Document:

SECURITIES
      PURCHASE AGREEMENT

     

     

    THIS
      SECURITIES PURCHASE AGREEMENT (“Agreement”) is made as of the 25th day of
      January, 2007 by and among Long-e International, Inc., a Utah corporation
      (“Company”) and the investors set forth on the signature pages affixed hereto
      (each an “Investor” and collectively the “Investors”).

     

    Recitals

     

    A.
       The
      Company and the Investors are executing and delivering this Agreement in
      reliance upon the exemption from securities registration afforded by the
      provisions of Regulation D (“Regulation D”), as promulgated by the U.S.
      Securities and Exchange Commission (the “SEC”) under the Securities Act of 1933,
      as amended; and

     

    B.
       Certain
      of the Investors wish to purchase from the Company, and the Company wishes
      to
      sell and issue to such Investors, upon the terms and conditions stated in this
      Agreement, (i) an aggregate of $5.812 Million of convertible promissory notes
      in
      the form attached hereto as Exhibit
      A
      (each a
“Note” and together the “Notes”
and,
      together with certain Preferred Stock of the Company into which the Notes may
      be
      converted, the “Convertible
      Security”)
      which
      Notes will be convertible into Fourteen Million Five Hundred Thirty Thousand
      (14,530,000) shares of Common Stock or Preferred Stock of the Company in
      accordance with the terms of the Notes, (ii) Series A warrants to purchase
      an
      aggregate of Seven Million Two Hundred Sixty Five Thousand (7,265,000) shares
      of
      Common Stock at an exercise price of $0.48 per share in the form attached hereto
      as Exhibit
      A-2,
      (collectively, the “Series A Warrants”) and (iii) Series B warrants to purchase
      an aggregate of Seven Million Two Hundred Sixty Five Thousand (7,265,000) shares
      of Common Stock at an exercise price of $0.60 per share in the form attached
      hereto as Exhibit
      A-3,
      (collectively, the “Series B Warrants” and together with the Series A Warrants,
      the “Warrants”), in each case, for an aggregate purchase price of $5.812 Million
      (the “Purchase Price”); and

     

    C.
       Contemporaneous
      with the sale of the Notes and the Warrants, the parties hereto will execute
      and
      deliver an Amended and Restated Registration Rights Agreement, in the form
      attached hereto as Exhibit
      B
      (the
“Registration Rights Agreement”), pursuant to which the Company will agree to
      provide certain registration rights under the Securities Act of 1933, as
      amended, and the rules and regulations promulgated thereunder, and applicable
      state securities laws; and

     

    D.
       The
      Company has retained WestPark Capital, Inc. (“WestPark”) to act as its exclusive
      placement agent in connection with the sale of the securities pursuant to this
      Agreement (WestPark, together with any authorized co-placement or sub-agents
      thereof, the “Placement Agent”)

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    In
      consideration of the mutual promises made herein and for other good and valuable
      consideration, the receipt and sufficiency of which are hereby acknowledged,
      the
      parties hereto agree as follows:

     

    1. Definitions.
      In
      addition to those terms defined above and elsewhere in this Agreement, for
      the
      purposes of this Agreement, the following terms shall have the meanings set
      forth below:

     

    “Affiliate”
means,
      with respect to any Person, any other Person which directly or indirectly
      through one or more intermediaries Controls, is controlled by, or is under
      common control with, such Person.

     

    “Business
      Day”
means
      a
      day, other than a Saturday or Sunday, on which banks in New York City are open
      for the general transaction of business.

     

    “Common
      Stock”
means
      the Company’s common stock, par value $0.001 per share, and any securities into
      which the common stock may be reclassified.

     

    “Common
      Stock Equivalents”
means
      any securities of the Company or the Subsidiaries which would entitle the holder
      thereof to acquire at any time Common Stock, including without limitation,
      any
      debt, preferred stock, rights, options, warrants or other instrument that is
      at
      any time convertible into or exchangeable for, or otherwise entitles the holder
      thereof to receive, Common Stock.

     

    “Company’s
      Knowledge”
means
      the actual knowledge of the executive officers (as defined in Rule 405 under
      the
      1933 Act) of the Company, after due inquiry.

     

    “Confidential
      Information”
means
      trade secrets, confidential information and know-how (including but not limited
      to ideas, formulae, compositions, processes, procedures and techniques, research
      and development information, computer program code, performance specifications,
      support documentation, drawings, specifications, designs, business and marketing
      plans, and customer and supplier lists and related information).

     

    “Control”
      (including the terms “controlling”, “controlled by” or “under common control
      with”) means the possession, direct or indirect, of the power to direct or cause
      the direction of the management and policies of a Person, whether through the
      ownership of voting securities, by contract or otherwise.

     

    “December
      Purchase Agreement”
means
      that Securities Purchase Agreement dated as of December 29, 2006 by and among
      the Company (formerly Inncardio, Inc.), Long-E International Group Co., Ltd.
      and
      certain investors.

     

    “Exempt
      Issuance”
means
      the issuance of (a) shares of Common Stock or options to employees, officers
      or
      directors of the Company pursuant to any stock or option plan or other
      arrangement duly adopted by the Board of Directors of the Company established
      for such purpose up to an aggregate of 10% of the outstanding shares of Common
      Stock outstanding immediately following the closing of the transactions
      contemplated by the Purchase Agreement (after giving effect to the conversion
      into Common Stock of all convertible promissory notes issued further to the
      Purchase Agreement, (b) securities upon the exercise of or conversion of any
      Securities issued hereunder or issued to the Placement Agent and its designees
      for the transactions contemplated hereunder or further to the December Purchase
      Agreement, or convertible securities, options or warrants issued and outstanding
      on the date of this Agreement, provided that such securities have not been
      amended since the date of this Agreement to increase the number of such
      securities, and (c) debt or equity issued pursuant to strategic transactions
      with an operating company in a business synergistic with the business of the
      Company at the time of such issuance and in which the Company receives benefits
      in addition to the investment of funds or pursuant to arms’-length acquisitions
      or arms’-length equipment leases, but shall not include a transaction in which
      the Company is issuing securities primarily for the purpose of raising capital
      or to an entity whose primary business is investing in securities. 

     

    
      
        
        

      

      
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    “Intellectual
      Property”
means
      all of the following: (i) patents, patent applications, patent disclosures
      and
      inventions (whether or not patentable and whether or not reduced to practice);
      (ii) trademarks, service marks, trade dress, trade names, corporate names,
      logos, slogans and Internet domain names, together with all goodwill associated
      with each of the foregoing; (iii) copyrights and copyrightable works; (iv)
      registrations, applications and renewals for any of the foregoing; and (v)
      proprietary computer software (including but not limited to data, data bases
      and
      documentation).

     

    “Material
      Adverse Effect”
means
      a
      material adverse effect on (i) the assets, liabilities, results of operations,
      condition (financial or otherwise), business, or prospects of the Company and
      its Subsidiaries taken as a whole, or (ii) the ability of the Company to perform
      its obligations under the Transaction Documents.

     

    “Person”
means
      an individual, corporation, partnership, limited liability company, trust,
      business trust, association, joint stock company, joint venture, sole
      proprietorship, unincorporated organization, governmental authority or any
      other
      form of entity not specifically listed herein.

     

    “Preferred
      Stock”
means
      shares of preferred stock of the Company with rights and preferences set forth
      in the Certificate of Designations, Rights and Preferences attached as Exhibit
      A
      to the Note.

     

    “Registration
      Statement”
has
      the
      meaning set forth in the Registration Rights Agreement.

     

    “SEC
      Filings”
has
      the
      meaning set forth in Section 4.9

     

    “Securities”
means,
      collectively, the Notes, the Common Stock and/or Preferred Stock issuable upon
      conversion of the Notes, the Warrants and the Warrant Shares.

     

    “Subsidiary”
of
      any
      Person means another Person, an amount of the voting securities, other voting
      ownership or voting partnership interests of which is sufficient to elect at
      least a majority of its Board of Directors or other governing body (or, if
      there
      are no such voting interests, 50% or more of the equity interests of which)
      is
      owned directly or indirectly by such first Person.

     

    “Transaction
      Documents”
means
      this Agreement, the Notes, the Warrants, the warrants to be issued to the
      Placement Agent, the Escrow Agreement and the Registration Rights
      Agreement.

     

    
      
        
        

      

      
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    “Warrant
      Shares”
means
      the shares of Common Stock issuable upon the exercise of the
      Warrants.

     

    “1933
      Act”
means
      the Securities Act of 1933, as amended, or any successor statute, and the rules
      and regulations promulgated thereunder.

     

    “1934
      Act”
means
      the Securities Exchange Act of 1934, as amended, or any successor statute,
      and
      the rules and regulations promulgated thereunder.

     

    2. Purchase
      and Sale of the Notes and Warrants.
      Subject
      to the terms and conditions of this Agreement, on the Closing Date (and by
      Subsequent Closing), each of the Investors shall severally, and not jointly,
      purchase, and the Company shall sell and issue to the Investors, the Notes
      and
      the Series A Warrants and the Series B Warrants in the respective amounts set
      forth opposite the Investors’ names on the signature pages attached hereto in
      exchange for the Purchase Price as specified in Section 3 below.

     

    3. Closing.

     

    3.1 Simultaneously
      with the execution and delivery of this Agreement, the Company shall deliver
      to
      the Placement Agent, in trust, the Notes, the Series A Warrants and the Series
      B
      Warrants, registered in such name or names as the Investors may designate,
      with
      instructions that such securities are to be held for release to the Investors
      only upon payment in full of the Purchase Price to the Company by all the
      Investors.

     

    3.2  a) Simultaneously
      with the execution and delivery of this Agreement by an Investor, such Investor
      shall: promptly cause a wire transfer of immediately available funds (U.S.
      dollars) in an amount representing the “Purchase Price”, as set forth on such
      Investor’s signature page, to be paid to an escrow account of Escrow Agent, set
      forth on Schedule
      I
      affixed
      hereto (the aggregate amounts being held in escrow are referred to herein as
      the
“Escrow Amount”). Escrow Agent shall hold the Escrow Amount in escrow in
      accordance with this Section 3.

     

    (b) Escrow
      Agent shall hold the Escrow Amount in escrow in accordance with and subject
      to
      the terms of that certain Escrow Agreement dated as of January 17, 2007, by
      and
      among the Company, the Placement Agent and the Escrow Agent.

     

    (c) On
      the
      date the Company receives the Purchase Price of at least $3.4 million in the
      aggregate from the Investors pursuant to the terms and conditions of this
      Agreement (the “Closing Date”), the Notes, the Series A Warrants and the Series
      B Warrants shall be released by the Placement Agent to the Investors (the
“Closing”). The Closing (and each Subsequent Closing) of the purchase and sale
      of the Notes and Warrants shall take place at the offices of Kirkpatrick &
Lockhart Preston Gates Ellis LLP, 10100 Santa Monica, Blvd., Seventh Floor,
      Los
      Angeles, California 90067, or at such other location and on such other date
      as
      the Company and the Investors shall mutually agree. Immediately following the
      Closing, the capitalization of the Company shall be as set forth on Exhibit
      C.

     

    
      
        
        

      

      
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    3.3 At
      any
      time on or before February 28, 2007, the Company may sell up to an additional
      $459,000
      principal amount of Notes not sold as of the Closing to such persons and in
      the
      amounts as may be approved by the Company, subject to the limitations of the
      following sentence. The parties acknowledge that such sales may be made pursuant
      to the exercise of rights described in Section 7.8 of the December Purchase
      Agreement; to the extent that such parties decline to exercise said rights,
      any
      such unpurchased Notes may not be reoffered by the Company to other parties.
      All
      such purchases of Notes shall be made on the terms and conditions set forth
      in
      this Agreement. Such purchases of Notes shall be made by each subsequent
      purchaser by executing counterpart signature pages to this Agreement and the
      other Transaction Documents, making such purchaser a party and bound by the
      terms and conditions of this Agreement and such Transaction Documents. Any
      Notes
      and Warrants sold pursuant to this Section 1.4 shall be deemed to be “Notes” and
“Warrants” for all purposes under this Agreement and any purchasers thereof
      shall be deemed to be “Investors” under this Agreement and each of the
      Transaction Documents. Each sale of additional Notes pursuant to this Section
      3.3 shall be deemed a “Subsequent Closing.” Exhibit C to this Agreement shall be
      updated to reflect the Notes and Warrants purchased at each Subsequent Closing
      and the parties purchasing such Notes and Warrants.

     

    4. Representations
      and Warranties of the Company.
      For
      purposes of this Section 4 only, the Company hereby represents and warrants
      to
      the Investors and the Placement Agent that, except as set forth in the schedules
      delivered herewith (collectively, the “Disclosure Schedules”):

     

    4.1 Organization,
      Good Standing and Qualification.
      Each of
      the Company and its Subsidiaries is duly organized, validly existing and in
      good
      standing under the laws of the jurisdiction of its incorporation and has all
      requisite power and authority to carry on its business as now conducted and
      to
      own its properties. Each of the Company and its Subsidiaries is duly qualified
      to do business as a foreign corporation and is in good standing in each
      jurisdiction in which the conduct of its business or its ownership or leasing
      of
      property makes such qualification or leasing necessary unless the failure to
      so
      qualify has not had and could not reasonably be expected to have a Material
      Adverse Effect. The Company’s Subsidiaries are listed in the SEC
      Filings.

     

    4.2  Authorization.
      The
      Company has full power and authority and has taken all requisite action on
      the
      part of the Company, its officers, directors and stockholders necessary for
      (i)
      the authorization, execution and delivery of the Transaction Documents, (ii)
      the
      authorization of the performance of all obligations of the Company hereunder
      or
      thereunder, and (iii) the authorization, issuance (or reservation for issuance)
      and delivery of the Securities. The Transaction Documents constitute the legal,
      valid and binding obligations of the Company, enforceable against the Company
      in
      accordance with their terms, subject to bankruptcy, insolvency, fraudulent
      transfer, reorganization, moratorium and similar laws of general applicability,
      relating to or affecting creditors’ rights generally.

     

    
      
        
        

      

      
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    4.3 Capitalization.
      The SEC
      Filings sets forth (a) the authorized capital stock of the Company on the date
      hereof; (b) the number of shares of capital stock issued and outstanding; (c)
      the number of shares of capital stock issuable pursuant to the Company’s stock
      plans; and (d) the number of shares of capital stock issuable and reserved
      for
      issuance pursuant to securities (other than the Securities) exercisable for,
      or
      convertible into or exchangeable for any shares of capital stock of the Company.
      All of the issued and outstanding shares of the Company’s capital stock have
      been duly authorized and validly issued and are fully paid, nonassessable and
      free of pre-emptive rights and were issued in compliance with applicable state
      and federal securities law and any rights of third parties. All of the issued
      and outstanding shares of capital stock of each Subsidiary have been duly
      authorized and validly issued and are fully paid, nonassessable and free of
      pre-emptive rights, were issued in compliance with applicable state and federal
      securities law and any rights of third parties and are owned by the Company,
      beneficially and of record, subject to no lien, encumbrance or other adverse
      claim. No Person is entitled to pre-emptive or similar statutory or contractual
      rights with respect to any securities of the Company. Except as described in
      the
      SEC Filings, there are no outstanding warrants, options, convertible securities
      or other rights, agreements or arrangements of any character under which the
      Company or any of its Subsidiaries is or may be obligated to issue any equity
      securities of any kind and except as contemplated by this Agreement, neither
      the
      Company nor any of its Subsidiaries is currently in negotiations for the
      issuance of any equity securities of any kind. Except as described in the SEC
      Filings and except for the Registration Rights Agreement and as set forth in
      the
      December Purchase Agreement, there are no voting agreements, buy-sell
      agreements, option or right of first purchase agreements or other agreements
      of
      any kind among the Company and any of the securityholders of the Company
      relating to the securities of the Company held by them. Except as described
      in
      the SEC Filings and except as provided in the Registration Rights Agreement,
      no
      Person has the right to require the Company to register any securities of the
      Company under the 1933 Act, whether on a demand basis or in connection with
      the
      registration of securities of the Company for its own account or for the account
      of any other Person.

     

    The
      issuance and sale of the Securities hereunder will not obligate the Company
      to
      issue shares of Common Stock or other securities to any other Person (other
      than
      the Investors) and will not result in the adjustment of the exercise,
      conversion, exchange or reset price of any outstanding security.

     

    The
      Company does not have outstanding stockholder purchase rights or “poison pill”
or any similar arrangement in effect giving any Person the right to purchase
      any
      equity interest in the Company upon the occurrence of certain
      events.

     

    4.4 Valid
      Issuance.
      The
      Notes have been duly and validly authorized when issued and paid for pursuant
      to
      this Agreement, shall be free and clear of all encumbrances and restrictions
      (other than those created by the Investors), except for restrictions on transfer
      set forth in the Transaction Documents or imposed by applicable securities
      laws.
      The Warrants have been duly and validly authorized. Upon the conversion of
      the
      Notes, the conversion of the Preferred Stock, if issued, and due exercise of
      the
      Warrants in accordance with the terms of the Warrants, shares of Common Stock
      and/or Preferred Stock issued upon conversion of the Notes, the Warrant Shares,
      respectively, will be validly issued, fully paid and non-assessable free and
      clear of all encumbrances and restrictions, except for restrictions on transfer
      set forth in the Transaction Documents or imposed by applicable securities
      laws
      and except for those created by the Investors. The Company has reserved a
      sufficient number of shares of Common Stock for issuance upon the conversion
      of
      the Notes (or the Preferred Stock) and the exercise of the Warrants, free and
      clear of all encumbrances and restrictions, except for restrictions on transfer
      set forth in the Transaction Documents or imposed by applicable securities
      laws
      and except for those created by the Investors. But for the stockholder approval
      referenced in Section 7.10 herein, the Series A Preferred Stock has been duly
      and validly authorized.

     

    
      
        
        

      

      
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    4.5 Consents.
      The
      execution, delivery and performance by the Company of the Transaction Documents
      and the offer, issuance and sale of the Securities require no consent of, action
      by or in respect of, or filing with, any Person, governmental body, agency,
      or
      official other (a) stockholder approval of the creation of “blank check”
preferred stock and (b) than filings that have been made pursuant to applicable
      state securities laws and post-sale filings pursuant to applicable state and
      federal securities laws which the Company undertakes to file within the
      applicable time periods. Subject to the accuracy of the representations and
      warranties of each Investor set forth in Section 6 hereof, the Company has
      taken
      all action necessary to exempt (i) the issuance and sale of the Securities,
      (ii)
      the issuance of the Warrant Shares upon due exercise of the Warrants, and (iii)
      the other transactions contemplated by the Transaction Documents from the
      provisions of any stockholder rights plan or other “poison pill” arrangement,
      any anti-takeover, business combination or control share law or statute binding
      on the Company or to which the Company or any of its assets and properties
      may
      be subject and any provision of the Company’s Articles of Incorporation or
      Bylaws that is or could reasonably be expected to become applicable to the
      Investors as a result of the transactions contemplated hereby, including without
      limitation, the issuance of the Securities and the ownership, disposition or
      voting of the Securities by the Investors or the exercise of any right granted
      to the Investors pursuant to this Agreement or the other Transaction
      Documents.

