BABYUNIVERSE, INC.
EXHIBIT 10.1
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<TYPE>EX-10.1
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<FILENAME>bu7350ex101.htm
<DESCRIPTION>EXHIBIT 10.1
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<p align="right"><font size="2" face="Times New Roman"><b>EXHIBIT 10.1</b></font></p>
<p  align="center">
<font size="2" face="Times New Roman"><b>SUBSCRIPTION AGREEMENT</b></font></p>
<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This
Subscription Agreement (this &#147;<b>Agreement</b>&#148;) is entered into as of
September 22, 2006 by and between BabyUniverse, Inc., a Florida corporation
(together with its successors and permitted assigns, the
&#147;<b>Issuer</b>&#148;), and the undersigned investor (together with its
successors and permitted assigns, the &#147;<b>Investor</b>&#148;). Capitalized
terms used but not otherwise defined herein shall have the meanings set forth in
<b>Section 9.1</b>.</font></p>
<p  align="center">
<font size="2" face="Times New Roman"><b>RECITALS</b></font></p>
<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subject to
the terms and conditions of this Agreement, the Investor desires to subscribe
for and purchase, and the Issuer desires to issue and sell to the Investor,
certain shares of the Issuer&#146;s common stock, par value $0.01 per share (the
&#147;<b>Common Stock</b>&#148;). The Board of Directors of the Issuer has
authorized the Issuer to offer a maximum of 263,852&#160; shares of Common Stock
in a private placement to the Investor and other investors at a purchase price
of $7.58 per share and on the other terms and conditions contained in this
Agreement (the &#147;<b>Offering</b>&#148;); <u>provided</u>, that the Offering
and the subsequent sale of Common Stock shall not require approval of the
Issuer&#146;s stockholders and that the Issuer reserves the right to issue and
sell a lesser or greater number of shares.</font></p>
<p  align="center">
<font size="2" face="Times New Roman"><b>TERMS OF AGREEMENT</b></font></p>
<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
consideration of the mutual representations and warranties, covenants and
agreements contained herein, the parties hereto agree as follows:</font></p>
<p>
<font size="2" face="Times New Roman">1. <b>SUBSCRIPTION AND ISSUANCE OF COMMON STOCK</b>.</font></p>
<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.1
<u>Subscription and Issuance of Common Stock</u>. Subject to the terms and
conditions of this Agreement, the Issuer shall issue and sell to the Investor
and the Investor subscribes for and shall purchase from the Issuer the number of
shares of Common Stock set forth on the signature page hereof (the
&#147;<b>Shares</b>&#148;) for the aggregate purchase price set forth on the
signature page hereof, which shall be equal to the product of the number of
Shares subscribed for by the Investor multiplied by the per share purchase price
specified in the above Recitals to this Agreement (the &#147;<b>Purchase
Price</b>&#148;).</font></p>

<p><font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.2
<u>Legend</u>. Any certificate or certificates representing the Shares shall
bear the following legend, in addition to any legend that may be required by any
Requirements of Law:</font></p>
<p>
<font size="2" face="Times New Roman">THE SHARES REPRESENTED BY THIS CERTIFICATE
MAY NOT BE SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF BY THE HOLDER EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT FILED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, AND IN COMPLIANCE WITH APPLICABLE SECURITIES LAWS OF ANY
STATE WITH RESPECT THERETO OR IN ACCORDANCE WITH AN OPINION OF COUNSEL IN FORM
AND SUBSTANCE SATISFACTORY TO THE ISSUER THAT AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE AND ALSO MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF EXCEPT IN COMPLIANCE WITH ANY APPLICABLE RULES OF THE SECURITIES AND
EXCHANGE COMMISSION.</font></p>
<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.3 <u>Use of
Proceeds</u>. The Issuer intends to use the net proceeds from the sale of the
Shares for general corporate purposes. Pending such uses, the Issuer intends to
invest the net proceeds from the sale of the Shares in short-term, marketable
securities.</font></p>

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<p>
<font size="2" face="Times New Roman">2. <b>CLOSING</b>.</font></p>
<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1
<u>Closing</u>. The closing of the transactions contemplated herein (the
&#147;<b>Closing</b>&#148;) shall take place on one or more dates designated by
the Issuer, which date (or dates) shall be at 10:00 a.m. on or after September
22, 2006. The Closing shall take place at the offices of Akerman Senterfitt.
Within two business days of the Closing, unless the Investor and the Issuer
otherwise agree (a) the Investor shall pay the Purchase Price to the Issuer, by
wire transfer of immediately available funds to an account designated in writing
by the Issuer, (b) the Issuer shall issue to the Investor the Shares, and shall
deliver or cause to be delivered to the Investor a certificate or certificates
representing the Shares duly registered in the name of the Investor, as
specified on the signature pages hereto, bearing the legend specified in Section
1.2 and (iii) all other actions referred to in this Agreement which are required
to be taken for the Closing shall be taken and all other agreements and other
documents referred to in this Agreement which are required for the Closing shall
be executed and delivered.</font></p>

<p><font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.2
<u>Termination</u>. This Agreement may be terminated at any time prior to the
Closing:</font></p>
<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(a) by mutual written consent of the Issuer and the Investor;</font></p>
<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(b) by the Investor, upon a materially inaccurate representation or breach of
any material warranty, covenant or agreement on the part of the Issuer set forth
in this Agreement, in either case such that the conditions in <b>Section 8.1</b>
would be reasonably incapable of being satisfied on or prior to the date of the
Closing; or</font></p>
<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(c) by the Issuer, upon a materially inaccurate representation or breach of any
material warranty, covenant or agreement on the part of the Investor set forth
in this Agreement, in either case such that the conditions in <b>Section 8.2</b>
would be reasonably incapable of being satisfied on or prior to the date of the
Closing.</font></p>
<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.3 <u>Effect
of Termination</u>. In the event of termination of this Agreement pursuant to
<b>Section 2.2</b>, this Agreement shall forthwith become void, there shall be
no liability on the part of the Issuer or the Investor to each other and all
rights and obligations of any party hereto shall cease; <u>provided</u>,
<u>however</u>, that nothing herein shall relieve any party from liability for
the willful breach of any of its representations and warranties, covenants or
agreements set forth in this Agreement.</font></p>
<p>
<font size="2" face="Times New Roman">3.<b> REPRESENTATIONS AND WARRANTIES OF THE ISSUER.</b></font></p>
<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As a material
inducement to the Investor entering into this Agreement and subscribing for the
Shares, the Issuer represents and warrants to the Investor as
follows:</font></p>

