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<SEC-DOCUMENT>0001380389-10-000011.txt : 20100203
<SEC-HEADER>0001380389-10-000011.hdr.sgml : 20100203
<ACCEPTANCE-DATETIME>20100203151835
ACCESSION NUMBER:		0001380389-10-000011
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		6
CONFORMED PERIOD OF REPORT:	20100203
ITEM INFORMATION:		Entry into a Material Definitive Agreement
ITEM INFORMATION:		Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant
ITEM INFORMATION:		Unregistered Sales of Equity Securities
ITEM INFORMATION:		Changes in Control of Registrant
ITEM INFORMATION:		Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers: Compensatory Arrangements of Certain Officers
ITEM INFORMATION:		Financial Statements and Exhibits
FILED AS OF DATE:		20100203
DATE AS OF CHANGE:		20100203

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			ECLIPS ENERGY TECHNOLOGIES, INC.
		CENTRAL INDEX KEY:			0001058307
		STANDARD INDUSTRIAL CLASSIFICATION:	POWER, DISTRIBUTION & SPECIALTY TRANSFORMERS [3612]
		IRS NUMBER:				650783722
		STATE OF INCORPORATION:			FL
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-25097
		FILM NUMBER:		10570390

	BUSINESS ADDRESS:	
		STREET 1:		3900A 31ST STREET NORTH
		CITY:			ST PETERSBURG
		STATE:			FL
		ZIP:			33714
		BUSINESS PHONE:		7275255552

	MAIL ADDRESS:	
		STREET 1:		3900A 31ST STREET NORTH
		CITY:			ST PETERSBURG
		STATE:			FL
		ZIP:			33714

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	WORLD ENERGY SOLUTIONS, INC.
		DATE OF NAME CHANGE:	20051114

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	ADVANCED 3-D ULTRASOUND SERVICES INC
		DATE OF NAME CHANGE:	20050809

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	YSEEK INC
		DATE OF NAME CHANGE:	20010413
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>eegt_form8k020210.htm
<DESCRIPTION>ECLIPS ENERGY TECHNOLOGIES, INC. FORM 8-K
<TEXT>
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<TITLE>UNITED STATES </TITLE>
<META NAME="author" CONTENT="RBMU">
<META NAME="date" CONTENT="02/02/2010">
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<DIV style="width:624px"><P style="line-height:18pt; margin:0px; font-size:16pt" align=center><B>UNITED STATES</B><FONT style="font-family:Courier New"> <A NAME="fis_top_of_document"></A><A NAME="june2320038k_txt"></A><A NAME="fis_form_8_k"></A></FONT></P>
<P style="line-height:18pt; margin:0px; font-size:16pt" align=center><B>SECURITIES AND EXCHANGE COMMISSION </B></P>
<P style="line-height:14pt; margin:0px; font-size:12pt" align=center>Washington, D.C. 20549 </P>
<P style="margin:0px"><BR></P>
<P style="line-height:14pt; margin:0px; font-size:12pt" align=center><B>FORM 8-K</B></P>
<P style="margin:0px"><BR></P>
<P style="line-height:14pt; margin:0px; font-size:12pt" align=center><B>CURRENT REPORT </B></P>
<P style="line-height:14pt; margin:0px; font-size:12pt" align=center><B>PURSUANT TO SECTION 13 OR 15(d) OF</B></P>
<P style="line-height:14pt; margin:0px; font-size:12pt" align=center><B>THE SECURITIES EXCHANGE ACT OF 1934 </B></P>
<P style="margin:0px"><BR></P>
<P style="line-height:14pt; margin:0px; font-size:12pt" align=center><I>Date of Report (Date of earliest event reported)</I>: <B>December 17, 2009</B> </P>
<P style="margin:0px"><BR></P>
<P style="line-height:20pt; margin:0px; font-size:18pt" align=center><B>ECLIPS ENERGY TECHNOLOGIES, INC.</B></P>
<P style="line-height:14pt; margin:0px; font-size:12pt" align=center>&nbsp;(<I>Exact name of registrant as specified in its charter</I>) </P>
<P style="margin:0px" align=center><BR></P>
<P style="line-height:14pt; margin:0px; font-size:12pt" align=center><B>Florida</B></P>
<P style="line-height:14pt; margin:0px; font-size:12pt" align=center><I>(State or Other Jurisdiction of Incorporation)</I></P>
<P style="margin:0px" align=center><BR></P>
<P style="line-height:14pt; margin:0px; font-size:12pt" align=center><B>000-25097</B></P>
<P style="line-height:14pt; margin:0px; font-size:12pt" align=center><I>(Commission File Number)</I></P>
<P style="margin:0px" align=center><BR></P>
<P style="line-height:14pt; margin:0px; font-size:12pt" align=center><B>65-0783722</B></P>
<P style="line-height:14pt; margin:0px; font-size:12pt" align=center><I>(IRS Employer Identification No.)</I></P>
<P style="margin:0px" align=center><BR></P>
<P style="margin:0px"><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=center><U>3900A 31<SUP>st</SUP> Street North, St. Petersburg, Florida &nbsp;33714 </U></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=center><I>(Address of principal executive offices) (zip code) </I></P>
<P style="margin:0px"><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=center><U>(727) 525-5552</U></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=center>&nbsp;<I>(Registrant's telephone number, including area code) </I></P>
<P style="margin:0px"><BR></P>
<A NAME="fis_other_events"></A><P style="margin:0px"><BR></P>
<P style="margin:0px" align=center><BR></P>
<P style="margin:0px">Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px">[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)</P>
<P style="margin:0px">[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)</P>
<P style="margin:0px">[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))</P>
<P style="margin:0px">[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR>
<BR></P>
<P style="line-height:14pt; margin:0px; font-size:12pt" align=center>1</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="line-height:13pt; margin-top:0px; margin-bottom:-17.333px; font-size:11pt; page-break-before:always"><B>Item 1.01 </B></P>
<P style="line-height:13pt; margin:0px; text-indent:96px; font-size:11pt"><B>Entry into a Material Definitive Agreement.</B></P>
<P style="margin:0px"><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt"><I><U>Purchase Agreement</U></I></P>
<P style="margin:0px"><BR></P>
<P style="line-height:13pt; margin-top:0px; margin-bottom:7.333px; text-indent:48px; font-size:11pt" align=justify>On December 22, 2009 (the &quot;<U>Purchase Date</U>&quot;), EClips Energy Technologies, Inc. (the &#147;<U>Company</U>&#148;) entered into a Stock Purchase Agreement, (the &#147;<U>Purchase Agreement</U>&#148;) by and among the Company, Benjamin C. Croxton (the &#147;<U>Seller</U>&#148;), and certain purchasers of securities owned by the Seller, representing a controlling interest in the Company &nbsp;(each a &#147; <U>Purchaser</U> &#148; and collectively the &quot;<U>Purchasers</U>&quot;). &nbsp;The Purchase Agreement was subsequently amended on January 12, 2010. &nbsp;As amended the Purchase Agreement contemplates a change of control of the Company through the resignation of the existing officers and directors, and the purchase, in privately negotiated transactions, of outstanding shares of the Company from the Seller, and the appointment of Greg Cohen as director and Chief Executive Officer
. &nbsp;Pursuant to the Purchase Agreement, Purchasers agreed to purchase from the Seller an aggregate of (i) 50,000,000 shares of common stock, $0.001 par value (&#147;<U>Common Stock</U>&#148;) and (ii) 1,500,000 shares of Series D preferred stock (the &#147;<U>Series D Preferred Stock</U>&#148; and collectively with the Common Stock, the &#147;<U>Shares</U>&#148;), comprising approximately 82% of the issued and outstanding voting stock of the Company. The closing of the purchase of the Shares is expected to occur on or about February 5, 2010, following the expiration of the period required under Rule 14F-1, promulgated under the Securities Exchange Act of 1934, as amended, for a change of control. The source of funds for the purchase was provided by payment into Seller&#146;s escrow account, from the personal funds of certain of the Purchasers. &nbsp;With respect to the Series D Preferred Stock purchase, the source of the funds for the Purchaser of the Series D Preferred Stock was initially an undocumente
d advance from the Purchasers. Upon closing of the Purchase Agreement, a change of control will occur in which Auracana, LLC will effectively have control of the Company through the exercise of the voting rights attributable to the voting power of 500 votes for each share outstanding of the Company&#146;s Series D Preferred Stock acquired from the Seller (750,000,000 votes total). &nbsp;There is no agreement or understanding in effect among the Purchasers with respect to the voting of any of the Shares.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:13pt; margin:0px; text-indent:48px; font-size:11pt" align=justify>In connection with the Purchase Agreement, the Company and Seller entered into a release pursuant to which in consideration for the termination of Seller&#146;s employment agreement, dated January 31, 2006, the Company issued to Seller 1,100,000 shares of the Company&#146;s common stock. &nbsp;Furthermore, the Company agreed to transfer to Seller or Seller&#146;s designee, Pure Air Technologies, Inc., Hydrogen Safe Technologies, Inc., World Energy Solutions Limited and Advanced Alternative Energy, Inc. and granted to Seller a five-year option for the purchase of H-Hybrid Technologies, Inc.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:13pt; margin:0px; text-indent:48px; font-size:11pt" align=justify>The Company's current officers and directors tendered their resignations to be effective on the 11<SUP>th</SUP> day following the mailing of the Schedule 14F filed with the Securities and Exchange Commission (the &#147;<U>Commission</U>&#148;). &nbsp;Under the Purchase Agreement, the Company is required to appoint as chief executive officer and director, Mr. Greg Cohen, which will be effective on the 11<SUP>th</SUP> day following the mailing of the Schedule 14F. The mailing of the Schedule 14F commenced on January 25, 2010. &nbsp;Previously, the Company and Purchasers had agreed to the appointment of Mr. Dana Boskoff to the positions to be assumed by Mr. Cohen and had prepared and filed with the Commission on December 22, 2009 a Schedule 14F reflecting the expected appointment (&#147;<U>December 2009 Schedule 14F</U>&#148;). &nbsp;Subsequent to the filing of the December 2009 Schedule 14F, Mr. Boskoff declined to accept s
uch appointment and Mr. Cohen has agreed to assume such positions. No formal action of the Board or the Company appointing Mr. Boskoff had been taken by the Company. &nbsp;&nbsp;</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:13pt; margin:0px; text-indent:48px; font-size:11pt" align=justify>During late 2009, the Company began to explore other business opportunities which in light of the execution of the Purchase Agreement likely will be limited to business opportunities introduced by Purchasers, and disposition of its existing businesses. &nbsp;Although no agreement has been entered, the Company has been advised by Purchasers that a privately owned online sports marketing and fantasy sports website and related businesses (the &#147;<U>Proposed Business</U>&#148;) is being proposed to be acquired following the closing of the Purchase Agreement. &nbsp;Certain Purchasers own debt and equity securities in the Proposed Business. &nbsp;In connection with the Purchase Agreement, as amended, Mr. Greg Cohen has been appointed to serve as sole director of the Company on the Effective Date. &nbsp;Mr. Cohen is not affiliated with the Proposed Business.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:13pt; margin:0px; text-indent:48px; font-size:11pt" align=justify>The closing of the Purchase Agreement is subject to the satisfaction of customary closing conditions, as well as, among others, the mailing of the Schedule 14F to the shareholders of the Company.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:13pt; margin-top:0px; margin-bottom:7.333px; text-indent:48px; font-size:11pt" align=justify>Upon consummation of the transactions contemplated by the Purchase Agreement, the Purchasers will own approximately 82% of the Company&#146;s issued and outstanding shares of common stock, based on 63,516,751 shares of common stock outstanding on the Purchase Date, and thus, a change of control will result in the Company. &nbsp;</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify><I><U>December 2009 Debenture Financing</U></I></P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:13pt; margin:0px; text-indent:48px; font-size:11pt" align=justify>On December 17, 2009, to obtain funding for working capital, the Company entered into securities purchase agreement (the &#147;<U>Securities Purchase Agreement</U>&#148;) with an accredited investor (the &#147;<U>Investor</U>&#148;) pursuant to which the Company agreed to issue its 6% Senior Convertible Debentures for an aggregate purchase price of $75,000 (the &#147;<U>Debenture</U>&#148;). &nbsp;The Debenture bears interest at 6% per annum and matures twenty-four months from the date of issuance. &nbsp;The Debenture will be convertible at the option of the holder at any time into shares of common stock, at an initial conversion price equal to the lesser of (i) $0.05 per share or (ii) until the eighteen (18) months anniversary of the Debenture, the lowest price paid per share or the lowest conversion price per share in a subsequent sale of the Company&#146;s equity and/or convertible debt securities paid by investors aft
er the date of the Debenture (&#147;<U>Initial Conversion Price</U>&#148;). </P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:13pt; margin:0px; text-indent:48px; font-size:11pt" align=justify>The Initial Conversion Price is subject to full ratchet and anti-dilution adjustment for subsequent lower price issuances by the Company, as well as customary adjustments provisions for stock splits, stock dividends, recapitalizations and similar events, and will receive the benefit of any more favorable terms or provisions provided to subsequent investors for a period of 18 months. &nbsp;</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:13pt; margin:0px; text-indent:48px; font-size:11pt" align=justify>The full principal amount of the Debenture is due immediately upon default under the terms Debenture. &nbsp;As of the date hereof, the Company is obligated on $75,000 face amount of the Debenture. &nbsp;The Debenture is a debt obligation arising other than in the ordinary course of business which constitute a direct financial obligation of the Company. </P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:13pt; margin:0px; text-indent:48px; font-size:11pt" align=justify>The securities were offered and sold to the Investor in a private placement transaction made in reliance upon exemptions from registration pursuant to Section 4(2) under the Securities Act of 1933, as amended and Rule 506 promulgated thereunder. &nbsp;</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:13pt; margin:0px; text-indent:48px; font-size:11pt" align=justify>The foregoing information is a summary of the agreements involved in the transactions described above, is not complete, and is qualified in its entirety by reference to the full text of such agreements, &nbsp;copies of which are attached as exhibits to this Current Report on Form 8-K.&nbsp;&nbsp;Readers should review such agreements for a complete understanding of the terms and conditions associated with this transaction.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:13pt; margin-top:0px; margin-bottom:-17.333px; padding-left:96px; text-indent:-96px; font-size:11pt" align=justify><B>Item 2.03 &nbsp;</B></P>
<P style="line-height:13pt; margin:0px; padding-left:96px; font-size:11pt" align=justify><B>Creation of a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet Arrangement of a Registrant</B></P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:13pt; margin:0px; text-indent:48px; font-size:11pt">See Item 1.01 (Entry into a Material Definitive Agreement) of this current report on Form 8-K, which is incorporated herein by reference.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; font-size:11pt"><B>Item 3.02. &nbsp;&nbsp;</B></P>
<P style="margin:0px; text-indent:96px; font-size:11pt"><B>Unregistered Sales of Equity Securities.</B></P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:13pt; margin:0px; text-indent:48px; font-size:11pt">See Item 1.01 (Entry into a Material Definitive Agreement) of this current report on Form 8-K, which is incorporated herein by reference.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:13pt; margin-top:0px; margin-bottom:-17.333px; font-size:11pt"><B>Item 5.01</B></P>
<P style="line-height:13pt; margin-top:0px; margin-bottom:7.333px; text-indent:96px; font-size:11pt"><B>&nbsp;Change of Control</B></P>
<P style="line-height:13pt; margin:0px; text-indent:48px; font-size:11pt">See Item 1.01 (Entry into a Material Definitive Agreement) of this current report on Form 8-K, which is incorporated herein by reference.</P>
<P style="margin:0px"><BR></P>
<P style="line-height:13pt; margin-top:0px; margin-bottom:-17.333px; padding-left:96px; text-indent:-94px; font-size:11pt"><B>Item 5.02 &nbsp;</B></P>
<P style="line-height:13pt; margin-top:0px; margin-bottom:7.333px; padding-left:96px; font-size:11pt"><B>Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers; Compensatory Arrangements of Certain Officers</B></P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:13pt; margin:0px; text-indent:48px; font-size:11pt">See Item 1.01 (Entry into a Material Definitive Agreement) of this current report on Form 8-K, which is incorporated herein by reference.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px"><B>Item 9.01 Financial Statements and Exhibits.</B></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px">(d) Exhibits</P>
<P style="margin:0px"><BR></P>
<TABLE style="font-size:10pt" cellspacing=0 align=center><TR height=0 style="font-size:0"><TD width=88.267></TD><TD width=17.8></TD><TD width=484.333></TD></TR>
<TR><TD style="border-bottom:1px solid #000000" valign=top width=88.267><P style="line-height:13pt; margin:0px; font-size:11pt"><B>Exhibit Number</B></P>
</TD><TD style="border-bottom:1px solid #000000" valign=top width=17.8><P>&nbsp;</P></TD><TD style="border-bottom:1px solid #000000" valign=top width=484.333><P style="margin:0px" align=center><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=center><B>Description</B></P>
</TD></TR>
<TR><TD valign=top width=88.267><P style="line-height:13pt; margin:0px; font-size:11pt">4.1</P>
</TD><TD valign=top width=17.8><P>&nbsp;</P></TD><TD valign=top width=484.333><P style="line-height:13pt; margin:0px; text-indent:-1.2px; font-size:11pt">Form of Debenture, dated December 17, 2009</P>
</TD></TR>
<TR><TD valign=top width=88.267><P style="line-height:13pt; margin:0px; font-size:11pt">99.1</P>
</TD><TD valign=top width=17.8><P>&nbsp;</P></TD><TD valign=top width=484.333><P style="line-height:13pt; margin:0px; text-indent:-1.2px; font-size:11pt">Stock Purchase Agreement, dated December 22, 2009, by and among EClips Energy Technologies, Inc., Benjamin Croxton and the purchasers signatory thereto</P>
</TD></TR>
<TR><TD valign=top width=88.267><P style="line-height:13pt; margin:0px; font-size:11pt">99.2</P>
</TD><TD valign=top width=17.8><P>&nbsp;</P></TD><TD valign=top width=484.333><P style="line-height:13pt; margin:0px; text-indent:-1.2px; font-size:11pt">Option Agreement, dated December 22, 2009, by and between EClips Energy Technologies, Inc. and Benjamin Croxton</P>
</TD></TR>
<TR><TD valign=top width=88.267><P style="line-height:13pt; margin:0px; font-size:11pt">99.3</P>
</TD><TD valign=top width=17.8><P>&nbsp;</P></TD><TD valign=top width=484.333><P style="line-height:13pt; margin:0px; text-indent:-1.2px; font-size:11pt">Release, dated December 22, 2009, by and between EClips Energy Technologies, Inc. and Benjamin Croxton</P>
</TD></TR>
<TR><TD valign=top width=88.267><P style="line-height:13pt; margin:0px; font-size:11pt">99.4</P>
</TD><TD valign=top width=17.8><P>&nbsp;</P></TD><TD valign=top width=484.333><P style="line-height:13pt; margin:0px; text-indent:-1.2px; font-size:11pt">Securities Purchase Agreement, dated December 17, 2009, by and among EClips Energy Technologies, Inc. and the purchasers signatory thereto</P>
</TD></TR>
</TABLE>
<P style="margin:0px" align=center><BR></P>
<P style="margin:0px"><BR>
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<P style="line-height:14pt; margin:0px; font-size:12pt" align=center>2</P>
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<P style="line-height:13pt; margin:0px; font-size:11pt" align=center><B>SIGNATURES</B></P>
<P style="margin:0px"><BR></P>
<P style="line-height:13pt; margin:0px; text-indent:48px; font-size:11pt">Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. </P>
<P style="margin:0px"><BR></P>
<P style="line-height:13pt; margin:0px; text-indent:240px; font-size:11pt"><B>ECLIPS ENERGY TECHNOLOGIES, INC.</B></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="line-height:13pt; margin-top:0px; margin-bottom:-17.333px; font-size:11pt">Dated: &nbsp;February 3, 2010</P>
<P style="line-height:13pt; margin:0px; text-indent:240px; font-size:11pt">By: <U>/s/: Benjamin C. Croxton</U></P>
<P style="line-height:13pt; margin:0px; text-indent:240px; font-size:11pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Benjamin C. Croxton</P>
<P style="line-height:13pt; margin:0px; text-indent:240px; font-size:11pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Chief Executive Officer</P>
<P style="margin:0px"><BR></P>
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<P style="line-height:14pt; margin:0px; font-size:12pt" align=center>3</P>
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<DESCRIPTION>FORM OF DEBENTURE DATED 12-17-2009
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<TITLE>Debenture</TITLE>
<META NAME="author" CONTENT="rcharron">
<META NAME="date" CONTENT="02/02/2010">
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<DIV style="width:624px"><P style="line-height:14pt; margin:0px; font-size:12pt" align=right>&nbsp;</P>
<P style="line-height:14pt; margin:0px; font-size:12pt">NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE &#147;SECURITIES ACT&#148;), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. &nbsp;THIS SECURITY AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.</P>
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<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; font-size:12pt">Original Issue Date: December 17, 2009</P>
<P style="line-height:14pt; margin:0px; text-indent:480px; font-size:12pt">$_______________</P>
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<P style="line-height:14pt; margin:0px; font-size:12pt" align=center><B>6% SENIOR CONVERTIBLE DEBENTURE</B></P>
<P style="line-height:14pt; margin:0px; font-size:12pt" align=center><B>DUE DECEMBER 17, 2011</B></P>
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<P style="line-height:14pt; margin:0px; text-indent:61.067px; font-size:12pt" align=justify>THIS 6% SENIOR CONVERTIBLE DEBENTURE is one of a series of duly authorized and validly issued 6% Senior Convertible Debentures of EClips Energy Technologies, Inc., a Florida corporation, (the &#147;<U>Company</U>&#148;), having its principal place of business at 8200 Seminole Boulevard, St. Petersburg Florida 33714 designated as its 6% Senior Convertible Debenture due December 17, 2011 (this debenture, the &#147;<U>Debenture</U>&#148; and, collectively with the other debentures of such series, the &#147;<U>Debentures</U>&#148;).</P>
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<P style="line-height:14pt; margin:0px; text-indent:48px; font-size:12pt" align=justify>FOR VALUE RECEIVED, the Company promises to pay to ________________________ or its registered assigns (the &#147;<U>Holder</U>&#148;), or shall have paid pursuant to the terms hereunder, the principal sum of $_______________ on December 17, 2011 (the &#147;<U>Maturity Date</U>&#148;) or such earlier date as this Debenture is required or permitted to be repaid as provided hereunder, and to pay interest to the Holder on the aggregate unconverted and then outstanding principal amount of this Debenture in accordance with the provisions hereof. &nbsp;This Debenture is subject to the following additional provisions:</P>
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<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:48px; font-size:12pt"><U>Section 1</U>.</P>
<P style="line-height:14pt; margin:0px; text-indent:144px; font-size:12pt"><U>Definitions</U>. &nbsp;For the purposes hereof, in addition to the terms defined elsewhere in this Debenture, (a) capitalized terms not otherwise defined herein shall have the meanings set forth in the Subscription Agreement and (b) the following terms shall have the following meanings:</P>
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<P style="line-height:14pt; margin:0px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>Alternate Consideration</U>&#148; shall have the meaning set forth in Section 5(e).</P>
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<P style="line-height:14pt; margin:0px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>Bankruptcy Event</U>&#148; means any of the following events: (a) the Company or any Significant Subsidiary (as such term is defined in Rule 1-02(w) of Regulation S-X) thereof commences a case or other proceeding under any bankruptcy, reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction relating to the Company or any Significant Subsidiary thereof, (b) there is commenced against the Company or any Significant Subsidiary thereof any such case or proceeding that is not dismissed within 60 days after commencement, (c) the Company or any Significant Subsidiary thereof is adjudicated insolvent or bankrupt or any order of relief or other order approving any such case or proceeding is entered, (d) the Company or any Significant Subsidiary thereof suffers any appointment of any custodian or the like for it or any s
ubstantial part of its property that is not discharged or stayed within 60 calendar days after such appointment, (e) the Company or any Significant Subsidiary thereof makes a general assignment for the benefit of creditors, (f) the Company or any Significant Subsidiary thereof calls a meeting of its creditors with a view to arranging a composition, adjustment or restructuring of its debts or (g) the Company or any Significant Subsidiary thereof, by any act or failure to act, expressly indicates its consent to, approval of or acquiescence in any of the foregoing or takes any corporate or other action for the purpose of effecting any of the foregoing.</P>
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<P style="line-height:14pt; margin:0px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>Business Day</U>&#148; means any day except any Saturday, any Sunday, any day which shall be a federal legal holiday in the United States or any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.</P>
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<P style="line-height:14pt; margin:0px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>Change of Control Transaction</U>&#148; means the occurrence after the date hereof of any of (a) an acquisition after the date hereof by an individual or legal entity or &#147;group&#148; (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of effective control (whether through legal or beneficial ownership of capital stock of the Company, by contract or otherwise) of in excess of 50% of the voting securities of the Company (other than by means of conversion or exercise of the Debentures and the Securities issued together with the Debentures), (b) the Company merges into or consolidates with any other Person, or any Person merges into or consolidates with the Company and, after giving effect to such transaction, the stockholders of the Company immediately prior to such transaction own less than 50% of the aggregate voting power of the Company or the successor entity of such tra
nsaction, or (c) the Company sells or transfers all or substantially all of its assets to another Person and the stockholders of the Company immediately prior to such transaction own less than 50% of the aggregate voting power of the acquiring entity immediately after the transaction, (d) a replacement at one time or within a three year period of more than one-half of the members of the Board of Directors which is not approved by a majority of those individuals who are members of the Board of Directors on the date hereof (or by those individuals who are serving as members of the Board of Directors on any date whose nomination to the Board of Directors was approved by a majority of the members of the Board of Directors who are members on the date hereof), or (e) the execution by the Company of an agreement to which the Company &nbsp;is a party or by which it is bound, providing for any of the events set forth in clauses (a) through (d) above.</P>
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<P style="line-height:14pt; margin:0px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>Closing Bid Price</U>&#148; means on any particular date (a)&nbsp;the last reported closing bid price per share of Common Stock on such date on the Trading Market (as reported by Bloomberg L.P. at 4:15 p.m. (New York City time)), or (b) if there is no such price on such date, then the closing bid price on the Trading Market on the date nearest preceding such date (as reported by Bloomberg L.P. at 4:15 p.m. (New York City time)), or (c)&nbsp; if the Common Stock is not then listed or quoted on a Trading Market and if prices for the Common Stock are then reported in the &#147;pink sheets&#148; published by Pink Sheets LLC (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d)&nbsp;if the shares of Common Stock are not then publicly traded the fair market value of a share of Common Stock as 
determined by an independent appraiser selected in good faith by the Holder &nbsp;and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.</P>
<P style="line-height:14pt; margin:0px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&nbsp;</P>
<P style="line-height:14pt; margin:0px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>Conversion</U>&#148; shall have the meaning ascribed to such term in Section 4. </P>
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<P style="line-height:14pt; margin:0px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>Conversion Date</U>&#148; shall have the meaning set forth in Section 4(a).</P>
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<P style="line-height:14pt; margin:0px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>Conversion Price</U>&#148; shall have the meaning set forth in Section 4(b).</P>
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<P style="line-height:14pt; margin:0px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>Conversion Schedule</U>&#148; means the Conversion Schedule in the form of <U>Schedule 1</U> attached hereto.</P>
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<P style="line-height:14pt; margin:0px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>Conversion Shares</U>&#148; means, collectively, the shares of Common Stock issuable upon conversion of this Debenture in accordance with the terms hereof.</P>
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<P style="line-height:14pt; margin:0px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>Debenture Register</U>&#148; shall have the meaning set forth in Section 2(c).</P>
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&#147;

<U>

Event of Default

</U>

&#148; shall have the meaning set forth in Section 7(a).