     

    4.6 Delivery
      of Memorandum and SEC Filings; Business.
      The
      Company has made available to the Investors through the EDGAR system, true
      and
      complete copies of the Company’s most recent Annual Report on Form 10-KSB for
      the fiscal year ended December 31, 2005 (the “10-KSB”), and all other reports
      filed by the Company pursuant to the 1934 Act since the filing of the 10-KSB
      and
      prior to the date hereof (collectively, the “SEC Filings”). The SEC Filings are
      the only filings required of the Company pursuant to the 1934 Act for such
      period. The Company and its Subsidiaries are engaged in all material respects
      only in the business described in the SEC Filings and the SEC Filings contain
      a
      complete and accurate description in all material respects of the business
      of
      the Company and its Subsidiaries, taken as a whole.

     

    4.7 Use
      of
      Proceeds.
      The net
      proceeds of the sale of the Notes and the Warrants hereunder shall be used
      by
      the Company for working capital and general corporate purposes.

     

    4.8 No
      Material Adverse Change.
      Since
      September 30, 2006, except as identified and described in the SEC Filings there
      has not been:

     

    (a) any
      change in the consolidated assets, liabilities, financial condition or operating
      results of the Company from that reflected in the financial statements included
      in the SEC Filings, except for changes in the ordinary course of business which
      have not had and could not reasonably be expected to have a Material Adverse
      Effect, individually or in the aggregate;

     

    (b) any
      declaration or payment of any dividend, or any authorization or payment of
      any
      distribution, on any of the capital stock of the Company, or any redemption
      or
      repurchase of any securities of the Company;

     

    
      
        
        

      

      
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    (c) any
      material damage, destruction or loss, whether or not covered by insurance to
      any
      assets or properties of the Company or its Subsidiaries;

     

    (d) any
      waiver, not in the ordinary course of business, by the Company or any Subsidiary
      of a material right or of a material debt owed to it;

     

    (e) any
      satisfaction or discharge of any lien, claim or encumbrance or payment of any
      obligation by the Company or a Subsidiary, except in the ordinary course of
      business and which is not material to the assets, properties, financial
      condition, operating results, business or prospects of the Company and its
      Subsidiaries taken as a whole (as such business is presently conducted and
      as it
      is proposed to be conducted);

     

    (f) any
      change or amendment to the Company’s Articles of Incorporation or Bylaws or
      other organizational documents, or material change to any material contract
      or
      arrangement by which the Company or any Subsidiary is bound or to which any
      of
      their respective assets or properties is subject;

     

    (g) any
      material labor difficulties or labor union organizing activities with respect
      to
      employees of the Company or any Subsidiary;

     

    (h) any
      material transaction entered into by the Company or a Subsidiary other than
      in
      the ordinary course of business;

     

    (i) the
      loss
      of the services of any key employee, or material change in the composition
      or
      duties of the senior management of the Company or any Subsidiary;

     

    (j) the
      loss
      or threatened loss of any customer which has had or could reasonably be expected
      to have a Material Adverse Effect; or

     

    (k) any
      other
      event or condition of any character that has had or could reasonably be expected
      to have a Material Adverse Effect.

     

    4.9 SEC
      Filings.
      At the
      time of filing thereof, the SEC Filings complied as to form in all material
      respects with the requirements of the 1934 Act and did not contain any untrue
      statement of a material fact or omit to state any material fact necessary in
      order to make the statements made therein, in the light of the circumstances
      under which they were made, not misleading.

     

    4.10 No
      Conflict, Breach, Violation or Default.
      The
      execution, delivery and performance of the Transaction Documents by the Company
      and the issuance and sale of the Securities will not (A) result in a violation
      of any of the terms and provisions of (i) the Company’s Articles of
      Incorporation or the Company’s Bylaws, both as in effect on the date hereof, or
      (ii) any statute, rule, regulation or order of any governmental agency or body
      or any court, domestic or foreign, having jurisdiction over the Company, any
      Subsidiary or any of their respective assets or properties the violation of
      which, either individually or in the aggregate, would not have a Material
      Adverse Effect, or (B) conflict with or result in a breach or violation of
      any
      of the terms and provisions of, or constitute a default under, any agreement
      or
      instrument to which the Company or any Subsidiary is a party or by which the
      Company or a Subsidiary is bound or to which any of their respective assets
      or
      properties is subject the violation of which, either individually or in the
      aggregate, would not have a Material Adverse Effect.

     

    
      
        
        

      

      
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    4.11 Tax
      Matters.
      The
      Company and each Subsidiary has timely prepared and filed all tax returns
      required to have been filed by the Company or such Subsidiary with all
      appropriate governmental agencies and timely paid all taxes shown thereon or
      otherwise owed by it. The charges, accruals and reserves on the books of the
      Company in respect of taxes for all fiscal periods are adequate in all material
      respects, and there are no material unpaid assessments against the Company
      or
      any Subsidiary nor, to the Company’s Knowledge, any basis for the assessment of
      any additional taxes, penalties or interest for any fiscal period or audits
      by
      any federal, state or local taxing authority except for any assessment which
      is
      not material to the Company and its Subsidiaries, taken as a whole. All taxes
      and other assessments and levies that the Company or any Subsidiary is required
      to withhold or to collect for payment have been duly withheld and collected
      and
      paid to the proper governmental entity or third party when due. There are no
      tax
      liens or claims pending or, to the Company’s Knowledge, threatened against the
      Company or any Subsidiary or any of their respective assets or property. Except
      as described on Schedule
      4.11,
      there
      are no outstanding tax sharing agreements or other such arrangements between
      the
      Company and any Subsidiary or other corporation or entity.

     

    4.12 Title
      to Properties.
      Except
      as disclosed in the SEC Filings, the Company and each Subsidiary has good and
      marketable title to all real properties and all other properties and assets
      owned by it, in each case free from liens, encumbrances and defects that would
      materially affect the value thereof or materially interfere with the use made
      or
      currently planned to be made thereof by them; and except as disclosed in the
      SEC
      Filings, the Company and each Subsidiary holds any leased real or personal
      property under valid and enforceable leases with no exceptions that would
      materially interfere with the use made or currently planned to be made thereof
      by them.

     

    4.13 Certificates,
      Authorities and Permits.
      The
      Company and each Subsidiary possess adequate certificates, authorities or
      permits issued by appropriate governmental agencies or bodies necessary to
      conduct the business now operated by it, and neither the Company nor any
      Subsidiary has received any notice of proceedings relating to the revocation
      or
      modification of any such certificate, authority or permit that, if determined
      adversely to the Company or such Subsidiary, could reasonably be expected to
      have a Material Adverse Effect, individually or in the aggregate.

     

    4.14 Labor
      Matters.
      

     

    (a) Except
      as
      set forth in the SEC Filings, neither the Company nor any Subsidiary is a party
      to or bound by any collective bargaining agreements or other agreements with
      labor organizations. Neither the Company nor any Subsidiary has violated in
      any
      material respect any laws, regulations, orders or contract terms, affecting
      the
      collective bargaining rights of employees, labor organizations or any laws,
      regulations or orders affecting employment discrimination, equal opportunity
      employment, or employees’ health, safety, welfare, wages and hours.

     

    
      
        
        

      

      
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    (b) (i)
      There
      are no labor disputes existing, or to the Company’s Knowledge, threatened,
      involving strikes, slow-downs, work stoppages, job actions, disputes, lockouts
      or any other disruptions of or by the employees of the Company or any
      Subsidiary, (ii) there are no unfair labor practices or petitions for election
      pending or, to the Company’s Knowledge, threatened before the National Labor
      Relations Board or any other federal, state or local labor commission relating
      to the employees of the Company or any Subsidiary, (iii) no demand for
      recognition or certification heretofore made by any labor organization or group
      of employees is pending with respect to the Company or any Subsidiary and (iv)
      to the Company’s Knowledge, the Company and each of its Subsidiaries, enjoys
      good labor and employee relations with its employees and labor
      organizations.

     

    (c) The
      Company and each of its Subsidiaries is in compliance in all material respects
      with all applicable laws respecting employment (including laws relating to
      classification of employees and independent contractors) and employment
      practices, terms and conditions of employment, wages and hours, and immigration
      and naturalization. There are no claims pending or, to the Company’s Knowledge,
      threatened against the Company or any Subsidiary before the Equal Employment
      Opportunity Commission or any other administrative body or in any court
      asserting any violation of Title VII of the Civil Rights Act of 1964, the Age
      Discrimination Act of 1967, 42 U.S.C. §§ 1981 or 1983 or any other foreign,
      federal, state or local law, statute or ordinance barring discrimination in
      employment.

     

    (d) Except
      as
      disclosed in the SEC Filings, neither the Company nor any Subsidiary is not
      a
      party to, or bound by, any employment or other contract or agreement that
      contains any severance, termination pay or change of control liability or
      obligation, including, without limitation, any “excess parachute payment,” as
      defined in Section 280(g) of the Internal Revenue Code of 1986, as
      amended.

     

    4.15 Intellectual
      Property.

     

    (a) All
      Intellectual Property of the Company and its Subsidiaries is currently in
      compliance with all material legal requirements (including timely filings,
      proofs and payments of fees) and is valid and enforceable. No Intellectual
      Property of the Company or its Subsidiaries which is necessary for the conduct
      of Company’s and each of its Subsidiaries’ respective businesses as currently
      conducted or as currently proposed to be conducted has been or is now involved
      in any cancellation, dispute or litigation, and, to the Company’s Knowledge, no
      such action is threatened. No patent of the Company or its Subsidiaries has
      been
      or is now involved in any interference, reissue, re-examination or opposition
      proceeding.

     

    (b) All
      of
      the licenses and sublicenses and consent, royalty or other agreements concerning
      Intellectual Property which are necessary for the conduct of the Company’s and
      each of its Subsidiaries’ respective businesses as currently conducted or as
      currently proposed to be conducted to which the Company or any Subsidiary is
      a
      party or by which any of their assets are bound (other than generally
      commercially available, non custom, off the shelf software application programs
      having a retail acquisition price of less than $500 per license) (collectively,
      “License Agreements”) are valid and binding obligations of the Company or its
      Subsidiaries that are parties thereto and, to the Company’s Knowledge, the other
      parties thereto, enforceable in accordance with their terms, except to the
      extent that enforcement thereof may be limited by bankruptcy, insolvency,
      reorganization, moratorium, fraudulent conveyance or other similar laws
      affecting the enforcement of creditors’ rights generally, and there exists no
      event or condition which will result in a material violation or breach of or
      constitute (with or without due notice or lapse of time or both) a default
      by
      the Company or any of its Subsidiaries under any such License
      Agreement.

     

    
      
        
        

      

      
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    (c) The
      Company and its Subsidiaries own or have the valid right to use all of the
      Intellectual Property that is necessary for the conduct of the Company’s and
      each of its Subsidiaries’ respective businesses as currently conducted or as
      currently proposed to be conducted and for the ownership, maintenance and
      operation of the Company’s and its Subsidiaries’ properties and assets, free and
      clear of all liens, encumbrances, adverse claims or obligations to license
      all
      such owned Intellectual Property and Confidential Information, other than
      licenses entered into in the ordinary course of the Company’s and its
      Subsidiaries’ businesses. The Company and its Subsidiaries have a valid and
      enforceable right to use all third party Intellectual Property and Confidential
      Information used or held for use in the respective businesses of the Company
      and
      its Subsidiaries.

     

    (d) To
      the
      Company’s Knowledge, the conduct of the Company’s and its Subsidiaries’
businesses as currently conducted does not infringe or otherwise impair or
      conflict with (collectively, “Infringe”) any Intellectual Property rights of any
      third party or any confidentiality obligation owed to a third party the
      Intellectual Property and Confidential Information of the Company and its
      Subsidiaries which are necessary for the conduct of Company’s and each of its
      Subsidiaries’ respective businesses as currently conducted or as currently
      proposed to be conducted are not being Infringed by any third party. There
      is no
      litigation or order pending or outstanding or, to the Company’s Knowledge,
      threatened or imminent, that seeks to limit or challenge or that concerns the
      ownership, use, validity or enforceability of any Intellectual Property or
      Confidential Information of the Company and its Subsidiaries and the Company’s
      and its Subsidiaries’ use of any Intellectual Property or Confidential
      Information owned by a third party, and, to the Company’s Knowledge, there is no
      valid basis for the same.

     

    (e) The
      consummation of the transactions contemplated hereby and by the other
      Transaction Documents will not result in the alteration, loss, impairment of
      or
      restriction on the Company’s or any of its Subsidiaries’ ownership or right to
      use any of the Intellectual Property or Confidential Information which is
      necessary for the conduct of Company’s and each of its Subsidiaries’ respective
      businesses as currently conducted or as currently proposed to be
      conducted.

     

    (f) The
      Company and its Subsidiaries have taken reasonable steps to protect the
      Company’s and its Subsidiaries’ rights in their Intellectual Property and
      Confidential Information. 

     

    
      
        
        

      

      
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    4.16 Environmental
      Matters.
      Neither
      the Company nor any Subsidiary is in violation of any statute, rule, regulation,
      decision or order of any governmental agency or body or any court, domestic
      or
      foreign, relating to the use, disposal or release of hazardous or toxic
      substances or relating to the protection or restoration of the environment
      or
      human exposure to hazardous or toxic substances (collectively, “Environmental
      Laws”), owns or operates any real property contaminated with any substance that
      is subject to any Environmental Laws, is liable for any off-site disposal or
      contamination pursuant to any Environmental Laws, or is subject to any claim
      relating to any Environmental Laws, which violation, contamination, liability
      or
      claim has had or could reasonably be expected to have a Material Adverse Effect,
      individually or in the aggregate; and there is no pending or, to the Company’s
      Knowledge, threatened investigation that might lead to such a
      claim.

     

    4.17 Litigation.
      Except
      as described or in the SEC Filings there are no pending actions, suits or
      proceedings against the Company, its Subsidiaries or any of its or their
      properties; and to the Company’s Knowledge, no such actions, suits or
      proceedings are threatened or contemplated.

     

    4.18 Financial
      Statements.
      The
      financial statements included in each SEC Filing present fairly, in all material
      respects, the consolidated financial position of the Company as of the dates
      shown and its consolidated results of operations and cash flows for the periods
      shown, and such financial statements have been prepared in conformity with
      United States generally accepted accounting principles applied on a consistent
      basis (“GAAP”) (except as may be disclosed therein or in the notes thereto, and,
      in the case of quarterly financial statements, as permitted by Form 10-QSB
      under
      the 1934 Act). Except as set forth in the financial statements of the Company
      included in the SEC Filings filed prior to the date hereof, neither the Company
      nor any of its Subsidiaries has incurred any liabilities, contingent or
      otherwise, except those incurred in the ordinary course of business, consistent
      (as to amount and nature) with past practices since the date of such financial
      statements, none of which, individually or in the aggregate, have had or could
      reasonably be expected to have a Material Adverse Effect.

     

    4.19 Insurance
      Coverage.
      The
      Company and each Subsidiary maintains in full force and effect insurance
      coverage that is customary for comparably situated companies for the business
      being conducted and properties owned or leased by the Company and each
      Subsidiary, and the Company reasonably believes such insurance coverage to
      be
      adequate against all liabilities, claims and risks against which it is customary
      for comparably situated companies to insure.

     

    4.20 Brokers
      and Finders.
      Except
      for the Placement Agent, no Person will have, as a result of the transactions
      contemplated by the Transaction Documents, any valid right, interest or claim
      against or upon the Company, any Subsidiary or an Investor for any commission,
      fee or other compensation pursuant to any agreement, arrangement or
      understanding entered into by or on behalf of the Company.

     

    4.21 No
      Directed Selling Efforts or General Solicitation.
      Neither
      the Company nor any Person acting on its behalf has conducted any general
      solicitation or general advertising (as those terms are used in Regulation
      D) in
      connection with the offer or sale of any of the Securities.

     

    4.22 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 Company
      security or solicited any offers to buy any security, under circumstances that
      would adversely affect reliance by the Company on Section 4(2) for the exemption
      from registration for the transactions contemplated hereby or would require
      registration of the Securities under the 1933 Act.

     

    
      
        
        

      

      
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    4.23 Private
      Placement.
      Subject
      to the accuracy of the representations and warranties of the Investors set
      forth
      in Section 5, the offer and sale of the Securities to the Investors as
      contemplated hereby is exempt from the registration requirements of the 1933
      Act.

     

    4.24 Questionable
      Payments.
      Neither
      the Company nor any of its Subsidiaries nor, to the Company’s Knowledge, any of
      their respective current or former stockholders, directors, officers, employees,
      agents or other Persons acting on behalf of the Company or any Subsidiary,
      has
      on behalf of the Company or any Subsidiary or in connection with their
      respective businesses: (a) used any corporate funds for unlawful contributions,
      gifts, entertainment or other unlawful expenses relating to political activity;
      (b) made any direct or indirect unlawful payments to any governmental officials
      or employees from corporate funds; (c) established or maintained any unlawful
      or
      unrecorded fund of corporate monies or other assets; (d) made any false or
      fictitious entries on the books and records of the Company or any Subsidiary;
      or
      (e) made any unlawful bribe, rebate, payoff, influence payment, kickback or
      other unlawful payment of any nature.

     

    4.25 Transactions
      with Affiliates.
      Except
      as disclosed in the SEC Filings, none of the officers or directors of the
      Company and, to the Company’s Knowledge, none of the employees of the Company is
      presently a party to any transaction with the Company or any Subsidiary (other
      than as holders of stock options and/or warrants, and for services as employees,
      officers and directors), including any contract, agreement or other arrangement
      providing for the furnishing of services to or by, providing for rental of
      real
      or personal property to or from, or otherwise requiring payments to or from
      any
      officer, director or such employee or, to the Company’s Knowledge, any entity in
      which any officer, director, or any such employee has a substantial interest
      or
      is an officer, director, trustee or partner.

