Document:

Exhibit
      4.1

    

    NOTE
      AND WARRANT PURCHASE AGREEMENT

    

    Dated
      as of August 16, 2007

     

    among

     

    JUMA
      TECHNOLOGY CORP.

     

    and

     

    THE
      PURCHASERS LISTED ON EXHIBIT A

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
 

    
      
        	
                TABLE
                  OF CONTENTS

              
	 
	 	
                Page

              
	
                ARTICLE
                  I Purchase and Sale of the Notes and Warrants

              	 
	
                Section
                  1.1

              	
                Purchase
                  and Sale of Notes

              	
                1

              
	
                Section
                  1.2

              	
                Warrants

              	
                1

              
	
                Section
                  1.3

              	
                Conversion
                  Shares

              	
                1

              
	
                Section
                  1.4

              	
                Purchase
                  Price and Closing

              	
                2

              
	
                 

              	
                 

              	 
	
                ARTICLE
                  II Representations and Warranties

              	 
	
                Section
                  2.1

              	
                Representations
                  and Warranties of the Company

              	
                2

              
	
                Section
                  2.2

              	
                Representations
                  and Warranties of the Purchasers

              	
                12

              
	
                 

              	 
	
                ARTICLE
                  III Covenants

              	 
	
                Section
                  3.1

              	
                Securities
                  Compliance

              	
                14

              
	
                Section
                  3.2

              	
                Registration
                  and Listing

              	
                14

              
	
                Section
                  3.3

              	
                Inspection
                  Rights

              	
                15

              
	
                Section
                  3.4

              	
                Compliance
                  with Laws

              	
                15

              
	
                Section
                  3.5

              	
                Keeping
                  of Records and Books of Account

              	
                15

              
	
                Section
                  3.6

              	
                Furnishing
                  of Information

              	
                15

              
	
                Section
                  3.7

              	
                Reporting
                  Requirements

              	
                15

              
	
                Section
                  3.8

              	
                Amendments

              	
                16

              
	
                Section
                  3.9

              	
                Other
                  Agreements

              	
                16

              
	
                Section
                  3.10

              	
                Distributions

              	
                16

              
	
                Section
                  3.11

              	
                Status
                  of Dividends

              	
                16

              
	
                Section
                  3.12

              	
                Use
                  of Proceeds

              	
                17

              
	
                Section
                  3.13

              	
                Reservation
                  of Shares

              	
                17

              
	
                Section
                  3.14

              	
                Transfer
                  Agent Instructions

              	
                17

              
	
                Section
                  3.15

              	
                Disposition
                  of Assets

              	
                18

              
	
                Section
                  3.16

              	
                Reporting
                  Status

              	
                18

              
	
                Section
                  3.17

              	
                Disclosure
                  of Transaction

              	
                18

              
	
                Section
                  3.18

              	
                Disclosure
                  of Material Information

              	
                18

              
	
                Section
                  3.19

              	
                Pledge
                  of Securities

              	
                18

              
	
                Section
                  3.20

              	
                Form
                  SB-2 Eligibility

              	
                19

              
	
                Section
                  3.21

              	
                Lock-Up
                  Agreement

              	
                19

              
	
                Section
                  3.22

              	
                DTC

              	
                19

              
	
                Section
                  3.23

              	
                Subsequent
                  Financings

              	
                19

              
	
                Section
                  3.24

              	
                Issuance
                  of Variable Securities

              	
                20

              
	
                Section
                  3.25

              	
                Approval
                  of Acquisitions.

              	
                20

              

      

       

      
        
          
          

        

        
          i

          
            

          

        

        
          
          

        

      

       

      
        	
                Section
                  3.26

              	
                Shareholder
                  Approval

              	
                20

              
	
                Section
                  3.27

              	
                Subsequent
                  Filings

              	
                20

              
	
                Section
                  3.28

              	
                Most
                  Favored Nations

              	
                20

              
	 	 
	
                ARTICLE
                  IV Conditions

              	 
	
                Section
                  4.1

              	
                Conditions
                  Precedent to the Obligation of the Company to Sell the
                  Shares

              	
                21

              
	
                Section
                  4.2

              	
                Conditions
                  Precedent to the Obligation of the Purchasers to Purchase the
                  Shares

              	
                21

              
	 	 
	
                ARTICLE
                  V Stock Certificate Legend

              	
              
	
                Section
                  5.1

              	
                Legend

              	23 
	 	 
	
                ARTICLE
                  VI Indemnification

              	
              
	
                Section
                  6.1

              	
                General
                  Indemnity

              	24
	
                Section
                  6.2

              	
                Indemnification
                  Procedure

              	24
	 	 
	
                ARTICLE
                  VII Miscellaneous

              	 
	
                Section
                  7.1

              	
                Fees
                  and Expenses

              	
                25

              
	
                Section
                  7.2

              	
                Specific
                  Enforcement

              	
                25

              
	
                Section
                  7.3

              	
                Entire
                  Agreement; Amendment

              	
                26

              
	
                Section
                  7.4

              	
                Rescission
                  and Withdrawal Right

              	
                26

              
	
                Section
                  7.5

              	
                Notices

              	
                27

              
	
                Section
                  7.6

              	
                Waivers

              	
                
                  27

                

              
	
                Section
                  7.7

              	
                Headings

              	
                27

              
	
                Section
                  7.8

              	
                Successors
                  and Assigns

              	
                28

              
	
                Section
                  7.9

              	
                No
                  Third Party Beneficiaries

              	
                28

              
	
                Section
                  7.10

              	
                Governing
                  Law; Consent to Jurisdiction

              	
                28

              
	
                Section
                  7.11

              	
                Survival

              	
                28

              
	
                Section
                  7.12

              	
                Counterparts

              	
                28

              
	
                Section
                  7.13

              	
                Publicity

              	
                28

              
	
                Section
                  7.14

              	
                Severability

              	
                29

              
	
                Section
                  7.15

              	
                Further
                  Assurances 

              	 

      

       

      
        
          
          

        

        
          ii

          
            

          

        

        
          
          

        

      

       

      
        TABLE
          OF CONTENTS

        (continued)

        

        EXHIBITS

      

       

      
        	
                Exhibit
                  A

              	
                List
                  of Purchasers

              	 
	
                Exhibit
                  B

              	
                Form
                  of 6% Convertible Promissory Note

              	 
	
                Exhibit
                  C

              	
                Certificate
                  of Designation of the Relative Rights and Preferences of
                  the Series A Convertible Preferred Stock

              	 
	
                Exhibit
                  D-1

              	
                Series
                  A Warrant

              	 
	
                Exhibit
                  D-2

              	
                Series
                  B Warrant

              	 
	
                Exhibit
                  D-3

              	
                Series
                  C Warrant

              	 
	
                Exhibit
                  E

              	
                Registration
                  Rights Agreement

              	 
	
                Exhibit
                  F

              	
                Lock-Up
                  Agreement

              	 
	
                Exhibit
                  G

              	
                Form
                  of Amended Certificate of Incorporation

              	 
	
                Exhibit
                  H

              	
                Irrevocable
                  Transfer Agent Instructions

              	 
	
                Exhibit
                  I

              	
                Opinion
                  of Counsel

              	 

      

      
         

        
          
          

        

        
          iii

          
            

          

        

        
          
          

        

      

       

    

    NOTE
      AND WARRANT PURCHASE AGREEMENT

     

    This
      NOTE
      AND WARRANT PURCHASE AGREEMENT (the “Agreement”)
      is
      dated as of August 16, 2007 by and among Juma Technology Corp., a Delaware
      corporation (the “Company”),
      and
      each of the Purchasers whose names are set forth on Exhibit
      A
      hereto
      (individually, a “Purchaser”
and
      collectively, the “Purchasers”).

    

    The
      parties hereto agree as follows:

    

    ARTICLE
      I

    Purchase
      and Sale of Preferred Stock

    

    Section
      1.1  Purchase
      and Sale of Notes.
      Upon
      the following terms and conditions, the Company shall issue and sell to the
      Purchasers and each of the Purchasers shall purchase from the Company, 6%
      convertible promissory notes in the aggregate principal amount of up to five
      million ($5,000,000) dollars (the “Notes”).
      The
      Notes provide for (i) optional conversion into shares of the Company’s common
      stock, par value $0.0001 per share (the “Common
      Stock”)
      and
      (ii) upon the adoption of the Amended Certificate and the filing of the
      Certificate of Designation (each as defined herein), mandatory conversion into
      shares of the Company’s Series A Convertible Preferred Stock, par value $0.0001
      per share (the “Preferred
      Stock”).
      The
      Note shall be substantially in the form attached hereto as Exhibit
      B.
      The
      designation, rights, preferences and other terms and provisions of the Series
      A
      Convertible Preferred Stock are set forth in the Certificate of Designation
      of
      the Relative Rights and Preferences of the Series A Convertible Preferred Stock
      attached hereto as Exhibit
      C
      (the
“Certificate
      of Designation”).
      The
      Company and the Purchasers are executing and delivering this Agreement in
      accordance with and in reliance upon the exemption from securities registration
      afforded by Rule 506 of Regulation D (“Regulation
      D”)
      as
      promulgated by the United States Securities and Exchange Commission (the
“Commission”)
      under
      the Securities Act of 1933, as amended (the “Securities
      Act”)
      or
      Section 4(2) of the Securities Act. 

     

    Section
      1.2  Warrants.
      Upon
      the following terms and conditions and for no additional consideration, each
      of
      the Purchasers shall be issued (i) Series A Warrants, in substantially the
      form
      attached hereto as Exhibit
      D-1
      (the
“Series
      A Warrant”),
      (ii)
      Series B Warrants, in substantially the form attached hereto as Exhibit
      D-2
      (the
“Series
      B Warrant” and
      (iii)
      Series C Warrants, in substantially the form attached hereto as Exhibit
      D-3
      (the
“Series
      C Warrant”
      and with
      the Series A Warrant and Series B Warrant, the “Warrants”).
      Any
      shares of Common Stock issuable upon exercise of the Warrants (and such shares
      when issued) are herein referred to as the “Warrant
      Shares.” 

     

    Section
      1.3  Conversion
      Shares.
      The
      Company has authorized (or will authorize as of the Preferred Stock Filing
      Date,
      as hereinafter defined) and will reserve and covenants to continue to reserve,
      free of preemptive rights and other similar contractual rights of stockholders,
      (i) such number of shares of Preferred Stock equal to one hundred twenty percent
      (120%) of the number of shares of Preferred Stock as shall from time to time
      be
      sufficient to effect the entire conversion of the Notes and any interest accrued
      and outstanding thereon; (ii) a number of shares of common stock, par value
      $0.0001 per share (the “Common
      Stock”)
      equal
      to one hundred twenty percent (120%) of the number of shares of Common Stock
      as
      shall from time to time be sufficient to effect the conversion of all of the
      Notes and/or the Preferred Stock and (iii) as of the date hereof, such number
      of
      shares of Common Stock equal to one hundred twenty percent (120%) of the number
      of shares of Common Stock as shall from time to time be sufficient to effect
      the
      exercise of the Warrants then outstanding. Any shares of Common Stock issuable
      upon conversion of the Note, the Preferred Stock and exercise of the Warrants
      (and such shares when issued) are herein referred to as the “Conversion
      Shares”
and
      the
      Warrant Shares, respectively. The Note, the Preferred Stock, the Warrants,
      the
      Preferred Stock, the Conversion Shares and the Warrant Shares are sometimes
      collectively referred to as the “Securities.”

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    Section
      1.4  Purchase
      Price and Closing.
      Subject
      to the terms and conditions hereof, the Company agrees to issue and sell to
      the
      Purchasers and, in consideration of and in express reliance upon the
      representations, warranties, covenants, terms and conditions of this Agreement,
      the Purchasers, severally but not jointly, agree to purchase the Notes and
      the
      Warrants for an aggregate purchase price of up to Five Million Dollars
      ($5,000,000) (the “Purchase
      Price”).
      The
      closing of the purchase and sale of the Notes and the Warrants to be acquired
      by
      the Purchasers from the Company under this Agreement shall take place at the
      offices of Sadis & Goldberg LLP, 551 Fifth Avenue, 21st
      Floor,
      New York, New York 10176 (the “Closing”)
      at
      10:00 a.m., New York time on such date as the Purchasers and the Company may
      agree upon; provided,
      that
      all of the conditions set forth in Article
      IV
      hereof
      and applicable to the Closing shall have been fulfilled or waived in accordance
      herewith (the “Closing
      Date”).
      Subject to the terms and conditions of this Agreement, at the Closing the
      Company shall deliver or cause to be delivered to each Purchaser (x) its Notes
      for the principal amount set forth opposite the name of such Purchaser on
Exhibit
      A
      hereto,
      (y) its Warrants to purchase such number of shares of Common Stock as is set
      forth opposite the name of such Purchaser on Exhibit
      A
      attached
      hereto and (z) any other documents required to be delivered pursuant to
Article
      IV
      hereof.
      At the Closing, each Purchaser shall deliver its Purchase Price by wire transfer
      to the Company. In addition, the parties acknowledge that Thirty Five Thousand
      ($35,000) of the Purchase Price funded on the Closing Date shall be deducted
      by
      the Purchase Price from the total amount otherwise payable to the Company,
      and
      paid over to counsel for the Purchasers in payment of reasonable legal fees
      and
      out of pocket expenses of the Purchasers’ counsel.

    

    ARTICLE
      II

    Representations
      and Warranties

     

    Section
      2.1 Representations
      and Warranties of the Company.
      The
      Company hereby represents and warrants to the Purchasers, as of the date hereof
      and Closing Date (except as set forth on the Schedule of Exceptions attached
      hereto with each numbered Schedule corresponding to the section number herein),
      as follows:

     

    (a) Organization,
      Good Standing and Power.
      The
      Company is a corporation duly incorporated, validly existing and in good
      standing under the laws of the State of Delaware and has the requisite corporate
      power to own, lease and operate its properties and assets and to conduct its
      business as it is now being conducted. Except as set forth in Schedule
      2.1(g)
      hereto,
      the Company does not have any Subsidiaries. Except as set forth on Schedule
      2.1(a),
      each of
      the Company and each such Subsidiary is duly qualified as a foreign corporation
      to do business and is in good standing in every jurisdiction in which the nature
      of the business conducted or property owned by it makes such qualification
      necessary except for any jurisdiction(s) (alone or in the aggregate) in which
      the failure to be so qualified will not have a Material Adverse Effect (as
      defined in Section
      2.1(c)
      hereof)
      on the Company’s financial condition.

    

    (b) Authorization;
      Enforcement.
      The
      Company has the requisite corporate power and authority to enter into and
      perform this Agreement, the Notes, the Warrants, the Registration Rights
      Agreement in the form attached hereto as Exhibit
      E
      (the
“Registration
      Rights Agreement”),
      the
      Lock-Up Agreement (as defined in Section
      3.20
      hereof)
      in the form attached hereto as Exhibit
      F,
      the
      Irrevocable Transfer Agent Instructions (as defined in Section
      3.13)
      substantially in the form of Exhibit
      H
      attached
      hereto, and the Certificate of Designation (collectively, the “Transaction
      Documents”)
      and to
      issue and sell the Securities in accordance with the terms hereof. The
      execution, delivery and performance of the Transaction Documents by the Company
      and the consummation by it of the transactions contemplated hereby and thereby
      have been duly and validly authorized by all necessary corporate action, and
      except as set forth on Schedule
      2.1(b),
      no
      further consent or authorization of the Company or its Board of Directors or
      stockholders is required. This Agreement has been duly executed and delivered
      by
      the Company. The other Transaction Documents will have been duly executed and
      delivered by the Company at the Closing. Each of the Transaction Documents
      constitutes, or shall constitute when executed and delivered, a valid and
      binding obligation of the Company enforceable against the Company in accordance
      with its terms, except as such enforceability may be limited by applicable
      bankruptcy, insolvency, reorganization, moratorium, liquidation,
      conservatorship, receivership or similar laws relating to, or affecting
      generally the enforcement of, creditor’s rights and remedies or by other
      equitable principles of general application. 

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    

    (c) Capitalization.
      The
      authorized capital stock of the Company and the shares thereof currently issued
      and outstanding as of the date hereof are set forth on Schedule
      2.1(c)
      hereto.
      All of the outstanding shares of the Common Stock have been duly and validly
      authorized. As of the date hereof, the Company does not possess the ability
      to
      issue shares of Preferred Stock. All shares of Preferred Stock will be duly
      and
      validly authorized for issuance upon conversion of the Notes no later than
      the
      Preferred Stock Filing Date. Except as set forth on Schedule
      2.1(c)
      hereto,
      no shares of Common Stock are entitled to preemptive rights or registration
      rights and there are no outstanding options, warrants, scrip, rights to
      subscribe to, call or commitments of any character whatsoever relating to,
      or
      securities or rights convertible into, any shares of capital stock of the
      Company. There are no contracts, commitments, understandings, or arrangements
      by
      which the Company is or may become bound to issue additional shares of the
      capital stock of the Company or options, securities or rights convertible into
      shares of capital stock of the Company. Except as set forth on Schedule
      2.1(c)
      hereto,
      the Company is not a party to any agreement granting registration or
      anti-dilution rights to any person with respect to any of its equity or debt
      securities. The Company is not a party to, and it has no knowledge of, any
      agreement restricting the voting or transfer of any shares of the capital stock
      of the Company. The offer and sale of all capital stock, convertible securities,
      rights, warrants, or options of the Company issued prior to the Closing complied
      with all applicable Federal and state securities laws, and no stockholder has
      a
      right of rescission or claim for damages with respect thereto. The Company
      has
      furnished or made available to the Purchasers true and correct copies of the
      Company’s Certificate of Incorporation as in effect on the date hereof (the
“Certificate”),
      a
      copy of the Company’s proposed Amended Certificate of Incorporation to be filed
      upon Shareholder Approval (as defined in Section
      3.26)
      (the
“Amended
      Certificate”
-
      attached hereto as Exhibit
      G),
      and
      the Company’s Bylaws as in effect on the date hereof (the “Bylaws”).
      For
      the purposes of this Agreement, “Material
      Adverse Effect”
means
      any material adverse effect on the business, operations, properties, prospects,
      or financial condition of the Company and its Subsidiaries, taken as a whole,
      and/or any condition, circumstance, or situation that would prohibit or
      otherwise materially interfere with the ability of the Company to perform any
      of
      its obligations under this Agreement.

     

    (d) Issuance
      of Securities.
      The
      Notes and the Warrants to be issued at the Closing have been duly authorized
      by
      all necessary corporate action and when paid for or issued in accordance with
      the terms hereof, the Notes and Warrants shall be validly issued and
      outstanding, free and clear of all liens, encumbrances and rights of refusal
      of
      any kind. Upon the adoption of the Amended Certificate and the filing of the
      Certificate of Designation, the Preferred Stock shall be validly issued and
      outstanding, free and clear of all liens, encumbrances and rights of refusal
      of
      any kind. When the Conversion Shares and the Warrant Shares are issued in
      accordance with the terms of this Agreement, the Notes, the Certificate of
      Designation and the Warrants, such shares will be duly authorized by all
      necessary corporate action and validly issued and outstanding, fully paid and
      nonassessable, free and clear of all liens, encumbrances and rights of refusal
      of any kind and the holders shall be entitled to all rights accorded to a holder
      of Common Stock.

     

    (e) No
      Conflicts.
      The
      execution, delivery and performance of the Transaction Documents by the Company,
      the performance by the Company of its obligations under the Notes and/or the
      Certificate of Designation and the consummation by the Company of the
      transactions contemplated herein and therein do not and will not (i) violate
      any
      provision of the Company’s Certificate,
      Amended
      Certificate or Bylaws, (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, mortgage, deed of trust, indenture, note, bond,
      license, lease agreement, instrument or obligation to which the Company is a
      party or by which it or its properties or assets are bound, except for conflicts
      or defaults, which singularly or in the aggregate do not and will not have
      a
      Material Adverse Effect, (iii) create or impose a lien, mortgage, security
      interest, charge or encumbrance of any nature on any property of the Company
      under any agreement or any commitment to which the Company is a party or by
      which the Company is bound or by which any of its respective properties or
      assets are bound, except for liens, mortgages, security interests, charges
      or
      encumbrances which singularly or in the aggregate do not and will not have
      a
      Material Adverse Effect, or (iv) result in a violation of any federal, state,
      local or foreign statute, rule, regulation, order, judgment or decree (including
      Federal and state securities laws and regulations) applicable to the Company
      or
      any of its Subsidiaries or by which any property or asset of the Company or
      any
      of its Subsidiaries are bound or affected, except for violations, which
      singularly or in the aggregate, do not and will not have a Material Adverse
      Effect. The business of the Company and its Subsidiaries is not being conducted
      in violation of any laws, ordinances or regulations of any governmental entity,
      except for possible violations which singularly or in the aggregate do not
      and
      will not have a Material Adverse Effect. The Company is not required under
      Federal, state or local law, rule or regulation 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 the Transaction Documents, or issue and sell the Notes, the
      Warrants, the Preferred Stock, the Conversion Shares and the Warrant Shares
      in
      accordance with the terms hereof or thereof (other than (x) any consent,
      authorization or order that has been obtained as of the date hereof, (y) any
      filing or registration that has been made as of the date hereof or (z) any
      filings which may be required to be made by the Company with the Commission
      or
      state securities administrators subsequent to the Closing, any registration
      statement which may be filed pursuant hereto or any other Transaction Document,
      and the Certificate of Designation); provided,
      that
      for purposes of the representation made in this sentence, the Company is
      assuming and relying upon the accuracy of the relevant representations and
      agreements of the Purchasers herein.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    

    (f) Commission
      Documents, Financial Statements.
      The
      Company has timely filed all reports, schedules, forms, statements and other
      documents required to be filed by it with the Commission pursuant to the
      reporting requirements of the Securities Exchange Act of 1934, as amended the
      (“Exchange
      Act”),
      including material filed pursuant to Section 13(a) or 15(d) of the Exchange
      Act
      (all of the foregoing including filings incorporated by reference therein being
      referred to herein as the “Commission
      Documents”).
      The
      Company has delivered or made available via EDGAR or another Internet web-site
      to each of the Purchasers true and complete copies of the Commission Documents.
      The Company has not provided to the Purchasers any material non-public
      information or other information which, according to applicable law, rule or
      regulation, was required to have been disclosed publicly by the Company but
      which has not been so disclosed, other than with respect to the transactions
      contemplated by this Agreement. At the times of their respective filings, the
      Commission Documents complied in all material respects with the requirements
      of
      the Exchange Act and the rules and regulations of the Commission promulgated
      thereunder and other federal, state and local laws, rules and regulations
      applicable to such documents, and, as of their respective dates, none of the
      Commission Documents contained any untrue statement of a material fact or
      omitted to state a material fact required to be stated therein or necessary
      in
      order to make the statements therein, in light of the circumstances under which
      they were made, not misleading. The financial statements of the Company included
      in the Commission Documents comply as to form in all material respects with
      applicable accounting requirements and the published rules and regulations
      of
      the Commission or other applicable rules and regulations with respect thereto.
      Such financial statements have been prepared in accordance with U. S. generally
      accepted accounting principles (“GAAP”)
      applied on a consistent basis 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 not include
      footnotes or may be condensed or summary statements), and fairly present in
      all
      material respects the financial position of the Company and its Subsidiaries
      as
      of the dates thereof and the results of operations and cash flows for the
      periods then ended (subject, in the case of unaudited statements, to normal
      year-end audit adjustments).

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    (g) Subsidiaries.
      Schedule
      2.1(g)
      hereto
      sets forth each Subsidiary of the Company, showing the jurisdiction of its
      incorporation or organization and showing the percentage of each person’s
      ownership. Each Subsidiary is a corporation duly incorporated, validly existing
      and in good standing under the laws of its state of incorporation and has the
      requisite corporate power to own, lease and operate its properties and assets
      and to conduct its business as it is now being conducted. For the purposes
      of
      this Agreement, “Subsidiary”
shall
      mean any corporation or other entity of which at least a majority of the
      securities or other ownership interest having ordinary voting power (absolutely
      or contingently) for the election of directors or other persons performing
      similar functions are at the time owned directly or indirectly by the Company
      and/or any of its other Subsidiaries. All of the outstanding shares of capital
      stock of each Subsidiary have been duly authorized and validly issued, and
      are
      fully paid and nonassessable. There are no outstanding preemptive, conversion
      or
      other rights, options, warrants or agreements granted or issued by or binding
      upon any Subsidiary for the purchase or acquisition of any shares of capital
      stock of any Subsidiary or any other securities convertible into, exchangeable
      for or evidencing the rights to subscribe for any shares of such capital stock.
      Neither the Company nor any Subsidiary is subject to any obligation (contingent
      or otherwise) to repurchase or otherwise acquire or retire any shares of the
      capital stock of any Subsidiary or any convertible securities, rights, warrants
      or options of the type described in the preceding sentence. Neither the Company
      nor any Subsidiary is party to, nor has any knowledge of, any agreement
      restricting the voting or transfer of any shares of the capital stock of any
      Subsidiary.