</P>
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<P style="line-height:14pt; margin:0px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>Fundamental Transaction</U>&#148; shall have the meaning set forth in Section 5(e).</P>
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<P style="line-height:14pt; margin:0px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>Interest Payment Date</U>&#148; shall have the meaning set forth in Section 2(a).</P>
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<P style="line-height:14pt; margin:0px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>Late Fees</U>&#148; shall have the meaning set forth in Section 2(d).</P>
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<P style="line-height:14pt; margin:0px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>New York Courts</U>&#148; shall have the meaning set forth in Section 8(d).</P>
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<P style="line-height:14pt; margin:0px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>Notice of Conversion</U>&#148; shall have the meaning set forth in Section 4(a).</P>
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<P style="line-height:14pt; margin:0px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>Original Issue Date</U>&#148; means the date of the first issuance of the Debentures, regardless of any transfers of any Debenture and regardless of the number of instruments which may be issued to evidence such Debentures.</P>
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<P style="line-height:14pt; margin:0px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>Securities Act</U>&#148; means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.</P>
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<P style="line-height:14pt; margin:0px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>Share Delivery Date</U>&#148; shall have the meaning set forth in Section 4(d)(ii).</P>
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<P style="line-height:14pt; margin:0px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>Subsidiary</U>&#148; shall have the meaning set forth in the Purchase Agreement.</P>
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<P style="line-height:14pt; margin:0px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>Securities Purchaser Agreement</U>&#148; means the Securities Purchase Agreement, dated as of December 17, 2009 among the Company and the original Holders, as amended, modified or supplemented from time to time in accordance with its terms.</P>
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<P style="line-height:14pt; margin:0px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>Trading Day</U>&#148; means a day on which the New York Stock Exchange is open for business.</P>
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<P style="line-height:14pt; margin:0px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>Trading Market</U>&#148; means the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the American Stock Exchange, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange or the OTC Bulletin Board.</P>
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<P style="line-height:14pt; margin:0px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>Transaction Documents</U>&#148; shall have the meaning set forth in the Subscription Agreement.</P>
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<P style="line-height:14pt; margin:0px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>VWAP</U>&#148; means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted for trading as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)); (b)&nbsp; if the OTC Bulletin Board is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the OTC Bulletin Board; (c) if the Common Stock is not then quoted for trading on the OTC Bulletin Board and if prices for the Common Stock are then reported in the &#147;Pink Sheets&#148; published by Pink Sheets, LLC (or a similar organization o
r agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported; or (d)&nbsp;in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Holder and reasonably acceptable to the Company.</P>
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<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:48px; font-size:12pt" align=justify><U>Section 2</U>.</P>
<P style="line-height:14pt; margin:0px; text-indent:144px; font-size:12pt" align=justify><U>Interest</U>.</P>
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<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:120px; text-indent:-24px; font-size:12pt" align=justify><U>a)</U></P>
<P style="line-height:14pt; margin:0px; padding-left:120px; font-size:12pt" align=justify><U>Payment of Interest</U>. The Company shall pay interest to the Holder on the aggregate unconverted and then outstanding principal amount of this Debenture at the rate of six (6%) percent per annum, on each Conversion Date (as to that principal amount then being converted) and on the Maturity Date (each such date, an &#147;<U>Interest Payment Date</U>&#148;) (if any Interest Payment Date is not a Business Day, then the applicable payment shall be due on the next succeeding Business Day), in cash. &nbsp;&nbsp;</P>
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<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:120px; text-indent:-24px; font-size:12pt" align=justify><U>b)</U></P>
<P style="line-height:14pt; margin:0px; padding-left:120px; font-size:12pt" align=justify><U>[Intentionally Omitted]</U></P>
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<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:120px; text-indent:-24px; font-size:12pt" align=justify><U>c)</U></P>
<P style="line-height:14pt; margin:0px; padding-left:120px; font-size:12pt" align=justify><U>Interest Calculations</U>. Interest shall be calculated on the basis of a 360-day year, consisting of twelve 30 calendar day periods, and shall accrue daily commencing on the Original Issue Date until payment in full of the outstanding principal, together with all accrued and unpaid interest, liquidated damages and other amounts which may become due hereunder, has been made. &nbsp;Interest hereunder will be paid to the Person in whose name this Debenture is registered on the records of the Company regarding registration and transfers of this Debenture (the &#147;<U>Debenture Register</U>&#148;). </P>
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<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:120px; text-indent:-24px; font-size:12pt" align=justify><U>d)</U></P>
<P style="line-height:14pt; margin:0px; padding-left:120px; font-size:12pt" align=justify><U>Late Fee</U>. &nbsp;All overdue accrued and unpaid interest to be paid hereunder shall entail a late fee at an interest rate equal to the lesser of 18% per annum or the maximum rate permitted by applicable law (the &#147;<U>Late Fees</U>&#148;) which shall accrue daily from the date such interest is due hereunder through and including the date of actual payment in full.</P>
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<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:48px; font-size:12pt" align=justify><U>Section 3.</U></P>
<P style="line-height:14pt; margin:0px; text-indent:144px; font-size:12pt" align=justify>&nbsp;<U>Registration of Transfers and Exchanges</U>. </P>
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<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:120px; text-indent:-24px; font-size:12pt" align=justify><U>a)</U></P>
<P style="line-height:14pt; margin:0px; padding-left:120px; font-size:12pt" align=justify><U>Different Denominations</U>. This Debenture is exchangeable for an equal aggregate principal amount of Debentures of different authorized denominations, as requested by the Holder surrendering the same. &nbsp;No service charge will be payable for such registration of transfer or exchange.</P>
<P style="line-height:14pt; margin:0px; padding-left:48px; font-size:12pt" align=justify>&nbsp;</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:120px; text-indent:-24px; font-size:12pt" align=justify><U>b)</U></P>
<P style="line-height:14pt; margin:0px; padding-left:120px; font-size:12pt" align=justify><U>Investment Representations</U>. This Debenture has been issued subject to certain investment representations of the original Holder set forth in the Subscription Agreement and may be transferred or exchanged only in compliance with the Subscription Agreement and applicable federal and state securities laws and regulations. &nbsp;</P>
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<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:120px; text-indent:-24px; font-size:12pt" align=justify><U>c)</U></P>
<P style="line-height:14pt; margin:0px; padding-left:120px; font-size:12pt" align=justify><U>Reliance on Debenture Register</U>. Prior to due presentment for transfer to the Company of this Debenture, the Company and any agent of the Company may treat the Person in whose name this Debenture is duly registered on the Debenture Register as the owner hereof for the purpose of receiving payment as herein provided and for all other purposes, whether or not this Debenture is overdue, and neither the Company nor any such agent shall be affected by notice to the contrary.</P>
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<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:48px; font-size:12pt" align=justify><U>Section 4.</U></P>
<P style="line-height:14pt; margin:0px; text-indent:144px; font-size:12pt" align=justify>&nbsp;&nbsp;<U>Conversion</U>.</P>
<P style="line-height:14pt; margin:0px; padding-left:48px; font-size:12pt" align=justify>&nbsp;</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:120px; text-indent:-24px; font-size:12pt" align=justify><U>a)</U></P>
<P style="line-height:14pt; margin:0px; padding-left:120px; font-size:12pt" align=justify><U>Voluntary Conversion</U>. At any time after the Original Issue Date until this Debenture is no longer outstanding, this Debenture shall be convertible, in whole or in part, into shares of Common Stock at the option of the Holder, at any time and from time to time. &nbsp;The Holder shall effect conversions by delivering to the Company a Notice of Conversion, the form of which is attached hereto as <U>Annex A</U> (each, a &#147;<U>Notice of Conversion</U>&#148;), specifying therein the principal amount of this Debenture to be converted and the date on which such conversion shall be effected (such date, the &#147;<U>Conversion Date</U>&#148;). &nbsp;If no Conversion Date is specified in a Notice of Conversion, the Conversion Date shall be the date that such Notice of Conversion is deemed delivered hereunder. &nbsp;To effect conversions hereunder, the Holder shall not be required to physically surrender this Debenture to
 the Company unless the entire principal amount of this Debenture, plus all accrued and unpaid interest thereon, has been so converted. Conversions hereunder shall have the effect of lowering the outstanding principal amount of this Debenture in an amount equal to the applicable conversion. &nbsp;The Holder and the Company shall maintain records showing the principal amount(s) converted and the date of such conversion(s). &nbsp;The Company may deliver an objection to any Notice of Conversion within 1 Business Day of delivery of such Notice of Conversion. &nbsp;<B>The Holder, and any assignee by acceptance of this Debenture, acknowledge and agree that, by reason of the provisions of this paragraph, following conversion of a portion of this Debenture, the unpaid and unconverted principal amount of this Debenture may be less than the amount stated on the face hereof.</B></P>
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<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:120px; text-indent:-24px; font-size:12pt" align=justify><U>b)</U></P>
<P style="line-height:14pt; margin:0px; padding-left:120px; font-size:12pt" align=justify><U>Conversion Price</U>. &nbsp;The conversion price in effect on any Conversion Date shall be equal to the lesser of (i) $0.05 per share of Common Stock or (z) until the eighteen (18) months anniversary of the Original Issue Date, the lowest price paid per share (other than in connection with any Excepted &nbsp;Issuance (as defined below)) or the lowest conversion price per share (other than in connection with any Excepted Issuance) in a subsequent sale of the Company&#146;s equity and/or convertible debt securities paid by investors after the Original Issue Date (the &#147;<U>Conversion Price</U>&#148;).</P>
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<A NAME="_DV_C10"></A><P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:120px; text-indent:-24px; font-size:12pt" align=justify><U>c)</U></P>
<P style="line-height:14pt; margin:0px; padding-left:120px; font-size:12pt" align=justify><U>[Intentionally Omitted]</U></P>
<P style="line-height:14pt; margin:0px; padding-left:48px; font-size:12pt" align=justify>&nbsp;</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:120px; text-indent:-24px; font-size:12pt" align=justify><U>d)</U></P>
<P style="line-height:14pt; margin:0px; padding-left:120px; font-size:12pt" align=justify><U>Mechanics of Conversion</U>.</P>
<P style="line-height:14pt; margin:0px; font-size:12pt" align=justify><U>&nbsp;</U></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:204px; text-indent:-12px; font-size:12pt" align=justify><U>i.</U></P>
<P style="line-height:14pt; margin:0px; padding-left:204px; font-size:12pt" align=justify><U>Conversion Shares Issuable Upon Conversion of Principal Amount</U>. &nbsp;The number of Conversion Shares issuable upon a conversion hereunder shall be determined by the quotient obtained by dividing (x) the outstanding principal amount of this Debenture to be converted by (y) the Conversion Price.</P>
<P style="margin:0px" align=justify><BR>
<BR></P>
<P style="line-height:14pt; margin:0px; font-size:12pt">1</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
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<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:204px; text-indent:-12px; font-size:12pt" align=justify><U>ii.</U></P>
<P style="line-height:14pt; margin:0px; padding-left:204px; text-indent:36px; font-size:12pt" align=justify><U>Delivery of Certificate Upon Conversion</U>. Not later than three Trading Days after each Conversion Date (the &#147;<U>Share Delivery Date</U>&#148;), the Company shall deliver, or cause to be delivered, to the Holder (A) a certificate or certificates representing the Conversion Shares which, on or after the six month anniversary of the Original Issue Date, shall be free of restrictive legends and trading restrictions (other than those which may then be required by the Purchase Agreement) representing the number of Conversion Shares being acquired upon the conversion of this Debenture and (B) a bank check in the amount of accrued and unpaid interest. On or after the six month anniversary of the Original Issue Date, the Company shall use its best efforts to deliver any certificate or certificates required to be delivered by the Company under this Section 4(d) electronically through the Depository Tr
ust Company or another established clearing corporation performing similar functions. &nbsp;</P>
<P style="line-height:14pt; margin:0px; padding-left:96px; text-indent:48px; font-size:12pt" align=justify><U>&nbsp;</U></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:204px; text-indent:-12px; font-size:12pt" align=justify><U>iii.</U></P>
<P style="line-height:14pt; margin:0px; padding-left:204px; text-indent:36px; font-size:12pt" align=justify><U>Failure to Deliver Certificates</U>. &nbsp;If in the case of any Notice of Conversion such certificate or certificates are not delivered to or as directed by the applicable Holder by the third Trading Day after the Conversion Date, the Holder shall be entitled to elect by written notice to the Company at any time on or before its receipt of such certificate or certificates, to rescind such Conversion, in which event the Company shall promptly return to the Holder any original Debenture delivered to the Company and the Holder shall promptly return to the Company the Common Stock certificates representing the principal amount of this Debenture unsuccessfully tendered for conversion to the Company. </P>
<P style="line-height:14pt; margin:0px; padding-left:96px; text-indent:48px; font-size:12pt" align=justify>&nbsp;</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:204px; text-indent:-12px; font-size:12pt" align=justify><U>iv.</U></P>
<P style="line-height:14pt; margin:0px; padding-left:204px; text-indent:36px; font-size:12pt" align=justify><U>Reservation of Shares Issuable Upon Conversion</U>. The Company covenants that it will at all times reserve and keep available out of its authorized and unissued shares of Common Stock for the sole purpose of issuance upon conversion of this Debenture and payment of interest on this Debenture, each as herein provided, free from preemptive rights or any other actual contingent purchase rights of Persons other than the Holder (and the other holders of the Debentures), not less than such aggregate number of shares of the Common Stock as shall (subject to the terms and conditions set forth in the Subscription Agreement) be issuable (taking into account the adjustments and restrictions of Section 5) upon the conversion of the outstanding principal amount of this Debenture and payment of interest hereunder. &nbsp;The Company covenants that all shares of Common Stock that shall be so issuable shall, upon i
ssue, be duly authorized, validly issued, fully paid and nonassessable.</P>
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<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:204px; text-indent:-12px; font-size:12pt" align=justify><U>v.</U></P>
<P style="line-height:14pt; margin:0px; padding-left:204px; text-indent:36px; font-size:12pt" align=justify><U>Fractional Shares</U>. No fractional shares or scrip representing fractional shares shall be issued upon the conversion of this Debenture. &nbsp;As to any fraction of a share which Holder would otherwise be entitled to purchase upon such conversion, the Company shall at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Conversion Price or round up to the next whole share.</P>
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<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:204px; text-indent:-12px; font-size:12pt" align=justify><U>vi.</U></P>
<P style="line-height:14pt; margin:0px; padding-left:204px; text-indent:36px; font-size:12pt" align=justify><U>Transfer Taxes</U>. &nbsp;The issuance of certificates for shares of the Common Stock on conversion of this Debenture shall be made without charge to the Holder hereof for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificates, provided that, the Company shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any such certificate upon conversion in a name other than that of the Holder of this Debenture so converted and the Company shall not be required to issue or deliver such certificates unless or until the person or persons requesting the issuance thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid. </P>
<P style="margin:0px"><BR></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:48px; font-size:12pt" align=justify><U>Section 5</U>.</P>
<P style="line-height:14pt; margin:0px; padding-left:48px; text-indent:96px; font-size:12pt" align=justify><U>Certain Adjustments</U>. </P>
<P style="line-height:14pt; margin:0px; padding-left:48px; font-size:12pt" align=justify>&nbsp;</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:120px; text-indent:-24px; font-size:12pt" align=justify><U>a)</U></P>
<P style="line-height:14pt; margin:0px; padding-left:120px; font-size:12pt" align=justify><U>Stock Dividends and Stock Splits</U>. &nbsp;If the Company, at any time while this Debenture is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions payable in shares of Common Stock on shares of Common Stock or any Common Stock Equivalents (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon conversion of, or payment of interest on, the Debentures), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of a reverse stock split) outstanding shares of Common Stock into a smaller number of shares or (iv) issues, in the event of a reclassification of shares of the Common Stock, any shares of capital stock of the Company, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding any treasury s
hares of the Company) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event. &nbsp;Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.</P>
<P style="line-height:14pt; margin:0px; padding-left:48px; font-size:12pt" align=justify>&nbsp;</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:120px; text-indent:-24px; font-size:12pt" align=justify><U>b)</U></P>
<P style="line-height:14pt; margin:0px; padding-left:120px; font-size:12pt" align=justify><U>Subsequent Rights Offerings</U>. &nbsp;If the Company, at any time while the Debenture is outstanding, shall issue rights, options or warrants to all holders of Common Stock (and not to Holders) entitling them to subscribe for or purchase shares of Common Stock at a price per share that is lower than the VWAP on the record date referenced below, then the Conversion Price shall be multiplied by a fraction of which the denominator shall be the number of shares of the Common Stock outstanding on the date of issuance of such rights or warrants plus the number of additional shares of Common Stock offered for subscription or purchase, and of which the numerator shall be the number of shares of the Common Stock outstanding on the date of issuance of such rights or warrants plus the number of shares which the aggregate offering price of the total number of shares so offered (assuming delivery to the Company in full of all co
nsideration payable upon exercise of such rights, options or warrants) would purchase at such VWAP. &nbsp;Such adjustment shall be made whenever such rights or warrants are issued, and shall become effective immediately after the record date for the determination of stockholders entitled to receive such rights, options or warrants. &nbsp;</P>
<P style="line-height:14pt; margin:0px; padding-left:48px; font-size:12pt" align=justify>&nbsp;</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:120px; text-indent:-24px; font-size:12pt" align=justify><U>c)</U></P>
<P style="line-height:14pt; margin:0px; padding-left:120px; font-size:12pt" align=justify><U>Pro Rata Distributions</U>. If the Company, at any time while this Debenture is outstanding, distributes to all holders of Common Stock (and not to the Holders) evidences of its indebtedness or assets (including cash and cash dividends) or rights or warrants to subscribe for or purchase any security (other than the Common Stock, which shall be subject to Section 5(b)), then in each such case the Conversion Price shall be adjusted by multiplying such Conversion Price in effect immediately prior to the record date fixed for determination of stockholders entitled to receive such distribution by a fraction of which the denominator shall be the VWAP determined as of the record date mentioned above, and of which the numerator shall be such VWAP on such record date less the then fair market value at such record date of the portion of such assets or evidence of indebtedness so distributed applicable to 1 outstanding share of
 the Common Stock as determined by the Board of Directors of the Company in good faith. &nbsp;In either case the adjustments shall be described in a statement delivered to the Holder describing the portion of assets or evidences of indebtedness so distributed or such subscription rights applicable to 1 share of Common Stock. &nbsp;Such adjustment shall be made whenever any such distribution is made and shall become effective immediately after the record date mentioned above.</P>
<P style="line-height:14pt; margin:0px; padding-left:48px; font-size:12pt" align=justify>&nbsp;</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:120px; text-indent:-24px; font-size:12pt" align=justify><U>d)</U></P>
<P style="line-height:14pt; margin:0px; padding-left:120px; font-size:12pt" align=justify><U>Fundamental Transaction</U>. If, at any time while this Debenture is outstanding, (i) the Company effects any merger or consolidation of the Company with or into another Person, (ii) the Company effects any sale of all or substantially all of its assets in one transaction or a series of related transactions, (iii) any tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to tender or exchange their shares for other securities, cash or property, or (iv) the Company effects any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property (in any such case, a &#147;<U>Fundamental Transaction</U>&#148;), then, upon any subsequent conversion of this Debenture, the Holder shall have the right to receive, for eac
h Conversion Share that would have been issuable upon such conversion immediately prior to the occurrence of such Fundamental Transaction, the same kind and amount of securities, cash or property as it would have been entitled to receive upon the occurrence of such Fundamental Transaction if it had been, immediately prior to such Fundamental Transaction, the holder of 1 share of Common Stock (the &#147;<U>Alternate Consideration</U>&#148;). &nbsp;For purposes of any such conversion, the determination of the Conversion Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of 1 share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Conversion Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. &nbsp;If holders of Common Stock are given any choice as to the securities, cash or property 
to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any conversion of this Debenture following such Fundamental Transaction. &nbsp;To the extent necessary to effectuate the foregoing provisions, any successor to the Company or surviving entity in such Fundamental Transaction shall issue to the Holder a new debenture consistent with the foregoing provisions and evidencing the Holder&#146;s right to convert such debenture into Alternate Consideration. The terms of any agreement pursuant to which a Fundamental Transaction is effected shall include terms requiring any such successor or surviving entity to comply with the provisions of this Section 5(e) and insuring that this Debenture (or any such replacement security) will be similarly adjusted upon any subsequent transaction analogous to a Fundamental Transaction.</P>
<P style="line-height:14pt; margin:0px; padding-left:48px; font-size:12pt" align=justify><U>&nbsp;</U></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:120px; text-indent:-24px; font-size:12pt" align=justify><U>e)</U></P>
<P style="line-height:14pt; margin:0px; padding-left:120px; font-size:12pt" align=justify><U>Calculations</U>. &nbsp;All calculations under this Section 5 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. &nbsp;For purposes of this Section 5, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding any treasury shares of the Company) issued and outstanding.</P>
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<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:120px; text-indent:-24px; font-size:12pt" align=justify><U>f)</U></P>
<P style="line-height:14pt; margin:0px; padding-left:120px; font-size:12pt" align=justify><U>Notice to the Holder</U>.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:204px; text-indent:-12px; font-size:12pt" align=justify><U>i.</U></P>
<P style="line-height:14pt; margin:0px; padding-left:204px; font-size:12pt" align=justify><U>Adjustment to Conversion Price</U>. &nbsp;Whenever the Conversion Price is adjusted pursuant to any provision of this Section 5, the Company shall promptly deliver to each Holder a notice setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment. &nbsp;</P>
<P style="line-height:14pt; margin:0px; padding-left:96px; text-indent:48px; font-size:12pt" align=justify>&nbsp;</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:204px; text-indent:-12px; font-size:12pt" align=justify><U>ii.</U></P>
<P style="line-height:14pt; margin:0px; padding-left:204px; text-indent:12px; font-size:12pt" align=justify><U>Notice to Allow Conversion by Holder</U>. &nbsp;If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock of rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, of any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property or (E) the Company shall authorize the voluntary or involuntary dissolution
, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be filed at each office or agency maintained for the purpose of conversion of this Debenture, and shall cause to be <A NAME="_DV_M152"></A>delivered to the Holder at its last address as it shall appear upon the Debenture Register, at least twenty (20) calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be 
entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange, provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice. &nbsp;The Holder is entitled to convert this Debenture during the 20-day period commencing on the date of such notice through the effective date of the event triggering such notice. </P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:120px; text-indent:-24px; font-size:12pt" align=justify><U>a)</U></P>
<P style="line-height:14pt; margin:0px; padding-left:120px; font-size:12pt" align=justify><U>Notwithstanding anything in this Agreement to the contrary, no adjustment under this Agreement shall be made in the event of any issuance that constitutes an Excepted Issuance.</U></P>
<P style="line-height:14pt; margin:0px; padding-left:96px; text-indent:48px; font-size:12pt" align=justify>&nbsp;&nbsp;</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify><U>Section 6</U>.</P>
<P style="line-height:13pt; margin:0px; padding-left:48px; text-indent:144px; font-size:11pt" align=justify><U>Favored Nations Provision</U>. &nbsp;Other than in connection with: (i) full or partial consideration in connection with a strategic merger, acquisition, consolidation or purchase of substantially all of the securities or assets of a corporation or other entity which holders of such securities or debt are not at any time granted registration rights equal to or greater than those granted to the Holders, (ii) the Company&#146;s issuance of securities in connection with strategic license agreements and other partnering arrangements so long as such issuances are not for the purpose of raising capital and which holders of such securities or debt are not at any time granted registration rights equal to or greater than those granted to the Holders, (iii) the Company&#146;s issuance of Common Stock or the issuances or grants of options to purchase Common Stock to employees, directors, and consultants, pursu
ant to plans approved by the Board of Directors of the Company in an amount not to exceed fifteen (15%) of the outstanding primary shares of the Company on the date of issuance, (iv) securities upon the exercise or exchange of or conversion of any securities exercisable or exchangeable for or convertible into shares of Common Stock issued and outstanding on the date of this Agreement on the terms in effect on the Closing Date including the permissible amendment thereof after the Closing Date, and pursuant to (v) above<B><U>)</U></B>, (v) as a result of the exercise of Warrants or conversion of Notes which are granted or issued pursuant to this Agreement, and (vi) the Company&#146;s issuance of Common Stock or the issuances or grants of options to purchase Common Stock to consultants and service providers approved by the Board of Directors other than as consideration for capital raising (collectively, the foregoing (i) through (vi) are &#147;<B>Excepted Issuances</B>&#148;), if at any time the Debenture is ou
tstanding, the Company shall issue (the &#147;<B>Lower Price Issuance</B>&#148;) any Common Stock or securities convertible into or exercisable for shares of Common Stock (or modify any of the foregoing which may be outstanding) to any person or entity at a price per share or conversion or exercise price per share which shall be less than the Conversion Price in effect at such time (or provide other value to such person or entity in connection with an equivalent price issuance or Lower Price Issuance), without the consent of the Holders, then the Conversion Price shall automatically be reduced to such other lower price and the Holders shall be entitled to receive any additional consideration as shall be issued to such person or entity. &nbsp;The provisions of this Section 6 shall terminate eighteen (18) months of the date of this Debenture. &nbsp;Securities issued or issuable by the Company for no consideration or for consideration that cannot be determined at the time of issue will be deemed issuable or to 
have been issued for $0.001 per share of Common Stock. &nbsp;The rights of Holders set forth in this Section 6 are in addition to any other rights the Holders have pursuant to this Agreement or the Debentures and any other agreement referred to or entered into in connection herewith or to which Holders and Company are parties.</P>
<P style="margin:0px; padding-left:48px; font-family:Courier New" align=justify><U>&nbsp;</U></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:48px; font-size:12pt" align=justify><U>Section 7</U>.</P>
<P style="line-height:14pt; margin:0px; text-indent:144px; font-size:12pt" align=justify><U>Events of Default</U>. &nbsp;</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:120px; text-indent:-24px; font-size:12pt" align=justify>a)</P>
<P style="line-height:14pt; margin:0px; padding-left:120px; font-size:12pt" align=justify>&#147;<U>Event of Default</U>&#148; means, wherever used herein, any of the following events (whatever the reason for such event and whether such event shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body):</P>
<P style="margin:0px"><BR></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:144px; text-indent:-12px; font-size:12pt">

i.

</P>
<P style="line-height:14pt; margin:0px; padding-left:144px; font-size:12pt">

any default in the payment of (A) the principal amount of any Debenture or (B) interest, liquidated damages and other amounts owing to a Holder on any Debenture, as and when the same shall become due and payable (whether on a Conversion Date or the Maturity Date or by acceleration or otherwise) which default, solely in the case of an interest payment or other default under clause (B) above, is not cured within 10 Trading Days;

</P>
<P style="line-height:14pt; margin:0px; font-size:12pt">

&nbsp;