     

    4.26 Internal
      Controls.
      The
      Company is in material compliance with the provisions of the Sarbanes-Oxley
      Act
      of 2002 currently applicable to the Company. The Company and the Subsidiaries
      maintain a system of internal accounting controls sufficient to provide
      reasonable assurance that (i) transactions are executed in accordance with
      management’s general or specific authorizations, (ii) transactions are recorded
      as necessary to permit preparation of financial statements in conformity with
      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. The Company has established disclosure controls and procedures
      (as
      defined in 1934 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, including the Subsidiaries, is made known to the
      certifying officers by others within those entities, particularly during the
      period in which the Company’s most recently filed period report under the 1934
      Act, as the case may be, is being prepared. The Company’s certifying officers
      have evaluated the effectiveness of the Company’s controls and procedures as of
      the end of the period covered by the most recently filed periodic report under
      the 1934 Act (such date, the “Evaluation Date”). The Company presented in its
      most recently filed periodic report under the 1934 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 (as such term is defined in Item 308 of Regulation S-K) or,
      to
      the Company’s Knowledge, in other factors that could significantly affect the
      Company’s internal controls. The Company maintains and will continue to maintain
      a standard system of accounting established and administered in accordance
      with
      GAAP and the applicable requirements of the 1934 Act.

     

    
      
        
        

      

      
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    4.27 Disclosures.
      Neither
      the Company nor any Person acting on its behalf has provided the Investors
      or
      their agents or counsel with any information that constitutes or might
      constitute material, non-public information. The written materials delivered
      to
      the Investors in connection with the transactions contemplated by the
      Transaction Documents do not contain any untrue statement of a material fact
      or
      omit to state a material fact necessary in order to make the statements
      contained therein, in light of the circumstances under which they were made,
      not
      misleading.

     

    5. Representations
      and Warranties of the Investors.
      Each of
      the Investors hereby severally, and not jointly, represents and warrants to
      the
      Company that:

     

    5.1 Organization
      and Existence.
      To the
      extent indicated on the signature pages hereto, such Investor either (i) an
      individual or a, (ii) corporation, (iii) limited partnership or (iv) limited
      liability company validly existing under the laws of its state of incorporation
      or formation, as applicable, and has, as applicable, all requisite corporate,
      partnership or limited liability company power and authority to invest in the
      Securities pursuant to this Agreement.

     

    5.2 Authorization.
      The
      execution, delivery and performance by such Investor of the Transaction
      Documents to which such Investor is a party have been duly authorized and will
      each constitute the valid and legally binding obligation of such Investor,
      enforceable against such Investor in accordance with their respective terms,
      subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
      moratorium and similar laws of general applicability, relating to or affecting
      creditors’ rights generally.

     

    5.3 Purchase
      Entirely for Own Account.
      The
      Securities to be received by such Investor hereunder will be acquired for such
      Investor’s own account, not as nominee or agent, and not with a view to the
      resale or distribution of any part thereof in violation of the 1933 Act, and
      such Investor has no present intention of selling, granting any participation
      in, or otherwise distributing the same in violation of the 1933 Act without
      prejudice, subject, however, to such Investor’s right at all times to sell or
      otherwise dispose of all or any part of such Securities in compliance with
      applicable federal and state securities laws. Nothing contained herein shall
      be
      deemed a representation or warranty by such Investor to hold the Securities
      for
      any period of time. Such Investor is not a broker-dealer registered with the
      SEC
      under the 1934 Act or an entity engaged in a business that would require it
      to
      be so registered.

     

    5.4 Investment
      Experience.
      Such
      Investor acknowledges that it can bear the economic risk and complete loss
      of
      its investment in the Securities and has such knowledge and experience in
      financial or business matters that it is capable of evaluating the merits and
      risks of the investment contemplated hereby.

     

    
      
        
        

      

      
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    5.5 Disclosure
      of Information.
      Such
      Investor has had an opportunity to receive all information related to the
      Company requested by it and to ask questions of and receive answers from the
      Company regarding the Company, its business and the terms and conditions of
      the
      offering of the Securities. Such Investor acknowledges receipt of copies of
      the
      SEC Filings. Neither such inquiries nor any other due diligence investigation
      conducted by such Investor shall modify, limit or otherwise affect such
      Investor’s right to rely on the Company’s representations and warranties
      contained in this Agreement.

     

    5.6 Restricted
      Securities.
      Such
      Investor understands that the Securities are characterized as “restricted
      securities” under the U.S. federal securities laws inasmuch as they are being
      acquired from the Company in a transaction not involving a public offering
      and
      that under such laws and applicable regulations such securities may be resold
      without registration under the 1933 Act only in certain limited
      circumstances.

     

    5.7 Legends.
      It is
      understood that, except as provided below, certificates evidencing the
      Securities may bear the following or any similar legend:

     

    (a) “The
      securities represented hereby may not be transferred unless (i) such securities
      have been registered for sale pursuant to the Securities Act of 1933, as
      amended, (ii) such securities may be sold pursuant to Rule 144(k), or (iii)
      the
      Company has received an opinion of counsel reasonably satisfactory to it that
      such transfer may lawfully be made without registration under the Securities
      Act
      of 1933 or qualification under applicable state securities laws.”

     

    (b) If
      required by the authorities of any state in connection with the issuance of
      sale
      of the Securities, the legend required by such state authority.

     

    5.8 Accredited
      Investor.
      Such
      Investor is an accredited investor as defined in Rule 501(a) of Regulation
      D, as
      amended, under the 1933 Act. The definition of “accredited investor” is annexed
      hereto.

     

    5.9 No
      General Solicitation.
      Such
      Investor did not learn of the investment in the Securities as a result of any
      general solicitation or general advertising.

     

    5.10 Brokers
      and Finders.
      No
      Person will have, as a result of the transactions contemplated by the
      Transaction Documents, any valid right, interest or claim against or upon the
      Company, any Subsidiary or an Investor for any commission, fee or other
      compensation pursuant to any agreement, arrangement or understanding entered
      into by or on behalf of such Investor.

     

    
      
        
        

      

      
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    5.11 Prohibited
      Transactions.
      During
      the last thirty (30) days prior to the date hereof, neither such Investor nor
      any Affiliate of such Investor which (x) had knowledge of the transactions
      contemplated hereby, (y) has or shares discretion relating to such Investor’s
      investments or trading or information concerning such Investor’s investments,
      including in respect of the Securities, or (z) is subject to such Investor’s
      review or input concerning such Affiliate’s investments or trading
      (collectively, “Trading Affiliates”) has, directly or indirectly, effected or
      agreed to effect any short sale, whether or not against the box, established
      any
“put equivalent position” (as defined in Rule 16a-1(h) under the 1934 Act) with
      respect to the Common Shares, granted any other right (including, without
      limitation, any put or call option) with respect to the Common Shares or with
      respect to any security that includes, relates to or derived any significant
      part of its value from the Common Shares or otherwise sought to hedge its
      position in the Securities (each, a “Prohibited Transaction”). Prior to the
      filing by the Company of a Current Report on Form 8-K announcing the
      transactions contemplated hereby, such Investor shall not, and shall cause
      its
      Trading Affiliates not to, engage, directly or indirectly, in a Prohibited
      Transaction. Such Investor acknowledges that the representations, warranties
      and
      covenants contained in this Section 6.11 are being made for the benefit of
      the
      Investors as well as the Company and that each of the other Investors shall
      have
      an independent right to assert any claims against such Investor arising out
      of
      any breach or violation of the provisions of this Section 6.11.

     

    6. Conditions
      to Closing.

     

    6.1 Conditions
      to the Investors’ Obligations. The obligation of each Investor to purchase the
      Notes and the Warrants at Closing is subject to the fulfillment to such
      Investor’s satisfaction, on or prior to the Closing Date, of the following
      conditions, any of which may be waived by such Investor (as to itself
      only):

     

    (a) The
      representations and warranties made by the Company in Section 4 hereof qualified
      as to materiality shall be true and correct on the Closing Date, except to
      the
      extent any such representation or warranty expressly speaks as of an earlier
      date, in which case such representation or warranty shall be true and correct
      as
      of such earlier date, and, the representations and warranties made by the
      Company in Section 4 hereof not qualified as to materiality shall be true and
      correct in all material respects on the Closing Date, except to the extent
      any
      such representation or warranty expressly speaks as of an earlier date, in
      which
      case such representation or warranty shall be true and correct in all material
      respects as of such earlier date. The Company shall have performed all
      obligations and covenants herein required to be performed by it on or prior
      to
      the Closing Date, including without limitation those contained in Section 3.1
      hereof.

     

    (b) The
      Company shall have obtained any and all consents, permits, approvals,
      registrations and waivers necessary or appropriate for consummation of the
      purchase and sale of the Notes and the Warrants and the consummation of the
      other transactions contemplated by the Transaction Documents to be consummated
      on or prior to the Closing Date, all of which shall be in full force and
      effect.

     

    (c) The
      Company shall have executed and delivered to the Placement Agent each of the
      Transition Documents.

     

    (d) No
      judgment, writ, order, injunction, award or decree of or by any court, or judge,
      justice or magistrate, including any bankruptcy court or judge, or any order
      of
      or by any governmental authority, shall have been issued, and no action or
      proceeding shall have been instituted by any governmental authority, enjoining
      or preventing the consummation of the transactions contemplated hereby or in
      the
      other Transaction Documents.

     

    
      
        
        

      

      
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    (e) The
      Company shall have delivered a Certificate, executed on behalf of the Company
      by
      its Chief Executive Officer or its Chief Financial Officer, dated as of the
      Closing Date, certifying to the fulfillment of the conditions specified in
      subsections (a), (b) and (d) of this Section 6.1.

     

    (f) The
      Company shall have delivered a Certificate, executed on behalf of the Company
      by
      its Secretary, dated as of the Closing Date, certifying the resolutions adopted
      by the Board of Directors of the Company approving, as applicable, the
      transactions contemplated by this Agreement and the other Transaction Documents,
      and the issuance of the Securities, certifying the current versions of its
      Articles of Incorporation and Bylaws or other organizational documents and
      certifying as to the signatures and authority of persons signing the Transaction
      Documents and related documents on its behalf.

     

    (g) No
      stop
      order or suspension of trading shall have been imposed by the SEC or any other
      governmental or regulatory body with respect to public trading in the Common
      Stock.

     

    (h) The
      Company and the Placement Agent shall have received executed signature pages
      from Investors representing purchases of the Securities of at least $3.0 million
      in the aggregate.

     

    (i) The
      Notes
      and Warrants shall have been deposited with the Escrow Agent in accordance
      with
      the terms of Section 3.1 hereof.

     

    6.2 Conditions
      to Obligations of the Company.
      The
      Company’s obligation to sell and issue the Notes and the Warrants at the Closing
      is subject to the fulfillment to the satisfaction of the Company on or prior
      to
      the Closing Date of the following conditions, any of which may be waived by
      the
      Company:

     

    (a) The
      representations and warranties made by the Investors in Section 6 hereof, other
      than the representations and warranties contained in Sections 5.3, 5.4, 5.5,
      5.6, 5.7, 5.8 and 5.9 (the “Investment Representations”), shall be true and
      correct in all material respects when made, and shall be true and correct in
      all
      material respects on the Closing Date with the same force and effect as if
      they
      had been made on and as of said date. The Investment Representations shall
      be
      true and correct in all respects when made, and shall be true and correct in
      all
      respects on the Closing Date with the same force and effect as if they had
      been
      made on and as of said date. The Investors shall have performed in all material
      respects all obligations and covenants herein required to be performed by them
      on or prior to the Closing Date.

     

    (b) The
      Investors shall have executed and delivered the Registration Rights
      Agreement.

     

    
      
        
        

      

      
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    6.3 Termination
      of Obligations to Effect Closing; Effects.

     

    (a) The
      outstanding obligations of the Company, on the one hand, and the Investors,
      on
      the other hand, to effect any Closing shall terminate as follows:

     

    (i) Upon
      the
      mutual written consent of the Company and the Investors;

     

    (ii) By
      the
      Company if any of the conditions set forth in Section 6.2 shall have become
      incapable of fulfillment, and shall not have been waived by the
      Company;

     

    (iii) By
      an
      Investor (with respect to itself only) if any of the conditions set forth in
      Section 6.1 shall have become incapable of fulfillment, and shall not have
      been
      waived by the Investor;

     

    (iv) By
      either
      the Company or any Investor (with respect to itself only) if the Closing has
      not
      occurred on or prior to February 28, 2007; or

     

    provided,
      however, that, except in the case of clause (i) above, the party seeking to
      terminate its obligation to effect a Closing shall not then be in breach of
      any
      of its representations, warranties, covenants or agreements contained in this
      Agreement or the other Transaction Documents if such breach has resulted in
      the
      circumstances giving rise to such party’s seeking to terminate its obligation to
      effect the Closing.

     

    (b) In
      the
      event of termination by any Investor of its obligations to effect a Closing
      pursuant to this Section 6.3, written notice thereof shall forthwith be given
      to
      the other Investors and the other Investors shall have the right to terminate
      their obligations to effect such Closing upon written notice to the Company
      and
      the other Investors. Nothing in this Section 6.3 shall be deemed to release
      any
      party from any liability for any breach by such party of the terms and
      provisions of this Agreement or the other Transaction Documents or to impair
      the
      right of any party to compel specific performance by any other party of its
      obligations under this Agreement or the other Transaction
      Documents.

     

    7. Covenants
      and Agreements of the Company.

     

    7.1 Reservation
      of Common Stock.
      The
      Company shall at all times reserve and keep available out of its authorized
      but
      unissued shares of Common Stock, solely for the purpose of providing for the
      conversion of the Notes and/or Preferred Stock, if any, and the exercise of
      the
      Warrants such number of shares of Common Stock as shall from time to time equal
      the Warrant Shares issuable from time to time and shares of Common Stock
      underlying the Notes and/or Preferred Stock, if any.

     

    7.2 Reports.
      The
      Company will furnish to the Investors and/or their assignees such information
      relating to the Company and its Subsidiaries as from time to time may reasonably
      be requested by the Investors and/or their assignees; provided, however, that
      the Company shall not disclose material, non-public information to the
      Investors, or to advisors to or representatives of the Investors, unless prior
      to disclosure of such information the Company identifies such information as
      being material, non-public information and provides the Investors, such advisors
      and representatives with the opportunity to accept or refuse to accept such
      material, non-public information for review and any Investor wishing to obtain
      such information enters into an appropriate confidentiality agreement with
      the
      Company with respect thereto.

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

       

    

    7.3 No
      Conflicting Agreements.
      The
      Company will not take any action, enter into any agreement or make any
      commitment that would conflict or interfere in any material respect with the
      Company’s obligations to the Investors under the Transaction
      Documents.

     

    7.4 Insurance.
      The
      Company shall not materially reduce the insurance coverages described in Section
      4.19.

     

    7.5 Compliance
      with Laws.
      The
      Company will comply in all material respects with all applicable laws, rules,
      regulations, orders and decrees of all governmental authorities.

     

    7.6 Termination
      of Covenants.
      The
      provisions of Sections 7.2 through 7.5 shall terminate and be of no further
      force and effect on the date on which the Company’s obligations under the
      Registration Rights Agreement to register or maintain the effectiveness of
      any
      registration covering the Registrable Securities (as such term is defined in
      the
      Registration Rights Agreement) shall terminate.

     

    7.7 Removal
      of Legends.
      Upon
      the earlier of (i) registration for resale pursuant to the Registration Rights
      Agreement or (ii) Rule 144(k) becoming available the Company shall (A) deliver
      to the Company’s transfer agent for the Common Stock (the “Transfer Agent”)
      irrevocable instructions that the Transfer Agent shall reissue a certificate
      representing shares of Common Stock without legends upon receipt by such
      Transfer Agent of the legended certificates for such shares, together with
      either (1) a customary representation by the Investor that Rule 144(k) applies
      to the shares of Common Stock represented thereby or (2) a statement by the
      Investor that such Investor has sold the shares of Common Stock represented
      thereby in accordance with the Plan of Distribution contained in the
      Registration Statement, and (B) cause its counsel to deliver to the Transfer
      Agent one or more blanket opinions to the effect that the removal of such
      legends in such circumstances may be effected under the 1933 Act. From and
      after
      the earlier of such dates, upon an Investor’s written request, the Company shall
      promptly cause certificates evidencing the Investor’s Securities to be replaced
      with certificates which do not bear such restrictive legends, and Warrant Shares
      or shares of Common Stock issuable upon conversion of the Notes and/or Preferred
      Stock, if any subsequently issued upon due exercise of the Warrants shall not
      bear such restrictive legends provided the provisions of either clause (i)
      or
      clause (ii) above, as applicable, are satisfied with respect to such Warrant
      Shares or conversion shares, as applicable. When the Company is required to
      cause unlegended certificates that replace previously issued legended
      certificates to be prepared by the Transfer Agent and delivered to the holders
      thereof, if unlegended certificates are not delivered to an Investor within
      five
      (5) Business Days of submission by that Investor of legended certificate(s)
      to
      the Transfer Agent as provided above (or to the Company, in the case of the
      Warrants or the Notes and/or Preferred Stock, if any), the Company shall be
      liable to the Investor for liquidated damages in an amount equal to 1.5% of
      the
      aggregate purchase price of the Securities evidenced by such certificate(s)
      for
      each thirty (30) day period (or portion thereof) beyond such five (5) Business
      Day that the unlegended certificates have not been so delivered.

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

       

    

    7.8 Participation
      Right.
      Excluding the issuance of the Securities referenced in Section 3.3 herein or
      as
      otherwise set forth in this Section 7.8, the Investors shall have a pro rata
      right to participate in any subsequent placements of debt or equity until one
      (1) year after the effective date of the initial registration statement filed
      further to the Registration Rights Agreement on terms no less favorable than
      those obtained by the Company from an unaffiliated third party. Each Investor
      must notify the Company within 20 days following their receipt of notice from
      the Company of such proposed financing of its intention to participate in the
      financing, the closing of which shall occur within 30 days following the
      Company’s receipt of such participation notice. This participation right shall
      not apply to an Exempt Issuance. In the event that there is such a subsequent
      placement of debt or equity to any of the Investors, the Placement Agent will
      be
      entitled to receive cash compensation with respect to the amount invested by
      such Investors based on the cash commission rate paid to the Placement Agent
      for
      the Securities sold hereunder.

