Intellectual Property, nor is the Company bound by or a party to any options, licenses or agreements of any kind with respect to the Intellectual Property of any other person. The Company has not received any written communications alleging that the Company has violated or, by conducting its business, would violate any of the Intellectual Property of any other person.

2.8

Employee and Consultant Matters. Each current and former employee, consultant and officer of the Company has executed an agreement with the Company regarding confidentiality and proprietary information substantially in the form or forms made available to the Purchasers or delivered to the counsel for the Purchasers.  No current or former employee or consultant has excluded any work or invention from his or her assignment of inventions. To the Company’s knowledge, no such employees or consultants is in violation thereof.  To the Company’s knowledge, none of its employees is obligated under any judgment, decree, contract, covenant or agreement that would materially interfere with such employee’s ability to promote the interest of the Company or that would interfere with such employee’s ability to promote the interests of the Company or that would conflict with the Company’s business. To the Company’s knowledge, all individuals who have purchased unvested shares of the Company’s Common Stock have timely filed elections under Section 83(b) of the Internal Revenue Code of 1986, as amended.

2.9

Compliance with Other Instruments.  The Company is not in violation or default (a) of any provisions of the Restated Charter or the Company’s bylaws, (b) of any judgment, order, writ or decree of any court or governmental entity, (c) under any agreement, instrument, contract, lease, note, indenture, mortgage or purchase order to which it is a party that is required to be listed on the Disclosure Schedule, or, (d) to its knowledge, of any provision of federal or state statute, rule or regulation materially applicable to the Company.  The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated by this Agreement will not result in any such violation or default, or constitute, with or without the passage of time and giving of 

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notice, either (i) a default under any such judgment, order, writ, decree, agreement, instrument, contract, lease, note, indenture, mortgage or purchase order or (ii) an event which results in the creation of any lien, charge or encumbrance upon any assets of the Company or the suspension, revocation, forfeiture, or nonrenewal of any material permit or license applicable to the Company.

2.10

Title to Property and Assets.  The Company owns its properties and assets free and clear of all mortgages, deeds of trust, liens, encumbrances and security interests except for statutory liens for the payment of current taxes that are not yet delinquent and liens, encumbrances and security interests which arise in the ordinary course of business and which do not affect material properties and assets of the Company.  With respect to the property and assets it leases, the Company is in material compliance with each such lease.

2.11

Agreements.  Except for this Agreement, there are no agreements, understandings, instruments, contracts or proposed transactions to which the Company is a party that involve (a) obligations (contingent or otherwise) of, or payments to, the Company in excess of $500,000, (b) the license of any Intellectual Property to or from the Company other than licenses with respect to commercially available software products under standard end-user object code license agreements or standard customer terms of service and privacy policies for Internet sites, (c) the grant of rights to manufacture, produce, assemble, license, market, or sell its products to any other person, or that limit the Company’s exclusive right to develop, manufacture, assemble, distribute, market or sell its products, or (d) indemnification by the Company with respect to infringements of proprietary rights other than standard customer or channel agreements (each, a “Material Agreement”).  The Company is not in material breach of any Material Agreement.  Each Material Agreement is in full force and effect and is enforceable by the Company in accordance with its respective terms, except as may be limited by (i) applicable bankruptcy, insolvency, reorganization or others laws of general application relating to or affecting the enforcement of creditors’ rights generally, or (ii) the effect of rules of law governing the availability of equitable remedies.

2.12

Liabilities.The Company has no liabilities or obligations, contingent or otherwise, in excess of $250,000 individually or $2,000,000 in the aggregate.  

3.

REPRESENTATIONS AND WARRANTIES AND COVENANTS OF THE PURCHASERS. Each Purchaser hereby represents and warrants to the Company, severally and not jointly, as follows.

3.1

Authorization.The Purchaser has full power and authority to enter into this Agreement.  This Agreement, when executed and delivered by the Purchaser, will constitute a valid and legally binding obligation of the Purchaser, enforceable in accordance with their terms, except (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, and any other laws of general application relating to or affecting the enforcement of creditors’ rights generally, or (b) the effect of rules of law governing the availability of equitable remedies.