     

    (h) No
      Material Adverse Change.
      Other
      than as disclosed in the Company’s Commission Documents, since January 1, 2007,
      the Company has not experienced or suffered any Material Adverse
      Effect.

     

    (i) No
      Undisclosed Liabilities.
      Except
      as set forth on Schedule
      2.1(i),
      since
      January 1, 2007 neither the Company nor any of its Subsidiaries has any
      liabilities, obligations, claims or losses (whether liquidated or unliquidated,
      secured or unsecured, absolute, accrued, contingent or otherwise) other than
      those incurred in the ordinary course of the Company’s or its Subsidiaries’
respective businesses and which, individually or in the aggregate, do not or
      would not have a Material Adverse Effect on the Company or its Subsidiaries,
      as
      the case may be.

    

    (j) Off
      Balance Sheet Arrangements.
      There
      is no transaction, arrangement, or other relationship between the Company and
      an
      unconsolidated or other off balance sheet entity that is required to be
      disclosed by the Company in its Commission
      Documents and
      is
      not so disclosed or that otherwise would be reasonably likely to have a Material
      Adverse Effect.

     

    (k) No
      Undisclosed Events or Circumstances.
      No
      event or circumstance has occurred or exists with respect to the Company or
      its
      Subsidiaries or their respective businesses, properties, prospects, operations
      or financial condition, which, under applicable law, rule or regulation,
      requires public disclosure or announcement by the Company but which has not
      been
      so publicly announced or disclosed.

    

    (l) Indebtedness.
      Schedule
      2.1(l)
      hereto
      sets forth as of the date hereof all outstanding secured and unsecured
      Indebtedness of the Company or any Subsidiary, or for which the Company or
      any
      Subsidiary has commitments. For the purposes of this Agreement, “Indebtedness”
shall
      mean (a) any liabilities for borrowed money or amounts owed, whether
      individually or in aggregate, in excess of $100,000 (other than trade accounts
      payable incurred in the ordinary course of business), (b) all guaranties,
      endorsements and other
      contingent obligations in respect of Indebtedness of others, whether or not
      the
      same are or should be reflected in the Company’s balance sheet (or the notes
      thereto), except guaranties by endorsement of negotiable instruments for deposit
      or collection or similar transactions in the ordinary course of business; and
      (c) the present value of any lease payments in excess of $25,000 due under
      leases required to be capitalized in accordance with GAAP. Except as set forth
      on Schedule
      2.1(l),
      neither
      the Company nor any Subsidiary is in default with respect to any
      Indebtedness.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    (m) Title
      to Assets.
      Except
      as set forth on Schedule
      2.1(m),
      each of
      the Company and the Subsidiaries has good and marketable title to all of its
      real and personal property, free and clear of any mortgages, pledges, charges,
      liens, security interests or other encumbrances. Except as set forth on
Schedule
      2.1(m),
      all
      leases of the Company and each of its Subsidiaries are valid and subsisting
      and
      in full force and effect.

    

    (n)
      Insurance.
      The
      Company and the Subsidiaries are insured by insurers of recognized financial
      responsibility against such losses and risks and in such amounts as are prudent
      and customary in the businesses and location in which the Company and the
      Subsidiaries are engaged. Neither the Company nor any Subsidiary has any
      knowledge that it will be unable to renew its existing insurance coverage for
      the Company and the Subsidiaries as and when such coverage expires or to obtain
      similar coverage from similar insurers as may be necessary to continue its
      business without a significant increase in cost.

     

    (o) Actions
      Pending.
      There
      is no action, suit, claim, investigation, arbitration, alternate dispute
      resolution proceeding or any other proceeding pending or, to the knowledge
      of
      the Company, threatened against the Company or any Subsidiary which questions
      the validity of this Agreement or any of the other Transaction Documents or
      the
      transactions contemplated hereby or thereby or any action taken or to be taken
      pursuant hereto or thereto. There is no action, suit, claim, investigation,
      arbitration, alternate dispute resolution proceeding or any other proceeding
      pending or, to the knowledge of the Company, threatened, against or involving
      the Company, any Subsidiary or any of their respective properties or assets.
      There are no outstanding orders, judgments, injunctions, awards or decrees
      of
      any court, arbitrator or governmental or regulatory body against the Company
      or
      any Subsidiary or any officers or directors of the Company or Subsidiary in
      their capacities as such.

     

    (p) Compliance
      with Law.
      The
      business of the Company and the Subsidiaries has been and is presently being
      conducted in accordance with all applicable federal, state and local
      governmental laws, rules, regulations and ordinances, except for such
      noncompliance that, individually or in the aggregate, would not cause a Material
      Adverse Effect. The Company and each of its Subsidiaries have all franchises,
      permits, licenses, consents and other governmental or regulatory authorizations
      and approvals necessary for the conduct of its business as now being conducted
      by it unless the failure to possess such franchises, permits, licenses, consents
      and other governmental or regulatory authorizations and approvals, individually
      or in the aggregate, would not have a Material Adverse Effect.

    

    (q) Taxes.
      The
      Company and each of the Subsidiaries has accurately prepared and filed all
      federal, state and other tax returns required by law to be filed by it, has
      paid
      or made provisions for the payment of all taxes shown to be due and all
      additional assessments, and adequate provisions have been and are reflected
      in
      the financial statements of the Company and the Subsidiaries for all current
      taxes and other charges to which the Company or any Subsidiary is subject and
      which are not currently due and payable. None of the federal income tax returns
      of the Company or any Subsidiary have been audited by the Internal Revenue
      Service. The Company has no knowledge of any additional assessments, adjustments
      or contingent tax liability (whether federal or state) of any nature whatsoever,
      whether pending or threatened against the Company or any Subsidiary for any
      period, nor of any basis for any such assessment, adjustment or
      contingency.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    (r) Certain
      Fees.
      Except
      for the fees payable (which shall not exceed $250,000) pursuant to that certain
      securities placement agreement dated June 15, 2007 by and between Westminster
      Securities Corporation and the Company, no brokers, finders or financial
      advisory fees or commissions will be payable by the Company or any Subsidiary
      or
      any Purchaser with respect to the transactions contemplated by this
      Agreement.

     

    (s) Disclosure.
      Neither
      this Agreement or the Schedules hereto nor any other documents, certificates
      or
      instruments furnished to the Purchasers by or on behalf of the Company or any
      Subsidiary in connection with the transactions contemplated by this Agreement
      contain any untrue statement of a material fact or omit to state a material
      fact
      necessary in order to make the statements made herein or therein, in the light
      of the circumstances under which they were made herein or therein, not
      misleading.

     

    (t) Operation
      of Business.
      Except
      as set forth in Schedule
      2.1(t),
      the
      Company and each of the Subsidiaries owns or possesses all patents, trademarks,
      domain names (whether or not registered) and any patentable improvements or
      copyrightable derivative works thereof, websites and intellectual property
      rights relating thereto, service marks, trade names, copyrights, licenses and
      authorizations, and all rights with respect to the foregoing, which are
      necessary for the conduct of its business as now conducted without any conflict
      with the rights of others.

     

    (u) Environmental
      Compliance.
      The
      Company and each of its Subsidiaries have obtained all material approvals,
      authorization, certificates, consents, licenses, orders and permits or other
      similar authorizations of all governmental authorities, or from any other
      person, that are required under any Environmental Laws. Except as set forth
      on
Schedule
      2.1(u),
      the
      Commission Documents describe all material permits, licenses and other
      authorizations issued under any Environmental Laws to the Company or its
      Subsidiaries. “Environmental
      Laws”
shall
      mean all applicable laws relating to the protection of the environment
      including, without limitation, all requirements pertaining to reporting,
      licensing, permitting, controlling, investigating or remediating emissions,
      discharges, releases or threatened releases of hazardous substances, chemical
      substances, pollutants, contaminants or toxic substances, materials or wastes,
      whether solid, liquid or gaseous in nature, into the air, surface water,
      groundwater or land, or relating to the manufacture, processing, distribution,
      use, treatment, storage, disposal, transport or handling of hazardous
      substances, chemical substances, pollutants, contaminants or toxic substances,
      material or wastes, whether solid, liquid or gaseous in nature. The Company
      has
      all necessary governmental approvals required under all Environmental Laws
      and
      used in its business or in the business of any of its Subsidiaries. The Company
      and each of its Subsidiaries are also in compliance with all other limitations,
      restrictions, conditions, standards, requirements, schedules and timetables
      required or imposed under all Environmental Laws. Except for such instances
      as
      would not individually or in the aggregate have a Material Adverse Effect,
      there
      are no past or present events, conditions, circumstances, incidents, actions
      or
      omissions relating to or in any way affecting the Company or its Subsidiaries
      that violate or may violate any Environmental Law after the Closing Date or
      that
      may give rise to any environmental liability, or otherwise form the basis of
      any
      claim, action, demand, suit, proceeding, hearing, study or investigation (i)
      under any Environmental Law, or (ii) based on or related to the manufacture,
      processing, distribution, use, treatment, storage (including without limitation
      underground storage tanks), disposal, transport or handling, or the emission,
      discharge, release or threatened release of any hazardous substance.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    

    (v) Books
      and Record Internal Accounting Controls.
      The
      books and records of the Company and its Subsidiaries accurately reflect in
      all
      material respects the information relating to the business of the Company and
      the Subsidiaries, the location and collection of their assets, and the nature
      of
      all transactions giving rise to the obligations or accounts receivable of the
      Company or any Subsidiary. The Company and each of its Subsidiaries maintain
      a
      system of internal accounting controls sufficient, in the judgment of the
      Company, 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 GAAP and to maintain asset accountability, (iii)
      access to assets is permitted only in accordance with management’s general or
      specific authorization and (iv) the recorded accountability for assets is
      compared with the existing assets at reasonable intervals and appropriate action
      is taken with respect to any differences.

     

    (w) Material
      Agreements.
      Except
      for the Transaction Documents (with respect to clause (i) only), as disclosed
      in
      the Commission Documents or as set forth on Schedule
      2.1(w)
      hereto,
      or as would not be reasonably likely to have a Material Adverse Effect, (i)
      the
      Company and each of its Subsidiaries have performed all obligations required
      to
      be performed by them to date under any written or oral contract, instrument,
      agreement, commitment, obligation, plan or arrangement, filed or required to
      be
      filed with the Commission (the "Material
      Agreements"),
      (ii)
      neither the Company nor any of its Subsidiaries has received any notice of
      default under any Material Agreement and, (iii) to the best of the Company's
      knowledge, neither the Company nor any of its Subsidiaries is in default under
      any Material Agreement now in effect.

     

    (x) Transactions
      with Affiliates.
      Except
      as set forth in the Commission Documents, there are no loans, leases,
      agreements, contracts, royalty agreements, management contracts or arrangements
      or other continuing transactions between (a) the Company or any Subsidiary
      on
      the one hand, and (b) on the other hand, any officer, employee, consultant
      or
      director of the Company or any of its Subsidiaries, or any person owning any
      capital stock of the Company or any Subsidiary or any member of the immediate
      family of such officer, employee, consultant, director or stockholder, or any
      corporation or other entity controlled by such officer, employee, consultant,
      director or stockholder, or a member of the immediate family of such officer,
      employee, consultant, director or stockholder.

    

    (y) Sarbanes-Oxley;
      Disclosure Controls.
      The
      Company is in compliance in all material respects with all of the provisions
      of
      the Sarbanes-Oxley Act of 2002 which are applicable to it as of the Closing
      Date. The Company has established disclosure controls and procedures (as defined
      in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed
      such
      disclosure controls and procedures to ensure that material information relating
      to the Company is made known to the certifying officers by others within those
      entities, particularly during the period in which the Company’s most recently
      filed periodic report under the Exchange Act is being prepared. The Company’s
      certifying officers have evaluated the effectiveness of the Company’s disclosure
      controls and procedures as of the end of the most recent periodic reporting
      period under the Exchange Act (such date, the “Evaluation
      Date”).
      The
      Company presented in its most recently filed periodic report under the Exchange
      Act the conclusions of the certifying officers about the effectiveness of the
      disclosure controls and procedures based on their evaluations as of the
      Evaluation Date. Since the Evaluation Date, there have been no significant
      changes in the Company’s internal controls over financial reporting (as such
      term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) or, to the
      Company’s knowledge, in other factors that could reasonably be expected to
      materially affect the Company’s internal controls over financial
      reporting

    

    (z) Securities
      Act of 1933.
      Based
      in material part upon the representations herein of the Purchasers, the Company
      has complied and will comply with all applicable federal and state securities
      laws in connection with the offer, issuance and sale of the Securities
      hereunder. Neither the Company nor anyone acting on its behalf, directly or
      indirectly, has or will sell, offer to sell or solicit offers to buy any of
      the
      Securities or similar securities to, or solicit offers with respect thereto
      from, or enter into any preliminary conversations or negotiations relating
      thereto with, any person, or has taken or will take any action so as to bring
      the issuance and sale of any of the Securities under the registration provisions
      of the Securities Act and applicable state securities laws, and 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 any of the Securities.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    (aa) Governmental
      Approvals.
      Except
      for the filing of any notice prior or subsequent to the Closing Date that may
      be
      required under applicable state and/or Federal securities laws (which if
      required, shall be filed on a timely basis), including the filing of a Form
      D
      and a registration statement or statements pursuant to the Registration Rights
      Agreement, and the filing of the Amended Certificate and the Certificate of
      Designation with the Secretary of State for the State of Delaware, no
      authorization, consent, approval, license, exemption of, filing or registration
      with any court or governmental department, commission, board, bureau, agency
      or
      instrumentality, domestic or foreign, is or will be necessary for, or in
      connection with, the execution or delivery of the Notes, Preferred Stock and
      the
      Warrants, or for the performance by the Company of its obligations under the
      Transaction Documents.

     

    (bb) Employees.
      Neither
      the Company nor any Subsidiary has any collective bargaining arrangements or
      agreements covering any of its employees. Except as set forth on Schedule
      2.1(bb),
      neither
      the Company nor any Subsidiary has any employment contract, agreement, regarding
      proprietary information, non-competition agreement, non-solicitation agreement,
      confidentiality agreement, or any other similar contract or restrictive
      covenant, relating to the right of any officer, employee or consultant to be
      employed or engaged by the Company or such Subsidiary. No officer, consultant
      or
      key employee of the Company or any Subsidiary whose termination, either
      individually or in the aggregate, could have a Material Adverse Effect, has
      terminated or, to the knowledge of the Company, has any present intention of
      terminating his or her employment or engagement with the Company or any
      Subsidiary.

     

    (cc) Absence
      of Certain Developments.
      Except
      as set forth on Schedule
      2.1(cc),
      since
      January 1, 2007, neither the Company nor any Subsidiary has:

     

    (i) issued
      any stock, bonds or other corporate securities or any rights, options or
      warrants with respect thereto;

     

    (ii) borrowed
      any amount or incurred or become subject to any liabilities (absolute or
      contingent) except current liabilities incurred in the ordinary course of
      business which are comparable in nature and amount to the current liabilities
      incurred in the ordinary course of business during the comparable portion of
      its
      prior fiscal year;

     

    (iii) discharged
      or satisfied any lien or encumbrance or paid any obligation or liability
      (absolute or contingent), other than current liabilities paid in the ordinary
      course of business;

     

    (iv) declared
      or made any payment or distribution of cash or other property to stockholders
      with respect to its stock, or purchased or redeemed, or made any agreements
      so
      to purchase or redeem, any shares of its capital stock;

     

    (v) sold,
      assigned or transferred any other tangible assets, or canceled any debts or
      claims, except in the ordinary course of business;

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    (vi) sold,
      assigned or transferred any patent rights, trademarks, trade names, copyrights,
      trade secrets or other intangible assets or intellectual property rights, or
      disclosed any proprietary confidential information to any person except to
      customers in the ordinary course of business;

     

    (vii) suffered
      any substantial losses or waived any rights of material value, whether or not
      in
      the ordinary course of business, or suffered the loss of any material amount
      of
      prospective business;

     

    (viii) made
      any
      changes in employee compensation except in the ordinary course of business
      and
      consistent with past practices;

     

    (ix) made
      capital expenditures or commitments therefor that aggregate in excess of
      $100,000;

     

    (x) entered
      into any other transaction other than in the ordinary course of business, or
      entered into any other material transaction, whether or not in the ordinary
      course of business;

     

    (xi) made
      charitable contributions or pledges in excess of $25,000;

     

    (xii) suffered
      any material damage, destruction or casualty loss, whether or not covered by
      insurance;

     

    (xiii) experienced
      any material problems with labor or management in connection with the terms
      and
      conditions of their employment;

     

    (xiv) effected
      any two or more events of the foregoing kind which in the aggregate would be
      material to the Company or its Subsidiaries; or

     

    (xv) entered
      into an agreement, written or otherwise, to take any of the foregoing
      actions.

     

    (dd) Public
      Utility Holding Company Act and Investment Company Act Status.
      The
      Company is not a “holding company” or a “public utility company” as such terms
      are defined in the Public Utility Holding Company Act of 1935, as amended.
      The
      Company is not, and as a result of and immediately upon the Closing will not
      be,
      an “investment company” or a company “controlled” by an “investment company,”
within the meaning of the Investment Company Act of 1940, as
      amended.

     

    (ee) ERISA.
      No
      liability to the Pension Benefit Guaranty Corporation has been incurred with
      respect to any Plan (as defined below) by the Company or any of its Subsidiaries
      which is or would be materially adverse to the Company and its Subsidiaries.
      The
      execution and delivery of this Agreement and the issuance and sale of the Shares
      will not involve any transaction which is subject to the prohibitions of Section
      406 of ERISA or in connection with which a tax could be imposed pursuant to
      Section 4975 of the Internal Revenue Code of 1986, as amended (the “Code”);
      provided
      that if
      any of the Purchasers, or any person or entity that owns a beneficial interest
      in any of the Purchasers, is an “employee pension benefit plan” (within the
      meaning of Section 3(2) of ERISA) with respect to which the Company is a “party
      in interest” (within the meaning of Section 3(14) of ERISA), the requirements of
      Sections 407(d)(5) and 408(e) of ERISA, if applicable, are met. As used in
      this
Section
      2.1(ee),
      the
      term “Plan”
shall
      mean an “employee pension benefit plan” (as defined in Section 3 of ERISA) which
      is or has been established or maintained, or to which contributions are or
      have
      been made, by the Company or any Subsidiary or by any trade or business, whether
      or not incorporated, which, together with the Company or any Subsidiary, is
      under common control, as described in Section 414(b) or (c) of the
      Code.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    (ff) Dilutive
      Effect.
      The
      Company understands and acknowledges that its obligation to (i) issue Preferred
      Stock upon conversion of the Notes and Conversion Shares upon conversion of
      the
      Notes and Preferred Stock in accordance with this Agreement, the Note and the
      Certificate of Designation, and (ii) its obligations to issue the Warrant Shares
      upon the exercise of the Warrants in accordance with this Agreement and the
      Warrants, is, in each case, absolute and unconditional regardless of the
      dilutive effect that such issuance may have on the ownership interest of other
      stockholders of the Company.

     

    (gg) No
      Integrated Offering.
      Neither
      the Company, nor any of its affiliates, nor any person acting on its or their
      behalf, has directly or indirectly made any offers or sales of any security
      or
      solicited any offers to buy any security under circumstances that would cause
      the offering of the Securities pursuant to this Agreement to be integrated
      with
      prior offerings by the Company for purposes of the Securities Act which would
      prevent the Company from selling the Securities pursuant to Rule 506 under
      the
      Securities Act, or any applicable exchange-related stockholder approval
      provisions, nor will the Company or any of its affiliates or Subsidiaries take
      any action or steps that would cause the offering of the Shares to be integrated
      with other offerings. The Company does not have any registration statement
      pending before the Commission or currently under the Commission’s review and
      since January
      1, 2007, the Company has not offered or sold any of its equity securities or
      debt securities convertible into shares of Common Stock.

     

    (hh) Independent
      Nature of Purchasers.
      The
      Company acknowledges that the obligations of each Purchaser under the
      Transaction Documents are several and not joint with the obligations of any
      other Purchaser, and no Purchaser shall be responsible in any way for the
      performance of the obligations of any other Purchaser under the Transaction
      Documents. The Company acknowledges that the decision of each Purchaser to
      purchase securities pursuant to this Agreement has been made by such Purchaser
      independently of any other purchase and independently of any information,
      materials, statements or opinions as to the business, affairs, operations,
      assets, properties, liabilities, results of operations, condition (financial
      or
      otherwise) or prospects of the Company or of its Subsidiaries which may have
      made or given by any other Purchaser or by any agent or employee of any other
      Purchaser, and no Purchaser or any of its agents or employees shall have any
      liability to any Purchaser (or any other person) relating to or arising from
      any
      such information, materials, statements or opinions. The Company acknowledges
      that nothing contained herein, or in any Transaction Document, and no action
      taken by any Purchaser pursuant hereto or thereto, shall be deemed to constitute
      the Purchasers as a partnership, an association, a joint venture or any other
      kind of entity, or create a presumption that the Purchasers are in any way
      acting in concert or as a group with respect to such obligations or the
      transactions contemplated by the Transaction Documents. The Company acknowledges
      that each Purchaser shall be entitled to independently protect and enforce
      its
      rights, including without limitation, the rights arising out of this Agreement
      or out of the other Transaction Documents, and it shall not be necessary for
      any
      other Purchaser to be joined as an additional party in any proceeding for such
      purpose. The Company acknowledges that for reasons of administrative convenience
      only, the Transaction Documents have been prepared by counsel for one of the
      Purchasers and such counsel does not represent all of the Purchasers but only
      such Purchaser and the other Purchasers have retained their own individual
      counsel with respect to the transactions contemplated hereby. The Company
      acknowledges that it has elected to provide all Purchasers with the same terms
      and Transaction Documents for the convenience of the Company and not because
      it
      was required or requested to do so by the Purchasers. 

    

    (ii)
      Questionable
      Payments.
      Neither
      the Company nor any of its Subsidiaries, nor, to the Company’s knowledge, any
      directors, officers, employees, agents or other Persons acting on behalf of
      the
      Company or any of its Subsidiaries has, in the course of its actions for, or
      on
      behalf of, the Company: (a) directly or indirectly, used any corporate funds
      for
      unlawful contributions, gifts, entertainment or other unlawful expenses relating
      to foreign or domestic political activity; (b) made any direct or indirect
      unlawful payments to any foreign or domestic governmental officials or employees
      or to any foreign or domestic political parties or campaigns from corporate
      funds; (c) violated in any material respect any provision of the Foreign Corrupt
      Practices Act of 1977, as amended; or (d) made any other unlawful bribe, rebate,
      payoff, influence payment, kickback or other unlawful payment to any foreign
      or
      domestic government official or employee.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    

    (jj)
      Application
      of Takeover Protections.
      The
      Company and its board of directors have taken all necessary action, if any,
      in
      order to render inapplicable any control share acquisition, business
      combination, poison pill (including any distribution under a rights agreement)
      or other similar anti-takeover provision under the Company’s charter documents
      or the laws of its state of incorporation that is or could reasonably be
      expected to become applicable to any of the Purchasers as a result of the
      Purchasers and the Company fulfilling their obligations or exercising their
      rights under the Transaction Documents, including, without limitation, the
      Company’s issuance of the Securities and the Purchasers’ ownership of the
      Securities.

    

    (kk) Transfer
      Agent.
      The
      name, address, telephone number, fax number, contact person and email address
      of
      the Company’s current transfer agent is set forth on Schedule
      2.1(kk)
      hereto.

     

    Section
      2.2 Representations
      and Warranties of the Purchasers.
      Each
      Purchaser hereby makes the following representations and warranties to the
      Company with respect solely to itself and not with respect to any other
      Purchaser:

     

    (a) Organization
      and Standing of the Purchasers.
      If the
      Purchaser is an entity, such Purchaser is a corporation, partnership or limited
      liability company duly incorporated or organized, validly existing and in good
      standing under the laws of the jurisdiction of its incorporation or
      organization.