     

    7.9 Subsequent
      Equity Sales.
      From
      the date hereof until such time as the Investors hold shares of Preferred Stock,
      Notes and/or Warrants convertible or exercisable, as the case may be, into
      an
      aggregate of less than 3.0 million (3,000,000) shares of the Company’s Common
      Stock, the Company shall be prohibited from effecting or entering into an
      agreement to effect a “Variable
      Rate Transaction”
or
      an
“MFN
      Transaction”
(each
      as defined below). The term “Variable
      Rate Transaction”
shall
      mean a transaction in which the Company issues or sells (i) any debt or equity
      securities that are convertible into, exchangeable or exercisable for, or
      include the right to receive additional shares of Common Stock either (A) at
      a
      conversion, exercise or exchange rate or other price that is based upon and/or
      varies with the trading prices of or quotations for the shares of Common Stock
      at any time after the initial issuance of such debt or equity securities, or
      (B)
      with a conversion, exercise or exchange price that is subject to being reset
      at
      some future date after the initial issuance of such debt or equity security
      or
      upon the occurrence of specified or contingent events directly or indirectly
      related to the business of the Company or the market for the Common Stock.
      The
      term “MFN
      Transaction”
shall
      mean a transaction in which the Company issues or sells any securities in a
      capital raising transaction or series of related transactions which grants
      to an
      investor the right to receive additional shares based upon future transactions
      of the Company on terms more favorable than those granted to such investor
      in
      such offering. Any Investor shall be entitled to obtain injunctive relief
      against the Company to preclude any such issuance, which remedy shall be in
      additional to any right to collect damages. Notwithstanding the foregoing this
      Section 7.9 shall not apply in respect of an Exempt Issuance, except that no
      Variable Rate Transaction or MFN Transaction shall be an Exempt
      Issuance.

     

    7.10 Stockholder
      Resolutions.
      At or
      before the next annual meeting of the stockholders of the Company, the Board
      of
      Directors shall propose and submit to the holders of the Common Stock for
      approval of the following:

     

    (a) adoption
      of that form of Certificate of Designations of Preferences, Rights and
      Limitations of Series A Convertible Preferred Stock attached hereto as
Exhibit
      D
      and
      filing of the same with the Secretary of State of Utah (or such other
      jurisdiction upon any reincorporation of the Company further to such stockholder
      solicitation); and 

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

       

    

    (b) an
      amendment to the Company’s Articles of Incorporation that provides substantially
      as follows: 

     

    The
      Company shall not effect any conversion of the Series A Convertible Preferred
      Stock or any exercise of any Series A or Series B Warrants to purchase shares
      of
      Common Stock, and no Holder shall have the right to convert any portion of
      the
      Series A Preferred Stock or exercise any such warrant to the extent that after
      such conversion or exercise, as the case may be, the Holder would beneficially
      own in excess of 9.9% of the then issued and outstanding shares of common stock.
      This provision may be waived or amended only with the consent of the subject
      Holder and the consent of holders of a majority of the shares of outstanding
      Common Stock who are not Affiliates. Solely for purposes of the foregoing,
      the
      term “Affiliate” shall mean any person: (a) that directly, or indirectly through
      one or more intermediaries, controls or is controlled by, or is under common
      control with the Company or (b) who beneficially owns (i) as an original
      purchaser any shares of Common Stock issued further to the December Purchase
      Agreement, (ii) any shares of the Company’s Series A Convertible Preferred Stock
      or (iii) any Series A or Series B Warrant(s) to purchase shares of the Company’s
      Common Stock issued further to the December Purchase Agreement or this
      Agreement.

     

    8. Survival
      and Indemnification.

     

    8.1 Survival.
      The
      representations, warranties, covenants and agreements contained in this
      Agreement shall survive the Closing of the transactions contemplated by this
      Agreement for a period of 18 months following the Closing.

     

    8.2 Indemnification.
      The
      Company agree to indemnify and hold harmless each Investor and the Placement
      Agent and their respective Affiliates and their respective directors, officers,
      employees and agents from and against any and all losses, claims, damages,
      liabilities and expenses (including without limitation reasonable attorneys’
fees and disbursements and other expenses incurred in connection with
      investigating, preparing or defending any action, claim or proceeding, pending
      or threatened and the costs of enforcement thereof) (collectively, “Losses”) to
      which such Person may become subject as a result of any breach of
      representation, warranty, covenant or agreement made by or to be performed
      on
      the part of the Company under the Transaction Documents, and will reimburse
      any
      such Person for all such amounts as they are incurred by such
      Person.

     

    8.3 Conduct
      of Indemnification Proceedings.
      Promptly after receipt by any Person (the “Indemnified Person”) of notice of any
      demand, claim or circumstances which would or might give rise to a claim or
      the
      commencement of any action, proceeding or investigation in respect of which
      indemnity may be sought pursuant to Section 8.2, such Indemnified Person shall
      promptly notify the Company in writing, and the Company shall assume the defense
      thereof, including the employment of counsel reasonably satisfactory to such
      Indemnified Person, and shall assume the payment of all fees and expenses;
      provided, however, that the failure of any Indemnified Person so to notify
      the
      Company shall not relieve the Company of its obligations hereunder except to
      the
      extent that the Company is materially prejudiced by such failure to notify.
      In
      any such proceeding, any Indemnified Person shall have the right to retain
      its
      own counsel, but the fees and expenses of such counsel shall be at the expense
      of such Indemnified Person unless: (i) the Company and the Indemnified Person
      shall have mutually agreed to the retention of such counsel; or (ii) in the
      reasonable judgment of counsel to such Indemnified Person representation of
      both
      parties by the same counsel would be inappropriate due to actual or potential
      differing interests between them. The Company shall not be liable for any
      settlement of any proceeding effected without its written consent, which consent
      shall not be unreasonably withheld, but if settled with such consent, or if
      there be a final judgment for the plaintiff, the Company shall indemnify and
      hold harmless such Indemnified Person from and against any loss or liability
      (to
      the extent stated above) by reason of such settlement or judgment. Without
      the
      prior written consent of the Indemnified Person, which consent shall not be
      unreasonably withheld, the Company shall not effect any settlement of any
      pending or threatened proceeding in respect of which any Indemnified Person
      is
      or could have been a party and indemnity could have been sought hereunder by
      such Indemnified Party, unless such settlement includes an unconditional release
      of such Indemnified Person from all liability arising out of such
      proceeding.

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

       

    

    9. Miscellaneous.

     

    9.1 Successors
      and Assigns.
      This
      Agreement may not be assigned by a party hereto without the prior written
      consent of the Company or the Investors, as applicable; provided, however,
      that
      an Investor may assign its rights and delegate its duties hereunder in whole
      or
      in part to an Affiliate or to a third party acquiring some or all of its
      Securities in a private transaction without the prior written consent of the
      Company or the other Investors, after notice duly given by such Investor to
      the
      Company; provided further, that no such assignment or obligation shall affect
      the obligations of such Investor hereunder. The provisions of this Agreement
      shall inure to the benefit of and be binding upon the respective permitted
      successors and assigns of the parties. Nothing in this Agreement, express or
      implied, is intended to confer upon any party other than the parties hereto
      and
      the Placement Agent or their respective successors and assigns any rights,
      remedies, obligations, or liabilities under or by reason of this Agreement,
      except as expressly provided in this Agreement.

     

    9.2 Counterparts;
      Faxes.
      This
      Agreement may be executed in two or more counterparts, each of which shall
      be
      deemed an original, but all of which together shall constitute one and the
      same
      instrument. This Agreement may also be executed via facsimile, which shall
      be
      deemed an original.

     

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

     

    9.4 Notices.
      Unless
      otherwise provided, any notice required or permitted under this Agreement shall
      be given in writing and shall be deemed effectively given as hereinafter
      described (i) if given by personal delivery, then such notice shall be deemed
      given upon such delivery, (ii) if given by telex or telecopier, then such notice
      shall be deemed given upon receipt of confirmation of complete transmittal,
      (iii) if given by mail, then such notice shall be deemed given upon the earlier
      of (A) receipt of such notice by the recipient or (B) three days after such
      notice is deposited in first class mail, postage prepaid, and (iv) if given
      by
      an internationally recognized overnight air courier, then such notice shall
      be
      deemed given one Business Day after delivery to such carrier. All notices shall
      be addressed to the party to be notified at the address as follows, or at such
      other address as such party may designate by ten days’ advance written notice to
      the other party:

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

       

    

    If
      to the
      Company:

     

    Long-E
      International Group Co., Ltd.

    C-6F,
      Huhan Chuangxin Block, Keyuan Road, 

    Hi-Tech
      Industry Zone,

    Shenzhen,
      518000, Guangdong, China

    Telephone:
      (86) 755 3396 5188

    Facsimile:
      (86) 755 3396 5123

    Attention:
      Chairman of the Board

     

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

     

    Kirkpatrick
      & Lockhart Preston Gates Ellis LLP

    10100
      Santa Monica Boulevard, Seventh Floor

    Los
      Angeles, California 90067

    Facsimile:
      (310) 552-5001

    Attention:
      Thomas Poletti, Esq.

     

    If
      to the
      Investors:

     

    to
      the
      addresses set forth on the signature pages hereto, with copies, as it relates
      to
      notices sent to Vision Opportunity Master Fund, Ltd. to (which shall not
      constitute notice):

     

    Olshan
      Grundman Frome Rosenzweig & Wolosky LLP

    Park
      Avenue Tower

    65
      East
      55th
      Street

    New
      York,
      New York 10022

    Facsimile:
      (212) 451-2222

    Attention:
      Kenneth M. Silverman, Esq.

     

    9.5 Expenses.
      The
      parties hereto shall pay their own costs and expenses in connection herewith,
      except that the Company shall pay the reasonable fees and expenses of Olshan
      Grundman Frome Rosenzweig & Wolosky LLP, counsel to Vision Opportunity
      Master Fund, Ltd. All of such fees and expenses shall be deducted from the
      Escrow Amount pursuant to signed written instructions of the Company and the
      Placement Agent.

     

    9.6 Amendments
      and Waivers.
      Any
      term of this Agreement may be amended and the observance of any term of this
      Agreement may be waived (either generally or in a particular instance and either
      retroactively or prospectively), only with the written consent of the Company
      and Investors holding eighty five percent (85%) of the principal amount of
      Notes
      issued further to this Agreement and then outstanding. Any amendment or waiver
      effected in accordance with this paragraph shall be binding upon each holder
      of
      any Securities purchased under this Agreement at the time outstanding, each
      future holder of all such Securities, and the Company.

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

       

    

    9.7 Publicity.
      Except
      as set forth below, no public release or announcement concerning the
      transactions contemplated hereby shall be issued by the Company or the Investors
      without the prior consent of the Company (in the case of a release or
      announcement by the Investors) or the Investors (in the case of a release or
      announcement by the Company) (which consents shall not be unreasonably
      withheld), except as such release or announcement may be required by law or
      the
      applicable rules or regulations of any securities exchange or securities market,
      in which case the Company or the Investors, as the case may be, shall allow
      the
      Investors or the Company, as applicable, to the extent reasonably practicable
      in
      the circumstances, reasonable time to comment on such release or announcement
      in
      advance of such issuance. By 8:30 a.m. (New York City time) on the trading
      day
      immediately following the Closing Date, the Company shall issue a press release
      disclosing the consummation of the transactions contemplated by this Agreement
      on such Closing Date. No later than the next trading day following the Closing
      Date, the Company will file a Current Report on Form 8-K attaching the press
      release described in the foregoing sentence as well as copies of the Transaction
      Documents and any material, non-public information that was disclosed on or
      prior to the Closing Date to any of the Investors. In addition, the Company
      will
      make such other filings and notices in the manner and time required by the
      SEC.
      Notwithstanding the foregoing, the Company shall not publicly disclose the
      name
      of any Investor, or include the name of any Investor in any filing with the
      SEC
      (other than the Registration Statement and any exhibits to filings made in
      respect of this transaction in accordance with periodic filing requirements
      under the 1934 Act) or any regulatory agency, without the prior written consent
      of such Investor, except to the extent such disclosure is required by law or
      trading market regulations, in which case the Company shall provide the
      Investors with prior notice of such disclosure.

     

    9.8 Severability.
      Any
      provision of this Agreement that is prohibited or unenforceable in any
      jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
      such prohibition or unenforceability without invalidating the remaining
      provisions hereof but shall be interpreted as if it were written so as to be
      enforceable to the maximum extent permitted by applicable law, and any such
      prohibition or unenforceability in any jurisdiction shall not invalidate or
      render unenforceable such provision in any other jurisdiction. To the extent
      permitted by applicable law, the parties hereby waive any provision of law
      which
      renders any provision hereof prohibited or unenforceable in any
      respect.

     

    9.9 Entire
      Agreement.
      This
      Agreement, including the Exhibits and the Disclosure Schedules, and the other
      Transaction Documents constitute the entire agreement among the parties hereof
      with respect to the subject matter hereof and thereof and supersede all prior
      agreements and understandings, both oral and written, between the parties with
      respect to the subject matter hereof and thereof.

     

    9.10 Further
      Assurances.
      The
      parties shall execute and deliver all such further instruments and documents
      and
      take all such other actions as may reasonably be required to carry out the
      transactions contemplated hereby and to evidence the fulfillment of the
      agreements herein contained.

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

       

    

    9.11 Governing
      Law; Consent to Jurisdiction; Waiver of Jury Trial.
      This
      Agreement shall be governed by, and construed in accordance with, the internal
      laws of the State of New York without regard to the choice of law principles
      thereof to the extent that the general application of the laws of another
      jurisdiction would be required thereby. Each of the parties hereto irrevocably
      submits to the exclusive jurisdiction of the courts of the State of New York
      located in New York County and the United States District Court for the Southern
      District of New York for the purpose of any suit, action, proceeding or judgment
      relating to or arising out of this Agreement and the transactions contemplated
      hereby. Service of process in connection with any such suit, action or
      proceeding may be served on each party hereto anywhere in the world by the
      same
      methods as are specified for the giving of notices under this Agreement. Each
      of
      the parties hereto irrevocably consents to the jurisdiction of any such court
      in
      any such suit, action or proceeding and to the laying of venue in such court.
      Each party hereto irrevocably waives any objection to the laying of venue of
      any
      such suit, action or proceeding brought in such courts and irrevocably waives
      any claim that any such suit, action or proceeding brought in any such court
      has
      been brought in an inconvenient forum. EACH
      OF THE PARTIES HERETO WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY
      LITIGATION WITH RESPECT TO THIS AGREEMENT AND REPRESENTS THAT COUNSEL HAS BEEN
      CONSULTED SPECIFICALLY AS TO THIS WAIVER.

     

    9.12 Independent
      Nature of Investors’ Obligations and Rights.
      The
      obligations of each Investor under any Transaction Document are several and
      not
      joint with the obligations of any other Investor, and no Investor shall be
      responsible in any way for the performance of the obligations of any other
      Investor under any Transaction Document. The decision of each Investor to
      purchase Securities pursuant to the Transaction Documents has been made by
      such
      Investor independently of any other Investor. Nothing contained herein or in
      any
      Transaction Document, and no action taken by any Investor pursuant thereto,
      shall be deemed to constitute the Investors as a partnership, an association,
      a
      joint venture or any other kind of entity, or create a presumption that the
      Investors are in any way acting in concert or as a group with respect to such
      obligations or the transactions contemplated by the Transaction Documents.
      Each
      Investor acknowledges that no other Investor has acted as agent for such
      Investor in connection with making its investment hereunder and that no Investor
      will be acting as agent of such Investor in connection with monitoring its
      investment in the Securities or enforcing its rights under the Transaction
      Documents. Each Investor 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 Investor to be joined as an additional party in any
      proceeding for such purpose. The Company acknowledges that each of the Investors
      has been provided with the same Transaction Documents for the purpose of closing
      a transaction with multiple Investors and not because it was required or
      requested to do so by any Investor.

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the parties have executed this Agreement or caused their duly
      authorized officers to execute this Agreement as of the date first above
      written.

     

    
      	 	 	 
	 	LONG-E
              INTERNATIONAL, INC.
	 
 	 
 	 
 
	 	By:  	/s/ Bu
              Shengfu
	 	
              
Name:
              Bu Shengfu
	 	Title:  
              Chairman and CEO

    

     

    

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

    
      	
              The
                Investors:

            	
              BARRON
                PARTNERS LP

            
	 	 
	 	 
	 	
              By:

            	/s/
              Andrew Barron Worden
	 	 	
              Name:

            	
              Andrew
                Barron Worden

            
	 	 	
              Title:

            	
              Managing
                Partner

            
	 	 
	
              Purchase
                Price:

            	
              $3.4
                Million

            
	
              Principal
                Amount of Notes:

            	
              $3.4
                Million

            
	
              Number
                of Series A Warrants:

            	
              4,250,000

            
	
              Number
                of Series B Warrants:

            	
              4,250,000

            
	 	 
	
              Address
                for Notice:

            	
              c/o
                Barron Capital Advisors LLC

              730
                Fifth Avenue, 9th Floor

              New
                York, NY 10019

              Telephone
                (212) 659-7790

              Facsimile
                (646) 607-2223

            

    

     

     

     

     

     

    [Signature
      page to Securities Purchase
      Agreement]

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    
      	
              The
                Investors:

            	
              VISION
                OPPORTUNITY MASTER FUND, LTD

            
	 	 
	 	 
	 	
              By:

            	 /s/
Adam
              Benowitz
	 	 	
              Name:

            	
              Adam
                Benowitz

            
	 	 	
              Title:

            	
              Managing
                Partner

            
	 	 
	
              Purchase
                Price:

            	
              $1.0
                Million

            
	
              Principal
                Amount of Notes:

            	
              $1.0
                Million

            
	
              Number
                of Series A Warrants:

            	
              1,250,000

            
	
              Number
                of Series B Warrants:

            	
              1,250,000

            
	 	 
	
              Address
                for Notice:

            	
              c/o
                Vision Capital Advisors LLC

              20
                W. 55th
                Street, 5th Floor

              New
                York, NY 10019

              Telephone
                (212) 849-8225

              Facsimile
                (212) 867-1416

            

    

    
       

       

       

       

       

      [Signature
        page to Securities Purchase
        Agreement]

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

      

    

    
      	
              The
                Investors:

            	
              JCAR
                FUNDS LTD.