3.2

Purchase Entirely for Own Account.This Agreement is made with the Purchaser in reliance upon the Purchaser’s representation to the Company, which by the Purchaser’s execution of this Agreement, the Purchaser hereby confirms, that the shares of Series D Preferred Stock to be acquired by the Purchaser will be acquired for investment for the Purchaser’s own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and that the Purchaser has no present intention of selling, granting any participation in, or otherwise distributing the same.  By executing this Agreement, the Purchaser further represents that the Purchaser does not presently have any contract, undertaking, agreement or arrangement with any 

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person to sell, transfer or grant participations to such person or to any third person, with respect to any of the shares of Series D Preferred Stock.  The Purchaser has not been formed for the specific purpose of acquiring the shares of Series D Preferred Stock.  

3.3

Disclosure of Information.The Purchaser has had an opportunity to discuss the Company’s business, management, financial affairs and the terms and conditions of the offering of the shares of Series D Preferred Stock with the Company’s management.  Nothing in this Section 3, including the foregoing sentence, limits or modifies the representations and warranties of the Company in Section 2 of this Agreement or the right of the Purchasers to rely thereon.

3.4

Restricted Securities. The Purchaser understands that the shares of Series D Preferred Stock have not been, and will not be, registered under the Securities Act, by reason of a specific exemption from the registration provisions of the Securities Act which depends upon, among other things, the bona fide nature of the investment intent and the accuracy of the Purchaser’s representations as expressed herein.  The Purchaser understands that the shares of Series D Preferred Stock are “restricted securities” under applicable United States federal and state securities laws and that, pursuant to these laws, the Purchaser must hold theshares of Series D Preferred Stock indefinitely unless they are registered with the Securities and Exchange Commission and qualified by state authorities or an exemption from such registration and qualification requirements is available.  The Purchaser acknowledges that the Company has no obligation to register or qualify the shares of Series D Preferred Stock, or the Common Stock into which it may be converted, for resale.  The Purchaser further acknowledges that if an exemption from registration or qualification is available, it may be conditioned on various requirements including, but not limited to, the time and manner of sale, the holding period for the shares of Series D Preferred Stock, and on requirements relating to the Company which are outside of the Purchaser’s control, and which the Company is under no obligation and may not be able to satisfy. 

3.5

No Public Market. The Purchaser understands that no public market now exists for the shares of Series D Preferred Stock, and that the Company has made no assurances that a public market will ever exist for the shares of Series D Preferred Stock.

3.6

Legends.  The Purchaser understands that the shares of Series D Preferred Stock and any securities issued in respect of or exchange for the shares of Series D Preferred Stock, may bear any one or more of the following legends:  (a) any legend set forth in, or required by, this Agreement; (b) any legend required by the securities laws of any state to the extent such laws are applicable to the shares of Series D Preferred Stock represented by the certificate so legended; and (c) the following legend:

“THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF.  NO TRANSFER MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.”

3.7

Accredited and Sophisticated Purchaser. The Purchaser is an accredited investor as defined in Rule 501(a) of Regulation D promulgated under the Securities Act.  The Purchaser is an investor in securities of companies in the development stage and acknowledges that 

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Purchaser is able to fend for itself, can bear the economic risk of its investment, and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in the shares of Series D Preferred Stock.  If other than an individual, Purchaser also represents it has not been organized for the purpose of acquiring the shares of Series D Preferred Stock.

3.8

No General Solicitation.  Neither the Purchaser nor any of its officers, directors, employees, agents, stockholders or partners has either directly or indirectly, including through a broker or finder (a) engaged in any general solicitation with respect to the offer and sale of the shares of Series D Preferred Stock, or (b) published any advertisement in connection with the offer and sale of the shares of Series D Preferred Stock.

3.9

Exculpation Among Purchasers.  The Purchaser acknowledges that it is not relying upon any person, other than the Company and its officers and directors, in making its investment or decision to invest in the Company.  The Purchaser agrees that neither any Purchaser nor the respective controlling persons, officers, directors, partners, agents, or employees of any Purchaser shall be liable to any other Purchaser for any action heretofore taken or omitted to be taken by any of them in connection with the purchase of the shares of Series D Preferred Stock.

