Document:

EXHIBIT
      10.16

     

    MANAGEMENT
      AGREEMENT

     

    THIS
      AGREEMENT
      is
      effective as of the 1st
      day of
      October, 2005 (the “Effective Date”).

     

    BETWEEN:

     

    I.Q.
      MICRO INC.,
      a
      company duly incorporated pursuant to the laws of the state of Colorado, having
      an office at 500 Australian Avenue, Suite 700, West Palm Beach, Florida, U.S.A.,
      33401.

     

    (hereinafter
      referred to as the “Company”)

     

    OF
      THE FIRST PART

     

    AND:

     

    JOCHRI
      CONSULT AS,
      a
      company duly incorporated pursuant to the laws of Norway, having an office
      at
      Spurvestien 24, 3189 Horten, Norway.

     

    (hereinafter
      referred to as the “Manager”)

     

    OF
      THE SECOND PART

     

    RECITALS

     

    WHEREAS
      the
      Company is a publicly traded corporation in the United States and the parent
      company, Osmotex A/S is a Norwegian, private corporation holding approximately
      85% of the total issued shares of the Company;

     

    WHEREAS
      Osmotex
      has developed and patented certain technologies in the field of microfluidics
      and Osmotex has granted a worldwide, exclusive sales and marketing license
      to
      the Company;

     

    WHEREAS
      the
      Company has established a wholly-owned subsidiary, IQ Micro (USA) Inc. that
      functions as the operating business of the Company and this subsidiary shares
      office space with its parent company in West Palm Beach, Florida;

     

    WHEREAS
      the
      Company has requested the assistance of the Manager and in particular, one
      of
      its employees, Johnny Christiansen in providing certain management services
      to
      the Company and its wholly-owned subsidiary as hereinafter described,
      and;

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    WHEREAS
      the
      Manager has agreed to provide such assistance and services to the Company in
      accordance with the terms and conditions herein set forth.

     

    NOW,
      THEREFORE,
      in
      consideration of the foregoing recitals and the mutual covenants set forth
      below, the parties hereto agree as follows:

     

    1.  DUTIES
      AND DEVOTION OF TIME

     

    1.1  Duties.
      During
      the term of this Agreement the Manager shall be responsible for the duties
      contained in Schedule “A” attached hereto and incorporated herein by this
      reference (the “Duties’).

     

    1.2  Devotion
      of Time.
      The
      parties hereto acknowledge and agree that the work of the Manager is and shall
      be of such a nature that regular business hours will not apply to his Duties.
      The Manager agrees that the consideration set forth herein shall be in full
      and
      complete satisfaction for such work and services, regardless of when and where
      such work and services are performed. The Company agrees that so long as the
      Manager properly discharges his duties hereunder, the Manager may devote the
      remainder of his time and attention to other non-competing business and personal
      pursuits.

     

    1.3  Business
      Opportunities the Property of the Company.
      The
      Manager agrees to communicate immediately to the Company all business
      opportunities, inventions and improvements in the nature of the business of
      the
      Company which, during the term of this Agreement, the Manager may conceive,
      make
      or discover, become aware of, directly or indirectly, or have presented to
      him
      in any manner which relates in any way to the Company, either as it is now
      or as
      it may develop, and such business opportunities, inventions or improvements
      shall become the exclusive property of the Company without any obligation on
      the
      part of the Company to make any payments in addition to the management fee
      to
      the Manager.

     

    1.4  No
      Personal Use.
      The
      Manager shall not use any of the work the Manager shall perform for the Company
      for any personal purposes without first obtaining the prior written consent
      of
      the Company.

     

    2.  MANAGEMENT
      FEES AND INCENTIVE STOCK OPTIONS

     

    2.1  Management
      Fees.
      In
      consideration of the Manager providing the services referred to herein, the
      Company agrees to pay the Manager a monthly management fee (the “Monthly
      Management Fee”) of eight thousand dollars, ($8,000.00) U.S.

     

    2.2  Incentive
      Stock Options.
      As a
      condition of this Agreement and to form part of this Agreement as attached
      Schedule “C”, Johnny Christiansen will be offered and will accept participation
      in an incentive stock option plan that will provide him with the opportunity
      to
      purchase either existing or new shares in the Company on terms acceptable to
      the
      Manager.

     

    
      
        
        

      

      
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    3.  REIMBURSEMENT
      OF EXPENSES

     

    3.1  Reimbursement
      of Expenses.
      The
      Manager shall be reimbursed for all reasonable out-of-pocket expenses incurred
      by the Manager in or about the execution of the Duties contained herein,
      including without limiting the generality of the foregoing, all reasonable
      travel and promotional expenses payable or incurred by the Manager in connection
      with the Duties under this Agreement. All payments and reimbursements shall
      be
      made within two (2) weeks of submission by the Manager of vouchers, bills or
      receipts for such expenses.

     

    4.  CONFIDENTIAL
      INFORMATION

     

    4.1  Confidential
      Information.
      The
      Manager shall not, either during the term of this Agreement or under the
      provisions of Section 5.3, without specific consent in writing, disclose or
      reveal in any manner whatsoever to any other person, firm or corporation, nor
      will he use, directly or indirectly, for any purpose other than the purposes
      of
      the Company, the private affairs of the company or any confidential information
      which he may acquire during the term of this Agreement with relation to the
      business and affairs of the directors and shareholders of the Company, unless
      the Manager is ordered to do so by a court of competent jurisdiction or unless
      required by any statutory authority.

     

    4.2  Non-Disclosure
      Provisions.
      The
      foregoing provision shall be subject to the further non-disclosure provisions
      contained in Schedule “B” attached hereto and incorporated hereinafter by this
      reference.

     

    4.3  Provisions
      Survive Termination.
      The
      provisions of this section shall survive the termination of this Agreement
      for a
      period of three years.

     

    5.  TERM

     

    5.1  Term.
      This
      Agreement shall remain in effect until terminated in accordance with any of
      the
      provisions contained in this Agreement.

     

    6.  TERMINATION

     

    6.1  Termination
      by Manager.
      Notwithstanding any other provision contained herein, the parties hereto agree
      that the Manager may terminate this Agreement, with or without cause, by giving
      ninety (90) days written notice of such intention to terminate.

     

    6.2  Resignation
      or Cessation of Duties.
      In the
      event that the Manager ceases to perform all of the Duties contained herein,
      other than by reason of Christiansen’s death or disability, or if he resigns
      unilaterally and on his own initiative from all of his positions this Agreement
      shall be deemed to be terminated by the Manager as of the date of such cessation
      of Duties or such resignation, and the Company shall have no further obligations
      under Section 2 hereof.

     

    
      
        
        

      

      
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    6.3  Termination
      by Company.
      The
      Company may terminate this Agreement at any time for just cause without further
      obligation. In the event of termination for any reason other than for just
      cause, the Company will continue to pay the management fee under Clause 2.1
      for
      three (3) additional months. Any stock options that have been granted but that
      have not yet vested shall immediately vest at the date of the final payment,
      and
      may be exercised for a period of 30 days only after the final
      payment.

     

    6.4  Death.
      In the
      event of the death of Christiansen during the term of this Agreement, this
      Agreement shall be terminated as of the date of such death, and the Manager
      shall be entitled to the termination allowance stated in Section 6.3
      hereof.

     

    6.5  Disability.
      In the
      event that Christiansen will during the term of this Agreement by reason of
      illness or mental or physical disability or incapacity be prevented from or
      incapable of performing the Duties hereunder, then the Manager shall be entitled
      to receive the remuneration provided for herein at the rate specified
      hereinbefore for the period during which such illness, disability or incapacity
      will continue, but not exceeding three (3) successive months. If such illness,
      disability or incapacity continues or will continue for a period longer than
      three (3) successive months, then this Agreement may, at the option of the
      Directors of the Company, forthwith be terminated, and the Manager shall be
      entitled to the termination allowance stated in Section 6.3 hereof.