            
	 	 
	 	 
	 	
              By:

            	
              /s/
                Jon Carnes

            
	 	 	
              Name:

            	
              Jon
                Carnes

            
	 	 	
              Title:

            	 
	 	 
	
              Purchase
                Price:

            	
              $400,000

            
	
              Principal
                Amount of Notes:

            	
              $400,000

            
	
              Number
                of Series A Warrants:

            	
              500,000

            
	
              Number
                of Series B Warrants:

            	
              500,000

            
	 	 
	
              Address
                for Notice:

            	
              205-3740
                Chatham Street

              Richmond,
                BC V7E 2Z3

              CANADA

              Attention:
                Jon Carnes

              Facsimile
                (800) 542-9862

            

    

    
       

       

       

      [Signature
        page to Securities Purchase
        Agreement]

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

        

          
            	
                    The
                      Investors:

                  	
                    RAY
                      RIVERS

                  
	 	 
	 	 
	 	
                    By:

                  	 /s/
                    Ray Rivers
	 	 	
                    Name:

                  	
                    Ray
                      Rivers

                  
	 	 	
                    Title:

                  	 
	 	 
	
                    Purchase
                      Price:

                  	
                    $100,000

                  
	
                    Principal
                      Amount of Notes:

                  	
                    $100,000

                  
	
                    Number
                      of Series A Warrants:

                  	
                    125,000

                  
	
                    Number
                      of Series B Warrants:

                  	
                    125,000

                  
	 	 
	
                    Address
                      for Notice:

                  	
                    262
                      Harbor Drive

                    Stamford,
                      CT 06902

                    Attention:
                      Ray Rivers

                    Facsimile
                      (203) 569-6400

                  

          

        

         

         

        [Signature
          page to Securities Purchase
          Agreement]

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        

          
            	
                    The
                      Investors:

                  	
                    STEVE
                      MAZUR

                  
	 	 
	 	 
	 	
                    By:

                  	 /s/
                    Steve Mazur
	 	 	
                    Name:

                  	
                    Steve
                      Mazur

                  
	 	 	
                    Title:

                  	 
	 	 
	
                    Purchase
                      Price:

                  	
                    $100,000

                  
	
                    Principal
                      Amount of Notes:

                  	
                    $100,000

                  
	
                    Number
                      of Series A Warrants:

                  	
                    125,000

                  
	
                    Number
                      of Series B Warrants:

                  	
                    125,000

                  
	 	 
	
                    Address
                      for Notice:

                  	
                    262
                      Harbor Drive

                    Stamford,
                      CT 06902

                    Attention:
                      Ray Rivers

                    Facsimile
                      (203) 569-6400

                  

          

        

         

         

         

         

        [Signature
          page to Securities Purchase
          Agreement]

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

           

          

            
              	
                      The
                        Investors:

                    	
                      WILLIAM
                        DENKIN

                    
	 	 
	 	 
	 	
                      By:

                    	 /s/
                      William Denkin
	 	 	
                      Name:

                    	
                      William
                        Denkin

                    
	 	 	
                      Title:

                    	 
	 	 
	
                      Purchase
                        Price:

                    	
                      $100,000

                    
	
                      Principal
                        Amount of Notes:

                    	
                      $100,000

                    
	
                      Number
                        of Series A Warrants:

                    	
                      125,000

                    
	
                      Number
                        of Series B Warrants:

                    	
                      125,000

                    
	 	 
	
                      Address
                        for Notice:

                    	
                      262
                        Harbor Drive

                      Stamford,
                        CT 06902

                      Attention:
                        Ray Rivers

                      Facsimile
                        (203)
                        569-6400

                    

            

          

        

      

    

    
       

       

       

       

      [Signature
        page to Securities Purchase
        Agreement]

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    
      	
              The
                Investors:

            	
              NUTMEG
                / MERCURY FUND, LLP

            
	 	 
	 	 
	 	
              By:

            	
              /s/
                Randall Goulding

            
	 	 	
              Name:

            	
              Randall
                Goulding

            
	 	 	
              Title:

            	 
	 	 
	
              Purchase
                Price:

            	
              $153,000

            
	
              Principal
                Amount of Notes:

            	
              $153,000

            
	
              Number
                of Series A Warrants:

            	
              191,250

            
	
              Number
                of Series B Warrants:

            	
              191,250

            
	 	 
	
              Address
                for Notice:

            	
              3346
                Commercial Avenue

              Northbrook,
                IL 60062

              Attention:
                Randall Goulding

              Facsimile
                (847) 291-7711

            

    

    
       

       

       

       

       

      [Signature
        page to Securities Purchase
        Agreement]

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

      

    

    
      	
              The
                Investors:

            	
              RONALD
                AND LINDA NASH JTWROS

            
	 	 
	 	 
	 	
              By:

            	
              /s/
                Ronald Nash

            
	 	 	
              Name:

            	
              Ronald
                Nash

            
	 	 	
              Title:

            	 
	 	 
	
              Purchase
                Price:

            	
              $100,000

            
	
              Principal
                Amount of Notes:

            	
              $100,000

            
	
              Number
                of Series A Warrants:

            	
              125,000

            
	
              Number
                of Series B Warrants:

            	
              125,000

            
	 	 
	
              Address
                for Notice:

            	
              350
                Madison Avenue, 11th Floor

              New
                York, NY 10017

              Attention:
                Ronald Nash

              Facsimile
                (847) 291-7711

            

    

    
       

       

       

       

       

      [Signature
        page to Securities Purchase
        Agreement]

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    

    Definition
      of “Accredited Investor”

     

    
      	
              Category
                A ___ 

               

            	
              The
                undersigned is an individual (not a partnership, corporation, etc.)
                whose
                individual net worth, or joint net worth with his or her spouse,
                presently
                exceeds $1,000,000.

               

            
	
              Category
                B ___

               

            	
              The
                undersigned is an individual (not a partnership, corporation, etc.)
                who
                had an income in excess of $200,000 in each of the two most recent
                years,
                or joint income with his or her spouse in excess of $300,000 in each
                of
                those years (in each case including foreign income, tax exempt income
                and
                full amount of capital gains and losses but excluding any income
                of other
                family members and any unrealized capital appreciation) and has a
                reasonable expectation of reaching the same income level in the current
                year.

               

            
	
              Category
                C ___

               

            	
              The
                undersigned is a director or executive officer of the Company which
                is
                issuing and selling the securities.

               

            
	
              Category
                D ___

               

            	
              The
                undersigned is a bank; a savings and loan association; insurance
                company;
                registered investment company; registered business development company;
                licensed small business investment company (“SBIC”); or employee benefit
                plan within the meaning of Title 1 of ERISA and (a) the investment
                decision is made by a plan fiduciary which is either a bank, savings
                and
                loan association, insurance company or registered investment advisor,
                or
                (b) the plan has total assets in excess of $5,000,000 or (c) is a
                self
                directed plan with investment decisions made solely by persons that
                are
                accredited investors.

               

            
	
              Category
                E ___

               

            	
              The
                undersigned is a private business development company as defined
                in
                section 202(a)(22) of the Investment Advisors Act of 1940.

               

            
	
              Category
                F ___

               

            	
              The
                undersigned is either a corporation, partnership, Massachusetts business
                trust, or non-profit organization within the meaning of Section 501(c)(3)
                of the Internal Revenue Code, in each case not formed for the specific
                purpose of acquiring the Securities and with total assets in excess
                of
                $5,000,000.

               

            
	
              Category
                G ___

               

            	
              The
                undersigned is a trust with total assets in excess of $5,000,000,
                not
                formed for the specific purpose of acquiring the Securities, where
                the
                purchase is directed by a “sophisticated investor” as defined in
                Regulation 506(b)(2)(ii) under the Act.

               

            
	
              Category
                H ___

               

            	
              The
                undersigned is an entity (other than a trust) in which all of the
                equity
                owners are “accredited investors” within one or more of the above
                categories. If relying upon this Category alone, each equity owner
                must
                complete a separate copy of this Agreement.

               

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SCHEDULE
      I

     

    Wire
      Instructions:

     

    
      	 	
              Bank:

            	
              Wells
                Fargo Bank

              1801
                Avenue of the Stars

              Los
                Angeles, CA 90067

            
	 	 	 
	 	 	 
	 	
              ABA
                No.:

            	
              121000248

            
	 	
              Account
                Name:

            	
              Subscription
                Escrow Account #3

            
	 	
              Account
                No.:

            	
              5763556601

            
	 	
              Reference:

            	
              Law
                Offices of David L. Kagel, A Professional
                Corporation

            

    

     

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      A-1

     

    Form
      of
      Convertible Note

     

    [See
      attached]

     

     

     

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    EXHIBIT
      A-2

     

    Form
      of
      Series A Warrant

     

    [See
      attached.]

    
       

       

       

      
 

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    EXHIBIT
      A-3

     

    Form
      of
      Series B Warrant

     

    [See
      attached.]

    
       

       

       

      
 

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    EXHIBIT
      B

     

    Form
      of
      Amended and Restated Registration Rights Agreement

     

    [See
      attached.]

    
       

       

       

      
 

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    EXHIBIT
      C

     

    Post-Closing
      Capitalization

     

    [See
      attached.]

    
       

       

       

      
 

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

         

      

    

    EXHIBIT
      D

     

    Form
      of
      Certificate of Designations of Preferences, 

     

    Rights
      and Limitations of Series A Convertible Preferred Stock

     

    [See
      attached.]AMENDED
      AND RESTATED REGISTRATION RIGHTS AGREEMENT

     

     

    This
      Amended and Restated Registration Rights Agreement (this “Agreement”)
      is
      made and entered into as this 25th
      day of
      January, 2007, by and among Long-E International, Inc., a Utah corporation
      (the
“Company”),
      and
      the purchasers listed on Schedule I hereto (the “Purchasers”).

     

    RECITALS

     

    WHEREAS,
      as of December 29, 2006, the Company (formerly Inncardio, Inc.) and certain
      of
      the Purchasers entered into a Registration Rights Agreement further to a
      Securities Purchase Agreement dated as of December 29, 2006 (the “December
      Purchase Agreement”) whereby shares of Common Stock and shares of Common Stock
      underlying warrants purchased by said purchasers further to such agreement
      were
      to be registered.

     

    WHEREAS,
      of even date herewith, the Company and certain of the Purchasers entered into
      a
      Securities Purchase Agreement (the “January Purchase Agreement”) further to
      which shares of Common Stock underlying convertible notes (the “Notes”) and
      Series A Convertible Preferred Stock issuable upon conversion of such Notes
      and
      shares of Common Stock underlying warrants purchased by said Purchasers further
      to such agreement were to be registered;

     

    WHEREAS,
      the Company and the Purchasers have agreed that all registration rights granted
      to the Purchasers with respect securities purchased further to the December
      Purchase Agreement and the January Purchase Agreement are to be governed by
      this
      Agreement.

     

    The
      Company and the Purchasers hereby agree as follows:

     

    1. Definitions.

     

    Capitalized
      terms used and not otherwise defined herein shall have the meanings given such
      terms in the January Purchase Agreement. As used in this Agreement, the
      following terms shall have the following meanings:

     

    “Advice”
shall
      have the meaning set forth in Section 3(m).

     

    “Affiliate”
means,
      with respect to any Person, any other Person that directly or indirectly
      controls or is controlled by or under common control with such Person. For
      the
      purposes of this definition, “control,”
when
      used with respect to any Person, means the possession, direct or indirect,
      of
      the power to direct or cause the direction of the management and policies of
      such Person, whether through the ownership of voting securities, by contract
      or
      otherwise; and the terms of “affiliated,”
      “controlling”
and
      “controlled”
have
      meanings correlative to the foregoing.

     

    “Board”
shall
      have the meaning set forth in Section 3(n).

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    “Bridge
      Investor”
shall
      have the meaning set forth in the December Purchase Agreement.

     

    “Business
      Day”
means
      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 generally are
      authorized or required by law or other government actions to close.

     

    “Closing
      Date”
means
      the date of the closing of the purchase and sale of the Common Stock and the
      Warrants pursuant to the December Purchase Agreement.

     

    “Commission”
means
      the Securities and Exchange Commission.

     

    “Common
      Stock”
means
      the Company’s Common Stock, par value $0.001 per share.

     

    “Convertible
      Bridge Note”
shall
      have the meaning set forth in the December Purchase Agreement.

     

    “Effectiveness
      Date”
means
      with respect to each Registration Statement the earlier of (A) the one hundred
      twentieth (120th) day following the initial filing date of such Registration
      Statement (or in the event the Registration Statement receives a “full review”
by the Commission, the one hundred fiftieth (150th) day following the initial
      filing date), or (B) the date which is within three (3) Business Days after
      the
      date on which the Commission informs the Company (i) that the Commission will
      not review the Registration Statement or (ii) that the Company may request
      the
      acceleration of the effectiveness of the Registration Statement and the Company
      makes such request; provided that,
      if the
      Effectiveness Date falls on a Saturday, Sunday or any other day which shall
      be a
      legal holiday or a day on which the Commission is authorized or required by
      law
      or other government actions to close, the Effectiveness Date shall be the
      following Business Day.

     

    “Effectiveness
      Period”
shall
      have the meaning set forth in Section 2.

     

    “Event”
shall
      have the meaning set forth in Section 7(e).

     

    “Event
      Date”
shall
      have the meaning set forth in Section 7(e).

     

    “Exchange
      Act”
means
      the Securities Exchange Act of 1934, as amended.

     

    “Filing
      Date”
means
      the one hundred twentieth (120th)
      day
      following the Closing Date or the thirtieth (30th)
      day
      following the Subsequent Registration Notice Date; provided that, if the Filing
      Date falls on a Saturday, Sunday or any other day which shall be a legal holiday
      or a day on which the Commission is authorized or required by law or other
      government actions to close, the Filing Date shall be the following Business
      Day.

     

    “Holder”
or
      “Holders”
means
      (i) the holder or holders, as the case may be, from time to time of Registrable
      Securities who agrees in writing to be bound by the terms of this Agreement
      pursuant to Section 7(i) hereof, (ii) solely with respect to the Registration
      Statement in respect of the Initially Registrable Shares, the holders of 41,859
      shares of Common Stock as set forth on Schedule II hereto and (iii) solely
      with
      respect to the Subsequent Registration Statement, the Placement Agent to the
      extent of the shares of Common Stock underlying the warrants issued to it by
      the
      Company on the Closing Date (the Persons referenced in subsections (ii) and
      (iii) hereof are intended to be third party beneficiaries of the Agreement
      to
      the limited extent as described herein).

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

       

    

    “Indemnified
      Party”
shall
      have the meaning set forth in Section 5(c).

     

    “Indemnifying
      Party”
shall
      have the meaning set forth in Section 5(c).

     

    “Initially
      Registrable Shares”
shall
      have the meaning set forth in Section 2.

     

    “Long-E”
shall
      mean Long-E International Group Co., Ltd., a Company organized under the laws
      of
      the British Virgin Islands.

     

    “Losses”
shall
      have the meaning set forth in Section 5(a).

     

    “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.

     

    “Placement
      Agent”
shall
      have the meaning set forth in the December Purchase Agreement.

     

    “Proceeding”
means
      an action, claim, suit, investigation or proceeding (including, without
      limitation, an investigation or partial proceeding, such as a deposition),
      whether commenced or threatened.

     

    “Prospectus”
means
      the prospectus included in the Registration Statement (including, without
      limitation, a prospectus that includes any information previously omitted from
      a
      prospectus filed as part of an effective registration statement in reliance
      upon
      Rule 430A promulgated under the Securities Act), as amended or supplemented
      by
      any prospectus supplement, with respect to the terms of the offering of any
      portion of the Registrable Securities covered by the Registration Statement,
      and
      all other amendments and supplements to the Prospectus, including post-effective
      amendments, and all material incorporated by reference in such
      Prospectus.

     

    “Registrable
      Securities”
means
      (i) the shares of Common Stock issued further to the December Purchase
      Agreement, (ii) the shares of Common Stock issuable upon conversion of
      convertible promissory notes (and/or the shares of Series A Convertible
      Preferred Stock issuable upon conversion of such notes) issued further to the
      January Purchase Agreement, (iii) the shares of Common Stock issuable upon
      exercise of the Warrants and (iv) to the limited extent described herein, the
      shares of Common Stock underlying the warrants (A) issued by the Company to
      the
      Placement Agent further to the sale of securities pursuant to the December
      Purchase Agreement and the January Purchase Agreement and (B) assumed by the
      Company that were issued by Long-E to the Bridge Investor in connection with
      Long-E’s issuance of the Convertible Bridge Note.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

       

    

    “Registration
      Statement”
means
      the registration statements and any additional registration statements
      contemplated by Section 2, including (in each case) the Prospectus, amendments
      and supplements to such registration statement or Prospectus, including pre-
      and
      post-effective amendments, all exhibits thereto, and all material incorporated
      by reference in such registration statement.

     

    “Rule
      144”
means
      Rule 144 promulgated by the Commission pursuant to the Securities Act, as such
      Rule may be amended from time to time, or any similar rule or regulation
      hereafter adopted by the Commission having substantially the same effect as
      such
      Rule.

     

    “Rule
      158”
means
      Rule 158 promulgated by the Commission pursuant to the Securities Act, as such
      Rule may be amended from time to time, or any similar rule or regulation
      hereafter adopted by the Commission having substantially the same effect as
      such
      Rule.

     

    “Rule
      415”
means
      Rule 415 promulgated by the Commission pursuant to the Securities Act, as such
      Rule may be amended from time to time, or any similar rule or regulation
      hereafter adopted by the Commission having substantially the same effect as
      such
      Rule.

     

    “Rule
      424”
means
      Rule 424 promulgated by the Commission pursuant to the Securities Act, as such
      Rule may be amended from time to time, or any similar rule or regulation
      hereafter adopted by the Commission having substantially the same effect as
      such
      Rule.

     

    “Securities
      Act”
means
      the Securities Act of 1933, as amended.

     

    “Special
      Counsel”
means
      Olshan Grundman Frome Rosenzweig & Wolosky LLP, for which the Holders will
      be reimbursed by the Company pursuant to Section 4.

     

    “Subsequent
      Registration Notice”
shall
      have the meaning set forth in Section 2.

     

    “Subsequent
      Registration Notice Date”
means
      the date on which the Company receives a Subsequent Registration
      Notice.

     

    “Subsequent
      Registration Statement”
shall
      have the meaning set forth in Section 2.

     

    “Warrants”
means
      the warrants to purchase shares of Common Stock issued to the Purchasers
      pursuant to the December Purchase Agreement and the January Purchase
      Agreement.

     

    2. Resale
      Registrations.
      On or
      prior to the Filing Date, the Company shall prepare and file with the Commission
      a “resale” Registration Statement providing for the resale of the portion of
      Registrable Securities corresponding to thirty percent (30%) of the Company’s
      Common Stock outstanding following the Closing for an offering to be made on
      a
      continuous basis pursuant to Rule 415; the holders and securities to be subject
      to such initial registration statement shall set forth on Schedule III hereto
      (as such Schedule III may be revised from time to time as described in Section
      7(a) herein) provided,
      however,
      that
      such Registration Statement shall not include the shares of Common Stock
      underlying the warrants issued to the Bridge Investor issued in connection
      with
      the issuance of the Convertible Bridge Note (such shares called “Initially
      Registrable Shares”).

