Document:

Reporting Period

    
      

    

     

    INVESTOR
      REGISTRATION RIGHTS AGREEMENT

     

    THIS
      REGISTRATION RIGHTS AGREEMENT
      (this
“Agreement”),
      dated
      as of October 10, 2005, by and among CENUCO,
      INC.,
      a
      Delaware 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, dated as of October 10, 2005 (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 (i) secured
      convertible debentures (the “Convertible
      Debentures”)
      which
      shall be convertible into such number of shares of the Company’s common stock,
      par value $0.001 per share (the “Common
      Stock”),
      as is
      provided for in the Convertible Debentures and (ii) warrants (the “Warrants”)
      to
      purchase 1,052,631 shares of Common Stock, pursuant to the terms of the
      Securities Purchase Agreement for an aggregate purchase price of Forty Million
      Dollars ($40,000,000). 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.

     

    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 Conversion Shares and the Warrant Shares, as such terms are defined in
      the
      Securities Purchase Agreement.

     

    
      
         

      

      
        
        

        
          

        

      

      
        
        

      

    

    (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, no later than sixty (60) days from the date hereof (the “Scheduled
      Filing Deadline”),
      with
      the SEC a registration statement on Form S-1 (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 up
      to
      42,105,263 Conversion Shares to be issued upon conversion of and/or default
      under the Convertible Debentures and 1,052,631 Warrant Shares to be issued
      upon
      exercise of the Warrants. The Company shall keep the Registration Statement
      “Evergreen” for the life of the Convertible Debentures or until Rule 144(k) of
      the Securities Act of 1933, as amended, is available to the Investor with
      respect to all of the Conversion Shares and Warrant Shares, whichever is later.
      The Company shall retain, and pay at its sole expense, a law firm to file the
      Registration Statement from a list of approved law firms provided by the
      Investor including but not limited to Sichenzia Ross Friedman Ference LLP,
      Greenberg Traurig, LLP and Kirkpatrick & Lockhart Nicholson Graham LLP.
      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 than 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
      declared effective by the SEC within one hundred twenty (120) days after filing
      thereof.

     

    (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
      Deadline (other than as a result of actions or failures to act of any of the
      Investors, including the failure to provide information required by the rules
      and regulations of the SEC), 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”)
      and
      not as a penalty, to the holder, a cash amount equal to two percent (2%) per
      month of the unpaid principal amount of the Convertible Debentures outstanding.
      The initial payment of Liquidated Damages shall be made within three (3)
      business days from the end of the month in which the Scheduled Filing Deadline
      or Scheduled Effective Deadline occurred, and shall continue thereafter until
      the Registration Statement is filed or declared effective as the case may
      be.

     

    
      
         

      

      
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    (d) 
Liquidated
      Damages.
      The
      Company and the Investors 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 subsection 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 file a Registration Statement or to obtain or maintain the
      effectiveness of a Registration Statement, (iii) one of the reasons for the
      Company and the Investors 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 Investors 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) 
Unless
      and until Rule 144(k) becomes available with respect to the Registrable
      Securities, the Company shall keep the Registration Statement effective pursuant
      to Rule 415 at all times until the date on which the Investors 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-K, Form 10-Q 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 reasonable 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.
      Notwithstanding any provision of this Agreement to the contrary, if the Company
      makes such a notification, the Company may suspend the use of any prospectus
      contained in any Registration Statement for periods not to exceed forty five
      (45) business days in any three month period or two periods not to exceed an
      aggregate of ninety (90) business days in any 12 month period in the event
      that
      the Company determines, in the exercise of its reasonable discretion, confirmed
      by a legal opinion from outside counsel, that sales of Registrable Securities
      thereunder could constitute violations of the Securities Act due to the
      Registration Statement containing 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. In each case the Company shall use commercially reasonable
      efforts to remedy the deficiency in the Registration Statement within thirty
      (30) business days. 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 reasonable 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
      in
      writing, 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 or 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.

     

    
      
         

        
        

      

      
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    (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.

     

    (j) 
The
      Company shall use its reasonable 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) to be
      included 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 to a transferee of an Investor (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 reasonable 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 reasonable best efforts to comply with all
      applicable rules and regulations of the SEC in connection with any registration
      hereunder.

     

    
      
         

      

      
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    (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.

     

    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 Section 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 from the Company 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 (other than underwriting discounts and selling
      commissions), 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:

     

    
      
         

        
        

      

      
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    (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.

     

    (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.
      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.

     

    
      
         

        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    (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.

     

    
      
         

        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    (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) 
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

     

    (c) 
furnish
      to each Investor so long as such Investor owns Registrable Securities, promptly
      upon written 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 unless the Company has not so complied, (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.

     

    
      
         

        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    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.

     

    (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:

            	
              Cenuco,
                Inc.

            
	 	
              200
                Lenox Drive

            
	 	
              Lawrenceville,
                NJ 08648

            
	 	
              Attention:

            	
              Joseph
                A. Falsetti

            
	 	
              Telephone:

            	
              (609)
                219-0930

            
	 	
              Facsimile:

            	
              (609)
                219-1238

            
	 	 	 
	
              With
                a copy to:

            	
              Wolf,
                Block, Schorr and Solis-Cohen LLP

            
	 	
              250
                Park Avenue

            
	 	
              New
                York, NY 10177

            
	 	
              Attention:
                

            	
              Herbert
                Henryson

            
	 	
              Telephone:

            	
              (212)
                883-4992

            
	 	
              Facsimile:

            	
              (212)
                672-1192

            

    

     

    
      
         

        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    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.

     

    (d) 
The
      parties hereto acknowledge that the transactions contemplated by this Agreement
      and the exhibits hereto bear a reasonable relation to the State of New York.
      The
      parties hereto agree that the internal laws of the State of New York shall
      govern this Agreement and the exhibits hereto, including, but not limited to,
      all issues related to usury. Any action to enforce the terms of this Agreement
      or any of its exhibits shall be brought exclusively in the state and/or federal
      courts situated in the County and State of New York. 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, the
      Warrants, 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 Warrants, 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.

     

    
      
         

        
        

      

      
        12

        
          

        

      

      
        
        

      

    

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

     

    (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 Investor Registration Rights Agreement to be duly
      executed as of day and year first above written.

     

    
      	 	
              COMPANY:

            	 
	 	
              Cenuco,
                Inc.

            	 
	 	 	 	 
	 	
              By:

            	  
	 	 
	 	
              Name: 

            	
              Joseph
                A. Falsetti

            	 
	 	
              Title: 

            	
              President
                and Chief Executive Officer

            	 

    

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

        
        

      

    

     

    SCHEDULE
      I

     

    SCHEDULE
      OF INVESTORS

     

    

    
      	
              Name

            	 	
              Signature

            	 	
              Address/Facsimile
                

              Number
                of Investors

            
	 	 	 	 	 	 
	 	 	 	 	 	 
	
              Highgate
                House Funds, Ltd.

            	 	
              By:

            	
            	 	 	
              488
                Madison Avenue

            
	 	 	
              Name:

            	
              Adam
                S. Gottbette

            	 	
              New
                York, NY 10022

            
	 	 	
              Its:

            	
              Portfolio
                Manager

            	 	
              Facsimile:
                (212) 400-6901

            
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	
              With
                a copy to: 

            	 	
              Jason
                M. Rimland, Esq.

            	 	
              Gottbetter
                & Partners, LLP

            
	 	 	 	 	488
              Madison Avenue
	 	 	 	 	 	
              New
                York, NY 10022

            
	 	 	 	 	 	
              Facsimile:
                (212) 400-6901

            
	 	 	 	__________________________________	 	 
	
              Prencen,
                LLC

            	 	
              By:

            	
              PRENTICE
                CAPITAL MANAGEMENT, LP,

            	 	
              623
                Fifth Avenue, 32nd
                Fl.

            
	 	 	 	
              as
                Manager

            	 	 
	 	 	 	 	 	
              New
                York, NY 10022

            
	 	 	
               

            	
              By:

            	  
	 	
              Facsimile:
                (212) 756-1480

            
	 	 	 	 	Name:	 	 
	 	 	 	 	
              Title:

            	 	 

    

     

    
      
        
           

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    

    

    EXHIBIT
      A

     

    FORM
      OF NOTICE OF EFFECTIVENESS

    OF
      REGISTRATION STATEMENT

     

    Attention: 

    

    
      	 	
              Re:

            	
              CENUCO,
                INC.

            

    

    

    Ladies
      and Gentlemen:

    

    We
      are
      counsel to Cenuco, Inc., a Delaware 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 $0.001 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]Exhibit 10.5

    
      

    

    STANDBY
      EQUITY DISTRIBUTION AGREEMENT

     

    THIS
      AGREEMENT
      dated as
      of the ___ day of October 2005 (the “Agreement”)
      between CORNELL
      CAPITAL PARTNERS, LP,
      a
      Delaware limited partnership (the “Investor”),
      and
CENUCO,
      INC.,
      a
      corporation organized and existing under the laws of the State of Delaware
      (the
“Company”).

     

    WHEREAS,
      the
      parties desire that, upon the terms and subject to the conditions contained
      herein, the Company shall issue and sell to the Investor, from time to time
      as
      provided herein, and the Investor shall purchase from the Company up to One
      Hundred Million Dollars ($100,000,000) of the Company’s common stock, par
      value $0.001 per share (the “Common
      Stock”);
      and

     

    WHEREAS,
      such
      investments will be made in reliance upon the provisions of Regulation D
      (“Regulation
      D”)
      of the
      Securities Act of 1933, as amended, and the regulations promulgated thereunder
      (the “Securities
      Act”),
      and
      or upon such other exemption from the registration requirements of the
      Securities Act as may be available with respect to any or all of the investments
      to be made hereunder.

     

    WHEREAS,
      the
      Company has engaged Monitor Capital, Inc. (the “Placement
      Agent”),
      to
      act as the Company’s exclusive placement agent in connection with the sale of
      the Company’s Common Stock to the Investor hereunder pursuant to the Placement
      Agent Agreement dated the date hereof by and among the Company, the Placement
      Agent and the Investor (the “Placement
      Agent Agreement”).