     

    6.6  Termination
      Payments.
      Any
      payments made by the Company to the Manager upon the termination of this
      Agreement shall be made in cash, or, if the Company does not have available
      funds, in equal monthly cash installments over one year. All payments required
      to be made by the Company to the Manager pursuant to Section 6 hereof shall
      be
      made in full.

     

    7.  RIGHTS
      AND OBLIGATIONS UPON TERMINATION

     

    7.1  Rights
      and Obligations.
      Upon
      termination of this Agreement, the Manager shall deliver up to the Company
      all
      documents, papers, plans, materials and other property of or relating to the
      affairs of the Company, other than the Manager’s personal papers in regard to
      his role in the Company, which may then be in the Manager’s possession or under
      his control.

     

    8.  CLOSING

     

    8.1  Closing
      Date.
      This
      Agreement shall be effective as of October 1, 2005.

     

    8.2  Conditions
      of Closing.
      The
      parties hereto agree that it shall be a condition of the execution of this
      Agreement that prior to or contemporaneously with the execution of this
      Agreement:

     

    (a)  this
      Agreement shall be approved by the Board of Directors of the
      Company.

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

     

    9.  NOTICES
      AND REQUESTS

     

    9.1  Notices
      and Requests.
      All
      notices and requests in connection with this Agreement shall be deemed given
      as
      of the day they are received either by messenger, delivery service, or mailed
      by
      registered or certified mail with postage prepaid and return receipt requested
      and addressed as follows:

     

    (a)  If
      to the
      Company, the registered office in the State of Florida.

     

    (b)  If
      to the
      Manager, the office address in Horten, Norway.

     

    or
      to
      such other address as the party to receive notice or request so designates
      by
      written notice to the others.

     

    10.  INDEPENDENT
      PARTIES

     

    10.1  Independent
      Parties.
      This
      Agreement is intended solely as a management services agreement and no
      partnership, agency, joint venture, distributorship or other form of agreement
      is intended.

     

    11.  AGREEMENT
      VOLUNTARY AND EQUITABLE

     

    11.1  Agreement
      Voluntary.
      The
      parties acknowledge and declare that in executing this Agreement they are each
      relying wholly on their own judgment and knowledge and have not been influenced
      to any extent whatsoever by any representations or statements made by or on
      behalf of any other party regarding any matters dealt with herein or incidental
      thereto.

     

    11.2  Agreement
      Equitable.
      The
      parties further acknowledge and declare that they each have carefully considered
      and understand the provisions contained herein, including, but without limiting
      the generality of the foregoing, the Manager’s rights upon termination and the
      restrictions on the Manager after termination and agree that the said provisions
      are mutually fair and equitable, and that they executed this Agreement
      voluntarily and of their own free will.

     

    12.  CONTRACT
      NON-ASSIGNABLE; INUREMENT

     

    12.1  Contract
      Non-Assignable.
      This
      Agreement and all other rights, benefits and privileges contained herein may
      not
      be assigned by the Manager.

     

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

     

    12.2  Inurement.
      The
      rights, benefits and privileges contained herein, including without limitation
      the benefits of Sections 2 and 6 hereof, shall inure to the benefit of and
      be
      binding upon the respective parties hereto, their heirs, executors,
      administrators and successors.

     

    13.  ENTIRE
      AGREEMENT

     

    13.1  Entire
      Agreement.
      This
      Agreement represents the entire Agreement between the parties and supersedes
      any
      and all prior agreements and understandings, whether written or oral, among
      the
      parties including the Management Agreement between Osmotex AS and Johnny
      Christiansen. The Manager acknowledges that he was not induced to enter into
      this Agreement by any representation, warranty, promise or other statement,
      except as contained herein.

     

    13.2  Previous
      Agreements Cancelled.
      Save
      and except for the express provisions of this Agreement, any and all previous
      agreements, written or oral, between the parties hereto or on their behalf
      relating to the services of the Manager for the Company are hereby terminated
      and cancelled and each of the parties hereby releases and further discharges
      the
      other of and from all manner of actions, causes of action, claims and demands
      whatsoever under or in respect of any such agreements.

     

    14.  WAIVER

     

    14.1  Waiver.
      No
      consent or waiver, express or implied, by either party to or of any breach
      or
      default by the other party in the performance by the other of its or his
      obligations herein shall be deemed or construed to be a consent or waiver to
      or
      of any breach or default of the same or any other obligation of such party.
      Failure on the part of either party to complain of any act or failure to act,
      or
      to declare the other party in default irrespective of how long such failure
      continues, shall not constitute a waiver by such party of its or his rights
      herein or of the right to then or subsequently declare a default.

     

    15.  SEVERABILITY

     

    15.1  Severability.
      If any
      provision contained herein is determined to be void or unenforceable in whole
      or
      in part, it is to that extent deemed omitted. The remaining provisions shall
      not
      be affected in any way.

     

    16.  AMENDMENT

     

    16.1  Amendment.
      This
      Agreement shall not be amended or otherwise modified except by a written notice
      of even date herewith or subsequent hereto signed by both parties.

     

    
      
        
        

      

      
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    17.  HEADINGS

     

    17.1  Headings.
      The
      headings of the sections and subsections herein are for convenience only and
      shall not control or affect the meaning or construction of any provisions of
      this Agreement.

     

    18.  GOVERNING
      LAW

     

    18.1  Governing
      Law.
      This
      Agreement shall be construed under and governed by the laws of the State of
      Florida and the laws of United States applicable therein.

     

    19.  EXECUTION

     

    19.1  Executive
      in Several Counterparts.
      This
      Agreement may be executed by facsimile and in several counterparts, each of
      which shall be deemed to be an original and all of which shall together
      constitute one and the same instrument.

     

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF,
      the
      parties hereto have executed this Agreement as of the ____ day of
      ____________________, 2005.

     

    
      	THE
              COMPANY	 
	 	 
	Per:  	 /s/
              Svein Milford	 
	 	Authorized Signatory	 
	 	 
	Name:  	Svein
              Milford	 
	 	 
	Title: 	Chairman
              of the Board	 
	 	 
	 	 

    

     

    
      	 	 	 
	SIGNED by Johnny
              Christiansen
              on
              behalf of	)	 
	the MANAGER
              in
              the presence of: 	)	 
	 	)	 
	/s/
              Johnny Christiansen	)	 
	Name	)	 
	 	)	 
	Spurvestien
              24	)	/s/
              Johhny Christiansen
	Address	
            	)	JOHHNY
              CHRISTIANSEN
	 	)	 
	3189
              Horten, Norway	)	 
	 	)	 
	 	
            	)	 
	Occupation	)	 
	 	)	 
	 	 	 

    

     

    

    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
      “A”

     

    MANAGER’S
      DUTIES

     

    1.  On
      behalf
      of the Manager, Johnny Christiansen shall be appointed as the Chief Executive
      Officer of the Company and he shall faithfully, honestly and diligently serve
      the Company and its subsidiary.

     

    2.  The
      Manager and Christiansen will create value for the shareholders by managing
      the
      overall interests of the Company by professionally performing the functions
      of
      Chief Executive Officer.

     

    3.  The
      Manager and Christiansen shall be responsible for managing the operations of
      the
      Company in accordance with the policies and instructions of the Board of
      Directors.