     

    (b) Authorization
      and Power.
      Each
      Purchaser has the requisite power and authority to enter into and perform this
      Agreement and to purchase the Notes and Warrants being sold to it hereunder.
      The
      execution, delivery and performance of this Agreement and the Registration
      Rights Agreement by such Purchaser and the consummation by it of the
      transactions contemplated hereby and thereby have been duly authorized by all
      necessary corporate or partnership action, and no further consent or
      authorization of such Purchaser or its Board of Directors, stockholders or
      partners, as the case may be, is required. Each of this Agreement and the
      Registration Rights Agreement has been duly authorized, executed and delivered
      by such Purchaser and constitutes, or shall constitute when executed and
      delivered, a valid and binding obligation of the Purchaser enforceable against
      the Purchaser in accordance with the terms thereof, except as such
      enforceability may be limited by applicable bankruptcy, insolvency,
      reorganization, moratorium, liquidation, conservatorship, receivership or
      similar laws relating to, or affecting generally the enforcement of, creditor’s
      rights and remedies or by other equitable principles of general
      application.

     

    (c) No
      Conflicts.
      The
      execution, delivery and performance of this Agreement and the Registration
      Rights Agreement and the consummation by such Purchaser of the transactions
      contemplated hereby and thereby or relating hereto do not and will not (i)
      result in a violation of such Purchaser’s charter documents or bylaws or other
      organizational documents 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 or obligation to which
      such Purchaser is a party or by which its properties or assets are bound, or
      result in a violation of any law, rule, or regulation, or any order, judgment
      or
      decree of any court or governmental agency applicable to such Purchaser or
      its
      properties (except for such conflicts, defaults and violations as would not,
      individually or in the aggregate, have a material adverse effect on such
      Purchaser). Such Purchaser 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 this Agreement or the Registration Rights Agreement or to purchase the
      Notes or acquire the Warrants in accordance with the terms hereof; provided
      that for
      purposes of the representation made in this sentence, such Purchaser is assuming
      and relying upon the accuracy of the relevant representations and agreements
      of
      the Company herein.

     

    
      
        
        

      

      
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    (d) Acquisition
      for Investment.
      Such
      Purchaser is acquiring the Securities solely for its own account for the purpose
      of investment and not with a view to or for sale in connection with
      distribution. Each Purchaser does not have a present intention to sell the
      Securities, nor a present arrangement (whether or not legally binding) or
      intention to effect any distribution of the Securities to or through any person
      or entity; provided,
      however,
      that by
      making the representations herein and subject to Section
      2.2(i)
      below,
      such Purchaser does not agree to hold the Securities for any minimum or other
      specific term and reserves the right to dispose of the Securities at any time
      in
      accordance with Federal and state securities laws applicable to such
      disposition. Each Purchaser acknowledges that it is able to bear the financial
      risks associated with an investment in the Securities and that it has been
      given
      full access to such records of the Company and the Subsidiaries and to the
      officers of the Company and the Subsidiaries and received such information
      as it
      has deemed necessary or appropriate to conduct its due diligence investigation
      and has sufficient knowledge and experience in investing in companies similar
      to
      the Company in terms of the Company’s stage of development so as to be able to
      evaluate the risks and merits of its investment in the Company.

    

    (e) Status
      of Purchasers.
      Each
      Purchaser is an “accredited investor” as defined in Regulation D promulgated
      under the Securities Act. Such Purchaser is not required to be registered as
      a
      broker-dealer under Section 15 of the Exchange Act and such Purchaser is not
      a
      broker-dealer.

     

    (f) Opportunities
      for Additional Information.
      Such
      Purchaser acknowledges that such Purchaser has had the opportunity to ask
      questions of and receive answers from, or obtain additional information from,
      the executive officers of the Company concerning the financial and other affairs
      of the Company, and to the extent deemed necessary in light of such Purchaser’s
      personal knowledge of the Company’s affairs, such Purchaser has asked such
      questions and received answers to the full satisfaction of such Purchaser,
      and
      such Purchaser desires to invest in the Company.

     

    (g) No
      General Solicitation.
      Such
      Purchaser acknowledges that the Securities were not offered to such Purchaser
      by
      means of any form of general or public solicitation or general advertising,
      or
      publicly disseminated advertisements or sales literature, including (i) any
      advertisement, article, notice or other communication published in any
      newspaper, magazine, or similar media, or broadcast over television or radio,
      or
      (ii) any seminar or meeting to which such Purchaser was invited by any of the
      foregoing means of communications.

     

    (h) Rule
      144.
      Such
      Purchaser understands that the Securities must be held indefinitely unless
      such
      Securities are registered under the Securities Act or an exemption from
      registration is available. Such Purchaser acknowledges that such Purchaser
      is
      familiar with Rule 144 of the rules and regulations of the Commission, as
      amended, promulgated pursuant to the Securities Act (“Rule
      144”),
      and
      that such Purchaser has been advised that Rule 144 permits resales only under
      certain circumstances. Such Purchaser understands that to the extent that Rule
      144 is not available, such Purchaser will be unable to sell any Securities
      without either registration under the Securities Act or the existence of another
      exemption from such registration requirement.

     

    
      
        
        

      

      
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    (i) General.
      Such
      Purchaser understands that the Securities are being offered and sold in reliance
      on a transactional exemption from the registration requirement of Federal and
      state securities laws and the Company is relying upon the truth and accuracy
      of
      the representations, warranties, agreements, acknowledgments and understandings
      of such Purchaser set forth herein in order to determine the applicability
      of
      such exemptions and the suitability of such Purchaser to acquire the
      Securities.

     

    (j) Independent
      Investment.
      Except
      as may be disclosed in any filings with the Commission by any Purchaser under
      Section 13 and/or Section 16 of the Exchange Act, such Purchaser has not agreed
      to act with any other Purchaser for the purpose of acquiring, holding, voting
      or
      disposing of the Securities purchased hereunder for purposes of Section 13(d)
      under the Exchange Act, and such Purchaser is acting independently with respect
      to its investment in the Securities.

    

    (k) Short
      Sales.
      Each
      Purchaser has not, during the last thirty (30) days prior to the date hereof,
      directly or indirectly, nor has any party acting on behalf of or pursuant to
      any
      understanding with such Purchaser, effected or agreed to effect any short sale,
      whether or not against the box, established any “put equivalent position” (as
      defined in Rule 16(a)-1(h) under the Exchange Act) with respect to any security
      of the Company, granted any other right (including, without limitation, any
      put
      or call option) with respect to any security of the Company or with respect
      to
      any security that includes, relates to, or derives any significant part of
      its
      value from any security of the Company or otherwise sought to hedge its
      positioning of the Company’s securities. Each Purchaser shall not, and shall
      cause any affiliates not to, engage, directly or indirectly, in any transactions
      in the securities of the Company (including, without limitation, any short
      sales) involving the Company’s securities during the period from the date hereof
      until such time as (i) after the transactions contemplated by this Agreement
      are
      first publicly announced as described in Section
      3.16
      or (ii)
      this Agreement is terminated in full pursuant to Section
      7.16. Each
      Purchaser understands and acknowledges, severally and not jointly with any
      other
      Purchaser, that the Commission currently takes the position that covering a
      short position established prior to effectiveness of a resale registration
      statement with shares included in such registration statement would be a
      violation of Section 5 of the Securities Act, as set forth in Item 65, Section
      5
      under Section A, of the Manual of Publicly Available Telephone Interpretations,
      dated July 1997, compiled by the Office of Chief Counsel, Division of
      Corporation Finance

    

    ARTICLE
      III

    Covenants

     

    The
      Company covenants with each of the Purchasers as follows, which covenants are
      for the benefit of each Purchaser and its permitted assignees (as defined
      herein):

     

    Section
      3.1 Securities
      Compliance.
      The
      Company shall notify the Commission in accordance with their rules and
      regulations, of the transactions contemplated by any of the Transaction
      Documents, including filing a Form D with respect to the Notes, Preferred Stock,
      Warrants, Conversion Shares and the Warrant Shares as required under Regulation
      D and applicable “blue sky” laws, and shall take all other necessary action and
      proceedings as may be required and permitted by applicable law, rule and
      regulation, for the legal and valid issuance of the Notes, Preferred Stock,
      the
      Warrants, the Conversion Shares and the Warrant Shares to the Purchasers or
      subsequent holders. 

     

    Section
      3.2 Registration
      and Listing.
      The
      Company shall (a) comply in all respects with its reporting and filing
      obligations under the Exchange Act, (b) comply with all requirements related
      to
      any registration statement filed pursuant to this Agreement and the Registration
      Rights Agreement, and (c) not take any action or file any document (whether
      or
      not permitted by the Securities Act or the rules promulgated thereunder) to
      terminate or suspend such registration or to terminate or suspend its reporting
      and filing obligations under the Exchange Act or Securities Act, except as
      permitted herein. The Company will take all action necessary to continue the
      listing or trading of its Common Stock on the OTC Bulletin Board or other
      exchange or market on which the Common Stock is trading or may be traded in
      the
      future. Subject to the terms of the Transaction Documents, the Company further
      covenants that it will take such further action as the Purchasers may reasonably
      request, all to the extent required from time to time to enable the Purchasers
      to sell the Shares without registration under the Securities Act within the
      limitation of the exemptions provided by Rule 144 promulgated under the
      Securities Act. Upon the request of the Purchasers, the Company shall deliver
      to
      the Purchasers a written certification of a duly authorized officer as to
      whether it has complied with such requirements.

     

    
      
        
        

      

      
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    Section
      3.3 Inspection
      Rights. The
      Company shall permit, during normal business hours and upon reasonable request
      and reasonable notice, each Purchaser or any employees, agents or
      representatives thereof, so long as such Purchaser shall be obligated hereunder
      to purchase the Notes or shall beneficially own any Preferred Stock, or shall
      own Conversion Shares which, in the aggregate, represent more than two percent
      (2%) of the total combined voting power of all voting securities then
      outstanding, for purposes reasonably related to such Purchaser’s interests as a
      stockholder, to examine and make reasonable copies of and extracts from the
      records and books of account of, and visit and inspect the properties, assets,
      operations and business of the Company and any Subsidiary, and to discuss the
      affairs, finances and accounts of the Company and any Subsidiary with any of
      its
      officers, consultants, directors, and key employees. As a condition to such
      inspection, Purchasers shall keep such information confidential; provided
      that
      such information may be disclosed (i) to the extent required by applicable
      law,
      regulation or legal process, subpoena, civil investigative demand or other
      similar process, (ii) to the extent reasonably necessary in connection with
      the
      enforcement of rights under this Agreement, (iii) to any governmental, judicial
      or regulatory authority requiring or requesting such information, and (iv)
      to
      its directors, officers, employees, agents, managers and general partners,
      consultants, accountants, financial advisers, legal counsel and other
      professional advisers. 

     

    Section
      3.4 Compliance
      with Laws.
      The
      Company shall comply, and cause each Subsidiary, whether such Subsidiary is
      in
      existence as of the date of this agreement or formed or acquired subsequent
      to
      the date of this agreement, to comply, with all applicable laws, rules,
      regulations and orders, noncompliance with which could have a Material Adverse
      Effect.

     

    Section
      3.5 Keeping
      of Records and Books of Account.
      The
      Company shall keep and cause each Subsidiary to keep adequate records and books
      of account, in which complete entries will be made in accordance with GAAP
      consistently applied, reflecting all financial transactions of the Company
      and
      its Subsidiaries, and in which, for each fiscal year, all proper reserves for
      depreciation, depletion, obsolescence, amortization, taxes, bad debts and other
      purposes in connection with its business shall be made.

    

     Section
      3.6 Furnishing
      of Information.
      Until
      all of the Securities
      are
      eligible for sale under Rule 144(k) promulgated under the Securities Act, the
      Company covenants to timely file (or obtain extensions in respect thereof and
      file within the applicable grace period) all reports required to be filed by
      the
      Company after the date hereof pursuant to the Exchange Act. Until all of the
      Securities are eligible for sale under Rule 144(k) promulgated under the
      Securities Act, if the Company is not required to file reports pursuant to
      such
      laws, it will prepare and furnish to the Purchasers and make publicly available
      in accordance with Rule 144(c) such information as is required for the
      Purchasers to sell the Securities under Rule 144. The Company further covenants
      that it will take such further action as any holder of Securities may reasonably
      request, all to the extent required from time to time to enable such Person
      to
      sell the Securities without registration under the Securities Act within the
      limitation of the exemptions provided by Rule 144.

     

    
      
        
        

      

      
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    Section
      3.7 Reporting
      Requirements.
      If the
      Commission ceases making periodic reports filed under the Exchange Act available
      via the Internet, then at a Purchaser’s request the Company shall furnish the
      following to such Purchaser so long as such Purchaser shall be obligated
      hereunder to purchase the Notes or shall beneficially own any
      Securities:

     

    (a) quarterly
      Reports filed with the Commission on Form 10-QSB as soon as practical after
      the
      document is filed with the Commission, and in any event within five (5) days
      after the document is filed with the Commission;

     

    (b) annual
      Reports filed with the Commission on Form 10-KSB as soon as practical after
      the
      document is filed with the Commission, and in any event within five (5) days
      after the document is filed with the Commission; and

     

    (c) copies
      of
      all notices and information, including without limitation notices and proxy
      statements in connection with any meetings, that are provided to holders of
      shares of Common Stock, contemporaneously with the delivery of such notices
      or
      information to such holders of Common Stock.

     

    Section
      3.8 Amendments.
      Other
      than the filing of the Amended Certificate, the Company shall not amend or
      waive
      any provision of the Certificate or Bylaws of the Company in any way that would
      materially and adversely affect the liquidation preferences, dividends rights,
      conversion rights, voting rights or redemption rights of the Preferred Stock;
      provided,
      however,
      that
      any creation and issuance, in accordance with the Certificate of Designation,
      of
      another series of Junior Stock (as defined in the Certificate of Designation)
      or
      any other class or series of equity securities which by its terms shall rank
      junior to the Preferred Stock shall not be deemed to materially and adversely
      affect such rights, preferences or privileges. No
      consideration shall be offered or paid to any holders of the Notes, the
Preferred
      Stock
      or the
      Warrants to amend or consent to a waiver or modification of any provision of
      any
      of the Transaction Documents unless the same consideration also is offered
      to
      all of the parties to the Transaction Documents, holders of Notes, Preferred
      Shares
      or
      Warrants, as the case may be. The Company has not, directly or indirectly,
      made
      any agreements with any Purchasers relating to the terms or conditions of the
      transactions contemplated by the Transaction Documents except as set forth
      in
      the Transaction Documents. Without limiting the foregoing, the Company confirms
      that, except as set forth in this Agreement, no Purchaser has made any
      commitment or promise or has any other obligation to provide any financing
      to
      the Company or otherwise.

     

    Section
      3.9 Other
      Agreements.
      The
      Company shall not enter into any agreement in which the terms of such agreement
      would materially restrict or impair the right or ability to perform of the
      Company or any Subsidiary under any Transaction Document.

     

    Section
      3.10 Distributions.
      So long
      as any Notes and/or Preferred Stock remain outstanding, the Company agrees
      that
      it shall not (i) declare or pay any dividends or make any distributions to
      any
      holder(s) of Common Stock or (ii) purchase or otherwise acquire for value,
      directly or indirectly, any Common Stock or other equity security of the
      Company.

     

    Section
      3.11 Status
      of Dividends.
      The
      Company covenants and agrees that (i) no Federal income tax return or claim
      for
      refund of Federal income tax or other submission to the Internal Revenue Service
      (the “Service”)
      will
      adversely affect the Notes, the Preferred Stock, any other series of its
      preferred stock, or the Common Stock, and no deduction shall operate to
      jeopardize the availability to Purchasers of the dividends received deduction
      provided by Section 243(a)(1) of the Code or any successor provision, (ii)
      in no
      report to shareholders or to any governmental body having jurisdiction over
      the
      Company or otherwise will it treat the Preferred Stock other than as equity
      capital or the dividends paid thereon other than as dividends paid on equity
      capital unless required to do so by a governmental body having jurisdiction
      over
      the accounts of the Company or by a change in generally accepted accounting
      principles required as a result of action by an authoritative accounting
      standards setting body, and (iii) it will take no action which would result
      in
      the dividends paid by the Company on the Preferred Stock out of the Company’s
      current or accumulated earnings and profits being ineligible for the dividends
      received deduction provided by Section 243(a)(1) of the Code. In the event
      that
      the Purchasers have reasonable cause to believe that dividends paid by the
      Company on the Preferred Stock out of the Company’s current or accumulated
      earnings and profits will not be treated as eligible for the dividends received
      deduction provided by Section 243(a)(1) of the Code, or any successor provision,
      the Company will, at the reasonable request of the Purchasers of 51% of the
      outstanding Preferred Stock, join with the Purchasers in the submission to
      the
      Service of a request for a ruling that dividends paid on the Securities will
      be
      so eligible for Federal income tax purposes, at the Purchasers expense. In
      addition, the Company will reasonably cooperate with the Purchasers (at
      Purchasers’ expense) in any litigation, appeal or other proceeding challenging
      or contesting any ruling, technical advice, finding or determination that
      earnings and profits are not eligible for the dividends received deduction
      provided by Section 243(a)(1) of the Code, or any successor provision to the
      extent that the position to be taken in any such litigation, appeal, or other
      proceeding is not contrary to any provision of the Code. 

     

    
      
        
        

      

      
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    Section
      3.12 Use
      of
      Proceeds.
      The net
      proceeds from the sale of the Notes and Warrants hereunder shall be used by
      the
      Company for working capital. The proceeds shall also be used for general
      corporate purposes, and not to redeem any Common Stock or securities
      convertible, exercisable or exchangeable into Common Stock, to settle any
      outstanding litigation or
      to
      cause any increase in management’s compensation, direct or otherwise, in a
      manner other than in the ordinary course of business.
      An
      estimated allocation of the net proceeds from the sale of the Securities
      hereunder is set forth on Schedule
      3.12
      hereto.

     

    Section
      3.13 Reservation
      of Shares.
      So long
      as any of the Notes, Preferred Stock or Warrants remain outstanding, the Company
      shall take all action necessary to at all times have authorized, and reserved
      for the purpose of issuance, no less than one hundred twenty percent (120%)
      of
      the aggregate number of shares of Common Stock needed to provide for the
      issuance of the Conversion Shares and the Warrant Shares. Upon the adoption
of
      the Amended Certificate and the filing of the Certificate of Designation the
      Company shall take all action necessary to at all times have authorized, and
      reserved for the purpose of issuance, no less than one hundred twenty percent
      (120%) of the aggregate number of shares of Preferred Stock needed to provide
      for the conversion of the Notes.

     

    Section
      3.14 Transfer
      Agent Instructions.
      The
      Company shall issue irrevocable instructions to its transfer agent, and any
      subsequent transfer agent, to issue certificates, registered in the name of
      each
      Purchaser or its respective nominee(s), for the Preferred Stock, the Conversion
      Shares and the Warrant Shares in such amounts as specified from time to time
      by
      each Purchaser to the Company upon conversion of the Notes, the Preferred Stock
      or exercise of the Warrants in the form of Exhibit
      H
      attached
      hereto (the “Irrevocable
      Transfer Agent Instructions”).
      Prior
      to registration of the Conversion Shares and the Warrant Shares under the
      Securities Act, all such certificates shall bear the restrictive legend
      specified in Section
      5.1
      of this
      Agreement. The Company warrants that no instruction other than the Irrevocable
      Transfer Agent Instructions referred to in this Section
      3.14
      will be
      given by the Company to its transfer agent and that the Shares shall otherwise
      be freely transferable on the books and records of the Company as and to the
      extent provided in this Agreement and the Registration Rights Agreement. If
      a
      Purchaser provides the Company with an opinion of counsel, in a generally
      acceptable form, to the effect that a public sale, assignment or transfer of
      the
      Shares may be made without registration under the Securities Act or the
      Purchaser provides the Company with reasonable assurances that such Shares
      can
      be sold pursuant to Rule 144 without any restriction as to the number of
      securities acquired as of a particular date that can then be immediately sold,
      the Company shall permit the transfer, and, in the case of the Preferred Stock,
      Conversion Shares and the Warrant Shares, promptly instruct its transfer agent
      to issue one or more certificates in such name and in such denominations as
      specified by such Purchaser and without any restrictive legend. The Company
      acknowledges that a breach by it of its obligations under this Section
      3.14
      will
      cause irreparable harm to the Purchasers by vitiating the intent and purpose
      of
      the transaction contemplated hereby. Accordingly, the Company acknowledges
      that
      the remedy at law for a breach of its obligations under this Section
      3.14
      will be
      inadequate and agrees, in the event of a breach or threatened breach by the
      Company of the provisions of this Section
      3.14,
      that
      the Purchasers shall be entitled, in addition to all other available remedies,
      to an order and/or injunction restraining any breach and requiring immediate
      issuance and transfer, without the necessity of showing economic loss and
      without any bond or other security being required.

     

    
      
        
        

      

      
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    Section
      3.15 Disposition
      of Assets.
      So long
      as any Notes or Preferred Stock remain outstanding, neither the Company nor
      any
      Subsidiary shall sell, transfer or otherwise dispose of any of its properties,
      assets and rights including, without limitation, its software and intellectual
      property, to any person except for (A) sales to customers in the ordinary course
      of business; (B) sales of assets in excess of 25% of the Company’s total assets
      as shown on its balance sheet; or (C) with the prior written consent of the
      holders of a majority of the holders of the Notes, Preferred Stock and/or
      Warrants then outstanding.

     

    Section
      3.16 Reporting
      Status. So
      long
      as a Purchaser beneficially owns any of the Securities, the Company shall timely
      file all reports required to be filed with the Commission pursuant to the
      Exchange Act, and the Company shall not cease filing reports under the Exchange
      Act even if the Exchange Act or the rules and regulations thereunder would
      permit such termination. 

     

    Section
      3.17 Disclosure
      of Transaction.
      The
      Company shall issue a press release describing the material terms of the
      transactions contemplated hereby (the “Press
      Release”)
      as
      soon as practicable after the Closing but in no event later than 24 hours after
      the Closing has been consummated. The Company shall also file with the
      Commission a Current Report on Form 8-K (the “Form
      8-K”)
      describing the material terms of the transactions contemplated hereby (and
      attaching as exhibits thereto this Agreement, the Registration Rights Agreement,
      the form of Certificate of Designation, the Lock-Up Agreement, the form of
      each
      series of Warrant and the Press Release) as soon as practicable following the
      Closing Date but in no event more than four (4) Trading Days following the
      Closing Date, which Press Release and Form 8-K shall be subject to prior review
      and comment by counsel for the Purchasers. “Trading
      Day”
means
      any day during which the OTC Bulletin Board (or other quotation venue or
      principal exchange on which the Common Stock is traded) shall be open for
      trading. 

     

    Section
      3.18 Disclosure
      of Material Information.
      The
      Company represents, covenants and agrees that neither it nor any other person
      acting on its behalf has provided or will provide any Purchaser or its agents
      or
      counsel with any information that the Company believes constitutes material
      non-public information (other than with respect to the transactions contemplated
      by this Agreement), unless prior thereto such Purchaser shall have executed
      a
      written agreement regarding the confidentiality and use of such information.
      The
      Company understands and confirms that each Purchaser shall be relying on the
      foregoing representations in effecting transactions in securities of the
      Company.

     

    Section
      3.19 Pledge
      of Securities.
      The
      Company acknowledges and agrees that the Securities may be pledged by a
      Purchaser in connection with a bona
      fide
      margin
      agreement or other loan or financing arrangement that is secured by the
      Securities. The pledge of Securities shall not be deemed to be a transfer,
      sale
      or assignment of the Securities hereunder, and no Purchaser effecting a pledge
      of Securities shall be required to provide the Company with any notice thereof
      or otherwise make any delivery to the Company pursuant to this Agreement or
      any
      other Transaction Document; provided
      that a
      Purchaser and its pledgee shall be required to comply with the provisions of
      Article
      V
      hereof
      in order to effect a sale, transfer or assignment of Securities to such pledgee.
      At the Purchasers' expense, the Company hereby agrees to execute and deliver
      such documentation as a pledgee of the Securities may reasonably request in
      connection with a pledge of the Securities to such pledgee by a
      Purchaser.

     

    
      
        
        

      

      
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    Section
      3.20 Form
      SB-2 Eligibility.
      The
      Company currently meets the “registrant eligibility” and transaction
      requirements set forth in the general instructions to Form SB-2 applicable
      to
“resale” registrations on Form SB-2 and the Company shall file all reports
      required to be filed by the Company with the Commission in a timely
      manner.