     

    NOW,
      THEREFORE,
      the
      parties hereto agree as follows:

     

    ARTICLE
      I.

    Certain
      Definitions

     

    Section
      1.1. 
“Advance”
shall
      mean the portion of the Commitment Amount requested by the Company in the
      Advance Notice.

     

    Section
      1.2. 
“Advance
      Date”
shall
      mean the first (1st)
      Trading
      Day after expiration of the applicable Pricing Period for each
      Advance.

     

    Section
      1.3. 
“Advance
      Notice”
shall
      mean a written notice to the Investor setting forth the Advance amount that
      the
      Company requests from the Investor and the Advance Date.

     

    Section
      1.4. 
“Advance
      Notice Date”
shall
      mean each date the Company delivers (in accordance with Section 2.2(b) of this
      Agreement) to the Investor an Advance Notice requiring the Investor to advance
      funds to the Company, subject to the terms of this Agreement. No Advance Notice
      Date shall be less than five (5) Trading Days after the prior Advance Notice
      Date.

     

    
      
        
        

      

      
        
           

        

        
          

        

      

      
        
        

      

    

     

    Section
      1.5. 
“Bid
      Price”
shall
      mean, on any date, the closing bid price (as reported by Bloomberg L.P.) of
      the
      Common Stock on the Principal Market or if the Common Stock is not traded on
      a
      Principal Market, the highest reported bid price for the Common Stock, as
      furnished by the National Association of Securities Dealers, Inc.

     

    Section
      1.6. 
“Closing”
shall
      mean one of the closings of a purchase and sale of Common Stock pursuant to
      Section 2.3.

     

    Section
      1.7. 
“Commitment
      Amount”
shall
      mean the aggregate amount of up to One Hundred Million Dollars ($100,000,000)
      which the Investor has agreed to provide to the Company in order to purchase
      the
      Company’s Common Stock pursuant to the terms and conditions of this
      Agreement.

     

    Section
      1.8. 
“Commitment
      Period”
shall
      mean the period commencing on the earlier to occur of (i) the Effective Date,
      or
      (ii) such earlier date as the Company and the Investor may mutually agree in
      writing, and expiring on the earliest to occur of (x) the date on which the
      Investor shall have made payment of Advances pursuant to this Agreement in
      the
      aggregate amount of One Hundred Million Dollars ($100,000,000), (y) the date
      this Agreement is terminated pursuant to Section 2.4, or (z) the date occurring
      twenty-four (24) months after the Effective Date.

     

    Section
      1.9. 
“Common
      Stock”
shall
      mean the Company’s common stock, par value $0.001 per share.

     

    Section
      1.10.            
      “Condition
      Satisfaction Date”
shall
      have the meaning set forth in Section 7.2.

     

    Section
      1.11.            
      “Damages”
shall
      mean any loss, claim, damage, liability, costs and expenses (including, without
      limitation, reasonable attorney’s fees and disbursements and costs and expenses
      of expert witnesses and investigation).

     

    Section
      1.12.            
      “Effective
      Date”
shall
      mean the date on which the SEC first declares effective a Registration Statement
      registering the resale of the Registrable Securities as set forth in Section
      7.2(a). 

     

    Section
      1.13.             
      Intentionally
      Omitted. 

     

    Section
      1.14.             “Exchange
      Act”
shall
      mean the Securities Exchange Act of 1934, as amended, and the rules and
      regulations promulgated thereunder.

     

    Section
      1.15.             “Material
      Adverse Effect”
shall
      mean any condition, circumstance, or situation that would prohibit or otherwise
      materially interfere with the ability of the Company to enter into and perform
      any of its obligations under this Agreement or the Registration Rights Agreement
      in any material respect.

     

    Section
      1.16.             “Market
      Price”
shall
      mean the lowest VWAP of the Common Stock during the Pricing
      Period.

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    Section
      1.17.             “Maximum
      Advance Amount”
shall
      be One Million Dollars ($1,000,000) per Advance Notice. 

     

    Section
      1.18.             “NASD”
shall
      mean the National Association of Securities Dealers, Inc.

     

    Section
      1.19.             “Person”
shall
      mean an individual, a corporation, a limited liability company, a partnership,
      an association, a trust or other entity or organization, including a government
      or political subdivision or an agency or instrumentality thereof.

     

    Section
      1.20.             “Placement
      Agent”
shall
      mean Monitor Capital, Inc., a registered broker-dealer.

     

    Section
      1.21.             “Pricing
      Period”
shall
      mean the five (5) consecutive Trading Days after the Advance Notice
      Date.

     

    Section
      1.22.             “Principal
      Market”
shall
      mean the Nasdaq National Market, the Nasdaq SmallCap Market, the American Stock
      Exchange (the “AMEX”),
      the
      OTC Bulletin Board or the New York Stock Exchange, whichever is at the time
      the
      principal trading exchange or market for the Common Stock.

     

    Section
      1.23.             “Purchase
      Price”
shall
      be set at ninety eight percent (98%) of the Market Price during the Pricing
      Period.

     

    Section
      1.24.             “Registrable
      Securities”
shall
      mean the shares of Common Stock to be issued hereunder (i)
      in
      respect of which the Registration Statement has not been declared effective
      by
      the SEC, (ii) which have not been sold under circumstances meeting all of the
      applicable conditions of Rule 144 (or any similar provision then in force)
      under
      the Securities Act (“Rule
      144”)
      or
      (iii) which have not been otherwise transferred to a holder who may trade such
      shares without restriction under the Securities Act, and the Company has
      delivered a new certificate or other evidence of ownership for such securities
      not bearing a restrictive legend.

     

    Section
      1.25.             “Registration
      Rights Agreement”
shall
      mean the Registration Rights Agreement dated the date hereof, regarding the
      filing of the Registration Statement for the resale of the Registrable
      Securities, entered into between the Company and the Investor.

     

    Section
      1.26.             “Registration
      Statement”
shall
      mean a registration statement on Form S-1 or SB-2 (if use of such form is then
      available to the Company pursuant to the rules of the SEC and, if not, on such
      other form promulgated by the SEC for which the Company then qualifies and
      which
      counsel for the Company shall deem appropriate, and which form shall be
      available for the resale of the Registrable Securities to be registered
      thereunder in accordance with the provisions of this Agreement and the
      Registration Rights Agreement, and in accordance with the intended method of
      distribution of such securities), for the registration of the resale by the
      Investor of the Registrable Securities under the Securities Act.

     

    Section
      1.27.             “Regulation
      D”
shall
      have the meaning set forth in the recitals of this Agreement.

     

    Section
      1.28.             “SEC”
shall
      mean the Securities and Exchange Commission.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    Section
      1.29.             “Securities
      Act”
shall
      have the meaning set forth in the recitals of this Agreement.

     

    Section
      1.30.             “SEC
      Documents”
shall
      mean Annual Reports on Form 10-KSB, Annual Reports on Form 10-K, Quarterly
      Reports on Form 10-QSB, Quarterly Reports on Form 10-Q, Current Reports on
      Form
      8-K and Proxy Statements of the Company as supplemented to the date hereof,
      filed by the Company for a period of at least twelve (12) months immediately
      preceding the date hereof or the Advance Date, as the case may be, until such
      time as the Company no longer has an obligation to maintain the effectiveness
      of
      a Registration Statement as set forth in the Registration Rights
      Agreement.

     

    Section
      1.31.             “Trading
      Day”
shall
      mean any day during which the American Stock Exchange shall be open for
      business.

     

    Section
      1.32.             “VWAP”
shall
      mean the volume weighted average price of the Company’s Common Stock as quoted
      by Bloomberg, LP.

     

    ARTICLE
      II.

    Advances

     

    Section
      2.1.              
      Investments.

     

    (a) 
Advances.
      Upon
      the terms and conditions set forth herein (including, without limitation, the
      provisions of Article VII hereof), on any Advance Notice Date the Company may
      request an Advance by the Investor by the delivery of an Advance Notice. The
      number of shares of Common Stock that the Investor shall receive for each
      Advance shall be determined by dividing the amount of the Advance by the
      Purchase Price. No fractional shares shall be issued. Fractional shares shall
      be
      rounded to the next higher whole number of shares. The aggregate maximum amount
      of all Advances that the Investor shall be obligated to make under this
      Agreement shall not exceed the Commitment Amount.

     

    Section
      2.2.               
      Mechanics.

     

    (a) 
Advance
      Notice.
      At any
      time during the Commitment Period, the Company may deliver an Advance Notice
      to
      the Investor, subject to the conditions set forth in Section 7.2; provided,
      however, the amount for each Advance as designated by the Company in the
      applicable Advance Notice, shall not be more than the Maximum Advance Amount.
      The aggregate amount of the Advances pursuant to this Agreement shall not exceed
      the Commitment Amount. The Company acknowledges that the Investor may sell
      shares of the Company’s Common Stock corresponding with a particular Advance
      Notice on the day the Advance Notice is received by the Investor. There shall
      be
      a minimum of five (5) Trading Days between each Advance Notice
      Date.

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    (b) 
Date
      of Delivery of Advance Notice.
      An
      Advance Notice shall be deemed delivered on (i) the Trading Day it is received
      by facsimile or otherwise by the Investor if such notice is received prior
      to
      5:00 pm Eastern Time, or (ii) the immediately succeeding Trading Day if it
      is
      received by facsimile or otherwise after 5:00 pm Eastern Time on a Trading
      Day
      or at any time on a day which is not a Trading Day. No Advance Notice may be
      deemed delivered on a day that is not a Trading Day. 