</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:144px; text-indent:-12px; font-size:12pt">ii.</P>
<P style="line-height:14pt; margin:0px; padding-left:144px; text-indent:48px; font-size:12pt">the Company shall fail to observe or perform any other covenant or agreement contained in the Debentures (other than a breach by the Company of its obligations to deliver shares of Common Stock to the Holder upon conversion, which breach is addressed in clause (xi) below) which failure is not cured, if possible to cure, within the earlier to occur of <A NAME="_DV_C193"></A>(A) 10 Trading Days after notice of such failure sent by the Holder or by any other Holde<A NAME="_DV_C195"></A>r to the Company and (B) 15 Trading Days after the Company has become or should have become aware of such failure;</P>
<P style="margin:0px"><BR></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:144px; text-indent:-12px; font-size:12pt">iii.</P>
<P style="line-height:14pt; margin:0px; padding-left:144px; text-indent:48px; font-size:12pt">a default or event of default (subject to any grace or cure period provided in the applicable agreement, document or instrument) shall occur under (A) any of the Transaction Documents or (B) any other material agreement, lease, document or instrument to which the Company or any Subsidiary is obligated (and not covered by clause (vi) below);</P>
<P style="margin:0px"><BR></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:144px; text-indent:-12px; font-size:12pt">iv.</P>
<P style="line-height:14pt; margin:0px; padding-left:144px; text-indent:48px; font-size:12pt">any repres<A NAME="_DV_C197"></A>entation or warranty made in this Debenture, any other Transaction Documents, any written statement pursuant hereto or thereto or any other report, financial statement or certificate made or delivered to the Holder or any other Holder shall be untrue or incorrect in any material respect as of the date when made or deemed made;</P>
<P style="margin:0px"><BR></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:144px; text-indent:-12px; font-size:12pt">v.</P>
<P style="line-height:14pt; margin:0px; padding-left:144px; text-indent:48px; font-size:12pt">the Company or any Significant Subsidiary (as such term is defined in Rule 1-02(w) of Regulation S-X) &nbsp;shall be subject to a Bankruptcy Event;</P>
<P style="line-height:14pt; margin:0px; font-size:12pt">&nbsp;</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:144px; text-indent:-12px; font-size:12pt">vi.</P>
<P style="line-height:14pt; margin:0px; padding-left:144px; text-indent:48px; font-size:12pt">the Company or any Subsidiary shall default on any of its obligations under any mortgage, credit agreement or other facility, indenture agreement, factoring agreement or other instrument under which there may be issued, or by which there may be secured or evidenced, any indebtedness for borrowed money or money due under any long term leasing or factoring arrangement that (a) involves an obligation greater than $150,000, whether such indebtedness now exists or shall hereafter be created, and (b) results in such indebtedness becoming or being declared due and payable prior to the date on which it would otherwise become due and payable; </P>
<P style="margin:0px"><BR></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:144px; text-indent:-12px; font-size:12pt">vii.</P>
<P style="line-height:14pt; margin:0px; padding-left:144px; text-indent:48px; font-size:12pt">the Common Stock shall not be eligible for listing or quotation for trading on a Trading Market and shall not be eligible to resume listing or quotation for trading thereon within seven Trading Days;</P>
<P style="margin:0px"><BR></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:144px; text-indent:-12px; font-size:12pt">viii.</P>
<P style="line-height:14pt; margin:0px; padding-left:144px; text-indent:48px; font-size:12pt">the Company shall be a party to any Change of Control Transaction or Fundamental Transaction or shall agree to sell or dispose of all or in excess of 50% of its assets in one transaction or a series of related transactions (whether or not such sale would constitute a Change of Control Transaction);</P>
<P style="margin:0px"><BR></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:144px; text-indent:-12px; font-size:12pt">ix.</P>
<P style="line-height:14pt; margin:0px; padding-left:144px; text-indent:48px; font-size:12pt">any Person shall breach any agreement delivered to the initial Holders pursuant to Section 2.2 of the Purchase Agreement; or</P>
<P style="margin:0px"><BR></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:144px; text-indent:-12px; font-size:12pt">x.</P>
<P style="line-height:14pt; margin:0px; padding-left:144px; text-indent:48px; font-size:12pt">any monetary judgment, writ or similar final process shall be entered or filed against the Company, any subsidiary or any of their respective property or other assets for more than $50,000, and such judgment, writ or similar final process shall remain unvacated, unbonded or unstayed for a period of 45 calendar days.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:120px; text-indent:-24px; font-size:12pt" align=justify><U>a)</U></P>
<P style="line-height:14pt; margin:0px; padding-left:120px; font-size:12pt" align=justify><U>Remedies Upon Event of Default</U>. If any Event of Default occurs, the outstanding principal amount of this Debenture, plus accrued but unpaid interest, liquidated damages and other amounts owing in respect thereof through the date of acceleration, shall become, at the Holder&#146;s election, immediately due and payable in cash at the Mandatory Default Amount. &nbsp;Commencing 5 days after the occurrence of any Event of Default that results in the eventual acceleration of this Debenture, the interest rate on this Debenture shall accrue at an interest rate equal to the lesser of 18% per annum or the maximum rate permitted under applicable law. &nbsp;Upon the payment in full of the Mandatory Default Amount, the Holder shall promptly surrender this Debenture to or as directed by the Company. &nbsp;In connection with such acceleration described herein, the Holder need not provide, and the Company hereby waives, any pres
entment, demand, protest or other notice of any kind, and the Holder may immediately and without expiration of any grace period enforce any and all of its rights and remedies hereunder and all other remedies available to it under applicable law. &nbsp;Such acceleration may be rescinded and annulled by Holder at any time prior to payment hereunder and the Holder shall have all rights as a holder of the Debenture until such time, if any, as the Holder receives full payment pursuant to this Section 8(b). &nbsp;No such rescission or annulment shall affect any subsequent Event of Default or impair any right consequent thereon.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:48px; font-size:12pt" align=justify><U>Section 9</U>.</P>
<P style="line-height:14pt; margin:0px; text-indent:144px; font-size:12pt" align=justify><U>Miscellaneous</U>. &nbsp;</P>
<P style="line-height:14pt; margin:0px; font-size:12pt" align=justify>&nbsp;</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:120px; text-indent:-24px; font-size:12pt" align=justify><U>a)</U></P>
<P style="line-height:14pt; margin:0px; padding-left:120px; font-size:12pt" align=justify><U>Notices</U>. &nbsp;Any and all notices or other communications or deliveries to be provided by the Holder hereunder, including, without limitation, any Notice of Conversion, shall be in writing and delivered personally, by facsimile, or sent by a nationally recognized overnight courier service, addressed to the Company, at the address set forth above, or such other facsimile number or address as the Company may specify for such purpose by notice to the Holder delivered in accordance with this Section 9(a). &nbsp;Any and all notices or other communications or deliveries to be provided by the Company hereunder shall be in writing and delivered personally, by facsimile, or sent by a nationally recognized overnight courier service addressed to each Holder at the facsimile number or address of the Holder appearing on the books of the Company, or if no such facsimile number or address appears, at the principal place of bus
iness of the Holder. &nbsp;Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified on the signature page prior to 5:30 p.m. (New York City time), (ii) the date immediately following the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified on the signature page between 5:30 p.m. (New York City time) and 11:59 p.m. (New York City time) on any date, (iii) the second Business Day following the date of mailing, if sent by nationally recognized overnight courier service or (iv) upon actual receipt by the party to whom such notice is required to be given.</P>
<P style="line-height:14pt; margin:0px; padding-left:48px; font-size:12pt" align=justify>&nbsp;</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:120px; text-indent:-24px; font-size:12pt" align=justify><U>b)</U></P>
<P style="line-height:14pt; margin:0px; padding-left:120px; font-size:12pt" align=justify><U>Absolute Obligation</U>. Except as expressly provided herein, no provision of this Debenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of, liquidated damages and accrued interest, as applicable, on this Debenture at the time, place, and rate, and in the coin or currency, herein prescribed. &nbsp;This Debenture is a direct debt obligation of the Company. &nbsp;This Debenture ranks <U>pari</U> <U>passu</U> with all other Debentures now or hereafter issued under the terms set forth herein. &nbsp;&nbsp;</P>
<P style="line-height:14pt; margin:0px; padding-left:48px; font-size:12pt" align=justify>&nbsp;</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:120px; text-indent:-24px; font-size:12pt" align=justify><U>c)</U></P>
<P style="line-height:14pt; margin:0px; padding-left:120px; font-size:12pt" align=justify><U>Lost or Mutilated Debenture</U>. &nbsp;If this Debenture shall be mutilated, lost, stolen or destroyed, the Company shall execute and deliver, in exchange and substitution for and upon cancellation of a mutilated Debenture, or in lieu of or in substitution for a lost, stolen or destroyed Debenture, a new Debenture for the principal amount of this Debenture so mutilated, lost, stolen or destroyed, but only upon receipt of evidence of such loss, theft or destruction of such Debenture, and of the ownership hereof, reasonably satisfactory to the Company.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:120px; text-indent:-24px; font-size:12pt" align=justify><U>d)</U></P>
<P style="line-height:14pt; margin:0px; padding-left:120px; font-size:12pt" align=justify><U>Governing Law</U>. &nbsp;All questions concerning the construction, validity, enforcement and interpretation of this Debenture shall be governed by and construed and enforced in accordance with the internal laws of the State of Florida, without regard to the principles of conflict of laws thereof. &nbsp;Each party agrees that all legal proceedings concerning the interpretation, enforcement and defense of the transactions contemplated by any of the Transaction Documents (whether brought against a party hereto or its respective Affiliates, directors, officers, shareholders, employees or agents) shall be commenced in the state and federal courts sitting in the Middle District of Florida located in Pinellas County, Florida (the &#147;<U>Courts</U>&#148;). &nbsp;Each party hereto hereby irrevocably submits to the exclusive jurisdiction of the Courts for the adjudication of any dispute hereunder or in connection herewith o
r with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of such Courts, or such Courts are improper or inconvenient venue for such proceeding. &nbsp;Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Debenture and agrees that such service shall constitute good and sufficient service of process and notice thereof. &nbsp;Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by applicable law. Each party hereto hereby irrevocably waives, to the ful
lest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Debenture or the transactions contemplated hereby. If either party shall commence an action or proceeding to enforce any provisions of this Debenture, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorneys fees and other costs and expenses incurred in the investigation, preparation and prosecution of such action or proceeding.</P>
<P style="line-height:14pt; margin:0px; padding-left:48px; font-size:12pt" align=justify>&nbsp;</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:120px; text-indent:-24px; font-size:12pt" align=justify><U>e)</U></P>
<P style="line-height:normal; margin:0px; padding-left:120px; font-size:12pt" align=justify><U>Amendment; Waiver</U>. &nbsp;No provision of this Agreement may be waived, modified, supplemented or amended except in a written instrument signed, in the case of an amendment, by the Company and the Holders of at least 51% of the Debentures then outstanding or, in the case of a waiver, by the party against whom enforcement of any such waived provision is sought.<FONT style="font-family:Courier New; font-size:10pt"> </FONT>&nbsp;Any waiver by the Company or the Holder of a breach of any provision of this Debenture shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Debenture. &nbsp;The failure of the Company or the Holder to insist upon strict adherence to any term of this Debenture on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term o
r any other term of this Debenture. &nbsp;</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:120px; text-indent:-24px; font-size:12pt" align=justify><U>f)</U></P>
<P style="line-height:14pt; margin:0px; padding-left:120px; font-size:12pt" align=justify><U>Severability</U>. &nbsp;If any provision of this Debenture is invalid, illegal or unenforceable, the balance of this Debenture shall remain in effect, and if any provision is inapplicable to any Person or circumstance, it shall nevertheless remain applicable to all other Persons and circumstances. &nbsp;If it shall be found that any interest or other amount deemed interest due hereunder violates the applicable law governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum rate of interest permitted under applicable law. The Company covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would prohibit or forgive the Company from paying all or any portion of the principal of or interest on this D
ebenture as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this indenture, and the Company (to the extent it may lawfully do so) hereby expressly waives all benefits or advantage of any such law, and covenants that it will not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Holder, but will suffer and permit the execution of every such as though no such law has been enacted.</P>
<P style="line-height:14pt; margin:0px; padding-left:48px; font-size:12pt" align=justify>&nbsp;</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:120px; text-indent:-24px; font-size:12pt" align=justify><U>g)</U></P>
<P style="line-height:14pt; margin:0px; padding-left:120px; font-size:12pt" align=justify><U>Next Business Day</U>. &nbsp;Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:120px; text-indent:-24px; font-size:12pt" align=justify><U>h)</U></P>
<P style="line-height:14pt; margin:0px; padding-left:120px; font-size:12pt" align=justify><U>Headings</U>. &nbsp;The headings contained herein are for convenience only, do not constitute a part of this Debenture and shall not be deemed to limit or affect any of the provisions hereof.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:120px; text-indent:-24px; font-size:12pt" align=justify><U>i)</U></P>
<P style="line-height:14pt; margin:0px; padding-left:120px; font-size:12pt" align=justify><U>Assumption</U>.&nbsp; Any successor to the Company or any surviving entity in a Fundamental Transaction shall (i) assume, prior to such Fundamental Transaction, all of the obligations of the Company under this Debenture and the other Transaction Documents pursuant to written agreements in form and substance satisfactory to the Holder (such approval not to be unreasonably withheld or delayed) and (ii) issue to the Holder a new debenture of such successor entity evidenced by a written instrument substantially similar in form and substance to this Debenture, including, without limitation, having a principal amount and interest rate equal to the principal amount and the interest rate of this Debenture and having similar ranking to this Debenture, which shall be satisfactory to the Holder (any such approval not to be unreasonably withheld or delayed). &nbsp;The provisions of this Section 9(i) shall apply similarly and equ
ally to successive Fundamental Transactions and shall be applied without regard to any limitations of this Debenture.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:14pt; margin:0px; font-size:12pt" align=center>*********************</P>
<P style="margin:0px"><BR></P>
<P style="line-height:14pt; margin:0px; font-size:12pt" align=center><I>(Signature pages to Follow)</I></P>
<P style="margin:0px" align=center><BR>
<BR></P>
<P style="margin:0px; font-family:Courier New">2</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; page-break-before:always" align=center><BR></P>
<P style="line-height:14pt; margin:0px; text-indent:30.867px; font-size:12pt" align=justify>IN WITNESS WHEREOF, the Company has caused this Debenture to be duly executed by a duly authorized officer as of the date first above indicated.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR height=0 style="font-size:0"><TD width=391.2></TD></TR>
<TR><TD valign=top width=391.2><P style="line-height:14pt; margin:0px; font-size:12pt"><B>ECLIPS ENERGY TECHNOLOGIES, INC.</B></P>
<P style="margin:0px"><BR></P>
</TD></TR>
<TR><TD valign=top width=391.2><P style="line-height:14pt; margin:0px; font-size:12pt">By<U>:/s/Benjamin Croxton_________________________</U></P>
<P style="line-height:14pt; margin:0px; font-size:12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Name: &nbsp;Benjamin Croxton</P>
<P style="line-height:14pt; margin:0px; font-size:12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Title: Chief Executive Officer</P>
<P style="line-height:14pt; margin:0px; font-size:12pt">Facsimile No. for delivery of Notices: _______________</P>
</TD></TR>
<TR><TD valign=top width=391.2><P>&nbsp;</P></TD></TR>
<TR><TD valign=top width=391.2><P>&nbsp;</P></TD></TR>
</TABLE>
<P style="line-height:12.95pt; margin:0px" align=justify><BR></P>
<P style="line-height:12.95pt; margin:0px" align=justify><BR></P>
<P style="margin:0px; font-family:Courier New">3</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="line-height:12.95pt; margin:0px; text-indent:276.267px; font-size:12pt; page-break-before:always" align=justify><B>ANNEX A</B></P>
<P style="line-height:12.95pt; margin:0px" align=justify><BR></P>
<P style="line-height:12.95pt; margin:0px; text-indent:217px; font-size:12pt" align=justify><B>NOTICE OF CONVERSION</B></P>
<P style="line-height:12.95pt; margin:0px" align=justify><BR></P>
<P style="line-height:12.95pt; margin:0px" align=justify><BR></P>
<P style="line-height:12.95pt; margin:0px; text-indent:48px; font-size:12pt" align=justify>The undersigned hereby elects to convert principal under the 6% Senior Convertible Debenture due December __, 2009 of EClips Energy Technologies, Inc., a Florida corporation (the &#147;<U>Company</U>&#148;), into shares of common stock (the &#147;<U>Common Stock</U>&#148;), of the Company according to the conditions hereof, as of the date written below. &nbsp;If shares of Common Stock are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is delivering herewith such certificates and opinions as reasonably requested by the Company in accordance therewith. &nbsp;No fee will be charged to the holder for any conversion, except for such transfer taxes, if any.</P>
<P style="line-height:12.95pt; margin:0px" align=justify><BR></P>
<P style="line-height:12.95pt; margin:0px" align=justify><BR></P>
<P style="line-height:12.95pt; margin:0px" align=justify><BR></P>
<P style="line-height:12.95pt; margin:0px; font-size:12pt" align=justify>Conversion calculations:</P>
<P style="line-height:12.95pt; margin:0px; text-indent:240px; font-size:12pt" align=justify>Date to Effect Conversion:</P>
<P style="line-height:12.95pt; margin:0px" align=justify><BR></P>
<P style="line-height:12.95pt; margin:0px; padding-left:240px; font-size:12pt" align=justify>Principal Amount of Debenture to&nbsp;be&nbsp;Converted:</P>
<P style="line-height:12.95pt; margin:0px" align=justify><BR></P>
<P style="line-height:12.95pt; margin:0px; padding-left:240px; font-size:12pt" align=justify>Number of shares of Common Stock to&nbsp;be&nbsp;issued:</P>
<P style="line-height:12.95pt; margin:0px" align=justify><BR></P>
<P style="line-height:12.95pt; margin:0px" align=justify><BR></P>
<P style="line-height:12.95pt; margin:0px; text-indent:240px; font-size:12pt" align=justify>Signature:</P>
<P style="line-height:12.95pt; margin:0px" align=justify><BR></P>
<P style="line-height:12.95pt; margin:0px; text-indent:240px; font-size:12pt" align=justify>Name:</P>
<P style="line-height:12.95pt; margin:0px" align=justify><BR></P>
<P style="line-height:12.95pt; margin:0px; text-indent:240px; font-size:12pt" align=justify>Address for Delivery of Common Stock Certificates:</P>
<P style="line-height:12.95pt; margin:0px" align=justify><BR></P>
<P style="line-height:12.95pt; margin:0px; text-indent:240px; font-size:12pt" align=justify><U>Or</U></P>
<P style="line-height:12.95pt; margin:0px" align=justify><BR></P>
<P style="line-height:12.95pt; margin:0px; text-indent:240px; font-size:12pt" align=justify>DWAC Instructions:</P>
<P style="line-height:12.95pt; margin:0px" align=justify><BR></P>
<P style="line-height:12.95pt; margin:0px; text-indent:240px; font-size:12pt" align=justify>Broker No:</P>
<P style="line-height:12.95pt; margin:0px; text-indent:240px; font-size:12pt" align=justify>Account No:</P>
<P style="line-height:12.95pt; margin:0px" align=justify><BR></P>
<P style="margin:0px; font-family:Courier New">4</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="line-height:12.95pt; margin:0px; page-break-before:always" align=justify><BR></P>
<P style="line-height:12.95pt; margin:0px; text-indent:276.667px; font-size:12pt" align=justify><B>Schedule 1</B></P>
<P style="line-height:12.95pt; margin:0px" align=justify><BR></P>
<P style="line-height:12.95pt; margin:0px; text-indent:216.733px; font-size:12pt" align=justify><B>CONVERSION SCHEDULE</B></P>
<P style="line-height:12.95pt; margin:0px" align=justify><BR></P>
<P style="line-height:12.95pt; margin:0px; font-size:12pt" align=justify>The 12% Subordinated Secured Convertible Debenture due on December __, 2009 in the original principal amount of $____________ is issued by EClips Energy Technologies, Inc., a Florida corporation. &nbsp;This Conversion Schedule reflects conversions made under Section 4 of the above referenced Debenture.</P>
<P style="line-height:12.95pt; margin:0px" align=justify><BR></P>
<P style="line-height:12.95pt; margin:0px; text-indent:288.667px; font-size:12pt" align=justify>Dated: </P>
<P style="line-height:12.95pt; margin:0px" align=justify><BR></P>
<P style="line-height:12.95pt; margin:0px" align=justify><BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR height=0 style="font-size:0"><TD width=162></TD><TD width=144></TD><TD width=126></TD><TD width=174></TD></TR>
<TR><TD style="border-left:3.6px double #000000; border-top:3.6px double #000000; border-right:1px solid #000000; border-bottom:1px solid #FFFFFF" width=162><P style="line-height:10.05pt; margin:0px"><BR></P>
<P style="line-height:12.95pt; margin:0px; font-size:12pt" align=center>Date of Conversion</P>
<P style="line-height:12.95pt; margin:0px; font-size:12pt" align=center>(or for first entry, Original Issue Date)</P>
</TD><TD style="border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" width=144><P style="line-height:10.05pt; margin:0px"><BR></P>
<P style="line-height:12.95pt; margin:0px; font-size:12pt" align=center>Amount of Conversion</P>
</TD><TD style="border-top:3.6px double #000000; border-right:1px solid #000000; border-bottom:1px solid #FFFFFF" width=126><P style="line-height:10.05pt; margin:0px"><BR></P>
<P style="line-height:12.95pt; margin:0px; font-size:12pt" align=center>Aggregate Principal Amount Remaining Subsequent to Conversion</P>
<P style="line-height:12.95pt; margin:0px; font-size:12pt" align=center>(or original Principal Amount)</P>
</TD><TD style="border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" width=174><P style="line-height:10.05pt; margin:0px"><BR></P>
<P style="line-height:12.95pt; margin:0px; font-size:12pt" align=center>Company Attest</P>
</TD></TR>
<TR><TD style="border-left:3.6px double #000000; border-right:1px solid #FFFFFF; border-bottom:1px solid #FFFFFF" valign=top width=162><P style="line-height:8.15pt; margin:0px"><BR></P>
<P style="line-height:12.95pt; margin:0px"><BR></P>
</TD><TD style="border-right:1px solid #FFFFFF; border-bottom:1px solid #FFFFFF" valign=top width=144><P style="line-height:8.15pt; margin:0px"><BR></P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #FFFFFF" valign=top width=126><P style="line-height:8.15pt; margin:0px"><BR></P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=174><P style="line-height:8.15pt; margin:0px"><BR></P>
</TD></TR>
<TR><TD style="border-left:3.6px double #000000; border-right:1px solid #FFFFFF; border-bottom:1px solid #FFFFFF" valign=top width=162><P style="line-height:8.15pt; margin:0px"><BR></P>
<P style="line-height:12.95pt; margin:0px"><BR></P>
</TD><TD style="border-right:1px solid #FFFFFF; border-bottom:1px solid #FFFFFF" valign=top width=144><P style="line-height:8.15pt; margin:0px"><BR></P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #FFFFFF" valign=top width=126><P style="line-height:8.15pt; margin:0px"><BR></P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=174><P style="line-height:8.15pt; margin:0px"><BR></P>
</TD></TR>
<TR><TD style="border-left:3.6px double #000000; border-right:1px solid #FFFFFF; border-bottom:1px solid #FFFFFF" valign=top width=162><P style="line-height:8.15pt; margin:0px"><BR></P>
<P style="line-height:12.95pt; margin:0px"><BR></P>
<P style="line-height:12.95pt; margin:0px; font-size:12pt">&nbsp;</P>
</TD><TD style="border-right:1px solid #FFFFFF; border-bottom:1px solid #FFFFFF" valign=top width=144><P style="line-height:8.15pt; margin:0px"><BR></P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #FFFFFF" valign=top width=126><P style="line-height:8.15pt; margin:0px"><BR></P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=174><P style="line-height:8.15pt; margin:0px"><BR></P>
</TD></TR>
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<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>3
<FILENAME>eegt_stkpurchaseagrmt.htm
<DESCRIPTION>STOCK PURCHASE AGREEMENT
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<DIV style="width:624px"><P style="line-height:14pt; margin:0px; font-size:12pt" align=center><B>STOCK PURCHASE AGREEMENT</B></P>
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<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; font-size:12pt" align=justify><B>STOCK PURCHASE AGREEMENT</B>, dated as of December 22, 2009 (the &#147;Agreement&#148;), among those persons or entities set forth on Schedule 1 annexed hereto, (each a &#147;Purchaser&#148; and collectively the &#147;Purchasers&#148;), EClips Energy Technologies, Inc., a corporation organized under the laws of Florida (the &#147;Company&#148;), and Benjamin C. Croxton (the &#147;Seller&#148;). &nbsp;The Purchasers, the Company and the Seller are collectively referred to herein as the &#147;Parties&#148;.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; font-size:12pt" align=center><U>W I T N E S S E T H</U>:</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; font-size:12pt" align=justify><B>WHEREAS</B>, Seller owns an aggregate of (i) 50,000,000 shares of common stock, par value $0.0001 per share of the Company (the &#147;Common Shares&#148;) and (ii) 1,500,000 shares of series D preferred stock, par value $0.0001 per share of the Company (the &#147;Preferred Shares&#148; and collectively with the Common Shares, the &#147;Shares&#148;); and</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; font-size:12pt" align=justify><B>WHEREAS</B>, the Seller desires to sell to the Purchasers, and the Purchasers desires to purchase from the Seller, the Shares for the purchase price and upon the terms and conditions hereinafter set forth; </P>
<P style="line-height:14pt; margin:0px; text-indent:96px; font-size:12pt" align=justify><B>WHEREAS</B>, contemporaneously with the execution and delivery of this Agreement, the Parties hereto, together with Law Office of Clifford J. Hunt, P.A. (&#147;Escrow Agent&#148;), are executing and delivering an Escrow Agreement, substantially in the form attached hereto as <U>Exhibit A</U> (the &#147;Escrow Agreement&#148;) pursuant to which the Buyers shall deposit their Purchase Price (as defined below) with the Escrow Agent to be applied to the transactions contemplated hereunder.</P>
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<P style="line-height:14pt; margin-top:0px; margin-bottom:32px; font-size:12pt" align=justify>NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements hereinafter contained, the Parties hereby agree as follows:</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:70.8px; text-indent:19.2px; font-size:12pt">ARTICLE I<BR>
DEFINITIONS</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt">1.1</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:144px; font-size:12pt">Definitions</P>
<P style="line-height:14pt; margin:0px; font-size:12pt" align=justify>. &nbsp;In addition to the terms defined elsewhere in this Agreement, for all purposes of this Agreement, the following terms have the meanings indicated in this Section 1.1:</P>
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<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>Action</U>&#148; shall have the meaning ascribed to such term in Section 4.10.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>Affiliate</U>&#148; means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person as such terms are used in and construed under Rule 144. &nbsp;With respect to a Purchaser, any investment fund or managed account that is managed on a discretionary basis by the same investment manager as such Purchaser will be deemed to be an Affiliate of such Purchasers.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>Closing</U>&#148; means the closing of the purchase and sale of the Common Stock pursuant to Section 3.1.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>Closing Date</U>&#148; shall have the meaning ascribed to such term in Section 3.1</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>Commission</U>&#148; means the Securities and Exchange Commission.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>Common Stock</U>&#148; means the common stock of the Company, par value $0.0001 per share, and any Shares into which such common stock may hereafter be reclassified. </P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>Common Stock Equivalents</U>&#148; means any Shares 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.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&nbsp;&#147;<U>Disclosure Schedules</U>&#148; means the Disclosure Schedules of the Company delivered concurrently herewith. </P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&nbsp;&#147;<U>Evaluation Date</U>&#148; shall have the meaning ascribed to such term in Section 4.18.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>Escrow Agreement</U>&#148; means the Escrow Agreement, dated as of the date hereof, by and among the Company, Purchasers and the Seller, in the form of <U>Exhibit A</U> attached hereto.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&nbsp;&#147;<U>Excess Liability Amount</U>&#148; shall have the meaning ascribed to such term in Section 4.2.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>Exchange Act</U>&#148; means the Shares Exchange Act of 1934, as amended.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>GAAP</U>&#148; shall have the meaning ascribed to such term in Section 4.8.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&nbsp;&#147;<U>Intellectual Property Rights</U>&#148; shall have the meaning ascribed to such term in Section 4.15.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>Liabilities</U>&#148; shall have the meaning ascribed to such term in Section 2.4.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&nbsp;&#147;<U>Liens</U>&#148; means a lien, charge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>Lock-Up Agreement</U>&#148; means the Lock-Up Agreement, dated as of the date hereof, by and among the Company and the Seller, in the form of <U>Exhibit B</U> attached hereto.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>Material Adverse Effect</U>&#148; shall have the meaning ascribed to such term in Section 4.2.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>Material Permits</U>&#148; shall have the meaning ascribed to such term in Section 4.13.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&nbsp;&#147;<U>Option Agreement</U>&#148; means the Option Agreement, dated as of the date hereof, by and among the Company and the Seller, in the form of <U>Exhibit D</U> attached hereto.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&nbsp;&#147;<U>Person</U>&#148; means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&nbsp;&#147;<U>Proceeding</U>&#148; means an action, claim, suit, investigation or proceeding (including, without limitation, an investigation or partial proceeding, such as a deposition), whether commenced or threatened.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>Purchase Price</U>&#148; shall have the meaning ascribed to such term in Section 2.2.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>Release</U>&#148; means the Release, dated as of the date hereof, by and among the Company and the Seller, in the form of <U>Exhibit C</U> attached hereto.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>Required Approvals</U>&#148; shall have the meaning ascribed to such term in Section 4.5.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>Rule 144</U>&#148; 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. </P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>SEC Reports</U>&#148; shall have the meaning ascribed to such term in Section 4.8.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&nbsp;&#147;<U>Securities Act</U>&#148; means the Securities Act of 1933, as amended.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>Shares</U>&#148; shall have the meaning set forth in the first &#147;Whereas&#148; clause hereto.&#147;<U>Subsidiary</U>&#148; shall mean the subsidiaries of the Company, if any, set forth on <U>Schedule 4.1</U>.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>Trading Day</U>&#148; means a day on which the Common Stock is traded on a Trading Market.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>Trading Market</U>&#148; means the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the OTC Bulletin Board, the American Stock Exchange, the New York Stock Exchange, the Nasdaq Global Market or the Nasdaq National Market.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>Transaction Documents</U>&#148; means this Agreement, the Lock-Up Agreement, the Release and any other documents or agreements executed in connection with the transactions contemplated hereunder.</P>
<P style="margin:0px"><BR></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:70.8px; text-indent:19.2px; font-size:12pt">ARTICLE II<BR>
PURCHASE AND SALE</P>
<A NAME="_Toc444572368"></A><A NAME="_Toc444572371"></A><A NAME="_Toc88578366"></A><P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt"><U>2.1</U></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:144px; font-size:12pt"><U>Sale and Purchase of Shares</U>. &nbsp;On the Closing Date, upon the terms and subject to the conditions contained herein, the Seller shall sell, assign, transfer, convey and deliver to the Purchasers, and the Purchasers shall purchase from the Seller, all of the Shares, free and clear of any liens, pledges, encumbrances, charges, claims or restrictions of any kind.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt"><U>2.2</U></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:144px; font-size:12pt"><U>Amount of Purchase Price</U>.<A NAME="_Toc444572372"></A> The purchase price for the Shares shall be US$100,000.00 (one hundred thousand US dollars) (the &#147;Purchase Price&#148;) which shall be deposited with the Escrow Agent as &#147;Escrow Funds&#148; pursuant to the Escrow Agreement. &nbsp;The Purchasers shall deliver the Purchase Price to the Escrow Agent via wire transfer or a certified check, immediately available funds.</P>
<A NAME="_Toc88578368"></A><A NAME="_Toc444572373"></A><P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt"><U>2.3</U></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:144px; font-size:12pt"><U>Payment of Purchase Price.</U> &nbsp;</P>
<A NAME="_Toc444572374"></A><P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt">2.4</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:144px; font-size:12pt">On the Closing Date, the Parties shall instruct the Escrow Agent to pay $25,000 of the Escrow Funds to the Seller, which shall be paid by the delivery to Seller by wire transfer of immediately available funds into accounts designated by the Seller. &nbsp;On each of the 60<SUP>th, </SUP>90<SUP>th</SUP> and 180<SUP>th</SUP> day following the Closing Date, the Parties shall instruct the Escrow Agent to pay $25,000 of the Escrow Funds to the Seller, which shall be paid by the delivery to Seller by wire transfer of immediately available funds into accounts designated by the Seller.<U> </U></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt"><U>2.5</U></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:144px; font-size:12pt"><U>Liabilities At Closing</U>. &nbsp;The Seller shall use his best efforts to cause the Company's liabilities (the &#147;Liabilities&#148;) as of the Closing to be not more than $75,000 (the &#147;Maximum Liability Amount&#148;). &nbsp;&nbsp;In the event that the amount of Liabilities is greater than the Maximum Liability Amount, the Seller agrees to indemnify and hold harmless the Company for all liabilities that exceed the Maximum Liability Amount. &nbsp;&nbsp;Notwithstanding such indemnity, Seller shall receive $25,000 of the Escrow Funds at closing and the remaining $75,000 of the Escrow Funds shall remain in escrow with the Escrow Agent pursuant to the terms of this Agreement and the Escrow Agreement. &nbsp;The Escrow Funds shall not be subject to any indemnity or demand by Purchasers or the Company for tender, delivery or payment of any Company Liability in excess of the Maximum Liability Amount or therea
fter. &nbsp;The Escrow Funds shall be paid out to Seller in accordance with the schedule set forth in this Agreement notwithstanding any indemnity responsibility of Seller. &nbsp;The Parties agree that they shall not tender any instructions or demands to Escrow Agent that directs the Escrow Agent to withhold such Escrow Funds from Seller when due to be paid in accordance with the payment schedule set forth herein or, which directs the payment of such Escrow Funds to any person or entity other than Seller.&nbsp;&nbsp;The Parties agree that only the filing of a civil action by a Company creditor identified in schedules to the Transaction Documents may trigger a demand for indemnity hereunder.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:70.8px; text-indent:19.2px; font-size:12pt">ARTICLE III<BR>
<A NAME="_Toc444572376"></A>CLOSING AND TERMINATION</P>
<A NAME="_Toc444572377"></A><P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt"><U>3.1</U></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:144px; font-size:12pt"><U>Closing Date</U>. &nbsp;<A NAME="_Toc444572378"></A>Subject to the satisfaction of the conditions set forth in Sections 7.1 and 7.2 hereof (or the waiver thereof by the Party entitled to waive that condition), the closing of the sale and purchase of the Shares provided for in Section 1.1 hereof (the &quot;Closing&quot;) shall take place at the offices of Law Office of Clifford J. Hunt, P.A. located at 8200 Seminole Boulevard, Seminole, Florida 33772 (or at such other place as the Parties may designate in writing) on such date as the Seller and the Purchasers may designate. &nbsp;The date on which the Closing shall be held is referred to in this Agreement as the &quot;Closing Date&quot;. &nbsp;At the Closing, Seller shall deliver the Shares, together with fully executed stock powers in blank, and medallion guarantee signatures, and Purchasers shall deliver the Purchase Price to the Escrow Agent. &nbsp;Escrow 