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

       

    

    Subject
      to the rights set forth in the following paragraph, the holders of the balance
      of the Registrable Securities will have registration rights entitling them
      to
      request that one additional registration statement only (the “Subsequent
      Registration Statement”)
      covering said shares be filed with the Commission no earlier than six (6) months
      after the effective date of the Initial Registration Statement and no later
      than
      nine (9) months from said effective date. Such request (the “Subsequent
      Registration Notice”)
      shall
      be made by Holders in interest of at least a majority of such Registrable
      Securities.

     

    Subject
      to the limitations set forth below, the holders of shares of Common Stock
      issuable upon exercise of the Warrants shall have an unlimited number of demand
      registrations; provided however,
      that no
      such shares of Common Stock may be included in such a demand registration
      statement (a) until such time as they are issued pursuant to the exercise of
      the
      Warrants, (b) if such shares are, at the time of such demand registration
      statement, not subject to and covered by an effective registration statement
      and
      (c) the aggregate gross proceeds received by the Company with respect to the
      shares issued upon exercise of such Warrants to be included in the demand
      registration statement exceeds $2.0 million. Once said $2.0 million is received
      by the Company, the Company shall send to each Holder of Common Stock referenced
      in this paragraph written notice of such determination and, if within thirty
      (30) days after receipt of such notice, the Company has received notices from
      Holders holding at least a majority of such shares of Common Stock desiring
      to
      effect a registration of the subject shares, the Company will file a
      Registration Statement with the Commission on such applicable form within 45
      days of the receipt of such notice. The Registration Statement shall be on
      Form
      SB-2 or Form S-3 (except if the Company is not then eligible to register for
      resale the Registrable Securities on Form SB-2 or Form S-3, in which case such
      registration shall be on another appropriate form in accordance herewith and
      with the Securities Act and the rules promulgated thereunder). The Company
      shall
      include in such Registration Statement all or any part of such shares of Common
      Stock as the Holders request to be registered; provided, however, that the
      Company shall not be required to register any such shares pursuant to this
      paragraph that are eligible for sale pursuant to Rule 144 of the Securities
      Act.

     

    Each
      Registration Statement shall be on Form SB-2 or Form S-3 (except if the Company
      is not then eligible to register for resale the Registrable Securities on Form
      SB-2 or Form S-3, in which case such registration shall be on another
      appropriate form in accordance herewith and with the Securities Act and the
      rules promulgated thereunder). Such Registration Statements shall cover to
      the
      extent allowable under the Securities Act and the rules promulgated thereunder
      (including Rules 415 and 416), such indeterminate number of additional shares
      of
      Common Stock resulting from stock splits, stock dividends or similar
      transactions with respect to the Registrable Securities. The Company shall
      (i)
      not permit any securities other than the Registrable Securities to be included
      in each Registration Statement and (ii) use its best efforts to cause each
      Registration Statement to be declared effective under the Securities Act as
      promptly as possible after the filing thereof, but in any event prior to the
      Effectiveness Date, and to keep such Registration Statement continuously
      effective under the Securities Act until such date as is the earlier of (y)
      the
      date when all Registrable Securities covered by such Registration Statement
      have
      been sold by the Purchasers or (z) the date on which the Registrable Securities
      may be sold without any restriction pursuant to Rule 144(k) as determined by
      the
      counsel to the Company pursuant to a written opinion letter to such effect,
      addressed to the Company’s transfer agent (the “Effectiveness
      Period”).
      The
      Company shall request that the effective time of the Registration Statement
      be
      4:00 p.m. Eastern Time on the effective date.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

       

    

    If
      at any
      time following the effective date of the Registration Statements referenced
      elsewhere in this Section 2, and for any reason, an additional Registration
      Statement is required to be filed because at such time the actual number of
      shares of Common Stock and shares of Common Stock for which the Warrants are
      exercisable exceeds the number of shares of Registrable Securities remaining
      under the Registration Statement, the Company shall file such additional
      Registration Statement on the first Business Day following the three-month
      anniversary of the Subsequent Registration Statement, and the Company shall
      use
      its best efforts to cause such additional Registration Statement to be declared
      effective by the Commission as soon as reasonably possible, but in no event
      later than sixty (60) days after filing.

     

    Notwithstanding
      anything to the contrary set forth in this Section 2, in the event the
      Commission does not permit the Company to register the “resale” of all of the
      Registrable Securities anticipated to be so registered on such Registration
      Statement pursuant to Rule 415, the Company shall register in the Registration
      Statement such number of Registrable Securities as is permitted by the
      Commission, that the number of Registrable Securities to be included in such
      Registration Statement or any subsequent registration statement shall be
      determined on a pro rata basis among the Holders, the amount of shares of Common
      Stock and shares of Common Stock underlying Warrants, if any, to be registered
      for a Holder to cut back proportionately. In the event the Commission does
      not
      permit the Company to register all of the Registrable Securities in the
      Registration Statement, the Company shall use its best efforts to register
      the
      Registrable Securities, subject to the foregoing sentence, that were not
      registered in the Registration Statement as promptly as possible and in a manner
      permitted by the Commission, in accordance with the provisions of this Section
      2.

     

    3. Registration
      Procedures.

     

    In
      connection with the Company’s registration obligations hereunder, the Company
      shall:

     

    (a) Prepare
      and file with the Commission, on or prior to the Filing Date, a Registration
      Statement on Form SB-2 or Form S-3 (or if the Company is not then eligible
      to
      register for resale the Registrable Securities on Form SB-2 or Form S-3 such
      registration shall be on another appropriate form in accordance herewith and
      the
      Securities Act and the rules promulgated thereunder) in accordance with the
      plan
      of distribution as set forth on Exhibit
      A
      hereto
      and in accordance with applicable law, regulations and Commission policies,
      and
      cause the Registration Statement to become effective and remain effective as
      provided herein; provided,
      however,
      that
      not less than ten (10) Business Days prior to the filing of the Registration
      Statement or any related Prospectus or any amendment or supplement thereto,
      the
      Company shall (i) furnish to the Holders and any Special Counsel, copies of
      all
      such documents proposed to be filed, which documents will be subject to the
      reasonable review of such Holders and such Special Counsel, and (ii) cause
      its
      officers and directors, counsel and independent certified public accountants
      to
      respond to such inquiries as shall be necessary, in the reasonable opinion
      of
      Special Counsel, to conduct a reasonable review of such documents. The Company
      shall not file the Registration Statement or any such Prospectus or any
      amendments or supplements thereto to which the Holders of a majority of the
      Registrable Securities or any Special Counsel shall reasonably object in writing
      within five (5) Business Days of their receipt thereof.

     

    
      
        
        

      

      
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    (b) (i)
      Prepare and file with the Commission such amendments, including post-effective
      amendments, to the Registration Statement as may be necessary to keep the
      Registration Statement continuously effective as to the applicable Registrable
      Securities for the Effectiveness Period and prepare and file with the Commission
      such additional Registration Statements as necessary in order to register for
      resale under the Securities Act all of the Registrable Securities; (ii) cause
      the related Prospectus to be amended or supplemented by any required Prospectus
      supplement, and as so supplemented or amended to be filed pursuant to Rule
      424
      (or any similar provisions then in force) promulgated under the Securities
      Act;
      (iii) respond as promptly as reasonably possible to any comments received from
      the Commission with respect to the Registration Statement or any amendment
      thereto and as promptly as possible provide the Holders true and complete copies
      of all correspondence from and to the Commission relating to the Registration
      Statement; (iv) file the final prospectus pursuant to Rule 424 of the Securities
      Act on the Business Day following the date the Registration Statement is
      declared effective by the Commission; and (v) comply in all material respects
      with the provisions of the Securities Act and the Exchange Act with respect
      to
      the disposition of all Registrable Securities covered by the Registration
      Statement during the Effectiveness Period in accordance with the intended
      methods of disposition by the Holders thereof set forth in the Registration
      Statement as so amended or in such Prospectus as so supplemented.

     

    (c) Notify
      the Holders of Registrable Securities and any Special Counsel as promptly as
      possible (and, in the case of (i)(A) below, not less than five (5) Business
      Days
      prior to such filing, and in the case of (iii) below, on the same day of receipt
      by the Company of such notice from the Commission) and (if requested by any
      such
      Person) confirm such notice in writing no later than three (3) Business Days
      following the day (i)(A) when a Prospectus or any Prospectus supplement or
      post-effective amendment to the Registration Statement is filed; (B) when the
      Commission notifies the Company whether there will be a “review” of such
      Registration Statement and whenever the Commission comments in writing on such
      Registration Statement and (C) with respect to the Registration Statement or
      any
      post-effective amendment, when the same has become effective; (ii) of any
      request by the Commission or any other Federal or state governmental authority
      for amendments or supplements to the Registration Statement or Prospectus or
      for
      additional information; (iii) of the issuance by the Commission of any stop
      order suspending the effectiveness of the Registration Statement covering any
      or
      all of the Registrable Securities or the initiation or threatening of any
      Proceedings for that purpose; (iv) of the receipt by the Company of any
      notification with respect to the suspension of the qualification or exemption
      from qualification of any of the Registrable Securities for sale in any
      jurisdiction, or the initiation or threatening of any Proceeding for such
      purpose; and (v) of the occurrence of any event that makes any statement made
      in
      the Registration Statement or Prospectus or any document incorporated or deemed
      to be incorporated therein by reference untrue in any material respect or that
      requires any revisions to the Registration Statement, Prospectus or other
      documents so that, in the case of the Registration Statement or the Prospectus,
      as the case may be, it will not contain any untrue statement of a material
      fact
      or omit to state any material fact required to be stated therein or necessary
      to
      make the statements therein, in the light of the circumstances under which
      they
      were made, not misleading.

     

    
      
        
        

      

      
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    (d) Use
      its
      best efforts to avoid the issuance of, or, if issued, obtain the withdrawal
      of,
      as promptly as possible, (i) any order suspending the effectiveness of the
      Registration Statement or (ii) any suspension of the qualification (or exemption
      from qualification) of any of the Registrable Securities for sale in any
      jurisdiction.

     

    (e) If
      requested by any Holder in writing, furnish to such Holder and any Special
      Counsel, without charge, at least one conformed copy of each Registration
      Statement and each amendment thereto, including financial statements and
      schedules, all documents incorporated or deemed to be incorporated therein
      by
      reference, and all exhibits to the extent requested by such Person (including
      those previously furnished or incorporated by reference) within three (3)
      Business Days of the Company’s receipt of such request.

     

    (f) Deliver
      to each Holder and any Special Counsel, without charge, as many copies of the
      Prospectus or Prospectuses (including each form of prospectus) and each
      amendment or supplement thereto as such Persons may reasonably request; and
      subject to the provisions of Sections 3(m) and 3(n), the Company hereby consents
      to the use of such Prospectus and each amendment or supplement thereto by each
      of the selling Holders in connection with the offering and sale of the
      Registrable Securities covered by such Prospectus and any amendment or
      supplement thereto.

     

    (g) Prior
      to
      any public offering of Registrable Securities, use commercially reasonable
      best
      efforts to register or qualify or reasonably cooperate with the selling Holders
      and any Special Counsel in connection with the registration or qualification
      (or
      exemption from such registration or qualification) of such Registrable
      Securities for offer and sale under the securities or Blue Sky laws of such
      jurisdictions within the United States as any Holder requests in writing, to
      keep each such registration or qualification (or exemption therefrom) effective
      during the Effectiveness Period and to do any and all other acts or things
      necessary or advisable to enable the disposition in such jurisdictions of the
      Registrable Securities covered by a Registration Statement; provided, however,
      that the Company shall not be required to qualify generally to do business
      in
      any jurisdiction where it is not then so qualified or to take any action that
      would subject it to general service of process in any such jurisdiction where
      it
      is not then so subject or subject the Company to any material tax in any such
      jurisdiction where it is not then so subject.

     

    (h) Cooperate
      with the Holders to facilitate the timely preparation and delivery of
      certificates representing Registrable Securities to be sold pursuant to a
      Registration Statement, which certificates, to the extent permitted by the
      Purchase Agreement, Warrants and applicable federal and state securities laws,
      shall be free of all restrictive legends, and to enable such Registrable
      Securities to be in such denominations and registered in such names as any
      Holder may request in connection with any sale of Registrable
      Securities.

     

    (i) Upon
      the
      occurrence of any event contemplated by Section 3(c)(vi) hereof, as promptly
      as
      reasonably possible, prepare a supplement or amendment, including a
      post-effective amendment, to the Registration Statement or a supplement to
      the
      related Prospectus or any document incorporated or deemed to be incorporated
      therein by reference, and file any other required document so that, as
      thereafter delivered, neither the Registration Statement nor such Prospectus
      will contain an untrue statement of a material fact or omit to state a material
      fact required to be stated therein or necessary to make the statements therein,
      in the light of the circumstances under which they were made, not
      misleading.

     

    
      
        
        

      

      
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    (j) Use
      its
      best efforts to cause all Registrable Securities relating to the Registration
      Statement to be listed or quoted on the OTC Bulletin Board or any other
      securities exchange, quotation system or market, if any, on which similar
      securities issued by the Company are then listed or traded as and when required
      pursuant to the Purchase Agreement.

     

    (k) Comply
      in
      all material respects with all applicable rules and regulations of the
      Commission and make generally available to its security holders all documents
      filed or required to be filed with the Commission, including, but not limited,
      to, earning statements satisfying the provisions of Section 11(a) of the
      Securities Act and Rule 158 not later than 90 days after the end of any 12-month
      period if such period is a fiscal year commencing on the first day of the first
      fiscal quarter of the Company after the effective date of the Registration
      Statement, which statement shall conform to the requirements of Rule
      158.

     

    (l) The
      Company may, at its option, require each selling Holder to furnish to the
      Company information regarding such Holder and the distribution of such
      Registrable Securities as is required by law to be disclosed in the Registration
      Statement, Prospectus, or any amendment or supplement thereto, and the Company
      may, at its option, exclude from such registration the Registrable Securities
      of
      any such Holder who unreasonably fails to furnish such information within a
      reasonable time after receiving such request.

     

    If
      the
      Registration Statement refers to any Holder by name or otherwise as the holder
      of any securities of the Company, then such Holder shall have the right to
      require (if such reference to such Holder by name or otherwise is not required
      by the Securities Act or any similar federal or applicable state law then in
      force) the deletion of the reference to such Holder in any amendment or
      supplement to the Registration Statement filed or prepared subsequent to the
      time that such reference ceases to be required.

     

    Each
      Holder covenants and agrees that it will not sell any Registrable Securities
      under the Registration Statement until the Company has electronically filed
      the
      Prospectus as then amended or supplemented as contemplated in Section 3(g)
      and
      notice from the Company that the Registration Statement and any post-effective
      amendments thereto have become effective as contemplated by Section
      3(c).

     

    Each
      Holder agrees by its acquisition of such Registrable Securities that, upon
      receipt of a notice from the Company of the occurrence of any event of the
      kind
      described in Section 3(c)(ii), 3(c)(iii), 3(c)(iv), 3(c)(v) or 3(n), such Holder
      will forthwith discontinue disposition of such Registrable Securities under
      the
      Registration Statement until such Holder’s receipt of the copies of the
      supplemented Prospectus and/or amended Registration Statement contemplated
      by
      Section 3(j), or until it is advised in writing (the “Advice”)
      by the
      Company that the use of the applicable Prospectus may be resumed, and, in either
      case, has received copies of any additional or supplemental filings that are
      incorporated or deemed to be incorporated by reference in such Prospectus or
      Registration Statement.

     

    
      
        
        

      

      
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    (m) If
      (i)
      there is material non-public information regarding the Company which the
      Company’s Board of Directors (the “Board”)
      determines not to be in the Company’s best interest to disclose and which the
      Company is not otherwise required to disclose, (ii) there is a significant
      business opportunity (including, but not limited to, the acquisition or
      disposition of assets (other than in the ordinary course of business) or any
      merger, consolidation, tender offer or other similar transaction) available
      to
      the Company which the Board determines not to be in the Company’s best interest
      to disclose, or (iii) the Company is required to file a post-effective amendment
      to the Registration Statement to incorporate the Company’s quarterly and annual
      reports and audited financial statements on Forms 10-QSB and 10-KSB, then the
      Company may (y) postpone or suspend filing of a registration statement for
      a
      period not to exceed thirty (30) consecutive days or (z) postpone or suspend
      effectiveness of a registration statement for a period not to exceed thirty
      (30)
      consecutive days; provided, that the Company may not postpone or suspend
      effectiveness of a registration statement under this Section 3(n) for more
      than
      sixty (60) days in the aggregate during any three hundred sixty (360) day
      period; provided, however, that no such postponement or suspension shall be
      permitted for consecutive thirty (30) day periods arising out of the same set
      of
      facts, circumstances or transactions.

     

    4. Registration
      Expenses.

     

    All
      fees
      and expenses incident to the performance of or compliance with this Agreement
      by
      the Company, except as and to the extent specified in this Section 4, shall
      be
      borne by the Company whether or not the Registration Statement is filed or
      becomes effective and whether or not any Registrable Securities are sold
      pursuant to the Registration Statement. The fees and expenses referred to in
      the
      foregoing sentence shall include, without limitation, (i) all registration
      and
      filing fees (including, without limitation, fees and expenses (A) with respect
      to filings required to be made with the OTC Bulletin Board and each other
      securities exchange or market on which Registrable Securities are required
      hereunder to be listed, if any (B) with respect to filing fees required to
      be
      paid to the National Association of Securities Dealers, Inc. and the NASD
      Regulation, Inc. and (C) in compliance with state securities or Blue Sky laws
      (including, without limitation, fees and disbursements of counsel for the
      Holders in connection with Blue Sky qualifications of the Registrable Securities
      and determination of the eligibility of the Registrable Securities for
      investment under the laws of such jurisdictions as the Holders of a majority
      of
      Registrable Securities may designate)), (ii) printing expenses (including,
      without limitation, expenses of printing certificates for Registrable Securities
      and of printing prospectuses if the printing of prospectuses is requested by
      the
      holders of a majority of the Registrable Securities included in the Registration
      Statement), (iii) messenger, telephone and delivery expenses, (iv) fees and
      disbursements of counsel for the Company and Special Counsel for the Holders,
      in
      the case of the Special Counsel, up to a maximum amount of $12,500, (v)
      Securities Act liability insurance, if the Company, at its option, elects to
      obtain such insurance, and (vi) fees and expenses of all other Persons retained
      by the Company in connection with the consummation of the transactions
      contemplated by this Agreement, including, without limitation, the Company’s
      independent public accountants (including the expenses of any comfort letters
      or
      costs associated with the delivery by independent public accountants of a
      comfort letter or comfort letters). In addition, the Company shall be
      responsible for all of its internal expenses incurred in connection with the
      consummation of the transactions contemplated by this Agreement (including,
      without limitation, all salaries and expenses of its officers and employees
      performing legal or accounting duties), the expense of any annual audit, the
      fees and expenses incurred in connection with the listing of the Registrable
      Securities on any securities exchange as required hereunder. The Company shall
      not be responsible for any discounts, commissions, transfer taxes or other
      similar fees incurred by the Holders in connection with the sale of the
      Registrable Securities.