3.10

Residence.If the Purchaser is an individual, then the Purchaser resides in the state identified in the address of the Purchaser set forth on the signature page hereto and/or on Schedule 1; if the Purchaser is a partnership, corporation, limited liability company or other entity, then the office or offices of the Purchaser in which its principal place of business is identified in the address or addresses of the Purchaser set forth on the signature page hereto and/or on Schedule 1. In the event that the Purchaser is not a resident of the United States, such Purchaser hereby agrees to make such additional representations and warranties relating to such Purchaser’s status as a non-United States resident as reasonably may be requested by the Company and to execute and deliver such documents or agreements as reasonably may be requested by the Company relating thereto as a condition to the purchase and sale of any shares of Series D Preferred Stock by such Purchaser.  

4.

COVENANTS OF THE COMPANY.  The Company shall become obligated to strictly comply with the following covenants upon receiving $750,000 in funds from the sale of the Series D. Preferred Stock, the failure of which will constitute a material breach of this Agreement.

4.1

Information Rights.

4.1.1

Financial Information.  The Company will furnish to each Purchaser monthlyunaudited financial statements of the Company, including the Company’s sales data, customer bookings and current sales backlog, account receivables, account payables, profit and loss statements and other relevant financial data that may be deemed necessary to keep the Purchaser informed about the Company’s financial condition.; and (2) quarterly unaudited financial statements for each fiscal quarter of the Company (except the last quarter of the Company’s fiscal year), including an unaudited balance sheet as of the end of such fiscal quarter, an unaudited statement of operations and an unaudited statement of cash flows of the Company for such quarter, all prepared in accordance with generally accepted accounting principles and practices, subject to changes resulting from normal year-end audit adjustments.  If the Company has audited records of any of the foregoing, it shall provide those in lieu of the unaudited versions.

4.1.2

Confidentiality.  Anything in this Agreement to the contrary notwithstanding, no Purchaser by reason of this Agreement shall have access to any trade secrets or confidential information of the Company.  The Company shall not be required to comply with any 

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information rights in respect of any Purchaser whom the Company reasonably determines to be a competitor or an officer, employee, director or holder of ten percent (10%) or more of a competitor.  Each Purchaser agrees that such Purchaser will keep confidential and will not disclose, divulge, or use for any purpose (other than to monitor its invest­ment in the Company) any confidential information obtained from the Company pursuant to the terms of this Agreement other than to any of the Purchaser’s attorneys, accountants, consultants, and other professionals, to the extent necessary to obtain their services in connection with monitoring the Purchaser’s investment in the Company.

4.1.3

Inspection Rights.  The Company shall permit each Purchaser to visit and inspect the Company’s properties, to examine its books of account and records and to discuss the Company’s affairs, finances and accounts with its officers, all at such reasonable times as may be requested by such Purchaser.

4.2

Use of Proceeds.The Company hereby agrees that it shall use the proceeds for the purpose of paying off any outstanding credit lines, account-receivables financing arrangements and like financial arrangements.

4.3

Payment of Special Dividend.Pay the special monthly divided at the rate of 17.5% per annum or at the option of the Purchaser such special may accrue such special dividends.  If the Company does not pay the special dividend within five (5) business days from the end of the calendar month for which the payment of such dividend to owed, the Company will pay the investor a penalty of 3.5%. Any unpaid or accrued special dividends will be paid upon a liquidation or redemption.  

4.4

Reservation of Common Stock.The Company will at all times reserve and keep available, solely for issuance and delivery upon the conversion of the Series D Preferred Stock, all Common Stock issuable from time to time upon conversion of that number of shares of Series D Preferred Stock equal to the Total Shares Authorized for Sale, regardless of whether or not all such shares have been issued at such time.

4.5

Investor Relations.  The Company shall retain an investor relations firm and shall pay a minimum of $2,500 per month on investor relations.

4.6

Additional Capital Offering(s).  The Company shall use its best efforts to raise an additional $250,000 in equity financing on or before October 31, 2013.

4.7

Security Interest.  The Company hereby grants to Purchaser(s) a first priority security interest in all assets, including but not limited to, the equipment, account receivables and inventory of the Company and its subsidiaries (the “Collateral”).  The Company hereby irrevocably authorizes the Purchaser(s) at any time, and from time to time, to file in any jurisdiction any initial financing statements and amendments thereto that the Purchaser(s) reasonably deems necessary to establish and maintain valid, attached and perfected first priority security interests in the Collateral in favor of the Purchaser(s), free and clear of all Liens and claims and rights of third parties whatsoever, and the Company shall cooperate with the Investor with respect to such filings.  Without the prior written consent of the Purchaser(s), the Company will not, in any way, hypothecate or create or permit to exist any Lien on or other interest in the Collateral, and the Company will not sell, transfer, assign, pledge, collaterally assign, exchange or otherwise dispose of the Collateral.