     

    4.  The
      Manager’s primary responsibility will be to successfully commercialize the
      Osmotex technologies on a worldwide basis.

     

    5.  The
      Manager and Christiansen shall report to the Board of Directors and shall work
      in close cooperation with the Chief Financial Officer of the
      Company.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
      “B”

     

    NON-DISCLOSURE PROVISIONS

     

    1.  CONFIDENTIAL
      INFORMATION AND MATERIALS

     

    
      	(a)  	
              “Confidential
                Information” shall mean, for the purposes of this Agreement, non-public
                information which the Company designates as being confidential or
                which,
                under the circumstances surrounding disclosure ought reasonably to
                be
                treated as confidential. Confidential Information includes, without
                limitation, information, whether written, oral or communicated by
                any
                other means, relating to released or unreleased Company software
                or
                hardware products, the marketing or promotion of any product of the
                Company, the Company’s business policies or practices, and information
                received from others which the Company is obliged to treat as
                confidential. Confidential Information disclosed to the Manager by
                any
                subsidiary and/or agents of the Company is covered by this
                Agreement.

            

    

     

    
      	(b)  	
              Confidential
                Information shall not include that information defined as Confidential
                Information hereinabove which the Manager can exclusively
                establish:

            

    

     

    
      	(i)  	
              is
                or subsequently becomes publicly available without breach of any
                obligation of confidentiality owed to the
                Company;

            

    

     

    
      	(ii)  	
              became
                known to the Manager prior to disclosure by the Company to the
                Manager;

            

    

     

    
      	(iii)  	
              became
                known to the Manager from a source other than the Company other than
                by
                the breach of any obligations of confidentiality owed to the Company;
                or

            

    

     

    
      	(iv)  	
              is
                independently developed by the
                Manager.

            

    

     

    
      	(c)  	
              Confidential
                Materials shall include all tangible materials containing Confidential
                Information, including, without limitation, written or printed documents
                and computer disks or tapes, whether machine or user
                readable.

            

    

     

    
      
        
        

      

      
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    2.  RESTRICTIONS

     

    
      	(a)  	
              The
                Manager shall not disclose any Confidential information to third
                parties
                for a period of three (3) years following the termination of this
                Agreement, except as provided herein. However, the Manager may disclose
                Confidential information during bona fide execution of the Duties
                or in
                accordance with judicial or other governmental order, provided that
                the
                Manager shall give reasonable notice to the Company prior to such
                disclosure and shall comply with any applicable protective order
                or
                equivalent.

            

    

     

    
      	(b)  	
              The
                Manager shall take reasonable security precautions, at least as great
                as
                the precautions he takes to protect his own confidential information,
                to
                keep confidential the Confidential Information, as defined
                hereinabove.

            

    

     

    
      	(c)  	
              Confidential
                Information and Materials may be disclosed, reproduced, summarized
                or
                distributed only in pursuance of the business relationship of the
                Manager
                with the Company, and only as provided
                hereunder.

            

    

     

    3.  RIGHTS
      AND REMEDIES

     

    
      	(a)  	
              The
                Manager shall notify the Company immediately upon discovery of any
                unauthorized use or disclosure of Confidential Information or Materials,
                or any other breach of this Agreement by the Manager, and shall co-operate
                with the Company in every reasonable manner to aid the Company to
                regain
                possession of said Confidential Information or Materials and prevent
                all
                such further unauthorized use.

            

    

     

    
      	(b)  	
              The
                Manager shall return all originals, copies, reproductions and summaries
                of
                or relating to the Confidential Information at the request of the
                Company
                or, at the option of the Company, certify destruction of the
                same.

            

    

     

    
      	(c)  	
              The
                parties hereto recognize that a breach by the Manager of any of the
                provisions contained herein would result in damages to the Company
                and
                that the Company could not be compensated adequately for such damages
                by
                monetary award. Accordingly, the Manager agrees that in the event
                of any
                such breach, in addition to all other remedies available to the Company
                at
                law or in equity, the Company shall be entitled as a matter of right
                to
                apply to a court of competent jurisdiction for such relief by way
                of
                restraining order, injunction, decree or otherwise, as may be appropriate
                to ensure compliance with the provisions of this
                Agreement.

            

    

     

     

    4.  MISCELLANEOUS

     

    
      	(a)  	
              All
                Confidential Information and Materials are and shall remain the property
                of the Company. By disclosing information to the Manager, the Company
                does
                not grant any express or implied right to the Manager to or under
                any and
                all patents, copyrights, trademarks, or trade secret information
                belonging
                to the Company.

            

    

     

     

    
      
        
        

      

        -3-Execution
      Copy

     

    EXHIBIT
      10.17

     

    AMENDED
      AND RESTATED INVESTOR REGISTRATION RIGHTS AGREEMENT

     

    THIS
      AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
      (this
“Agreement”),
      dated
      as of November 30, 2005, by and among IQ
      MICRO INC.,
      a
      Colorado corporation (the “Company”),
      and
      the undersigned investors listed on Schedule I attached hereto (each, an
“Investor”
and
      collectively, the “Investors”).

     

    WHEREAS:

     

    A. In
      connection with the Securities Purchase Agreement by and among the parties
      hereto of even date herewith (the “Securities
      Purchase Agreement”),
      the
      Company has agreed, upon the terms and subject to the conditions of the
      Securities Purchase Agreement, to issue and sell to the Investors secured
      convertible debentures (the “Convertible
      Debentures”)
      which
      shall be convertible into that number of shares of the Company’s common stock,
      par value $0.0001 per share (the “Common
      Stock”),
      pursuant to the terms of the Securities Purchase Agreement for an aggregate
      purchase price of up to Five Hundred Thousand Dollars ($500,000).
      Capitalized terms not defined herein shall have the meaning ascribed to them
      in
      the Securities Purchase Agreement.

     

    B. To
      induce
      the Investors to execute and deliver the Securities Purchase Agreement, the
      Company has agreed to provide certain registration rights under the Securities
      Act of 1933, as amended, and the rules and regulations there under, or any
      similar successor statute (collectively, the “Securities
      Act”),
      and
      applicable state securities laws.

     

    C.
       On
      August
      12, 2005, the parties hereto entered into an Investor Registration Rights
      Agreement in connection with purchase of the original principal amount of Five
      Hundred Thousand ($500,000) of convertible debentures (the “Prior
      Convertible Debenture”).
      This
      Agreement shall amend and restate the Investor Registration Rights Agreement
      dated August 12, 2005. 

     

    NOW,
      THEREFORE,
      in
      consideration of the premises and the mutual covenants contained herein and
      other good and valuable consideration, the receipt and sufficiency of which
      are
      hereby acknowledged, the Company and the Investors hereby agree as
      follows:

     

    1.  DEFINITIONS.

     

    As
      used
      in this Agreement, the following terms shall have the following
      meanings:

     

    (a)  “Person”
means
      a
      corporation, a limited liability company, an association, a partnership, an
      organization, a business, an individual, a governmental or political subdivision
      thereof or a governmental agency.

     

    (b)  “Register,”
      “registered,”
and
      “registration”
refer
      to a registration effected by preparing and filing one or more Registration
      Statements (as defined below) in compliance with the Securities Act and pursuant
      to Rule 415 under the Securities Act or any successor rule providing for
      offering securities on a continuous or delayed basis (“Rule
      415”),
      and
      the declaration or ordering of effectiveness of such Registration Statement(s)
      by the United States Securities and Exchange Commission (the “SEC”).