     

    Section
      3.21 Lock-Up
      Agreement.
      The
      persons listed on Schedule
      3.21
      attached
      hereto shall be subject to the terms and provisions of a lock-up agreement
      in
      substantially the form as Exhibit
      F
      hereto
      (the “Lock-Up
      Agreement”),
      which
      shall provide the manner in which such persons will sell, transfer or dispose
      of
      their shares of Common Stock. 

    

    Section
      3.22 DTC.
      Not
      later than the effective date of the Registration Statement (as defined in
      the
      Registration Rights Agreement), the Company shall cause its Common Stock to
      be
      eligible for transfer with its transfer agent pursuant to the Depository Trust
      Company Automated Securities Transfer Program.

     

    Section
      3.23 Subsequent
      Financings.
      

    

    (a) For
      a
      period of twelve (12) months following the effective date of the Registration
      Statement (as defined in the Registration Rights Agreement), the Company
      covenants and agrees to promptly notify (in no event later than five (5) days
      after making or receiving an applicable offer) in writing (a “Rights
      Notice”)
      each
      holder of Notes and/or Preferred Stock (as the case may be, each a “Noteholder”
and
      collectively the “Noteholders”)
      of the
      terms and conditions of any proposed offer or sale to, or exchange with (or
      other type of distribution to) any third party (a “Subsequent
      Financing”),
      of
      Common Stock or any debt or equity securities convertible, exercisable or
      exchangeable into Common Stock; provided,
      however,
      prior
      to delivering to each Noteholder a Rights Notice, the Company shall first
      deliver to each Noteholder a written notice of its intention to effect a
      Subsequent Financing (“Pre-Notice”)
      within
      three (3) Trading Days of receiving an applicable offer, which Pre-Notice shall
      ask such Noteholder if it wants to review the details of such financing. Upon
      the request of a Noteholder, and only upon a request by such Noteholder within
      three (3) Trading Days of receipt of a Pre-Notice, the Company shall promptly,
      but no later than two (2) Trading Days after such request, deliver a Rights
      Notice to such Noteholder. The Rights Notice shall describe, in reasonable
      detail, the proposed Subsequent Financing, the names and investment amounts
      of
      all investors participating in the Subsequent Financing (if known), the proposed
      closing date of the Subsequent Financing, which shall be no earlier than ten
      (10) Trading Days from the date of the Rights Notice, and all of the terms
      and
      conditions thereof and proposed definitive documentation to be entered into
      in
      connection therewith. The Rights Notice shall provide each Noteholder an option
      (the “Rights
      Option”)
      during
      the ten (10) Trading Days following delivery of the Rights Notice (the
“Option
      Period”)
      to
      inform the Company whether such Noteholder will purchase up to its pro
      rata
      portion
      of all or a portion of the securities being offered in such Subsequent Financing
      on the same, absolute terms and conditions as contemplated by such Subsequent
      Financing. If any Noteholder elects not to participate in any such Subsequent
      Financing, the other Noteholder may therein participate on a pro
      rata
      basis.
      For purposes of this Section, all references to “pro
      rata”
means,
      for any Noteholder electing to participate in such Subsequent Financing, the
      percentage obtained by dividing (x) the number of Notes and/or Preferred Stock,
      (as the case may be), held by such Noteholder at the Closing by (y) the total
      number of all of the Notes and/or Preferred Stock (as the case may be),
      outstanding. Delivery of any Rights Notice constitutes a representation and
      warranty by the Company that there are no other material terms and conditions,
      arrangements, agreements or otherwise except for those disclosed in the Rights
      Notice, to provide additional compensation to any party participating in any
      proposed Subsequent Financing, including, but not limited to, additional
      compensation based on changes in the Purchase Price or any type of reset or
      adjustment of a purchase or conversion price or to issue additional securities
      at any time after the closing date of a Subsequent Financing. If the Company
      does not receive notice of exercise of the Rights Option from the Noteholder
      within the Option Period, the Company shall have the right to close the
      Subsequent Financing on the scheduled closing date with a third party;
provided
      that all
      of the material terms and conditions of the closing are the same as those
      provided to the Noteholder in the Rights Notice. If the closing of the proposed
      Subsequent Financing does not occur that date, any closing of the contemplated
      Subsequent Financing or any other Subsequent Financing shall be subject to
      all
      of the provisions of this Section
      3.22(a),
      including, without limitation, the delivery of a new Rights Notice. The
      provisions of this Section
      3.22(a)
      shall
      not apply to issuances of securities in a Permitted Financing.

     

    
      
        
        

      

      
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    (b) For
      purposes of this Agreement, a Permitted Financing (as defined hereinafter)
      shall
      not be considered a Subsequent Financing. A “Permitted
      Financing”
shall
      mean (i) securities issued pursuant to the conversion or exercise of convertible
      or exercisable securities issued or outstanding on or prior to the date of
      this
      Agreement or issued pursuant to this Agreement (so long as the conversion or
      exercise price in such securities are not amended to lower such price and/or
      adversely affect the Purchasers), (ii) Common Stock issued or the issuance
      or
      grants of options to purchase Common Stock pursuant to the Company’s stock
      option plans and employee stock purchase plans that either (x) exist on the
      date
      hereof, or (y) do not exceed ten percent (10%) of the outstanding Common Stock
      of the Company as of the date hereof (such percentage subject to adjustment
      consistent with the terms of anti-dilution
      terms of the Note or of
      the
      Certificate of Designation, whichever is outstanding as of the time of
      determination), (iii) any warrants issued to the placement agent and its
      designees for the transactions contemplated by this Agreement, and (iv)
      securities issued in connection with a merger, consolidation, acquisition,
      strategic joint venture, or strategic partnership relationship.

    

    Section
      3.24  Issuance
      of Variable Securities. So
      long
      as any Notes and/or Preferred Stock remain outstanding, the Company agrees
      that
      it shall not issue any security with a variable conversion price or variable
      exercise price for a period of two (2) years from the Closing Date.

    

    Section
      3.25 Approval
      of Acquisitions.
      So long
      as any Notes and/or shares of Preferred Stock remain outstanding, the Company
      shall not effect, or agree to effect, an acquisition or buy out of or with
      any
      entity (including without limitation the acquisition of a substantial portion
      of
      the outstanding securities or assets of another entity other than in the
      ordinary course of business), or a consolidation or merger of the Company with
      or into any other corporation or corporations (or other entity or entities),
      or
      a sale of all or substantially all of the assets of the Company, or the
      effectuation by the Company of a transaction or series of related transactions
      in which more than 50% of the voting shares of the Company is disposed of or
      conveyed, without providing he holders of the Notes and/or Preferred Stock
      (as
      the case may be) with ten (10) days’ notice of such transaction.

    

    Section
      3.26 Shareholder
      Approval.
      The
      Company shall no later than September 15, 2007 obtain shareholder approval
      (“Shareholder
      Approval”)
      for
      the filing of the Amended Certificate. 

    

    Section
      3.27 Subsequent
      Filings.
      The
      Company shall no later than ten (10) calendar days from the date in which they
      receive Shareholder Approval, file the Amended Certificate and the Certificate
      of Designations with the Secretary of State of Delaware (the date of such
      filing, the “Preferred
      Stock Filing Date”)
      and
      inform Purchasers of such filing no later than two (2) business days thereafter.
      

    

    Section
      3.28 Most
      Favored Nations.
      If the
      Company has, on or prior to the date of this Agreement, entered into, or shall
      in the future enter into, any agreement with any purchaser or holder of capital
      stock of the Company, by providing such purchaser or holder with any terms
      that
      are more favorable than the rights made available to the Purchasers pursuant
      any
      terms set out in the Transaction Documents in issue as of the date hereof,
      the
      Company shall promptly notify the Purchasers of such terms in writing and
      Purchasers shall have the right to elect in writing within thirty (30) days
      of
      the receipt of such notice to elect to have such terms apply to such Transaction
      Documents. This provision shall only apply to an equity or convertible debt
      investment by one or more investors in excess of $2million and shall terminate
      upon the earlier to occur of (A) one (1) year from the date of this Agreement
      or
      (B) at any time Purchasers own in the aggregate less than four (4%) percent
      of
      the Company’s outstanding common stock on a fully diluted basis. 

     

    
      
        
        

      

      
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    ARTICLE
      IV

    Conditions

     

    Section
      4.1 Conditions
      Precedent to the Obligation of the Company to Sell the
      Securities.
      The
      obligation hereunder of the Company to issue and sell the Securities to the
      Purchasers is subject to the satisfaction or waiver, at or before the Closing,
      of each of the conditions set forth below. These conditions are for the
      Company’s sole benefit and may be waived by the Company at any time in its sole
      discretion.

     

    (a) Accuracy
      of Each Purchaser’s Representations and Warranties.
      The
      representations and warranties of each Purchaser shall be true and correct
      in
      all material respects as of the date when made and as of the Closing Date as
      though made at that time, except for representations and warranties that are
      expressly made as of a particular date, which shall be true and correct in
      all
      material respects as of such date.

     

    (b) Performance
      by the Purchasers.
      Each
      Purchaser shall have performed, satisfied and complied in all respects with
      all
      covenants, agreements and conditions required by this Agreement to be performed,
      satisfied or complied with by such Purchaser at or prior to the
      Closing.

     

    (c) 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 which prohibits the consummation of any
      of
      the transactions contemplated by this Agreement. 

     

    (d) Delivery
      of Purchase Price.
      The
      Purchase Price for the Securities has been delivered to the
      Company.

     

    (e) Delivery
      of Transaction Documents.
      The
      Transaction Documents have been duly executed and delivered by the Purchasers
      to
      the Company.

     

    Section
      4.2 Conditions
      Precedent to the Obligation of the Purchasers to Purchase the
      Shares.
      The
      obligation hereunder of each Purchaser to acquire and pay for the Securities
      is
      subject to the satisfaction or waiver, at or before the Closing, of each of
      the
      conditions set forth below. These conditions are for each Purchaser’s sole
      benefit and may be waived by such Purchaser at any time in its sole
      discretion.

     

    (a) Accuracy
      of the Company’s Representations and Warranties.
      Each of
      the representations and warranties of the Company in this Agreement and the
      Registration Rights Agreement shall be true and correct in all respects as
      of
      the date when made and as of the Closing Date as though made at that time
      (except for representations and warranties that are expressly made as of a
      particular date), which shall be true and correct in all respects as of such
      date.

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

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

     

    (c) No
      Suspension, Etc.
      Trading
      in the Company’s Common Stock shall not have been suspended by the Commission or
      the OTC Bulletin Board (except for any suspension of trading of limited duration
      agreed to by the Company, which suspension shall be terminated prior to the
      applicable Closing), and, at any time prior to the Closing Date, trading in
      securities generally as reported by Bloomberg Financial Markets (“Bloomberg”)
      shall
      not have been suspended or limited, or minimum prices shall not have been
      established on securities whose trades are reported by Bloomberg, or on the
      New
      York Stock Exchange, nor shall a banking moratorium have been declared either
      by
      the United States or New York State authorities, nor shall there have occurred
      any material outbreak or escalation of hostilities or other national or
      international calamity or crisis of such magnitude in its effect on, or any
      material adverse change in any financial market which, in each case, in the
      judgment of such Purchaser, makes it impracticable or inadvisable to purchase
      the Preferred Shares.

     

    (d) 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 which prohibits the consummation of any
      of
      the transactions contemplated by this Agreement.

     

    (e) No
      Proceedings or Litigation.
      No
      action, suit or proceeding before any arbitrator or any governmental authority
      shall have been commenced, and no investigation by any governmental authority
      shall have been threatened, against the Company or any Subsidiary, or any of
      the
      officers, directors or affiliates of the Company or any Subsidiary seeking
      to
      restrain, prevent or change the transactions contemplated by this Agreement,
      or
      seeking damages in connection with such transactions.

     

    (f) Opinion
      of Counsel, Etc.
      At the
      Closing, the Purchasers shall have received an opinion of counsel to the
      Company, dated the date of the Closing, in substantially the form of
Exhibit
      I
      hereto,
      and such other certificates and documents as the Purchasers or its counsel
      shall
      reasonably require incident to the Closing.

     

    (g) Registration
      Rights Agreement.
      At the
      Closing, the Company shall have executed and delivered the Registration Rights
      Agreement to each Purchaser.

     

    (h) Notes
      and Warrants.
      The
      Company shall have executed and delivered to the Purchasers the certificates
      (in
      such denominations as such Purchaser shall request) for the Notes and Warrants
      being acquired by such Purchaser at the Closing (in such denominations as such
      Purchaser shall request).

     

    (i) Resolutions.
      The
      Board of Directors of the Company shall have adopted resolutions consistent
      with
Section
      2.1(b)
      hereof
      in a form reasonably acceptable to such Purchaser (the “Resolutions”).

     

    (j) Reservation
      of Shares.
      So long
      as any of the Notes or Warrants remain outstanding, the Company shall take
      all
      action necessary to at all times have authorized, and reserved for the purpose
      of issuance, no less than (i) such number of shares of Preferred Stock equal
      to
      one hundred twenty percent (120%) of the number of shares of Preferred Stock
      as
      shall from time to time be sufficient to effect the entire conversion of the
      Notes and any interest accrued and outstanding thereon; (ii) a number of shares
      of common stock, par value $0.0001 per share (the “Common
      Stock”)
      equal
      to one hundred twenty percent (120%) of the number of shares of Common Stock
      as
      shall from time to time be sufficient to effect the conversion of all of the
      Notes and/or the Preferred Stock and (iii) as of the date hereof, such number
      of
      shares of Common Stock equal to one hundred twenty percent (120%) of the number
      of shares of Common Stock as shall from time to time be sufficient to effect
      the
      exercise of the Warrants then outstanding..

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

    (k) Transfer
      Agent Instructions.
      As of
      the Closing Date, the Irrevocable Transfer Agent Instructions, in the form
      of
Exhibit
      H
      attached
      hereto, shall have been delivered to and acknowledged in writing by the
      Company’s transfer agent.

     

    (l) Lock-Up
      Agreement.
      As of
      the Closing Date, the persons listed on Schedule
      3.20
      hereto
      shall have delivered to the Purchasers a fully executed Lock-Up Agreement in
      the
      form of Exhibit
      F
      attached
      hereto. 

     

    (m) Secretary’s
      Certificate.
      The
      Company shall have delivered to such Purchaser a secretary’s certificate, dated
      as of the Closing Date, as to (i) the Resolutions, (ii) the Certificate, (iii)
      the Bylaws; each as of the Closing, and (iv) the authority and incumbency of
      the
      officers of the Company executing the Transaction Documents and any other
      documents required to be executed or delivered in connection
      therewith.

     

    (n) Officer’s
      Certificate.
      The
      Company shall have delivered to the Purchasers a certificate of an executive
      officer of the Company, dated as of the Closing Date, confirming the accuracy
      of
      the Company’s representations, warranties and covenants as of the Closing Date
      and confirming the compliance by the Company with the conditions precedent
      set
      forth in this Section
      4.2
      as of
      the Closing Date.

     

    (o) Material
      Adverse Effect.
      No
      Material Adverse Effect shall have occurred at or before the Closing Date.
        

    

    ARTICLE
      V

    Stock
      Certificate Legend

     

    Section
      5.1 Legend.
      Each
      certificate representing the Notes, Preferred Stock and the Warrants, and,
      if
      appropriate, securities issued upon conversion or exercise thereof (or
      securities issued in connection with Section
      1.4,
      shall
      be stamped or otherwise imprinted with a legend substantially in the following
      form (in addition to any legend required by applicable state securities or
“blue
      sky” laws):

     

    THE
      SECURITIES REPRESENTED BY THIS CERTIFICATE (THE “SECURITIES”) HAVE NOT BEEN
      REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”)
      OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
      DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE
      STATE SECURITIES LAWS OR MARKETING WORLDWIDE CORPORATION SHALL HAVE RECEIVED
      AN
      OPINION OF COUNSEL THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES
      ACT
      AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT
      REQUIRED.

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

    The
      Company agrees to reissue certificates representing any of the Conversion Shares
      and the Warrant Shares, without the legend set forth above if at such time,
      prior to making any transfer of any such securities, such holder thereof shall
      give written notice to the Company describing the manner and terms of such
      transfer and removal as the Company may reasonably request. Such proposed
      transfer and removal will not be effected until: (a) either (i) the Company
      has
      received an opinion of counsel reasonably satisfactory to the Company, to the
      effect that the registration of the Conversion Shares or the Warrant Shares
      under the Securities Act is not required in connection with such proposed
      transfer, (ii) a registration statement under the Securities Act covering such
      proposed disposition has been filed by the Company with the Commission and
      has
      become effective under the Securities Act, (iii) the Company has received other
      evidence reasonably satisfactory to the Company that such registration and
      qualification under the Securities Act and state securities laws are not
      required, or (iv) the holder provides the Company with reasonable assurances
      that such security can be sold pursuant to Rule 144 under the Securities Act;
      and (b) either (i) the Company has received an opinion of counsel reasonably
      satisfactory to the Company, to the effect that registration or qualification
      under the securities or “blue sky” laws of any state is not required in
      connection with such proposed disposition, or (ii) compliance with applicable
      state securities or “blue sky” laws has been effected or a valid exemption
      exists with respect thereto. The Company will respond to any such notice from
      a
      holder within five (5) business days. In the case of any proposed transfer
      under
      this Section
      5.1,
      the
      Company will use reasonable efforts to comply with any such applicable state
      securities or “blue sky” laws, but shall in no event be required, (x) to qualify
      to do business in any state where it is not then qualified, (y) to take any
      action that would subject it to tax or to the general service of process in
      any
      state where it is not then subject, or (z) to comply with state securities
      or
“blue sky” laws of any state for which registration by coordination is
      unavailable to the Company. The restrictions on transfer contained in this
      Section
      5.1
      shall be
      in addition to, and not by way of limitation of, any other restrictions on
      transfer contained in any other section of this Agreement. Whenever a
      certificate representing the Conversion Shares or Warrant Shares is required
      to
      be issued to a Purchaser without a legend, in lieu of delivering physical
      certificates representing the Conversion Shares or Warrant Shares (provided
      that
      a registration statement under the Securities Act providing for the resale
      of
      the Warrant Shares and Conversion Shares is then in effect), the Company shall
      cause its transfer agent to electronically transmit the Conversion Shares or
      Warrant Shares to a Purchaser by crediting the account of such Purchaser or
      such
      Purchaser's Prime Broker with the Depository Trust Company (“DTC”)
      through its Deposit Withdrawal Agent Commission (“DWAC”)
      system
      (to the extent not inconsistent with any provisions of this
      Agreement).

    

    ARTICLE
      VI 

    Indemnification

     

    Section
      6.1 General
      Indemnity.
      The
      Company agrees to indemnify and hold harmless the Purchasers (and their
      respective directors, officers, managers, partners, members, shareholders,
      affiliates, agents, successors and assigns) from and against any and all losses,
      liabilities, deficiencies, costs, damages and expenses (including, without
      limitation, reasonable attorneys’ fees, charges and disbursements) incurred by
      the Purchasers as a result of any inaccuracy in or breach of the
      representations, warranties or covenants made by the Company herein.

     

    Section
      6.2 Indemnification
      Procedure.
      Any
      party entitled to indemnification under this Article
      VI
      (an
“indemnified
      party”)
      will
      give written notice to the indemnifying party of any matters giving rise to
      a
      claim for indemnification; provided
      that the
      failure of any party entitled to indemnification hereunder to give notice as
      provided herein shall not relieve the indemnifying party of its obligations
      under this Article
      VI
      except
      to the extent that the indemnifying party is actually prejudiced by such failure
      to give notice. In case any action, proceeding or claim is brought against
      an
      indemnified party in respect of which indemnification is sought hereunder,
      the
      indemnifying party shall be entitled to participate in and, unless in the
      reasonable judgment of the indemnified party a conflict of interest between
      it
      and the indemnifying party may exist with respect of such action, proceeding
      or
      claim, to assume the defense thereof with counsel reasonably satisfactory to
      the
      indemnified party. In the event that the indemnifying party advises an
      indemnified party that it will contest such a claim for indemnification
      hereunder, or fails, within thirty (30) days of receipt of any indemnification
      notice to notify, in writing, such person of its election to defend, settle
      or
      compromise, at its sole cost and expense, any action, proceeding or claim (or
      discontinues its defense at any time after it commences such defense), then
      the
      indemnified party may, at its option, defend, settle or otherwise compromise
      or
      pay such action or claim. In any event, unless and until the indemnifying party
      elects in writing to assume and does so assume the defense of any such claim,
      proceeding or action, the indemnified party’s costs and expenses arising out of
      the defense, settlement or compromise of any such action, claim or proceeding
      shall be losses subject to indemnification hereunder. The indemnified party
      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 which relates to such action or claim. The indemnifying
      party shall keep the indemnified party fully apprised at all times as to the
      status of the defense or any settlement negotiations with respect thereto.
      If
      the indemnifying party elects to defend any such action or claim, then the
      indemnified party shall be entitled to participate in such defense with counsel
      of its choice at its sole cost and expense. The indemnifying party shall not
      be
      liable for any settlement of any action, claim or proceeding effected without
      its prior written consent. Notwithstanding anything in this Article
      VI
      to the
      contrary, the indemnifying party shall not, without the indemnified party’s
      prior written consent, settle or compromise any claim or consent to entry of
      any
      judgment in respect thereof which imposes any future obligation on the
      indemnified party or which does not include, as an unconditional term thereof,
      the giving by the claimant or the plaintiff to the indemnified party of a
      release from all liability in respect of such claim. The indemnification
      required by this Article
      VI
      shall be
      made by periodic payments of the amount thereof during the course of
      investigation or defense, as and when bills are received or expense, loss,
      damage or liability is incurred, so long as the indemnified party irrevocably
      agrees to refund such moneys if it is ultimately determined by a court of
      competent jurisdiction that such party was not entitled to indemnification.
      The
      indemnity agreements contained herein shall be in addition to (a) any cause
      of
      action or similar rights of the indemnified party against the indemnifying
      party
      or others, and (b) any liabilities the indemnifying party may be subject to
      pursuant to the law.

     

    
      
        
        

      

      
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    ARTICLE
      VII 

    Miscellaneous

     

    Section
      7.1 Fees
      and Expenses.
      Except
      as otherwise set forth in this Agreement and the other Transaction Documents,
      each party shall pay the fees and expenses of its advisors, counsel, accountants
      and other experts, if any, and all other expenses, incurred by such party
      incident to the negotiation, preparation, execution, delivery and performance
      of
      this Agreement. Notwithstanding the foregoing sentence, the Company shall pay
      all reasonable attorneys' fees and expenses (including disbursements and
      out-of-pocket expenses) incurred by the Purchasers in connection with (i) the
      preparation, negotiation, execution and delivery of this Agreement and the
      other
      Transaction Documents and the transactions contemplated thereunder, which
      payment shall be made at the Closing (which fees and expenses shall not exceed
      $35,000), (ii) the filing and declaration of effectiveness by the Commission
      of
      the Registration Statement (which fees and expenses shall not exceed $7,500)
      and
      (iii) any amendments, modifications or waivers of this Agreement or any of
      the
      other Transaction Documents. The Company shall pay all reasonable fees and
      expenses incurred by the Purchasers in connection with the enforcement of this
      Agreement or any of the other Transaction Documents, including, without
      limitation, all reasonable attorneys' fees and expenses but only if the
      Purchasers are successful in any litigation or arbitration relating to such
      enforcement. 

     

    Section
      7.2 Specific
      Enforcement.
      The
      Company and the Purchasers acknowledge and agree that irreparable damage would
      occur in the event that any of the provisions of this Agreement or the other
      Transaction Documents were not performed in accordance with their specific
      terms
      or were otherwise breached. It is accordingly agreed that the parties shall
      be
      entitled to an injunction or injunctions to prevent or cure breaches of the
      provisions of this Agreement or the Registration Rights Agreement and to enforce
      specifically the terms and provisions hereof or thereof, this being in addition
      to any other remedy to which any of them may be entitled by law or
      equity.

     

    
      
        
        

      

      
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    Section
      7.3 Entire
      Agreement; Amendment.
      This
      Agreement and the Transaction Documents contains the entire understanding and
      agreement of the parties with respect to the matters covered hereby and, except
      as specifically set forth herein or in the Transaction Documents, neither the
      Company nor any of the Purchasers makes any representations, warranty, covenant
      or undertaking with respect to such matters and they supersede all prior
      understandings and agreements with respect to said subject matter, all of which
      are merged herein. No provision of this Agreement may be waived or amended
      other
      than by a written instrument signed by the Company and the holders of at least
      a
      majority of the Notes and/or Preferred Stock (as the case may be) then
      outstanding, and no provision hereof may be waived other than by an a written
      instrument signed by the party against whom enforcement of any such amendment
      or
      waiver is sought. No such amendment shall be effective to the extent that it
      applies to less than all of the holders of the Notes and/or Preferred Stock
      (as
      the case may be) then outstanding. 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 the Transaction Documents unless the same consideration is also offered
      to all of the parties to the Transaction Documents or holders of Notes and
      Preferred Stock, as the case may be.