Agent shall promptly deliver to Harvey Kesner, Esq., counsel for the Purchasers at the address set for notices herein, the Shares, together with the stock powers executed by Seller in blank and medallion guarantees and upon delivery to an overnight delivery service, properly addressed, may release the first payment of $25,000 from the Escrow. &nbsp;The parties hereto agree that the Purchasers shall be designated in a supplemental Schedule to this Agreement that shall be delivered to Seller following closing, together with a copy of the transfer agent instructions for execution by the Company authorizing transfer of such shares. &nbsp;Company hereby appoints Harvey Kesner, Esq. as &nbsp;attorney in fact, commencing upon delivery of the Purchase Price to the Escrow Agent, for the sole purpose of instructing the transfer agent for the Company with respect to transfer of the purchased Shares, and Company shall provide all further cooperation and instructions to transfer agent necessary or desirable to complete t
he transfer of Shares to the Purchasers.</P>
<A NAME="_Toc444572379"></A><P style="line-height:14pt; margin:0px; font-size:12pt"><B><U>Omitted</U></B>.<A NAME="_Toc444572380"></A> </P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:70.8px; text-indent:19.2px; font-size:12pt">ARTICLE IV<BR>
<A NAME="_Toc444572385"></A>REPRESENTATIONS AND WARRANTIES OF THE SELLER AND THE COMPANY</P>
<P style="margin:0px"><BR></P>
<A NAME="_Toc444572386"></A><P style="line-height:14pt; margin-top:0px; margin-bottom:16px; font-size:12pt">The Seller and the Company hereby, jointly and severally, represent and warrant to the Purchasers that:</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt"><U>4.1</U></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:144px; font-size:12pt"><U>Subsidiaries</U>. &nbsp;All of the direct and indirect subsidiaries of the Company are set forth on <U>Schedule 4.1</U> (each a &#147;Subsidiary&#148; and collectively, the &#147;Subsidiaries&#148;) or in the filings of the Company made with the Securities and Exchange Commission. &nbsp;The Company owns, directly or indirectly, all of the capital stock or other equity interests of each Subsidiary free and clear of any liens, and all of the issued and outstanding shares of capital stock of each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar rights to subscribe for or purchase Shares. &nbsp;If the Company has no subsidiaries, all other references to the Subsidiaries or any of them in this Agreement shall be disregarded.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt"><U>4.2</U></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:144px; font-size:12pt"><U>Organization and Qualification</U>. &nbsp;The Company and each of the Subsidiaries is an entity duly incorporated or otherwise organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization (as applicable), with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted. &nbsp;Neither the Company nor any Subsidiary is in violation nor default of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational or charter documents. &nbsp;Each of the Company and the Subsidiaries is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so q
ualified or in good standing, as the case may be, could not have or reasonably be expected to result in: (i) a material adverse effect on the legality, validity or enforceability of this Agreement, (ii) a material adverse effect on the results of operations, assets, business, prospects or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse effect on the Company&#146;s ability to perform in any material respect on a timely basis its obligations under this Agreement (any of (i), (ii) or (iii), a &#147;<U>Material Adverse Effect</U>&#148;) and no Proceeding has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt"><U>4.3</U></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:144px; font-size:12pt"><U>Authorization; Enforcement</U>. &nbsp;The Company and Seller have the requisite corporate power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder. &nbsp;The execution and delivery of this Agreement by the Company and the Seller and the consummation by them of the transactions contemplated hereby have been duly authorized by all necessary action on the part of the Company or Seller and no further action is required by the Company, the Board of Directors or the Company&#146;s stockholders or Seller in connection therewith. &nbsp;This Agreement to which it is a Party has been (or upon delivery will have been) duly executed by the Company and Seller, and when delivered in accordance with the terms hereof and thereof, will constitute the valid and binding obligation of the Company and Seller enforceable against the Co
mpany and Seller in accordance with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors&#146; rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt"><U>4.4</U></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:144px; font-size:12pt"><U>No Conflicts</U>. &nbsp;The execution, delivery and performance by the Company and Seller of this Agreement and the consummation by Seller and Company of each Agreement as to which it is a Party of the other transactions contemplated hereby do not and will not: (i) conflict with or violate any provision of the Company&#146;s or any Subsidiary&#146;s or Seller&#146;s certificate or articles of incorporation, bylaws or other organizational or charter documents, or (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in the creation of any Lien upon any of the properties or assets of the Company or any Subsidiary or Seller, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a 
Company or Subsidiary or Seller debt or otherwise) or other understanding to which the Company or any Subsidiary or Seller is a party or by which any property or asset of the Company or any Subsidiary or Seller is bound or affected, or (iii) subject to the Required Approvals, conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company or a Subsidiary or Seller is subject (including federal and state Securities laws and regulations), or by which any property or asset of the Company or a Subsidiary or Seller is bound or affected; except in the case of each of clauses (ii) and (iii), such as could not have or reasonably be expected to result in a Material Adverse Effect.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt"><U>4.5</U></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:144px; font-size:12pt"><U>Filings, Consents and Approvals</U>. &nbsp;Neither the Company nor Seller is required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Company or Seller of this Agreement.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt"><U>4.6</U></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:144px; font-size:12pt"><U>Ownership of the Shares</U>. &nbsp;Seller is the lawful record and beneficial owner of the Shares, free and clear of any liens, pledges, encumbrances, charges, claims or restrictions of any kind, except as set forth in Schedule 4.6, and has, or will have on the Closing Date, the absolute, unilateral right, power, authority and capacity to enter into and perform this Agreement without any other or further authorization, action or proceeding, except as specified herein. &nbsp;</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt"><U>4.7</U></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:144px; font-size:12pt"><U>Capitalization</U>. &nbsp;The capitalization of the Company is as set forth on <U>Schedule 4.7</U>. Except as set forth on <U>Schedule 4.7</U>, the Company has not issued any capital stock since its most recently filed periodic report under the Exchange Act, other than pursuant to the exercise of employee stock options under the Company&#146;s stock option plans, the issuance of shares of Common Stock to employees pursuant to the Company&#146;s employee stock purchase plans and pursuant to the conversion and/or exercise of Common Stock Equivalents outstanding as of the date of the most recently filed periodic report under the Exchange Act, each of which have been disclosed in an Exchange Act Report or other SEC filing. &nbsp;No Person has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by this Agreement. &nbsp;Except a
s set forth on <U>Schedule 4.7</U>, there are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any person any right to subscribe for or acquire any shares of Common Stock, or contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become bound to issue additional shares of Common Stock or Common Stock Equivalents. The sale of the Shares will not obligate the Company to issue shares of Common Stock or Common Stock Equivalents to any Person and will not result in a right of any holder of Common Stock or Common Stock Equivalents to adjust the exercise, conversion, exchange or reset price under any of such securities. All of the outstanding shares of capital stock of the Company are validly issued, fully paid and nonassessable, have been issued in compliance with all federal and state Securi
ties laws, and none of such outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase Common Stock. &nbsp;No further approval or authorization of any stockholder, the Board of Directors or others is required for the issuance and sale of the Shares. &nbsp;There are no stockholders agreements, voting agreements or other similar agreements with respect to the Company&#146;s capital stock to which the Company is a party or, to the knowledge of the Company and Seller, between or among any of the Company&#146;s stockholders.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt"><U>4.8</U></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:144px; font-size:12pt"><U>SEC Reports; Financial Statements</U>. &nbsp;Except as set forth on Schedule 4.8 of the Disclosure Schedules, the Company has filed all reports, schedules, forms, statements and other documents required to be filed by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the date hereof (or such shorter period as the Company was required by law or regulation to file such material) (the foregoing materials and any amendments filed through the date hereof, including the exhibits thereto and documents incorporated by reference therein, being collectively referred to herein as the &#147;<U>SEC Reports</U>&#148;) on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension. &nbsp;As of their respective dates, the SEC Reports complied 
in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. &nbsp;Except as described on <U>Schedule 4.8</U>, the Company has never been an issuer subject to Rule 144(i) under the Securities Act. The financial statements of the Company included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing. &nbsp;Such financial statements have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis during the periods involved (&#147;<U>GAAP</U>&#148;), except as may be otherwise specified 
in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of the Company and its consolidated Subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt"><U>4.9</U></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:144px; font-size:12pt"><U>Material Changes</U>. &nbsp;Since the date of the latest audited financial statements included within the SEC Reports, except as specifically disclosed in a subsequent SEC Report filed prior to the date hereof: (i) there has been no event, occurrence or development that has had or that could reasonably be expected to result in a Material Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or otherwise) other than (A) trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice and (B) liabilities not required to be reflected in the Company&#146;s financial statements pursuant to GAAP or disclosed in filings made with the Commission, (iii) the Company has not altered its method of accounting, (iv) the Company has not declared or made any dividend or distribution of cash or other property to its stockholders or purchased, redeemed or ma
de any agreements to purchase or redeem any shares of its capital stock and (v) the Company has not issued any equity Shares to any officer, director or Affiliate, except pursuant to existing Company stock option plans. The Company does not have pending before the Commission any request for confidential treatment of information. &nbsp;Except for the sale of the Shares contemplated by this Agreement or as set forth on <U>Schedule 4.9</U>, no event, liability or development has occurred or exists with respect to the Company or its Subsidiaries or their respective business, properties, operations or financial condition, that would be required to be disclosed by the Company under applicable Securities laws at the time this representation is made or deemed made that has not been publicly disclosed at least 1 Trading Day prior to the date that this representation is made.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt"><U>4.10</U></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:144px; font-size:12pt"><U>Litigation</U>. &nbsp;Except as set forth in the SEC Reports or as set forth on Schedule 4.10, there is no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to the knowledge of the Company and Seller, threatened against or affecting the Company, any Subsidiary or any of their respective properties before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an &#147;<U>Action</U>&#148;) which (i) adversely affects or challenges the legality, validity or enforceability of this Agreement or (ii) could, if there were an unfavorable decision, have or reasonably be expected to result in a Material Adverse Effect. &nbsp;Neither the Company nor any Subsidiary, nor any director or officer thereof, is or has been the subject of any Action involving a claim of violation of or liability under
 federal or state Securities laws or a claim of breach of fiduciary duty. &nbsp;There has not been, and to the knowledge of the Company and Seller, there is not pending or contemplated, any investigation by the Commission involving the Company or any current or former director or officer of the Company. &nbsp;The Commission has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company or any Subsidiary under the Exchange Act or the Securities Act. &nbsp;</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt"><U>4.11</U></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:144px; font-size:12pt"><U>Labor Relations</U>. &nbsp;No material labor dispute exists or, to the knowledge of the Company and Seller, is imminent with respect to any of the employees of the Company which could reasonably be expected to result in a Material Adverse Effect. &nbsp;None of the Company&#146;s or its Subsidiaries&#146; employees is a member of a union that relates to such employee&#146;s relationship with the Company or such Subsidiary, and neither the Company nor any of its Subsidiaries is a party to a collective bargaining agreement, and the Company and its Subsidiaries believe that their relationships with their employees are good. &nbsp;No executive officer, to the knowledge of the Company and Seller, is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement or non-competition agreement, or any other contract or agreement
 or any restrictive covenant in favor of any third party, and the continued employment of each such executive officer does not subject the Company or any of its Subsidiaries to any liability with respect to any of the foregoing matters. &nbsp;The Company and its Subsidiaries are in compliance with all U.S. federal, state, local and foreign laws and regulations relating to employment and employment practices, terms and conditions of employment and wages and hours, except where the failure to be in compliance could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt"><U>4.12</U></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:144px; font-size:12pt"><U>Compliance</U>. &nbsp;Neither the Company nor any Subsidiary: (i) is in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary under), nor has the Company or any Subsidiary received notice of a claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived), (ii) is in violation of any order of any court, arbitrator or governmental body or (iii) is or has been in violation of any statute, rule or regulation of any governmental authority, including without limitation all foreign, federal, state and local laws applicable to its business and all such laws that affect the envi
ronment, except in each case as could not have or reasonably be expected to result in a Material Adverse Effect.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt"><U>4.13</U></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:144px; font-size:12pt"><U>Regulatory Permits</U>. &nbsp;The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses as described in the SEC Reports, except where the failure to possess such permits could not reasonably be expected to result in a Material Adverse Effect (&#147;<U>Material Permits</U>&#148;), and neither the Company nor any Subsidiary has received any notice of proceedings relating to the revocation or modification of any Material Permit.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt"><U>4.14</U></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:144px; font-size:12pt"><U>Title to Assets</U>. &nbsp;The Company and the Subsidiaries have good and marketable title in fee simple to all real property owned by them and good and marketable title in all personal property owned by them that is material to the business of the Company and the Subsidiaries, in each case free and clear of all Liens, except for Liens as do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by the Company and the Subsidiaries and Liens for the payment of federal, state or other taxes, the payment of which is neither delinquent nor subject to penalties. &nbsp;Any real property and facilities held under lease by the Company and the Subsidiaries are held by them under valid, subsisting and enforceable leases with which the Company and the Subsidiaries are in compliance.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt"><U>4.15</U></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:144px; font-size:12pt"><U>Patents and Trademarks</U>. &nbsp;The Company and the Subsidiaries have, or have rights to use, all patents, patent applications, trademarks, trademark applications, service marks, trade names, trade secrets, inventions, copyrights, licenses and other intellectual property rights and similar rights as described in the SEC Reports as necessary or material for use in connection with their respective businesses and which the failure to so have could have a Material Adverse Effect (collectively, the &#147;<U>Intellectual Property Rights</U>&#148;). &nbsp;Neither the Company nor any Subsidiary has received a notice (written or otherwise) that any of the Intellectual Property Rights used by the Company or any Subsidiary violates or infringes upon the rights of any Person. To the knowledge of the Company and Seller, all such Intellectual Property Rights are enforceable and there is no existing infringement by anoth
er Person of any of the Intellectual Property Rights. &nbsp;The Company and its Subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality and value of all of their intellectual properties, except where failure to do so could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt"><U>4.16</U></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:144px; font-size:12pt"><U>Insurance</U>. &nbsp;The Company and the Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in the businesses in which the Company and the Subsidiaries are engaged.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt"><U>4.17</U></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:144px; font-size:12pt"><U>Transactions with Affiliates and Employees</U>. &nbsp;Except as set forth in the SEC Reports, none of the officers or directors of the Company and, to the knowledge of the Company and Seller, none of the employees of the Company is presently a party to any transaction with the Company or any Subsidiary (other than for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Company and Seller, any entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner, in each case in excess of $120,000 other than for: (i) payment of salary or consulting fees for services rendered, (
ii) reimbursement for expenses incurred on behalf of the Company and (iii) other employee benefits, including stock option agreements under any stock option plan of the Company.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt"><U>4.18</U></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:144px; font-size:12pt"><U>Sarbanes-Oxley; Internal Accounting Controls</U>. &nbsp;The Company is in material compliance with all provisions of the Sarbanes-Oxley Act of 2002 which are applicable to it as of the Closing Date. &nbsp;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&#146;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&#146;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 con
trols and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed such disclosure controls and procedures to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission&#146;s rules and forms. &nbsp;The Company&#146;s certifying officers have evaluated the effectiveness of the Company&#146;s disclosure controls and procedures as of the end of the period covered by the Company&#146;s most recently filed periodic report under the Exchange Act (such date, the &#147;<U>Evaluation Date</U>&#148;). &nbsp;The Company presented in its most recently filed periodic report under the Exchange Act the conclusions of the certifying officers about the effectiveness of the disclosure controls and procedures based on their evaluations as of the Evaluation Date. &nbsp;Since the Evaluation Date, there have been no changes in
 the Company&#146;s internal control over financial reporting (as such term is defined in the Exchange Act) that has materially affected, or is reasonably likely to materially affect, the Company&#146;s internal control over financial reporting.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt"><U>4.19</U></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:144px; font-size:12pt"><U>Certain Fees</U>. &nbsp;No brokerage or finder&#146;s fees or commissions are or will be payable by the Company to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by the Transaction Documents. &nbsp;The Purchasers shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated in this Section that may be due in connection with the transactions contemplated by the Transaction Documents. &nbsp;</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt"><U>4.20</U></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:144px; font-size:12pt"><U>Investment Company</U>. The Company is not, and is not an Affiliate of, and immediately after receipt of payment for the Shares, will not be or be an Affiliate of, an &#147;investment company&#148; within the meaning of the Investment Company Act of 1940, as amended. &nbsp;The Company shall conduct its business in a manner so that it will not become subject to the Investment Company Act of 1940, as amended.<A NAME="_Toc430524909"></A><A NAME="_Toc449254780"></A></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt"><U>4.21</U></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:144px; font-size:12pt"><U>Listing and Maintenance Requirements</U>. &nbsp;The Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and the Company has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration of the Common Stock under the Exchange Act nor has the Company received any notification that the Commission is contemplating terminating such registration. &nbsp;The Company has not, in the 12 months preceding the date hereof, received notice from any Trading Market on which the Common Stock is or has been listed or quoted to the effect that the Company is not in compliance with the listing or maintenance requirements of such Trading Market. The Company is, and has no reason to believe that it will not in the foreseeable future continue to be, in compliance with all such listing and maintenance requirements.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt"><U>4.22</U></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:144px; font-size:12pt"><U>Disclosure</U>. &nbsp;Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents, the Company confirms that neither it nor any other Person acting on its behalf has provided any of the Purchasers or their agents or counsel with any information that it believes constitutes or might constitute material, nonpublic information. &nbsp;The Company understands and confirms that the Purchasers will rely on the foregoing representation in effecting transactions in Shares of the Company. &nbsp;All disclosure furnished by or on behalf of the Company to the Purchasers regarding the Company, its business and the transactions contemplated hereby, including the Disclosure Schedules to this Agreement, is true and correct and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made the
rein, in light of the circumstances under which they were made, not misleading. &nbsp;&nbsp;The press releases disseminated by the Company during the twelve months preceding the date of this Agreement taken as a whole do not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made and when made, not misleading. &nbsp;The Company acknowledges and agrees that no Purchasers makes or has made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in Section 3.2 hereof.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt"><U>4.23</U></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:144px; font-size:12pt"><U>Solvency</U>. &nbsp;Except for the Going Concern note included in the SEC Reports which advised that recurring losses and negative cash flows are indicative that the Company may not be able to continue as a going concern, the Company and Seller have no knowledge of any facts or circumstances which lead it to believe that it would be compelled to file for reorganization or liquidation under the bankruptcy or reorganization laws of any jurisdiction within one year from the Closing Date. &nbsp;There has been no material change in the Company financial position regarding such status since the filing of the Company&#146;s Form 10-Q filed with the Commission on November 15, 2009 and the Company and Seller do not expect any material change up to and including the Closing Date. </P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt"><U>4.24</U></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:144px; font-size:12pt"><U>Tax Status</U>. </P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:240px; font-size:12pt">&nbsp;Except for matters that would not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect, the Company and each Subsidiary has filed all necessary federal, state and foreign income and franchise tax returns and has paid or accrued all taxes shown as due thereon, and the Company has no knowledge of a tax deficiency which has been asserted or threatened against the Company or any Subsidiary.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt"><U>4.25</U></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:144px; font-size:12pt"><U>Foreign Corrupt Practices.</U> &nbsp;Neither the Company, nor to the knowledge of the Company and Seller, any agent or other person acting on behalf of the Company, has: (i) directly or indirectly, used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns from corporate funds, (iii) failed to disclose fully any contribution made by the Company (or made by any person acting on its behalf of which the Company is aware) which is &nbsp;in violation of law or (iv) violated in any material respect any provision of the Foreign Corrupt Practices Act of 1977, as amended. &nbsp;</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt"><U>4.26</U></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:144px; font-size:12pt"><U>Liabilities</U>. &nbsp;As of the Closing Date, the Company and Seller jointly and severally agree that they shall use best efforts to reduce the liabilities of the Company to an amount that is not in excess of $75,000. All liabilities in excess of $75,000 at the Closing Date shall be subject to the indemnity provision set forth in Section 2.4 of this Agreement.</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:70.8px; text-indent:19.2px; font-size:12pt">ARTICLE V<BR>
<A NAME="_Toc444572432"></A>REPRESENTATIONS AND WARRANTIES OF PURCHASERS</P>
<A NAME="_Toc444572433"></A><P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt"><U>5.1</U></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:144px; font-size:12pt"><U>Organization and Good Standing</U>. If an entity, the Purchaser is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with full right, corporate or partnership power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder. This Agreement to which it is a Party has been duly executed by such Purchasers, and when delivered by such Purchasers in accordance with the terms hereof, will constitute the valid and legally binding obligation of such Purchasers, enforceable against it in accordance with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors&#146; rights generally, (ii) as limited by laws relating to
 the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt"><U>5.2</U></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:144px; font-size:12pt"><U>Own Account</U>. &nbsp;The Purchasers understands that the Shares are &#147;restricted Shares&#148; and have not been registered under the Securities Act or any applicable state Securities law and is acquiring the Shares as principal for its own account and not with a view to or for distributing or reselling such Shares or any part thereof in violation of the Securities Act or any applicable state Securities law, has no present intention of distributing any of such Shares in violation of the Securities Act or any applicable state securities law and has no direct or indirect arrangement or understandings with any other persons to distribute or regarding the distribution of such Shares (this representation and warranty not limiting such Purchasers&#146; right to sell the Shares in compliance with applicable federal and state Securities laws) in violation of the Securities Act or any applicable state securities
 law. &nbsp;Such Purchasers are acquiring the Shares hereunder in the ordinary course of its business.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt"><U>5.3</U></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:144px; font-size:12pt"><U>Purchasers Status</U>. &nbsp;As of the date hereof, each Purchaser is an &#147;accredited investor&#148; as defined in Rule 501(a) under the Securities Act. &nbsp;Such Purchasers are not required to be registered as a broker-dealer under Section 15 of the Exchange Act.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt"><U>5.4</U></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:144px; font-size:12pt"><U>Experience of Such Purchasers</U>. &nbsp;Such Purchasers, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Shares, and has so evaluated the merits and risks of such investment. &nbsp;Such Purchasers are able to bear the economic risk of an investment in the Shares and, at the present time, is able to afford a complete loss of such investment.</P>
<A NAME="_Toc444572438"></A><P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt"><U>5.5</U></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:144px; font-size:12pt"><U>Litigation</U>.<A NAME="_Toc444572439"></A> &nbsp;There are no Legal Proceedings pending or, to the best knowledge of each Purchaser, threatened that are reasonably likely to prohibit or restrain the ability of the Purchaser to enter into this Agreement or consummate the transactions contemplated hereby.</P>
<A NAME="_Toc444572442"></A><P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt"><U>5.6</U></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:144px; font-size:12pt"><U>Broker</U>. &nbsp;The Purchasers have not retained any broker in connection with any transaction contemplated by this Agreement. &nbsp;Seller shall not be obligated to pay any fee or commission associated with the retention or engagement by the Purchasers of any broker in connection with any transaction contemplated by this Agreement.</P>
<P style="line-height:14pt; margin:0px; text-indent:48px; font-size:12pt" align=justify>&nbsp;&nbsp;</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:70.8px; text-indent:19.2px; font-size:12pt">ARTICLE VI<BR>
<A NAME="_Toc444572444"></A>COVENANTS</P>
<A NAME="_Toc444572445"></A><P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt"><U>6.1</U></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:144px; font-size:12pt"><U>Legend</U>. The Purchasers understand and agree that the certificates for the Shares and the Seller shall bear substantially the following legend until (i) such Shares shall have been registered under the Securities Act and effectively disposed of in accordance with a registration statement that has been declared effective or (ii) in the opinion of counsel for the Company, such Shares may be sold without registration under the Securities Act, as well as any applicable &#147;blue sky&#148; or state Securities laws:</P>
<P style="line-height:14pt; margin:0px; padding-left:48px; padding-right:48px; font-size:12pt" align=justify>THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE &#147;SECURITIES ACT&#148;), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. &nbsp;THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN &#147;ACCREDITED INVESTOR&#14
8; AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt"><U>6.2</U></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:144px; font-size:12pt"><U>Access to Information</U>.<A NAME="_Toc444572446"></A> The Seller and the Company agree that, prior to the Closing Date, the Purchasers shall be entitled, through its officers, employees and representatives (including, without limitation, its legal advisors and accountants), to make such investigation of the properties, businesses and operations of the Company and their Subsidiaries and such examination of the books, records and financial condition of the Company and their Subsidiaries as it reasonably requests and to make extracts and copies of such books and records. &nbsp;Any such investigation and examination shall be conducted during regular business hours and under reasonable circumstances, and the Seller shall cooperate, and shall cause the Company and their Subsidiaries to cooperate, fully therein. &nbsp;No investigation by the Purchasers prior to or after the date of this Agreement shall diminish or
 obviate any of the representations, warranties, covenants or agreements of the Seller contained in this Agreement. &nbsp;In order that the Purchasers may have full opportunity to make such physical, business, accounting and legal review, examination or investigation as it may reasonably request of the affairs of the Company and its Subsidiaries, the Seller shall cause the officers, employees, consultants, agents, accountants, attorneys and other representatives of the Company and their Subsidiaries to cooperate fully with such representatives in connection with such review and examination.</P>
<A NAME="_Toc444572447"></A><P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt"><U>6.3</U></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:144px; font-size:12pt"><U>Conduct of the Business Pending the Closing</U>.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt">a)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:120px; font-size:12pt">Except as otherwise expressly contemplated by this Agreement or with the prior written consent of the Purchasers, the Seller shall use their best efforts, and shall cause the Company to:</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:144px; font-size:12pt">(i)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:192px; font-size:12pt">Conduct the businesses of the Company only in the ordinary course consistent with past practice;</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:144px; font-size:12pt">(ii)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:192px; font-size:12pt">Use its best efforts to (A) preserve its present business operations, organization (including, without limitation, management and the sales force) and goodwill of the Company and (B) preserve its present relationship with Persons having business dealings with the Company;</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:144px; font-size:12pt">(iii)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:192px; font-size:12pt">Maintain (A) all of the assets and properties of the Company in their current condition, ordinary wear and tear excepted and (B) insurance upon all of the properties and assets of the Company in such amounts and of such kinds com-parable to that in effect on the date of this Agreement;</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:144px; font-size:12pt">(iv)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:192px; font-size:12pt">(A) maintain the books, accounts and records of the Company in the ordinary course of business consistent with past practices, (B) continue to collect accounts receivable and pay accounts payable utilizing normal procedures and without discounting or accelerating payment of such accounts, and (C) comply with all contractual and other obligations applicable to the operation of the Company; and</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:144px; font-size:12pt">(v)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:192px; font-size:12pt">Comply in all material respects with applicable Laws.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt">b)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:120px; font-size:12pt">Except as otherwise expressly contemplated by this Agreement or with the prior written consent of the Purchasers, the Seller shall not, and shall cause the Company not to:</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:144px; font-size:12pt">(i)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:192px; font-size:12pt">Declare, set aside, make or pay any dividend or other distribution in respect of the capital stock of the Company &nbsp;or repurchase, redeem or otherwise acquire any outstanding shares of the capital stock or other Shares of, or other ownership interests in, the Company;</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:144px; font-size:12pt">(ii)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:192px; font-size:12pt">Transfer, issue, sell or dispose of any shares of capital stock or other Shares of the Company or grant options, warrants, calls or other rights to purchase or otherwise acquire shares of the capital stock or other Shares of the Company;</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:144px; font-size:12pt">(iii)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:192px; font-size:12pt">Effect any recapitalization, reclassification, stock split or like change in the capitalization of the Company;</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:144px; font-size:12pt">(iv)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:192px; font-size:12pt">Amend the certificate of incorporation or by-laws of the Company;</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:144px; font-size:12pt">(v)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:192px; font-size:12pt">(A) materially increase the annual level of compensation of any employee of the Company, (B) increase the annual level of compensation payable or to become payable by the Company &nbsp;to any of its executive officers, (C) grant any unusual or extraordinary bonus, benefit or other direct or indirect compensation to any employee, director or consultant, (D) increase the coverage or benefits available under any (or create any new) severance pay, termination pay, vacation pay, company awards, salary continuation for disability, sick leave, deferred compensation, bonus or other incentive compensation, insurance, pension or other employee benefit plan or arrangement made to, for, or with any of the directors, officers, employees, agents or representatives of the Company &nbsp;or otherwise modify or amend or terminate any such plan or arrangement or (E) enter into any employment, deferred compensation, severance, con