5.

RESTRICTIONS ON TRANSFER.

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5.1

Limitations on Disposition.  Each person owning of record shares of Common Stock of the Company issued or issuable pursuant to the conversion of the shares of Series D Preferred Stock and any shares of Common Stock of the Company issued as a dividend or other distribution with respect thereto or in exchange therefor or in replacement thereof (collectively, the “Securities”) or any assignee of record of Securities (each such person, a “Holder”) hereby agrees not to make any disposition of all or any portion of any Securities unless and until:

(a)

there is then in effect a registration statement under the Securities Act, covering such proposed disposition and such disposition is made in accordance with such registration statement; or

(b)

such Holder shall have notified the Company of the proposed disposition and shall have furnished the Company with a statement of the circumstances surrounding the proposed disposition, and, at the expense of such Holder or its transferee, with an opinion of counsel, reasonably satisfactory to the Company, that such disposition will not require registration of such securities under the Securities Act.

Notwithstanding the provisions of Sections 5.1(a) and (b) above, no such registration statement or opinion of counsel shall be required: (i) for any transfer of any Securities in compliance with the Securities and Exchange Commission’s Rule 144 or Rule 144A, or (ii) for any transfer of any Securities by a Holder that is a partnership, limited liability company, a corporation or a venture capital fund to (A) a partner of such partnership, a member of such limited liability company or stockholder of such corporation, (B) an affiliate of such partnership, limited liability company or corporation (including, without limitation, any affiliated investment fund of such Holder), (C) a retired partner of such partnership or a retired member of such limited liability company, (D) the estate of any such partner, member or stockholder, or (iii) for the transfer by gift, will or intestate succession by any Holder to his or her spouse or lineal descendants or ancestors or any trust for any of the foregoing; provided that in the case of clauses (ii) and (iii) the transferee agrees in writing to be subject to the terms of this Agreement to the same extent as if the transferee were an original Purchaser hereunder and in the case of clause (iii) the transfer was without additional consideration or at no greater than cost.

6.

PROTECTIVE PROVISIONS.

6.1

General.  So long as51% of shares of Series D Preferred are outstanding, in addition to any other vote or approval required under the Company’s Charter or By-laws, the Company will not, without the written consent of the holders of at least 51% of the Company’s Series D Preferred outstanding, either directly or indirectly by amendment, merger, consolidation, or otherwise: (i) liquidate, dissolve or wind-up the business and affairs of the Company, or effect any Deemed Liquidation Event or consent to any of the foregoing if such Deemed Liquidation Event would result in the Investor not being made whole in their investment hereunder; (ii) amend, alter, or repeal any provision of the Certificate of Incorporation or Bylaws in a manner adverse to the Series D Preferred; (iii) create or authorize the creation of or issue or obligate itself to issue shares of, any other security convertible into or exercisable for any equity security, having rights, preferences or privileges senior toor on parity with the Series D Preferred, or increase the authorized number of shares of Series D Preferred or of any additional class or series of capital stock unless it ranks junior to the Series D Preferred; (iv) reclassify, alter or amend any existing security that is junior to or on parity with the Series D Preferred, if such reclassification, alteration or amendment would render such other security senior to or on parity with the Series D Preferred; (v) purchase or redeem or pay any dividend on any capital stock prior to the Series D Preferred, other than stock repurchased from former employees or consultants in connection with the cessation of their employment/services, at the lower of fair market 

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value or cost; other than as approved by the Board; or (vii) dispose of any subsidiary stock or all or substantially all of any subsidiary assets. 

7.

REDEMPTION; LIQUIDATION PREFERENCE.

7.1

Purchaser Redemption Right.  The Series D Preferred shall be redeemable from funds legally available for distribution at the option of the individual holders of the Series D Preferred commencing any time after the one (1) year period from the Closing(the “Redemption Period”) at a price equal to the Purchase Price plus all accrued but unpaid dividends.  If Company is not in financial position to pay it back it need to notify the Purchaser(s) thirty (30) days prior the Redemption Period commencing and both parties will negotiate in good faith for an extension of the Redemption Period.