     

    Section
      2.3. 
Closings.
      On each
      Advance Date, the Company shall deliver to the Investor shares of the Company’s
      Common Stock, representing the amount of the Advance specified in such Advance
      Notice pursuant to Section 2.1 herein, registered in the name of the Investor
      and upon receipt of such shares, the Investor shall deliver to the Company
      the
      amount of the Advance specified in the Advance Notice by wire transfer of
      immediately available funds. In addition, on or prior to the Advance Date,
      each
      of the Company and the Investor shall deliver to the other through the
      Investor’s counsel, all documents, instruments and writings required to be
      delivered by either of them pursuant to this Agreement in order to implement
      and
      effect the transactions contemplated herein. To the extent the Company has
      not
      paid the fees, expenses, and disbursements of the Investor, the Investor’s
      counsel, or the Company’s counsel in accordance with Section 12.4, the amount of
      such fees, expenses, and disbursements may be deducted by the Investor (and
      shall be paid to the relevant party) from the amount of the Advance with no
      reduction in the amount of shares of the Company’s Common Stock to be delivered
      on such Advance Date. 

     

    Section
      2.4. 
Termination
      of Investment.
      The
      obligation of the Investor to make an Advance to the Company pursuant to this
      Agreement shall terminate permanently (including with respect to an Advance
      Date
      that has not yet occurred) in the event that (i) there shall occur any stop
      order or suspension of the effectiveness of the Registration Statement for
      an
      aggregate of fifty (50) Trading Days, other than due to the acts of the
      Investor, during the Commitment Period, or (ii) the Company shall at any time
      fail materially to comply with the requirements of Article VI and such failure
      is not cured within thirty (30) days after receipt of written notice from the
      Investor, provided,
      however,
      that
      this termination provision shall not apply to any period commencing upon the
      filing of a post-effective amendment to such Registration Statement and ending
      upon the date on which such post effective amendment is declared effective
      by
      the SEC.

     

    Section
      2.5. 
Agreement
      to Advance Funds.
      The
      Investor agrees to advance the amount specified in the Advance Notice to the
      Company after the completion of each of the following conditions and the other
      conditions set forth in this Agreement:

     

    (a)  the
      execution and delivery by the Company, and the Investor, of this Agreement
      and
      the Exhibits hereto;

     

    (b) 
The
      Investor shall have received the shares of Common Stock applicable to the
      Advance in accordance with Section 2.3. Such shares shall be free of restrictive
      legends.

     

    (c) 
the
      Company’s Registration Statement with respect to the resale of the Registrable
      Securities in accordance with the terms of the Registration Rights Agreement
      shall have been declared effective by the SEC;

     

    (d) 
the
      Company shall have obtained all material permits and qualifications required
      by
      any applicable state for the offer and sale of the Registrable Securities,
      or
      shall have the availability of exemptions therefrom. The sale and issuance
      of
      the Registrable Securities shall be legally permitted by all laws and
      regulations to which the Company is subject; 

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    (e) 
the
      Company shall have filed with the SEC in a timely manner all reports, notices
      and other documents required of a “reporting company” under the Exchange Act and
      applicable Commission regulations;

     

    (f) 
the
      fees
      as set forth in Section 12.4 below shall have been paid or can be withheld
      as
      provided in Section 2.3; and

     

    (g) 
the
      conditions set forth in Section 7.2 shall have been satisfied.

     

    (h) 
the
      Company shall have provided to the Investor an acknowledgement, from the
      Company’s independent certified public accountants as to its ability to provide
      all consents required in order to file a registration statement in connection
      with this transaction;

     

    (i) 
the
      stockholders of the Company shall have approved the issuance of the shares
      of
      Common Stock as contemplated by this Agreement as required by the rules of
      the
      American Stock Exchange; and 

     

    (j) 
the
      Company’s transfer agent shall be DWAC eligible.

     

    Section
      2.6.            
   Lock
      Up Period.
      On the
      date hereof, the Company shall obtain from the Company’s Chief Executive Officer
      and President a lock-up agreement, as defined below, in the form annexed hereto
      as Schedule 2.6 agreeing to only sell in compliance with the volume
      limitation of Rule 144.

     

    Section
      2.7.               
Hardship.
      In the
      event the Investor sells shares of the Company’s Common Stock after receipt of
      an Advance Notice and the Company fails to perform its obligations as mandated
      in Section 2.3, and specifically the Company fails to deliver to the Investor
      on
      the Advance Date the shares of Common Stock corresponding to the applicable
      Advance, the Company acknowledges that the Investor shall suffer financial
      hardship and therefore shall be liable for any and all losses, commissions,
      fees, or financial hardship caused to the Investor.

     

    ARTICLE
      III.

    Representations
      and Warranties of Investor

     

    Investor
      hereby represents and warrants to, and agrees with, the Company that the
      following are true and correct as of the date hereof and as of each Advance
      Date:

     

    Section
      3.1. 
Organization
      and Authorization.
      The
      Investor is duly organized and validly existing as a limited partnership in
      the
      State of Delaware and has all requisite power and authority to purchase and
      hold
      the securities issuable hereunder. The decision to invest and the execution
      and
      delivery of this Agreement by such Investor, the performance by such Investor
      of
      its obligations hereunder and the consummation by such Investor of the
      transactions contemplated hereby have been duly authorized and requires no
      other
      proceedings on the part of the Investor. The undersigned has the right, power
      and authority to execute and deliver this Agreement and all other instruments
      (including, without limitations, the Registration Rights Agreement), on behalf
      of the Investor. This Agreement has been duly executed and delivered by the
      Investor and, assuming the execution and delivery hereof and acceptance thereof
      by the Company, will constitute the legal, valid and binding obligations of
      the
      Investor, enforceable against the Investor in accordance with its
      terms.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    Section
      3.2. 
Evaluation
      of Risks.
      The
      Investor has such knowledge and experience in financial, tax and business
      matters as to be capable of evaluating the merits and risks of, and bearing
      the
      economic risks entailed by, an investment in the Company and of protecting
      its
      interests in connection with this transaction. It recognizes that its investment
      in the Company involves a high degree of risk.

     

    Section
      3.3. 
No
      Legal Advice From the Company.
      The
      Investor acknowledges that it had the opportunity to review this Agreement
      and
      the transactions contemplated by this Agreement with his or its own legal
      counsel and investment and tax advisors. The Investor is relying solely on
      such
      counsel and advisors and not on any statements or representations of the Company
      or any of its representatives or agents for legal, tax or investment advice
      with
      respect to this investment, the transactions contemplated by this Agreement
      or
      the securities laws of any jurisdiction.

     

    Section
      3.4. 
Investment
      Purpose.
      The
      securities are being purchased by the Investor for its own account, and for
      investment purposes. The Investor agrees not to assign or in any way transfer
      the Investor’s rights to the securities or any interest therein and acknowledges
      that the Company will not recognize any purported assignment or transfer except
      in accordance with applicable Federal and state securities laws. No other person
      has or will have a direct or indirect beneficial interest in the securities.
      The
      Investor agrees not to sell, hypothecate or otherwise transfer the Investor’s
      securities unless the securities are registered under Federal and applicable
      state securities laws or unless, in the opinion of counsel satisfactory to
      the
      Company, an exemption from such laws is available.

     

    Section
      3.5. 
Accredited
      Investor.
      The
      Investor is an “Accredited
      Investor”
as
      that
      term is defined in Rule 501(a)(3) of Regulation D of the Securities
      Act.

     

    Section
      3.6. 
Information.
      The
      Investor and its advisors (and its counsel), if any, have been furnished with
      all materials relating to the business, finances and operations of the Company
      and information it deemed material to making an informed investment decision.
      The Investor and its advisors, if any, have been afforded the opportunity to
      ask
      questions of the Company and its management. Neither such inquiries nor any
      other due diligence investigations conducted by such Investor or its advisors,
      if any, or its representatives shall modify, amend or affect the Investor’s
      right to rely on the Company’s representations and warranties contained in this
      Agreement. The Investor understands that its investment involves a high degree
      of risk. The Investor is in a position regarding the Company, which, based
      upon
      employment, family relationship or economic bargaining power, enabled and
      enables such Investor to obtain information from the Company in order to
      evaluate the merits and risks of this investment. The Investor has sought such
      accounting, legal and tax advice, as it has considered necessary to make an
      informed investment decision with respect to this transaction.

     

    Section
      3.7. 
Receipt
      of Documents.
      The
      Investor and its counsel have received and read in their entirety: (i) this
      Agreement and the Exhibits annexed hereto; (ii) all due diligence and other
      information necessary to verify the accuracy and completeness of such
      representations, warranties and covenants; (iii) the Company’s Form 10-KSB for
      the year ended June 30, 2004, Forms 10-QSB for the fiscal quarters ended
      September 30, 2004, December 31, 2004 and March 31, 2005 and Form 10-Q for
      the
      period ended May 28, 2005; and (iv) answers to all questions the Investor
      submitted to the Company regarding an investment in the Company; and the
      Investor has relied on the information contained therein and has not been
      furnished any other documents, literature, memorandum or prospectus.

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    Section
      3.8. 
Registration
      Rights Agreement.
      The
      parties have entered into the Registration Rights Agreement dated the date
      hereof.

     

    Section
      3.9. 
No
      General Solicitation.
      Neither
      the Company, nor any of its affiliates, nor any person acting on its or their
      behalf, has engaged in any form of general solicitation or general advertising
      (within the meaning of Regulation D under the Securities Act) in connection
      with
      the offer or sale of the shares of Common Stock offered hereby.

     

    Section
      3.10.            Not
      an
      Affiliate.
      The
      Investor is not an officer, director or a person that directly, or indirectly
      through one or more intermediaries, controls or is controlled by, or is under
      common control with the Company or any “Affiliate”
of
      the
      Company (as that term is defined in Rule 405 of the Securities Act).