sulting, non-competition or similar agreement (or amend any such agreement) to which the Company is a party or involving a director, officer or employee of the Company in his or her capacity as a director, officer or employee of the Company;</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:144px; font-size:12pt">(vi)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:192px; font-size:12pt">Except for trade payables and for indebtedness for borrowed money incurred in the ordinary course of business and consistent with past practice, borrow monies for any reason or draw down on any line of credit or debt obligation, or become the guarantor, surety, endorser or otherwise liable for any debt, obligation or liability (contingent or otherwise) of any other Person, or change the terms of payables or receivables; </P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:144px; font-size:12pt">(vii)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:192px; font-size:12pt">Subject to any Lien (except for leases that do not materially impair the use of the property subject thereto in their respective businesses as presently conducted), any of the properties or assets (whether tangible or intangible) of the Company;</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:144px; font-size:12pt">(viii)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:192px; font-size:12pt">Acquire any material properties or assets or sell, assign, transfer, convey, lease or otherwise dispose of any of the material properties or assets (except for fair consideration in the ordinary course of business consistent with past practice) of the Company;</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:144px; font-size:12pt">(ix)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:192px; font-size:12pt">Cancel or compromise any debt or claim or waive or release any material right of the Company except in the ordinary course of business consistent with past practice;</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:144px; font-size:12pt">(x)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:192px; font-size:12pt">Enter into any commitment for capital expenditures or the purchase of assets out of the ordinary course in excess of $5,000;</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:144px; font-size:12pt">(xi)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:192px; font-size:12pt">Permit the Company to enter into any transaction or to make or enter into any Contract which by reason of its size or otherwise is not in the ordinary course of business consistent with past practice;</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:144px; font-size:12pt">(xii)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:192px; font-size:12pt">Permit the Company to enter into or agree to enter into any merger or consolidation with, any corporation or other entity, and not engage in any new business or invest in, make a loan, advance or capital contribution to, or otherwise acquire the Shares of any other Person;</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:144px; font-size:12pt">(xiii)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:192px; font-size:12pt">Except for transfers of cash pursuant to normal cash management practices, permit the Company to make any investments in or loans to, or pay any fees or expenses to, or enter into or modify any Contract with, the Seller or any Affiliate of the Seller; or</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:144px; font-size:12pt">(xiv)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:192px; font-size:12pt">Agree to do anything prohibited by this Section 6.2 or anything which would make any of the representations and warranties of the Seller in this Agreement or the Transaction Documents untrue or incorrect in any material respect as of any time through and including the Effective Time.</P>
<A NAME="_Toc444572448"></A><P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt"><U>6.4</U></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:144px; font-size:12pt"><U>Consents</U>.<A NAME="_Toc444572449"></A> &nbsp;The Seller and the Company shall use their best efforts, and the Purchasers shall cooperate with the Seller and the Company to obtain at the earliest practicable date all consents and approvals required to consummate the transactions contemplated by this Agreement, including, without limitation, the consents and approvals referred to in Section 4.5 hereof; provided, however, that neither the Seller, the Company nor the Purchasers shall be obligated to pay any consideration therefor to any third party from whom consent or approval is requested.</P>
<A NAME="_Toc444572451"></A><P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt"><U>6.5</U></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:144px; font-size:12pt"><U>Other Actions</U>.<A NAME="_Toc444572452"></A> &nbsp;Each of the Seller, the Company and the Purchasers shall use its best efforts to (i) take all actions necessary or appropriate to consummate the transactions contemplated by this Agreement and (ii) cause the fulfillment at the earliest practicable date of all of the conditions to their respective obligations to consummate the transactions contemplated by this Agreement.</P>
<P style="margin:0px"><BR></P>
<A NAME="_Toc444572455"></A><P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt"><U>6.6</U></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:144px; font-size:12pt"><U>Preservation of Records</U>.<A NAME="_Toc444572456"></A> &nbsp;The Seller and the Purchasers agree that each of them shall preserve and keep the records held by it relating to the business of the Company for a period of three years from the Closing Date and shall make such records and personnel available to the other as may be reasonably required by such party in connection with, among other things, any insurance claims by, legal proceedings against or governmental investigations of the Seller or the Purchasers or any of their Affiliates or in order to enable the Seller or the Purchasers to comply with their respective obligations under this Agreement and each other agreement, document or instrument contemplated hereby or thereby. &nbsp;</P>
<P style="margin:0px"><BR></P>
<A NAME="_Toc444572459"></A><P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt"><U>6.7</U></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:144px; font-size:12pt"><U>Securities Laws Disclosure; Publicity</U>. &nbsp;The Company shall, by 8:30 a.m. Eastern time on the 4<SUP>th</SUP> Trading Day following the date hereof, issue a Current Report on Form 8-K, reasonably acceptable to each Purchasers disclosing the material terms of the transactions contemplated hereby, and shall attach the Transaction Documents thereto. &nbsp;The Company, Seller and each Purchasers shall consult with each other in issuing any other press releases with respect to the transactions contemplated hereby, and neither the Company, Seller nor any Purchasers shall issue any such press release or otherwise make any such public statement without the prior consent of the other Parties, which consent shall not unreasonably be withheld, except if such disclosure is required by law, in which case the disclosing party shall promptly provide the other party with prior notice of such public statement or commun
ication. &nbsp;</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt"><U>6.8</U></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:144px; font-size:12pt"><U>Preparation of the 14f-1 Notice.</U> Upon execution of this Agreement, the Company shall prepare and file with the Commission the 14f-1 Notice in connection with the consummation of this Agreement. The Company shall cause the 14f-1 Notice to be mailed to its stockholders as promptly as practicable thereafter.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt"><U>6.9</U></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:144px; font-size:12pt"><U>Transfer of Assets.</U> &nbsp;At the Closing, the Company shall transfer to Seller or Seller&#146;s designee, all of the capital stock of each of the Company&#146;s Subsidiaries, except for H-Hybrid Technologies, Inc. (&#147;HHTI&#148;). &nbsp;These Subsidiaries include Pure Air Technologies, Inc., Hydrogen Safe Technologies, Inc., World Energy Solutions, Limited, and Advanced Alternative Energy, Inc. Simultaneous with the Closing, the Company shall execute an Option Agreement, substantially in the form annexed hereto as <U>Exhibit D</U> with Seller for the purchase of HHTI by Seller or his designee within a five-year period. &nbsp;Additionally, the Company shall transfer to Seller or his designee at the Closing, all completed inventory of transient voltage surge suppressor units (the &#147;TVSS Units&#148;), components and parts utilized in assembly of the TVSS Units as well as all rights, title and interes
t to the Underwriter&#146;s Laboratory number previously granted to the Company with respect to the TVSS Units and the right to manufacture, wholesale and sell the TVSS Units after the Closing. Additionally, the Company shall transfer to Seller or his designee at the Closing, all rights, title and interest to (i) the name &#147;EClips Energy Technologies&#148; and any derivatives of such name; (ii) the Company bank accounts (including all cash and cash equivalents contained therein); and (iii) furniture, fixtures, tools, equipment, supplies, office supplies, office equipment, inventories and leases, in addition to all other personal property and physical assets of the Company (excluding HHTI) (the &#147;Transferred Assets&#148;). &nbsp;The Company and Seller acknowledge that Purchasers has expressed its intent not to utilize any of the Transferred Assets in the business of the Company after the Closing and Company and Seller agree that the Transferred Assets do not presently and will not at the time of Closi
ng or immediately thereafter, constitute all or substantially all of the assets of the Company.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt"><U>6.10</U></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:144px; font-size:12pt"><U>Release from Employment Agreement.</U> &nbsp;</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt" align=justify>a)</P>
<P style="line-height:14pt; margin:0px; text-indent:120px; font-size:12pt" align=justify>At the Closing, the Company shall release Seller from all provisions, obligations, restrictions and prohibitions contained in that certain Employment Agreement, dated January 31, 2006, between Seller and the Company, by way of a Release substantially in the form annexed hereto as <U>Exhibit C</U>. &nbsp;Upon closing of the transactions contemplated by this Agreement, such Employment Agreement shall be null and void and have no further force or effect.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt" align=justify>b)</P>
<P style="line-height:14pt; margin:0px; text-indent:120px; font-size:12pt" align=justify>In consideration for the cancellation of Seller&#146;s employment agreement with the Company, on the Closing Date the Company shall issue the Seller one million one hundred thousand (1,100,000) shares of the Company&#146;s Common Stock (the &#147;Seller&#146;s Common Shares&#148;). &nbsp;The Seller&#146;s Common Shares shall be &#147;restricted&#148; securities and shall be subject to the restrictions set forth in Section 6.1 hereto.</P>
<P style="margin:0px"><BR></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt" align=justify>c)</P>
<P style="line-height:14pt; margin:0px; text-indent:120px; font-size:12pt" align=justify>Seller has agreed that in connection with the issuance of the Seller&#146;s Common Shares as set forth in this Section 6.10, Seller shall enter into a Lock-Up Agreement with the Company substantially in the form annexed hereto as <U>Exhibit B</U>.</P>
<P style="margin:0px"><BR></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt" align=justify>d)</P>
<P style="line-height:14pt; margin:0px; text-indent:120px; font-size:12pt" align=justify>In connection with the issuance of the Seller&#146;s Common Shares, Seller represents and warrants:</P>
<P style="margin:0px"><BR></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:144px; font-size:12pt"><U>(i)</U></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:192px; font-size:12pt"><U>Own Account</U>. &nbsp;Seller understands that the Seller&#146;s Common Shares are &#147;restricted securities&#148; and have not been registered under the Securities Act or any applicable state securities law and is acquiring the Seller&#146;s Common Shares as principal for its own account and not with a view to or for distributing or reselling such Seller&#146;s Common Shares or any part thereof in violation of the Securities Act or any applicable state securities law, has no present intention of distributing any of such Securities in violation of the Securities Act or any applicable state securities law and has no direct or indirect arrangement or understandings with any other persons to distribute or regarding the distribution of such Securities (this representation and warranty not limiting such Seller&#146;s right to sell the Seller&#146;s Common Shares in compliance with applicable federal and state s
ecurities laws) in violation of the Securities Act or any applicable state securities law. &nbsp;</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:144px; font-size:12pt"><U>(ii)</U></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:192px; font-size:12pt"><U>Accredited Investor Status</U>. &nbsp;As of the date hereof, Seller is an &#147;accredited investor&#148; as defined in Rule 501(a) under the Securities Act.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:144px; font-size:12pt"><U>(iii)</U></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:192px; font-size:12pt"><U>Experience of Seller</U>. &nbsp;Such Seller, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Seller&#146;s Common Shares, and has so evaluated the merits and risks of such investment. &nbsp;Such Seller is able to bear the economic risk of an investment in the Seller&#146;s Common Shares and, at the present time, is able to afford a complete loss of such investment.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:144px; font-size:12pt"><U>(iv)</U></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:192px; font-size:12pt"><U>General Solicitation</U>. &nbsp;Such Seller is not receiving the Seller&#146;s Common Shares as a result of any advertisement, article, notice or other communication regarding the Seller&#146;s Common Shares published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or any other general solicitation or general advertisement.</P>
<A NAME="_Toc444572467"></A><P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:70.8px; text-indent:19.2px; font-size:12pt">ARTICLE VII<BR>
<A NAME="_Toc444572470"></A>CONDITIONS TO CLOSING</P>
<A NAME="_Toc444572471"></A><P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt"><U>7.1</U></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:144px; font-size:12pt"><U>Conditions Precedent to Obligations of Purchasers</U>. &nbsp;</P>
<A NAME="_Toc444572472"></A><P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:96px; font-size:12pt">The obligation of the Purchasers to consummate the transactions contemplated by this Agreement is subject to the fulfillment, on or prior to the Closing Date, of each of the following conditions (any or all of which may be waived by the Purchasers in whole or in part to the extent permitted by applicable law):</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt">a)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:120px; font-size:12pt">all representations and warranties of the Seller and the Company contained herein shall be true and correct as of the date hereof;</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt">b)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:120px; font-size:12pt">all representations and warranties of the Seller and the Company contained herein qualified as to materiality shall be true and correct, and the representations and warranties of the Seller and the Company contained herein not qualified as to materiality shall be true and correct in all material respects, at and as of the Closing Date with the same effect as though those representations and warranties had been made again at and as of that time;</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt">c)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:120px; font-size:12pt">the Seller and the Company shall have performed and complied in all material respects with all obligations and covenants required by this Agreement to be performed or complied with by &nbsp;them on or prior to the Closing Date;</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt">d)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:120px; font-size:12pt">the Purchasers shall have been furnished with certificates (dated the Closing Date and in form and substance reasonably satisfactory to the Purchasers) executed by the Seller certifying as to the fulfillment of the conditions specified in Sections 7.1(a), 7.1(b) and 7.1(c) hereof;</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt">e)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:120px; font-size:12pt">Certificates representing 100% of the Shares shall have been, or shall at the Closing be, validly delivered and transferred to the Purchasers, free and clear of any and all Liens;</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt">f)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:120px; font-size:12pt">there shall not have been or occurred any Material Adverse Change;</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt">g)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:120px; font-size:12pt">the Seller and the Company shall have obtained all consents and waivers referred to in Section 4.7 hereof, in a form reasonably satisfactory to the Purchasers, with respect to the transactions contemplated by this Agreement and the Transaction Documents;</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt">h)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:120px; font-size:12pt">no legal proceedings shall have been instituted or threatened or claim or demand made against the Seller and the Company, or the Purchasers seeking to restrain or prohibit or to obtain substantial damages with respect to the consummation of the transactions contemplated hereby, and there shall not be in effect any order by a governmental body of competent jurisdiction restraining, enjoining or otherwise prohibiting the consummation of the transactions contemplated hereby;</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt">i)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:120px; font-size:12pt">the Purchasers shall have received the written resignations of each director and officer of the Company;</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt">j)</P>
<P style="line-height:14pt; margin:0px; text-indent:120px; font-size:12pt">the Schedule 14f-1 shall have been filed with the Commission and mailed to the shareholders of the Company.</P>
<P style="margin:0px"><BR></P>
<A NAME="_Toc444572473"></A><P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt"><U>7.2</U></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:144px; font-size:12pt"><U>Conditions Precedent to Obligations of the Seller and the Company.</U> &nbsp;</P>
<A NAME="_Toc444572474"></A><P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:96px; font-size:12pt">The obligations of the Seller and the Company to consummate the transactions contemplated by this Agreement are subject to the fulfillment, prior to or on the Closing Date, of each of the following conditions (any or all of which may be waived by the Seller and the Company in whole or in part to the extent permitted by applicable law):</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt">a)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:120px; font-size:12pt">all representations and warranties of the Purchasers contained herein shall be true and correct as of the date hereof;</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt">b)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:120px; font-size:12pt">all representations and warranties of the Purchasers contained herein qualified as to materiality shall be true and correct, and all representations and warranties of the Purchasers contained herein not qualified as to materiality shall be true and correct in all material respects, at and as of the Closing Date with the same effect as though those representations and warranties had been made again at and as of that date;</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt">c)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:120px; font-size:12pt">the Purchasers shall have performed and complied in all material respects with all obligations and covenants required by this Agreement to be performed or complied with by Purchasers on or prior to the Closing Date;</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt">d)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:120px; font-size:12pt">the Seller shall have been furnished with certificates (dated the Closing Date and in form and substance reasonably satisfactory to the Seller) executed by the Chief Executive Officer of the Purchasers certifying as to the fulfillment of the conditions specified in Sections 7.2(a), 7.2(b) and 7.2(c); and</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt">e)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:120px; font-size:12pt">no legal proceedings shall have been instituted or threatened or claim or demand made against the Seller, the Company, or the Purchasers seeking to restrain or prohibit or to obtain substantial damages with respect to the consummation of the transactions contemplated hereby, and there shall not be in effect any Order by a Governmental Body of competent jurisdiction restraining, enjoining or otherwise prohibiting the consummation of the transactions contemplated hereby. </P>
<P style="line-height:14pt; margin:0px; font-size:12pt" align=justify>&nbsp;</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:70.8px; text-indent:19.2px; font-size:12pt">ARTICLE VIII<BR>
<A NAME="_Toc444572475"></A>DOCUMENTS TO BE DELIVERED</P>
<A NAME="_Toc444572476"></A><P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt"><U>8.1</U></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:144px; font-size:12pt"><U>Documents to be Delivered by the Seller.</U> &nbsp;</P>
<A NAME="_Toc444572477"></A><P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:96px; font-size:12pt">At the Closing, the Seller shall deliver, or cause to be delivered, to the Purchasers the following:</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt">a)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:120px; font-size:12pt">stock certificates representing the Shares, duly endorsed in blank or accompanied by stock transfer powers and with all requisite stock transfer tax stamps attached; </P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt">b)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:120px; font-size:12pt">copies of all consents and waivers referred to in Section 7.1(g) hereof;</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt">c)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:120px; font-size:12pt">evidence of approval of the Board of Directors of the Company of the &nbsp;transactions contemplated hereby;</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt">d)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:120px; font-size:12pt">written resignations of each of the officers and directors of the Company;</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt">e)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:120px; font-size:12pt">certificate of good standing with respect to the Company issued by the Secretary of State of the State of incorporation, and for each state in which the Company is qualified to do business as a foreign corporation;</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt">f)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:120px; font-size:12pt">resolutions of the board of directors of the Company appointing Greg Cohen as the President, Chairman and CEO</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt">g)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:120px; font-size:12pt">this Agreement duly executed by the Seller and the Company;</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt">h)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:120px; font-size:12pt">the Escrow Agreement duly executed by the Seller and the Company; </P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt">i)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:120px; font-size:12pt">the Option Agreement duly executed by the Seller and the Company;</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt">j)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:120px; font-size:12pt">&nbsp;and the Lock-Up Agreement duly executed by the Seller</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt">k)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:120px; font-size:12pt">such other documents as the Purchasers shall reasonably request.</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<A NAME="_Toc444572478"></A><P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt"><U>8.2</U></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:144px; font-size:12pt"><U>Documents to be Delivered by the Purchasers</U>. &nbsp;</P>
<A NAME="_Toc444572479"></A><P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:96px; font-size:12pt">At the Closing, the Purchasers shall deliver to the Seller the following:</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt">a)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:120px; font-size:12pt">the Purchase Price;</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:96px; font-size:12pt">b) &nbsp;the certificates referred to in Section 7.2(d) hereof; </P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:96px; font-size:12pt">c) &nbsp;this Agreement duly executed by the Purchasers;</P>
<P style="line-height:14pt; margin:0px; text-indent:96px; font-size:12pt">d) the Escrow Agreement duly executed by the Purchasers; </P>
<P style="margin:0px"><BR></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:96px; font-size:12pt">e); and</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:96px; font-size:12pt">f) such other documents as the Seller shall reasonably request.</P>
<P style="margin:0px"><BR></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:70.8px; text-indent:19.2px; font-size:12pt">ARTICLE IX<BR>
<A NAME="_Toc444572480"></A>INDEMNIFICATION</P>
<A NAME="_Toc444572481"></A><P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt"><U>9.1</U></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:144px; font-size:12pt"><U>Indemnification</U>.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt">a)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:120px; font-size:12pt">Seller hereby agrees to indemnify and hold the Purchasers, the Company, and their respective directors, officers, employees, Affiliates, agents, successors and assigns (collectively, the &quot;Purchasers Indemnified Parties&quot;) harmless from and against:</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:144px; font-size:12pt">(i)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:192px; font-size:12pt">any an all liabilities of the Company of every kind, nature, and description, absolute or contingent, existing as against the Company prior to and including the Closing Date or thereafter coming into being or arising by reason of any state of facts existing, or any transaction entered into, on or prior to the Closing Date, except to the extent that the same have been fully provided for in the Financial Statements or disclosed in the notes thereto or the Schedules hereto or were incurred in the ordinary course of business between the December 31, 2009 and the Closing Date; &nbsp;</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:144px; font-size:12pt">(ii)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:192px; font-size:12pt">subject to Section 10.3, any and all losses, liabilities, obligations, damages, costs and expenses based upon, attributable to or resulting from the failure of any representation or warranty of the Seller set forth in Section 4 hereof, or any representation or warranty contained in any certificate delivered by or on behalf of the Seller pursuant to this Agreement, to be true and correct in all respects as of the date made; </P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:144px; font-size:12pt">(iii)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:192px; font-size:12pt">any and all losses, liabilities, obligations, damages, costs and expenses based upon, attributable to or resulting from the breach of any covenant or other agreement on the part of the Seller under this Agreement; </P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:144px; font-size:12pt">(iv)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:192px; font-size:12pt">any and all notices, actions, suits, proceedings, claims, demands, assessments, judgments, costs, penalties and expenses, including attorneys' and other professionals' fees and disbursements (collectively, &quot;Expenses&quot;) incident to any and all losses, liabilities, obligations, damages, costs and expenses with respect to which indemnification is provided hereunder (collectively, &quot;Losses&quot;).</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt">b)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:120px; font-size:12pt">Purchasers hereby agrees to indemnify and hold the Seller and his Affiliates, agents, successors and assigns (collectively, the &quot;Seller Indemnified Parties&quot;) harmless from and against:</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:144px; font-size:12pt">(i)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:192px; font-size:12pt">any and all Losses based upon, attributable to or resulting from the failure of any representation or warranty of the Purchasers set forth in Section 5 hereof, or any representation or warranty contained in any certificate delivered by or on behalf of the Purchasers pursuant to this Agreement, to be true and correct as of the date made;</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:144px; font-size:12pt">(ii)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:192px; font-size:12pt">any and all Losses based upon, attributable to or resulting from the breach of any covenant or other agreement on the part of the Purchasers under this Agreement or arising from the ownership or operation of the Company from and after the Closing Date; and</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:144px; font-size:12pt">(iii)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:192px; font-size:12pt">any and all Expenses incident to the foregoing.</P>
<P style="margin:0px" align=justify><BR></P>
<A NAME="_Toc444572483"></A><P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt"><U>9.2</U></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:144px; font-size:12pt"><U>Indemnification Procedures</U>.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt">a)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:120px; font-size:12pt">In the event that any Legal Proceedings shall be instituted or that any claim or demand (&quot;Claim&quot;) shall be asserted by any Person in respect of which payment may be sought under Section 9.1 hereof, the indemnified Party shall reasonably and promptly cause written notice of the assertion of any Claim of which it has knowledge which is covered by this indemnity to be forwarded to the indemnifying Party. &nbsp;The indemnifying Party shall have the right, at its sole option and expense, to be represented by counsel of its choice, which must be reasonably satisfactory to the indemnified Party, and to defend against, negotiate, settle or otherwise deal with any Claim which relates to any Losses indemnified against hereunder. &nbsp;If the indemnifying party elects to defend against, negotiate, settle or otherwise deal with any Claim which relates to any losses indemnified against hereunder, it shall within f
ive (5) days (or sooner, if the nature of the Claim so requires) notify the indemnified Party of its intent to do so. &nbsp;If the indemnifying Party elects not to defend against, negotiate, settle or otherwise deal with any Claim which relates to any losses indemnified against hereunder, fails to notify the indemnified Party of its election as herein provided or contests its obligation to indemnify the indemnified Party for such losses under this Agreement, the indemnified Party may defend against, negotiate, settle or otherwise deal with such Claim. &nbsp;If the indemnified Party defends any Claim, then the indemnifying Party shall reimburse the indemnified Party for the Expenses of defending such Claim upon submission of periodic bills. &nbsp;If the indemnifying Party shall assume the defense of any Claim, the indemnified Party may participate, at his or its own expense, in the defense of such Claim; provided, however, that such indemnified Party shall be entitled to participate in any such defense with s
eparate counsel at the expense of the indemnifying Party if (i) so requested by the indemnifying Party to participate or (ii) in the reasonable opinion of counsel to the indemnified Party, a conflict or potential conflict exists between the indemnified Party and the indemnifying Party that would make such separate representation advisable; and provided, further, that the indemnifying Party shall not be required to pay for more than one such counsel for all indemnified Parties in connection with any Claim. &nbsp;The Parties hereto agree to cooperate fully with each other in connection with the defense, negotiation or settlement of any such Claim.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt">b)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:120px; font-size:12pt">After any final judgment or award shall have been rendered by a court, arbitration board or administrative agency of competent jurisdiction and the expiration of the time in which to appeal therefrom, or a settlement shall have been consummated, or the indemnified Party and the indemnifying Party shall have arrived at a mutually binding agreement with respect to a Claim hereunder, the indemnified Party shall forward to the indemnifying Party notice of any sums due and owing by the indemnifying Party pursuant to this Agreement with respect to such matter and the indemnifying Party shall be required to pay all of the sums so due and owing to the indemnified Party by wire transfer of immediately available funds within 10 business days after the date of such notice.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt">c)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:120px; font-size:12pt">The failure of the indemnified Party to give reasonably prompt notice of any Claim shall not release, waive or otherwise affect the indemnifying Party's obligations with respect thereto except to the extent that the indemnifying Party can demonstrate actual loss and prejudice as a result of such failure.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:70.8px; text-indent:19.2px; font-size:12pt">ARTICLE X<BR>
<A NAME="_Toc444572489"></A>MISCELLANEOUS</P>
<A NAME="_Toc444572491"></A><P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt"><U>10.1</U></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:144px; font-size:12pt"><U>Payment of Sales, Use or Similar Taxes</U>. &nbsp;<A NAME="_Toc444572492"></A>All sales, use, transfer, intangible, recordation, documentary stamp or similar Taxes or charges, of any nature whatsoever, applicable to, or resulting from, the transactions contemplated by this Agreement shall be borne by the Seller.</P>
<A NAME="_Toc444572493"></A><P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt"><U>10.2</U></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:144px; font-size:12pt"><U>Survival of Representations and Warranties</U>. &nbsp;<A NAME="_Toc444572494"></A><A NAME="_Toc444572495"></A>&nbsp;The Parties hereto hereby agree that the representations and warranties contained in this Agreement or in any certificate, document or instrument delivered in connection herewith, shall survive the execution and delivery of this Agreement, and the Closing hereunder, regardless of any investigation made by the parties hereto; provided, however, that any claims or actions with respect thereto shall terminate unless within thirty-six (36) months after the Closing Date written notice of such claims is given to the Seller or such actions are commenced.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt"><U>10.3</U></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:144px; font-size:12pt"><U>Expenses</U>. &nbsp;<A NAME="_Toc444572496"></A>Except as otherwise provided in this Agreement, the Seller and the Purchasers shall each bear its own expenses incurred in connection with the negotiation and execution of this Agreement and each other agreement, document and instrument contemplated by this Agreement and the consummation of the transactions contemplated hereby and thereby. </P>
<A NAME="_Toc444572497"></A><P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt"><U>10.4</U></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:144px; font-size:12pt"><U>Specific Performance</U>. &nbsp;<A NAME="_Toc444572498"></A>The Seller and the Company acknowledge and agree that the breach of this Agreement would cause irreparable damage to the Purchasers and that the Purchasers will not have an adequate remedy at law. &nbsp;Therefore, the obligations of the Seller and the Company under this Agreement, including, without limitation, the Seller&#146;s obligation to sell the Shares to the Purchasers, shall be enforceable by a decree of specific performance issued by any court of competent jurisdiction, and appropriate injunctive relief may be applied for and granted in connection therewith. &nbsp;Such remedies shall, however, be cumulative and not exclusive and shall be in addition to any other remedies which any Party may have under this Agreement or otherwise.</P>
<A NAME="_Toc444572499"></A><P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt"><U>10.5</U></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:144px; font-size:12pt"><U>Further Assurances</U>. &nbsp;<A NAME="_Toc444572500"></A>The Seller and the Purchasers each agrees to execute and deliver such other documents or agreements and to take such other action as may be reasonably necessary or desirable for the implementation of this Agreement and the consummation of the transactions contemplated hereby.</P>
<A NAME="_Toc444572501"></A><P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt"><U>10.6</U></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:144px; font-size:12pt"><U>Submission to Jurisdiction; Consent to Service of Process</U>. &nbsp;The parties hereto hereby irrevocably submit to the non-exclusive jurisdiction of any federal or state court located within Pinellas and Hillsborough Counties, Florida over any dispute arising out of or relating to this Agreement or any of the transactions contemplated hereby and each party hereby irrevocably agrees that all claims in respect of such dispute or any suit, action proceeding related thereto may be heard and determined in such courts. &nbsp;The Parties hereby irrevocably waive, to the fullest extent permitted by applicable law, any objection which they may now or hereafter have to the laying of venue of any such dispute brought in such court or any defense of inconvenient forum for the maintenance of such dispute. &nbsp;Each of the Parties hereto agrees that a judgment in any such dispute may be enforced in other jurisdictions 
by suit on the judgment or in any other manner provided by law. &nbsp;Each of the Parties hereto hereby consents to process being served by any party to this Agreement in any suit, action or proceeding by the mailing of a copy thereof in accordance with the provisions of Section 10.10.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt"><U>10.7</U></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:144px; font-size:12pt"><U>Entire Agreement; Amendments and Waivers</U>. &nbsp;This Agreement (including the schedules and exhibits hereto) represents the entire understanding and agreement between the Parties hereto with respect to the subject matter hereof and can be amended, supplemented or changed, and any provision hereof can be waived, only by written instrument making specific reference to this Agreement signed by the Party against whom enforcement of any such amendment, supplement, modification or waiver is sought. &nbsp;No action taken pursuant to this Agreement, including without limitation, any investigation by or on behalf of any Party, shall be deemed to constitute a waiver by the Party taking such action of compliance with any representation, warranty, covenant or agreement contained herein. &nbsp;The waiver by any Party hereto of a breach of any provision of this Agreement shall not operate or be construed as a further 
or continuing waiver of such breach or as a waiver of any other or subsequent breach. &nbsp;No failure on the part of any Party to exercise, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of such right, power or remedy by such Party preclude any other or further exercise thereof or the exercise of any other right, power or remedy. &nbsp;All remedies hereunder are cumulative and are not exclusive of any other remedies provided by law.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt"><U>10.8</U></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:144px; font-size:12pt"><U>Governing Law</U>. &nbsp;This Agreement shall be governed by and construed in accordance with the laws of the state of Florida.</P>
<A NAME="_Toc444572502"></A><P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt"><U>10.9</U></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:144px; font-size:12pt"><U>Table of Contents and Headings</U>. &nbsp;<A NAME="_Toc444572503"></A>The table of contents and section headings of this Agreement are for reference purposes only and are to be given no effect in the construction or interpretation of this Agreement.</P>