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (c)  “Registrable
      Securities”
means
      the (i) shares of Common Stock issuable to the Investors upon conversion of
      the
      Convertible Debentures pursuant to the Securities Purchase Agreement of even
      date herewith, (ii) the shares of Common Stock to be issued upon exercise of
      the
      Warrant of even date herewith, (iii) shares of Common Stock issuable to the
      Investors upon conversion of the Prior Convertible Debenture pursuant to the
      Securities Purchase Agreement of dated August 12, 2005, and (iv) the shares
      of
      Common Stock to be issued upon exercise of the Warrant of dated August 12,
      2005
      (the shares of Common Stock to be issued upon exercise of the Warrant dated
      August 12, 2005 and the Warrant of even date herewith shall collectively be
      referred to as the “Warrant
      Shares”).

     

    (d)  “Registration
      Statement”
means
      a
      registration statement under the Securities Act which covers the Registrable
      Securities.

     

    2.  REGISTRATION.

     

    (a)  Subject
      to the terms and conditions of this Agreement, the Company shall prepare and
      file, within ten (10) days from obtaining a listing on the NASD OTC Bulletin
      Board but no later than by March 25, 2006 (the “Scheduled
      Filing Deadline”),
      with
      the SEC a registration statement on Form S-1 or SB-2 (or, if the Company is
      then
      eligible, on Form S-3) under the Securities Act (the “Initial
      Registration Statement”)
      for
      the resale by the Investors of the Registrable Securities, which includes at
      least 19,600,000 shares of Common Stock to be issued upon conversion of the
      Convertible Debentures and 200,000 shares of Common Stock underlying the Warrant
      of even date herewith. The Company shall cause the Registration Statement to
      remain effective until all of the Registrable Securities have been sold. Prior
      to the filing of the Registration Statement with the SEC, the Company shall
      furnish a copy of the Initial Registration Statement to the Investors for their
      review and comment. The Investors shall furnish comments on the Initial
      Registration Statement to the Company within twenty-four (24) hours of the
      receipt thereof from the Company.

     

    (b)  Effectiveness
      of the Initial Registration Statement.
      The
      Company shall use its best efforts (i) to have the Initial Registration
      Statement declared effective by the SEC no later one hundred twenty (120) days
      after the date filed (the “Scheduled
      Effective Deadline”)
      and
      (ii) to insure that the Initial Registration Statement and any subsequent
      Registration Statement remains in effect until all of the Registrable Securities
      have been sold, subject to the terms and conditions of this Agreement. It shall
      be an event of default hereunder if the Initial Registration Statement is not
      filed by the Scheduled Filing Deadline or declared effective by the Scheduled
      Effective Deadline.

     

    (c)  Failure
      to File or Obtain Effectiveness of the Registration Statement.
      In the
      event the Registration Statement is not filed by the Scheduled Filing Deadline
      or is not declared effective by the SEC on or before the Scheduled Effective
      Date, or if after the Registration Statement has been declared effective by
      the
      SEC, sales cannot be made pursuant to the Registration Statement (whether
      because of a failure to keep the Registration Statement effective, failure
      to
      disclose such information as is necessary for sales to be made pursuant to
      the
      Registration Statement, failure to register sufficient shares of Common Stock
      or
      otherwise then as partial relief for the damages to any holder of Registrable
      Securities by reason of any such delay in or reduction of its ability to sell
      the underlying shares of Common Stock (which remedy shall not be exclusive
      of
      any other remedies at law or in equity), the Company will pay as liquidated
      damages (the “Liquidated
      Damages”)
      to the
      holder, at the holder’s option, either a cash amount or shares of the Company’s
      Common Stock within three (3) business days, after demand therefore, equal
      to
      two percent (2%) of the liquidated value of the Convertible Debentures
      outstanding as Liquidated Damages for each thirty (30) day period after the
      Scheduled Filing Deadline or the Scheduled Effective Date as the case may
      be.

     

    
      
        
        

      

      
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    (d)  Liquidated
      Damages.
      The
      Company and the Investor hereto acknowledge and agree that the sums payable
      under subsection 2(c) above shall constitute liquidated damages and not
      penalties and are in addition to all other rights of the Investor, including
      the
      right to call a default. The parties further acknowledge that (i) the amount
      of
      loss or damages likely to be incurred is incapable or is difficult to precisely
      estimate, (ii) the amounts specified in such subsections bear a reasonable
      relationship to, and are not plainly or grossly disproportionate to, the
      probable loss likely to be incurred in connection with any failure by the
      Company to obtain or maintain the effectiveness of a Registration Statement,
      (iii) one of the reasons for the Company and the Investor reaching an agreement
      as to such amounts was the uncertainty and cost of litigation regarding the
      question of actual damages, and (iv) the Company and the Investor are
      sophisticated business parties and have been represented by sophisticated and
      able legal counsel and negotiated this Agreement at arm’s length. 

     

    3.  RELATED
      OBLIGATIONS.

     

    (a)  The
      Company shall keep the Registration Statement effective pursuant to
      Rule 415 at all times until the date on which the Investor shall have sold
      all the Registrable Securities covered by such Registration Statement (the
      “Registration
      Period”),
      which
      Registration Statement (including any amendments or supplements thereto and
      prospectuses contained therein) shall not contain any untrue statement of a
      material fact or omit to state a material fact required to be stated therein,
      or
      necessary to make the statements therein, in light of the circumstances in
      which
      they were made, not misleading.

     

    (b)  The
      Company shall prepare and file with the SEC such amendments (including
      post-effective amendments) and supplements to a Registration Statement and
      the
      prospectus used in connection with such Registration Statement, which prospectus
      is to be filed pursuant to Rule 424 promulgated under the Securities Act, as
      may
      be necessary to keep such Registration Statement effective at all times during
      the Registration Period, and, during such period, comply with the provisions
      of
      the Securities Act with respect to the disposition of all Registrable Securities
      of the Company covered by such Registration Statement until such time as all
      of
      such Registrable Securities shall have been disposed of in accordance with
      the
      intended methods of disposition by the seller or sellers thereof as set forth
      in
      such Registration Statement. In the case of amendments and supplements to a
      Registration Statement which are required to be filed pursuant to this Agreement
      (including pursuant to this Section 3(b)) by reason of the Company’s filing a
      report on Form 10-KSB, Form 10-QSB or Form 8-K or any analogous report under
      the
      Securities Exchange Act of 1934, as amended (the “Exchange
      Act”),
      the
      Company shall incorporate such report by reference into the Registration
      Statement, if applicable, or shall file such amendments or supplements with
      the
      SEC on the same day on which the Exchange Act report is filed which created
      the
      requirement for the Company to amend or supplement the Registration Statement.
      

     

    
      
        
        

      

      
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    (c)  The
      Company shall furnish to each Investor whose Registrable Securities are included
      in any Registration Statement, without charge, (i) at least one (1) copy of
      such
      Registration Statement as declared effective by the SEC and any amendment(s)
      thereto, including financial statements and schedules, all documents
      incorporated therein by reference, all exhibits and each preliminary prospectus,
      (ii) ten (10) copies of the final prospectus included in such Registration
      Statement and all amendments and supplements thereto (or such other number
      of
      copies as such Investor may reasonably request) and (iii) such other documents
      as such Investor may reasonably request from time to time in order to facilitate
      the disposition of the Registrable Securities owned by such
      Investor.