     

    Section
      3.11.            Trading
      Activities.
      The
      Investor’s trading activities with respect to the Company’s Common Stock shall
      be in compliance with all applicable federal and state securities laws, rules
      and regulations and the rules and regulations of the Principal Market on which
      the Company’s Common Stock is listed or traded. Neither
      the Investor nor its affiliates has an open short position in the Common Stock
      of the Company, the Investor agrees that it shall not, and that it will cause
      its affiliates not to, engage in any short sales of or hedging transactions
      with
      respect to the Common Stock, provided
      that the
      Company acknowledges and agrees that upon receipt of an Advance Notice the
      Investor has the right to sell the shares to be issued to the Investor pursuant
      to the Advance Notice
      during
      the applicable Pricing Period. 

     

    ARTICLE
      IV.

    Representations
      and Warranties of the Company

     

    Except
      as
      stated below, on the disclosure schedules delivered in connection herewith
      or in
      the SEC Documents (as defined herein), the Company hereby represents and
      warrants to, and covenants with, the Investor that the following are true and
      correct as of the date hereof:

     

    Section
      4.1. 
Organization
      and Qualification.
      The
      Company is duly incorporated and validly existing in the State of Delaware
      and
      has all requisite corporate power to own its properties and to carry on its
      business as now being conducted. Each of the Company and its subsidiaries is
      duly qualified as a foreign corporation or limited liability company to do
      business and is in good standing in every jurisdiction in which the nature
      of
      the business conducted by it makes such qualification necessary, except to
      the
      extent that the failure to be so qualified or be in good standing would not
      have
      a Material Adverse Effect on the Company and its subsidiaries taken as a
      whole.

     

    Section
      4.2. 
Authorization,
      Enforcement, Compliance with Other Instruments.
      (i) The
      Company has the requisite corporate power and authority to enter into and
      perform this Agreement, the Registration Rights Agreement, the Placement Agent
      Agreement and any related agreements, in accordance with the terms hereof and
      thereof, (ii) the execution and delivery of this Agreement, the Registration
      Rights Agreement, the Placement Agent Agreement and any related agreements
      by
      the Company and the consummation by it of the transactions contemplated hereby
      and thereby, have been duly authorized by the Company’s Board of Directors and
      no further consent or authorization is required by the Company, its Board of
      Directors or its stockholders, (iii) this Agreement, the Registration
      Rights Agreement, the Placement Agent Agreement and any related agreements
      have
      been duly executed and delivered by the Company, (iv) this Agreement, the
      Registration Rights Agreement, the Placement Agent Agreement and assuming the
      execution and delivery thereof and acceptance by the Investor and any related
      agreements constitute the valid and binding obligations of the Company
      enforceable against the Company in accordance with their terms, except as such
      enforceability may be limited by general principles of equity or applicable
      bankruptcy, insolvency, reorganization, moratorium, liquidation or similar
      laws
      relating to, or affecting generally, the enforcement of creditors’ rights and
      remedies.

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    Section
      4.3. 
Capitalization.
      The
      authorized capital stock of the Company consists of 25,000,000 shares of Common
      Stock and 1,000,000 shares of Preferred Stock, $0.001 par value per share
      (“Preferred
      Stock”),
      of
      which 13,826,556 shares of Common Stock and 2,553.6746 shares of Preferred
      Stock, designated as Series A Junior Participating Preferred Stock, are issued
      and outstanding. All of such outstanding shares have been validly issued and
      are
      fully paid and nonassessable. Except as disclosed in the SEC Documents, no
      shares of Common Stock are subject to preemptive rights or any other similar
      rights or any liens or encumbrances suffered or permitted by the Company. Except
      as disclosed in the SEC Documents, as of the date hereof, (i) there are no
      outstanding options, warrants, scrip, rights to subscribe to, calls or
      commitments of any character whatsoever relating to, or securities or rights
      convertible into, any shares of capital stock of the Company or any of its
      subsidiaries, or contracts, commitments, understandings or arrangements by
      which
      the Company or any of its subsidiaries is or may become bound to issue
      additional shares of capital stock of the Company or any of its subsidiaries
      or
      options, warrants, scrip, rights to subscribe to, calls or commitments of any
      character whatsoever relating to, or securities or rights convertible into,
      any
      shares of capital stock of the Company or any of its subsidiaries, (ii) there
      are no outstanding debt securities (iii) there
      are no outstanding registration statements other than on Form S-8 and (iv)
      there
      are no agreements or arrangements under which the Company or any of its
      subsidiaries is obligated to register the sale of any of their securities under
      the Securities Act (except pursuant to the Registration Rights Agreement and
      other agreements in connection with the aggregate financing of which this
      Agreement is a portion). There are no securities or instruments containing
      anti-dilution or similar provisions that will be triggered by this Agreement
      or
      any related agreement or the consummation of the transactions described herein
      or therein. The Company has furnished to the Investor true and correct copies
      of
      the Company’s Certificate of Incorporation, as amended and as in effect on the
      date hereof (the “Certificate
      of Incorporation”),
      and
      the Company’s By-laws, as in effect on the date hereof (the “By-laws”),
      and
      the terms of all securities convertible into or exercisable for Common Stock
      and
      the material rights of the holders thereof in respect thereto.

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    Section
      4.4. 
No
      Conflict.
      Subject
      to the approval of the stockholders of the Company as required by the rules
      of
      the American Stock Exchange, the execution, delivery and performance of this
      Agreement by the Company and the consummation by the Company of the transactions
      contemplated hereby will not (i) result in a violation of the Certificate of
      Incorporation, any certificate of designations of any outstanding series of
      Preferred Stock of the Company or By-laws or (ii) conflict with or constitute
      a
      default (or an event which with notice or lapse of time or both would become
      a
      default) under, or give to others any rights of termination, amendment,
      acceleration or cancellation of, any agreement, indenture or instrument to
      which
      the Company or any of its subsidiaries is a party, or result in a violation
      of
      any law, rule, regulation, order, judgment or decree (including federal and
      state securities laws and regulations and the rules and regulations of the
      Principal Market on which the Common Stock is quoted) applicable to the Company
      or any of its subsidiaries or by which any material property or asset of the
      Company or any of its subsidiaries is bound or affected and which would cause
      a
      Material Adverse Effect. Except as disclosed in the SEC Documents, neither
      the
      Company nor its subsidiaries is in violation of any term of or in default under
      its Certificate of Incorporation or By-laws or their organizational charter
      or
      by-laws, respectively, or any material contract, agreement, mortgage,
      indebtedness, indenture, instrument, judgment, decree or order or any statute,
      rule or regulation applicable to the Company or its subsidiaries. The business
      of the Company and its subsidiaries is not being conducted in violation of
      any
      material law, ordinance, regulation of any governmental entity. Except as
      specifically contemplated by this Agreement and as required under the Securities
      Act and any applicable state securities laws, the Company is not required to
      obtain any consent, authorization or order of, or make any filing or
      registration with, any court or governmental agency in order for it to execute,
      deliver or perform any of its obligations under or contemplated by this
      Agreement or the Registration Rights Agreement in accordance with the terms
      hereof or thereof. All consents, authorizations, orders, filings and
      registrations which the Company is required to obtain pursuant to the preceding
      sentence have been obtained or effected on or prior to the date hereof. The
      Company and its subsidiaries are unaware of any fact or circumstance which
      might
      give rise to any of the foregoing.

     

    Section
      4.5. 
SEC
      Documents; Financial Statements.
      Except
      as disclosed in the SEC Documents and except for the failure to file an Interim
      Annual Report on Form 10-K for the period ended February 28, 2005, since January
      1, 2003, the Company has filed all reports, schedules, forms, statements and
      other documents required to be filed by it with the SEC under the Exchange
      Act.
      The Company has delivered to the Investor or its representatives, or made
      available through the SEC’s website at http://www.sec.gov, true and complete
      copies of the SEC Documents. Except as disclosed in the SEC Documents, as of
      their respective dates, the financial statements of the Company disclosed in
      the
      SEC Documents (the “Financial
      Statements”)
      complied as to form in all material respects with applicable accounting
      requirements and the published rules and regulations of the SEC with respect
      thereto. Such financial statements have been prepared in accordance with
      generally accepted accounting principles, consistently applied, during the
      periods involved (except (i) as may be otherwise indicated in such financial
      statements or the notes thereto, or (ii) in the case of unaudited interim
      statements, to the extent they may exclude footnotes or may be condensed or
      summary statements) and, fairly present in all material respects the financial
      position of the Company as of the dates thereof and the results of its
      operations and cash flows for the periods then ended (subject, in the case
      of
      unaudited statements, to normal year-end audit adjustments). No other written
      information, excluding any financial or business projections, provided by or
      on
      behalf of the Company to the Investor which is not included in the SEC
      Documents, including, without limitation, information referred to in this
      Agreement, contains any untrue statement of a material fact or omits to state
      any material fact necessary in order to make the statements herein, in the
      light
      of the circumstances under which they were made, not misleading.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    Section
      4.6. 
10b-5.
      The SEC
      Documents do not include any untrue statements of material fact, nor do they
      omit to state any material fact required to be stated therein necessary to
      make
      the statements made, in light of the circumstances under which they were made,
      not misleading.

     

    Section
      4.7. 
No
      Default.
      Except
      as disclosed in the SEC Documents, the Company is not in default in the
      performance or observance of any material obligation, agreement, covenant or
      condition contained in any indenture, mortgage, deed of trust or other material
      instrument or agreement to which it is a party or by which it is or its property
      is bound and neither the execution, nor the delivery by the Company, nor the
      performance by the Company of its obligations under this Agreement or any of
      the
      exhibits or attachments hereto will conflict with or result in the breach or
      violation of any of the terms or provisions of, or constitute a default or
      result in the creation or imposition of any lien or charge on any assets or
      properties of the Company under its Certificate of Incorporation, By-Laws,
      any
      material indenture, mortgage, deed of trust or other material agreement
      applicable to the Company or instrument to which the Company is a party or
      by
      which it is bound, or any statute, or any decree, judgment, order, rules or
      regulation of any court or governmental agency or body having jurisdiction
      over
      the Company or its properties, in each case which default, lien or charge is
      likely to cause a Material Adverse Effect on the Company’s business or financial
      condition.