<A NAME="_Toc444572504"></A><P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt"><U>10.10</U></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:144px; font-size:12pt"><U>Notices</U>. &nbsp;<A NAME="_Toc444572505"></A>All notices and other communications under this Agreement shall be in writing and shall be deemed given when delivered personally or mailed by certified mail, return receipt requested, to the Parties (and shall also be transmitted by facsimile to the Persons receiving <A NAME="_Toc444572506"></A>copies thereof) at the following addresses (or to such other address as a party may have specified by notice given to the other party pursuant to this provision):</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:96px; text-indent:-48px; font-size:12pt" align=justify>(a)</P>
<P style="margin:0px; padding-left:96px; font-size:12pt" align=justify>Purchasers:</P>
<P style="margin:0px; padding-left:108px; font-size:12pt" align=justify>_________</P>
<P style="line-height:14pt; margin:0px; text-indent:96px; font-size:12pt">&nbsp;&nbsp;&nbsp;As set forth in Schedule 1</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; padding-left:108px; font-size:12pt" align=justify>Copy to:</P>
<P style="margin:0px; padding-left:108px; font-size:12pt" align=justify>Harvey Kesner, Esq.</P>
<P style="margin:0px; padding-left:108px; font-size:12pt" align=justify>Sichenzia Ross Friedman Ference LLP</P>
<P style="margin:0px; padding-left:108px; font-size:12pt" align=justify>61 Broadway</P>
<P style="margin:0px; padding-left:108px; font-size:12pt" align=justify>New York, New York 10006</P>
<P style="margin:0px; padding-left:108px; font-size:12pt" align=justify>Phone: &nbsp;(212) 930-9700</P>
<P style="margin:0px; padding-left:108px; font-size:12pt" align=justify>Facsimile: (212) 930-9725</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px"><BR></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:96px; text-indent:-48px; font-size:12pt">(b)</P>
<P style="line-height:14pt; margin:0px; padding-left:96px; font-size:12pt">Seller:</P>
<P style="line-height:14pt; margin:0px; padding-left:96px; font-size:12pt">Benjamin C. Croxton</P>
<P style="line-height:14pt; margin:0px; padding-left:96px; font-size:12pt">920 16th Ave., North,</P>
<P style="line-height:14pt; margin:0px; padding-left:96px; font-size:12pt">St. Petersburg, Florida 704</P>
<P style="line-height:14pt; margin:0px; padding-left:96px; font-size:12pt">Tel: (727) 642-5339</P>
<P style="line-height:14pt; margin:0px; padding-left:96px; font-size:12pt">Fax: (727) 419-7413</P>
<P style="margin:0px"><BR></P>
<P style="line-height:14pt; margin:0px; padding-left:96px; font-size:12pt">Copy to:</P>
<P style="line-height:14pt; margin:0px; padding-left:96px; font-size:12pt">Clifford J. Hunt, Esquire</P>
<P style="line-height:14pt; margin:0px; padding-left:96px; font-size:12pt">8200 Seminole Boulevard</P>
<P style="line-height:14pt; margin:0px; padding-left:96px; font-size:12pt">Seminole, FL 33772</P>
<P style="line-height:14pt; margin:0px; padding-left:96px; font-size:12pt">Tel: (727) 471-0444</P>
<P style="line-height:14pt; margin:0px; padding-left:96px; font-size:12pt">Fax: (727) 471-0447</P>
<P style="margin:0px"><BR></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:96px; text-indent:-48px; font-size:12pt">(c)</P>
<P style="line-height:14pt; margin:0px; padding-left:96px; font-size:12pt">Company:</P>
<P style="margin:0px"><BR></P>
<P style="line-height:14pt; margin:0px; padding-left:96px; font-size:12pt">EClips Energy Technologies, Inc. </P>
<P style="line-height:14pt; margin:0px; padding-left:96px; font-size:12pt">3900A 30 1st St. N.</P>
<P style="line-height:14pt; margin:0px; padding-left:96px; font-size:12pt">St. Petersburg, FL 33714</P>
<P style="line-height:14pt; margin:0px; padding-left:96px; font-size:12pt">Tel: (727) 525-5552</P>
<P style="line-height:14pt; margin:0px; padding-left:96px; font-size:12pt">Fax: (727) 526-2990</P>
<P style="margin:0px"><BR></P>
<P style="line-height:14pt; margin:0px; padding-left:96px; font-size:12pt">Copy to:</P>
<P style="line-height:14pt; margin:0px; padding-left:96px; font-size:12pt">Clifford J. Hunt, Esquire</P>
<P style="line-height:14pt; margin:0px; padding-left:96px; font-size:12pt">8200 Seminole Boulevard</P>
<P style="line-height:14pt; margin:0px; padding-left:96px; font-size:12pt">Seminole, FL 33772</P>
<P style="line-height:14pt; margin:0px; padding-left:96px; font-size:12pt">Tel: (727) 471-0444</P>
<P style="line-height:14pt; margin:0px; padding-left:96px; font-size:12pt">Fax: (727) 471-0447</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; padding-left:108px; font-size:12pt" align=justify>Copy to:</P>
<P style="margin:0px; padding-left:108px; font-size:12pt" align=justify>Harvey Kesner, Esq.</P>
<P style="margin:0px; padding-left:108px; font-size:12pt" align=justify>Sichenzia Ross Friedman Ference LLP</P>
<P style="margin:0px; padding-left:108px; font-size:12pt" align=justify>61 Broadway</P>
<P style="margin:0px; padding-left:108px; font-size:12pt" align=justify>New York, New York 10006</P>
<P style="margin:0px; padding-left:108px; font-size:12pt" align=justify>Phone: &nbsp;(212) 930-9700</P>
<P style="margin:0px; padding-left:108px; font-size:12pt" align=justify>Facsimile: (212) 930-9725</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<A NAME="_Toc444572507"></A><P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:-6px; text-indent:102px; font-size:12pt">10.11 &nbsp;<U>Severability</U>. &nbsp;<A NAME="_Toc444572508"></A>If any provision of this Agreement is invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Agreement shall not in any way be affected or impaired thereby and the parties will attempt to agree upon a valid and enforceable provision that is a reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Agreement.<A NAME="_Toc444572509"></A></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:-6px; text-indent:102px; font-size:12pt">10.12 &nbsp;&nbsp;&nbsp;&nbsp;<U>Binding Effect; Assignment</U>.<A NAME="_Toc444572510"></A> &nbsp;This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and permitted assigns. &nbsp;Nothing in this Agreement shall create or be deemed to create any third party beneficiary rights in any person or entity not a party to this Agreement except as provided below. &nbsp;No assignment of this Agreement or of any rights or obligations hereunder may be made by either the Seller or the Purchasers (by operation of law or otherwise) without the prior written consent of the other parties hereto and any attempted <A NAME="_Toc444572511"></A>assignment without the required consents shall be void; provided, however, that the Purchasers may assign this Agreement and any or all rights or obligations hereunder (including, without limitation, the Purchaser's r
ights to purchase the Shares and the Purchaser's rights to seek indemnification hereunder) to any Affiliate of the Purchasers; provided, further, that notwithstanding any such assignment or delegation, the Purchasers shall continue to be bound by all the terms of this Agreement. &nbsp;Upon any such permitted assignment, the references in this Agreement to the Purchasers shall also apply to any such assignee unless the context otherwise requires.<U> </U></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:-6px; text-indent:102px; font-size:12pt">10.13 &nbsp;&nbsp;<U>Execution</U>. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a &#147;.pdf&#148; format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or &#147;.pdf&#148; signature page were an original thereof.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:-6px; text-indent:102px; font-size:12pt">10.14 &nbsp;<U>Independent Nature of Purchasers&#146; Obligations and Rights</U>. &nbsp;The obligations of each Purchasers under any Transaction Documents are several and not joint with the obligations of any other Purchasers, and no Purchasers shall be responsible in any way for the performance of the obligations of any other Purchasers under any Transaction Documents. &nbsp;Nothing contained herein or in any Transaction Documents, and no action taken by any Purchasers pursuant thereto, shall be deemed to constitute the Purchasers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Purchasers are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Documents. &nbsp;Each Purchaser shall be entitled to independently protect and enforce its rights, including wit
hout limitation, the rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other Purchasers to be joined as an additional party in any proceeding for such purpose. &nbsp;Each Purchaser has been represented by its own separate legal counsel in their review and negotiation of the Transaction Documents.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:-6px; text-indent:102px; font-size:12pt">10.15 &nbsp;<U>Construction</U>. The parties agree that each of them and/or their respective counsel has reviewed and had an opportunity to revise the Transaction Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of the Transaction Documents or any amendments hereto</P>
<P style="margin:0px"><BR></P>
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<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:96px; font-size:12pt">IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date first above written.</P>
<P style="margin:0px"><BR></P>
<P style="line-height:14pt; margin:0px; text-indent:48px; font-size:12pt"><B>[PURCHASERS]</B></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="line-height:14pt; margin:0px; font-size:12pt">By:<U>/s/ Greg Cohen</U></P>
<P style="line-height:14pt; margin:0px; font-size:12pt">Name: Greg Cohen</P>
<P style="line-height:14pt; margin:0px; font-size:12pt">Title: Authorized Signatory</P>
<P style="margin:0px"><BR></P>
<P style="line-height:14pt; margin:0px; font-size:12pt"><B>ECLIPS ENERGY TECHNOLOGIES, INC.</B></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="line-height:14pt; margin:0px; font-size:12pt">By<U>:_/s/ Peter W. James</U></P>
<P style="line-height:14pt; margin:0px; font-size:12pt">Name: Peter W. James</P>
<P style="line-height:14pt; margin:0px; font-size:12pt">Title: Chief Operating Officer</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="line-height:14pt; margin:0px; font-size:12pt"><U>/s/ Benjamin C. Croxton</U></P>
<P style="line-height:14pt; margin:0px; font-size:12pt">Benjamin C. Croxton, Individually</P>
<P style="margin:0px" align=center><BR></P>
<P style="margin:0px" align=center><BR></P>
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<BR></P>
</DIV></BODY>
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</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2
<SEQUENCE>4
<FILENAME>eegt_optionagreement.htm
<DESCRIPTION>OPTION AGREEMENT DATED 12-22-2009
<TEXT>
<!doctype html public "-//IETF//DTD HTML//EN">
<HTML>
<HEAD>
<TITLE>SETTLEMENT AND RELEASE AGREEMENT</TITLE>
<META NAME="author" CONTENT="Cliff Hunt">
<META NAME="date" CONTENT="02/02/2010">
</HEAD>
<BODY style="line-height:12pt; font-family:Times New Roman; font-size:10pt; color:#000000">
<DIV style="width:624px"><P style="margin:0px; text-indent:48px" align=center><B>OPTION AGREEMENT</B></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; text-indent:48px" align=justify>This Option Agreement (&#147;Agreement&#148;) is entered into by and between EClips Energy Technologies, Inc. (the &#147;Company&#148;) and Benjamin C. Croxton (&#147;Croxton&#148;), and is effective as of the last date of execution set forth below. &nbsp;The aforementioned individual and entity may be referred to collectively herein as the &#147;Parties&#148;.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; text-indent:48px" align=justify>WHEREAS, Croxton is employed by the Company as Chief Executive Officer and Chief Financial Officer and also served as a director on the Company Board of Directors;</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; text-indent:48px" align=justify>WHEREAS, the Company and Croxton previously entered into an Employment Agreement dated January 31, 2006 (the &#147;Employment Agreement&#148;) which Employment Agreement contained, among other things, a restrictive covenant not to compete upon termination of the Employment Agreement and the requirement that the Company pay severance to Croxton equal to one year's salary; and</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; text-indent:48px" align=justify>WHEREAS, Croxton has advised the Company that he intends to resign from the Company regarding all corporate capacities held by him and that he desires to acquire an option to purchase certain assets of the Company in exchange for waiver of all severance pay due and owing to him upon termination of employment; and</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; text-indent:48px" align=justify>WHEREAS, the Company does not possess sufficient cash resources to tender the severence pay that would be due and owing to Croxton upon termination of his employment and desires to resolve all issues surrounding the Employment Agreement as requested by Croxton; and</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; text-indent:48px" align=justify>WHEREAS, the Parties desire to enter into an agreement to memorialize the terms upon which they have agreed.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; text-indent:48px" align=justify>NOW THEREFORE, the Parties hereto warrant, covenant and agree as follows, based upon good and valuable consideration, the sufficiency of which is hereby acknowledged.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-16px; text-indent:48px" align=justify><B>1.</B></P>
<P style="margin:0px; text-indent:96px" align=justify><B><U>Option to Purchase Assets</U></B></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; text-indent:48px" align=justify>The Company, for and in consideration of the promises and conditions contained herein, hereby agrees to grant to Croxton an option to purchase all issued and outstanding shares of common stock of H-Hybrid Technologies, Inc., a wholly-owned subsidiary of Company. &nbsp;The option to purchase shall be for a period of five years from the date of this Agreement. &nbsp;Croxton may exercise the option and purchase all issued and outstanding shares of common stock of H-Hybrid Technologies, Inc. for the total sum of $10 and other good and valuable consideration by providing written notice to the Company of his intention to exercise the option and by tendering the agreed-upon consideration to the Company.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-16px; text-indent:48px" align=justify><B>2.</B></P>
<P style="margin:0px; text-indent:96px" align=justify><B><U>Waiver of Severence Pay</U></B></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; text-indent:48px" align=justify>Upon execution of this Agreement and performance of all acts by the Company as required in all ancillary documents executed concurrently herewith, Croxton agrees to waive all severance pay required to be paid under the Employment Agreement upon termination of his employment with the Company.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-16px; text-indent:48px" align=justify><B>3.</B></P>
<P style="margin:0px; text-indent:96px" align=justify><B>Governing Law and Venue</B></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; text-indent:48px" align=justify>This Agreement shall be governed by the laws of the State of Florida. &nbsp;Venue for any dispute arising from this Agreement that results in a civil action shall be exclusively in any court of competent jurisdiction in Pinellas County, Florida. </P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-16px; text-indent:48px" align=justify><B>4.</B></P>
<P style="margin:0px; text-indent:96px" align=justify><B><U>Entire Agreement</U></B></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; text-indent:48px" align=justify>This Agreement contains the entire agreement of the Parties regarding the subject matter described herein. &nbsp;It may be changed only by an agreement in writing signed by both Parties.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR>
<BR></P>
<P style="margin-top:0px; margin-bottom:-16px; padding-left:48px; page-break-before:always" align=justify><B>5.</B></P>
<P style="margin:0px; padding-left:48px; text-indent:48px" align=justify><B><U>Severability</U></B></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; text-indent:48px" align=justify>If any provision of this Agreement shall be deemed invalid, illegal, or unenforceable, the balance of this Agreement shall remain in effect, and if any provision is inapplicable to any person or circumstance, it shall nevertheless remain applicable to all other persons or circumstances.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-16px; padding-left:48px" align=justify><B>6.</B></P>
<P style="margin:0px; padding-left:48px; text-indent:48px" align=justify><B><U>Headings</U></B></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; text-indent:48px" align=justify>The headings in this Agreement are solely for convenience of reference and shall be given no effect in the construction or interpretation of this Agreement.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-16px; text-indent:48px" align=justify><B>7.</B></P>
<P style="line-height:22pt; margin:0px; text-indent:96px" align=justify><B><U>Miscellaneous terms</U></B> &nbsp;</P>
<P style="margin:0px; text-indent:48px">The Parties to this Agreement declare and represent that:</P>
<P style="margin-top:0px; margin-bottom:-16px; text-indent:48px">a.</P>
<P style="margin:0px; text-indent:96px">They have read and understand this Agreement;</P>
<P style="margin-top:0px; margin-bottom:-16px; padding-left:96px; text-indent:-48px">b.</P>
<P style="margin:0px; padding-left:96px">They have been given the opportunity to consult with an attorney if they so desire; &nbsp;</P>
<P style="margin-top:0px; margin-bottom:-16px; padding-left:96px; text-indent:-48px">c.</P>
<P style="margin:0px; padding-left:96px">They intend to be legally bound by the promises set forth in this Agreement and enter into it freely, without duress or coercion;</P>
<P style="margin-top:0px; margin-bottom:-16px; text-indent:48px">d.</P>
<P style="margin:0px; text-indent:96px">They have retained signed copies of this Agreement for their records; and</P>
<P style="margin-top:0px; margin-bottom:-16px; padding-left:96px; text-indent:-48px">e.</P>
<P style="margin:0px; padding-left:96px">The rights, responsibilities and duties of the Parties hereto, and the covenants and agreements contained herein, shall continue to bind the Parties and shall continue in full force and effect until each and every obligation of the Parties under this Agreement has been performed.</P>
<P style="margin:0px"><BR></P>
<P style="margin-top:0px; margin-bottom:-16px; text-indent:48px" align=justify><B>8.</B></P>
<P style="line-height:22pt; margin:0px; text-indent:96px" align=justify><B><U>Counterparts</U></B> &nbsp;</P>
<P style="margin:0px; text-indent:48px" align=justify>This Agreement may be executed in multiple counterparts, each of which shall be deemed to be an original for all purposes.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; text-indent:48px" align=justify>IN WITNESS WHEREOF, the Parties have executed this Agreement the day and year set forth below.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-16px" align=justify>Date:</P>
<P style="margin-top:0px; margin-bottom:-16px; text-indent:48px" align=justify><U>12-18-2009</U></P>
<P style="margin:0px; text-indent:240px" align=justify>ECLIPS ENERGY TECHNOLOGIES, INC. </P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; padding-left:48px; text-indent:192px" align=justify><U>/s/: &nbsp;Peter W. James</U></P>
<P style="margin:0px; text-indent:240px" align=justify>Peter W. James, President, Chief Operating Officer</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-16px" align=justify>Date: </P>
<P style="margin-top:0px; margin-bottom:-16px; text-indent:48px" align=justify><U>12-18-2009</U></P>
<P style="margin:0px; text-indent:240px" align=justify><U>/s/: &nbsp;Benjamin C. Croxton</U></P>
<P style="margin:0px; text-indent:240px" align=justify>Benjamin C. Croxton, Individually</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR>
<BR></P>
<P style="margin:0px">2</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
</DIV></BODY>
<!-- EDGAR Validation Code: 9B853B35 -->
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.3
<SEQUENCE>5
<FILENAME>agreement_release.htm
<DESCRIPTION>RELEASE DATED 12-22-2009
<TEXT>
<!doctype html public "-//IETF//DTD HTML//EN">
<HTML>
<HEAD>
<TITLE>SETTLEMENT AND RELEASE AGREEMENT</TITLE>
<META NAME="author" CONTENT="Cliff Hunt">
<META NAME="date" CONTENT="02/02/2010">
</HEAD>
<BODY style="line-height:12pt; font-family:Times New Roman; font-size:10pt; color:#000000">
<DIV style="width:624px"><P style="margin:0px; text-indent:48px" align=center><B>AGREEMENT</B></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; text-indent:48px" align=justify>This Agreement (&#147;Agreement&#148;) is entered into by and between EClips Energy Technologies, Inc. (the &#147;Company&#148;) and Benjamin C. Croxton (&#147;Croxton&#148;), and is effective as of the last date of execution set forth below. &nbsp;The aforementioned individual and entity may be referred to collectively herein as the &#147;Parties&#148;.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; text-indent:48px" align=justify>WHEREAS, Croxton is employed by the Company as Chief Executive Officer and Chief Financial Officer and also served as a director on the Company Board of Directors;</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; text-indent:48px" align=justify>WHEREAS, the Company and Croxton previously entered into an Employment Agreement dated January 31, 2006 (the &#147;Employment Agreement&#148;) which Employment Agreement contained, among other things, a restrictive covenant not to compete upon termination of the Employment Agreement and the requirement that the Company pay severance to Croxton equal to one year's salary; and</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; text-indent:48px" align=justify>WHEREAS, Croxton has advised the Company that he intends to resign from the Company regarding all corporate capacities held by him and that he desires to obtain a release from the restrictive covenant not to compete provisions of the Employment Agreement and, to acquire certain assets of the Company in exchange for waiver of all severance pay due and owing to him upon termination of employment; and</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; text-indent:48px" align=justify>WHEREAS, the Company does not possess sufficient cash resources to tender the severance pay that would be due and owing to Croxton upon termination of his employment and desires to resolve all issues surrounding the Employment Agreement as requested by Croxton; and</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; text-indent:48px" align=justify>WHEREAS, the Parties desire to enter into an agreement to memorialize the terms upon which they have agreed.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; text-indent:48px" align=justify>NOW THEREFORE, the Parties hereto warrant, covenant and agree as follows, based upon good and valuable consideration, the sufficiency of which is hereby acknowledged.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-16px; text-indent:48px" align=justify><B>1.</B></P>
<P style="margin:0px; text-indent:96px" align=justify><B><U>Release and Hold Harmless Agreement</U></B></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; text-indent:48px" align=justify>The Company, for and in consideration of the promises and conditions contained herein, hereby agrees to release, hold harmless, remit, remise and forever discharge Croxton, his heirs and assigns from any and all restrictive covenants in the Employment Agreement , as well as all civil actions, arbitration claims, administrative claims, causes of action, claims at law and choses in equity, known or unknown, directly or indirectly relating to the Employment Agreement and/or Croxton&#146;s employment with the Company, from the date of execution below back to the beginning of time. &nbsp;</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-16px; text-indent:48px" align=justify><B>2.</B></P>
<P style="margin:0px; text-indent:96px" align=justify><B><U>Waiver of Severance Pay</U></B></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify>Upon execution of this Agreement and performance of all acts by the Company as required in all ancillary documents executed concurrently herewith, Croxton agrees to waive all severance pay required to be paid under the Employment Agreement upon termination of his employment with the Company.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-16px; text-indent:48px" align=justify><B>3.</B></P>
<P style="margin:0px; text-indent:96px" align=justify><B>Governing Law and Venue</B></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; text-indent:48px" align=justify>This Agreement shall be governed by the laws of the State of Florida. &nbsp;Venue for any dispute arising from this Agreement that results in a civil action shall be exclusively in any court of competent jurisdiction in Pinellas County, Florida. </P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-16px; text-indent:48px" align=justify><B>4.</B></P>
<P style="margin:0px; text-indent:96px" align=justify><B><U>Entire Agreement</U></B></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; text-indent:48px" align=justify>This Agreement contains the entire agreement of the Parties regarding the subject matter described herein. &nbsp;It may be changed only by an agreement in writing signed by both Parties.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR>
<BR></P>
<P style="margin-top:0px; margin-bottom:-16px; padding-left:48px; page-break-before:always" align=justify><B>5.</B></P>
<P style="margin:0px; padding-left:48px; text-indent:48px" align=justify><B><U>Severability</U></B></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; text-indent:48px" align=justify>If any provision of this Agreement shall be deemed invalid, illegal, or unenforceable, the balance of this Agreement shall remain in effect, and if any provision is inapplicable to any person or circumstance, it shall nevertheless remain applicable to all other persons or circumstances.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-16px; padding-left:48px" align=justify><B>6.</B></P>
<P style="margin:0px; padding-left:48px; text-indent:48px" align=justify><B><U>Headings</U></B></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; text-indent:48px" align=justify>The headings in this Agreement are solely for convenience of reference and shall be given no effect in the construction or interpretation of this Agreement.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-16px; text-indent:48px" align=justify><B>7.</B></P>
<P style="line-height:22pt; margin:0px; text-indent:96px" align=justify><B><U>Miscellaneous terms</U></B> &nbsp;</P>
<P style="margin:0px; text-indent:48px">The Parties to this Agreement declare and represent that:</P>
<P style="margin-top:0px; margin-bottom:-16px; text-indent:48px">a.</P>
<P style="margin:0px; text-indent:96px">They have read and understand this Agreement;</P>
<P style="margin-top:0px; margin-bottom:-16px; padding-left:96px; text-indent:-48px">b.</P>
<P style="margin:0px; padding-left:96px">They have been given the opportunity to consult with an attorney if they so desire; &nbsp;</P>
<P style="margin-top:0px; margin-bottom:-16px; padding-left:96px; text-indent:-48px">c.</P>
<P style="margin:0px; padding-left:96px">They intend to be legally bound by the promises set forth in this Agreement and enter into it freely, without duress or coercion;</P>
<P style="margin-top:0px; margin-bottom:-16px; text-indent:48px">d.</P>
<P style="margin:0px; text-indent:96px">They have retained signed copies of this Agreement for their records; and</P>
<P style="margin-top:0px; margin-bottom:-16px; padding-left:96px; text-indent:-48px">e.</P>
<P style="margin:0px; padding-left:96px">The rights, responsibilities and duties of the Parties hereto, and the covenants and agreements contained herein, shall continue to bind the Parties and shall continue in full force and effect until each and every obligation of the Parties under this Agreement has been performed.</P>
<P style="margin:0px"><BR></P>
<P style="margin-top:0px; margin-bottom:-16px; text-indent:48px" align=justify><B>8.</B></P>
<P style="line-height:22pt; margin:0px; text-indent:96px" align=justify><B><U>Counterparts</U></B> &nbsp;</P>
<P style="margin:0px; text-indent:48px" align=justify>This Agreement may be executed in multiple counterparts, each of which shall be deemed to be an original for all purposes.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; text-indent:48px" align=justify>IN WITNESS WHEREOF, the Parties have executed this Agreement the day and year set forth below.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-16px" align=justify>Date:</P>
<P style="margin-top:0px; margin-bottom:-16px; text-indent:48px" align=justify><U>12-18-2009</U></P>
<P style="margin:0px; text-indent:240px" align=justify>ECLIPS ENERGY TECHNOLOGIES, INC. </P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; padding-left:48px; text-indent:192px" align=justify><U>/s/: &nbsp;Peter W. James</U></P>
<P style="margin:0px; text-indent:240px" align=justify>Peter W. James, President, Chief Operating Officer</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-16px" align=justify>Date: </P>
<P style="margin-top:0px; margin-bottom:-16px; text-indent:48px" align=justify><U>12-18-2009</U></P>
<P style="margin:0px; text-indent:240px" align=justify><U>/s/: &nbsp;Benjamin C. Croxton</U></P>
<P style="margin:0px; text-indent:240px" align=justify>Benjamin C. Croxton, Individually</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR>
<BR></P>
<P style="margin:0px">2</P>
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<TYPE>EX-99.4
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<FILENAME>eegt_debenturespa.htm
<DESCRIPTION>DEBENTURE SECURITIES PURCHASE AGREEMENT 12-17-2009
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<TITLE>Securities Purchase Agreement</TITLE>
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<META NAME="date" CONTENT="02/02/2010">
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<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:171.6px; font-size:12pt" align=justify><B>SECURITIES PURCHASE AGREEMENT</B></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:48px; font-size:12pt" align=justify>This Securities Purchase Agreement (this &#147;<U>Agreement</U>&#148;) is dated as of December 17, 2009 between EClips Energy Technologies, Inc., a Florida corporation (the &#147;<U>Company</U>&#148;), and each purchaser identified on the signature pages hereto (each, including its successors and assigns, a &#147;<U>Purchaser</U>&#148; and collectively, the &#147;<U>Purchasers</U>&#148;).</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:48px; font-size:12pt" align=justify>WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to Section 4(2) of the Securities Act of 1933, as amended (the &#147;<U>Securities Act</U>&#148;), and Rule 506 promulgated thereunder, the Company desires to issue and sell to each Purchaser, and each Purchaser, severally and not jointly, desires to purchase from the Company, securities of the Company as more fully described in this Agreement.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:48px; font-size:12pt" align=justify>NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Company and each Purchaser agree as follows:</P>
<P style="line-height:14pt; margin-top:8px; margin-bottom:0px; font-size:12pt"><B>ARTICLE I.</B></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; font-size:12pt" align=center><B>DEFINITIONS</B></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:48px; font-size:12pt" align=justify>1.1</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:72px; font-size:12pt" align=justify><U>Definitions</U>. &nbsp;In addition to the terms defined elsewhere in this Agreement: (a) capitalized terms that are not otherwise defined herein have the meanings given to such terms in the Debentures (as defined herein), and (b) the following terms have the meanings set forth in this Section 1.1:</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>Acquiring Person</U>&#148; shall have the meaning ascribed to such term in Section 4.7.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>Action</U>&#148; shall have the meaning ascribed to such term in Section 3.1(j).</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>Affiliate</U>&#148; means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.<A NAME="_Toc430524857"></A><A NAME="_Toc449254725"></A> &nbsp;</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>Board of Directors</U>&#148; means the board of directors of the Company.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>Business Day</U>&#148; means any day except Saturday, Sunday, any day which is a federal legal holiday in the United States or any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>Closing</U>&#148; means the closing of the purchase and sale of the Securities pursuant to Section 2.1.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>Closing Date</U>&#148; means the Trading Day when all of the Transaction Documents have been executed and delivered by the applicable parties thereto, and all conditions precedent to (i) the Purchasers&#146; obligations to pay the Subscription Amount and (ii) the Company&#146;s obligations to deliver the Securities have been satisfied or waived.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>Closing Statement</U>&#148; means the Closing Statement in the form <U>Annex A</U> attached hereto.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&nbsp;&#147;<U>Commission</U>&#148; means the United States Securities and Exchange Commission.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>Common Stock</U>&#148; means the common stock of the Company, par value $0.0001 per share, and any other class of securities into which such securities may hereafter be reclassified or changed into.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>Common Stock Equivalents</U>&#148; 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 exercisable or exchangeable for, or otherwise entitles the holder thereof to receive Common Stock.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>Company Counsel</U>&#148; means &nbsp;&nbsp;counsel to the Company in connection with this Agrement.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>Conversion Price</U>&#148; shall have the meaning ascribed to such term in the Debentures.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>Debentures</U>&#148; means the 6% Senior Convertible Debentures due, subject to the terms therein, two (2) years from their date of issuance, issued by the Company to the Purchasers hereunder, in the form of <U>Exhibit A</U> attached hereto.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>Disclosure Schedules</U>&#148; shall have the meaning ascribed to such term in Section 3.1.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>Discussion Time</U>&#148; shall have the meaning ascribed to such term in Section 3.2(f). </P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&nbsp;&#147;<U>Evaluation Date</U>&#148; shall have the meaning ascribed to such term in Section 3.1(r). </P>
<P style="line-height:14pt; margin:0px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>Exchange Act</U>&#148; means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>Exempt Issuance</U>&#148; means the issuance of (a) shares of Common Stock or options to employees, officers, consultants, advisors or directors of the Company pursuant to any stock or option plan duly adopted for such purpose by a majority of the members of the Board of Directors or a majority of the members of a committee of directors established for such purpose, (b) securities upon the exercise or exchange of or conversion of any Securities issued hereunder and/or other securities exercisable or exchangeable for or convertible into shares of Common Stock 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 or to decrease the exercise, exchange or conversion price of such securities, and (c) securities issued pursuant to acquisitions or strat
egic transactions approved by a majority of the disinterested directors of the Company, provided that any such issuance shall only be to a Person which is, itself or through its subsidiaries, an operating company in a business synergistic with the business of the Company and in which the Company receives benefits in addition to the investment of funds, 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.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&nbsp;&#147;<U>GAAP</U>&#148; shall have the meaning ascribed to such term in Section 3.1(h).</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>Indebtedness</U>&#148; shall have the meaning ascribed to such term in Section 3.1(aa).</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>Intellectual Property Rights</U>&#148; shall have the meaning ascribed to such term in Section 3.1(o).</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>Legend Removal Date</U>&#148; shall have the meaning ascribed to such term in Section 4.1(c). </P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>Liens</U>&#148; means a lien, charge, security interest, encumbrance, right of first refusal, preemptive right or other restriction. </P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&nbsp;&#147;<U>Material Adverse Effect</U>&#148; shall have the meaning assigned to such term in Section 3.1(b).</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>Material Permits</U>&#148; shall have the meaning ascribed to such term in Section 3.1(m).</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>Maximum Rate</U>&#148; shall have the meaning ascribed to such term in Section 5.17.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&nbsp;&#147;<U>Person</U>&#148; means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&nbsp;&#147;<U>Pro Rata Portion</U>&#148; shall have the meaning ascribed to such term in Section 4.12(e).</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>Proceeding</U>&#148; means an action, claim, suit, investigation or proceeding (including, without limitation, an informal investigation or partial proceeding, such as a deposition), whether commenced or threatened.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>Purchaser Party</U>&#148; shall have the meaning ascribed to such term in Section 4.10.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>Required Approvals</U>&#148; shall have the meaning ascribed to such term in Section 3.1(e).</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>Rule 144</U>&#148; 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.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>SEC Reports</U>&#148; shall have the meaning ascribed to such term in Section 3.1(h).</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>Securities</U>&#148; means the Debentures and the Underlying Shares.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>Securities Act</U>&#148; means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&nbsp;&#147;<U>Short Sales</U>&#148; means all &#147;short sales&#148; as defined in Rule 200 of Regulation SHO under the Exchange Act (but shall not be deemed to include the location and/or reservation of borrowable shares of Common Stock).&nbsp;</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&nbsp;&#147;<U>Subscription Amount</U>&#148; means, as to each Purchaser, the aggregate amoun<A NAME="_DV_M77"></A>t to be paid for Debentures purchased hereunder as specified below such Purchaser&#146;s name on the signature page of this Agreement and next to the heading &#147;Subscription Amount,&#148; in United States dollars and in immediately available funds.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&nbsp;&#147;<U>Subsidiary</U>&#148; means any subsidiary of the Company as set forth on <U>Schedule 3.1(a)</U> and shall, where applicable, include any direct or indirect subsidiary of the Company formed or acquired after the date hereof.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>Trading Day</U>&#148; means a day on which the principal Trading Market is open for trading.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>Trading Market</U>&#148; means the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the American Stock Exchange, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange or the OTC Bulletin Board.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&nbsp;&#147;<U>Transaction Documents</U>&#148; means this Agreement, the Debentures, all exhibits and schedules thereto and hereto and any other documents or agreements executed in connection with the transactions contemplated hereunder.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:18.667px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>Transfer Agent</U>&#148; means the current transfer agent of the Company and any successor transfer agent of the Company.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>Underlying Shares</U>&#148; means the shares of Common Stock issued and issuable upon conversion or redemption of the Debentures in accordance with the terms of the Debentures.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>Variable Rate Transaction</U>&#148; shall have the meaning ascribed to such term in Section 4.13(b).</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:48px; font-size:12pt" align=justify>&#147;<U>VWAP</U>&#148; means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. New York City time to 4:02 p.m. New York City time); (b)&nbsp; if the OTC Bulletin Board is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the OTC Bulletin Board; (c) if the Common Stock is not then listed or quoted for trading on the OTC Bulletin Board and if prices for the Common Stock are then reported in the &#147;Pink Sheets&#148; published by Pink Sheets, LLC (or a simi