    

    Section
      7.4 Rescission
      and Withdrawal Right.   
      Notwithstanding anything to the contrary contained in (and without limiting
      any
      similar provisions of) the Transaction Documents, whenever any Purchaser
      exercises a material right, election, demand or option under a Transaction
      Document and the Company does not timely perform its related obligations within
      the periods therein provided, then such Purchaser may rescind or withdraw,
      in
      its sole discretion from time to time upon written notice to the Company, any
      relevant notice, demand or election in whole or in part without prejudice to
      its
      future actions and rights.

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

    
       

      Section
        7.5 Notices.
        Any
        notice, demand, request, waiver or other communication required or permitted
        to
        be given hereunder shall be in writing and shall be effective (a) upon hand
        delivery by telex (with correct answer back received), telecopy or facsimile
        at
        the address or number designated below (if delivered on a business day during
        normal business hours where such notice is to be received), or the first
        business day following such delivery (if delivered other than on a business
        day
        during normal business hours where such notice is to be received) or (b)
        on the
        second business day following the date of mailing by express courier service,
        fully prepaid, addressed to such address, or upon actual receipt of such
        mailing, whichever shall first occur. The addresses for such communications
        shall be:

    

     

    
      	
              If
                to the Company:

            	
              Juma
                Technology Corp.

              154
                Toledo Street

              Farmingdale,
                New York 11735

              Attention:
                Chief Executive Officer

              Tel.
                No.: (631) 300-1000

              Fax
                No.: (631) 270-1105 

               

            
	
              with
                copies to:

            	
              Gersten
                Savage LLP

              600
                Lexington Avenue, 9th
                Floor

              New
                York, New York 10022

              Attention:
                Jay Kaplowitz, Esq.

              Tel.
                No.: (212) 752-9700

              Fax
                No.: (212) 980-5192

               

            
	
              If
                to any Purchaser:

            	
              At
                the address of such Purchaser set forth on Exhibit
                A
                to
                this Agreement, with copies to Purchaser’s counsel (which copies shall not
                constitute notice to such purchaser) as set forth on Exhibit
                A
                or
                as specified in writing by such Purchaser.

               

            
	
              with
                copies to:

            	
              Sadis
                & Goldberg LLP

              551
                Fifth Avenue, 21st
                Floor

              New
                York, New York 10176

              Attention:
                Steven Huttler, Esq.

              Tel
                No.: (212) 947-3793

              Fax
                No.: (212) 947-3796

            

    

     

    Any
      party
      hereto may from time to time change its address for notices by giving at least
      ten (10) days written notice of such changed address to the other parties
      hereto.

     

    Section
      7.6 Waivers.
      No
      waiver by either party of any default with respect to any provision, condition
      or requirement of this Agreement shall be deemed to be a continuing waiver
      in
      the future or a waiver of any other provisions, condition or requirement hereof,
      nor shall any delay or omission of any party to exercise any right hereunder
      in
      any manner impair the exercise of any such right accruing to it
      thereafter.

     

    Section
      7.7 Headings.
      The
      article, section and subsection headings in this Agreement are for convenience
      only and shall not constitute a part of this Agreement for any other purpose
      and
      shall not be deemed to limit or affect any of the provisions
      hereof.

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

     

    Section
      7.8 Successors
      and Assigns.
      This
      Agreement shall be binding upon and inure to the benefit of the parties and
      their successors and assigns.  

     

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

     

    Section
      7.10 Governing
      Law; Consent to Jurisdiction.
      The
      parties acknowledge and agree that any claim, controversy, dispute or action
      relating in any way to this agreement or the subject matter of this agreement
      shall be governed solely by the laws of the State of Delaware, without regard
      to
      any conflict of laws doctrines. The parties irrevocably consent to being served
      with legal process issued from the state and federal courts located in New
      York
      and irrevocably consent to the exclusive personal jurisdiction of the federal
      and state courts situated in the State of New York. The parties irrevocably
      waive any objections to the personal jurisdiction of these courts. Said courts
      shall have sole and exclusive jurisdiction over any and all claims,
      controversies, disputes and actions which in any way relate to this agreement
      or
      the subject matter of this agreement. The parties also irrevocably waive any
      objections that these courts constitute an oppressive, unfair, or inconvenient
      forum and agree not to seek to change venue on these grounds or any other
      grounds.
      The
      parties hereby agree that the prevailing party in any suit, action or proceeding
      arising out of or relating to this Agreement or the Purchase Agreement, shall
      be
      entitled to reimbursement for reasonable legal fees from the non-prevailing
      party. The parties hereby waive all rights to a trial by jury.

     

    Section
      7.11 Survival.
      The
      representations and warranties of the Company and the Purchasers shall survive
      the execution and delivery hereof and the Closing hereunder.

     

    Section
      7.12 Counterparts.
      This
      Agreement may be executed in any number of counterparts, each of which when
      so
      executed shall be deemed to be an original and all of which taken together
      shall
      constitute one and the same Agreement, and shall become effective when
      counterparts have been signed by each party and delivered to the other parties
      hereto, it being understood that all parties need not sign the same counterpart.
      In the event that any signature is delivered by facsimile or electronic mail
      transmission, such signature shall create a valid binding obligation of the
      party executing (or on whose behalf such signature is executed) the same with
      the same force and effect as if such facsimile signature were the original
      thereof.

     

    Section
      7.13 Publicity.
      The
      Company agrees that it will not disclose, and will not include in any public
      announcement, the name of the Purchasers without the consent of the Purchasers
      unless and until such disclosure is required by law or applicable regulation,
      and then only to the extent of such requirement.

     

    Section
      7.14 Severability.
      The
      provisions of this Agreement and the Transaction Documents are severable and,
      in
      the event that any court of competent jurisdiction shall determine that any
      one
      or more of the provisions or part of the provisions contained in this Agreement
      or the Transaction Documents shall, for any reason, be held to be invalid,
      illegal or unenforceable in any respect, such invalidity, illegality or
      unenforceability shall not affect any other provision or part of a provision
      of
      this Agreement or the Transaction Documents and such provision shall be reformed
      and construed as if such invalid or illegal or unenforceable provision, or
      part
      of such provision, had never been contained herein, so that such provisions
      would be valid, legal and enforceable to the maximum extent
      possible.

     

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

    
       

      Section
        7.15 Further
        Assurances.
        From
        and after the date of this Agreement, upon the request of any Purchaser or
        the
        Company, each of the Company and the Purchasers shall execute and deliver
        such
        instrument, documents and other writings as may be reasonably necessary or
        desirable to confirm and carry out and to effectuate fully the intent and
        purposes of this Agreement, the Preferred Shares, the Conversion Shares,
        the
        Warrants, the Warrant Shares, the Certificate of Designation and the
        Registration Rights Agreement.

    [remainder
      of page intentionally left blank]

     

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

    

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

     

    
      	 	 	 
	 	
              JUMA
                TECHNOLOGY CORP.

            
	 
 	 
 	 
 
	
            	By:  	
            
	 	
              

              Name:
                

            
	 	Title:  

    

     

    
       

      
        	 	 	 
	 	
                PURCHASER:

              
	 
 	 
 	 
 
	
              	By:  	
              
	 	
                

                Name:
                  

              
	 	Title:  

      

       

    

    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

    

    EXHIBIT
      A

    to
      the

    NOTE
      AND WARRANT STOCK PURCHASE AGREEMENT FOR

    JUMA
      TECHNOLOGY CORP.

    

    
      	
              Names
                and Addresses of the Purchasers

            	 	
              Investment
                Amount

            	 	
              Shares
                & Warrants Purchased

            
	
              Vision
                Opportunity Master Fund, Ltd.

              c/o
                Vision Opportunity Capital Management, LLC

              20
                West 55th
                Street

              New
                York, NY 10019

              Attn:
                Antti Uusiheimala

            	 	
              $5,000,000

            	 	
              $5,000,000
                principal amount of Note

               

              Series
                A Warrant: 8,333,333

              Series
                B Warrant: 2,777,778

              Series
                C Warrant: 2,777,778

            

    

     

    
      
        
        

      

      
        i

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      B

    to
      the

    NOTE
      AND WARRANT STOCK PURCHASE AGREEMENT FOR

    JUMA
      TECHNOLOGY CORP.

    

    FORM
      OF NOTE

     

    
      
        
        

      

      
        ii

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      C

    to
      the

    NOTE
      AND WARRANT STOCK PURCHASE AGREEMENT FOR

    JUMA
      TECHNOLOGY CORP.

    

    FORM
      OF CERTIFICATE OF DESIGNATION

     

    
      
        
        

      

      
        iii

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      D-1

    to
      the

    NOTE
      AND WARRANT STOCK PURCHASE AGREEMENT FOR

    JUMA
      TECHNOLOGY CORP.

    

    FORM
      OF SERIES A WARRANT

     

    
      
        
        

      

      
        iv

        
          

        

      

      
        
        

      

    

    EXHIBIT
      D-2

    to
      the

    NOTE
      AND WARRANT STOCK PURCHASE AGREEMENT FOR

    JUMA
      TECHNOLOGY CORP.

    

    FORM
      OF SERIES B WARRANT

     

    
      
        
        

      

      
        v

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      D-3

    to
      the

    NOTE
      AND WARRANT STOCK PURCHASE AGREEMENT FOR

    JUMA
      TECHNOLOGY CORP.

    

    FORM
      OF SERIES C WARRANT

     

    
      
        
        

      

      
        vi

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      E

    to
      the

    NOTE
      AND WARRANT STOCK PURCHASE AGREEMENT FOR

    JUMA
      TECHNOLOGY CORP.

    

    FORM
      OF REGISTRATION RIGHTS AGREEMENT

     

    
      
        
        

      

      
        vii

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      F

    to
      the

    NOTE
      AND WARRANT STOCK PURCHASE AGREEMENT FOR

    JUMA
      TECHNOLOGY CORP.

    

    FORM
      OF LOCK -UP AGREEMENT

     

    
      
        
        

      

      
        viii

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      G

    to
      the

    NOTE
      AND WARRANT PURCHASE AGREEMENT FOR

    JUMA
      TECHNOLOGY CORP.

    

    AMENDED
      CERTIFICATE OF INCORPORATION

     

    
      
        
        

      

      
        ix

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      H

    to
      the

    NOTE
      AND WARRANT PURCHASE AGREEMENT FOR

    JUMA
      TECHNOLOGY CORP.

    

    FORM
      OF IRREVOCABLE TRANSFER AGENT INSTRUCTIONS

    

    [NAME
      AND ADDRESS OF TRANSFER AGENT]

    Attn:
      ____________________________

    

    Re:
      Juma
      Technology Corp. 

     

    Ladies
      and Gentlemen:

     

    Reference
      is made to that certain Note and Warrant Purchase Agreement (the “Purchase
      Agreement”),
      dated
      as of August 16, 2007, by and among Juma Technology Corp., a Delaware
      corporation (the “Company”),
      and
      the purchasers named therein (collectively, the “Purchasers”)
      pursuant to which the Company is issuing to the Purchasers 6% Convertible Notes
      (the “Notes”)
      and
      warrants (the “Warrants”)
      to
      purchase shares of the Company’s common stock, par value $0.0001 per share (the
“Common
      Stock”).
      This
      letter shall serve as our irrevocable authorization and direction to you
      provided that you are the transfer agent of the Company at such time) to issue
      shares of Common Stock upon conversion of the Notes and/or the Preferred Stock
      (the “Conversion
      Shares”)
      and
      exercise of the Warrants (the “Warrant
      Shares”)
      to or
      upon the order of a Purchaser from time to time upon (i) surrender to you of
      a
      properly completed and duly executed Conversion Notice or Exercise Notice,
      as
      the case may be, in the form attached hereto as Exhibit I and Exhibit II,
      respectively, (ii) in the case of the conversion of Notes and/or the Preferred
      Stock, a copy of the Note, a copy of the certificates (with the original
      certificates delivered to the Company) representing Preferred Stock being
      converted or, in the case of Warrants being exercised, a copy of the Warrants
      (with the original Warrants delivered to the Company) being exercised (or,
      in
      each case, an indemnification undertaking with respect to such share
      certificates or the warrants in the case of their loss, theft or destruction),
      and (iii) delivery of a treasury order or other appropriate order duly executed
      by a duly authorized officer of the Company. So long as you have previously
      received (x) written confirmation from counsel to the Company that a
      registration statement covering resales of the Conversion Shares or Warrant
      Shares, as applicable, has been declared effective by the Securities and
      Exchange Commission (the “SEC”)
      under
      the Securities Act of 1933, as amended (the “1933
      Act”),
      and
      no subsequent notice by the Company or its counsel of the suspension or
      termination of its effectiveness and (y) a copy of such registration statement,
      and if the Purchaser represents in writing that the Conversion Shares or the
      Warrant Shares, as the case may be, were sold pursuant to the Registration
      Statement, then certificates representing the Conversion Shares and the Warrant
      Shares, as the case may be, shall not bear any legend restricting transfer
      of
      the Conversion Shares and the Warrant Shares, as the case may be, thereby and
      should not be subject to any stop-transfer restriction. Provided, however,
      that
      if you have not previously received those items and representations listed
      above, then the certificates for the Conversion Shares and the Warrant Shares
      shall bear the following legend:

     

    “THE
      SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED (THE SECURITIES ACT”), OR ANY STATE
      SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS
      REGISTERED UNDER THE SECURITIES ACT OR APPLICABLE STATE SECURITIES LAWS, OR
      MARKETING WORLDWIDE CORPORATION SHALL HAVE RECEIVED AN OPINION OF ITS COUNSEL
      THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER THE
      PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.”

     

    
      
        
        

      

      
        x

        
          

        

      

      
        
        

      

    

     

    and,
      provided further, that the Company may from time to time notify you to place
      stop-transfer restrictions on the certificates for the Conversion Shares and
      the
      Warrant Shares in the event a registration statement covering the Conversion
      Shares and the Warrant Shares is subject to amendment for events then
      current.

     

    A
      form of
      written confirmation from counsel to the Company that a registration statement
      covering resales of the Conversion Shares and the Warrant Shares has been
      declared effective by the SEC under the 1933 Act is attached hereto as Exhibit
      III.

     

    Please
      be
      advised that the Purchasers are relying upon this letter as an inducement to
      enter into the Purchase Agreement and, accordingly, each Purchaser is a third
      party beneficiary to these instructions.

     

    Please
      execute this letter in the space indicated to acknowledge your agreement to
      act
      in accordance with these instructions. Should you have any questions concerning
      this matter, please contact me at ___________.

     

    
      	 	 	 
	 	
              Very
                truly yours,

            
	 	 
	 	
              JUMA
                TECHNOLOGY CORP.

            
	 
 	 
 	 
 
	
            	By:  	
            
	 	
              
Name:

	 	Title:
              

    

     

    
      	
              ACKNOWLEDGED
                AND AGREED:

               

            	 	 	 
	
              [TRANSFER
                AGENT]

            	 	 	 
	 	 	 	 
	 	 	 	 
	
              By:

            	 	 	
            
	
              
                

              

              Name:
                

              Title:
                

              Date:

            	 	 	
            

    

     

    
      
        
        

      

      
        xi

        
          

        

      

      
        
        

      

    

    EXHIBIT
      I

    CONVERSION
      NOTICE

    JUMA
      TECHNOLOGY CORP.

    

    (To
      be
      Executed by the Registered Holder in order to Convert the Note)

    

    In
      accordance with and pursuant to the Note, the undersigned hereby elects to
      convert the Note into such number of shares of Common stock, of Juma Technology
      Corp., a Delaware corporation (the “Company”),
      indicated below:

     

    Date
      of
      Conversion:
      ___________________________________________________________  

     

    Applicable
      Conversion
      Price:______________________________________________________

     

    Number
      of
      shares of Common Stock beneficially owned or deemed beneficially owned by the
      Holder on the date of
      Conversion__________________________________________

    

    

    
      	
              Dated: ____________________

            	
              Signature:
                ___________________________________________________________

               

            
	 	
              Address:___________________________________________________________

            
	 	
               ___________________________________________________________

            
	 	
               ___________________________________________________________

            

    

     

    
      
        
        

      

      
        xii

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      II

    CONVERSION
      NOTICE

    JUMA
      TECHNOLOGY CORP.

    

    Reference
      is made to the Certificate of Designation of the Relative Rights and Preferences
      of the Series A Convertible Preferred Stock of Juma Technology Corp. (the
“Certificate
      of Designation”).
      In
      accordance with and pursuant to the Certificate of Designation, the undersigned
      hereby elects to convert the number of shares of Series A Convertible Preferred
      Stock, par value $0.0001 per share (the “Preferred
      Shares”),
      of
      Juma Technology Corp., a Delaware corporation (the “Company”),
      indicated below into shares of Common Stock, par value $0.0001 per share (the
      “Common
      Stock”),
      of
      the Company, by tendering the stock certificate(s) representing the share(s)
      of
      Preferred Shares specified below as of the date specified
      below.

     

    Date
      of
      Conversion:
      ____________________________________________________________

     

    Number
      of
      Preferred Stock to be
      converted: ___________________________________________

     

    Stock
      certificate no(s). of Preferred Shares to be
      converted: _______________________________

     

    The
      Common Stock have been sold pursuant to the Registration Statement (as defined
      in the Registration Rights Agreement): YES o 
      NO o

    

    Please
      confirm the following information:

     

    Conversion
      Price: ____________________________________________________________ 

     

    Number
      of
      shares of Common Stock to be issued:
      ______________________________________

     

    Number
      of
      shares of Common Stock beneficially owned or deemed beneficially owned by the
      Holder on the Date of Conversion: _____________________________  

    

    Please
      issue the Common Stock into which the Preferred Stock are being converted and,
      if applicable, any check drawn on an account of the Company in the following
      name and to the following address:

     

    
      	
              Issue
                to: 

            	
              ____________________________________________________________

               

              ____________________________________________________________

               

              Facsimile
                No.: ____________________________________________________________

            
	
               

              Authorization: ____________________________________________________________

            
	 
	 	
              By: ____________________________________________________________

              Title: ____________________________________________________________

              Dated: ____________________________________________________________

            
	 	 

    

    

    
      
        
        

      

      
        xiii

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      III

    FORM
      OF EXERCISE NOTICE

    JUMA
      TECHNOLOGY CORP.

    

    The
      undersigned_______________, pursuant to the provisions of the within Warrant,
      hereby elects to purchase ______ shares of Common Stock of Juma Technology
      Corp.
      covered by the within Warrant.

    

    
      	
              Dated: ____________________

            	
              Signature:  ___________________________________________________________

            
	 	 
	 	
              Address:  ___________________________________________________________

            
	 	
               ___________________________________________________________

            

    

    

    Number
      of
      shares of Common Stock beneficially owned or deemed beneficially owned by the
      Holder on the date of Exercise:     

    

    ASSIGNMENT

    

    FOR
      VALUE
      RECEIVED, ______________________ hereby sells, assigns and transfers unto
      _____________________ the within Warrant and all rights evidenced thereby and
      does irrevocably constitute and appoint __________________________, attorney,
      to
      transfer the said Warrant on the books of the within named
      corporation.

     

    
      	
              Dated: ____________________

            	
              Signature:
                ___________________________________________________________

            
	 	 
	 	
              Address: 
                ___________________________________________________________

            
	 	
              ___________________________________________________________

            

    

    

    PARTIAL
      ASSIGNMENT

    

    FOR
      VALUE
      RECEIVED, ______________________ hereby sells, assigns and transfers unto
      _____________________ the right to purchase ___________________ shares of
      Warrant Stock evidenced by the within Warrant together with all rights therein,
      and does irrevocably constitute and appoint __________________________,
      attorney, to transfer that part of the said Warrant on the books of the within
      named corporation.

    

    
      	
              Dated:  ___________________

            	
              Signature:
                ___________________________________________________________

            
	 	 
	 	
              Address:
                ___________________________________________________________

            
	 	
              ___________________________________________________________

            

    

    

    FOR
      USE BY THE ISSUER ONLY:

    

    This
      Warrant No. W-__________ canceled (or transferred or exchanged) this _______
      day
      of ______________, _______, shares of Common Stock issued therefor in the name
      of __________________________, Warrant No. W-_________ issued for ______________
      shares of Common Stock in the name of ______________________.

     

    
      
        
        

      

      
        xiv

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      IV

    FORM
      OF NOTICE OF EFFECTIVENESS

    OF
      REGISTRATION STATEMENT

     

    [NAME
      AND ADDRESS OF TRANSFER AGENT]

    Attn:
      ____________________________

    

    Re:
      Juma
      Technology Corp. 

     

    Ladies
      and Gentlemen:

     

    We
      are
      special counsel to Juma Technology Corp., a Delaware corporation (the
“Company”),
      and
      have represented the Company in connection with that certain Note and Warrant
      Purchase Agreement (the “Purchase
      Agreement”),
      dated
      as of August 16, 2007, by and among the Company and the purchasers named therein
      (collectively, the “Purchasers”)
      pursuant to which the Company issued to the Purchasers 6% convertible promissory
      notes (the “Notes”)
      and
      warrants (the “Warrants”)
      to
      purchase shares of the Company’s common stock, par value $0.0001 per share (the
“Common
      Stock”).
      Pursuant to the Purchase Agreement, the Company has also entered into a
      Registration Rights Agreement with the Purchasers (the “Registration
      Rights Agreement”),
      dated
      as of August 16, 2007, pursuant to which the Company agreed, among other things,
      to register the Registrable Securities (as defined in the Registration Rights
      Agreement), including the shares of Common Stock issuable upon conversion of
      the
      Notes, the Preferred Stock underlying the Notes and the shares of Common Stock
      issuable upon exercise of the Warrants, under the Securities Act of 1933, as
      amended (the “1933
      Act”).
      In
      connection with the Company’s obligations under the Registration Rights
      Agreement, on ________________, 2007, the Company filed a Registration Statement
      on Form SB-2 (File No. 333-________) (the “Registration
      Statement”)
      with
      the Securities and Exchange Commission (the “SEC”)
      relating to the resale of the Registrable Securities which names each of the
      present Purchasers as a selling stockholder thereunder.

     

    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 1933 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
      accordingly, the Registrable Securities are available for resale under the
      1933
      Act pursuant to the Registration Statement.

     

    
      	 	 	 
	 	
              Very
                truly yours,

            
	 	 
	 	
              [COMPANY
                COUNSEL]

            
	 
 	 
 	 
 
	
            	By:  	
            
	 	
              

            
	 	
            

    

    cc:
      [LIST NAMES OF PURCHASERS]

     

    
      
        
        

      

      
        xv

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      I

    to
      the

    NOTE
      AND WARRANT PURCHASE AGREEMENT FOR

    JUMA
      TECHNOLOGY
      CORP.

    

    FORM
      OF OPINION OF COUNSEL

    

    1.
      The
      Company is a corporation duly incorporated, validly existing and in good
      standing under the laws of the State of Delaware and has the requisite corporate
      power to own, lease and operate its properties and assets, and to carry on
      its
      business as presently conducted. The Company is duly qualified as a foreign
      corporation to do business and is in good standing in every jurisdiction in
      which the nature of the business conducted or property owned by it makes such
      qualification necessary, which the failure to so qualify could have a Material
      Adverse Effect on the Company.

    

    2.
      Each
      of the following Subsidiaries of the Company (the “Subsidiaries”)
      is a
      corporation, duly organized and in good standing under the laws of [Insert
      State]: [Insert Subsidiary Name]

    

    3.
      The
      Company has the requisite corporate power and authority to enter into and
      perform its obligations under the Transaction Documents and to issue the Notes,
      the Warrants, the Preferred Stock issuable upon conversion of the Notes, the
      Common Stock issuable upon conversion of the Notes and the Common Stock issuable
      upon conversion of the Preferred Stock and exercise of the Warrants. The
      execution, delivery and performance of each of the Transaction Documents by
      the
      Company and the consummation by it of the transactions contemplated thereby
      have
      been duly and validly authorized by all necessary corporate action and no
      further consent or authorization of the Company or its Board of Directors or
      stockholders is required. Each of the Transaction Documents have been duly
      executed and delivered, and the Notes and the Warrants have been duly executed,
      issued and delivered by the Company and each of the Transaction Documents
      constitutes a legal, valid and binding obligation of the Company enforceable
      against the Company in accordance with its respective terms. The Common Stock
      issuable upon conversion of the Notes and the Preferred Stock and exercise
      of
      the Warrants are not subject to any preemptive rights under the Certificate
      of
      Incorporation or the Bylaws.