     

    Section
      4.8. 
Absence
      of Events of Default.
      Except
      for matters described in the SEC Documents and/or this Agreement, no Event
      of
      Default, as defined in the respective agreement to which the Company is a party,
      and no event which, with the giving of notice or the passage of time or both,
      would become an Event of Default (as so defined), has occurred and is
      continuing, which would have a Material Adverse Effect on the Company’s
      business, properties, financial condition or results of operations.

     

    Section
      4.9. 
Intellectual
      Property Rights.
      The
      Company and its subsidiaries own or possess adequate rights or licenses to
      use
      all material trademarks, trade names, service marks, service mark registrations,
      service names, patents, patent rights, copyrights, inventions, licenses,
      approvals, governmental authorizations, trade secrets and rights necessary
      to
      conduct their respective businesses as now conducted. The Company and its
      subsidiaries do not have any knowledge of any infringement by the Company or
      its
      subsidiaries of trademark, trade name rights, patents, patent rights,
      copyrights, inventions, licenses, service names, service marks, service mark
      registrations, trade secret or other similar rights of others, and, to the
      knowledge of the Company, there is no claim, action or proceeding being made
      or
      brought against, or to the Company’s knowledge, being threatened against, the
      Company or its subsidiaries regarding trademark, trade name, patents, patent
      rights, invention, copyright, license, service names, service marks, service
      mark registrations, trade secret or other infringement; and the Company and
      its
      subsidiaries are unaware of any facts or circumstances which might give rise
      to
      any of the foregoing. 

     

    Section
      4.10. 
Employee
      Relations.
      Neither
      the Company nor any of its subsidiaries is involved in any labor dispute nor,
      to
      the knowledge of the Company or any of its subsidiaries, is any such dispute
      threatened. None of the Company’s or its subsidiaries’ employees is a member of
      a union and the Company and its subsidiaries believe that their relations with
      their employees are good.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    Section
      4.11. 
Environmental
      Laws.
      The
      Company and its subsidiaries are (i) in material compliance with any and all
      applicable material foreign, federal, state and local laws and regulations
      relating to the protection of human health and safety, the environment or
      hazardous or toxic substances or wastes, pollutants or contaminants
      (“Environmental
      Laws”),
      (ii)
      have received all material permits, licenses or other approvals required of
      them
      under applicable Environmental Laws to conduct their respective businesses
      and
      (iii) are in material compliance with all terms and conditions of any such
      permit, license or approval.

     

    Section
      4.12. 
Title.
      Except
      as set forth in the SEC Documents, the Company has good and marketable title
      to
      its properties and material assets owned by it, free and clear of any pledge,
      lien, security interest, encumbrance, claim or equitable interest other than
      such as are not material to the business of the Company. Any real property
      and
      facilities held under lease by the Company and its subsidiaries are held by
      them
      under valid, subsisting and enforceable leases with such exceptions as are
      not
      material and do not interfere with the use made and proposed to be made of
      such
      property and buildings by the Company and its subsidiaries.

     

    Section
      4.13. 
Insurance.
      The
      Company and each of its subsidiaries are insured by insurers of recognized
      financial responsibility against such losses and risks and in such amounts
      as
      management of the Company believes to be prudent and customary in the businesses
      in which the Company and its subsidiaries are engaged. Neither the Company
      nor
      any such subsidiary has been refused any insurance coverage sought or applied
      for and neither the Company nor any such subsidiary has any reason to believe
      that it will not be able to renew its existing insurance coverage as and when
      such coverage expires or to obtain similar coverage from similar insurers as
      may
      be necessary to continue its business at a cost that would not materially and
      adversely affect the condition, financial or otherwise, or the earnings,
      business or operations of the Company and its subsidiaries, taken as a
      whole.

     

    Section
      4.14. 
Regulatory
      Permits.
      The
      Company and its subsidiaries possess all material certificates, authorizations
      and permits issued by the appropriate federal, state or foreign regulatory
      authorities necessary to conduct their respective businesses, and neither the
      Company nor any such subsidiary has received any notice of proceedings relating
      to the revocation or modification of any such certificate, authorization or
      permit.

     

    Section
      4.15. 
Internal
      Accounting Controls.
      The
      Company and each of its subsidiaries maintain a system of internal accounting
      controls sufficient to provide reasonable assurance that (i) transactions are
      executed in accordance with management’s general or specific authorizations,
      (ii) transactions are recorded as necessary to permit preparation of financial
      statements in conformity with generally accepted accounting principles and
      to
      maintain asset accountability, (iii) access to assets is permitted only in
      accordance with management’s general or specific authorization and (iv) the
      recorded accountability for assets is compared with the existing assets at
      reasonable intervals and appropriate action is taken with respect to any
      differences.

     

    
      
        
        

      

      
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    Section
      4.16. 
No
      Material Adverse Breaches, etc.
      Except
      as set forth in the SEC Documents, neither the Company nor any of its
      subsidiaries is subject to any charter, corporate or other legal restriction,
      or
      any judgment, decree, order, rule or regulation which in the judgment of the
      Company’s officers has or is expected in the future to have a Material Adverse
      Effect on the business, properties, operations, financial condition, results
      of
      operations or prospects of the Company or its subsidiaries. Except as set forth
      in the SEC Documents, neither the Company nor any of its subsidiaries is in
      breach of any contract or agreement which breach, in the judgment of the
      Company’s officers, has or is expected to have a Material Adverse Effect on the
      business, properties, operations, financial condition or results of operations
      of the Company or its subsidiaries.

     

    Section
      4.17. 
Absence
      of Litigation.
      Except
      as set forth in the SEC Documents, there is no action, suit, proceeding, inquiry
      or investigation before or by any court, public board, government agency,
      self-regulatory organization or body pending against or affecting the Company,
      the Common Stock or any of the Company’s subsidiaries, wherein an unfavorable
      decision, ruling or finding would (i) have a Material Adverse Effect on the
      transactions contemplated hereby (ii) adversely affect the validity or
      enforceability of, or the authority or ability of the Company to perform its
      obligations under, this Agreement or any of the documents contemplated herein,
      or (iii) except as expressly disclosed in the SEC Documents, have a Material
      Adverse Effect on the business, operations, properties, financial condition
      or
      results of operation of the Company and its subsidiaries taken as a
      whole.

     

    Section
      4.18. 
Subsidiaries.
      Except
      as disclosed in the SEC Documents, the Company does not presently own or
      control, directly or indirectly, any interest in any other corporation,
      partnership, association or other business entity.

     

    Section
      4.19. 
Tax
      Status.
      Except
      as disclosed in the SEC Documents, the Company and each of its subsidiaries
      has
      made or filed all federal and state income and all other tax returns, reports
      and declarations required by any jurisdiction to which it is subject and (unless
      and only to the extent that the Company and each of its subsidiaries has set
      aside on its books provisions reasonably adequate for the payment of all unpaid
      and unreported taxes) has paid all taxes and other governmental assessments
      and
      charges that are material in amount, shown or determined to be due on such
      returns, reports and declarations, except those being contested in good faith
      and has set aside on its books provision reasonably adequate for the payment
      of
      all taxes for periods subsequent to the periods to which such returns, reports
      or declarations apply. There are no unpaid taxes in any material amount claimed
      to be due by the taxing authority of any jurisdiction, and the officers of
      the
      Company know of no basis for any such claim.

     

    Section
      4.20. 
Certain
      Transactions.
      Except
      as set forth in the SEC Documents none of the officers, directors, or employees
      of the Company is presently a party to any transaction with the Company (other
      than for services as employees, officers and directors), including any contract,
      agreement or other arrangement providing for the furnishing of services to
      or
      by, providing for rental of real or personal property to or from, or otherwise
      requiring payments to or from any officer, director or such employee or, to
      the
      knowledge of the Company, any corporation, partnership, trust or other entity
      in
      which any officer, director, or any such employee has a substantial interest
      or
      is an officer, director, trustee or partner.

    
      
        
        

      

      
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    Section
      4.21. 
Fees
      and Rights of First Refusal.
      The
      Company is not obligated to offer the securities offered hereunder on a right
      of
      first refusal basis or otherwise to any third parties including, but not limited
      to, current or former shareholders of the Company, underwriters, brokers, agents
      or other third parties.

     

    Section
      4.22. 
Use
      of
      Proceeds.
      The
      Company shall use the net proceeds from this offering for general corporate
      purposes, including, without limitation, the payment of loans incurred by the
      Company. However, in no event shall the Company use the net proceeds from this
      offering for the payment (or loan to any such person for the payment) of any
      judgment, or other liability, incurred by any executive officer, officer,
      director or employee of the Company, except for any liability owed to such
      person for services rendered, or if any judgment or other liability is incurred
      by such person originating from services rendered to the Company, or the Company
      has indemnified such person from liability.

     

    Section
      4.23. 
Further
      Representation and Warranties of the Company.
      For so
      long as any securities issuable hereunder held by the Investor remain
      outstanding, the Company acknowledges, represents, warrants and agrees that
      it
      will use its best efforts to maintain the listing of its Common Stock on the
      Principal Market.

     

    Section
      4.24. 
Opinion
      of Counsel.
      Investor shall receive an opinion letter from counsel to the Company on the
      date
      hereof.

     

    Section
      4.25. 
Opinion
      of Counsel.
      The
      Company will obtain for the Investor, at the Company’s expense, any and all
      opinions of counsel which may be reasonably required in order to sell the
      securities issuable hereunder without restriction.

     

    Section
      4.26. 
Dilution.
      The
      Company is aware and acknowledges that issuance of shares of the Company’s
      Common Stock could cause dilution to existing shareholders and could
      significantly increase the outstanding number of shares of Common Stock.

     

    ARTICLE
      V.

    Indemnification

     

    The
      Investor and the Company represent to the other the following with respect
      to
      itself:

     

    Section
      5.1. 
Indemnification.