     

    (d)  The
      Company shall use its best efforts to (i) register and qualify the Registrable
      Securities covered by a Registration Statement under such other securities
      or
“blue sky” laws of such jurisdictions in the United States as any Investor
      reasonably requests, (ii) prepare and file in those jurisdictions, such
      amendments (including post-effective amendments) and supplements to such
      registrations and qualifications as may be necessary to maintain the
      effectiveness thereof during the Registration Period, (iii) take such other
      actions as may be necessary to maintain such registrations and qualifications
      in
      effect at all times during the Registration Period, and (iv) take all other
      actions reasonably necessary or advisable to qualify the Registrable Securities
      for sale in such jurisdictions; provided, however, that the Company shall not
      be
      required in connection therewith or as a condition thereto to (w) make any
      change to its articles of incorporation or by-laws, (x) qualify to do business
      in any jurisdiction where it would not otherwise be required to qualify but
      for
      this Section 3(d), (y) subject itself to general taxation in any such
      jurisdiction, or (z) file a general consent to service of process in any such
      jurisdiction. The Company shall promptly notify each Investor who holds
      Registrable Securities of the receipt by the Company of any notification with
      respect to the suspension of the registration or qualification of any of the
      Registrable Securities for sale under the securities or “blue sky” laws of any
      jurisdiction in the United States or its receipt of actual notice of the
      initiation or threat of any proceeding for such purpose.

     

    (e)  As
      promptly as practicable after becoming aware of such event or development,
      the
      Company shall notify each Investor in writing of the happening of any event
      as a
      result of which the prospectus included in a Registration Statement, as then
      in
      effect, includes an untrue statement of a material fact or omission to state
      a
      material fact required to be stated therein or necessary to make the statements
      therein, in light of the circumstances under which they were made, not
      misleading (provided that in no event shall such notice contain any material,
      nonpublic information), and promptly prepare a supplement or amendment to such
      Registration Statement to correct such untrue statement or omission, and deliver
      ten (10) copies of such supplement or amendment to each Investor. The Company
      shall also promptly notify each Investor in writing (i) when a prospectus or
      any
      prospectus supplement or post-effective amendment has been filed, and when
      a
      Registration Statement or any post-effective amendment has become effective
      (notification of such effectiveness shall be delivered to each Investor by
      facsimile on the same day of such effectiveness), (ii) of any request by the
      SEC
      for amendments or supplements to a Registration Statement or related prospectus
      or related information, and (iii) of the Company’s reasonable determination
      that a post-effective amendment to a Registration Statement would be
      appropriate.

     

    
      
        
        

      

      
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    (f)  The
      Company shall use its best efforts to prevent the issuance of any stop order
      or
      other suspension of effectiveness of a Registration Statement, or the suspension
      of the qualification of any of the Registrable Securities for sale in any
      jurisdiction within the United States of America and, if such an order or
      suspension is issued, to obtain the withdrawal of such order or suspension
      at
      the earliest possible moment and to notify each Investor who holds Registrable
      Securities being sold of the issuance of such order and the resolution thereof
      or its receipt of actual notice of the initiation or threat of any proceeding
      for such purpose.

     

    (g)  At
      the
      reasonable request of any Investor, the Company shall furnish to such Investor,
      on the date of the effectiveness of the Registration Statement and thereafter
      from time to time on such dates as an Investor may reasonably request (i) a
      letter, dated such date, from the Company’s independent certified public
      accountants in form and substance as is customarily given by independent
      certified public accountants to underwriters in an underwritten public offering,
      and (ii) an opinion, dated as of such date, of counsel representing the Company
      for purposes of such Registration Statement, in form, scope and substance as
      is
      customarily given in an underwritten public offering, addressed to the
      Investors.

     

    (h)  The
      Company shall make available for inspection by (i) any Investor and
      (ii) one (1) firm of accountants or other agents retained by the Investors
      (collectively, the “Inspectors”)
      all
      pertinent financial and other records, and pertinent corporate documents and
      properties of the Company (collectively, the “Records”),
      as
      shall be reasonably deemed necessary by each Inspector, and cause the Company’s
      officers, directors and employees to supply all information which any Inspector
      may reasonably request; provided, however, that each Inspector shall agree,
      and
      each Investor hereby agrees, to hold in strict confidence and shall not make
      any
      disclosure (except to an Investor) or use any Record or other information which
      the Company determines in good faith to be confidential, and of which
      determination the Inspectors are so notified, unless (a) the disclosure of
      such
      Records is necessary to avoid or correct a misstatement or omission in any
      Registration Statement or is otherwise required under the Securities Act, (b)
      the release of such Records is ordered pursuant to a final, non-appealable
      subpoena or order from a court or government body of competent jurisdiction,
      or
      (c) the information in such Records has been made generally available to the
      public other than by disclosure in violation of this or any other agreement
      of
      which the Inspector and the Investor has knowledge. Each Investor agrees that
      it
      shall, upon learning that disclosure of such Records is sought in or by a court
      or governmental body of competent jurisdiction or through other means, give
      prompt notice to the Company and allow the Company, at its expense, to undertake
      appropriate action to prevent disclosure of, or to obtain a protective order
      for, the Records deemed confidential.

     

    (i)  The
      Company shall hold in confidence and not make any disclosure of information
      concerning an Investor provided to the Company unless (i) disclosure of such
      information is necessary to comply with federal or state securities laws, (ii)
      the disclosure of such information is necessary to avoid or correct a
      misstatement or omission in any Registration Statement, (iii) the release of
      such information is ordered pursuant to a subpoena or other final,
      non-appealable order from a court or governmental body of competent
      jurisdiction, or (iv) such information has been made generally available to
      the
      public other than by disclosure in violation of this Agreement or any other
      agreement. The Company agrees that it shall, upon learning that disclosure
      of
      such information concerning an Investor is sought in or by a court or
      governmental body of competent jurisdiction or through other means, give prompt
      written notice to such Investor and allow such Investor, at the Investor’s
      expense, to undertake appropriate action to prevent disclosure of, or to obtain
      a protective order for, such information.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    (j)  The
      Company shall use its best efforts either to cause all the Registrable
      Securities covered by a Registration Statement (i) to be listed on each
      securities exchange on which securities of the same class or series issued
      by
      the Company are then listed, if any, if the listing of such Registrable
      Securities is then permitted under the rules of such exchange or (ii) the
      inclusion for quotation on the National Association of Securities Dealers,
      Inc.
      OTC Bulletin Board for such Registrable Securities. The Company shall pay all
      fees and expenses in connection with satisfying its obligation under this
      Section 3(j).

     

    (k)  The
      Company shall cooperate with the Investors who hold Registrable Securities
      being
      offered and, to the extent applicable, to facilitate the timely preparation
      and
      delivery of certificates (not bearing any restrictive legend) representing
      the
      Registrable Securities to be offered pursuant to a Registration Statement and
      enable such certificates to be in such denominations or amounts, as the case
      may
      be, as the Investors may reasonably request and registered in such names as
      the
      Investors may request.

     

    (l)  The
      Company shall use its best efforts to cause the Registrable Securities covered
      by the applicable Registration Statement to be registered with or approved
      by
      such other governmental agencies or authorities as may be necessary to
      consummate the disposition of such Registrable Securities.

     

    (m)  The
      Company shall make generally available to its security holders as soon as
      practical, but not later than ninety (90) days after the close of the period
      covered thereby, an earnings statement (in form complying with the provisions
      of
      Rule 158 under the Securities Act) covering a twelve (12) month period beginning
      not later than the first day of the Company’s fiscal quarter next following the
      effective date of the Registration Statement.

     

    (n)  The
      Company shall otherwise use its best efforts to comply with all applicable
      rules
      and regulations of the SEC in connection with any registration
      hereunder.

     

    (o)  Within
      two (2) business days after a Registration Statement which covers Registrable
      Securities is declared effective by the SEC, the Company shall deliver, and
      shall cause legal counsel for the Company to deliver, to the transfer agent
      for
      such Registrable Securities (with copies to the Investors whose Registrable
      Securities are included in such Registration Statement) confirmation that such
      Registration Statement has been declared effective by the SEC in the form
      attached hereto as Exhibit
      A.