    

    4.
      The
      Notes and the Warrants have been duly authorized and, when delivered against
      payment in full as provided in the Purchase Agreement, will be validly issued,
      fully paid and nonassessable. The shares of Common Stock issuable upon
      conversion of the Notes and/or the Preferred Stock and exercise of the Warrants,
      have been duly authorized and reserved for issuance, and, when delivered upon
      exercise or payment in full as provided in the Warrants will be validly issued,
      fully paid and nonassessable.

    

    5.
      The
      execution, delivery and performance of and compliance with the terms of the
      Transaction Documents and the issuance of Notes, the Warrants, the Preferred
      Stock issuable upon conversion of the Notes and the Common Stock issuable upon
      conversion of the Preferred Stock and exercise of the Warrants do not (i)
      violate any provision of the Certificate of Incorporation or Bylaws, (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 material agreement,
      mortgage, deed of trust, indenture, note, bond, license, lease agreement,
      instrument or obligation to which the Company is a party, (iii) create or impose
      a lien, charge or encumbrance on any property of the Company under any agreement
      or any commitment to which the Company is a party or by which the Company is
      bound or by which any of its respective properties or assets are bound, or
      (iv)
      result in a violation of any federal, state, local or foreign statute, rule,
      regulation, order, judgment, injunction or decree (including Federal and state
      securities laws and regulations) applicable to the Company or by which any
      property or asset of the Company is bound or affected, except, in all cases
      other than violations pursuant to clauses (i) and (iv) above, for such
      conflicts, default, terminations, amendments, acceleration, cancellations and
      violations as would not, individually or in the aggregate, have a Material
      Adverse Effect.

     

    
      
        
        

      

      
        xvi

        
          

        

      

      
        
        

      

    

    

    6.
      No
      consent, approval or authorization of or designation, declaration or filing
      with
      any governmental authority on the part of the Company is required under Federal,
      state or local law, rule or regulation in connection with the valid execution
      and delivery of the Transaction Documents, or the offer, sale or issuance of
      the
      Preferred Stock, the Warrants or the Common Stock issuable upon conversion
      of
      the Preferred Stock and exercise of the Warrants other than the Certificate
      of
      Designation and the Registration Statement.

    

    7.
      To our
      knowledge, there is no action, suit, claim, investigation or proceeding pending
      or threatened against the Company which questions the validity of this Agreement
      or the transactions contemplated hereby or any action taken or to be taken
      pursuant hereto or thereto. To our knowledge, there is no action, suit, claim,
      investigation or proceeding pending, or to our knowledge, threatened, against
      or
      involving the Company or any of its properties or assets and which, if adversely
      determined, is reasonably likely to result in a Material Adverse Effect. There
      are no outstanding orders, judgments, injunctions, awards or decrees of any
      court, arbitrator or governmental or regulatory body against the Company or
      any
      officers or directors of the Company in their capacities as such.

    

    8.
      Based
      upon the representations of the Purchaser, the offer, issuance and sale of
      the
      Notes and the Warrants and the offer, issuance and sale of the shares of
      Preferred Stock issuable upon conversion of the Notes and the Common Stock
      issuable upon conversion of the Preferred Stock and exercise of the Warrants
      pursuant to the Purchase Agreement, the Certificate of Designation and the
      Warrants, as applicable, are exempt from the registration requirements of the
      Securities Act.

    

    9.
      The
      Company is not, and as a result of and immediately upon Closing will not be,
      an
“investment company” or a company “controlled” by an “investment company,”
within the meaning of the Investment Company Act of 1940, as
      amended.

     

    
      	 	 	 
	 	
              Very
                truly yours,

            
	 	 
	 	
              [COMPANY
                COUNSEL]

            
	 
 	 
 	 
 
	
            	By:  	 
	 	
              

            

    

     

    
      
        
        

      

      
        xviiExhibit
      4.2

    

    THIS
      NOTE AND THE SECURITIES ISSUABLE UPON CONVERSION HEREOF HAVE NOT BEEN REGISTERED
      UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
      OR APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD, TRANSFERRED, OR
      OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR RECEIPT BY THE
      MAKER OF A WRITTEN OPINION OF COUNSEL IN THE FORM, SUBSTANCE AND SCOPE
      REASONABLY SATISFACTORY TO THE MAKER THAT THIS NOTE AND THE SECURITIES ISSUABLE
      UPON CONVERSION HEREOF MAY BE SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF,
      UNDER
      AN EXEMPTION FROM REGISTRATION UNDER THE ACT AND SUCH STATE SECURITIES
      LAWS.

    

    JUMA
      TECHNOLOGY CORP.

    

    6%
      Convertible Promissory Note

    

    Date:
      August 16, 2007

    $5,000,000

    

    For
      value
      received, JUMA TECHNOLOGY CORP., a Delaware corporation (the "Maker"),
      hereby promises to pay to the order of Vision Opportunity Master Fund, Ltd.
      (together with its successors, representatives, and permitted assigns, the
      "Holder"),
      in
      accordance with the terms hereinafter provided, the principal amount of five
      million dollars ($5,000,000), together with interest thereon. The Maker is
      issuing this 6% convertible promissory note (the “Note”)
      to
      purchasers pursuant to the Purchase Agreement (as defined in Section
      1.1
      hereof).
      In the event that this Note is surrendered to the Maker for multiple Notes,
      then
      such Notes shall hereinafter be referred to as the “Other
      Notes”
and
      such Holders as the “Other
      Holders.”

     

    All
      payments under or pursuant to this Note shall be made in United States Dollars
      in immediately available funds to the Holder at
      the
      address of the Holder as set forth in the Purchase Agreement or at such other
      place as the Holder may designate from time to time in writing to the Maker
      or
      by wire transfer of funds to the Holder's account, instructions for which are
      attached hereto as Exhibit
      A. The
      outstanding principal balance of this Note shall be due and payable on the
      sixth
      month anniversary of the Issuance Date (the "Maturity
      Date")
      or at
      such earlier time as provided herein. 

     

    ARTICLE
      I

     

    Section
      1.1 Purchase
      Agreement. This Note has been executed and delivered pursuant to the Note
      and Warrant Purchase Agreement dated as of August 16, 2007 (the "Purchase
      Agreement”)
      by and
      among the Maker
      and the
      purchasers listed therein. Capitalized terms used and not otherwise defined
      herein shall have the meanings set forth for such terms in the Purchase
      Agreement. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Section
      1.2 Interest.
      Beginning on the issuance date of this Note (the “Issuance
      Date”),
      the
      outstanding principal balance of this Note shall bear interest, in arrears,
      at a
      rate per annum equal to six percent (6%), payable in cash quarterly commencing
      on September
      1, 2007 and on the first business day of each December, March and June
      thereafter so long as any principal amount evidenced by this Note remains
      outstanding. Interest shall be computed on the basis of a 360-day year of twelve
      (12) 30-day months and shall accrue commencing on the Issuance Date.
Furthermore,
      upon the occurrence of an Event of Default (as defined in Section
      2.1
      hereof),
      then to the extent permitted by law, the Maker will pay interest in cash to
      the
      Holder, payable on demand, on the outstanding principal balance of the Note
      from
      the date of the Event of Default (taking into account the applicable cure
      period, if any) until such Event of Default is cured at the rate of the lesser
      of fifteen percent (15%) and the maximum applicable legal rate per
      annum. 

     

    Section
      1.3 Rank.
      All payments due under this Note shall be pari
      passu,
      with
      all other Company indebtedness. 

     

    Section
      1.4 Payment
      on Non-Business Days. Whenever any payment to be made shall be due on a
      Saturday, Sunday or a public holiday under the laws of the State of New York,
      such payment may be due on the next succeeding business day and such next
      succeeding day shall be included in the calculation of the amount of accrued
      interest payable on such date.

     

    Section
      1.5 Transfer.
      This Note may be transferred or sold, subject to the provisions of Section
      4.8
      of this
      Note, or pledged, hypothecated or otherwise granted as security by the
      Holder.

     

    Section
      1.6 Replacement.
      Upon receipt of a duly executed, notarized and unsecured written statement
      from
      the Holder with respect to the loss, theft or destruction of this Note (or
      any
      replacement hereof) and a standard indemnity reasonably satisfactory to the
      Maker, or, in the case of a mutilation of this Note, upon surrender and
      cancellation of such Note, the Maker shall issue a new Note, of like tenor
      and
      amount, in lieu of such lost, stolen, destroyed or mutilated Note.

     

    ARTICLE
      II

     

    EVENTS
      OF DEFAULT; REMEDIES

     

    Section
      2.1 Events
      of Default. The occurrence of any of the following events shall be an
      "Event
      of Default"
      under
      this Note:

     

    (a) the
      Maker
      shall fail to make any principal or interest payments due under this Note on
      the
      date such payments are due and such default is not fully cured within three
      (3)
      business days after the occurrence thereof; or

     

    (b) intentionally
      omitted; or

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    (c) intentionally
      omitted; or

     

    (d) the
      Maker's notice to the Holder, including by way of public announcement, at any
      time, of its inability to comply (including for any of the reasons described
      in
Section
      3.8(a)
      hereof)
      or its intention not to comply with proper requests for conversion of this
      Note
      into shares of Preferred Stock or Common Stock, as the case may be;
      or

     

    (e) the
      Maker
      shall fail to (i) timely deliver the shares of Common Stock upon conversion
      of
      the Note, (ii) timely deliver the shares of Preferred Stock upon conversion
      of
      the Note; or (iii) make the payment of any fees and/or liquidated damages under
      this Note, the Purchase Agreement or the Registration Rights Agreement, which
      failure in the case of items (i) and (iv) of this Section
      2.1(e)
      is not
      remedied within ten (10) business days after the incurrence thereof and, solely
      with respect to item (iv) above, after the Holder delivers written notice to
      the
      Maker of the incurrence thereof; or

     

    (f) while
      the
      Registration Statement is required to be maintained effective pursuant to the
      terms of the Registration Rights Agreement, the effectiveness of the
      Registration Statement lapses for any reason (including, without limitation,
      the
      issuance of a stop order) or is unavailable to the Holder for sale of the
      Registrable Securities (as defined in the Registration Rights Agreement) in
      accordance with the terms of the Registration Rights Agreement, and such lapse
      or unavailability continues for a period of ten (10) consecutive Trading Days,
      provided
      that the
      Maker has not exercised its rights pursuant to Section
      3(n)
      of the
      Registration Rights Agreement; or

     

    (g) default
      shall be made in the performance or observance of (i) any covenant, condition
      or
      agreement contained in this Note (other than as set forth in clause (f) of
      this
Section
      2.1)
      and
      such default is not fully cured within ten (10) business days after the Holder
      delivers written notice to the Maker of the occurrence thereof or (ii) any
      covenant, condition or agreement contained in the Purchase Agreement, the Other
      Notes, the Warrants, the Registration Rights Agreement or any other Transaction
      Document which is not covered by any other provisions of this Section
      2.1
      and such
      default is not fully cured within ten (10) business days after the Holder
      delivers written notice to the Maker of the occurrence thereof; or

     

    (h) any
      material representation or warranty made by the Maker herein or in the Purchase
      Agreement, the Registration Rights Agreement, the Other Notes, the Warrants
      or
      any other Transaction Document shall prove to have been false or incorrect
      or
      breached in a material respect on the date as of which made and the Holder
      delivers written notice to the Maker of the occurrence thereof; or

     

    (i) the
      Maker
      shall after the Issuance Date (A) default in any payment of any amount or
      amounts of principal of or interest on any indebtedness (other than the
      indebtedness hereunder) the aggregate principal amount of which indebtedness
      is
      in excess of $100,000 or
      (B)
      default in the observance or performance of any other agreement or condition
      relating to any indebtedness or contained in any instrument or agreement
      evidencing, securing or relating thereto, or any other event shall occur or
      condition exist, the effect of which default or other event or condition is
      to
      cause, or to permit the holder or holders or beneficiary or beneficiaries of
      such indebtedness to cause with the giving of notice if required, such
      indebtedness to become due prior to its stated maturity; or 

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    (j) the
      Maker
      shall (i) apply for or consent to the appointment of, or the taking of
      possession by, a receiver, custodian, trustee or liquidator of itself or of
      all
      or a substantial part of its property or assets, (ii) make a general assignment
      for the benefit of its creditors, (iii) commence a voluntary case under the
      United States Bankruptcy Code (as now or hereafter in effect) or under the
      comparable laws of any jurisdiction (foreign or domestic), (iv) file a petition
      seeking to take advantage of any bankruptcy, insolvency, moratorium,
      reorganization or other similar law affecting the enforcement of creditors'
      rights generally, (v) acquiesce in writing to any petition filed against it
      in
      an involuntary case under United States Bankruptcy Code (as now or hereafter
      in
      effect) or under the comparable laws of any jurisdiction (foreign or domestic),
      or (vi) issue a notice of bankruptcy or winding down of its operations or issue
      a press release regarding same; or 

     

    (k) a
      proceeding or case shall be commenced in respect of the Maker, without its
      application or consent, in any court of competent jurisdiction, seeking (i)
      the
      liquidation, reorganization, moratorium, dissolution, winding up, or composition
      or readjustment of its debts, (ii) the appointment of a trustee, receiver,
      custodian, liquidator or the like of it or of all or any substantial part of
      its
      assets in connection with the liquidation or dissolution of the Maker or (iii)
      similar relief in respect of it under any law providing for the relief of
      debtors, and such proceeding or case described in clause (i), (ii) or (iii)
      shall continue undismissed, or unstayed and in effect, for a period of thirty
      (30) days or any order for relief shall be entered in an involuntary case under
      United States Bankruptcy Code (as now or hereafter in effect) or under the
      comparable laws of any jurisdiction (foreign or domestic) against the Maker
      or
      action under the laws of any jurisdiction (foreign or domestic) analogous to
      any
      of the foregoing shall be taken with respect to the Maker and shall continue
      undismissed, or unstayed and in effect for a period of thirty (30) days;
      or

     

    (l) the
      failure of the Maker to instruct its transfer agent to remove any legends from
      shares of Common Stock eligible to be sold under Rule 144 of the Securities
      Act
      and issue such unlegended certificates to the Holder within five (5) business
      days of the Holder’s request so long as the Holder has provided reasonable
      assurances to the Maker, and based thereon the Maker has determined, that such
      shares of Common Stock can be sold pursuant to Rule 144; or

     

    (m) the
      failure of the Maker to pay any amounts due to the Holder herein or any other
      Transaction Document within five (5) business days of the date such payments
      are
      due and such default is not fully cured within five (5)business days after
      the
      Holder delivers written notice to the Maker of the occurrence thereof;
      or

     

    (n) the
      occurrence of an Event of Default under the Other Notes and/or the
      Warrants.

     

    Section
      2.2 Remedies
      Upon An Event of Default. If an Event of Default shall have occurred and
      shall be continuing, the Holder of this Note may at any time at its option,
      (a)
      declare the entire unpaid principal balance of this Note, together with all
      interest accrued hereon, due and payable, and thereupon, the same shall be
      accelerated and so due and payable, without presentment, demand, protest, or
      notice, all of which are hereby expressly unconditionally and irrevocably waived
      by the Maker; provided, however, that upon the occurrence of an
      Event of Default described in (i) Sections
      2.1(j)
      or
(k),
      the
      outstanding principal balance and accrued interest hereunder shall be
      automatically due and payable and (ii) Sections
      2.1(d)-(i),
      (l),
      (m)and
      (n),
      demand
      the prepayment of this Note pursuant to Section
      3.7
      hereof,
      (b) demand that the principal amount of this Note then outstanding shall be
      converted into shares of Common Stock at a Conversion Price per share calculated
      pursuant to Section
      3.1
      hereof
      assuming that the date that the Event of Default occurs is the Conversion Date
      (as defined in Section
      3.1
      hereof),
      or (c) exercise or otherwise enforce any one or more of the Holder's rights,
      powers, privileges, remedies and interests under this Note, the Purchase
      Agreement, the Registration Rights Agreement or applicable law. No course of
      delay on the part of the Holder shall operate as a waiver thereof or otherwise
      prejudice the right of the Holder. No remedy conferred hereby shall be exclusive
      of any other remedy referred to herein or now or hereafter available at law,
      in
      equity, by statute or otherwise.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      III

     

    CONVERSION;
      ANTIDILUTION; PREPAYMENT

     

    Section
      3.1 Conversion
      Options. 

     

    (a) Optional
      Conversion.
      At any
      time on or after the Issuance Date, this Note shall be convertible (in whole
      or
      in part), at the option of the Holder (the "Optional
      Conversion"),
      into
      such number of fully paid and non-assessable shares of Common Stock (the
      "Conversion
      Rate")
      as is
      determined by dividing (x) that portion of the outstanding principal balance
      under this Note as of such date that the Holder elects to convert by (y) the
      Conversion Price (as defined in Section
      3.2(a)
      hereof)
      then in effect on the date on which the Holder faxes a notice of conversion
      (the
      "Optional
      Conversion Notice"),
      duly
      executed, to the Maker (facsimile number (631) 270-1105, Attn.: Chief Executive
      Officer) (the “Optional
      Conversion Date”),
      provided, however, that the Conversion Price shall be subject to adjustment
      as
      described in Section
      3.6
      of this
      Note. The Holder shall deliver this Note to the Maker at the address designated
      in the Purchase Agreement at such time that this Note is fully converted. With
      respect to partial conversions of this Note, the Maker shall keep and attach
      hereto written records of the amount of this Note converted as of each
      Conversion Date. 

     

    (b) Mandatory
      Conversion.
       At such time after the Issuance Date and prior to the Maturity Date as (1)
      the Company obtains Shareholder Approval for the filing of the Amended
      Certificate of Incorporation and the Certificate of Designation (in the form
      attached to the Purchase Agreement) providing for the issuance of Series A
      Preferred Stock, par value $0.0001 per share (the “Preferred
      Stock”)
      and
      (2) has filed such documentation with the Secretary of State of Delaware no
      later then the Preferred Stock Target Filing Date (the “Mandatory
      Conversion Date”),
      then
      immediately following such Mandatory Conversion Date, all Holders shall convert
      all then outstanding Notes into Preferred Stock at the then-applicable
      Conversion Price (“Mandatory
      Conversion”).
       The Company shall notify each of the Holders of the Mandatory Conversion
      Date (the “Mandatory
      Conversion Notice”)
      and,
      on such date, all of the outstanding Notes shall for all purposes be deemed
      converted into shares of Preferred Stock into which the Note is convertible
      hereunder, and all other rights of the Holder under this Note, with the
      exception of provisions relating to the Mandatory Conversion, shall terminate.
      The Mandatory Conversion shall take place automatically without any further
      action by the Holders of such Notes.  The Company shall cause its Transfer
      Agent to deliver promptly certificates representing the shares of Preferred
      Stock issuable upon such Mandatory Conversion.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    Section
      3.2 Conversion
      Price.

     

    (a) The
      term
      "Conversion
      Price"
      shall
      mean $0.60, subject to adjustment under Section
      3.6
      hereof.

     

    (b) The
      term
“Conversion
      Shares”
shall
      mean such shares of Common Stock or Preferred Stock (as the case may be)
      issuable upon Conversion of this Note.

     

    (c) Notwithstanding
      any of the foregoing to the contrary, if during any period (a "Black-out
      Period"),
      the
      Holder is unable to trade any Common Stock issued or issuable upon conversion
      of
      this Note immediately due to the postponement of filing or delay or suspension
      of effectiveness of the Registration Statement or because the Maker has
      otherwise informed such Holder that an existing prospectus cannot be used at
      that time in the sale or transfer of such Common Stock (provided that such
      postponement, delay, suspension or fact that the prospectus cannot be used
      is
      not due to factors solely within the control of the Holder of this Note or
      due
      to the Maker exercising its rights under Section
      3(n)
      of the
      Registration Rights Agreement), such Holder shall have the option but not the
      obligation on any Conversion Date within ten (10) Trading Days following the
      expiration of the Black-out Period of using the Conversion Price applicable
      on
      such Optional Conversion Date or any Conversion Price selected by the Holder
      that would have been applicable had such Optional Conversion Date been at any
      earlier time during the Black-out Period or within the ten (10) Trading Days
      thereafter. In no event shall the Black-out Period have any effect on the
      Maturity Date of this Note. 

     

    Section
      3.3 Mechanics
      of Conversion. 

     

    (a) Not
      later
      than three (3) Trading Days after any Optional Conversion Date (the
“Delivery
      Date”),
      the
      Maker or its designated transfer agent, as applicable, shall issue and deliver
      to the Depository Trust Company (“DTC”)
      account on the Holder’s behalf via the Deposit Withdrawal Agent Commission
      System (“DWAC”)
      as
      specified in the Optional Conversion Notice, registered in the name of the
      Holder or its designee, for the number of shares of Common Stock to which the
      Holder shall be entitled. Notwithstanding the foregoing, in the alternative,
      not
      later than the Delivery Date, the Maker shall deliver to the applicable Holder
      by express courier a certificate or certificates which shall be free of
      restrictive legends and trading restrictions (other than those required by
      Section
      5.1
      of the
      Purchase Agreement) representing the number of shares of Common Stock being
      acquired upon the conversion of this Note. If in the case of any Optional
      Conversion such DWAC transfer or certificate or certificates are not delivered
      to or as directed by the applicable Holder by the Delivery Date, the Holder
      shall be entitled by written notice to the Maker at any time on or before its
      receipt of such certificate or certificates thereafter, to rescind such
      conversion, in which event the Maker shall immediately return this Note tendered
      for conversion, whereupon the Maker and the Holder shall each be restored to
      their respective positions immediately prior to the delivery of such notice
      of
      revocation, except that any amounts described in Sections
      3.3(b)
      and
(c)
      shall be
      payable through the date notice of rescission is given to the Maker.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    (b) The
      Maker
      understands that a delay in the delivery of the shares of Common Stock upon
      conversion of this Note beyond the Delivery Date could result in economic loss
      to the Holder. If the Maker fails to deliver to the Holder such shares via
      DWAC
      or a certificate or certificates pursuant to this Section hereunder by the
      Delivery Date, the Maker shall pay to such Holder, in cash, an amount per
      Trading Day for each Trading Day until such shares are delivered via DWAC or
      certificates are delivered, together with interest on such amount at a rate
      of
      10% per annum, accruing until such amount and any accrued interest thereon
      is
      paid in full, equal to the greater of (A) (i) 1% of the aggregate principal
      amount of the Notes requested to be converted for the first five (5) Trading
      Days after the Delivery Date and (ii) 2% of the aggregate principal amount
      of
      the Notes requested to be converted for each Trading Day thereafter and (B)
      $5,000 per day (which amount shall be paid as liquidated damages and not as
      a
      penalty). Nothing herein shall limit a Holder's right to pursue actual damages
      for the Maker's failure to deliver certificates representing shares of Common
      Stock (as the case may be) upon conversion within the period specified herein
      and such Holder shall have the right to pursue all remedies available to it
      at
      law or in equity (including, without limitation, a decree of specific
      performance and/or injunctive relief). Notwithstanding anything to the contrary
      contained herein, the Holder shall be entitled to withdraw an Optional
      Conversion Notice, and upon such withdrawal the Maker shall only be obligated
      to
      pay the liquidated damages accrued in accordance with this Section
      3.3(b)
      through
      the date the Optional Conversion Notice is withdrawn.