     

    (a) 
In
      consideration of the Investor’s execution and delivery of this Agreement, and in
      addition to all of the Company’s other obligations under this Agreement, the
      Company shall defend, protect, indemnify and hold harmless the Investor, and
      all
      of its officers, directors, partners, employees and agents (including, without
      limitation, those retained in connection with the transactions contemplated
      by
      this Agreement) (collectively, the “Investor
      Indemnitees”)
      from
      and against any and all actions, causes of action, suits, claims, losses, costs,
      penalties, fees, liabilities and damages, and expenses in connection therewith
      (irrespective of whether any such Investor Indemnitee is a party to the action
      for which indemnification hereunder is sought), and including reasonable
      attorneys’ fees and disbursements (the “Indemnified
      Liabilities”),
      incurred by the Investor Indemnitees or any of them as a result of, or arising
      out of, or relating to (a) any misrepresentation or breach of any representation
      or warranty made by the Company in this Agreement or the Registration Rights
      Agreement or any other certificate, instrument or document contemplated hereby
      or thereby, (b) any breach of any covenant, agreement or obligation of the
      Company contained in this Agreement or the Registration Rights Agreement or
      any
      other certificate, instrument or document contemplated hereby or thereby, or
      (c)
      any cause of action, suit or claim brought or made against such Investor
      Indemnitee not arising out of any action or inaction of an Investor Indemnitee,
      and arising out of or resulting from the execution, delivery, performance or
      enforcement of this Agreement or any other instrument, document or agreement
      executed pursuant hereto by any of the Investor Indemnitees. To the extent
      that
      the foregoing undertaking by the Company may be unenforceable for any reason,
      the Company shall make the maximum contribution to the payment and satisfaction
      of each of the Indemnified Liabilities, which is permissible under applicable
      law.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    (b) 
In
      consideration of the Company’s execution and delivery of this Agreement, and in
      addition to all of the Investor’s other obligations under this Agreement, the
      Investor shall defend, protect, indemnify and hold harmless the Company and
      all
      of its officers, directors, shareholders, employees and agents (including,
      without limitation, those retained in connection with the transactions
      contemplated by this Agreement) (collectively, the “Company
      Indemnitees”)
      from
      and against any and all Indemnified Liabilities incurred by the Company
      Indemnitees or any of them as a result of, or arising out of, or relating to
      (a)
      any misrepresentation or breach of any representation or warranty made by the
      Investor in this Agreement, the Registration Rights Agreement, or any instrument
      or document contemplated hereby or thereby executed by the Investor, (b) any
      breach of any covenant, agreement or obligation of the Investor(s) contained
      in
      this Agreement, the Registration Rights Agreement or any other certificate,
      instrument or document contemplated hereby or thereby executed by the Investor,
      or (c) any cause of action, suit or claim brought or made against such Company
      Indemnitee based on misrepresentations or due to a breach by the Investor and
      arising out of or resulting from the execution, delivery, performance or
      enforcement of this Agreement or any other instrument, document or agreement
      executed pursuant hereto by any of the Company Indemnitees. To the extent that
      the foregoing undertaking by the Investor may be unenforceable for any reason,
      the Investor shall make the maximum contribution to the payment and satisfaction
      of each of the Indemnified Liabilities, which is permissible under applicable
      law.

     

    (c) 
The
      obligations of the parties to indemnify or make contribution under this Section
      5.1 shall survive termination.

     

    ARTICLE
      VI.

    Covenants
      of the Company

     

    Section
      6.1.            Registration
      Rights.
      The
      Company shall cause the Registration Rights Agreement to remain in full force
      and effect and the Company shall comply in all material respects with the terms
      thereof.

     

    Section
      6.2.            Listing
      of Common Stock.
      The
      Company shall maintain the Common Stock’s authorization for quotation on a
      Principal Market. 

     

    
      
        
        

      

      
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    Section
      6.3.            Exchange
      Act Registration.
      The
      Company will cause its Common Stock to continue to be registered under Section
      12(g) of the Exchange Act, will file in a timely manner all reports and other
      documents required of it as a reporting company under the Exchange Act and
      will
      not take any action or file any document (whether or not permitted by Exchange
      Act or the rules thereunder) to terminate or suspend such registration or to
      terminate or suspend its reporting and filing obligations under said Exchange
      Act unless otherwise required by law or regulation.

     

    Section
      6.4.            Transfer
      Agent Instructions.
      Upon
      effectiveness of the Registration Statement the Company shall deliver
      instructions to its transfer agent to issue shares of Common Stock to the
      Investor free of restrictive legends on or before each Advance Date

     

    Section
      6.5.            Corporate
      Existence.
      Subject
      to the provisions of Section 6.8 hereof, the Company will take all steps
      necessary to preserve and continue the corporate existence of the
      Company.

     

    Section
      6.6.            Notice
      of Certain Events Affecting Registration; Suspension of Right to Make an
      Advance.
      The
      Company will immediately notify the Investor upon its becoming aware of the
      occurrence of any of the following events in respect of a registration statement
      or related prospectus relating to an offering of Registrable Securities: (i)
      receipt of any request for additional information by the SEC or any other
      Federal or state governmental authority during the period of effectiveness
      of
      the Registration Statement for amendments or supplements to the registration
      statement or related prospectus; (ii) the issuance by the SEC or any other
      Federal or state governmental authority of any stop order suspending the
      effectiveness of the Registration Statement or the initiation of any proceedings
      for that purpose; (iii) receipt of any notification with respect to the
      suspension of the qualification or exemption from qualification of any of the
      Registrable Securities for sale in any jurisdiction or the initiation or
      threatening of any proceeding for such purpose; (iv) the happening of any event
      that makes any statement made in the Registration Statement or related
      prospectus of any document incorporated or deemed to be incorporated therein
      by
      reference untrue in any material respect or that requires the making of any
      changes in the Registration Statement, related prospectus or documents so that,
      in the case of the Registration Statement, it will not contain any untrue
      statement of a material fact or omit to state any material fact required to
      be
      stated therein or necessary to make the statements therein not misleading,
      and
      that in the case of the related prospectus, it will not contain any untrue
      statement of a material fact or omit to state any material fact required to
      be
      stated therein or necessary to make the statements therein, in the light of
      the
      circumstances under which they were made, not misleading; and (v) the Company’s
      reasonable determination that a post-effective amendment to the Registration
      Statement would be appropriate; and the Company will promptly make available
      to
      the Investor any such supplement or amendment to the related prospectus. The
      Company shall not deliver to the Investor any Advance Notice during the
      continuation of any of the foregoing events.

     

    Section
      6.7.    Restriction
      on Sale of Capital Stock.
      During
      the Commitment Period, the Company shall not, without the prior written consent
      of the Investor, except in connection with the exercise or conversion of
      warrants, options and convertible securities issued and outstanding prior to
      the
      date hereof or otherwise issued in accordance with the terms hereof, (i) issue
      or sell any Common Stock or Preferred Stock without consideration or for a
      consideration per share less than the Bid Price of the Common Stock determined
      immediately prior to its issuance, or (ii) issue or sell any
      Preferred Stock
      warrant, option, right, contract, call, or other security or instrument granting
      the holder thereof the right to acquire Common Stock without consideration
      or
      for a consideration per share (assuming exercise or conversion of all such
      securities) less than such Common Stock’s Bid Price determined immediately prior
      to its issuance. 

     

    
      
        
        

      

      
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    Section
      6.8.    
Consolidation;
      Merger.
      The
      Company shall not, at any time after the date hereof, effect any merger or
      consolidation of the Company with or into, or a transfer of all or substantially
      all the assets of the Company to another entity (a “Consolidation
      Event”)
      unless
      the resulting successor or acquiring entity (if not the Company) assumes by
      written instrument the obligation to deliver to the Investor such shares of
      stock and/or securities as the Investor is entitled to receive pursuant to
      this
      Agreement.

     

    Section
      6.9.    
Issuance
      of the Company’s Common Stock.
      The sale
      of the shares of Common Stock shall be made in accordance with the provisions
      and requirements of Regulation D and any applicable state securities
      law.

     

    Section
      6.10.    Review
      of Public Disclosures.
      All SEC
      filings (including, without limitation, all filings required under the Exchange
      Act, which include Forms 10-Q and 10-QSB, 10-K and 10K-SB, 8-K, etc) and other
      public disclosures made by the Company, including, without limitation, all
      press
      releases, investor relations materials, and scripts of analysts meetings and
      calls, shall be reviewed and approved for release by the Company’s attorneys
      and, if containing financial information, the Company’s independent certified
      public accountants. 

     

    Section
      6.11.    Market
      Activities. The
      Company will not, directly or indirectly, (i) take any action designed to cause
      or result in, or that constitutes or might reasonably be expected to constitute,
      the stabilization or manipulation of the price of any security of the Company
      to
      facilitate the sale or resale of the Common Stock or (ii) sell, bid for or
      purchase the Common Stock, or pay anyone any compensation for soliciting
      purchases of the Common Stock.

     

    ARTICLE
      VII.

    Conditions
      for Advance and Conditions to Closing

     

    Section
      7.1.    Conditions
      Precedent to the Obligations of the Company.
      The
      obligation hereunder of the Company to issue and sell the shares of Common
      Stock
      to the Investor incident to each Closing is subject to the satisfaction, or
      waiver by the Company, at or before each such Closing, of each of the conditions
      set forth below.

     

    (a)    
Accuracy
      of the Investor’s Representations and Warranties.
      The
      representations and warranties of the Investor shall be true and correct in
      all
      material respects.

     

    (b)    Performance
      by the Investor.
      The
      Investor shall have performed, satisfied and complied in all material respects
      with all covenants, agreements and conditions required by this Agreement and
      the
      Registration Rights Agreement to be performed, satisfied or complied with by
      the
      Investor at or prior to such Closing.