<p><font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.1
<u>Corporate Status</u>. The Issuer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Florida. Each of
the Issuer and its Subsidiaries has full corporate power and authority to own
and hold its properties and to conduct its business as described in the
Issuer&#146;s SEC Reports. Each of the Issuer and its Subsidiaries is duly
qualified to do business and is in good standing in each jurisdiction in which
the nature of its business requires qualification or good standing, except for
any failure to be so qualified or be in good standing that would not have a
Material Adverse Effect.</font></p>

<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2
<u>Corporate Power and Authority</u>. The Issuer has the corporate power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder and to consummate the transactions contemplated hereby. At or prior to
the Closing, the Issuer will have taken all necessary corporate action to
authorize the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby. No further approval or
authorization of any stockholder or the Board of Directors of the Issuer is
required for the issuance and sale of the Shares. </font></p>
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<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.3
<u>Enforceability</u>. This Agreement has been duly executed and delivered by
the Issuer and (assuming it has been duly authorized, executed and delivered by
the Investor) constitutes a legal, valid and binding obligation of the Issuer,
enforceable against the Issuer in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors&#146; rights generally, or general equitable principles, regardless of
whether such enforceability is considered in a proceeding at law or in
equity.</font></p>
<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.4 <u>No
Violation</u>. The execution and delivery by the Issuer of this Agreement, the
consummation of the transactions contemplated hereby, and the compliance by the
Issuer with the terms and provisions hereof (including, without limitation, the
Issuer&#146;s issuance to the Investor of the Shares as contemplated by and in
accordance with this Agreement), will not result in a default under (or give any
other party the right, with the giving of notice or the passage of time (or
both), to declare a default or accelerate any obligation under) or violate the
Certificate of Incorporation or By-Laws of the Issuer or any material Contract
to which the Issuer is a party (except to the extent such a default,
acceleration, or violation would not, in the case of a Contract, have a Material
Adverse Effect on the Issuer), or materially violate any Requirement of Law
applicable to the Issuer, or result in the creation or imposition of any
material Lien upon any of the capital stock, properties or assets of the Issuer
or any of its Subsidiaries (except where such violations of any Requirement of
Law or creations or impositions of any Liens would not have a Material Adverse
Effect on the Issuer). Neither the Issuer nor any of its Subsidiaries is (a) in
default under or in violation of any material Contract to which it is a party or
by which it or any of its properties is bound or (b) to its knowledge, in
violation of any order of any Governmental Authority, which, in the case of
<b>clauses (a)</b> and <b>(b)</b>, could reasonably be expected to have a
Material Adverse Effect. </font></p>

<p><font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.5
<u>Consents/Approvals</u>. Except for the filings with the SEC, the securities
commissions of the states in which the Shares are to be issued, and the NASDAQ
Stock Market (if any), all of which the Issuer agrees to timely file after
Closing, no consents, filings, authorizations or other actions of any
Governmental Authority are required to be obtained or made by the Issuer for the
Issuer&#146;s execution, delivery and performance of this Agreement which have
not already been obtained or made. No consent, approval, waiver or other action
by any Person under any Contract to which the Issuer is a party or by which the
Issuer or any of its properties or assets are bound is required or necessary for
the execution, delivery or performance by the Issuer of this Agreement and the
consummation of the transactions contemplated hereby, except where the failure
to obtain such consents would not have a Material Adverse Effect on the Issuer.
</font></p>
<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.6 <u>Valid
Issuance</u>. Upon payment of the Purchase Price by the Investor and delivery to
the Investor of the certificates for the Shares, such Shares will be validly
issued, fully paid and non-assessable and will be free and clear of all Liens
imposed by the Issuer and will not be subject to any preemptive rights or other
similar rights of stockholders of the Issuer.</font></p>
<font size="2" face="Times New Roman">
</font>

<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.7 <u>SEC
Filings, Other Filings and NASDAQ Stock Market Compliance</u>. The Issuer has
timely made all filings required to be made by it under the Exchange Act. The
Issuer has delivered or made accessible to the Investor true, accurate and
complete copies of (a) Issuer&#146;s Annual Report on Form 10-K for the fiscal
year ended December 31, 2005, (b) the Issuer&#146;s Quarterly Report on Form
10-Q for the fiscal quarter ended June 30, 2006, and (c) the Issuer&#146;s
definitive proxy statement dated May 1, 2006 relating to its 2006 Annual Meeting
of Stockholders (the &#147;<b>SEC Reports</b>&#148;). The SEC Reports, when
filed, complied in all material respects with all applicable requirements of the
Exchange Act and the Sarbanes-Oxley Act of 2002, if and to the extent
applicable, and the rules and regulations of the SEC thereunder applicable to
the SEC Reports. None of the SEC Reports, at the time of filing, 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 not
misleading in light of the circumstances in which they were made. The Issuer has
filed in a timely manner all documents that the Issuer was required to file
under the Exchange Act during the twelve (12) months preceding the date of this
Agreement. The Issuer is currently eligible to register the resale of the Shares
in a secondary offering on a registration statement on Form S-3 under the
Securities Act.</font></p>