     

    (c) In
      addition to any other rights available to the Holder, if the Maker fails to
      cause its transfer agent to transmit to the Holder a certificate or certificates
      representing the shares of Common Stock issuable upon conversion of this Note
      on
      or before the Delivery Date, and if after such date the Holder is required
      by
      its broker to purchase (in an open market transaction or otherwise) shares
      of
      Common Stock to deliver in satisfaction of a sale by the Holder of the shares
      of
      Common Stock issuable upon conversion of this Note which the Holder anticipated
      receiving upon such exercise (a “Buy-In”),
      then
      the Maker shall (1) pay in cash to the Holder the amount by which (x) the
      Holder’s total purchase price (including brokerage commissions, if any) for the
      shares of Common Stock so purchased exceeds (y) the amount obtained by
      multiplying (A) the number of shares of Common Stock issuable upon conversion
      of
      this Note that the Maker was required to deliver to the Holder in connection
      with the conversion at issue times (B) the price at which the sell order giving
      rise to such purchase obligation was executed, and (2) at the option of the
      Holder, either reinstate the portion of the Note and equivalent number of shares
      of Common Stock for which such conversion was not honored or deliver to the
      Holder the number of shares of Common Stock that would have been issued had
      the
      Maker timely complied with its conversion and delivery obligations hereunder.
      For example, if the Holder purchases Common Stock having a total purchase price
      of $11,000 to cover a Buy-In with respect to an attempted conversion of shares
      of Common Stock with an aggregate sale price giving rise to such purchase
      obligation of $10,000, under clause (1) of the immediately preceding sentence
      the Maker shall be required to pay the Holder $1,000. The Holder shall provide
      the Maker written notice indicating the amounts payable to the Holder in respect
      of the Buy-In, together with applicable confirmations and other evidence
      reasonably requested by the Maker. Nothing herein shall limit a Holder’s right
      to pursue any other remedies available to it hereunder, at law or in equity
      including, without limitation, a decree of specific performance and/or
      injunctive relief with respect to the Maker’s failure to timely deliver
      certificates representing shares of Common Stock upon conversion of this Note
      as
      required pursuant to the terms hereof.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    Section
      3.4 Ownership
      Cap and Certain Conversion Restriction. Notwithstanding
      anything to the contrary set forth in Section
      3
      of this
      Note, at no time may the Holder convert all or a portion of this Note if the
      number of shares of Common Stock to be issued pursuant to such conversion would
      exceed, when aggregated with all other shares of Common Stock owned by the
      Holder at such time, the number of shares of Common Stock which would result
      in
      the Holder beneficially owning (as determined in accordance with Section 13(d)
      of the Exchange Act and the rules thereunder) more than 4.99% of all of the
      Common Stock outstanding at such time; provided, however, that upon the Holder
      providing the Maker with sixty-one (61) days notice (pursuant to Section
      4.1
      hereof)
      (the "Waiver
      Notice")
      that
      the Holder would like to waive this Section
      3.4
      with
      regard to any or all shares of Common Stock issuable upon conversion of this
      Note, this Section
      3.4
      will be
      of no force or effect with regard to all or a portion of the Note referenced
      in
      the Waiver Notice. 

     

    Section
      3.5 Intentionally
      Omitted.

     

    Section
      3.6 Adjustment
      of Conversion Price.

     

    (a) The
      Conversion Price shall be subject to adjustment from time to time as
      follows:

     

    (i) Adjustments
      for Stock Splits and Combinations.
      If the
      Maker shall at any time or from time to time after the Issuance Date, effect
      a
      stock split of the outstanding Common Stock, the applicable Conversion Price
      in
      effect immediately prior to the stock split shall be proportionately decreased.
      If the Maker shall at any time or from time to time after the Issuance Date,
      combine the outstanding shares of Common Stock, the applicable Conversion Price
      in effect immediately prior to the combination shall be proportionately
      increased. Any adjustments under this Section
      3.6(a)(i)
      shall be
      effective at the close of business on the date the stock split or combination
      occurs.

     

    (ii) Adjustments
      for Certain Dividends and Distributions.
      If the
      Maker shall at any time or from time to time after the Issuance Date, make
      or
      issue or set a record date for the determination of holders of Common Stock
      entitled to receive a dividend or other distribution payable in shares of Common
      Stock, then, and in each event, the applicable Conversion Price in effect
      immediately prior to such event shall be decreased as of the time of such
      issuance or, in the event such record date shall have been fixed, as of the
      close of business on such record date, by multiplying, the applicable Conversion
      Price then in effect by a fraction:

     

    (1) the
      numerator of which shall be the total number of shares of Common Stock issued
      and outstanding immediately prior to the time of such issuance or the close
      of
      business on such record date; and

     

    (2) the
      denominator of which shall be the total number of shares of Common Stock issued
      and outstanding immediately prior to the time of such issuance or the close
      of
      business on such record date plus the number of shares of Common Stock issuable
      in payment of such dividend or distribution.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    (iii) Adjustment
      for Other Dividends and Distributions.
      If the
      Maker shall at any time or from time to time after the Issuance Date, make
      or
      issue or set a record date for the determination of holders of Common Stock
      entitled to receive a dividend or other distribution payable in other than
      shares of Common Stock, then, and in each event, an appropriate revision to
      the
      applicable Conversion Price shall be made and provision shall be made (by
      adjustments of the Conversion Price or otherwise) so that the holders of this
      Note shall receive upon conversions thereof, in addition to the number of shares
      of Common Stock receivable thereon, the number of securities of the Maker which
      they would have received had this Note been converted into Common Stock on
      the
      date of such event and had thereafter, during the period from the date of such
      event to and including the Conversion Date, retained such securities (together
      with any distributions payable thereon during such period), giving application
      to all adjustments called for during such period under this Section
      3.6(a)(iii)
      with
      respect to the rights of the holders of this Note and the Other Notes;
provided,
      however,
      that if
      such record date shall have been fixed and such dividend is not fully paid
      or if
      such distribution is not fully made on the date fixed therefor, the Conversion
      Price shall be adjusted to the Conversion Price in effect immediately prior
      to
      such adjustment until the time of actual payment of such dividends or
      distributions.

     

    (iv) Adjustments
      for Reclassification, Exchange or Substitution.
      If the
      Common Stock issuable upon conversion of this Note at any time or from time
      to
      time after the Issuance Date shall be changed to the same or different number
      of
      shares of any class or classes of stock, whether by reclassification, exchange,
      substitution or otherwise (other than by way of a stock split or combination
      of
      shares or stock dividends provided for in Sections
      3.6(a)(i),
      (ii)
      and
(iii),
      or a
      reorganization, merger, consolidation, or sale of assets provided for in
Section
      3.6(a)(v)),
      then,
      and in each event, an appropriate revision to the Conversion Price shall be
      made
      and provisions shall be made (by adjustments of the Conversion Price or
      otherwise) so that the Holder shall have the right thereafter to convert this
      Note into the kind and amount of shares of stock and other securities receivable
      upon reclassification, exchange, substitution or other change, by holders of
      the
      number of shares of Common Stock into which such Note might have been converted
      immediately prior to such reclassification, exchange, substitution or other
      change, all subject to further adjustment as provided herein.

     

    (v) Adjustments
      for Reorganization, Merger, Consolidation or Sales of Assets.
      If at
      any time or from time to time after the Issuance Date there shall be a capital
      reorganization of the Maker (other than by way of a stock split or combination
      of shares or stock dividends or distributions provided for in Section
      3.6(a)(i),
      (ii)
      and
(iii),
      or a
      reclassification, exchange or substitution of shares provided for in
Section
      3.6(a)(iv)),
      or a
      merger or consolidation of the Maker with or into another corporation where
      the
      holders of outstanding voting securities of the Maker prior to such merger
      or
      consolidation do not own over fifty percent (50%) of the outstanding voting
      securities of the merged or consolidated entity, immediately after such merger
      or consolidation, or the sale of all or substantially all of the Maker's
      properties or assets to any other person (an "Organic
      Change"),
      then
      as a part of such Organic Change, (A) if the surviving entity in any such
      Organic Change is a public company that is
      registered pursuant to the Securities Exchange Act of 1934, as amended, and
      its
      common stock is listed or quoted on a national exchange or the OTC Bulletin
      Board, an
      appropriate revision to the Conversion Price shall be made and provision shall
      be made (by adjustments of the Conversion Price) so that the Holder shall have
      the right thereafter to convert such Note into the kind and amount of shares
      of
      stock and other securities or property of the Maker or any successor corporation
      as it would have received as a result of such Organic Change if it had converted
      this Note into Common Stock immediately prior to such Organic Change, and (B)
      if
      the surviving entity in any such Organic Change is not a public company that
      is
      registered pursuant to the Securities Exchange Act of 1934, as amended, or
      its
      common stock is not listed or quoted on a national exchange or the OTC Bulletin
      Board,
      the
      Holder shall have the right to demand prepayment pursuant to Section
      3.7(b)
      hereof.
      In any such case, appropriate adjustment shall be made in the application of
      the
      provisions of this Section
      3.6(a)(v)
      with
      respect to the rights of the Holder after the Organic Change to the end that
      the
      provisions of this Section
      3.6(a)(v)
      (including any adjustment in the applicable Conversion Price then in effect
      and
      the number of shares of stock or other securities deliverable upon conversion
      of
      this Note) shall be applied after that event in as nearly an equivalent manner
      as may be practicable.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    (vi) Adjustments
      for Issuance of Additional Shares of Common Stock. 

    

    (1) In
      the
      event the Issuer shall at any time within two (2) years following the Issuance
      Date (the “Full
      Ratchet Period”),
      the
      Maker shall issue or sell any additional shares of common stock (otherwise
      than
      as provided in the foregoing subsections (i) through (v) of this Section
      3.6(a)
      or
      pursuant to Common Stock Equivalents (hereafter defined) granted or issued
      prior
      to the Issuance Date) (“Additional
      Shares of Common Stock”),
      at a
      price per share less than the Conversion Price then in effect or without
      consideration (the “New
      Conversion Price”),
      then
      the Conversion Price upon each such issuance shall be reduced to an amount
      equal
      to such New Conversion Price.

    

    (2) The
      provisions of paragraph (1) of this Section
      3.6(a)(vi)
      shall
      not apply to any issuance of Additional Shares of Common Stock for which an
      adjustment is provided under Section
      3.6(a)(vii).
      No
      adjustment of the number of shares of Common Stock for which this Note shall
      be
      convertible shall be made under paragraph (1) of this Section
      3.6(a)(vi)
      upon the
      issuance of any Additional Shares of Common Stock which are issued pursuant
      to
      the exercise of any Common Stock Equivalents, if any such adjustment shall
      previously have been made upon the issuance of such Common Stock Equivalents
      pursuant to Section
      3.6(a)(vii).

    

    (vii) Issuance
      of Common Stock Equivalents.
      In the
      event the Issuer shall at any time within the Full Ratchet Period issue any
      securities convertible into or exchangeable for, directly or indirectly, Common
      Stock ("Convertible
      Securities"),
      other
      than the Notes, or any rights or warrants or options to purchase any such Common
      Stock or Convertible Securities, shall be issued or sold (collectively, the
      "Common
      Stock Equivalents")
      and
      the aggregate price per share for which Additional Shares of Common Stock may
      be
      issuable thereafter pursuant to such Common Stock Equivalent, plus the
      consideration received by the Maker for issuance of such Common Stock Equivalent
      divided by the number of shares of Common Stock issuable pursuant to such Common
      Stock Equivalent (the “Aggregate
      Per Common Share Price”)
      shall
      be less than the applicable Conversion Price then in effect, or if, after any
      such issuance of Common Stock Equivalents, the price per share for which
      Additional Shares of Common Stock may be issuable thereafter is amended or
      adjusted, and such price as so amended shall make the Aggregate Per Common
      Share
      Price be less than the applicable Conversion Price in effect at the time of
      such
      amendment or adjustment, then the applicable Conversion Price upon each such
      issuance or amendment shall be adjusted as provided in the first sentence of
      subsection (vi) of this Section
      3.6(a)
      on the
      basis that (1) the maximum number of Additional Shares of Common Stock issuable
      pursuant to all such Common Stock Equivalents shall be deemed to have been
      issued (whether or not such Common Stock Equivalents are actually then
      exercisable, convertible or exchangeable in whole or in part) as of the earlier
      of (A) the date on which the Maker shall enter into a firm contract for the
      issuance of such Common Stock Equivalent, or (B) the date of actual issuance
      of
      such Common Stock Equivalent. No adjustment of the applicable Conversion Price
      shall be made under this subsection (vii) upon the issuance of any Convertible
      Security which is issued pursuant to the exercise of any warrants or other
      subscription or purchase rights therefor, if any adjustment shall previously
      have been made to the exercise price of such warrants or other subscription
      or
      purchase rights therefor, then in effect upon the issuance of such warrants
      or
      other subscription or purchase rights therefor pursuant to this subsection
      (vii). No adjustment shall be made to the Conversion Price upon the issuance
      of
      Common Stock pursuant to the exercise, conversion or exchange of any Convertible
      Security or Common Stock Equivalent where an adjustment to the Conversion Price
      was made as a result of the issuance or purchase of any Convertible Security
      or
      Common Stock Equivalent.

    

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    (viii) Consideration
      for Stock.
      In case
      any shares of Common Stock or any Common Stock Equivalents shall be issued
      or
      sold:

     

    (1) in
      connection with any merger or consolidation in which the Maker is the surviving
      corporation (other than any consolidation or merger in which the previously
      outstanding shares of Common Stock of the Maker shall be changed to or exchanged
      for the stock or other securities of another corporation), the amount of
      consideration therefor shall be, deemed to be the fair market value, as
      determined reasonably and in good faith by the board of directors of the Maker
      (the “Board”),
      of
      such portion of the assets and business of the nonsurviving corporation as
      the
      Board may determine to be attributable to such shares of Common Stock,
      Convertible Securities, rights or warrants or options, as the case may be;
      or

     

    (2) in
      the
      event of any consolidation or merger of the Maker in which the Maker is not
      the
      surviving corporation or in which the previously outstanding shares of Common
      Stock of the Maker shall be changed into or exchanged for the stock or other
      securities of another corporation, or in the event of any sale of all or
      substantially all of the assets of the Maker for stock or other securities
      of
      any corporation, the Maker shall be deemed to have issued a number of shares
      of
      its Common Stock for stock or securities or other property of the other
      corporation computed on the basis of the actual exchange ratio on which the
      transaction was predicated, and for a consideration equal to the fair market
      value on the date of such transaction of all such stock or securities or other
      property of the other corporation. If any such calculation results in adjustment
      of the applicable Conversion Price, or the number of shares of Common Stock
      issuable upon conversion of the Notes, the determination of the applicable
      Conversion Price or the number of shares of Common Stock issuable upon
      conversion of the Notes immediately prior to such merger, consolidation or
      sale,
      shall be made after giving effect to such adjustment of the number of shares
      of
      Common Stock issuable upon conversion of the Notes. In the event Common Stock
      is
      issued with other shares or securities or other assets of the Maker for
      consideration which covers both, the consideration computed as provided in
      this
Section
      3.6(viii)
      shall be
      allocated among such securities and assets as determined in good faith by the
      Board.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    (b) Record
      Date.
      In case
      the Maker shall take record of the holders of its Common Stock for the purpose
      of entitling them to subscribe for or purchase Common Stock or Convertible
      Securities, then the date of the issue or sale of the shares of Common Stock
      shall be deemed to be such record date.

     

    (c) Certain
      Issues Excepted.
      Anything herein to the contrary notwithstanding, the Maker shall not be required
      to make any adjustment to the Conversion Price in connection with (i) securities
      issued (other than for cash) in connection with a merger, acquisition, or
      consolidation that do not exceed 25% of the outstanding Common Stock of the
      Maker as of the date of the Purchase Agreement (such percentage subject to
      adjustment in a manner consistent with the adjustments to the Conversion Price
      contemplated in Section
      3
      hereof)
      and such issuances are determined in the light of the whole transaction to
      which
      they are a part to be in the best interests of the Company, (ii) securities
      issued pursuant to the conversion or exercise of convertible or exercisable
      securities issued or outstanding on or prior to the date of the Purchase
      Agreement or issued pursuant to the Purchase Agreement (so long as the
      conversion or exercise price in such securities are not amended to lower such
      price and/or adversely affect the Holders), (iii) the Conversion Shares, (iv)
      Common
      Stock issued or the issuance or grants of options to purchase Common Stock
      pursuant to the Company’s stock option plans and employee stock purchase plans
      that either (x) exist on the date of the Purchase Agreement, or (y) do not
      exceed ten percent (10%) of the outstanding Common Stock of the Company as
      of
      the date of the Purchase Agreement,
      (v) any
      notes issued to the placement agent and its designees for the transactions
      contemplated by the Purchase Agreement, and (vi) securities issued in connection
      with bona fide strategic license agreements or other partnering agreements
      so
      long as such issuances are not for the purpose of raising capital which are
      approved by a majority of its independent directors and such issuances are
      determined in the light of the whole transaction to which they are a part to
      be
      in the best interests of the Company.

    

    (d) No
      Impairment.
      The
Maker
      shall
      not, by amendment of its Certificate of Incorporation or through any
      reorganization, transfer of assets, consolidation, merger, dissolution, issue
      or
      sale of securities or any other voluntary action, avoid or seek to avoid the
      observance or performance of any of the terms to be observed or performed
      hereunder by the Maker,
      but
      will at all times in good faith, assist in the carrying out of all the
      provisions of this Section
      3.6
      and in
      the taking of all such action as may be necessary or appropriate in order to
      protect the conversion rights of the Holder against impairment. In the event
      a
      Holder shall elect to convert any Notes as provided herein, the Maker cannot
      refuse conversion based on any claim that such Holder or any one associated
      or
      affiliated with such Holder has been engaged in any violation of law, violation
      of an agreement to which such Holder is a party or for any reason whatsoever,
      unless, an injunction from a court, or notice, restraining and or adjoining
      conversion of all or of said Notes shall have issued and the Maker posts a
      surety bond for the benefit of such Holder in an amount equal to one hundred
      percent (100%) of the amount of the Notes the Holder has elected to convert,
      which bond shall remain in effect until the completion of arbitration/litigation
      of the dispute and the proceeds of which shall be payable to such Holder (as
      liquidated damages) in the event it obtains judgment.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    (e) Certificates
      as to Adjustments.
      Upon
      occurrence of each adjustment or readjustment of the Conversion Price or number
      of shares of Common Stock issuable upon conversion of this Note pursuant to
      this
Section
      3.6,
      the
Maker
      at its
      expense shall promptly compute such adjustment or readjustment in accordance
      with the terms hereof and furnish to the Holder a certificate setting forth
      such
      adjustment and readjustment, showing in detail the facts upon which such
      adjustment or readjustment is based. The Maker
      shall,
      upon written request of the Holder, at any time, furnish or cause to be
      furnished to the Holder a like certificate setting forth such adjustments and
      readjustments, the applicable Conversion Price in effect at the time, and the
      number of shares of Common Stock and the amount, if any, of other securities
      or
      property which at the time would be received upon the conversion of this Note.
      Notwithstanding the foregoing, the Maker shall not be obligated to deliver
      a
      certificate unless such certificate would reflect an increase or decrease of
      at
      least one percent (1%) of such adjusted amount.

     

    (f) Issue
      Taxes.
      The
      Maker shall pay any and all issue and other taxes, excluding federal, state
      or
      local income taxes, that may be payable in respect of any issue or delivery
      of
      shares of Common Stock on conversion of this Note pursuant thereto; provided,
      however,
      that
      the Maker shall not be obligated to pay any transfer taxes resulting from any
      transfer requested by the Holder in connection with any such
      conversion.

     

    (g) Fractional
      Shares.
      No
      fractional shares of Common Stock shall be issued upon conversion of this Note.
      In lieu of any fractional shares to which the Holder would otherwise be
      entitled, the Maker shall pay cash equal to the product of the fraction that
      would evidence such fractional shares multiplied by the average of the Closing
      Bid Prices of the Common Stock for the five (5) consecutive Trading Days
      immediately preceding the Conversion Date. The term "Closing
      Bid Price"
      shall
      mean, on any particular date (i) the last closing bid price per share of the
      Common Stock on such date on the OTC
      Bulletin Board or
      another registered national stock exchange on which the Common Stock is then
      listed, or if there is no such price on such date, then the last closing bid
      price on such exchange or quotation system on the date nearest preceding such
      date, or (ii) if the Common Stock is not listed then on the OTC Bulletin Board
      or any registered national stock exchange, the last trading price for a share
      of
      Common Stock in the over-the-counter market, as reported by the OTC Bulletin
      Board or in the National Quotation Bureau Incorporated or similar organization
      or agency succeeding to its functions of reporting prices) at the close of
      business on such date, or (iii) if the Common Stock is not then reported by
      the
      OTC Bulletin Board or the National Quotation Bureau Incorporated (or similar
      organization or agency succeeding to its functions of reporting prices), then
      the average of the "Pink Sheet" quotes for the relevant conversion period,
      as
      determined in good faith by the Holder and reasonably acceptable to the Maker,
      or (iv) if the Common Stock is not then publicly traded the fair market value
      of
      a share of Common Stock as determined by the Holder and reasonably acceptable
      to
      the Maker.

     

    (h) Reservation
      of Common Stock.
      The
      Maker shall at all times when this Note shall be outstanding, reserve and keep
      available out of its authorized but unissued Common Stock, one hundred twenty
      percent (120%) of such number of shares of Common Stock as shall from time
      to
      time be sufficient to effect the conversion of this Note. The Maker shall,
      from
      time to time in accordance with Delaware law, increase the authorized number
      of
      shares of Common Stock if at any time the unissued number of authorized shares
      shall not be sufficient to satisfy the Maker’s obligations under this
Section
      3.6(h).

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    (i) Regulatory
      Compliance.
      If any
      shares of Common Stock to be reserved for the purpose of conversion of this
      Note
      require registration or listing with or approval of any governmental authority,
      stock exchange or other regulatory body under any federal or state law or
      regulation or otherwise before such shares may be validly issued or delivered
      upon conversion, the Maker shall, at its sole cost and expense, in good faith
      and as expeditiously as possible, endeavor to secure such registration, listing
      or approval, as the case may be.

    

    Section
      3.7 Prepayment.

     

    (a) Prepayment
      Upon an Event of Default.
      Notwithstanding anything to the contrary contained herein, upon the occurrence
      of an Event of Default described in Sections
      2.1(b)-(k)
      hereof,
      the Holder shall have the right, at such Holder's option, to require the Maker
      to prepay in cash all or a portion of this Note at a price equal to one hundred
      percent (100%) of the aggregate principal amount of this Note plus all accrued
      and unpaid interest applicable at the time of such request. Nothing in this
      Section
      3.7(a)
      shall
      limit the Holder's rights under Section
      2.2
      hereof.

     

    (b) Prepayment
      Option Upon Major Transaction. In addition to all other rights of the Holder
      contained herein, simultaneous with the occurrence of a Major Transaction (as
      defined below), the Holder shall have the right, at the Holder's option, to
      require the Maker to prepay in cash all or a portion of the Holder's Notes
      at a
      price equal to one hundred percent (100%) of the aggregate principal amount
      of
      this Note plus all accrued and unpaid interest (the "Major
      Transaction Prepayment Price").
      

     

    (c) Prepayment
      Option Upon Triggering Event.
      In
      addition to all other rights of the Holder contained herein, after a Triggering
      Event (as defined below), the Holder shall have the right, at the Holder's
      option, to require the Maker to prepay all or a portion of this Note in cash
      at
      a price equal to one hundred percent (100%) of the aggregate principal amount
      of
      this Note plus all accrued and unpaid interest (the "Triggering
      Event Prepayment Price,"
      and,
      collectively with the Major Transaction Prepayment Price, the "Prepayment
      Price").
      

     

    (d) Intentionally
      Omitted.

     

    (e) "Major
      Transaction."
      A
      "Major
      Transaction"
      shall
      be deemed to have occurred at such time as any of the following
      events:

     

    (i) the
      consolidation, merger or other business combination of the Maker with or into
      another Person (as defined in Section
      4.13
      hereof)
      (other than (A) pursuant to a migratory merger effected solely for the purpose
      of changing the jurisdiction of incorporation of the Maker or (B) a
      consolidation, merger or other business combination in which holders of the
      Maker's voting power immediately prior to the transaction continue after the
      transaction to hold, directly or indirectly, the voting power of the surviving
      entity or entities necessary to elect a majority of the members of the board
      of
      directors (or their equivalent if other than a corporation) of such entity
      or
      entities); or

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    (ii) the
      sale
      or transfer of more than fifty percent (50%) of the Maker’s assets (based on the
      fair market value as determined in good faith by the Board) other than inventory
      in the ordinary course of business in one or a related series of transactions;
      or

     

    (iii) closing
      of a purchase, tender or exchange offer made to the holders of more than fifty
      percent (50%) of the outstanding shares of Common Stock in which more than
      fifty
      percent (50%) of the outstanding shares of Common Stock were tendered and
      accepted; or

     

    (iv) a
      change
      in more than fifty percent (50%) of the current members of the Company’s Board
      of Directors as of the Issuance Date.