7.2

Company Redemption Right.  Notwithstanding, the Company may elect to redeem the Series D Preferred shares any time after the Closing at a price equal to Purchase Price plus all accrued but unpaid dividends subject to the Purchaser(s) right to convert by providing the Purchaser’s written notice about its intent to redeem whereby the Purchaser(s) shall have the right to convert per the terms of the conversion terms at least ten (10) days prior to such redemption by the Company.

7.3

Liquidation Preference.  The Company hereby agrees to first pay one times the Purchase Price plus accrued dividends plus declared and unpaid dividends on each share of Series D Preferred.  Thereafter, the Series D Preferred participates with the Common Stock pro rata on an as-converted basis.

8.

GENERAL PROVISIONS.

8.1

Successors and Assigns. The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the parties.  Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.

8.2

Governing Law. This Agreement shall be governed by, and construed in accordance with the laws of the State of California, regardless of the laws that might otherwise govern under applicable principles of conflicts of law. 

8.3

Counterparts; Facsimile or Electronic Signature. This Agreement may be executed and delivered by facsimile or electronic signature and in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

8.4

Titles and Subtitles. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.  

8.5

Notices.  All notices and other communications given or made pursuant to this Agreement shall be in writing and shall be deemed effectively given upon the earlier of actual receipt or:  (a) personal delivery to the party to be notified, (b) when sent, if sent by facsimile or electronic mail during normal business hours of the recipient, and if not sent during normal business hours, then 

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on the recipient’s next business day, (c) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one (1) business day after deposit with a nationally recognized overnight courier, freight prepaid, specifying next business day delivery, with written verification of receipt.  All communications shall be sent to the respective parties at their address as set forth on the signature page or Schedule 1, or to such address, facsimile number or electronic mail address as subsequently modified by written notice given in accordance with this Section 8.5.

8.6

No Finder’s Fees. Each party represents that it neither is nor will be obligated for any finder’s fee or commission in connection with this transaction.  Each Purchaser agrees to indemnify and to hold harmless the Company from any liability for any commission or compensation in the nature of a finder’s or broker’s fee arising out of this transaction (and the costs and expenses of defending against such liability or asserted liability) for which each Purchaser or any of its officers, employees, or representatives is responsible.  The Company agrees to indemnify and hold harmless each Purchaser from any liability for any commission or compensation in the nature of a finder’s or broker’s fee arising out of this transaction (and the costs and expenses of defending against such liability or asserted liability) for which the Company or any of its officers, employees or representatives is responsible.

8.7

Attorneys’ Fees.  If any action at law or in equity (including arbitration) is necessary to enforce or interpret the terms of this Agreement, the prevailing party shall be entitled to reasonable attorneys’ fees, costs and necessary disbursements in addition to any other relief to which such party may be entitled.  Each party shall pay all costs and expenses that it incurs with respect to the negotiation, execution, delivery and performance of the Agreement; provided, however, that the Company shall, at the Closing, reimburse the fees and expenses of one counsel for Purchasers, for a flat fee equal to the Purchaser Counsel Reimbursement Amount.

8.8

Amendments and Waivers. Except as specified in Section 1.2.2, any term of this Agreement may be amended, terminated or waived (either generally or in a particular instance and either retroactively or prospectively) only with the written consent of the Company and the Purchasers holding a majority of the then-outstanding shares of Series D Preferred Stock (or Common Stock issued on conversion thereof); provided, however, that any amendment to Section 7.1(a) or Section 7.1(c) shall also require the additional written consent of the holders of a majority of the outstanding shares of the Company’s Common Stock then held by all of the Common Control Holders.  Any amendment or waiver effected in accordance with this Section 8.8 shall be binding upon the Purchasers, the Key Holders, each transferee of the shares of Series D Preferred Stock (or the Common Stock issuable upon conversion thereof) or Common Stock from a Purchaser or Key Holders, as applicable, and each future holder of all such securities, and the Company.

8.9

Severability. The invalidity or unenforceability of any provision hereof shall in no way affect the validity or enforceability of any other provision.