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<p><font size="2" face="Times New Roman">The Issuer has taken, or will have
taken prior to the Closing, all necessary actions to ensure its continued
inclusion in, and the continued eligibility of the Common Stock for trading on,
the NASDAQ Stock Market under all currently effective inclusion requirements.
Each balance sheet included in the SEC Reports (including any related notes and
schedules) fairly presents in all material respects the consolidated financial
position of the Issuer as of its date, and each of the other financial
statements included in the SEC Reports (including any related notes and
schedules) fairly presents in all material respects the consolidated results of
operations of the Issuer for the periods or as of the dates therein set forth in
accordance with GAAP consistently applied during the periods involved (except
that the interim reports are subject to adjustments which might be required as a
result of year end audit and except as otherwise stated therein). Such financial
statements included in the SEC Reports were, at that time they were filed,
consistent with the books and records of the Issuer in all material respects and
complied as to form in all material respects with then applicable accounting
requirements and with the rules and regulations of the SEC with respect thereto.
The Issuer keeps accounting records in accordance with GAAP in which all
material assets and liabilities, and all material transactions, including
off-balance sheet transactions, of the Issuer are recorded in material
conformity with applicable accounting principles and disclosed as required by
Requirements of Law in the SEC Reports.</font></p>
<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.8
<u>Commissions</u>. The Issuer has not incurred any obligation for any
finder&#146;s or broker&#146;s or agent&#146;s fees or commissions in connection
with the transactions contemplated hereby.</font></p>
<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.9
<u>Capitalization.</u> As of the date of this Agreement, the authorized capital
stock of the Issuer consists of 50 million shares of Common Stock and 10 million
shares of Preferred Stock. All issued and outstanding shares of capital stock of
the Issuer have been, and as of the Closing Date will be, duly authorized and
validly issued and are fully paid and non-assessable, have been issued in
compliance with all applicable state and federal securities laws in all material
respects and were not issued in violation of, or subject to, any preemptive,
subscription or other similar rights of any stockholder of the Issuer. As of
June 30, 2006, the Issuer had issued and outstanding 5,392,534 shares of Common
Stock and no shares of preferred stock. Except for outstanding options to
purchase 279,248 shares of Common Stock, warrants to purchase 240,000 shares of
Common Stock, and restricted stock agreements covering 107,138 shares of
nonvested Common Stock, as of June 30, 2006, there were no outstanding options,
warrants, rights (including conversion or preemptive rights and rights of first
refusal and similar rights) or agreements, orally or in writing, for the
purchase or acquisition from the Issuer of any shares of capital stock, and the
Issuer is not a party to or subject to any agreement or understanding and, to
the Issuer&#146;s knowledge, there is no agreement or understanding between any
Persons, which affects or relates to the voting or giving of written consents
with respect to any security or by a director of the Issuer.&#160; The Issuer
owns, directly or indirectly, all of the capital stock of its Subsidiaries, free
and clear of any Liens or equitable interests other than as reflected in the SEC
Reports. The Issuer has no obligation, contingent or otherwise, to redeem or
repurchase any equity security or any security that is a combination of debt and
equity.</font></p>

<p><font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.10
<u>Material Changes</u>. Except as set forth in the SEC Reports or as otherwise
contemplated herein, since June 30, 2006, there has been no Material Adverse
Effect in respect of the Issuer and its Subsidiaries taken as a whole. Except as
set forth in the SEC Reports, since June 30, 2006, there has not been: (i) any
direct or indirect redemption, purchase or other acquisition by the Issuer of
any shares of the Common Stock; (ii) any declaration, setting aside or payment
of any dividend or other distribution by the Issuer with respect to the Common
Stock; (iii) any borrowings incurred or any material liabilities (absolute,
accrued or contingent) assumed, other than current liabilities incurred in the
ordinary course of business, liabilities under Contracts entered into in the
ordinary course of business, liabilities not required to be reflected on the
Issuer&#146;s financial statements pursuant to GAAP or required to be disclosed
in the SEC Reports, or as disclosed in the Form 8-K filed by the Issuer on July
14, 2006 (the &#147;Hercules 8-K&#148;); (iv) any Lien or adverse claim on any
of its material properties or assets, except for Liens for taxes not yet due and
payable or otherwise in the ordinary course of business and as disclosed in the
Hercules 8-K; (v) any sale, assignment or transfer of any of its material
assets, tangible or intangible, except in the ordinary course of business; (vi)
any extraordinary losses or waiver of any rights of material value, other than
in the ordinary course of business; (vii) any material capital expenditures or
commitments therefor other than in the ordinary course of business;</font></p>

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<p>
<font size="2" face="Times New Roman">(viii) any other material transaction
other than in the ordinary course of business; (ix) any material change in the
nature or operations of the business of the Issuer and its Subsidiaries; (x) any
default in the payment of principal or interest in any material amount, or
violation of any material covenant, with respect to any outstanding debt
obligations that are material to the Issuer and its Subsidiaries as a whole;
(xi) any material changes to its critical accounting policies or material
deviations from historical accounting and other practices in connection with the
maintenance of the Issuer&#146;s books and records; or (xii) any agreement or
commitment to do any of the foregoing.</font></p>

<p><font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.11
<u>Litigation</u>. Except as disclosed in the SEC Reports, there is no action,
suit, proceeding or investigation pending or, to the Issuer&#146;s knowledge,
currently threatened against the Issuer or any of its Subsidiaries that
questions the validity of this Agreement or the right of the Issuer to enter
into it, or to consummate the transactions contemplated hereby, or that could
reasonably be expected to result, either individually or in the aggregate, in a
Material Adverse Effect on the Issuer or any change in the current equity
ownership of the Issuer. The foregoing includes, without limitation, actions
pending or, to the Issuer&#146;s knowledge, threatened involving the prior
employment of any of the Issuer&#146;s employees or their use in connection with
the Issuer&#146;s business of any information or techniques allegedly
proprietary to any of their former employers. Neither the Issuer nor any of its
Subsidiaries is a party to or subject to the provisions of any order, writ,
injunction, judgment or decree of any court or Governmental Authority. There is
no action, suit, proceeding or investigation by the Issuer or any of its
Subsidiaries currently pending or which the Issuer or any of its Subsidiaries
currently intends to initiate, which could reasonably be expected to have a
Material Adverse Effect.</font></p>
<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.12
<u>Rights of Registration, Voting Rights, and Anti-Dilution</u>. Except as
contemplated in this Agreement and except as disclosed on <b>Schedule 3.12</b>,
the Issuer has not granted or agreed to grant any registration rights, including
piggyback rights, to any Person and, to the Issuer&#146;s knowledge, no
stockholder of the Issuer has entered into any agreements with respect to the
voting of capital shares of the Issuer. Except as disclosed on <b>Schedule
3.12</b>, the issuance of the Shares does not constitute an anti-dilution event
for any existing security holders of the Issuer, pursuant to which such security
holders would be entitled to additional securities or a reduction in the
applicable conversion price or exercise price of any securities.</font></p>
<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.13
<u>Offerings</u>. Subject in part to the truth and accuracy of Investor&#146;s
representations and warranties set forth in this Agreement, the offer, sale and
issuance of the Shares as contemplated by this Agreement are exempt from the
registration requirements of the Securities Act and any applicable state
securities laws, and neither the Issuer nor any authorized agent acting on its
behalf will take any action hereafter that would cause the loss of such
exemption.</font></p>