     

    (p)  The
      Company shall take all other reasonable actions necessary to expedite and
      facilitate disposition by the Investors of Registrable Securities pursuant
      to a
      Registration Statement.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    4.  OBLIGATIONS
      OF THE INVESTORS.

     

    Each
      Investor agrees that, upon receipt of any notice from the Company of the
      happening of any event of the kind described in Section 3(f) or the first
      sentence of 3(e), such Investor will immediately discontinue disposition of
      Registrable Securities pursuant to any Registration Statement(s) covering such
      Registrable Securities until such Investor’s receipt of the copies of the
      supplemented or amended prospectus contemplated by Section 3(e) or receipt
      of
      notice that no supplement or amendment is required. Notwithstanding anything
      to
      the contrary, the Company shall cause its transfer agent to deliver unlegended
      certificates for shares of Common Stock to a transferee of an Investor in
      accordance with the terms of the Securities Purchase Agreement in connection
      with any sale of Registrable Securities with respect to which an Investor has
      entered into a contract for sale prior to the Investor’s receipt of a notice
      from the Company of the happening of any event of the kind described in Section
      3(f) or the first sentence of 3(e) and for which the Investor has not yet
      settled.

     

    5.  EXPENSES
      OF REGISTRATION.

     

    All
      expenses incurred in connection with registrations, filings or qualifications
      pursuant to Sections 2 and 3, including, without limitation, all registration,
      listing and qualifications fees, printers, legal and accounting fees shall
      be
      paid by the Company. 

     

    6.  INDEMNIFICATION.

     

    With
      respect to Registrable Securities which are included in a Registration Statement
      under this Agreement:

     

    (a)  To
      the
      fullest extent permitted by law, the Company will, and hereby does, indemnify,
      hold harmless and defend each Investor, the directors, officers, partners,
      employees, agents, representatives of, and each Person, if any, who controls
      any
      Investor within the meaning of the Securities Act or the Exchange Act (each,
      an
“Indemnified
      Person”),
      against any losses, claims, damages, liabilities, judgments, fines, penalties,
      charges, costs, reasonable attorneys’ fees, amounts paid in settlement or
      expenses, joint or several (collectively, “Claims”)
      incurred in investigating, preparing or defending any action, claim, suit,
      inquiry, proceeding, investigation or appeal taken from the foregoing by or
      before any court or governmental, administrative or other regulatory agency,
      body or the SEC, whether pending or threatened, whether or not an indemnified
      party is or may be a party thereto (“Indemnified
      Damages”),
      to
      which any of them may become subject insofar as such Claims (or actions or
      proceedings, whether commenced or threatened, in respect thereof) arise out
      of
      or are based upon: (i) any untrue statement or alleged untrue statement of
      a
      material fact in a Registration Statement or any post-effective amendment
      thereto or in any filing made in connection with the qualification of the
      offering under the securities or other “blue sky” laws of any jurisdiction in
      which Registrable Securities are offered (“Blue
      Sky Filing”),
      or
      the omission or alleged omission to state a material fact required to be stated
      therein or necessary to make the statements therein not misleading; (ii) any
      untrue statement or alleged untrue statement of a material fact contained in
      any
      final prospectus (as amended or supplemented, if the Company files any amendment
      thereof or supplement thereto with the SEC) or the omission or alleged omission
      to state therein any material fact necessary to make the statements made
      therein, in light of the circumstances under which the statements therein were
      made, not misleading; or (iii) any violation or alleged violation by the Company
      of the Securities Act, the Exchange Act, any other law, including, without
      limitation, any state securities law, or any rule or regulation there under
      relating to the offer or sale of the Registrable Securities pursuant to a
      Registration Statement (the matters in the foregoing clauses (i) through (iii)
      being, collectively, “Violations”).
      The
      Company shall reimburse the Investors and each such controlling person promptly
      as such expenses are incurred and are due and payable, for any legal fees or
      disbursements or other reasonable expenses incurred by them in connection with
      investigating or defending any such Claim. Notwithstanding anything to the
      contrary contained herein, the indemnification agreement contained in this
      Section 6(a): (x) shall not apply to a Claim by an Indemnified Person arising
      out of or based upon a Violation which occurs in reliance upon and in conformity
      with information furnished in writing to the Company by such Indemnified Person
      expressly for use in connection with the preparation of the Registration
      Statement or any such amendment thereof or supplement thereto; (y) shall not
      be
      available to the extent such Claim is based on a failure of the Investor to
      deliver or to cause to be delivered the prospectus made available by the
      Company, if such prospectus was timely made available by the Company pursuant
      to
      Section 3(c); and (z) shall not apply to amounts paid in settlement of any
      Claim if such settlement is effected without the prior written consent of the
      Company, which consent shall not be unreasonably withheld. Such indemnity shall
      remain in full force and effect regardless of any investigation made by or
      on
      behalf of the Indemnified Person and shall survive the transfer of the
      Registrable Securities by the Investors pursuant to Section 9
      hereof.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    (b)  In
      connection with a Registration Statement, each Investor agrees to severally
      and
      not jointly indemnify, hold harmless and defend, to the same extent and in
      the
      same manner as is set forth in Section 6(a), the Company, each of its directors,
      each of its officers, employees, representatives, or agents and each Person,
      if
      any, who controls the Company within the meaning of the Securities Act or the
      Exchange Act (each an “Indemnified
      Party”),
      against any Claim or Indemnified Damages to which any of them may become
      subject, under the Securities Act, the Exchange Act or otherwise, insofar as
      such Claim or Indemnified Damages arise out of or is based upon any Violation,
      in each case to the extent, and only to the extent, that such Violation occurs
      in reliance upon and in conformity with written information furnished to the
      Company by such Investor expressly for use in connection with such Registration
      Statement; and, subject to Section 6(d), such Investor will reimburse any legal
      or other expenses reasonably incurred by them in connection with investigating
      or defending any such Claim; provided, however, that the indemnity agreement
      contained in this Section 6(b) and the agreement with respect to contribution
      contained in Section 7 shall not apply to amounts paid in settlement of any
      Claim if such settlement is effected without the prior written consent of such
      Investor, which consent shall not be unreasonably withheld; provided, further,
      however, that the Investor shall be liable under this Section 6(b) for only
      that
      amount of a Claim or Indemnified Damages as does not exceed the net proceeds
      to
      such Investor as a result of the sale of Registrable Securities pursuant to
      such
      Registration Statement. Such indemnity shall remain in full force and effect
      regardless of any investigation made by or on behalf of such Indemnified Party
      and shall survive the transfer of the Registrable Securities by the Investors
      pursuant to Section 9. Notwithstanding anything to the contrary contained
      herein, the indemnification agreement contained in this Section 6(b) with
      respect to any prospectus shall not inure to the benefit of any Indemnified
      Party if the untrue statement or omission of material fact contained in the
      prospectus was corrected and such new prospectus was delivered to each Investor
      prior to such Investor’s use of the prospectus to which the Claim
      relates.