8.10

Delays or Omissions.No delay or omission to exercise any right, power or remedy accruing to any party under this Agreement, upon any breach or default of any other party under this Agreement, shall impair any such right, power or remedy of such non-breaching or non-defaulting party nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring.  Any waiver, permit, consent or approval of any kind or character on the part of any party of any breach or default under this Agreement, or any waiver on the part of any party of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent 

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specifically set forth in such writing.  All remedies, either under this Agreement or by law or otherwise afforded to any party, shall be cumulative and not alternative.

8.11

Termination.  Unless terminated earlier pursuant to the terms of this Agreement, (x) the rights, duties and obligations under Sections 4, 6 and 7 shall terminate immediately prior to the closing of the Company’s initial public offering of Common Stock pursuant to an effective registration statement filed under the Securities Act, (y) notwithstanding anything to the contrary herein, this Agreement (excluding any then-existing obligations) shall terminate upon the closing of a Deemed Liquidation Event as defined in the Company’s Restated Charter, as amended from time to time and (z) notwithstanding anything to the contrary herein, Section 1, Section 2, Section 3, Section 4.1.2 and this Section 8 shall survive any termination of this Agreement.

8.12

Dispute Resolution. The Parties hereby irrevocably and unconditionally agree that Any controversy, dispute, or claim of whatever nature arising out of, in connection with, or in relation to the interpretation, performance or breach of this agreement, shall be settled at the request of any party to this agreement, by final and binding arbitration administered by American Arbitration Association, conducted in Irvine, California, administered by and in accordance with the then existing Rules of Practice and Procedure of American Arbitration Association, and judgment upon any award rendered by the arbitrator(s) may be entered by any state or federal court having jurisdiction thereof. The cost of arbitration shall be borne by the party against whom the award is rendered or, if in the interest of fairness, as allocated in accordance with the judgment of the arbitrators. All awards in arbitration made in good faith and not infected with fraud or other misconduct shall be final and binding.

8.13

Entire Agreement. This Agreement (including the Exhibits and Schedules hereto) together with the Restated Charter constitute the full and entire understanding and agreement between the parties with respect to the subject matter hereof, and any other written or oral agreement relating to the subject matter hereof existing between the parties are expressly canceled. 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year first written above.

				
	THE COMPANY:

	 

	Name:

	 
	 
	 

	By:

	 
	 
	 

	Title:

	 
	 

				
	PURCHASERS:

	 

	[FOR ENTITY INVESTOR USE

FOLLOWING SIGNATURE BLOCK:]

	[FOR INDIVIDUAL INVESTOR USE 

FOLLOWING SIGNATURE BLOCK:]

	Name:

	 
	Name:

	 

	 
	 
	 
	[TYPE NAME ON LINE]

	By:

	 
	By:

	 

	Title:

	 
	 
	[SIGN HERE]

SUBSCRIPTION AMOUNT:

Purchaser hereby irrevocably commits to purchase a Note in the principal amount of 

$_________________________.

Note that the principal amount shown above must be in increments of US$25,000.00 and must meet the following minimum investment requirements of $100,000.

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EXHIBIT A

SCHEDULE OF PURCHASERS

PURCHASERS:

																
	

Name, Address and E-Mail of Purchaser

	 
	Series D Preferred Stock Shares Purchased

	 
	Indebtedness Cancellation

	 
	Cash Payment

	 
	Total

Purchase 

Amount

	 
	 
	 
	 
	 
	 
	 
	 
	 

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EXHIBIT B

DISCLOSURE SCHEDULE

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EXHIBIT C

FORM OF OFFICER’S CERTIFICATE

Officer’s Certificate

The undersigned, Kambiz Mahdi, is the Chief Executive Officer and Chairman of Probe Manufacturing, Inc., a Nevada Company, ("Company"), and is delivering this Officer's Certificate to the Purchaser(s) of the Series D Preferred Stock Offering ("Purchaser"), pursuant to that certain Preferred Series D Stock Investment Agreement, dated June 20, 2013, by and between Company and the Purchaser(s) (the "Agreement"). Capitalized terms used herein shall have the meanings given to them in the Agreement. Company hereby certifies to Purchaser that as of the date hereof the following conditions precedent to consummate the Closing have been satisfied:

1. All representations and warranties of the Company contained in the Agreement are true and correct in all material respects as of the date of the Closing, and

2. All covenants and agreements required by the terms of the Preferred Series D Stock Investment Agreement to be performed and complied with by Company prior to or at the Closing have been duly performed in all material respects as of the date of the Closing.