<p><font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.14
<u>Disclosure.</u> The Disclosure Documents (as defined in <b>Section 4.7</b>),
as of their respective dates, did not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading.</font></p>
<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.15
<u>Licenses and Permits</u>. To the Issuer&#146;s knowledge, each of the Issuer
and its Subsidiaries has all Permits under applicable Requirements of Law from
all applicable Governmental Authorities that are necessary to operate its
businesses as presently conducted and all such Permits are in full force and
effect, except where the failure to have any such Permits in full force and
effect would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect. To the Issuer&#146;s knowledge, neither the
Issuer nor any of its Subsidiaries is in default under, or in violation of or
noncompliance with, any of such Permits, except for any such default, violation,
or noncompliance which would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect. To the Issuer&#146;s knowledge,
other than as disclosed in the SEC Reports, there is no proposed change in any
Requirements of Law which would require the Issuer and its Subsidiaries to
obtain any Permits in order to conduct its business as presently conducted that
the Issuer and its Subsidiaries do not currently possess and the lack of which
could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.</font></p>

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<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.16
<u>Patents and Trademarks.</u> To the Issuer&#146;s knowledge and except as
disclosed in the SEC Reports the Issuer and each of its Subsidiaries has, or has
rights to use, all patents, patent applications, trademarks, trademark
applications, service marks, trade names, copyrights, licenses and know-how
(including trade secrets or other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures) (collectively, the
&#147;<b>Intellectual Property Rights</b>&#148;) that are necessary for use in
connection with its business as presently conducted, except where the failure to
have such Intellectual Property Rights would not reasonably be expected to have
a Material Adverse Effect, and, to the Issuer&#146;s knowledge and except as
disclosed in the SEC Reports, there is no existing infringement by another
person or entity of any of the Intellectual Property Rights that are necessary
for use in connection with the Issuer&#146;s business as presently conducted. To
the Issuer&#146;s knowledge and except as disclosed in the SEC Reports, the
Issuer is not infringing on, or in conflict with, any right of any other person
with respect to any intangibles nor is there any claim of infringement made or
threatened by a third party against or involving the Issuer.</font></p>

<p><font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.17
<u>Insurance.</u> The Issuer maintains and will continue to maintain insurance
with such insurers, and insuring against such losses, in such amounts, and
subject to such deductibles and exclusions as are customary in the Issuer&#146;s
industry and otherwise reasonably prudent, all of which insurance is in full
force and effect.</font></p>
<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.18
<u>Material Contracts</u>. All material Contracts to which the Issuer or its
Subsidiaries is a party and which are required to have been filed by the Issuer
as exhibits to the SEC Reports have been filed by the Issuer with the SEC
pursuant to the requirements of the Exchange Act. Each such material Contract is
in full force and effect, except as otherwise required pursuant to their
respective terms, and is binding on the Issuer or its Subsidiaries, as the case
may be, in each case, in accordance with their respective terms, and neither the
Issuer or any of its Subsidiaries nor, to the Issuer&#146;s knowledge, any other
party thereto is in breach of, or in default under, any such material Contract,
which breach or default would reasonably be expected to have a Material Adverse
Effect. There exists no actual or, to the knowledge of the Issuer, threatened
termination, cancellation or limitation of, or any material adverse modification
or change in, the business relationship of the Issuer or any of its
Subsidiaries, or the business of the Issuer or any of its Subsidiaries, with any
customer or supplier or any group of customers or suppliers whose purchases or
inventories provided to the business of the Issuer or any of its Subsidiaries
would, individually or in the aggregate, have a Material Adverse
Effect.</font></p>
<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.19
<u>Taxes</u>. The Issuer has filed all material federal, state and foreign
income and franchise tax returns (or has duly filed extensions thereto) and has
paid or accrued all taxes shown as due thereon, and the Issuer has no knowledge
of a tax deficiency which has been or might be asserted or threatened against it
which is reasonably likely to have a Material Adverse Effect.</font></p>
<p>
<font size="2" face="Times New Roman">4. <b>REPRESENTATIONS AND WARRANTIES OF THE INVESTOR</b>.</font></p>

<p><font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As a material
inducement to the Issuer entering into this Agreement and issuing the Shares,
the Investor represents, warrants, and covenants to the Issuer as
follows:</font></p>
<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.1 <u>Power
and Authority</u>. The Investor, if other than a natural person, is an entity
duly organized, validly existing and in good standing under the laws of the
state of its incorporation or formation. The Investor has the corporate,
partnership or other power (or capacity) and authority under applicable law to
execute and deliver this Agreement and consummate the transactions contemplated
hereby, and has all necessary authority to execute, deliver and perform its
obligations under this Agreement and to consummate the transactions contemplated
hereby. The Investor has taken all necessary action to authorize the execution,
delivery and performance of this Agreement and the transactions contemplated
hereby.</font></p>
<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2 <u>No
Violation</u>. The execution and delivery by the Investor of this Agreement, the
consummation of the transactions contemplated hereby, and the compliance by the
Investor with the terms and provisions hereof, will not result in a default
under (or give any other party the right, with the giving of notice or the
passage of time (or both), to declare a default or accelerate any obligation
under) or violate any charter or similar documents of the Investor, if other
than a natural person, or any Contract to which the Investor is a party or by
which it or its properties or assets are bound, or violate any Requirement of
Law applicable to the Investor, other than such violations or defaults which,
individually and in the aggregate, do not and will not have a Material Adverse
Effect on the Investor. The Investor will comply with any Requirement of Law
applicable to it in connection with the Offering and any resale by the Investor
of the Shares.</font></p>