     

    Section
      7.2.    Conditions
      Precedent to the Right of the Company to Deliver an Advance Notice and the
      Obligation of the Investor to Purchase Shares of Common Stock.
      The
      right of the Company to deliver an Advance Notice and the obligation of the
      Investor hereunder to acquire and pay for shares of the Company’s Common Stock
      incident to a Closing is subject to the fulfillment by the Company, on (i)
      the
      date of delivery of such Advance Notice and (ii) the applicable Advance
      Date (each a “Condition
      Satisfaction Date”),
      of
      each of the following conditions:

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    (a)    Registration
      of the Common Stock with the SEC.
      The
      Company shall have filed with the SEC a Registration Statement with respect
      to
      the resale of the Registrable Securities in accordance with the terms of the
      Registration Rights Agreement. As set forth in the Registration Rights
      Agreement, the Registration Statement shall have previously become effective
      and
      shall remain effective on each Condition Satisfaction Date and (i) neither
      the
      Company nor the Investor shall have received notice that the SEC has issued
      or
      intends to issue a stop order with respect to the Registration Statement or
      that
      the SEC otherwise has suspended or withdrawn the effectiveness of the
      Registration Statement, either temporarily or permanently, or intends or has
      threatened to do so (unless the SEC’s concerns have been addressed and the
      Investor is reasonably satisfied that the SEC no longer is considering or
      intends to take such action), and (ii) no other suspension of the use or
      withdrawal of the effectiveness of the Registration Statement or related
      prospectus shall exist. The Registration Statement must have been declared
      effective by the SEC prior to the first Advance Notice Date.

     

    (b)    Authority.
      The
      Company shall have obtained all permits and qualifications required by any
      applicable state in accordance with the Registration Rights Agreement for the
      offer and sale of the shares of Common Stock, or shall have the availability
      of
      exemptions therefrom. The sale and issuance of the shares of Common Stock shall
      be legally permitted by all laws and regulations to which the Company is
      subject.

     

    (c)    Fundamental
      Changes.
      There
      shall not exist any fundamental changes to the information set forth in the
      Registration Statement which would require the Company to file a post-effective
      amendment to the Registration Statement. 

     

    (d)    Performance
      by the Company.
      The
      Company shall have performed, satisfied and complied in all material respects
      with all covenants, agreements and conditions required by this Agreement
      (including, without limitation, the conditions specified in Section 2.5
      hereof) and the Registration Rights Agreement to be performed, satisfied or
      complied with by the Company at or prior to each Condition Satisfaction
      Date.

     

    (e)    No
      Injunction.
      No
      statute, rule, regulation, executive order, decree, ruling or injunction shall
      have been enacted, entered, promulgated or endorsed by any court or governmental
      authority of competent jurisdiction that prohibits or directly and adversely
      affects any of the transactions contemplated by this Agreement, and no
      proceeding shall have been commenced that may have the effect of prohibiting
      or
      adversely affecting any of the transactions contemplated by this
      Agreement.

     

    (f)    No
      Suspension of Trading in or Delisting of Common Stock.
      The
      trading of the Common Stock is not suspended by the SEC or the Principal Market
      (if the Common Stock is traded on a Principal Market). The issuance of shares
      of
      Common Stock with respect to the applicable Closing, if any, shall not violate
      the shareholder approval requirements of the Principal Market (if the Common
      Stock is traded on a Principal Market). The Company shall not have received
      any
      notice threatening the continued listing of the Common Stock on the Principal
      Market (if the Common Stock is traded on a Principal Market).

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

    (g)    Maximum
      Advance Amount.
      The
      amount of an Advance requested by the Company shall not exceed the Maximum
      Advance Amount. In addition, in no event shall the number of shares issuable
      to
      the Investor pursuant to an Advance cause the aggregate number of shares of
      Common Stock beneficially owned by the Investor and its affiliates to exceed
      nine and 9/10 percent (9.9%) of the then outstanding Common Stock of the
      Company. For the purposes of this section beneficial ownership shall be
      calculated in accordance with Section 13(d) of the Exchange Act.

     

    (h)    No
      Knowledge.
      The
      Company has no knowledge of any event which would be more likely than not to
      have the effect of causing such Registration Statement to be suspended or
      otherwise ineffective.

     

    (i)     Other.
      On each
      Condition Satisfaction Date, the Investor shall have received the certificate
      executed by an officer of the Company in the form of Exhibit
      A
      attached
      hereto.

     

    ARTICLE
      VIII.

    Due
      Diligence Review; Non-Disclosure of Non-Public Information

     

    Section
      8.1.    Due
      Diligence Review.
      Prior
      to the filing of the Registration Statement the Company shall make available
      for
      inspection and review by the Investor, its advisors and representatives, and
      any
      underwriter participating in any disposition of the Registrable Securities
      on
      behalf of the Investor pursuant to the Registration Statement, any such
      registration statement or amendment or supplement thereto or any blue sky,
      NASD
      or other filing, all financial and other records, all SEC Documents and other
      filings with the SEC, and all other corporate documents and properties of the
      Company as may be reasonably necessary for the purpose of such review, and
      cause
      the Company’s officers, directors and employees to supply all such information
      reasonably requested by the Investor or any such representative, advisor or
      underwriter in connection with such Registration Statement (including, without
      limitation, in response to all questions and other inquiries reasonably made
      or
      submitted by any of them), prior to and from time to time after the filing
      and
      effectiveness of the Registration Statement for the sole purpose of enabling
      the
      Investor and such representatives, advisors and underwriters and their
      respective accountants and attorneys to conduct initial and ongoing due
      diligence with respect to the Company and the accuracy of the Registration
      Statement.

     

    Section
      8.2.    Non-Disclosure
      of Non-Public Information.

     

    (a)    The
      Company shall not disclose non-public information to the Investor, its advisors,
      or its representatives, unless prior to disclosure of such information the
      Company identifies such information as being non-public information and provides
      the Investor, such advisors and representatives with the opportunity to accept
      or refuse to accept such non-public information for review. The Company may,
      as
      a condition to disclosing any non-public information hereunder, require the
      Investor’s advisors and representatives to enter into a confidentiality
      agreement in form reasonably satisfactory to the Company and the
      Investor.

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

    (b)    Nothing
      herein shall require the Company to disclose non-public information to the
      Investor or its advisors or representatives, and the Company represents that
      it
      does not disseminate non-public information to any investors who purchase stock
      in the Company in a public offering, to money managers or to securities
      analysts, provided, however, that notwithstanding anything herein to the
      contrary, the Company will, as hereinabove provided, immediately notify the
      advisors and representatives of the Investor and, if any, underwriters, of
      any
      event or the existence of any circumstance (without any obligation to disclose
      the specific event or circumstance) of which it becomes aware, constituting
      non-public information (whether or not requested of the Company specifically
      or
      generally during the course of due diligence by such persons or entities),
      which, if not disclosed in the prospectus included in the Registration Statement
      would cause such prospectus to include a material misstatement or to omit a
      material fact required to be stated therein in order to make the statements,
      therein, in light of the circumstances in which they were made, not misleading.
      Nothing contained in this Section 8.2 shall be construed to mean that such
      persons or entities other than the Investor (without the written consent of
      the
      Investor prior to disclosure of such information) may not obtain non-public
      information in the course of conducting due diligence in accordance with the
      terms of this Agreement and nothing herein shall prevent any such persons or
      entities from notifying the Company of their opinion that based on such due
      diligence by such persons or entities, that the Registration Statement contains
      an untrue statement of material fact or omits a material fact required to be
      stated in the Registration Statement or necessary to make the statements
      contained therein, in light of the circumstances in which they were made, not
      misleading.

     

    ARTICLE
      IX.

    Choice
      of Law/Jurisdiction

     

    Section
      9.1.    Governing
      Law.
      This
      Agreement shall be governed by and interpreted in accordance with the laws
      of
      the State of New Jersey without regard to the principles of conflict of laws.
      The parties further agree that any action between them shall be heard in Hudson
      County, New Jersey, and expressly consent to the jurisdiction and venue of
      the
      Superior Court of New Jersey, sitting in Hudson County, New Jersey and the
      United States District Court of New Jersey, sitting in Newark, New Jersey,
      for
      the adjudication of any civil action asserted pursuant to this
      paragraph.

     

    ARTICLE
      X.

    Assignment;
      Termination

     

    Section
      10.1.    Assignment.
      Neither
      this Agreement nor any rights of the Company hereunder may be assigned to any
      other Person. 

     

    Section
      10.2.    Termination.
      The
      obligations of the Investor to make Advances under Article II hereof shall
      terminate twenty-four (24) months after the Effective Date.

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      XI.

    Notices

     

    Section
      11.1.    Notices.
      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 a copy is mailed by U.S. certified
      mail, return receipt requested; (iii) three (3) days after being sent by U.S.
      certified mail, return receipt requested, or (iv) one (1) 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:

            	
              Cenuco,
                Inc.

            
	 	
              200
                Lenox Drive

            
	 	
              Lawrenceville,
                NJ 08648

            
	 	
              Attention: 

            	
              Joseph
                A. Falsetti

            
	 	
              Facsimile: 

            	 
	 	 	 

    

    

    
      	
              With
                a copy to:

            	
              Wolf,
                Block, Schorr and Solis-Cohen LLP

            
	 	
              250
                Park Avenue

            
	 	
              New
                York, New York 10177

            
	 	
              Attention:
                

            	
              Herbert
                Henryson, Esquire

            
	 	
              Facsimile:
                

            	
              (212)
                672-1192

            
	 	 	 
	
              If
                to the Investor(s):

            	
              Cornell
                Capital Partners, LP

            
	 	
              101
                Hudson Street -Suite 3700

            
	 	
              Jersey
                City, NJ 07302

            
	 	
              Attention: 

            	
              Mark
                Angelo

            
	 	 	
              Portfolio
                Manager

            
	 	
              Facsimile:  

            	
              (201)
                985-8266

            
	 	 	 
	
              With
                a Copy to:

            	
              Cornell
                Capital Partners, LP

            
	 	
              101
                Hudson Street - Suite 3700

            
	 	
              Jersey
                City, NJ 07302

            
	 	
              Attention: 

            	
              Troy
                J. Rillo, Esq.