IN WITNESS WHEREOF, the undersigned has caused this Certificate to be duly executed June [__], 2013.

Probe Manufacturing, Inc.

By: ____________________________

Kambiz Mahdi, CEO & Chairman

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EXHIBIT D

FORM OF LEGAL OPINION

Based upon the foregoing and subject to the additional qualifications set forth below, we are of the opinion that:

1.

The Company is validly existing as a corporation and in good standing under Nevada law and is qualified as a foreign corporation and in good standing in California.

2.

The Company has the corporate power to execute and deliver the Transaction Documents in which it is named as a party and to perform its obligations thereunder.

3.

The Company has duly authorized, executed and delivered the Transaction Documents in which it is named as a party, and such Transaction Documents constitute its valid and binding obligations enforceable against it in accordance with their terms.

4.

The execution and delivery by the Company of the Transaction Documents and the performance by the Company of its obligations under the Transaction Documents, including its issuance and sale of the Preferred Shares and issuance of shares of Common Stock upon conversion of the Preferred Shares in accordance with the Company’s certificate of incorporation (the “Conversion Shares”), do not and will not (i) violate the Nevada Revised Statutes governing corporations (“NRS”), the law of State of California or United States federal law,  (ii) violate any court order, judgment or decree,  (iii) result in a breach of, or constitute a default under, any of the agreements or instruments; and/or (iv) violate the Company’s certificate of incorporation or by-laws.

5.

The Company is not required to obtain any consent, approval, license or exemption by, or order or authorization of, or to make any filing, recording or registration with, any governmental authority pursuant to the NRS, the law of California or United States federal law in connection with the execution and delivery by the Company of the Transaction Documents in which it is named as a party or the performance by it of its obligations other than those that have been obtained or made.

6.

The authorized capital stock of the Company is accurately stated in the Preferred Series D Stock Investment Agreement, dated June 20, 2013. All such issued and outstanding shares have been duly authorized and validly issued and are fully paid and nonassessable.

7.

The Preferred Shares have been duly authorized, and when issued, delivered and paid for in accordance with the Purchase Agreement, will be validly issued, fully paid and nonassessable.  The Conversion Shares have been duly authorized and, when issued in accordance with the Company's certificate of incorporation upon conversion of the Preferred Shares, will be validly issued, fully paid and nonassessable.  Neither the issuance or sale of the Preferred Shares nor the issuance of the Conversion Shares is subject to any preemptive rights under the NRS or the Company’s certificate of incorporation or by-laws.

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8.

Based on, and assuming the accuracy of, the representations of each of the Purchasers in the Purchase Agreement, the sale of the Preferred Shares pursuant to the Purchase Agreement does not, the sale of the Warrants pursuant to the Series F & G Warrant Purchase Agreements and the issuance of the Conversion Shares upon conversion of the Preferred Shares or the Warrants in accordance with the Company’s certificate of incorporation will not (assuming no commission or other remuneration is paid or given directly or indirectly for soliciting the conversion), require registration under the Securities Act.

LAW OFFICE

______________________

Name of Attorney

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EXHIBIT E

CONVERSION NOTICE

Probe Manufacturing, Inc.:

Theundersignedherebyelectstoconvert _________________________sharesofSeriesDPreferred Stock(“SeriesD Stock”)ofProbe Manufacturing,Inc.(the“Company”), represented bythe attached certificate no. , into shares of the Company’sStock(“CommonShares”)pursuant to the formula stated in Section 1.4 of the Series D Preferred Stock Investment Agreement, dated June 17, 2013.

ThestockcertificatefortheCommon Sharesissuableupontheconversion ofthe

Series D Stock shouldberegisteredinthenameof _____________________ and delivered to the following address:

______________________________________

______________________________________

______________________________________

______________________________________

Executed this ___ day of _____________, 201__

By: _______________________________________________

Signature

Print Name:_________________________________________

[If the holder of the attached Series 1 Class B Shares is an entity and not an individual, please print below the name of the entity and the title of the Authorized Representative who signed this conversion notice on behalf of such entity]

Entity Name:________________________________________

Title of Authorized

Representative:______________________________________

21

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