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<PAGE>
<br>

<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.3
<u>Consents/Approvals</u>. No consents, filings, authorizations or actions of
any Governmental Authority are required for the Investor&#146;s execution,
delivery and performance of this Agreement. No consent, approval, waiver or
other actions by any Person under any Contract to which the Investor is a party
or by which the Investor or any of its properties or assets are bound is
required or necessary for the execution, delivery and performance by the
Investor of this Agreement and the consummation of the transactions contemplated
hereby.</font></p>

<p><font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.4
<u>Enforceability</u>. This Agreement has been duly executed and delivered by
the Investor and (assuming it has been duly authorized, executed, and delivered
by the Issuer) constitutes a legal, valid and binding obligation of the
Investor, enforceable against the Investor in accordance with its terms, except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditor&#146;s rights generally, or general equitable principles, regardless of
whether enforceability is considered in a proceeding at law or in
equity.</font></p>
<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.5
<u>Investment Intent</u>. The Investor is acquiring the Shares hereunder for its
own account and with no present intention of distributing or selling such Shares
and further agrees not to transfer such Shares in violation of the Securities
Act or any applicable state securities law, and no one other than the Investor
will have any beneficial interest in the Shares (except to the extent that the
Investor may have delegated voting authority to its investment advisor). The
Investor agrees that it will not sell or otherwise dispose of any of the Shares
unless such sale or other disposition has been registered under the Securities
Act or, in the opinion of counsel acceptable to the Issuer, is exempt from
registration under the Securities Act and has been registered or qualified or,
in the opinion of such counsel acceptable to the Issuer, is exempt from
registration or qualification under applicable state securities laws. The
Investor understands that the offer and sale by the Issuer of the Shares being
acquired by the Investor hereunder has not been registered under the Securities
Act by reason of their contemplated issuance in transactions exempt from the
registration and prospectus delivery requirements of the Securities Act pursuant
to Section 4(2) thereof, and that the reliance of the Issuer on such exemption
from registration is predicated in part on these representations and warranties
of the Investor. The Investor acknowledges that pursuant to <b>Section 1.2
</b>of this Agreement a restrictive legend consistent with the foregoing has
been or will be placed on the certificates for the Shares.</font></p>

<p><font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.6
<u>Accredited Investor</u>. The Investor is an &#147;accredited investor&#148;
as such term is defined in Rule 501(a) of Regulation D under the Securities Act,
and has such knowledge and experience in financial and business matters that it
is capable of evaluating the merits and risks of the investment to be made by it
hereunder.</font></p>
<font size="2" face="Times New Roman">
</font>

<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.7
<u>Adequate Information</u>. The Investor has received from the Issuer, and has
reviewed, such information which the Investor considers necessary or appropriate
to evaluate the risks and merits of an investment in the Shares, including
without limitation, the Disclosure Schedule to this Agreement, which have been
received by the Investor as part of an informational packet of materials from
the Issuer (the &#147;<b>Disclosure Documents</b>&#148;). The Investor
acknowledges that each of the SEC Reports, including the risk factors contained
therein, are specifically incorporated herein by reference and form an integral
part of this Agreement.</font></p>
<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.8
<u>Opportunity to Question</u>. The Investor has had the opportunity to
question, and has questioned, to the extent deemed necessary or appropriate,
representatives of the Issuer so as to receive answers and verify information
obtained in the Investor&#146;s examination of the Issuer, including the
information that the Investor has received and reviewed as referenced in
<b>Section 4.7</b> hereof in relation to its investment in the
Shares.</font></p>

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<PAGE>
<br>

<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.9 <u>No
Other Representations</u>. No oral or written material representations have been
made to the Investor in connection with the Investor&#146;s acquisition of the
Shares which were in any way inconsistent with the information set forth in the
Disclosure Documents. The Investor acknowledges that in deciding whether to
enter into this Agreement and to purchase the Shares hereunder, it has not
relied on any representations or warranties of any type or description made by
the Issuer or any of its representatives with regard to the Issuer, any of its
Subsidiaries, any of their respective businesses, properties or prospects of the
investment contemplated herein, other than the representations and warranties
set forth in Section 3 hereof.</font></p>

<p><font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.10
<u>Knowledge and Experience</u>. The Investor has such knowledge and experience
in financial, tax and business matters, including substantial experience in
evaluating and investing in common stock and other securities (including the
common stock and other securities of speculative companies), so as to enable the
Investor to utilize the information referred to in <b>Section 4.7</b> hereof and
any other information made available by the Issuer to the Investor in order to
evaluate the merits and risks of an investment in the Shares and to make an
informed investment decision with respect thereto.</font></p>
<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.11
<u>Independent Decision</u>. The Investor is not relying on the Issuer or on any
legal or other opinion in the materials reviewed by the Investor with respect to
the financial or tax considerations of the Investor relating to its investment
in the Shares. The Investor has relied solely on the representations and
warranties, covenants and agreements of the Issuer in this Agreement (including
the exhibits and schedules hereto) and on its examination and independent
investigation in making its decision to acquire the Shares.</font></p>
<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.12
<u>Commissions</u>. The Investor has not incurred any obligation for any
finder&#146;s or broker&#146;s or agent&#146;s fees or commissions in connection
with the transactions contemplated hereby.</font></p>
<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.13
<u>Underwriter Disclaimer</u>. The Investor disclaims being an underwriter, but
the Investor being deemed an underwriter by the SEC shall not relieve the Issuer
of any of its obligations hereunder.</font></p>
<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.14
<u>Independent Acquisition</u>. The Investor is acquiring from the Issuer for
its own account, and is making an independent investment decision in subscribing
for, that number of shares of Common Stock set forth on the signature page
hereof; the Investor is not acting in concert with any other investor or
purchaser in connection with the acquisition or subsequent voting or disposition
of the shares being subscribed for pursuant to this Agreement.</font></p>