     

    (c)  Promptly
      after receipt by an Indemnified Person or Indemnified Party under this Section
      6
      of notice of the commencement of any action or proceeding (including any
      governmental action or proceeding) involving a Claim, such Indemnified Person
      or
      Indemnified Party shall, if a Claim in respect thereof is to be made against
      any
      indemnifying party under this Section 6, deliver to the indemnifying party
      a
      written notice of the commencement thereof, and the indemnifying party shall
      have the right to participate in, and, to the extent the indemnifying party
      so
      desires, jointly with any other indemnifying party similarly noticed, to assume
      control of the defense thereof with counsel mutually satisfactory to the
      indemnifying party and the Indemnified Person or the Indemnified Party, as
      the
      case may be; provided, however, that an Indemnified Person or Indemnified Party
      shall have the right to retain its own counsel with the fees and expenses of
      not
      more than one (1) counsel for such Indemnified Person or Indemnified Party
      to be
      paid by the indemnifying party, if, in the reasonable opinion of counsel
      retained by the indemnifying party, the representation by such counsel of the
      Indemnified Person or Indemnified Party and the indemnifying party would be
      inappropriate due to actual or potential differing interests between such
      Indemnified Person or Indemnified Party and any other party represented by
      such
      counsel in such proceeding. The Indemnified Party or Indemnified Person shall
      cooperate fully with the indemnifying party in connection with any negotiation
      or defense of any such action or claim by the indemnifying party and shall
      furnish to the indemnifying party all information reasonably available to the
      Indemnified Party or Indemnified Person which relates to such action or claim.
      The indemnifying party shall keep the Indemnified Party or Indemnified Person
      fully apprised at all times as to the status of the defense or any settlement
      negotiations with respect thereto. No indemnifying party shall be liable for
      any
      settlement of any action, claim or proceeding effected without its prior written
      consent; provided, however, that the indemnifying party shall not unreasonably
      withhold, delay or condition its consent. No indemnifying party shall, without
      the prior written consent of the Indemnified Party or Indemnified Person,
      consent to entry of any judgment or enter into any settlement or other
      compromise which does not include as an unconditional term thereof the giving
      by
      the claimant or plaintiff to such Indemnified Party or Indemnified Person of
      a
      release from all liability in respect to such claim or litigation. Following
      indemnification as provided for hereunder, the indemnifying party shall be
      subrogated to all rights of the Indemnified Party or Indemnified Person with
      respect to all third parties, firms or corporations relating to the matter
      for
      which indemnification has been made. The failure to deliver written notice
      to
      the indemnifying party within a reasonable time of the commencement of any
      such
      action shall not relieve such indemnifying party of any liability to the
      Indemnified Person or Indemnified Party under this Section 6, except to the
      extent that the indemnifying party is prejudiced in its ability to defend such
      action.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    (d)  The
      indemnification required by this Section 6 shall be made by periodic payments
      of
      the amount thereof during the course of the investigation or defense, as and
      when bills are received or Indemnified Damages are incurred.

     

    (e)  The
      indemnity agreements contained herein shall be in addition to (i) any cause
      of action or similar right of the Indemnified Party or Indemnified Person
      against the indemnifying party or others, and (ii) any liabilities the
      indemnifying party may be subject to pursuant to the law.

     

    7.  CONTRIBUTION.

     

    To
      the
      extent any indemnification by an indemnifying party is prohibited or limited
      by
      law, the indemnifying party agrees to make the maximum contribution with respect
      to any amounts for which it would otherwise be liable under Section 6 to the
      fullest extent permitted by law; provided, however, that: (i) no seller of
      Registrable Securities guilty of fraudulent misrepresentation (within the
      meaning of Section 11(f) of the Securities Act) shall be entitled to
      contribution from any seller of Registrable Securities who was not guilty of
      fraudulent misrepresentation; and (ii) contribution by any seller of Registrable
      Securities shall be limited in amount to the net amount of proceeds received
      by
      such seller from the sale of such Registrable Securities.

     

    8.  REPORTS
      UNDER THE EXHANGE ACT.

     

    With
      a
      view to making available to the Investors the benefits of Rule 144 promulgated
      under the Securities Act or any similar rule or regulation of the SEC that
      may
      at any time permit the Investors to sell securities of the Company to the public
      without registration (“Rule
      144”)
      the
      Company agrees to:

     

    (a)  make
      and
      keep public information available, as those terms are understood and defined
      in
      Rule 144;

     

    (b)  commencing
      at the time the Company becomes obligated to make filings under the Exchange
      Act, file with the SEC in a timely manner all reports and other documents
      required of the Company under the Securities Act and the Exchange Act so long
      as
      the Company remains subject to such requirements (it being understood that
      nothing herein shall limit the Company’s obligations under Section 4(c) of the
      Securities Purchase Agreement) and the filing of such reports and other
      documents as are required by the applicable provisions of Rule 144;
      and

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    (c)  furnish
      to each Investor so long as such Investor owns Registrable Securities, promptly
      upon request, (i) a written statement by the Company that it has complied with
      the reporting requirements of Rule 144, the Securities Act and the Exchange
      Act,
      (ii) a copy of the most recent annual or quarterly report of the Company and
      such other reports and documents so filed by the Company, and (iii) such other
      information as may be reasonably requested to permit the Investors to sell
      such
      securities pursuant to Rule 144 without registration.

     

    9.  AMENDMENT
      OF REGISTRATION RIGHTS.

     

    Provisions
      of this Agreement may be amended and the observance thereof may be waived
      (either generally or in a particular instance and either retroactively or
      prospectively), only with the written consent of the Company and Investors
      who
      then hold at least two-thirds (2/3) of the Registrable Securities. Any amendment
      or waiver effected in accordance with this Section 9 shall be binding upon
      each Investor and the Company. No such amendment shall be effective to the
      extent that it applies to fewer than all of the holders of the Registrable
      Securities. No consideration shall be offered or paid to any Person to amend
      or
      consent to a waiver or modification of any provision of any of this Agreement
      unless the same consideration also is offered to all of the parties to this
      Agreement.

     

    10.  MISCELLANEOUS.

     

    (a)  A
      Person
      is deemed to be a holder of Registrable Securities whenever such Person owns
      or
      is deemed to own of record such Registrable Securities. If the Company receives
      conflicting instructions, notices or elections from two (2) or more Persons
      with
      respect to the same Registrable Securities, the Company shall act upon the
      basis
      of instructions, notice or election received from the registered owner of such
      Registrable Securities.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    (b)  Any
      notices, consents, waivers or other communications required or permitted to
      be
      given under the terms of this Agreement must be in writing and will be deemed
      to
      have been delivered: (i) upon receipt, when delivered personally; (ii) upon
      receipt, when sent by facsimile (provided confirmation of transmission is
      mechanically or electronically generated and kept on file by the sending party);
      or (iii) one (1) business day after deposit with a nationally recognized
      overnight delivery service, in each case properly addressed to the party to
      receive the same. The addresses and facsimile numbers for such communications
      shall be:

     

    
      	
              If
                to the Company, to:

            	
              IQ
                Micro Inc.

            
	 	
              500
                Australian Avenue South - Suite 700

            
	 	
              West
                Palm Beach, Florida 33401

            
	 	
              Attention: Robert
                V. Rudman

            
	 	
              Telephone: (561)
                514-0018

            
	 	
              Facsimile: (561)
                514-0195

            
	 	 
	
              With
                Copy to:

            	
              Gunster
                Yoakley & Stewart, P.A.

            
	 	
              Broward
                Financial Centre - Suite 1400

              500
                East Broward Blvd.

            
	 	
              Fort
                Lauderdale, Florida 33394

            
	 	
              Attention: Robert
                C. White, Jr. Esq.