lar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported; or (d)&nbsp;in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Purchasers of a majority in interest of the Securities then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.</P>
<P style="line-height:14pt; margin-top:8px; margin-bottom:0px; font-size:12pt"><B>ARTICLE II.</B></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; font-size:12pt" align=center><B>PURCHASE AND SALE</B></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:48px; font-size:12pt" align=justify>2.1</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:72px; font-size:12pt" align=justify><U>Closing</U>. &nbsp;On the Closing Date, upon the terms and subject to the conditions set forth herein, substantially concurrent with the execution and delivery of this Agreement by the parties hereto, the Company agrees to sell, and the Purchasers, severally and not jointly, agree to purchase, Debentures. &nbsp;Each Purchaser shall deliver to the Company via wire transfer or a certified check, immediately available funds equal to its Subscription Amount and the Company shall deliver to each Purchaser its respective Debenture, as determined pursuant to Section 2.2(a), and the Company and each Purchaser shall deliver the other items set forth in Section 2.2 deliverable at the Closing. &nbsp;Upon satisfaction of the conditions set forth in Sections 2.2 and 2.3, the Closing shall occur at the offices of Company Counsel or such other location as the parties shall mutually agree. &nbsp;The parties ack
nowledge and agree that the Debentures are being purchased hereunder at an original issue discount.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:48px; font-size:12pt">2.2</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:72px; font-size:12pt"><U>Deliveries</U></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; font-size:12pt">.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:120px; text-indent:-24px; font-size:12pt" align=justify>(a)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:120px; font-size:12pt" align=justify>On the Closing Date, the Company shall deliver or cause to be delivered to each Purchaser the following:</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:192px; text-indent:-24px; font-size:12pt" align=justify>(i)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:192px; font-size:12pt" align=justify>this Agreement duly executed by the Company;</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:168px; text-indent:-24px; font-size:12pt" align=justify>(ii)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:168px; font-size:12pt" align=justify>a Debenture with a principal amount equal to such Purchaser&#146;s Principal Amount, registered in the name of such Purchaser;</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:120px; text-indent:-24px; font-size:12pt" align=justify>(b)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:120px; font-size:12pt" align=justify>On the Closing Date, each Purchaser shall deliver or cause to be delivered to the Company the following: </P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:192px; text-indent:144px; font-size:12pt" align=justify>(i)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:192px; text-indent:192px; font-size:12pt" align=justify>this Agreement duly executed by such Purchaser;</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:96px; text-indent:144px; font-size:12pt" align=justify>(ii)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:96px; text-indent:192px; font-size:12pt" align=justify>such Purchaser&#146;s Subscription Amount by wire transfer to the account as specified in writing by the Company;</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:48px; font-size:12pt" align=justify>1.2</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:72px; font-size:12pt" align=justify><U>Closing Conditions</U>. </P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:120px; text-indent:-24px; font-size:12pt" align=justify>(a)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:120px; font-size:12pt" align=justify>The obligations of the Company hereunder in connection with the Closing are subject to the following conditions being met:</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:96px; text-indent:144px; font-size:12pt" align=justify>(i)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:96px; text-indent:192px; font-size:12pt" align=justify>the accuracy in all material respects on the Closing Date of the representations and warranties of the Purchasers contained herein;</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:96px; text-indent:144px; font-size:12pt" align=justify>(ii)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:96px; text-indent:192px; font-size:12pt" align=justify>all obligations, covenants and agreements of each Purchaser required to be performed at or prior to the Closing Date shall have been performed; and</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:96px; text-indent:144px; font-size:12pt" align=justify>(iii)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:96px; text-indent:192px; font-size:12pt" align=justify>the delivery by each Purchaser of the items set forth in Section 2.2(b) of this Agreement.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:120px; text-indent:-24px; font-size:12pt" align=justify>(a)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:120px; font-size:12pt" align=justify>The respective obligations of the Purchasers hereunder in connection with the Closing are subject to the following conditions being met:</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:96px; text-indent:144px; font-size:12pt" align=justify>(i)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:96px; text-indent:192px; font-size:12pt" align=justify>the accuracy in all material respects when made and on the Closing Date of the representations and warranties of the Company contained herein;</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:96px; text-indent:144px; font-size:12pt" align=justify>(ii)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:96px; text-indent:192px; font-size:12pt" align=justify>all obligations, covenants and agreements of the Company required to be performed at or prior to the Closing Date shall have been performed; </P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:96px; text-indent:144px; font-size:12pt" align=justify>(iii)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:96px; text-indent:192px; font-size:12pt" align=justify>the delivery by the Company of the items set forth in Section 2.2(a) of this Agreement; </P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:96px; text-indent:144px; font-size:12pt" align=justify>(iv)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:96px; text-indent:192px; font-size:12pt" align=justify>there shall have been no Material Adverse Effect with respect to the Company since the date hereof; and</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:96px; text-indent:144px; font-size:12pt" align=justify>(v)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:96px; text-indent:192px; font-size:12pt" align=justify>from the date hereof to the Closing Date, trading in the Common Stock shall not have been suspended by the Commission &nbsp;or the Company&#146;s principal Trading Market (except for any suspension of trading of limited duration agreed to by the Company, which suspension shall be terminated prior to the Closing), and, at any time prior to the Closing Date, trading in securities generally as reported by Bloomberg L.P. shall not have been suspended or limited, or minimum prices shall not have been established on securities whose trades are reported by such service, or on any Trading Market, nor shall a banking moratorium have been declared either by the United States or New York State authorities nor shall there have occurred any material outbreak or escalation of hostilities or other national or international calamity of such magnitude in its effect on, or any material adverse ch
ange in, any financial market which, in each case, in the reasonable judgment of each Purchaser, makes it impracticable or inadvisable to purchase the Securities at the Closing.</P>
<P style="line-height:14pt; margin-top:8px; margin-bottom:0px; font-size:12pt"><B>ARTICLE II.</B></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; font-size:12pt" align=center><B>REPRESENTATIONS AND WARRANTIES</B></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:48px; font-size:12pt" align=justify>2.1</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:72px; font-size:12pt" align=justify><U>Representations and Warranties of the Company</U>. &nbsp;Except as set forth under the corresponding section of the disclosure schedules delivered to the Purchasers concurrently herewith (the &#147;Disclosure Schedules&#148;), which Disclosure Schedules shall be deemed a part hereof and shall qualify any representation or otherwise made herein to the extent of the disclosure contained in the corresponding section of the Disclosure Schedules, the Company hereby makes the following representations and warranties to each Purchaser:</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:48px; text-indent:96px; font-size:12pt" align=justify>(a)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:144px; font-size:12pt" align=justify><U>Subsidiaries</U>. &nbsp;All of the direct and indirect subsidiaries of the Company are set forth on <U>Schedule 3.1(a) or as disclosed in the SEC Reports</U>. &nbsp;The Company owns, directly or indirectly, all of the capital stock or other equity interests of each Subsidiary free and clear of any Liens, and all of the issued and outstanding shares of capital stock of each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar rights to subscribe for or purchase securities. &nbsp;If the Company has no subsidiaries, all other references to the Subsidiaries or any of them in the Transaction Documents shall be disregarded.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:48px; text-indent:96px; font-size:12pt" align=justify>(b)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:144px; font-size:12pt" align=justify><U>Organization and Qualification</U>. &nbsp;The Company and each of the Subsidiaries is an entity duly incorporated or otherwise organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization (as applicable), with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted. &nbsp;Neither the Company nor any Subsidiary is in violation nor default of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational or charter documents. &nbsp;Each of the Company and the Subsidiaries is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, ex
cept where the failure to be so qualified or in good standing, as the case may be, could not have or reasonably be expected to result in: (i) a material adverse effect on the legality, validity or enforceability of any Transaction Document, (ii) a material adverse effect on the results of operations, assets, business, prospects or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse effect on the Company&#146;s ability to perform in any material respect on a timely basis its obligations under any Transaction Document (any of (i), (ii) or (iii), a &#147;<U>Material Adverse Effect</U>&#148;) and no Proceeding has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:48px; text-indent:96px; font-size:12pt" align=justify>(c)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:144px; font-size:12pt" align=justify><U>Authorization; Enforcement</U>. &nbsp;The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by each of the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. &nbsp;The execution and delivery of each of the Transaction Documents by the Company and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Company and no further action is required by the Company, the Board of Directors or the Company&#146;s stockholders in connection therewith other than in connection with the Required Approvals. &nbsp;Each Transaction Document to which it is a party has been (or upon delivery will have been) duly executed by the Company and, when delivered in accordance with the terms hereof and thereof,
 will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors&#146; rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:48px; text-indent:96px; font-size:12pt" align=justify>(d)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:144px; font-size:12pt" align=justify><U>No Conflicts</U>. &nbsp;The execution, delivery and performance by the Company of the Transaction Documents and the consummation by it to which it is a party of the other transactions contemplated hereby and thereby do not and will not: (i) conflict with or violate any provision of the Company&#146;s or any Subsidiary&#146;s certificate or articles of incorporation, bylaws or other organizational or charter documents, or (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in the creation of any Lien upon any of the properties or assets of the Company or any Subsidiary, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company or Subsidia
ry debt or otherwise) or other understanding to which the Company or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound or affected, or (iii) subject to the Required Approvals, conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company or a Subsidiary is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company or a Subsidiary is bound or affected; except in the case of each of clauses (ii) and (iii), such as could not have or reasonably be expected to result in a Material Adverse Effect.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:48px; text-indent:96px; font-size:12pt" align=justify>(e)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:144px; font-size:12pt" align=justify><U>Filings, Consents and Approvals</U>. &nbsp;The Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Company of the Transaction Documents, other than: (i) the filings required pursuant to Section 4.6, (ii) the notice and/or application(s) to each applicable Trading Market for the issuance and sale of the Securities and the listing of the Underlying Shares for trading thereon in the time and manner required thereby and (iii) the filing of Form D with the Commission and such filings as are required to be made under applicable state securities laws (collectively, the &#147;<U>Required Approvals</U>&#148;).</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:48px; text-indent:96px; font-size:12pt" align=justify>(f)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:144px; font-size:12pt" align=justify><U>Issuance of the Securities</U>. &nbsp;The Securities are duly authorized and, when issued and paid for in accordance with the applicable Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company other than restrictions on transfer provided for in the Transaction Documents. &nbsp;The Underlying Shares, when issued in accordance with the terms of the Transaction Documents, will be validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company other than restrictions on transfer provided for in the Transaction Documents. &nbsp;</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:48px; text-indent:96px; font-size:12pt" align=justify>(g)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:144px; font-size:12pt" align=justify><U>Capitalization</U>. &nbsp;The capitalization of the Company is as set forth on <U>Schedule 3.1(g)</U>, which <U>Schedule 3.1(g)</U> shall also include the number of shares of Common Stock owned beneficially, and of record, by Affiliates of the Company as of the date hereof. Except as set forth on <U>Schedule 3.1(g), </U>the Company has not issued any capital stock since its most recently filed periodic report under the Exchange Act, other than pursuant to the exercise of employee stock options under the Company&#146;s stock option plans, the issuance of shares of Common Stock to employees pursuant to the Company&#146;s employee stock purchase plans and pursuant to the conversion and/or exercise of Common Stock Equivalents outstanding as of the date of the most recently filed periodic report under the Exchange Act. &nbsp;No Person has any right of first refusal, preemptive rig
ht, right of participation, or any similar right to participate in the transactions contemplated by the Transaction Documents. &nbsp;Except as set forth on <U>Schedule 3.1(g)</U> and as a result of the purchase and sale of the Securities, there are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire any shares of Common Stock, or contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become bound to issue additional shares of Common Stock or Common Stock Equivalents. The issuance and sale of the Securities will not obligate the Company to issue shares of Common Stock or other securities to any Person (other than the Purchasers) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or 
reset price under any of such securities. All of the outstanding shares of capital stock of the Company are validly issued, fully paid and nonassessable, have been issued in compliance with all federal and state securities laws, and none of such outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities. &nbsp;No further approval or authorization of any stockholder, the Board of Directors or others is required for the issuance and sale of the Securities. &nbsp;There are no stockholders agreements, voting agreements or other similar agreements with respect to the Company&#146;s capital stock to which the Company is a party or, to the knowledge of the Company, between or among any of the Company&#146;s stockholders.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:48px; text-indent:96px; font-size:12pt" align=justify>(h)</P>
<P style="line-height:normal; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:144px; font-size:12pt" align=justify><U>SEC Reports; Financial Statements</U>. &nbsp;Except as set forth on Schedule 3.1(h) of the Disclosure Schedules, the Company has filed all reports, schedules, forms, statements and other documents required to be filed by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the date hereof (or such shorter period as the Company was required by law or regulation to file such material) (the foregoing materials and any amendments filed through the date hereof, including the exhibits thereto and documents incorporated by reference therein, being collectively referred to herein as the &#147;<U>SEC Reports</U>&#148;) on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension. &nbsp;As of their respe
ctive dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. &nbsp;Except as described on <U>Schedule 3.1(h)</U><FONT style="font-size:10pt">, t</FONT>he Company has never been an issuer subject to Rule 144(i) under the Securities Act. The financial statements of the Company included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing. &nbsp;Such financial statements have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis during the peri
ods involved (&#147;<U>GAAP</U>&#148;), except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of the Company and its consolidated Subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:48px; text-indent:96px; font-size:12pt" align=justify>(i)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:144px; font-size:12pt" align=justify><U>Material Changes</U>. &nbsp;Since the date of the latest audited financial statements included within the SEC Reports, except as specifically disclosed in a subsequent SEC Report filed prior to the date hereof: (i) there has been no event, occurrence or development that has had or that could reasonably be expected to result in a Material Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or otherwise) other than (A) trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice and (B) liabilities not required to be reflected in the Company&#146;s financial statements pursuant to GAAP or disclosed in filings made with the Commission, (iii) the Company has not altered its method of accounting, (iv) the Company has not declared or made any dividend or distribution of cash or other property to its stockhol
ders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock and (v) the Company has not issued any equity securities to any officer, director or Affiliate, except pursuant to existing Company stock option plans. The Company does not have pending before the Commission any request for confidential treatment of information. &nbsp;Except for the issuance of the Securities contemplated by this Agreement or as set forth on <U>Schedule 3.1(i)</U>, no event, liability or development has occurred or exists with respect to the Company or its Subsidiaries or their respective business, properties, operations or financial condition, that would be required to be disclosed by the Company under applicable securities laws at the time this representation is made or deemed made that has not been publicly disclosed at least 1 Trading Day prior to the date that this representation is made.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:48px; text-indent:96px; font-size:12pt" align=justify>(j)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:144px; font-size:12pt" align=justify><U>Litigation</U>. &nbsp;Except as set forth in the SEC Reports, there is no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to the knowledge of the Company, threatened against or affecting the Company, any Subsidiary or any of their respective properties before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an &#147;<U>Action</U>&#148;) which (i) adversely affects or challenges the legality, validity or enforceability of any of the Transaction Documents or the Securities or (ii) could, if there were an unfavorable decision, have or reasonably be expected to result in a Material Adverse Effect. &nbsp;Neither the Company nor any Subsidiary, nor any director or officer thereof, is or has been the subject of any Action involving a claim of violat
ion of or liability under federal or state securities laws or a claim of breach of fiduciary duty. &nbsp;There has not been, and to the knowledge of the Company, there is not pending or contemplated, any investigation by the Commission involving the Company or any current or former director or officer of the Company. &nbsp;The Commission has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company or any Subsidiary under the Exchange Act or the Securities Act. &nbsp;</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:48px; text-indent:96px; font-size:12pt" align=justify>(k)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:144px; font-size:12pt" align=justify><U>Labor Relations</U>. &nbsp;No material labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the employees of the Company which could reasonably be expected to result in a Material Adverse Effect. &nbsp;None of the Company&#146;s or its Subsidiaries&#146; employees is a member of a union that relates to such employee&#146;s relationship with the Company or such Subsidiary, and neither the Company nor any of its Subsidiaries is a party to a collective bargaining agreement, and the Company and its Subsidiaries believe that their relationships with their employees are good. &nbsp;No executive officer, to the knowledge of the Company, is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement or non-competition agreement, or any other contract o
r agreement or any restrictive covenant in favor of any third party, and the continued employment of each such executive officer does not subject the Company or any of its Subsidiaries to any liability with respect to any of the foregoing matters. &nbsp;The Company and its Subsidiaries are in compliance with all U.S. federal, state, local and foreign laws and regulations relating to employment and employment practices, terms and conditions of employment and wages and hours, except where the failure to be in compliance could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:48px; text-indent:96px; font-size:12pt" align=justify>(l)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:144px; font-size:12pt" align=justify><U>Compliance</U>. &nbsp;Neither the Company nor any Subsidiary: (i) is in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary under), nor has the Company or any Subsidiary received notice of a claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived), (ii) is in violation of any order of any court, arbitrator or governmental body or (iii) is or has been in violation of any statute, rule or regulation of any governmental authority, including without limitation all foreign, federal, state and local laws applicable to its business and a
ll such laws that affect the environment, except in each case as could not have or reasonably be expected to result in a Material Adverse Effect.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:48px; text-indent:96px; font-size:12pt" align=justify>(m)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:144px; font-size:12pt" align=justify><U>Regulatory Permits</U>. &nbsp;The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses as described in the SEC Reports, except where the failure to possess such permits could not reasonably be expected to result in a Material Adverse Effect (&#147;<U>Material Permits</U>&#148;), and neither the Company nor any Subsidiary has received any notice of proceedings relating to the revocation or modification of any Material Permit.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:48px; text-indent:96px; font-size:12pt" align=justify>(n)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:144px; font-size:12pt" align=justify><U>Title to Assets</U>. &nbsp;The Company and the Subsidiaries have good and marketable title in fee simple to all real property owned by them and good and marketable title in all personal property owned by them that is material to the business of the Company and the Subsidiaries, in each case free and clear of all Liens, except for Liens as do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by the Company and the Subsidiaries and Liens for the payment of federal, state or other taxes, the payment of which is neither delinquent nor subject to penalties. &nbsp;Any real property and facilities held under lease by the Company and the Subsidiaries are held by them under valid, subsisting and enforceable leases with which the Company and the Subsidiaries are in compliance.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:48px; text-indent:96px; font-size:12pt" align=justify>(o)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:144px; font-size:12pt" align=justify><U>Patents and Trademarks</U>. &nbsp;The Company and the Subsidiaries have, or have rights to use, all patents, patent applications, trademarks, trademark applications, service marks, trade names, trade secrets, inventions, copyrights, licenses and other intellectual property rights and similar rights as described in the SEC Reports as necessary or material for use in connection with their respective businesses and which the failure to so have could have a Material Adverse Effect (collectively, the &#147;<U>Intellectual Property Rights</U>&#148;). &nbsp;Neither the Company nor any Subsidiary has received a notice (written or otherwise) that any of the Intellectual Property Rights used by the Company or any Subsidiary violates or infringes upon the rights of any Person. To the knowledge of the Company, all such Intellectual Property Rights are enforceable and there is no existing
 infringement by another Person of any of the Intellectual Property Rights. &nbsp;The Company and its Subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality and value of all of their intellectual properties, except where failure to do so could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:48px; text-indent:96px; font-size:12pt" align=justify>(p)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:144px; font-size:12pt" align=justify><U>Insurance</U>. &nbsp;The Company and the Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in the businesses in which the Company and the Subsidiaries are engaged, including, but not limited to, directors and officers insurance coverage. </P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:48px; text-indent:96px; font-size:12pt" align=justify>(q)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:144px; font-size:12pt" align=justify><U>Transactions with Affiliates and Employees</U>. &nbsp;Except as set forth in the SEC Reports, none of the officers or directors of the Company and, to the knowledge of the Company, none of the employees of the Company is presently a party to any transaction with the Company or any Subsidiary (other than for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Company, any entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner, in each case in excess of $120,000 other than for: (i) payment of salary or consulting fees for services 
rendered, (ii) reimbursement for expenses incurred on behalf of the Company and (iii) other employee benefits, including stock option agreements under any stock option plan of the Company.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:48px; text-indent:96px; font-size:12pt" align=justify>(r)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:144px; font-size:12pt" align=justify><U>Sarbanes-Oxley; Internal Accounting Controls</U>. &nbsp;The Company is in material compliance with all provisions of the Sarbanes-Oxley Act of 2002 which are applicable to it as of the Closing Date. &nbsp;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&#146;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&#146;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 Compa
ny has established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed such disclosure controls and procedures to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission&#146;s rules and forms. &nbsp;The Company&#146;s certifying officers have evaluated the effectiveness of the Company&#146;s disclosure controls and procedures as of the end of the period covered by the Company&#146;s most recently filed periodic report under the Exchange Act (such date, the &#147;<U>Evaluation Date</U>&#148;). &nbsp;The Company presented in its most recently filed periodic report under the Exchange Act the conclusions of the certifying officers about the effectiveness of the disclosure controls and procedures based on their evaluations as of the Evaluation Date. &nbsp;Since the Evaluation Da
te, there have been no changes in the Company&#146;s internal control over financial reporting (as such term is defined in the Exchange Act) that has materially affected, or is reasonably likely to materially affect, the Company&#146;s internal control over financial reporting.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:48px; text-indent:96px; font-size:12pt" align=justify>(s)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:144px; font-size:12pt" align=justify><U>Certain Fees</U>. &nbsp;No brokerage or finder&#146;s fees or commissions are or will be payable by the Company to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by the Transaction Documents. &nbsp;The Purchasers shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated in this Section that may be due in connection with the transactions contemplated by the Transaction Documents. &nbsp;</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:48px; text-indent:96px; font-size:12pt" align=justify>(t)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:144px; font-size:12pt" align=justify><U>Private Placement</U>. &nbsp;Assuming the accuracy of the Purchasers&#146; representations and warranties set forth in Section 3.2, no registration under the Securities Act is required for the offer and sale of the Securities by the Company to the Purchasers as contemplated hereby. The issuance and sale of the Securities hereunder does not contravene the rules and regulations of the Trading Market.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:48px; text-indent:96px; font-size:12pt" align=justify>(u)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:144px; font-size:12pt" align=justify><U>Investment Company</U>. The Company is not, and is not an Affiliate of, and immediately after receipt of payment for the Securities, will not be or be an Affiliate of, an &#147;investment company&#148; within the meaning of the Investment Company Act of 1940, as amended. &nbsp;The Company shall conduct its business in a manner so that it will not become subject to the Investment Company Act of 1940, as amended.</P>
<A NAME="_Toc430524909"></A><A NAME="_Toc449254780"></A><P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:48px; text-indent:96px; font-size:12pt" align=justify>(v)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:144px; font-size:12pt" align=justify><U>Listing and Maintenance Requirements</U>. &nbsp;The Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and the Company has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration of the Common Stock under the Exchange Act nor has the Company received any notification that the Commission is contemplating terminating such registration. &nbsp;The Company has not, in the 12 months preceding the date hereof, received notice from any Trading Market on which the Common Stock is or has been listed or quoted to the effect that the Company is not in compliance with the listing or maintenance requirements of such Trading Market. The Company is, and has no reason to believe that it will not in the foreseeable future continue to be, in compliance with all such listing and maintenance requirements.
</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:48px; text-indent:96px; font-size:12pt" align=justify>(w)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:144px; font-size:12pt" align=justify><U>Disclosure</U>. &nbsp;Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents, the Company confirms that neither it nor any other Person acting on its behalf has provided any of the Purchasers or their agents or counsel with any information that it believes constitutes or might constitute material, nonpublic information. &nbsp;The Company understands and confirms that the Purchasers will rely on the foregoing representation in effecting transactions in securities of the Company. &nbsp;All disclosure furnished by or on behalf of the Company to the Purchasers regarding the Company, its business and the transactions contemplated hereby, including the Disclosure Schedules to this Agreement, is true and correct and does 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 light of the circumstances under which they were made, not misleading. &nbsp;&nbsp;The press releases disseminated by the Company during the twelve months preceding the date of this Agreement taken as a whole do not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made and when made, not misleading. &nbsp;The Company acknowledges and agrees that no Purchaser makes or has made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in Section 3.2 hereof.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:48px; text-indent:96px; font-size:12pt" align=justify>(x)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:144px; font-size:12pt" align=justify><U>No Integrated Offering</U>. Assuming the accuracy of the Purchasers&#146; representations and warranties set forth in Section 3.2, neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause this offering of the Securities to be integrated with prior offerings by the Company for purposes of (i) the Securities Act which would require the registration of any such securities under the Securities Act, or (ii) any applicable shareholder approval provisions of any Trading Market on which any of the securities of the Company are listed or designated.<U> </U></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:48px; text-indent:96px; font-size:12pt" align=justify>(y)</P>
<P style="line-height:normal; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:144px; font-size:12pt" align=justify><U>Solvency</U>. &nbsp;Except for the Going Concern note included in the SEC Reports which advised that recurring losses and negative cash flows are indicative that the Company may not be able to continue as a going concern, the Company and Seller have no knowledge of any facts or circumstances which lead it to believe that it would be compelled to file for reorganization or liquidation under the bankruptcy or reorganization laws of any jurisdiction within one year from the Closing Date. &nbsp;There has been no material change in the Company financial position regarding such status since the filing of the Company&#146;s Form 10-Q filed with the Commission on November 15, 2009 and the Company and Seller do not expect any material change up to and including the Closing Date.<FONT style="font-size:10pt"> </FONT></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:48px; text-indent:96px; font-size:12pt" align=justify>(z)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:48px; text-indent:144px; font-size:12pt" align=justify><U>Tax Status</U>. </P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:240px; font-size:12pt" align=justify>&nbsp;Except for matters that would not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect, the Company and each Subsidiary has filed all necessary federal, state and foreign income and franchise tax returns and has paid or accrued all taxes shown as due thereon, and the Company has no knowledge of a tax deficiency which has been asserted or threatened against the Company or any Subsidiary.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:48px; text-indent:96px; font-size:12pt" align=justify>(aa)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:144px; font-size:12pt" align=justify><U>No General Solicitation</U>. Neither the Company nor any person acting on behalf of the Company has offered or sold any of the Securities by any form of general solicitation or general advertising. &nbsp;The Company has offered the Securities for sale only to the Purchasers and certain other &#147;accredited investors&#148; within the meaning of Rule 501 under the Securities Act.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:48px; text-indent:96px; font-size:12pt" align=justify>(bb)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:144px; font-size:12pt" align=justify><U>Foreign Corrupt Practices.</U> &nbsp;Neither the Company, nor to the knowledge of the Company, any agent or other person acting on behalf of the Company, has: (i) directly or indirectly, used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns from corporate funds, (iii) failed to disclose fully any contribution made by the Company (or made by any person acting on its behalf of which the Company is aware) which is &nbsp;in violation of law or (iv) violated in any material respect any provision of the Foreign Corrupt Practices Act of 1977, as amended.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:48px; text-indent:96px; font-size:12pt" align=justify>(cc)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:144px; font-size:12pt" align=justify><U>Seniority</U>. &nbsp;As of the Closing Date, no Indebtedness or other claim against the Company is senior to the Debentures in right of payment, whether with respect to interest or upon liquidation or dissolution, or otherwise, other than indebtedness secured by purchase money security interests (which is senior only as to underlying assets covered thereby) and capital lease obligations (which is senior only as to the property covered thereby).</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:48px; text-indent:96px; font-size:12pt" align=justify>(dd)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:144px; font-size:12pt" align=justify><U>Acknowledgment Regarding Purchasers&#146; Purchase of Securities</U>. &nbsp;The Company acknowledges and agrees that each of the Purchasers is acting solely in the capacity of an arm&#146;s length purchaser with respect to the Transaction Documents and the transactions contemplated thereby. &nbsp;The Company further acknowledges that no Purchaser is acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated thereby and any advice given by any Purchaser or any of their respective representatives or agents in connection with the Transaction Documents and the transactions contemplated thereby is merely incidental to the Purchasers&#146; purchase of the Securities. &nbsp;The Company further represents to each Purchaser that the Company&#146;s decision to enter into this Agreeme
nt and the other Transaction Documents has been based solely on the independent evaluation of the transactions contemplated hereby by the Company and its representatives.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:48px; text-indent:96px; font-size:12pt" align=justify>(ee)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:144px; font-size:12pt" align=justify><U>