<p><font size="2" face="Times New Roman">5. <b>COVENANTS</b>.</font></p>
<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.1 <u>Public
Announcements</u>. The Investor agrees not to make any public announcement or
issue any press release or otherwise publicly disseminate any information about
the subject matter of this Agreement. Except as provided herein, the Issuer
shall have the right to make such public announcements and shall control, in its
sole and absolute discretion, the timing, form and content of all press releases
or other public communications of any sort relating to the subject matter of
this Agreement, and the method of their release, or publication thereof. The
Issuer shall file after the Closing Date a Current Report on Form 8-K with the
SEC in respect of the transactions contemplated by this Agreement within the
time period prescribed by that Form. The Issuer may issue an initial press
release relating to the transactions contemplated by this Agreement, but shall
not identify any Investor in such press release without the consent of such
Investor, except as may be required by any Requirement of Law or rule of any
exchange or national securities association on which the Issuer&#146;s
securities are listed.</font></p>
<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.2
<u>Further Assurances</u>. Each party shall execute and deliver such additional
instruments and other documents and shall take such further actions as may be
reasonably necessary or appropriate to effectuate, carry out and comply with all
of the terms of this Agreement and the transactions contemplated hereby. Each of
the Investor and the Issuer shall make on a prompt and timely basis all
governmental or regulatory notifications and filings required to be made by it
with or to any Governmental Authority in connection with the consummation of the
transactions contemplated hereby. The Issuer and the Investor each agree to
cooperate with the other in the preparation and filing of all forms,
notifications, reports and information, if any, required or reasonably deemed
advisable pursuant to any Requirement of Law or the rules of The NASDAQ Stock
Market in connection with the transactions contemplated by this Agreement and to
use their respective commercially reasonable efforts to agree jointly on a
method to overcome any objections by any Governmental Authority to any such
transactions. Except as may be specifically required hereunder, neither of the
parties hereto or their respective Affiliates shall be required to agree to take
any action that in the reasonable opinion of such party would result in or
produce a Material Adverse Effect on such party.</font></p>


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<p><font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.3
<u>Notification of Certain Matters</u>. Prior to the Closing, each party hereto
shall give prompt notice to the other party of the occurrence, or
non-occurrence, of any event which would be likely to cause any representation
and warranty herein to be untrue or inaccurate, or any covenant, condition or
agreement herein not to be complied with or satisfied.</font></p>
<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.4
<u>Confidential Information</u>. The Investor agrees that no portion of the
Confidential Information (as defined below) shall be disclosed to third parties,
except as may be required by law, without the prior express written consent of
the Issuer, and shall not be used by the Investor other than in connection with
its evaluation of the transactions contemplated hereby; <u>provided</u>, that
the Investor may share such information with such of its officers and
professional advisors as may need to know such information to assist the
Investor in its evaluation thereof on the condition that such parties agree to
be bound by the terms hereof. &#147;<b>Confidential Information</b>&#148; means
the existence and terms of this Agreement, the transactions contemplated hereby,
and the disclosures and other information contained herein, excluding any
disclosures or other information that is publicly available. To the extent the
Investor has executed a separate confidentiality agreement with the Issuer in
connection with the Offering, the Investor agrees to comply with all of its
obligations under such agreement.</font></p>
<p>
<font size="2" face="Times New Roman">6. <b>OMMITTED</b></font></p>
<p>
<font size="2" face="Times New Roman">7. <b>OMMITTED</b></font></p>
<p>
<font size="2" face="Times New Roman">8. <b>CONDITIONS TO CLOSING</b>.</font></p>
<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.1
<u>Conditions to the Obligations of the Investor</u>. The obligation of the
Investor to proceed with the Closing is subject to the following conditions any
and all of which may be waived by the Investor, in whole or in part, to the
extent permitted by applicable law: </font></p>
<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)
<u>Representations and Warranties</u>. Each of the representations and
warranties of the Issuer contained in this Agreement shall be true and correct
in all material respects as of the Closing as though made on and as of the
Closing, except (i) for changes specifically permitted by this Agreement, (ii)
that those representations and warranties which address matters only as of a
particular date shall remain true and correct as of such date, and (iii) such
failures to be true and correct which would not, individually or in the
aggregate, have a Material Adverse Effect on the Issuer. Unless the Investor
receives written notice to the contrary at the Closing, Investor shall be
entitled to assume that the preceding is accurate in all respects at the
Closing. </font></p>

<p><font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)
<u>Agreement and Covenants</u>. The Issuer shall have performed or complied in
all material respects with all agreements and covenants required by this
Agreement to be performed or complied with by it on or prior to the Closing.
Unless the Investor receives written notice to the contrary at the Closing,
Investor shall be entitled to assume that the preceding is accurate in all
respects at the Closing. </font></p>
<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)
<u>No Order</u>. No Governmental Authority shall have enacted, issued,
promulgated, enforced or entered any statute, rule, regulation, executive order,
decree, injunction, or other order (whether temporary, preliminary or permanent)
which is in effect and which materially restricts, prevents or prohibits
consummation of the Closing or any transaction contemplated by this Agreement.
</font></p>
<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)
<u>Opinion of Issuer&#146;s Counsel</u>. The Investor shall have received an
opinion of Issuer&#146;s counsel, dated the Closing Date, with respect to legal
matters customary for private offerings of this type.</font></p>