            
	 	
              Telephone: (954)
                468-1360

            
	 	
              Facsimile: (954)
                888-2037

            
	 	 

    

    If
      to an
      Investor, to its address and facsimile number on the Schedule of Investors
      attached hereto, with copies to such Investor’s representatives as set forth on
      the Schedule of Investors or to such other address and/or facsimile number
      and/or to the attention of such other person as the recipient party has
      specified by written notice given to each other party five (5) days prior to
      the
      effectiveness of such change. Written confirmation of receipt (A) given by
      the
      recipient of such notice, consent, waiver or other communication, (B)
      mechanically or electronically generated by the sender’s facsimile machine
      containing the time, date, recipient facsimile number and an image of the first
      page of such transmission or (C) provided by a courier or overnight courier
      service shall be rebuttable evidence of personal service, receipt by facsimile
      or receipt from a nationally recognized overnight delivery service in accordance
      with clause (i), (ii) or (iii) above, respectively.

     

    (c)  Failure
      of any party to exercise any right or remedy under this Agreement or otherwise,
      or delay by a party in exercising such right or remedy, shall not operate as
      a
      waiver thereof.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    (d)  The
      laws
      of the State of New Jersey shall govern all issues concerning the relative
      rights of the Company and the Investors as its stockholders. All other questions
      concerning the construction, validity, enforcement and interpretation of this
      Agreement shall be governed by the internal laws of the State of New Jersey,
      without giving effect to any choice of law or conflict of law provision or
      rule
      (whether of the State of New Jersey or any other jurisdiction) that would cause
      the application of the laws of any jurisdiction other than the State of New
      Jersey. Each party hereby irrevocably submits to the non-exclusive jurisdiction
      of the Superior Courts of the State of New Jersey, sitting in Hudson County,
      New
      Jersey and federal courts for the District of New Jersey sitting Newark, New
      Jersey, for the adjudication of any dispute hereunder or in connection herewith
      or with any transaction contemplated hereby or discussed herein, and hereby
      irrevocably waives, and agrees not to assert in any suit, action or proceeding,
      any claim that it is not personally subject to the jurisdiction of any such
      court, that such suit, action or proceeding is brought in an inconvenient forum
      or that the venue of such suit, action or proceeding is improper. Each party
      hereby irrevocably waives personal service of process and consents to process
      being served in any such suit, action or proceeding by mailing a copy thereof
      to
      such party at the address for such 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 manner permitted by law. If any provision of
      this
      Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity
      or unenforceability shall not affect the validity or enforceability of the
      remainder of this Agreement in that jurisdiction or the validity or
      enforceability of any provision of this Agreement in any other jurisdiction.
      EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT
      TO
      REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
      CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
      CONTEMPLATED HEREBY.

     

    (e)  This
      Agreement, the Irrevocable Transfer Agent Instructions, the Securities Purchase
      Agreement and related documents including the Convertible Debenture and the
      Escrow Agreement dated the date hereof by and among the Company, the Investors
      set forth on the Schedule of Investors attached hereto, and David Gonzalez,
      Esq.
      (the “Escrow
      Agreement”)
      and
      the Security Agreement dated the date hereof (the “Security
      Agreement”)
      constitute the entire agreement among the parties hereto with respect to the
      subject matter hereof and thereof. There are no restrictions, promises,
      warranties or undertakings, other than those set forth or referred to herein
      and
      therein. This Agreement, the Irrevocable Transfer Agent Instructions, the
      Securities Purchase Agreement and related documents including the Convertible
      Debenture, the Escrow Agreement and the Security Agreement supersede all prior
      agreements and understandings among the parties hereto with respect to the
      subject matter hereof and thereof.

     

    (f)  This
      Agreement shall inure to the benefit of and be binding upon the permitted
      successors and assigns of each of the parties hereto.

     

    (g)  The
      headings in this Agreement are for convenience of reference only and shall
      not
      limit or otherwise affect the meaning hereof.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    (h)  This
      Agreement may be executed in identical counterparts, each of which shall be
      deemed an original but all of which shall constitute one and the same agreement.
      This Agreement, once executed by a party, may be delivered to the other party
      hereto by facsimile transmission of a copy of this Agreement bearing the
      signature of the party so delivering this Agreement.

     

    (i)  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.

     

    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.

     

    (j)  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.

     

    

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK]

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF,
      the
      parties have caused this Amended and Restated Investor Registration Rights
      Agreement to be duly executed as of day and year first above
      written.

     

    
      	 	
              COMPANY:

            
	 	
              IQ
                MICRO INC.

            
	 	 
	 	
              By:
                /s/
                Robert V. Rudman

            
	 	
              Name: Robert
                V. Rudman

            
	 	
              Title: CFO

            
	 	 

    

    

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
      I

     

    SCHEDULE
      OF INVESTORS

     

    
      	
              Name

            	
              Signature

            	
              Address/Facsimile
                

              Number
                of Investors

            
	 	 	 
	
              Cornell
                Capital Partners, LP

            	
              By: Yorkville
                Advisors, LLC

            	
              101
                Hudson Street - Suite 3700

            
	 	
              Its: General
                Partner

            	
              Jersey
                City, NJ 07303

            
	 	 	
              Facsimile: (201)
                985-8266

            
	 	 	 
	 	
              By: /s/
                Mark Angelo   

            	 
	 	
              Name: Mark
                Angelo

            	 
	 	
              Its: Portfolio
                Manager

            	 
	 	 	 
	
              With
                a copy to: 

            	
              Troy
                Rillo, Esq.

            	
              101
                Hudson Street - Suite 3700

            
	 	 	
              Jersey
                City, NJ 07302

            
	 	 	
              Facsimile:
                (201) 985-8266

            
	 	 	 

    

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      A

     

    FORM
      OF NOTICE OF EFFECTIVENESS

    OF
      REGISTRATION STATEMENT

     

    Attention: 

    

    
      	 	
              Re:

            	
              IQ
                MICRO INC.

            

    

    

    Ladies
      and Gentlemen:

    

    We
      are
      counsel to IQ Micro Inc., a Colorado corporation (the “Company”),
      and
      have represented the Company in connection with that certain Securities Purchase
      Agreement (the “Securities
      Purchase Agreement”)
      entered into by and among the Company and the investors named therein
      (collectively, the “Investors”)
      pursuant to which the Company issued to the Investors shares of its Common
      Stock, par value $0.0001 per share (the “Common
      Stock”).
      Pursuant to the Purchase Agreement, the Company also has entered into a
      Registration Rights Agreement with the Investors (the “Investor
      Registration Rights Agreement”)
      pursuant to which the Company agreed, among other things, to register the
      Registrable Securities (as defined in the Registration Rights Agreement) under
      the Securities Act of 1933, as amended (the “Securities
      Act”).
      In
      connection with the Company’s obligations under the Registration Rights
      Agreement, on ____________ ____, the Company filed a Registration Statement
      on
      Form ________ (File No. 333-_____________) (the “Registration
      Statement”)
      with
      the Securities and Exchange SEC (the “SEC”)
      relating to the Registrable Securities which names each of the Investors as
      a
      selling stockholder there under.

     

    In
      connection with the foregoing, we advise you that a member of the SEC’s staff
      has advised us by telephone that the SEC has entered an order declaring the
      Registration Statement effective under the Securities Act at [ENTER
      TIME OF EFFECTIVENESS]
      on
[ENTER
      DATE OF EFFECTIVENESS]
      and we
      have no knowledge, after telephonic inquiry of a member of the SEC’s staff, that
      any stop order suspending its effectiveness has been issued or that any
      proceedings for that purpose are pending before, or threatened by, the SEC
      and
      the Registrable Securities are available for resale under the Securities Act
      pursuant to the Registration Statement.

     

    
      	 	 	 
	 	Very
              truly
              yours,
	 	 
	 	[Law Firm]
	 	 
	 
 	 
 	 
 
	 	By:  	 
	 	
              

            
	cc: [LIST
              NAMES OF INVESTORS]

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