            
	 	
              Facsimile: 

            	
              (201)
                985-8266

            

    

    

    Each
      party shall provide five (5) days’ prior written notice to the other party of
      any change in address or facsimile number.

     

    ARTICLE
      XII.

    Miscellaneous

     

    Section
      12.1.   Counterparts.
      This
      Agreement may be executed in two or more identical counterparts, all of which
      shall be considered one and the same agreement and shall become effective when
      counterparts have been signed by each party and delivered to the other party.
      In
      the event any signature page is delivered by facsimile transmission, the party
      using such means of delivery shall cause four (4) additional original executed
      signature pages to be physically delivered to the other party within five (5)
      days of the execution and delivery hereof, though failure to deliver such copies
      shall not affect the validity of this Agreement.

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    Section
      12.2.   Entire
      Agreement; Amendments.
      This
      Agreement supersedes all other prior oral or written agreements between the
      Investor, the Company, their affiliates and persons acting on their behalf
      with
      respect to the matters discussed herein, and this Agreement and the instruments
      referenced herein contain the entire understanding of the parties with respect
      to the matters covered herein and therein and, except as specifically set forth
      herein or therein, neither the Company nor the Investor makes any
      representation, warranty, covenant or undertaking with respect to such matters.
      No provision of this Agreement may be waived or amended other than by an
      instrument in writing signed by the party to be charged with
      enforcement.

     

    Section
      12.3.   Reporting
      Entity for the Common Stock.
      The
      reporting entity relied upon for the determination of the trading price or
      trading volume of the Common Stock on any given Trading Day for the purposes
      of
      this Agreement shall be Bloomberg, L.P. or any successor thereto. The written
      mutual consent of the Investor and the Company shall be required to employ
      any
      other reporting entity.

     

    Section
      12.4.  
Fees
      and Expenses.
      The
      Company hereby agrees to pay the following fees:

     

    (a)    Structuring
      Fees.
      Each of
      the parties shall pay its own fees and expenses (including the fees of any
      attorneys, accountants, appraisers or others engaged by such party) in
      connection with this Agreement and the transactions contemplated hereby, except
      that the Company will pay a structuring fee of Twenty Thousand
      Dollars ($20,000) to Yorkville Advisors Management, LLC, which shall be
      paid on the date hereof. Subsequently on each advance date, the Company will
      pay
      Yorkville Advisors Management, LLC a structuring fee of Five Hundred
      Dollars ($500) directly out the proceeds of any Advances
      hereunder.

     

    (b)    Commitment
      Fees.

     

    (i) 
On
      each
      Advance Date the Company shall pay to the Investor, directly from the gross
      proceeds, an amount equal to three and one-half percent (3.5%) of the amount
      of
      each Advance. The Company hereby agrees that if such payment, as is described
      above, is not made by the Company on the Advance Date, such payment will be
      made
      at the direction of the Investor as outlined and mandated by Section 2.3 of
      this
      Agreement. 

     

    (ii) 
Within
      5
      Trading Days after the stockholders of the Company approve the issuance of
      shares of Common Stock pursuant to the terms of this Agreement as required
      by
      the rules of the American Stock Exchange, the Company shall issue to the
      Investor 746,350 shares of the Company’s Common Stock (the “Investor’s
      Shares”).

     

    (iii) 
Fully
      Earned.
      The
      Investor’s Shares shall be deemed fully earned as of the date hereof.

     

    (iv) 
Registration
      Rights.
      The
      Investor’s Shares will have “piggy-back” registration rights.

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

    

     

    Section
      12.5.    Brokerage.
      Each of
      the parties hereto represents that it has had no dealings in connection with
      this transaction with any finder or broker who will demand payment of any fee
      or
      commission from the other party. The Company on the one hand, and the Investor,
      on the other hand, agree to indemnify the other against and hold the other
      harmless from any and all liabilities to any person claiming brokerage
      commissions or finder’s fees on account of services purported to have been
      rendered on behalf of the indemnifying party in connection with this Agreement
      or the transactions contemplated hereby.

     

    Section
      12.6.    Confidentiality.
      If for
      any reason the transactions contemplated by this Agreement are not consummated,
      each of the parties hereto shall keep confidential any information obtained
      from
      any other party (except information publicly available or in such party’s domain
      prior to the date hereof, and except as required by court order) and shall
      promptly return to the other parties all schedules, documents, instruments,
      work
      papers or other written information without retaining copies thereof, previously
      furnished by it as a result of this Agreement or in connection
      herein.

     

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK]

    

    

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

    

    IN
      WITNESS WHEREOF,
      the
      parties hereto have caused this Standby Equity Distribution Agreement to be
      executed by the undersigned, thereunto duly authorized, as of the date first
      set
      forth above.

     

    
      	 	
              COMPANY:

            	 
	 	
              CENUCO,
                INC.

            	 
	 	 	 	 
	 	
              By:

            	   
	 	 
	 	
              Name:

            	
              Joseph
                A. Falsetti

            	 
	 	
              Title:

            	
              President
                & CEO

            	 
	 	 	 	 
	 	 	 	 
	 	
              INVESTOR:

            	 
	 	
              CORNELL
                CAPITAL PARTNERS, LP

            	 
	 	 	 	 
	 	
              By:

            	
              Yorkville
                Advisors, LLC

            	 
	 	
              Its:

            	
              General
                Partner

            	 
	 	 	 	 
	 	
              By:

            	  
	 	 
	 	
              Name:

            	
              Mark
                Angelo

            	 
	 	
              Title:

            	
              Portfolio
                Manager

            	 
	 	 	 	 

    

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      A

     

    ADVANCE
      NOTICE/COMPLIANCE CERTIFICATE

     

    CENUCO,
      INC.

     

    

    The
      undersigned, Joseph A. Falsetti hereby certifies, with respect to the sale
      of
      shares of Common Stock of CENUCO,
      INC.
      (the
“Company”),
      issuable in connection with this Advance Notice and Compliance Certificate
      dated
      ___________________ (the “Notice”),
      delivered pursuant to the Standby Equity Distribution Agreement (the
“Agreement”),
      as
      follows: 

     

    1.    The
      undersigned is the duly elected President and CEO of the Company.

     

    2.    There
      are
      no fundamental changes to the information set forth in the Registration
      Statement which would require the Company to file a post effective amendment
      to
      the Registration Statement. 

     

    3.     The
      Company has performed in all material respects all covenants and agreements
      to
      be performed by the Company on or prior to the Advance Date related to the
      Notice and has complied in all material respects with all obligations and
      conditions contained in the Agreement.

     

    4.    The
      undersigned hereby represents, warrants and covenants that it has made all
      filings (“SEC
      Filings”)
      required to be made by it pursuant to applicable securities laws (including,
      without limitation, all filings required under the Securities Exchange Act
      of
      1934, which include Forms 10-Q or 10-QSB, 10-K or 10-KSB, 8-K, etc.). All SEC
      Filings and other public disclosures made by the Company, including, without
      limitation, all press releases, analysts meetings and calls, etc. (collectively,
      the “Public
      Disclosures”),
      have
      been reviewed and approved for release by the Company’s attorneys and, if
      containing financial information, the Company’s independent certified public
      accountants. None of the Company’s Public Disclosures contain any untrue
      statement of a material fact or omit to state any material fact required to
      be
      stated therein or necessary to make the statements therein, in the light of
      the
      circumstances under which they were made, not misleading.

     

    5.    The
      Advance requested is _____________________.

     

    The
      undersigned has executed this Certificate this ____ day of
      _________________.

     

    
      	 	
              CENUCO,
                INC.

            	 
	 	 	 	 
	 	 	 	 
	 	
              By:

            	  
	 	 
	 	
              Name:

            	
              Joseph
                A. Falsetti

            	 
	 	
              Title:

            	
              President
                & CEO

            	 

    

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
      2.6

     

    CENUCO,
      INC.

     

    The
      undersigned hereby agrees that for a period commencing on October 10, 2005
      and
      expiring on the earlier to occur of (i) the termination of the Standby Equity
      Distribution Agreement dated October 10, 2005 between Cenuco, Inc. (the
“Company”)
      and
      Cornell Capital Partners, LP (the “Investor”)
      or
      (ii) the date the undersigned ceases to be an officer, director or "affiliate"
      (as defined in Rule 144(a)(1) of the General Rules and Regulations under the
      Securities Act of 1933, as amended) of the Company (the “Lock-up
      Period”),
      he,
      she or it will not, directly or indirectly, without the prior written consent
      of
      the Investor, issue, offer, agree or offer to sell, sell, grant an option for
      the purchase or sale of, transfer, pledge, assign, hypothecate, distribute
      or
      otherwise encumber or dispose of any securities of the Company, including common
      stock or options, rights, warrants or other securities underlying, convertible
      into, exchangeable or exercisable for or evidencing any right to purchase or
      subscribe for any common stock (whether or not beneficially owned by the
      undersigned), or any beneficial interest therein (collectively, the
“Securities”)
      except
      in accordance with the volume limitations set forth in Rule 144(e) of the
      General Rules and Regulations under the Securities Act of 1933, as
      amended.

     

    In
      order
      to enable the aforesaid covenants to be enforced, the undersigned hereby
      consents to the placing of legends and/or stop-transfer orders with the transfer
      agent of the Company’s securities with respect to any of the Securities
      registered in the name of the undersigned or beneficially owned by the
      undersigned, and the undersigned hereby confirms the undersigned’s investment in
      the Company.

     

    Dated:
      _______________, 2005

    
 

    
      
        	 	
                Signature

              	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	
                Name:
                  

              	  
	 	 
	 	
                Address:

              	 	 
	 	
                City,
                  State, Zip Code:

              	 

      

      

      
        	 	 	 
	 	 	 
	 	 	 
	 	
                Print
                  Social Security Number 

              	 
	 	
                or
                  Taxpayer I.D. Number

              	 

      

      

        26

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