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<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)
<u>Closing Certificate</u>. The Investor shall have received a certificate
executed by the President or Chief Financial Officer of the Issuer, dated as of
the Closing, to the effect that the representations and warranties of the Issuer
contained in <b>Section 3</b> hereof are true and correct in all material
respects as of the Closing, and that all covenants, agreements and conditions
required to be satisfied by the Issuer under this Agreement at or prior to the
Closing have been performed, satisfied and complied with by the Issuer in all
material respects. </font></p>
<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.2
<u>Conditions to the Obligations of the Issuer</u>. The obligation of the Issuer
to proceed with the Closing is subject to the following conditions any and all
of which may be waived by the Issuer, in whole or in part, to the extent
permitted by applicable law: </font></p>

<p><font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)
<u>Representations and Warranties</u>. Each of the representations and
warranties of the Investor contained in this Agreement shall be true and correct
as of the Closing as though made on and as of the Closing, except (i) for
changes specifically permitted by this Agreement, and (ii) that those
representations and warranties which address matters only as of a particular
date shall remain true and correct as of such date. Unless the Issuer receives
written notification to the contrary at the Closing, the Issuer shall be
entitled to assume that the preceding is accurate in all respects at the
Closing. </font></p>
<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)
<u>Agreement and Covenants</u>. The Investor shall have performed or complied in
all material respects with all agreements and covenants required by this
Agreement to be performed or complied with by it on or prior to the Closing.
Unless the Issuer receives written notification to the contrary at the Closing,
the Issuer shall be entitled to assume that the preceding is accurate in all
respects at the Closing. </font></p>
<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)
<u>No Order</u>. No Governmental Authority shall have enacted, issued,
promulgated, enforced or entered any statute, rule, regulation, executive order,
decree, injunction, or other order (whether temporary, preliminary or permanent)
which is in effect and which materially restricts, prevents or prohibits
consummation of the Closing or any transaction contemplated by this Agreement.
</font></p>
<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)
<u>Agreement</u>. The Investor shall have executed and delivered to the Issuer
this Agreement (and completed the information requested on the signature page
hereto). </font></p>
<font size="2" face="Times New Roman">
</font>

<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)
<u>Securities Exemptions</u>. The offer and sale of the Shares to the Investor
pursuant to this Agreement shall be exempt from the registration requirements of
the Securities Act and the registration and/or qualification requirements of all
applicable state securities laws. </font></p>

<p><font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)
<u>Payment of Purchase Price</u>. The Investor shall have delivered to the
Issuer by wire transfer of immediately available funds, full payment of the
purchase price for the purchased shares as specified in <b>Section
1.1</b>.</font></p>
<p>
<font size="2" face="Times New Roman">9. <b>MISCELLANEOUS</b>.</font></p>
<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.1
<u>Defined Terms</u>. As used herein the following terms shall have the
following meanings: </font></p>
<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)
&#147;<b>Affiliate</b>&#148; shall have the meaning ascribed to it in Rule 12b-2
of the General Rules and Regulations under the Exchange Act, as in effect on the
date hereof. </font></p>
<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)
&#147;<b>Agreement</b>&#148; has the meaning specified in the preamble to this
Agreement. </font></p>
<p>

<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)
Omitted. </font></p>
<p>

<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)
&#147;<b>Bylaws</b>&#148; means the Bylaws of the Issuer, as the same may be
supplemented, amended, or restated from time to time. </font></p>

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<br>

<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)
&#147;<b>Certificate of Incorporation</b>&#148; means the Issuer&#146;s
Certificate of Incorporation, as the same may be supplemented, amended or
restated from time to time. </font></p>
<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)
&#147;<b>Closing</b>&#148; has the meaning specified in <b>Section 2.1</b> of
this Agreement. </font></p>

<p><font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)
&#147;<b>Common Stock</b>&#148; has the meaning specified in the Recitals to
this Agreement. </font></p>
<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)
&#147;<b>Confidential Information</b>&#148; has the meaning specified in
<b>Section 5.4</b> of this Agreement. </font></p>
<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)
&#147;<b>Contract</b>&#148; means any indenture, lease, sublease, loan
agreement, mortgage, note, restriction, commitment, obligation or other
contract, agreement or instrument. </font></p>
<p>

<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j)
&#147;<b>Disclosure Documents</b>&#148; has the meaning specified in <b>Section
4.7</b> of this Agreement. </font></p>
<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k)
&#147;<b>Exchange Act</b>&#148; means the Securities Exchange Act of 1934, as
amended. </font></p>
<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l)
&#147;<b>GAAP</b>&#148; means generally accepted accounting principles in effect
in the United States of America. </font></p>
<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m)
&#147;<b>Governmental Authority</b>&#148; means any nation or government, any
state or other political subdivision thereof, and any entity or official
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government. </font></p>
<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n)
Omitted. </font></p>
<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o)
Omitted. </font></p>

<p><font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(p)
&#147;<b>Intellectual Property Rights</b>&#148; has the meaning specified in
<b>Section 3.16</b> of this Agreement. </font></p>
<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(q)
&#147;<b>Investor</b>&#148; has the meaning specified in the preamble to this
Agreement. </font></p>
<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(r)
&#147;<b>Issuer</b>&#148; has the meaning specified in the preamble to this
Agreement. </font></p>
<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(s)
Omitted </font></p>
<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(t)
&#147;<b>Lien</b>&#148; means any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any conditional sale or other
title retention agreement, any lease in the nature thereof, and the filing of or
agreement to give any financing statement under the Uniform Commercial Code or
comparable law of any jurisdiction in connection with such mortgage, pledge,
security interest, encumbrance, lien or charge). </font></p>
<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(u)
&#147;<b>Material Adverse Effect</b>&#148; means a material and adverse change
in, or effect on, the financial condition, properties, assets, liabilities,
rights, obligations, operations or business, of a Person and its Subsidiaries
taken as a whole. </font></p>
<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v)
&#147;<b>Offering</b>&#148; has the meaning specified in the Recitals to this
Agreement. </font></p>
<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(w)
&#147;<b>Permit</b>&#148; means any permit, certificate, consent, approval,
authorization, order, license, variance, franchise or other similar indicia of
authority issued or granted by any Governmental Authority. </font></p>