     

    
      
        
        

      

      
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    5. Indemnification.

     

    (a) Indemnification
      by the Company.
      The
      Company shall, notwithstanding any termination of this Agreement, indemnify
      and
      hold harmless each Holder, the officers, directors, managers, partners, members,
      shareholders, agents, brokers, investment advisors and employees of each of
      them, each Person who controls any such Holder (within the meaning of Section
      15
      of the Securities Act or Section 20 of the Exchange Act) and the officers,
      directors, agents and employees of each such controlling Person, to the fullest
      extent permitted by applicable law, from and against any and all losses, claims,
      damages, liabilities, costs (including, without limitation, costs of preparation
      and reasonable attorneys’ fees) and expenses (collectively, “Losses”)
      , as
      incurred, arising out of or relating to any violation of securities laws by
      the
      Company or untrue or alleged untrue statement of a material fact contained
      in
      the Registration Statement, any Prospectus or any form of prospectus or in
      any
      amendment or supplement thereto or in any preliminary prospectus, or arising
      out
      of or relating to any omission or alleged omission of a material fact required
      to be stated therein or necessary to make the statements therein (in the case
      of
      any Prospectus or form of prospectus or supplement thereto, in the light of
      the
      circumstances under which they were made) not misleading, except to the extent,
      but only to the extent, that such untrue statements or omissions are based
      solely upon information regarding such Holder or such other Indemnified Party
      furnished in writing to the Company by such Holder expressly for use therein.
      The Company shall notify the Holders promptly of the institution, threat or
      assertion of any Proceeding of which the Company is aware in connection with
      the
      transactions contemplated by this Agreement.

     

    (b) Indemnification
      by Holders.
      Each
      Holder shall, severally and not jointly, indemnify and hold harmless the
      Company, its directors, officers, agents and employees, each Person who controls
      the Company (within the meaning of Section 15 of the Securities Act and Section
      20 of the Exchange Act), and the directors, officers, agents and employees
      of
      such controlling Persons, to the fullest extent permitted by applicable law,
      from and against all Losses (as determined by a court of competent jurisdiction
      in a final judgment not subject to appeal or review), as incurred, arising
      solely out of or based solely upon any untrue statement of a material fact
      contained in the Registration Statement, any Prospectus, or any form of
      prospectus, or in any amendment or supplement thereto, or arising solely out
      of
      or based solely upon any omission of a material fact required to be stated
      therein or necessary to make the statements therein (in the case of any
      Prospectus or form of prospectus or supplement thereto, in the light of the
      circumstances under which they were made) not misleading, to the extent, but
      only to the extent, that such untrue statement or omission is contained in
      any
      information so furnished in writing by such Holder to the Company specifically
      for inclusion in the Registration Statement or such Prospectus. Notwithstanding
      anything to the contrary contained herein, in no event shall any indemnity
      under
      this Section 5(b) exceed the net proceeds actually received by such Holder
      as a
      result of the sale of Registrable Securities pursuant to a Registration
      Statement.

     

    
      
        
        

      

      
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    (c) Conduct
      of Indemnification Proceedings.
      If any
      Proceeding shall be brought or asserted against any Person entitled to indemnity
      hereunder (an “Indemnified
      Party”),
      such
      Indemnified Party promptly shall notify the Person from whom indemnity is sought
      (the “Indemnifying
      Party”)
      in
      writing, and the Indemnifying Party shall be entitled to assume the defense
      thereof, including the employment of counsel reasonably satisfactory to the
      Indemnified Party and the payment of all fees and expenses incurred in
      connection with defense thereof; provided, that the failure of any Indemnified
      Party to give such notice shall not relieve the Indemnifying Party of its
      obligations or liabilities pursuant to this Agreement, except (and only) to
      the
      extent that it shall be finally determined by a court of competent jurisdiction
      (which determination is not subject to appeal or further review) that such
      failure shall have proximately and materially adversely prejudiced the
      Indemnifying Party.

     

    An
      Indemnified Party shall have the right to employ separate counsel in any such
      Proceeding and to participate in the defense thereof, but the fees and expenses
      of such counsel shall be at the expense of such Indemnified Party unless: (1)
      the Indemnifying Party has agreed in writing to pay such fees and expenses;
      or
      (2) the Indemnifying Party shall have failed promptly to assume the defense
      of
      such Proceeding and to employ counsel reasonably satisfactory to such
      Indemnified Party in any such Proceeding; or (3) the named parties to any such
      Proceeding (including any impleaded parties) include both such Indemnified
      Party
      and the Indemnifying Party, and such parties shall have been advised by counsel
      that a conflict of interest is likely to exist if the same counsel were to
      represent such Indemnified Party and the Indemnifying Party (in which case,
      if
      such Indemnified Party notifies the Indemnifying Party in writing that it elects
      to employ separate counsel at the expense of the Indemnifying Party, the
      Indemnifying Party shall not have the right to assume the defense thereof and
      such counsel shall be at the expense of the Indemnifying Party). The
      Indemnifying Party shall not be liable for any settlement of any such Proceeding
      effected without its written consent, which consent shall not be unreasonably
      withheld or delayed. No Indemnifying Party shall, without the prior written
      consent of the Indemnified Party, effect any settlement of any pending or
      threatened Proceeding in respect of which any Indemnified Party is a party
      and
      indemnity has been sought hereunder, unless such settlement includes an
      unconditional release of such Indemnified Party from all liability on claims
      that are the subject matter of such Proceeding.

     

    All
      fees
      and expenses of the Indemnified Party (including reasonable fees and expenses
      to
      the extent incurred in connection with investigating or preparing to defend
      such
      Proceeding in a manner not inconsistent with this Section) shall be paid to
      the
      Indemnified Party, as incurred, within ten (10) Business Days of written notice
      thereof to the Indemnifying Party (regardless of whether it is ultimately
      determined that an Indemnified Party is not entitled to indemnification
      hereunder; provided, that the Indemnified Party shall reimburse all such fees
      and expenses to the extent it is finally judicially determined that such
      Indemnified Party is not entitled to indemnification hereunder).

     

    
      
        
        

      

      
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    (d) Contribution.
      If a
      claim for indemnification under Section 5(a) or 5(b) is due but unavailable
      to
      an Indemnified Party because of a failure or refusal of a governmental authority
      to enforce Section 5(a) or 5(b) in accordance with its terms (by reason of
      public policy or otherwise), then each Indemnifying Party, in lieu of
      indemnifying such Indemnified Party, shall contribute to the amount paid or
      payable by such Indemnified Party as a result of such Losses, in such proportion
      as is appropriate to reflect the relative benefits received by the Indemnifying
      Party on the one hand and the Indemnified Party on the other from the offering
      of the Common Stock and the Warrants. If, but only if, the allocation provided
      by the foregoing sentence is not permitted by applicable law, the allocation
      of
      contribution shall be made in such proportion as is appropriate to reflect
      not
      only the relative benefits referred to in the foregoing sentence but also the
      relative fault, as applicable, of the Indemnifying Party and Indemnified Party
      in connection with the actions, statements or omissions that resulted in such
      Losses as well as any other relevant equitable considerations. The relative
      fault of such Indemnifying Party and Indemnified Party shall be determined
      by
      reference to, among other things, whether any action in question, including
      any
      untrue or alleged untrue statement of a material fact or omission or alleged
      omission of a material fact, has been taken or made by, or relates to
      information supplied by, such Indemnifying Party or Indemnified Party, and
      the
      parties’ relative intent, knowledge, access to information and opportunity to
      correct or prevent such action, statement or omission. The amount paid or
      payable by a party as a result of any Losses shall be deemed to include, subject
      to the limitations set forth in Section 5(c), any reasonable attorneys’ or other
      reasonable fees or expenses incurred by such party in connection with any
      Proceeding to the extent such party would have been indemnified for such fees
      or
      expenses if the indemnification provided for in this Section was available
      to
      such party in accordance with its terms. In no event shall any selling Holder
      be
      required to contribute an amount under this Section 5(d) in excess of the net
      proceeds actually received by such Holder upon sale of such Holder’s Registrable
      Securities pursuant to the Registration Statement giving rise to such
      contribution obligation.

     

    The
      parties hereto agree that it would not be just and equitable if contribution
      pursuant to this Section 5(d) were determined by pro rata allocation or by
      any
      other method of allocation that does not take into account the equitable
      considerations referred to in the immediately preceding paragraph. No Person
      guilty of fraudulent misrepresentation (within the meaning of Section 11(f)
      of
      the Securities Act) shall be entitled to contribution from any Person who was
      not guilty of such fraudulent misrepresentation.

     

    (e) Non-exclusive
      Remedy.
      The
      indemnity and contribution agreements contained in this Section are in addition
      to any liability that the Indemnifying Parties may have to the Indemnified
      Parties pursuant to the law.

     

    (f) Underwritten
      Offering; Conflict.
      Notwithstanding the foregoing, to the extent that the provisions on
      indemnification and contribution contained in the underwriting agreement entered
      into in connection with an underwritten public offering are in conflict with
      the
      foregoing provisions, the provisions of the underwriting agreement shall
      control.

     

    (g) Survival
      of Obligations.
      The
      obligations of the Company and the Holders under this Section 5 shall survive
      the completion of any offering of Registrable Securities in a registration
      statement under Section 2 of this Agreement or otherwise.

     

    
      
        
        

      

      
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    6. Rule
      144.

     

    As
      long
      as any Holder owns Common Stock, Warrants or Registrable Securities, 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 Section 13(a) or 15(d) of the Exchange
      Act. As long as any Holder owns Common Stock, Warrants or Registrable
      Securities, if the Company is not required to file reports pursuant to Section
      13(a) or 15(d) of the Exchange Act, it will prepare and furnish to the Holders
      and make publicly available in accordance with Rule 144(c) promulgated under
      the
      Securities Act annual and quarterly financial statements, together with a
      discussion and analysis of such financial statements in form and substance
      substantially similar to those that would otherwise be required to be included
      in reports required by Section 13(a) or 15(d) of the Exchange Act, as well
      as
      any other information required thereby, in the time period that such filings
      would have been required to have been made under the Exchange Act. The Company
      further covenants that it will take such further action as any Holder may
      reasonably request, all to the extent required from time to time to enable
      such
      Person to sell Conversion Shares and Warrant Shares without registration under
      the Securities Act within the limitation of the exemptions provided by Rule
      144
      promulgated under the Securities Act, including providing any legal opinions
      relating to such sale pursuant to Rule 144. Upon the request of any Holder,
      the
      Company shall deliver to such Holder a written certification of a duly
      authorized officer as to whether it has complied with such
      requirements.

     

    7. Miscellaneous.

     

    (a) Notwithstanding
      anything to the contrary contained herein, if the Company shall issue additional
      Notes and Warrants pursuant to the January Purchase Agreement, any purchaser
      of
      such Notes and Warrants may become a party to this Agreement by executing and
      delivering an additional counterpart signature page to this Agreement and shall
      be deemed a “Purchaser” hereunder and Schedules I and III hereto shall be
      revised accordingly.

     

    (b) Remedies.
      In the
      event of a breach by the Company or by a Holder, of any of their obligations
      under this Agreement, such Holder or the Company, as the case may be, in
      addition to being entitled to exercise all rights granted by law and under
      this
      Agreement, including recovery of damages, will be entitled to specific
      performance of its rights under this Agreement. The Company and each Holder
      agree that monetary damages would not provide adequate compensation for any
      losses incurred by reason of a breach by it of any of the provisions of this
      Agreement and hereby further agrees that, in the event of any action for
      specific performance in respect of such breach, it shall waive the defense
      that
      a remedy at law would be adequate.

     

    (c) No
      Inconsistent Agreements.
      Neither
      the Company nor any of its subsidiaries has, as of the date hereof entered
      into
      and currently in effect, nor shall the Company or any of its subsidiaries,
      on or
      after the date of this Agreement, enter into any agreement with respect to
      its
      securities that is inconsistent with the rights granted to the Holders in this
      Agreement or otherwise conflicts with the provisions hereof. Neither the Company
      nor any of its subsidiaries has previously entered into any agreement currently
      in effect granting any registration rights with respect to any of its securities
      to any Person. Without limiting the generality of the foregoing, without the
      written consent of the Holders of a majority of the then outstanding Registrable
      Securities, the Company shall not grant to any Person the right to request
      the
      Company to register any securities of the Company under the Securities Act
      unless the rights so granted are subject in all respects to the prior rights
      in
      full of the Holders set forth herein, and are not otherwise in conflict with
      the
      provisions of this Agreement.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

       

    

    (d) No
      Piggyback on Registrations.
      Neither
      the Company nor any of its security holders (other than the Holders in such
      capacity pursuant hereto may include securities of the Company in the
      Registration Statement, and the Company shall not after the date hereof enter
      into any agreement providing such right to any of its securityholders, unless
      the right so granted is subject in all respects to the prior rights in full
      of
      the Holders set forth herein, and is not otherwise in conflict with the
      provisions of this Agreement.

     

    (e) Piggy
      Back Registrations.
      For a
      period of thirty-six (36) months following the Closing Date, if there is not
      an
      effective Registration Statement covering (i) Conversion Shares or (ii) Warrant
      Shares, and the Company shall determine to prepare and file with the Commission
      a registration statement relating to an offering for its own account or the
      account of others under the Securities Act of any of its equity securities,
      other than on Form S-4 or Form S-8 (each as promulgated under the Securities
      Act) or their then equivalents relating to equity securities to be issued solely
      in connection with any acquisition of any entity or business or equity
      securities issuable in connection with stock option or other employee benefit
      plans, the Company shall send to each Holder of Registrable Securities written
      notice of such determination and, if within thirty (30) days after receipt
      of
      such notice, or within such shorter period of time as may be specified by the
      Company in such written notice as may be necessary for the Company to comply
      with its obligations with respect to the timing of the filing of such
      registration statement, any such Holder shall so request in writing, (which
      request shall specify the Registrable Securities intended to be disposed of
      by
      the Purchasers), the Company will cause the registration under the Securities
      Act of all Registrable Securities which the Company has been so requested to
      register by the Holder, to the extent requisite to permit the disposition of
      the
      Registrable Securities so to be registered, provided that if at any time after
      giving written notice of its intention to register any securities and prior
      to
      the effective date of the registration statement filed in connection with such
      registration, the Company shall determine for any reason not to register or
      to
      delay registration of such securities, the Company may, at its election, give
      written notice of such determination to such Holder and, thereupon, (i) in
      the
      case of a determination not to register, shall be relieved of its obligation
      to
      register any Registrable Securities in connection with such registration (but
      not from its obligation to pay expenses in accordance with Section 4 hereof),
      and (ii) in the case of a determination to delay registering, shall be permitted
      to delay registering any Registrable Securities being registered pursuant to
      this Section 7(d) for the same period as the delay in registering such other
      securities. The Company shall include in such registration statement all or
      any
      part of such Registrable Securities such holder requests to be registered;
      provided,
      however,
      that
      the Company shall not be required to register any Registrable Securities
      pursuant to this Section 7(d) that are eligible for sale pursuant to Rule 144
      of
      the Securities Act. In the case of an underwritten public offering, if the
      managing underwriter(s) or underwriter(s) should reasonably object to the
      inclusion of the Registrable Securities in such registration statement, then
      if
      the Company after consultation with the managing underwriter should reasonably
      determine that the inclusion of such Registrable Securities would materially
      adversely affect the offering contemplated in such registration statement,
      and
      based on such determination recommends inclusion in such registration statement
      of fewer or none of the Registrable Securities of the Holders, then (x) the
      number of Registrable Securities of the Holders included in such registration
      statement shall be reduced pro rata among such Holders (based upon the number
      of
      Registrable Securities requested to be included in the registration), if the
      Company after consultation with the underwriter(s) recommends the inclusion
      of
      fewer Registrable Securities, or (y) none of the Registrable Securities of
      the
      Holders shall be included in such registration statement, if the Company after
      consultation with the underwriter(s) recommends the inclusion of none of such
      Registrable Securities; provided, however, that if securities are being offered
      for the account of other persons or entities as well as the Company, such
      reduction shall not represent a greater fraction of the number of Registrable
      securities intended to be offered by the Holders than the fraction of similar
      reductions imposed on such other persons or entities (other than the
      Company).

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

       

    

    (f) Failure
      to File Registration Statement and Other Events.
      The
      Company and the Purchasers agree that the Holders will suffer damages if any
      Registration Statement is not filed on or prior to the applicable Filing Date
      and not declared effective by the Commission on or prior to the applicable
      Effectiveness Date and maintained in the manner contemplated herein during
      the
      Effectiveness Period or if certain other events occur. The Company and the
      Holders further agree that it would not be feasible to ascertain the extent
      of
      such damages with precision. Accordingly, if (A) the Registration Statement
      is
      not filed on or prior to the Filing Date, or (B) the Registration Statement
      is
      not declared effective by the Commission on or prior to the Effectiveness Date,
      or (C) the Company fails to file with the Commission a request for acceleration
      in accordance with Rule 461 promulgated under the Securities Act within three
      (3) Business Days of the date that the Company is notified (orally or in
      writing, whichever is earlier) by the Commission that a Registration Statement
      will not be “reviewed,” or not subject to further review, or (D) the
      Registration Statement is filed with and declared effective by the Commission
      but thereafter ceases to be effective as to all Registrable Securities at any
      time prior to the expiration of the Effectiveness Period, without being
      succeeded immediately by a subsequent Registration Statement filed with and
      declared effective by the Commission, or (E) the Company has breached Section
      3(n) hereof, or (F) trading in the Common Stock shall be suspended or if the
      Common Stock is no longer quoted on or delisted from the OTC Bulletin Board
      (or
      other principal exchange on which the Common Stock is traded) for any reason
      for
      more than three (3) Business Days in the aggregate (any such failure or breach
      being referred to as an “Event,”
and
      for purposes of clauses (A) and (B) the date on which such Event occurs, or
      for
      purposes of clause (C) the date on which such three (3) Business Day period
      is
      exceeded, or for purposes of clause (D) after more than fifteen (15) Business
      Days, or for purposes of clause (F) the date on which such three (3) Business
      Day period is exceeded, being referred to as “Event
      Date”),
      the
      Company shall pay an amount in cash as liquidated damages to each Holder equal
      to two percent (2%) of the amount of the Holder’s initial investment in the
      Common Stock and Warrants pursuant to the Purchase Agreement for each thirty
      (30)-day period or portion thereof thereafter from the Event Date until the
      applicable Event is cured; provided,
      however,
      that in
      no event shall the amount of liquidated damages payable at any time and from
      time to time to any Holder pursuant to this Section 7(e) exceed an aggregate
      of
      twenty percent (20%) of the amount of the Holder’s initial investment in the
      Common Stock. Notwithstanding anything to the contrary in this paragraph (e),
      if
      (a) any of the Events described in clauses (A), (B), (C), (D) or (F) shall
      have
      occurred, (b) on or prior to the applicable Event Date, the Company shall have
      exercised its rights under Section 3(n) hereof and (c) the postponement or
      suspension permitted pursuant to such Section 3(n) shall remain effective as
      of
      such applicable Event Date, then the applicable Event Date shall be deemed
      instead to occur on the second Business Day following the termination of such
      postponement or suspension. Liquidated damages payable by the Company pursuant
      to this Section 7(d) shall be payable on the first (1st) Business Day of each
      thirty (30)-day period following the Event Date in cash.