Acknowledgment Regarding Purchasers&#146; Trading Activity

</U>

.. &nbsp;Notwithstanding anything in this Agreement or elsewhere herein to the contrary (except for Sections 3.2(f) and 4.15 hereof), it is understood and acknowledged by the Company that: (i) none of the Purchasers has been asked to agree by the Company, nor has any Purchaser agreed, to desist from purchasing or selling, long and/or short, securities of the Company, or &#147;derivative&#148; securities based on securities issued by the Company or to hold the Securities for any specified term, (ii) past or future open market or other transactions by any Purchaser, specifically including, without limitation, Short Sales or &#147;derivative&#148; transactions, before or after the closing of this or future private placement transactions, may negatively impact the market price of the Company&#146;s publicly-traded securities, (iii) any Purchaser, and counter-parties in &#147;derivative&#148; transactions to which any such Purchaser is a party, directly or indirectly, may presently have a &#147;short&#148; positi
on in the Common Stock and (iv) each Purchaser shall not be deemed to have any affiliation with or control over any arm&#146;s length counter-party in any &#147;derivative&#148; transaction. &nbsp;

The Company further understands and acknowledges that (y) one or more Purchasers may engage in hedging activities at various times during the period that the Securities are outstanding, including, without limitation, during the periods that the value of the Underlying Shares deliverable with respect to Securities are being determined, and (z) such hedging activities (if any) could reduce the value of the existing stockholders' equity interests in the Company at and after the time that the hedging activities are being conducted.&nbsp; The Company acknowledges that such aforementioned hedging activities do not constitute a breach of any of the Transaction Documents.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:48px; text-indent:96px; font-size:12pt" align=justify>(ff)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:144px; font-size:12pt" align=justify><U>Regulation M Compliance</U>.&nbsp; The Company has not, and to its knowledge no one acting on its behalf has, (i) taken, directly or indirectly, any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of any of the Securities, (ii) sold, bid for, purchased, or paid any compensation for soliciting purchases of, any of the securities of the Company, or (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase any other securities of the Company, other than, in the case of clauses (ii) and (iii), compensation paid to the Company&#146;s placement agent in connection with the placement of the Securities.</P>
<P style="margin:0px"><BR></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:48px; font-size:12pt" align=justify>2.2</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:72px; font-size:12pt" align=justify><U>Representations and Warranties of the Purchasers</U>. &nbsp;&nbsp;&nbsp;Each Purchaser, for itself and for no other Purchaser, hereby represents and warrants as of the date hereof and as of the Closing Date to the Company as follows:</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:48px; text-indent:96px; font-size:12pt" align=justify>(a)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:144px; font-size:12pt" align=justify><U>Organization; Authority</U>. &nbsp;Such Purchaser is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with full right, corporate or partnership power and authority to enter into and to consummate the transactions contemplated by the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of the Transaction Documents and performance by such Purchaser of the transactions contemplated by the Transaction Documents have been duly authorized by all necessary corporate or similar action on the part of such Purchaser. &nbsp;Each Transaction Document to which it is a party has been duly executed by such Purchaser, and when delivered by such Purchaser in accordance with the terms hereof, will constitute the valid and legally binding obligation of such Purc
haser, enforceable against it in accordance with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors&#146; rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:48px; text-indent:96px; font-size:12pt" align=justify>(b)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:144px; font-size:12pt" align=justify><U>Own Account</U>. &nbsp;Such Purchaser understands that the Securities are &#147;restricted securities&#148; and have not been registered under the Securities Act or any applicable state securities law and is acquiring the Securities as principal for its own account and not with a view to or for distributing or reselling such Securities or any part thereof in violation of the Securities Act or any applicable state securities law, has no present intention of distributing any of such Securities in violation of the Securities Act or any applicable state securities law and has no direct or indirect arrangement or understandings with any other persons to distribute or regarding the distribution of such Securities (this representation and warranty not limiting such Purchaser&#146;s right to sell the Securities in compliance with applicable federal and state securities laws) in viola
tion of the Securities Act or any applicable state securities law. &nbsp;Such Purchaser is acquiring the Securities hereunder in the ordinary course of its business.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:48px; text-indent:96px; font-size:12pt" align=justify>(c)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:144px; font-size:12pt" align=justify><U>Purchaser Status</U>. &nbsp;At the time such Purchaser was offered the Securities, it was, and as of the date hereof it is, and on each date on which it converts any Debentures it will be either: (i) an &#147;accredited investor&#148; as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act or (ii) a &#147;qualified institutional buyer&#148; as defined in Rule 144A(a) under the Securities Act. &nbsp;Such Purchaser is not required to be registered as a broker-dealer under Section 15 of the Exchange Act.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:48px; text-indent:96px; font-size:12pt" align=justify>(d)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:144px; font-size:12pt" align=justify><U>Experience of Such Purchaser</U>. &nbsp;Such Purchaser, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Securities, and has so evaluated the merits and risks of such investment. &nbsp;Such Purchaser is able to bear the economic risk of an investment in the Securities and, at the present time, is able to afford a complete loss of such investment.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:48px; text-indent:96px; font-size:12pt" align=justify>(e)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:144px; font-size:12pt" align=justify><U>General Solicitation</U>. &nbsp;Such Purchaser is not purchasing the Securities as a result of any advertisement, article, notice or other communication regarding the Securities published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or any other general solicitation or general advertisement.</P>
<P style="margin-top:0px; margin-bottom:16px" align=justify><BR></P>
<P style="line-height:14pt; margin-top:8px; margin-bottom:0px; font-size:12pt"><B>ARTICLE III.</B></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; font-size:12pt" align=center><B>OTHER AGREEMENTS OF THE PARTIES</B></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:48px; font-size:12pt" align=justify>3.1</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:72px; font-size:12pt" align=justify><U>Transfer Restrictions</U>.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:48px; text-indent:96px; font-size:12pt" align=justify>(a)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:144px; font-size:12pt" align=justify>The Securities may only be disposed of in compliance with state and federal securities laws. &nbsp;In connection with any transfer of Securities other than pursuant to an effective registration statement or Rule 144, to the Company or to an Affiliate of a Purchaser or in connection with a pledge as contemplated in Section 4.1(b), the Company may require the transferor thereof to provide to the Company an opinion of counsel selected by the transferor and reasonably acceptable to the Company, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration of such transferred Securities under the Securities Act. &nbsp;As a condition of transfer, any such transferee shall agree in writing to be bound by the terms of this Agreement and shall have the rights of a Purchaser under this Agreement. </P
>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:48px; text-indent:96px; font-size:12pt" align=justify>(b)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:144px; font-size:12pt" align=justify>The Purchasers agree to the imprinting, so long as is required by this Section 4.1, of a legend on any of the Securities in the following form:</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; font-size:12pt">[NEITHER] THIS SECURITY [NOR THE SECURITIES INTO WHICH THIS SECURITY IS [EXERCISABLE] [CONVERTIBLE]] HAS [NOT] BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE &#147;SECURITIES ACT&#148;), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. &nbsp;THIS SECURITY [AND THE SECURITIES ISSUABLE UPON [EXERCISE] [CONVERSION] OF THIS SECURITY] MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE M
ARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; font-size:12pt">The Company acknowledges and agrees that a Purchaser may from time to time pledge pursuant to a bona fide margin agreement with a registered broker-dealer or grant a security interest in some or all of the Securities to a financial institution that is an &#147;accredited investor&#148; as defined in Rule 501(a) under the Securities Act and who agrees to be bound by the provisions of this Agreement and, if required under the terms of such arrangement, such Purchaser may transfer pledged or secured Securities to the pledgees or secured parties. &nbsp;Such a pledge or transfer would not be subject to approval of the Company and no legal opinion of legal counsel of the pledgee, secured party or pledgor shall be required in connection therewith. &nbsp;Further, no notice shall be required of such pledge. &nbsp;At the appropriate Purchaser&#146;s expense, the Company will execute and deliver such reasonable documentation as a pledgee or
 secured party of Securities may reasonably request in connection with a pledge or transfer of the Securities, including, if the Securities are subject to registration, the preparation and filing of any required prospectus supplement under Rule 424(b)(3) under the Securities Act or other applicable provision of the Securities Act to appropriately amend the list of Selling Stockholders thereunder.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:48px; text-indent:96px; font-size:12pt" align=justify>(c)</P>
<P style="line-height:14pt; margin:0px; padding-left:48px; text-indent:144px; font-size:12pt" align=justify>Certificates evidencing the Underlying Shares shall not contain any legend (including the legend set forth in Section 4.1(b) hereof): (i) while a registration statement covering the resale of such security is effective under the Securities Act, or (ii) following any sale of such Underlying Shares pursuant to Rule 144, or (iii) if such Underlying Shares are eligible for sale under Rule 144, without the requirement for the Company to be in compliance with the current public information required under Rule 144 as to such Underlying Shares and without volume or manner-of-sale restrictions or (iv) if such legend is not required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the Commission). &nbsp;If all or any portion of a Debenture is converted at a time when there is an effective registration statement to cover the resale o
f the Underlying Shares, or if such Underlying Shares may be sold under Rule 144, without the requirement for the Company to be in compliance with the current public information required under Rule 144 as to such Underlying Shares and without volume or manner-of-sale restrictions or if such legend is not otherwise required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the Commission) then such Underlying Shares shall be issued free of all legends. &nbsp;The Company agrees that following such time as such legend is no longer required under this Section 4.1(c), it will, no later than three Trading Days following the delivery by a Purchaser to the Company or the Transfer Agent of a certificate representing Underlying Shares, as applicable, issued with a restrictive legend (such third Trading Day, the &#147;<U>Legend Removal Date</U>&#148;), deliver or cause to be delivered to such Purchaser a certificate representing such shares
 that is free from all restrictive and other legends. &nbsp;The Company may not make any notation on its records or give instructions to the Transfer Agent that enlarge the restrictions on transfer set forth in this Section 4. &nbsp;Certificates for Underlying Shares subject to legend removal hereunder shall be transmitted by the Transfer Agent to the Purchaser by crediting the account of the Purchaser&#146;s prime broker with the Depository Trust Company System as directed by such Purchaser.</P>
<P style="margin:0px"><BR></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:48px; text-indent:96px; font-size:12pt" align=justify>(d)</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; padding-left:48px; text-indent:144px; font-size:12pt" align=justify>Each Purchaser, severally and not jointly with the other Purchasers, agrees that such Purchaser will sell any Securities pursuant to either the registration requirements of the Securities Act, including any applicable prospectus delivery requirements, or an exemption therefrom, and that if Securities are sold pursuant to a registration statement, they will be sold in compliance with the plan of distribution set forth therein, and acknowledges that the removal of the restrictive legend from certificates representing Securities as set forth in this Section 4.1 is predicated upon the Company&#146;s reliance upon this understanding.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:48px; font-size:12pt" align=justify>3.2</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:72px; font-size:12pt" align=justify><U>Acknowledgment of Dilution</U>. &nbsp;The Company acknowledges that the issuance of the Securities may result in dilution of the outstanding shares of Common Stock, which dilution may be substantial under certain market conditions. &nbsp;The Company further acknowledges that its obligations under the Transaction Documents, including, without limitation, its obligation to issue the Underlying Shares pursuant to the Transaction Documents, are unconditional and absolute and not subject to any right of set off, counterclaim, delay or reduction, regardless of the effect of any such dilution or any claim the Company may have against any Purchaser and regardless of the dilutive effect that such issuance may have on the ownership of the other stockholders of the Company.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:48px; font-size:12pt" align=justify>3.3</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:72px; font-size:12pt" align=justify><U>Furnishing of Information</U>. &nbsp;If the Common Stock is not registered under Section 12(b) or 12(g) of the Exchange Act on the date hereof, the Company agrees to cause the Common Stock to be registered under Section 12(g) of the Exchange Act on or before the 60<SUP>th</SUP> calendar day following the date hereof. Until the time that no Purchaser owns Securities, the Company covenants to maintain the registration of the Common Stock under Section 12(b) or 12(g) of the Exchange Act and to timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to the Exchange Act. &nbsp;As long as any Purchaser owns Securities, if the Company is not required to file reports pursuant to the Exchange Act, it will prepare and furnish to the Purchasers and make publicly available in accordance w
ith Rule 144(c) such information as is required for the Purchasers to sell the Securities under Rule 144. &nbsp;The Company further covenants that it will take such further action as any holder of Securities may reasonably request, to the extent required from time to time to enable such Person to sell such Securities without registration under the Securities Act within the requirements of the exemption provided by Rule 144. </P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:48px; font-size:12pt" align=justify>3.4</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:72px; font-size:12pt" align=justify><U>Integration</U>. &nbsp;The Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Securities to the Purchasers in a manner that would require the registration under the Securities Act of the sale of the Securities to the Purchasers or that would be integrated with the offer or sale of the Securities for purposes of the rules and regulations of any Trading Market.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:48px; font-size:12pt" align=justify>3.5</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:72px; font-size:12pt" align=justify><U>Conversion Procedures</U>. &nbsp;The form of Notice of Conversion included in the Debentures<B> </B>set forth the totality of the procedures required of the Purchasers in order to convert the Debentures. &nbsp;No additional legal opinion, other information or instructions shall be required of the Purchasers to convert their Debentures. &nbsp;The Company shall honor conversions of the Debentures and shall deliver Underlying Shares in accordance with the terms, conditions and time periods set forth in the Transaction Documents.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:48px; font-size:12pt" align=justify>3.6</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:72px; font-size:12pt" align=justify><U>Securities Laws Disclosure; Publicity</U>. &nbsp;The Company shall, by 8:30 a.m. (New York City time) on the Trading Day immediately following the date hereof, issue a Current Report on Form 8-K disclosing the material terms of the transactions contemplated hereby and including the Transaction Documents as exhibits thereto. &nbsp;The Company and each Purchaser shall consult with each other in issuing any other press releases with respect to the transactions contemplated hereby, and neither the Company nor any Purchaser shall issue any such press release nor otherwise make any such public statement without the prior consent of the Company, with respect to any press release of any Purchaser, or without the prior consent of each Purchaser, with respect to any press release of the Company, which consent shall not unreasonably be withheld or delayed, except if such disclosure is required by law, in w
hich case the disclosing party shall promptly provide the other party with prior notice of such public statement or communication. &nbsp;Notwithstanding the foregoing, the Company shall not publicly disclose the name of any Purchaser, or include the name of any Purchaser in any filing with the Commission or any regulatory agency or Trading Market, without the prior written consent of such Purchaser, except: (a) as required by federal securities law in connection with (i) any registration statement and (ii) the filing of final Transaction Documents (including signature pages thereto) with the Commission and (b) to the extent such disclosure is required by law or Trading Market regulations, in which case the Company shall provide the Purchasers with prior notice of such disclosure permitted under this clause (b).</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:48px; font-size:12pt" align=justify>3.7</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:72px; font-size:12pt" align=justify><U>Non-Public Information</U>. &nbsp;Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents, the Company covenants and agrees that neither it, nor any other Person acting on its behalf, will provide any Purchaser or its agents or counsel with any information that the Company believes constitutes material non-public information, unless prior thereto such Purchaser shall have executed a written agreement regarding the confidentiality and use of such information. &nbsp;The Company understands and confirms that each Purchaser shall be relying on the foregoing covenant in effecting transactions in securities of the Company.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:48px; font-size:12pt" align=justify>3.8</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:72px; font-size:12pt" align=justify><U>Use of Proceeds</U>. &nbsp;Except as set forth on <U>Schedule 4.8</U> attached hereto, the Company shall use the net proceeds from the sale of the Securities hereunder for working capital purposes.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:48px; font-size:12pt" align=justify>3.9</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:72px; font-size:12pt" align=justify><U>Indemnification of Purchasers</U>. &nbsp;&nbsp;Subject to the provisions of this Section 4.9, the Company will indemnify and hold each Purchaser and its directors, officers, shareholders, members, partners, employees and agents (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title), each Person who controls such Purchaser (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders, agents, members, partners or employees (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title) of such controlling person (each, a &#147;<U>Purchaser Party</U>&#148;) harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, cost
s and expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys&#146; fees and costs of investigation that any such Purchaser Party may suffer or incur as a result of or relating to (a) any breach of any of the representations, warranties, covenants or agreements made by the Company in this Agreement or in the other Transaction Documents or (b) any action instituted against a Purchaser in any capacity, or any of them or their respective Affiliates, by any stockholder of the Company who is not an Affiliate of such Purchaser, with respect to any of the transactions contemplated by the Transaction Documents (unless such action is based upon a breach of such Purchaser&#146;s representations, warranties or covenants under the Transaction Documents or any agreements or understandings such Purchaser may have with any such stockholder or any violations by the Purchaser of state or federal securities laws or any conduct by such Purchaser which constitutes fraud, gross neglig
ence, willful misconduct or malfeasance). &nbsp;If any action shall be brought against any Purchaser Party in respect of which indemnity may be sought pursuant to this Agreement, such Purchaser Party shall promptly notify the Company in writing, and the Company shall have the right to assume the defense thereof with counsel of its own choosing reasonably acceptable to the Purchaser Party. &nbsp;Any Purchaser Party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Purchaser Party except to the extent that (i) the employment thereof has been specifically authorized by the Company in writing, (ii) the Company has failed after a reasonable period of time to assume such defense and to employ counsel or (iii) in such action there is, in the reasonable opinion of such separate counsel, a material conflict on any material issue between the position of the Company and the position of such
 Purchaser Party, in which case the Company shall be responsible for the reasonable fees and expenses of no more than one such separate counsel. &nbsp;The Company will not be liable to any Purchaser Party under this Agreement (y) for any settlement by a Purchaser Party effected without the Company&#146;s prior written consent, which shall not be unreasonably withheld or delayed; or (z) to the extent, but only to the extent that a loss, claim, damage or liability is attributable to any Purchaser Party&#146;s breach of any of the representations, warranties, covenants or agreements made by such Purchaser Party in this Agreement or in the other Transaction Documents.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:48px; font-size:12pt" align=justify>3.10</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:96px; font-size:12pt" align=justify><U>Reservation and Listing of Securities</U>. &nbsp;The Company shall maintain a reserve from its duly authorized shares of Common Stock for issuance pursuant to the Transaction Documents in such amount as may then be required to fulfill its obligations in full under the Transaction Documents.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:48px; font-size:12pt" align=justify>3.11</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:96px; font-size:12pt" align=justify><U>Equal Treatment of Purchasers</U>. &nbsp;No consideration (including any modification of any Transaction Document) shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision of any of the Transaction Documents unless the same consideration is also offered to all of the parties to the Transaction Documents. Further, the Company shall not make any payment of principal or interest on the Debentures in amounts which are disproportionate to the respective principal amounts outstanding on the Debentures at any applicable time. &nbsp;For clarification purposes, this provision constitutes a separate right granted to each Purchaser by the Company and negotiated separately by each Purchaser, and is intended for the Company to treat the Purchasers as a class and shall not in any way be construed as the Purchasers acting in concert or as a group with respect to t
he purchase, disposition or voting of Securities or otherwise.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:48px; font-size:12pt" align=justify>3.12</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:96px; font-size:12pt" align=justify><U>Form D; Blue Sky Filings</U>. &nbsp;The Company agrees to timely file a Form D with respect to the Securities as required under Regulation D and to provide a copy thereof, promptly upon request of any Purchaser. The Company shall take such action as the Company shall reasonably determine is necessary in order to obtain an exemption for, or to qualify the Securities for, sale to the Purchasers at the Closing under applicable securities or &#147;Blue Sky&#148; laws of the states of the United States, and shall provide evidence of such actions promptly upon request of any Purchaser.</P>
<P style="line-height:14pt; margin-top:8px; margin-bottom:0px; font-size:12pt"><B>ARTICLE IV.</B></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; font-size:12pt" align=center><B>MISCELLANEOUS</B></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:48px; font-size:12pt" align=justify>4.1</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:72px; font-size:12pt" align=justify><B><U>Omitted</U></B>.&nbsp; </P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:48px; font-size:12pt" align=justify>4.2</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:72px; font-size:12pt" align=justify><U>Fees and Expenses</U>. &nbsp;Except as expressly set forth in the Transaction Documents to the contrary, each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement. &nbsp;The Company shall pay all transfer agent fees, stamp taxes and other taxes and duties levied in connection with the delivery of any Securities to the Purchasers. &nbsp;Palladium Capital Advisors shall be engaged as placement agent with respect to the purchase of Debentures and shall be entitled to be paid the Company a fee in the amount of two (2%) of all Debentures sold in the offering within thirty (30) days following termination of the offering.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:48px; font-size:12pt" align=justify>4.3</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:72px; font-size:12pt" align=justify><U>Entire Agreement</U>. &nbsp;The Transaction Documents, together with the exhibits and schedules thereto, contain the entire understanding of the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:48px; font-size:12pt" align=justify>4.4</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:72px; font-size:12pt" align=justify><U>Notices</U>. &nbsp;Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of: (a) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto prior to 5:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (c) the second Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service or (d) upon actual receipt by the party to whom such notice is required t
o be given. &nbsp;The address for such notices and communications shall be as set forth on the signature pages attached hereto.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:48px; font-size:12pt" align=justify>4.5</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:72px; font-size:12pt" align=justify><U>Amendments; Waivers</U>. &nbsp;No provision of this Agreement may be waived, modified, supplemented or amended except in a written instrument signed, in the case of an amendment, by the Company and the Purchasers holding at least 67% in interest of the Securities then outstanding or, in the case of a waiver, by the party against whom enforcement of any such waived provision is sought. &nbsp;No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:48px; font-size:12pt" align=justify>4.6</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:72px; font-size:12pt" align=justify><U>Headings</U>. &nbsp;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>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:48px; font-size:12pt" align=justify>4.7</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:72px; font-size:12pt" align=justify><U>Successors and Assigns</U>. &nbsp;This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. &nbsp;The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of each Purchaser (other than by merger). &nbsp;Any Purchaser may assign any or all of its rights under this Agreement to any Person to whom such Purchaser assigns or transfers any Securities, provided that such transferee agrees in writing to be bound, with respect to the transferred Securities, by the provisions of the Transaction Documents that apply to the &#147;Purchasers.&#148;</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:48px; font-size:12pt" align=justify>4.8</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:72px; font-size:12pt" align=justify><U>No Third-Party Beneficiaries</U>. &nbsp;This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except as otherwise set forth in Section 4.10.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:48px; font-size:12pt" align=justify>4.9</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:72px; font-size:12pt" align=justify><U>Governing Law</U>. &nbsp;All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. &nbsp;Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York. &nbsp;Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, borough of Manhattan for the adjudication 
of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient venue for such proceeding. &nbsp;Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) 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. &nbsp;Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner pe
rmitted by law. &nbsp;&nbsp;If either party shall commence an action or proceeding to enforce any provisions of the Transaction Documents, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its reasonable attorneys&#146; fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:48px; font-size:12pt" align=justify>4.10</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:96px; font-size:12pt" align=justify><U>Survival</U>. &nbsp;The representations and warranties shall survive the Closing and the delivery of the Securities for the applicable statute of limitations.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:48px; font-size:12pt" align=justify>4.11</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:96px; font-size:12pt" align=justify><U>Execution</U>. &nbsp;This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. &nbsp;In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a &#147;.pdf&#148; format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or &#147;.pdf&#148; signature page were an original thereof.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:48px; font-size:12pt" align=justify>4.12</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:96px; font-size:12pt" align=justify><U>Severability</U>. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, 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 commercially 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.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:48px; font-size:12pt" align=justify>4.13</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:96px; font-size:12pt" align=justify><U>Rescission and Withdrawal Right</U>. &nbsp;Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of) any of the other Transaction Documents, whenever any Purchaser exercises a right, election, demand or option under a Transaction Document and the Company does not timely perform its related obligations within the periods therein provided, then such Purchaser may rescind or withdraw, in its sole discretion from time to time upon written notice to the Company, any relevant notice, demand or election in whole or in part without prejudice to its future actions and rights; <U>provided</U>, <U>however</U>, that in the case of a rescission of a conversion of a Debenture, the Purchaser shall be required to return any shares of Common Stock subject to any such rescinded conversion or exercise notice.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:48px; font-size:12pt" align=justify>4.14</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:96px; font-size:12pt" align=justify><U>Replacement of Securities</U>. &nbsp;If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in the case of mutilation), or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction. &nbsp;The applicant for a new certificate or instrument under such circumstances shall also pay any reasonable third-party costs (including customary indemnity) associated with the issuance of such replacement Securities.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:48px; font-size:12pt" align=justify>4.15</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:96px; font-size:12pt" align=justify><U>Remedies</U>. &nbsp;In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of the Purchasers and the Company will be entitled to specific performance under the Transaction Documents. &nbsp;The parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations contained in the Transaction Documents and hereby agrees to waive and not to assert in any action for specific performance of any such obligation the defense that a remedy at law would be adequate. &nbsp;</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:48px; font-size:12pt" align=justify>4.16</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:96px; font-size:12pt" align=justify><U>Payment Set Aside</U>. To the extent that the Company makes a payment or payments to any Purchaser pursuant to any Transaction Document or a Purchaser enforces or exercises its rights thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other person under any law (including, without limitation, any bankruptcy law, state or federal law, common law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:48px; font-size:12pt" align=justify>4.17</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:96px; font-size:12pt" align=justify><U>Usury</U>. &nbsp;To the extent it may lawfully do so, the Company hereby agrees not to insist upon or plead or in any manner whatsoever claim, and will resist any and all efforts to be compelled to take the benefit or advantage of, usury laws wherever enacted, now or at any time hereafter in force, in connection with any claim, action or proceeding that may be brought by any Purchaser in order to enforce any right or remedy under any Transaction Document. &nbsp;Notwithstanding any provision to the contrary contained in any Transaction Document, it is expressly agreed and provided that the total liability of the Company under the Transaction Documents for payments in the nature of interest shall not exceed the maximum lawful rate authorized under applicable law (the &#147;<U>Maximum Rate</U>&#148;), and, without limiting the foregoing, in no event shall any rate of interest or default interest, o
r both of them, when aggregated with any other sums in the nature of interest that the Company may be obligated to pay under the Transaction Documents exceed such Maximum Rate. &nbsp;It is agreed that if the maximum contract rate of interest allowed by law and applicable to the Transaction Documents is increased or decreased by statute or any official governmental action subsequent to the date hereof, the new maximum contract rate of interest allowed by law will be the Maximum Rate applicable to the Transaction Documents from the effective date forward, unless such application is precluded by applicable law. &nbsp;If under any circumstances whatsoever, interest in excess of the Maximum Rate is paid by the Company to any Purchaser with respect to indebtedness evidenced by the Transaction Documents, such excess shall be applied by such Purchaser to the unpaid principal balance of any such indebtedness or be refunded to the Company, the manner of handling such excess to be at such Purchaser&#146;s election.</P>

<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:48px; font-size:12pt" align=justify>4.18</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:96px; font-size:12pt" align=justify><U>Independent Nature of Purchasers&#146; Obligations and Rights</U>. &nbsp;The obligations of each Purchaser under any Transaction Document are several and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance or non-performance of the obligations of any other Purchaser under any Transaction Document. &nbsp;Nothing contained herein or in any other Transaction Document, and no action taken by any Purchaser pursuant thereto, shall be deemed to constitute the Purchasers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Purchasers are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Documents. &nbsp;Each Purchaser shall be entitled to independently protect and enforce its rights, including, wit
hout 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. &nbsp;Each Purchaser has been represented by its own separate legal counsel in their review and negotiation of the Transaction Documents. &nbsp;The Company 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.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:48px; font-size:12pt" align=justify>4.19</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:96px; font-size:12pt" align=justify><U>Liquidated Damages</U>. &nbsp;The Company&#146;s obligations to pay any partial liquidated damages or other amounts owing under the Transaction Documents is a continuing obligation of the Company and shall not terminate until all unpaid partial liquidated damages and other amounts have been paid notwithstanding the fact that the instrument or security pursuant to which such partial liquidated damages or other amounts are due and payable shall have been canceled.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:48px; font-size:12pt" align=justify>4.20</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:96px; font-size:12pt" align=justify><U>Saturdays, Sundays, Holidays, etc.</U></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:336px; font-size:12pt" align=justify>If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding Business Day.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:48px; font-size:12pt" align=justify>4.21</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:96px; font-size:12pt" align=justify><U>Construction</U>. The parties agree that each of them and/or their respective counsel has reviewed and had an opportunity to revise the Transaction Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of the Transaction Documents or any amendments hereto.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:48px; font-size:12pt" align=justify>4.22</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:96px; font-size:12pt" align=justify><B><U>WAIVER OF JURY TRIAL</U>. &nbsp;IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY. </B></P>
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<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; font-size:12pt" align=center><I>(Signature Pages Follow)</I></P>
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<P style="line-height:14pt; margin-top:0px; margin-bottom:16px; text-indent:48px; font-size:12pt" align=justify>IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.</P>
<TABLE style="font-size:10pt" cellspacing=0><TR height=0 style="font-size:0"><TD width=391.2></TD><TD width=247.2></TD></TR>
<TR><TD valign=top width=391.2><P style="line-height:14pt; margin:0px; font-family:TIMES NEW ROMAN BOLD; font-size:12pt"><B>ECLIPS ENERGY TECHNOLOGIES, INC.</B></P>
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</TD><TD valign=top width=247.2><P>&nbsp;</P></TD></TR>
<TR><TD valign=top width=391.2><P style="line-height:14pt; margin:0px; font-size:12pt">By<U>:_/s/ Benjamin Croxton_____________________</U></P>
<P style="line-height:14pt; margin:0px; font-size:12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Name: Benjamin Croxton</P>
<P style="line-height:14pt; margin:0px; font-size:12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Title: Chief Executive Officer</P>
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<P style="line-height:14pt; margin:0px; padding-left:96px; font-size:12pt">EClips Energy Technologies, Inc. </P>
<P style="line-height:14pt; margin:0px; padding-left:96px; font-size:12pt">3900A 30 1st St. N.</P>
<P style="line-height:14pt; margin:0px; padding-left:96px; font-size:12pt">St. Petersburg, FL 33714</P>
<P style="line-height:14pt; margin:0px; padding-left:96px; font-size:12pt">Tel: (727) 525-5552</P>
<P style="line-height:14pt; margin:0px; padding-left:96px; font-size:12pt">Fax: (727) 526-2990</P>
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<P style="line-height:14pt; margin:0px; padding-left:96px; font-size:12pt">Copy to:</P>
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<P style="line-height:14pt; margin:0px; padding-left:96px; font-size:12pt">Clifford J. Hunt, Esquire</P>
<P style="line-height:14pt; margin:0px; padding-left:96px; font-size:12pt">8200 Seminole Boulevard</P>
<P style="line-height:14pt; margin:0px; padding-left:96px; font-size:12pt">Seminole, FL 33772</P>
<P style="line-height:14pt; margin:0px; padding-left:96px; font-size:12pt">Tel: (727) 471-0444</P>
<P style="line-height:14pt; margin:0px; padding-left:96px; font-size:12pt">Fax: (727) 471-0447</P>
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<P style="line-height:14pt; margin:0px; font-size:12pt" align=center>[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:32px; font-size:12pt" align=center>SIGNATURE PAGE FOR PURCHASER FOLLOWS]</P>
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<P style="line-height:14pt; margin:0px; font-size:12pt" align=center>2</P>
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<P style="line-height:14pt; margin:0px; padding-right:-48px; font-size:12pt" align=center>[PURCHASER SIGNATURE PAGES TO EEGT SECURITIES PURCHASE AGREEMENT]</P>
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<P style="line-height:14pt; margin-top:0px; margin-bottom:32px; text-indent:48px; font-size:12pt" align=justify>IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.</P>
<P style="line-height:26pt; margin:0px; padding-right:-48px; font-size:12pt" align=justify>Name of Purchaser: ________________________________________________________</P>
<P style="line-height:26pt; margin:0px; padding-right:-48px; font-size:12pt" align=justify><I>Signature of Authorized Signatory of Purchaser</I>: __________________________________</P>
<P style="line-height:26pt; margin:0px; padding-right:-48px; font-size:12pt" align=justify>Name of Authorized Signatory: ____________________________________________________</P>
<P style="line-height:26pt; margin:0px; padding-right:-48px; font-size:12pt" align=justify>Title of Authorized Signatory: _____________________________________________________</P>
<P style="line-height:26pt; margin:0px; padding-right:-48px; font-size:12pt" align=justify>Email Address of Authorized Signatory: _____________________________________________</P>
<P style="line-height:26pt; margin:0px; padding-right:-48px; font-size:12pt">Facsimile Number of Authorized Signatory: __________________________________________</P>
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<P style="line-height:14pt; margin:0px; padding-right:-48px; font-size:12pt">Address for Notice of Purchaser:</P>
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<P style="line-height:14pt; margin:0px; padding-right:-48px; font-size:12pt">Address for Delivery of Securities for Purchaser (if not same as address for notice):</P>
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<P style="line-height:14pt; margin:0px; padding-right:-48px; font-size:12pt">Subscription Amount: <U>__$___________</U></P>
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<P style="line-height:14pt; margin:0px; padding-right:-48px; font-size:12pt">EIN Number: &nbsp;<B>[PROVIDE THIS UNDER SEPARATE COVER]</B></P>
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<P style="line-height:14pt; margin:0px; font-size:12pt" align=center>3</P>
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