     

    (f) "Triggering
      Event."
      A "Triggering
      Event"
      shall
      be deemed to have occurred at such time as any of the following
      events:

     

    (i) so
      long
      as any Notes are outstanding, the effectiveness of the Registration Statement,
      after it becomes effective, (i) lapses for any reason (including, without
      limitation, the issuance of a stop order) or (ii) is unavailable to the Holder
      for sale of the shares of Common Stock, and such lapse or unavailability
      continues for a period of twenty (20) consecutive Trading Days, and the shares
      of Common Stock into which the Holder's Notes can be converted cannot be sold
      in
      the public securities market pursuant to Rule 144(k) under the Securities Act,
      provided that the cause of such lapse or unavailability is not due to factors
      primarily within the control of the Holder of the Notes; and provided further
      that a Triggering Event shall not have occurred if and to the extent the Maker
      exercised its rights set forth in Section
      3(n)
      of the
      Registration Rights Agreement; 

     

    (ii) the
      suspension from listing, without subsequent listing on any one of, or the
      failure of the Common Stock to be listed on at least one of the OTC Bulletin
      Board, the American Stock Exchange, the Nasdaq National Market, the Nasdaq
      Capital Market or The New York Stock Exchange, Inc., for a period of ten (10)
      consecutive Trading Days;

     

    (iii) the
      Maker's notice to the Holder or any Other Holders, including by way of public
      announcement, at any time, of its inability to comply (including for any of
      the
      reasons described in Section
      3.8(a)
      hereof)
      or its intention not to comply with proper requests for conversion of any Notes
      into shares of Preferred or Common Stock; or

     

    (iv) the
      Maker's failure to comply with a Conversion Notice tendered in accordance with
      the provisions of this Note within five (5) Trading Days after the receipt
      by
      the Maker of the Conversion Notice; or

     

    (v) the
      Maker
      deregisters its shares of Common Stock and as a result such shares of Common
      Stock are no longer publicly traded; or

     

    (vi) the
      Maker
      consummates a “going private” transaction and as a result the Common Stock is no
      longer registered under Sections 12(b) or 12(g) of the Exchange Act;
      or

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    (vii) the
      Maker
      breaches any representation, warranty, covenant or other term or condition
      of
      the Purchase Agreement, this Note or any other agreement, document, certificate
      or other instrument delivered in connection with the transactions contemplated
      thereby or hereby, except to the extent that such breach would not have a
      Material Adverse Effect (as defined in the Purchase Agreement) and except,
      in
      the case of a breach of a covenant which is curable, only if such breach
      continues for a period of a least twenty (20) business days.

     

    (g) Intentionally
      Omitted.

    

    (h) Mechanics
      of Prepayment at Option of Holder Upon Major Transaction. No sooner than
      fifteen (15) days nor later than ten (10) days prior to the consummation of
      a
      Major Transaction, but in no event prior to the public announcement of such
      Major Transaction, the Maker shall deliver written notice thereof via facsimile
      and overnight courier ("Notice
      of Major Transaction")
      to the
      Holder of this Note and the Other Holders. At any time after receipt of a Notice
      of Major Transaction (or, in the event a Notice of Major Transaction is not
      delivered at least ten (10) days prior to a Major Transaction, at any time
      during the ten (10) day period prior to a Major Transaction), the Holder of
      this
      Note and the Other Holders of the Other Notes then outstanding may require
      the
      Maker to prepay, effective immediately prior to the consummation of such Major
      Transaction, all or any portion of this Note then outstanding by delivering
      written notice thereof via facsimile and overnight courier ("Notice
      of Prepayment at Option of Holder Upon Major
      Transaction")
      to the
      Maker, which Notice of Prepayment at Option of Holder Upon Major Transaction
      shall indicate (i) the principal amount of this Note that the Holder is electing
      to have prepaid and (ii) the applicable Major Transaction Prepayment Price,
      as
      calculated pursuant to Section
      3.7(b)above.

     

    (i) Mechanics
      of Prepayment at Option of Holder Upon Triggering Event. Within three (3)
      business days after the occurrence of a Triggering Event, the Maker shall
      deliver written notice thereof via facsimile and overnight courier
      ("Notice
      of Triggering Event")
      to the
      Holder and the Other Holders. At any time after the earlier of the Holder's
      receipt of a Notice of Triggering Event and the Holder becoming aware of a
      Triggering Event, the Holder of this Note and the Other Holders of the Other
      Notes then outstanding may require the Maker to prepay all or any portion of
      this Note then outstanding by delivering written notice thereof via facsimile
      and overnight courier ("Notice
      of Prepayment at Option of Holder Upon Triggering Event")
      to the
      Maker, which Notice of Prepayment at Option of Holder Upon Triggering Event
      shall indicate (i) the amount of the Note that the Holder is electing to have
      prepaid and (ii) the applicable Triggering Event Prepayment Price, as calculated
      pursuant to Section
      3.7(c)
      above.
      The Holder shall only be permitted to require the Maker to prepay this Note
      pursuant to Section
      3.7
      hereof
      for the greater of a period of ten (10) days after receipt by the Holder of
      a
      Notice of Triggering Event or for so long as such Triggering Event is
      continuing.

     

    (j) Payment
      of Prepayment Price.
      Upon
      the Maker’s receipt of a Notice(s) of Prepayment at Option of Holder Upon
      Triggering Event or a Notice(s) of Prepayment at Option of Holder Upon Major
      Transaction from the Holder or the Other Holders, the Maker shall notify the
      Holder or such Other Holder, as the case may be, by facsimile of the Maker’s
      receipt of such Notice(s) of Prepayment at Option of Holder Upon Triggering
      Event or Notice(s) of Prepayment at Option of Holder Upon Major Transaction
      within two (2) business days of the Maker’s receipt of the same and the Holder
      and each Other Holder which has sent such a notice shall promptly thereafter
      submit to the Maker this Note (or certificates representing a portion of this
      Note if the Holder elects not to have all of the outstanding principal and
      accrued interest hereunder prepaid) or the Other Notes (or certificates
      representing a portion of the Other Notes if the Other Holders elect not to
      have
      all of the outstanding principal and accrued interest hereunder prepaid) which
      the Holder or Other Holders, as the case may be have elected to have prepaid.
      The Maker shall deliver the applicable Triggering Event Prepayment Price to
      the
      Holder, within five (5) business days after the Maker’s receipt of this Note or
      the certificates related thereto, as the case may be, and, in the case of a
      prepayment pursuant to Section
      3.7(h),
      the
      Maker shall deliver the applicable Major Transaction Prepayment Price
      immediately prior to the consummation of the Major Transaction; provided that
      the Holder’s original Note or the Other Holders original Other Note, or the
      certificates related thereto, shall have been so delivered to the Maker;
      provided further that if the Maker is unable to prepay all of the Notes to
      be
      prepaid, the Maker shall prepay an amount to the Holder and each Other Holder
      of
      this Note and the Other Notes being prepaid equal to such holder’s pro-rata
      amount (based on the principal amount outstanding under the Notes held by such
      holder relative to the principal amount outstanding under all of the Notes)
      of
      all Notes being prepaid. If the Maker shall fail to prepay all of the Notes
      submitted for prepayment (other than pursuant to a dispute as to the arithmetic
      calculation of the Prepayment Price), in addition to any remedy such holder
      of
      the Notes may have under this Note and the Purchase Agreement, the applicable
      Prepayment Price payable in respect of such Notes not prepaid shall bear
      interest at the rate of two percent (2%) per month (prorated for partial months)
      until paid in full. Until the Maker pays such unpaid applicable Prepayment
      Price
      in full to a holder of the Notes submitted for prepayment, such holder shall
      have the option (the “Void
      Optional Prepayment Option”)
      to, in
      lieu of prepayment, require the Maker to promptly return to such holder(s)
      all
      of the Notes that were submitted for prepayment by such holder(s) under this
      Section
      3.7
      and for
      which the applicable Prepayment Price has not been paid, by sending written
      notice thereof to the Maker via facsimile (the “Void
      Optional Prepayment Notice”).
      Upon
      the Maker’s receipt of such Void Optional Prepayment Notice(s) and prior to
      payment of the full applicable Prepayment Price to such holder, (i) the
      Notice(s) of Prepayment at Option of Holder Upon Triggering Event or the
      Notice(s) of Prepayment at Option of Holder Upon Major Transaction, as the
      case
      may be, shall be null and void ab
      initio
      with
      respect to those Notes submitted for prepayment and for which the applicable
      Prepayment Price has not been paid, (ii) the Maker shall immediately return
      any
      such Notes submitted to the Maker by each holder for prepayment under this
      Section
      3.7(j)
      and for
      which the applicable Prepayment Price has not been paid and (iii) the Conversion
      Price of such returned Notes shall be adjusted to the lesser of (A) the
      Conversion Price as in effect on the date on which the applicable Void Optional
      Prepayment Notice(s) is delivered to the Maker and (B) the lowest Closing Bid
      Price during the period beginning on the date on which the Notice(s) of
      Prepayment of Option of Holder Upon Major Transaction or the Notice(s) of
      Prepayment at Option of Holder Upon Triggering Event, as the case may be, is
      delivered to the Maker and ending on the date on which the Void Optional
      Prepayment Notice(s) is delivered to the Maker; provided that no adjustment
      shall be made if such adjustment would result in an increase of the Conversion
      Price then in effect. A holder’s delivery of a Void Optional Prepayment Notice
      and exercise of its rights following such notice shall not effect the Maker’s
      obligations to make any payments which have accrued prior to the date of such
      notice. Payments provided for in this Section
      3.7
      shall
      have priority to payments to other stockholders in connection with a Major
      Transaction. 

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    Section
      3.8 Inability
      to Fully Convert.

     

    (a) Holder's
      Option if Maker Cannot Fully Convert.
      If,
      upon the Maker's receipt of a Conversion Notice, the Maker cannot issue shares
      of Preferred Stock, or Common Stock registered for resale under the Registration
      Statement, for any reason, including, without limitation, because the Maker
      (x)
      does not have a sufficient number of shares of Preferred or Common Stock
      authorized and available, (y) with respect to the Common Stock, is otherwise
      prohibited by applicable law or by the rules or regulations of any stock
      exchange, interdealer quotation system or other self-regulatory organization
      with jurisdiction over the Maker or any of its securities from issuing all
      of
      the Common Stock which is to be issued to the Holder pursuant to a Conversion
      Notice or (z) with respect to the Common Stock, fails to have a sufficient
      number of shares of Common Stock registered for resale under the Registration
      Statement, then the Maker shall issue as many shares of Preferred or Common
      Stock, as the case may be, as it is able to issue in accordance with the
      Holder's Conversion Notice and, with respect to the unconverted portion of
      this
      Note, the Holder, solely at Holder's option, can elect to:

     

    (i) require
      the Maker to prepay that portion of this Note for which the Maker is unable
      to
      issue Preferred or Common Stock in accordance with the Holder's Conversion
      Notice (the "Mandatory
      Prepayment")
      at a
      price per share equal to the Triggering Event Prepayment Price as of such
      Conversion Date (the "Mandatory
      Prepayment Price");

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    (ii) with
      respect to the Common Stock, if the Maker's inability to fully convert is
      pursuant to Section
      3.8(a)(y)
      above,
      require the Maker to issue restricted shares of Common Stock, if it is
      permissible for the Maker to do so, in accordance with the Holder's Conversion
      Notice;

     

    (iii) void
      its
      Conversion Notice and retain or have returned, as the case may be, this Note
      that was to be converted pursuant to the Conversion Notice (provided that the
      Holder's voiding its Conversion Notice shall not effect the Maker's obligations
      to make any payments which have accrued prior to the date of such
      notice);

     

    (iv) exercise
      its Buy-In rights pursuant to and in accordance with the terms and provisions
      of
Section
      3.3(c)
      of this
      Note.

     

    (b) Mechanics
      of Fulfilling Holder's Election.
      Upon
      receipt of a facsimile copy of a Conversion Notice from the Holder which cannot
      be fully satisfied as described in Section
      3.8(a)
      above,
      the Maker shall within two (2) Trading Days send via facsimile to the Holder
      a
      notice of the Maker's inability to fully satisfy the Conversion Notice (the
      "Inability
      to Fully Convert Notice").
      Such
      Inability to Fully Convert Notice shall indicate (i) the reason why the Maker
      is
      unable to fully satisfy the Holder's Conversion Notice, (ii) the amount of
      this
      Note which cannot be converted and (iii) the applicable Mandatory Prepayment
      Price. The Holder shall notify the Maker of its election pursuant to
Section
      3.8(a)
      above by
      delivering written notice via facsimile to the Maker ("Notice
      in Response to Inability to Convert").

     

    (c) Payment
      of Prepayment Price.
      If the
      Holder shall elect to have its Notes prepaid pursuant to Section
      3.8(a)(i)
      above,
      the Maker shall pay the Mandatory Prepayment Price to the Holder within thirty
      (30) days of the Maker's receipt of the Holder's Notice in Response to Inability
      to Convert, provided
      that
      prior to the Maker's receipt of the Holder's Notice in Response to Inability
      to
      Convert the Maker has not delivered a notice to the Holder stating, to the
      satisfaction of the Holder, that the event or condition resulting in the
      Mandatory Prepayment has been cured and all Conversion Shares issuable to the
      Holder can and will be delivered to the Holder in accordance with the terms
      of
      this Note. If the Maker shall fail to pay the applicable Mandatory Prepayment
      Price to the Holder on the date that is three (3) business days following the
      Maker's receipt of the Holder's Notice in Response to Inability to Convert
      (other than pursuant to a dispute as to the determination of the arithmetic
      calculation of the Prepayment Price), in addition to any remedy the Holder
      may
      have under this Note and the Purchase Agreement, such unpaid amount shall bear
      interest at the rate of two percent (2%) per month (prorated for partial months)
      until paid in full. Until the full Mandatory Prepayment Price is paid in full
      to
      the Holder, the Holder may (i) void the Mandatory Prepayment with respect to
      that portion of the Note for which the full Mandatory Prepayment Price has
      not
      been paid, (ii) receive back such Note, and (iii) require that the Conversion
      Price of such returned Note be adjusted to the lesser of (A) the Conversion
      Price as in effect on the date on which the Holder voided the Mandatory
      Prepayment and (B) the lowest Closing Bid Price during the period beginning
      on
      the Conversion Date and ending on the date the Holder voided the Mandatory
      Prepayment. 

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    (d) Pro-rata
      Conversion and Prepayment.
      In the
      event the Maker receives a Conversion Notice from the Holder and the Other
      Holders on the same day and the Maker can convert and prepay some, but not
      all,
      of this Note pursuant to this Section
      3.8,
      the
      Maker shall convert and prepay from the Holder and each Other Holder electing
      to
      have its Other Notes converted and prepaid at such time an amount equal to
      the
      Holder or such Other Holder's pro-rata amount (based on the principal amount
      of
      this Note held by the Holder or the Other Notes held by the Other Holder
      relative to the principal amount of the Notes and Other Notes outstanding)
      of
      all the Notes and the Other Notes being converted and prepaid at such
      time.

     

    Section
      3.9 No
      Rights as Stockholder. Nothing contained in this Note shall be construed as
      conferring upon the Holder, prior to the conversion of this Note, the right
      to
      vote or to receive dividends or to consent or to receive notice as a stockholder
      in respect of any meeting of stockholders for the election of directors of
      the
      Maker or of any other matter, or any other rights as a stockholder of the
      Maker.

     

    ARTICLE
      IV

     

    MISCELLANEOUS

     

    Section
      4.1 Notices.
      Any notice, demand, request, waiver or other communication required or permitted
      to be given hereunder shall be in writing and shall be effective (a) upon hand
      delivery, telecopy or facsimile at the address or number designated in the
      Purchase Agreement (if delivered on a business day during normal business hours
      where such notice is to be received), or the first business day following such
      delivery (if delivered other than on a business day during normal business
      hours
      where such notice is to be received) or (b) on the second business day following
      the date of mailing by express courier service, fully prepaid, addressed to
      such
      address, or upon actual receipt of such mailing, whichever shall first occur.
      The Maker will give written notice to the Holder at least ten (10) days prior
      to
      the date on which the Maker takes a record (x) with respect to any dividend
      or
      distribution upon the Common Stock, (y) with respect to any pro rata
      subscription offer to holders of Common Stock or (z) for determining rights
      to
      vote with respect to any Organic Change, dissolution, liquidation or winding-up
      but in no event shall such notice be provided to the Holder prior to such
      information being made known to the public. The Maker will also give written
      notice to the Holder at least ten (10) days prior to the date on which any
      Organic Change, dissolution, liquidation or winding-up will take place but
      in no
      event shall such notice be provided to the Holder prior to such information
      being made known to the public. The Maker shall promptly notify the Holder
      of
      any notices sent or received, or any actions taken with respect to the Other
      Notes.

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    Section
      4.2 Governing
      Law; Consent to Jurisdiction. The
      parties acknowledge and agree that any claim, controversy, dispute or action
      relating in any way to this agreement or the subject matter of this agreement
      shall be governed solely by the laws of the State of Delaware, without regard
      to
      any conflict of laws doctrines. The parties irrevocably consent to being served
      with legal process issued from the state and federal courts located in New
      York
      and irrevocably consent to the exclusive personal jurisdiction of the federal
      and state courts situated in the State of New York. The parties irrevocably
      waive any objections to the personal jurisdiction of these courts. Said courts
      shall have sole and exclusive jurisdiction over any and all claims,
      controversies, disputes and actions which in any way relate to this agreement
      or
      the subject matter of this agreement. The parties also irrevocably waive any
      objections that these courts constitute an oppressive, unfair, or inconvenient
      forum and agree not to seek to change venue on these grounds or any other
      grounds. 

     

    Section
      4.3 Headings.
      Article and section headings in this Note are included herein for purposes
      of
      convenience of reference only and shall not constitute a part of this Note
      for
      any other purpose.

     

    Section
      4.4 Remedies,
      Characterizations, Other Obligations, Breaches and Injunctive Relief. The
      remedies provided in this Note shall be cumulative and in addition to all other
      remedies available under this Note, at law or in equity (including, without
      limitation, a decree of specific performance and/or other injunctive relief),
      no
      remedy contained herein shall be deemed a waiver of compliance with the
      provisions giving rise to such remedy and nothing herein shall limit a Holder's
      right to pursue actual damages for any failure by the Maker to comply with
      the
      terms of this Note. Amounts set forth or provided for herein with respect to
      payments, conversion and the like (and the computation thereof) shall be the
      amounts to be received by the Holder hereof and shall not, except as expressly
      provided herein, be subject to any other obligation of the Maker (or the
      performance thereof). The Maker acknowledges that a breach by it of its
      obligations hereunder will cause irreparable and material harm to the Holder
      and
      that the remedy at law for any such breach may be inadequate. Therefore the
      Maker agrees that, in the event of any such breach or threatened breach, the
      Holder shall be entitled, in addition to all other available rights and
      remedies, at law or in equity, to seek and obtain such equitable relief,
      including but not limited to an injunction restraining any such breach or
      threatened breach, without the necessity of showing economic loss and without
      any bond or other security being required. 

     

    Section
      4.5 Enforcement
      Expenses. The Maker agrees to pay all costs and expenses of the Holder
      incurred as a result of enforcement of this Note, including, without limitation,
      reasonable attorneys' fees and expenses.

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    Section
      4.6 Binding
      Effect. The obligations of the Maker and the Holder set forth herein shall
      be binding upon the successors and assigns of each such party, whether or not
      such successors or assigns are permitted by the terms hereof.

     

    Section
      4.7 Amendments.
      This Note may not be modified or amended in any manner except in writing
      executed by the Maker and the Holder.

     

    Section
      4.8 Compliance
      with Securities Laws. The Holder of this Note acknowledges that this Note is
      being acquired solely for the Holder's own account and not as a nominee for
      any
      other party, and for investment, and that the Holder shall not offer, sell
      or
      otherwise dispose of this Note. This Note and any Note issued in substitution
      or
      replacement therefor shall be stamped or imprinted with a legend in
      substantially the following form:

     

    "THIS
      NOTE
      AND THE SECURITIES ISSUABLE UPON CONVERSION HEREOF HAVE NOT BEEN REGISTERED
      UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
      OR
      APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR TRANSFERRED IN THE
      ABSENCE OF SUCH REGISTRATION OR RECEIPT BY THE MAKER OF A WRITTEN OPINION OF
      COUNSEL IN THE FORM, SUBSTANCE AND SCOPE REASONABLY SATISFACTORY TO THE MAKER
      THAT THIS NOTE AND THE SECURITIES ISSUABLE UPON CONVERSION HEREOF HAVE MAY
      BE
      SOLD, TRANSFERRED, HYPOTHECATED OR OTHERWISE DISPOSED OF, UNDER AN EXEMPTION
      FROM REGISTRATION UNDER THE ACT AND SUCH STATE SECURITIES LAWS."

    

    Section
      4.9 Accredited
      Investor Status. In no event may the Holder convert this Note in whole or in
      part unless the Holder is an “accredited investor” as defined in Regulation D
      under the Act.

     

    Section
      4.10 Parties
      in Interest. This Note shall be binding upon, inure to the benefit of and be
      enforceable by the Maker, the Holder and their respective successors and
      permitted assigns.

     

    Section
      4.11 Failure
      or Indulgence Not Waiver. No failure or delay on the part of the Holder in
      the exercise of any power, right or privilege hereunder shall operate as a
      waiver thereof, nor shall any single or partial exercise of any such power,
      right or privilege preclude other or further exercise thereof or of any other
      right, power or privilege, nor shall any waiver by the Holder of any such right
      or rights on any one occasion be deemed a waiver of the same right or rights
      on
      any future occasion.

     

    Section
      4.12 Maker
      Waivers. 

     

    (a)
       Except
      as
      otherwise specifically provided herein, the Maker and all others that may become
      liable for all or any part of the obligations evidenced by this Note, hereby
      waive presentment, demand, notice of nonpayment, protest and all other demands'
      and notices in connection with the delivery, acceptance, performance and
      enforcement of this Note, and do hereby consent to any number of renewals of
      extensions of the time or payment hereof and agree that any such renewals or
      extensions may be made without notice to any such persons and without affecting
      their liability herein and do further consent to the release of any person
      liable hereon, all without affecting the liability of the other persons, firms
      or Maker liable for the payment of this Note, AND DO HEREBY WAIVE TRIAL BY
      JURY.

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    (b) Intentionally
      omitted.

     

    Section
      4.13 Definitions.
      For the
      purposes hereof, the following terms shall have the following
      meanings:

    

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

     

    “Trading
      Day”
means
      (a) a day on which the Common Stock is traded on the OTC Bulletin Board, or
      (b)
      if the Common Stock is not traded on the OTC Bulletin Board, a day on which
      the
      Common Stock is quoted in the over-the-counter market as reported by the
      National Quotation Bureau Incorporated (or any similar organization or agency
      succeeding its functions of reporting prices); provided,
      however,
      that in
      the event that the Common Stock is not listed or quoted as set forth in (a)
      or
      (b) hereof, then Trading Day shall mean any day except Saturday, Sunday and
      any
      day which shall be a legal holiday or a day on which banking institutions in
      the
      State of New York are authorized or required by law or other government action
      to close.

    

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the Company has caused this Note to be duly executed as of
      the
      Issuance Date set out above.

     

    
      	 	 	 
	 	JUMA
              TECHNOLOGY CORP.
	 
 	 
 	 
 
	
            	By:  	
            
	 	
              
Name:
	 	Title:

    

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      A

    

    WIRE
      INSTRUCTIONS

     

    Payee:
      ________________________________________________________

     

    Bank:
      ________________________________________________________

     

    Address:
      _____________________________________________________

     

    ______________________________________________________

     

    Bank
      No.:
      _____________________________________________________

     

    Account
      No.: __________________________________________________

     

    Account
      Name: _________________________________________________

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

     

    FORM
      OF

     

    NOTICE
      OF
      OPTIONAL CONVERSION INTO SHARES OF COMMON STOCK

     

    (To
      be
      Executed by the Registered Holder in order to Convert the Note into Shares
      of
      Common Stock)

     

    The
      undersigned hereby irrevocably elects to convert $ ________________ of the
      principal amount of the above Note No. ___ into shares of Common Stock of JUMA
      TECHNOLOGY CORP. (the “Maker”)
      according to the conditions hereof, as of the date written below.

     

    Date
      of
      Conversion
      _________________________________________________________

     

    Applicable
      Conversion Price __________________________________________________

     

    Number
      of
      shares of Common Stock beneficially owned or deemed beneficially owned by the
      Holder on the Date of Conversion: _________________________

     

    Signature
      

    
      

    

    [Name]

     

    Address:
      __________________________________________________________________

     

     _______________________________________________________________________

    

    
      
        
        

      

      
        25

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