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

       

    

    Notwithstanding
      anything to the contrary contained herein, in no event shall any liquidated
      damages be payable with respect to the delay caused solely due to a Rule 415
      comment by the Commission.

     

    (g) Amendments
      and Waivers.
      The
      provisions of this Agreement, including the provisions of this sentence, may
      not
      be amended, modified or supplemented, and waivers or consents to departures
      from
      the provisions hereof may not be given, unless the same shall be in writing
      and
      signed by the Company and the Holders of at least a majority of the Registrable
      Securities outstanding.

     

    (h) 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 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:

            	 	
              Long-E
                International, Inc.

              C-6F,
                Huhan Chuangxin Block, Keyuan Road, 

              Hi-Tech
                Industry Zone,

              Shenzhen,
                518000, Guangdong, China

              Telephone:
                (86) 755 3396 5188

              Attention:
                Chairman of the Board

            
	 	 	 	 
	 	
              with
                copies (which shall not constitute notice) to:

            	 	
              Kirkpatrick
                & Lockhart Preston Gates Ellis LLP

              10100
                Santa Monica Boulevard, Seventh Floor

              Los
                Angeles, California 90067

              Attention:
                Thomas Poletti, Esq.

            
	 	 	 	 
	 	
              If
                to any Purchaser:

            	 	
              At
                the address of such Purchaser set forth on 

              Schedule
                I to this Agreement, with copies to 

              Purchaser’s
                counsel as set forth on Schedule I or as 

              specified
                in writing by such:

            
	 	 	 	 
	 	
              with
                copies (which shall not constitute notice) to:

            	 	
              Olshan
                Grundman Frome Rosenzweig

              &
                Wolosky LLP

              Park
                Avenue Tower,

              65
                East 55th
                Street

              New
                York, New York 10022

              Attention:
                Kenneth M. Silverman, Esq.

            

    

    

    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 party
      hereto.

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

       

    

    (i) Successors
      and Assigns.
      This
      Agreement shall be binding upon and inure to the benefit of the parties and
      their successors and permitted assigns and shall inure to the benefit of each
      Holder and its successors and assigns. The Company may not assign this Agreement
      or any of its rights or obligations hereunder without the prior written consent
      of each Holder. Each Purchaser may assign its rights hereunder in the manner
      and
      to the Persons as permitted under the Purchase Agreement.

     

    (j) Assignment
      of Registration Rights.
      The
      rights of each Holder hereunder, including the right to have the Company
      register for resale Registrable Securities in accordance with the terms of
      this
      Agreement, shall be automatically assignable by each Holder to any Person of
      all
      or a portion of the Common Stock or the Registrable Securities if: (i) the
      Holder agrees in writing with the transferee or assignee to assign such rights,
      and a copy of such agreement is furnished to the Company within a reasonable
      time after such assignment, (ii) the Company is, within a reasonable time after
      such transfer or assignment, furnished with written notice of (a) the name
      and
      address of such transferee or assignee, and (b) the securities with respect
      to
      which such registration rights are being transferred or assigned, (iii)
      following such transfer or assignment the further disposition of such securities
      by the transferee or assignees is restricted under the Securities Act and
      applicable state securities laws, (iv) at or before the time the Company
      receives the written notice contemplated by clause (ii) of this Section, the
      transferee or assignee agrees in writing with the Company to be bound by all
      of
      the provisions of this Agreement, and (v) such transfer shall have been made
      in
      accordance with the applicable requirements of the Purchase Agreement. The
      rights to assignment shall apply to the Holders (and to subsequent) successors
      and assigns.

     

    (k) 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 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.

     

    (l) Governing
      Law; Jurisdiction.
      This
      Agreement shall be governed by and construed in accordance with the internal
      laws of the State of New York, without giving effect to any of the conflicts
      of
      law principles that would result in the general application of the substantive
      law of another jurisdiction. This Agreement shall not be interpreted or
      construed with any presumption against the party causing this Agreement to
      be
      drafted. The Company and the Holders agree that venue for any dispute arising
      under this Agreement will lie exclusively in the state or federal courts located
      in New York County, New York, and the parties irrevocably waive any right to
      raise forum
      non conveniens
      or any
      other argument that New York is not the proper venue. The Company and the
      Holders irrevocably consent to personal jurisdiction in the state and federal
      courts of the state of New York. The Company and the Holders consent to process
      being served in any such suit, action or proceeding by delivering a copy thereof
      to such party at the address in effect for notices to it under this Agreement
      and agrees that such service shall constitute good and sufficient service of
      process and notice thereof. Nothing in this Section 7(k) shall affect or limit
      any right to serve process in any other manner permitted by law. The Company
      and
      the Holders 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.

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

       

    

    (m) Cumulative
      Remedies.
      The
      remedies provided herein are cumulative and not exclusive of any remedies
      provided by law.

     

    (n) Severability.
      If any
      term, provision, covenant or restriction of this Agreement is held to be
      invalid, illegal, void or unenforceable in any respect, the remainder of the
      terms, provisions, covenants and restrictions set forth herein shall remain
      in
      full force and effect and shall in no way be affected, impaired or invalidated,
      and the parties hereto shall use their reasonable efforts to find and employ
      an
      alternative means to achieve the same or substantially the same result as that
      contemplated by such term, provision, covenant or restriction. It is hereby
      stipulated and declared to be the intention of the parties that they would
      have
      executed the remaining terms, provisions, covenants and restrictions without
      including any of such that may be hereafter declared invalid, illegal, void
      or
      unenforceable.

     

    (o) Headings.
      The
      headings herein are for convenience only, do not constitute a part of this
      Agreement and shall not be deemed to limit or affect any of the provisions
      hereof.

     

    (p) Shares
      Held by the Company and its Affiliates.
      Whenever the consent or approval of Holders of a specified percentage of
      Registrable Securities is required hereunder, Registrable Securities held by
      the
      Company or its Affiliates (other than any Holder or transferees or successors
      or
      assigns thereof if such Holder is deemed to be an Affiliate solely by reason
      of
      its holdings of such Registrable Securities) shall not be counted in determining
      whether such consent or approval was given by the Holders of such required
      percentage.

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

       

    

    (q) 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 the Purchase Agreement has been made by such
      Purchaser independently of any other Purchaser 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 been 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 (including, but not limited to, the (i) inclusion of a Purchaser in
      the
      Registration Statement and (ii) review by, and consent to, such Registration
      Statement by a Purchaser) 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. 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. The Company acknowledges
      that such procedure with respect to the Transaction Documents in no way creates
      a presumption that the Purchasers are in any way acting in concert or as a
      group
      with respect to the Transaction Documents or the transactions contemplated
      hereby or thereby.

     

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK]

     

     

     

    
 

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

       

    

    IN
      WITNESS WHEREOF, the parties hereto have caused this Amended and Restated
      Registration Rights Agreement to be duly executed by their respective authorized
      persons as of the date first indicated above.

     

    
      	 	 	 
	 	
              LONG-E
                INTERNATIONAL, INC.

            
	 
 	 
 	 
 
	 	By:  	/s/ Bu
              Shengfu
	 	
              

              Name:
                Bu Shengfu

            
	 	
              Title:
                President and Chief Executive
                Officer 

            

    

     

    

 

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

       

    

    IN
      WITNESS WHEREOF, the parties hereto have caused this Amended and Restated
      Registration Rights Agreement to be duly executed by their respective authorized
      persons as of the date first indicated above.

     

    
      	 	 	 
	 	
              PURCHASER:

            
	 
 	 
 	 
 
	 	By:  	/s/ by
              purchasers listed on attached Schedule I
	 	
              

              Name:

            
	 	Title: 

    

     

     

    
 

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

    Schedule
      I

    Purchasers

     

    

    

      Professional
        Offshore Opportunity Fund

      Nutmeg
        Group

      Kagel
        Family Trust

      WestPark
        Capital Financial Services, LLC

      Vision
        Opportunity Master Fund, Ltd.

      MidSouth
        Investor Fund, L.P.

      Barron
        Partners, LP

      JCAR
        Funds Ltd.

      Steve
        Mazur

      William
        Denkin

      Ray
        Rivers

      Nutmeg
        /
        Mercury Fund, LLP

      Ronald
        and Linda Nash JTWROS

    

    

    

    

    

    

    
 

    ____________

    
      *
        Further
        to the January Purchase Agreement, up to an additional $459,000 of Convertible
        Notes and Warrants may be sold by the Company. Further to Section 7(a) of
        the
        Agreement, these parties shall be deemed Purchasers hereunder and this
        Schedule I shall be revised accordingly.

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Schedule
      II

    Holders
      of Limited Registration Rights

     

    

    
      	
              Eric
                Thatcher:

            	10,000 shares
	
              Biar
                Capital Limited:

            	30,000 shares
	
              Capital
                Resource Alliance LLC:

            	750 shares
	
              Lionel
                Drage:

            	100 shares
	
              Global
                Funding Group, Inc.: 

            	1,009 shares

    

     

    

 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    Schedule
      III

    Initially
      Registrable Securities

     

    

      
        	 	 	 	 	 

                Common
                  Shares Underlying

              	 
	
                Investor

              	 	
                Common
                  Shares

              	 	
                Convertible
                  Notes

              	 	
                Series
                  A
                  Warrants

              	 	
                Series
                  B Warrants

              	 
	
                Barron
                  Partners, LP

              	 	 	
                
                

                -

              	 	 	
                
                

                2,011,702

              	 	 	
                
                

                1,005,851

              	 	 	
                
                

                1,005,581

              	 
	
                Vision
                  Opportunity Master Fund, Ltd.

              	 	 	
                
                

                1,065,018

              	 	 	
                
                

                591,677

              	 	 	
                
                

                295,839

              	 	 	
                
                

                295,839

              	 
	
                MidSouth
                  Investor Fund LP

              	 	 	
                
                

                843,562

              	 	 	
                
                

                -

              	 	 	
                
                

                -

              	 	 	
                
                

                -

              	 
	
                WestPark
                  Capital Financial Services, LLC

              	 	 	
                
                

                295,838

              	 	 	
                
                

                -

              	 	 	
                
                

                -

              	 	 	
                
                

                -

              	 
	
                JCAR
                  Funds Ltd.

              	 	 	
                
                

                -

              	 	 	
                
                

                236,671

              	 	 	
                
                

                118,335

              	 	 	
                
                

                118,335

              	 
	
                Steve
                  Mazur

              	 	 	
                
                

                -

              	 	 	
                
                

                39,168

              	 	 	
                
                

                29,584

              	 	 	
                
                

                29,584

              	 
	
                William
                  Denkin

              	 	 	
                
                

                -

              	 	 	
                
                

                39,168

              	 	 	
                
                

                29,584

              	 	 	
                
                

                29,584

              	 
	
                Ray
                  Rivers

              	 	 	
                
                

                -

              	 	 	
                
                

                39,168

              	 	 	
                
                

                29,584

              	 	 	
                
                

                29,584

              	 
	
                Nutmeg
                  / Mercury Fund, LLP

              	 	 	
                
                

                -

              	 	 	
                
                

                90,527

              	 	 	
                
                

                45,263

              	 	 	
                
                

                45,263

              	 
	
                Ronald
                  and Linda Nash JTWROS

              	 	 	
                
                

                -

              	 	 	
                
                

                59,168

              	 	 	
                
                

                29,584

              	 	 	
                
                

                29,584

              	 
	
                Nutmeg
                  Group

              	 	 	
                
                

                59,168

              	 	 	
                
                

                -

              	 	 	
                
                

                -

              	 	 	
                
                

                -

              	 
	
                Kagel
                  Family Trust

              	 	 	
                
                

                59,168

              	 	 	
                
                

                -

              	 	 	
                
                

                -

              	 	 	
                
                

                -

              	 

      

    

     

     

     

     

    

    ____________

    
      *
        This
        table gives effect to the Purchasers to date in the December Purchase Agreement
        and the January Purchase Agreement. An aggregate of 9,377,914 shares are
        to be
        registered under the Initial Registration Statement. Further to the January
        Purchase Agreement, up to an additional $459,000 of Convertible Notes and
        Warrants may be sold by the Company. Assuming the sale of a maximum number
        of
        Notes, an aggregate of 2,500,258 Common Shares, and 3,438,528, 1,719,414
        and
        1,791,414 Common Shares underlying the Convertible Notes, Series A Warrants
        and Series B Warrants, respectively, will be offered in the Initial
        Registration Statement. The shares set forth in this Schedule III give
        effect to the sale of all authorized Notes ($5.812 million) pursuant to the
        January Purchase Agreement. If less than all of such Notes are sold, the
        securities offered by the other Purchasers in the Initial Registration Statement
        will be proportionately increased up to said 9,377,914 number. As additional
        Purchasers are added, this Schedule III shall be revised
        accordingly.

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Exhibit
      A

    Plan
      of Distribution

     

    The
      selling security holders and any of their pledgees, donees, assignees and
      successors-in-interest may, from time to time, sell any or all of their shares
      of common stock being offered under this prospectus on any stock exchange,
      market or trading facility on which shares of our common stock are traded or
      in
      private transactions. These sales may be at fixed or negotiated prices. The
      selling security holders may use any one or more of the following methods when
      disposing of shares:

     

    
      	 	
              ·

            	
              ordinary
                brokerage transactions and transactions in which the broker-dealer
                solicits purchasers;

            

    

     

    
      	 	
              ·

            	
              block
                trades in which the broker-dealer will attempt to sell the shares
                as agent
                but may position and resell a portion of the block as principal to
                facilitate the transaction;

            

    

     

    
      	 	
              ·

            	
              purchases
                by a broker-dealer as principal and resales by the broker-dealer
                for its
                account;

            

    

     

    
      	 	
              ·

            	
              an
                exchange distribution in accordance with the rules of the applicable
                exchange;

            

    

     

    
      	 	
              ·

            	
              privately
                negotiated transactions;

            

    

     

    
      	 	
              ·

            	
              to
                cover short sales made after the date that the registration statement
                of
                which this prospectus is a part is declared effective by the
                Commission;

            

    

     

    
      	 	
              ·

            	
              broker-dealers
                may agree with the selling security holders to sell a specified number
                of
                such shares at a stipulated price per
                share;

            

    

     

    
      	 	
              ·

            	
              a
                combination of any of these methods of sale;
                and

            

    

     

    
      	 	
              ·

            	
              any
                other method permitted pursuant to applicable
                law.

            

    

     

    The
      shares may also be sold under Rule 144 under the Securities Act of 1933, as
      amended (“Securities Act”), if available, rather than under this prospectus. The
      selling security holders have the sole and absolute discretion not to accept
      any
      purchase offer or make any sale of shares if they deem the purchase price to
      be
      unsatisfactory at any particular time.

     

    The
      selling security holders may pledge their shares to their brokers under the
      margin provisions of customer agreements. If a selling security holder defaults
      on a margin loan, the broker may, from time to time, offer and sell the pledged
      shares.

     

    Broker-dealers
      engaged by the selling security holders may arrange for other broker-dealers
      to
      participate in sales. Broker-dealers may receive commissions or discounts from
      the selling security holders (or, if any broker-dealer acts as agent for the
      purchaser of shares, from the purchaser) in amounts to be negotiated, which
      commissions as to a particular broker or dealer may be in excess of customary
      commissions to the extent permitted by applicable law.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    If
      sales
      of shares offered under this prospectus are made to broker-dealers as
      principals, we would be required to file a post-effective amendment to the
      registration statement of which this prospectus is a part. In the post-effective
      amendment, we would be required to disclose the names of any participating
      broker-dealers and the compensation arrangements relating to such
      sales.

     

    The
      selling security holders and any broker-dealers or agents that are involved
      in
      selling the shares offered under this prospectus may be deemed to be
“underwriters” within the meaning of the Securities Act in connection with these
      sales. Commissions received by these broker-dealers or agents and any profit
      on
      the resale of the shares purchased by them may be deemed to be underwriting
      commissions or discounts under the Securities Act. Any broker-dealers or agents
      that are deemed to be underwriters may not sell shares offered under this
      prospectus unless and until we set forth the names of the underwriters and
      the
      material details of their underwriting arrangements in a supplement to this
      prospectus or, if required, in a replacement prospectus included in a
      post-effective amendment to the registration statement of which this prospectus
      is a part.

     

    The
      selling security holders and any other persons participating in the sale or
      distribution of the shares offered under this prospectus will be subject to
      applicable provisions of the Exchange Act, and the rules and regulations under
      that act, including Regulation M. These provisions may restrict activities
      of,
      and limit the timing of purchases and sales of any of the shares by, the selling
      security holders or any other person. Furthermore, under Regulation M, persons
      engaged in a distribution of securities are prohibited from simultaneously
      engaging in market making and other activities with respect to those securities
      for a specified period of time prior to the commencement of such distributions,
      subject to specified exceptions or exemptions. All of these limitations may
      affect the marketability of the shares.

     

    If
      any of
      the shares of common stock offered for sale pursuant to this prospectus are
      transferred other than pursuant to a sale under this prospectus, then subsequent
      holders could not use this prospectus until a post-effective amendment or
      prospectus supplement is filed, naming such holders. We offer no assurance
      as to
      whether any of the selling security holders will sell all or any portion of
      the
      shares offered under this prospectus.

     

    We
      have
      agreed to pay all fees and expenses we incur incident to the registration of
      the
      shares being offered under this prospectus. However, each selling security
      holder and purchaser is responsible for paying any discounts, commissions and
      similar selling expenses they incur.

     

    We
      and
      the selling security holders have agreed to indemnify one another against
      certain losses, damages and liabilities arising in connection with this
      prospectus, including liabilities under the Securities Act.

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