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<p><font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x)
&#147;<b>Person</b>&#148; means an individual, partnership, corporation, limited
liability company, business trust, joint stock company, estate, trust,
unincorporated association, joint venture, Governmental Authority or other
entity, of whatever nature. </font></p>
<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(y)
&#147;<b>Purchase Price</b>&#148; has the meaning specified in <b>Section
1.1</b> of this Agreement. </font></p>
<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(z)
Omitted. </font></p>
<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(aa)
Omitted<b>.</b> </font></p>
<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(bb)
&#147;<b>Requirements of Law</b>&#148; means as to any Person, the certificate
of incorporation, by-laws or other organizational or governing documents of such
Person, and any domestic or foreign and federal, state or local law, rule,
regulation, statute or ordinance or determination of any arbitrator or a court
or other Governmental Authority, in each case applicable to, or binding upon,
such Person or any of its properties or to which such Person or any of its
property is subject. </font></p>
<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(cc)
Omitted. </font></p>
<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(dd)
&#147;<b>SEC</b>&#148; means the Securities and Exchange Commission. </font></p>
<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ee)
&#147;<b>SEC Reports</b>&#148; has the meaning specified in <b>Section 3.7</b>
of this Agreement. </font></p>

<p><font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ff)
&#147;<b>Securities Act</b>&#148; means the Securities Act of 1933, as amended.
</font></p>
<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(gg)
&#147;<b>Shares</b>&#148; has the meaning specified in <b>Section 1.1</b> of
this Agreement. </font></p>
<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(hh)
Omitted</font></p>
<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)
&#147;<b>Subsidiary</b>&#148; means as to any Person, a corporation or limited
partnership of which more than 50% of the outstanding capital stock or
partnership interests having full voting power is at the time directly or
indirectly owned or controlled by such Person. </font></p>
<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.2 <u>Other
Definitional Provisions</u>.</font></p>
<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)
All terms defined in this Agreement shall have the defined meanings when used in
any certificates, reports or other documents made or delivered pursuant hereto
or thereto, unless the context otherwise requires. </font></p>
<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)
Terms defined in the singular shall have a comparable meaning when used in the
plural, and vice versa. </font></p>
<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)
All accounting terms shall have a meaning determined in accordance with
GAAP.</font></p>
<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)
The words &#147;hereof,&#148; &#147;herein&#148; and &#147;hereunder,&#148; and
words of similar import, when used in this Agreement shall refer to this
Agreement as a whole (including any exhibits and schedules hereto) and not to
any particular provision of this Agreement. </font></p>

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<br>


<p><font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.3
<u>Notices</u>. All notices, requests, demands, claims, and other communications
hereunder shall be in writing and shall be delivered by certified or registered
mail (first class postage pre-paid), guaranteed overnight delivery, or facsimile
transmission if such transmission is confirmed by delivery by certified or
registered mail (first class postage pre-paid) or guaranteed overnight delivery,
to the following addresses and telecopy numbers (or to such other addresses or
telecopy numbers which such party shall subsequently designate in writing to the
other party): </font></p>

<table align="center"  border="0" style="border-collapse:collapse" cellspacing="0"  cellpadding="0"  width="100%">

 <tr>
  <td width="5%" valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td width="5%" valign="top">
  <p>
<font size="2" face="Times New Roman">(a)</font></p>  </td>
  <td width="90%" valign="top">
  <p>
<font size="2" face="Times New Roman">if to the Issuer to:</font></p>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">BabyUniverse, Inc.</font></p>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">150 South US Highway One,   Suite 500</font></p>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p><font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">Jupiter, Florida 33477</font></p>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">Attn: Chief Financial   Officer</font></p>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">Telecopy: (562) 277-6446</font></p>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">with a copy to:</font></p>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">Akerman Senterfitt</font></p>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">One Southeast Third Avenue</font></p>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p><font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">28th Floor</font></p>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">Miami, FL 33131</font></p>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">Attn: Bradley Houser</font></p>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">Telecopy: (305) 374-5095</font></p>  </td>
 </tr>
</table>

<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)
if to the Investor to the address set forth next to its name on the signature
page hereto with a copy to Bradley B. Eavenson, P.L., 100 Village Square
Crossing, Suite 207, Palm Beach Gardens, FL 33410. Attn: Brad Eavenson,
Esq.</font></p>
<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each such
notice or other communication shall for all purposes of this Agreement be
treated as effective or having been given when delivered if delivered by hand,
by messenger or by courier, or if sent by facsimile, upon confirmation of
receipt. </font></p>
<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.4 <u>Entire
Agreement</u>. This Agreement (including the exhibits and schedules attached
hereto), the Registration Rights Agreement between the Issuer and the Investor
entered into concurrently herewith, and other documents delivered at the Closing
pursuant hereto, together with any confidentiality agreement executed by the
Investor in connection with the Offering, contain the entire understanding of
the parties in respect of its subject matter and supersede all prior agreements
and understandings between the parties with respect to such subject matter.
</font></p>

<p><font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.5
<u>Expenses; Taxes</u>. The Issuer shall pay the invoiced fees and expenses of
the Investor, including counsel fees, as well as an un-accounted for expense
amount of $25,000.00, incurred in connection with this Agreement or any
transaction contemplated hereby. Any sales tax, stamp duty, deed transfer or
other tax (except taxes based on the income of the Investor) arising out of the
issuance of the Shares (but not with respect to subsequent transfers) by the
Issuer to the Investor and consummation of the transactions contemplated by this
Agreement shall be paid by the Issuer.&#160; In addition, Issuer shall pay all
of its fees and expenses, including counsel fees. </font></p>
<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.6
<u>Amendment; Waiver</u>. This Agreement may not be modified, amended,
supplemented, canceled or discharged, except by written instrument executed by
both parties. No failure to exercise, and no delay in exercising, any right,
power or privilege under this Agreement shall operate as a waiver, nor shall any
single or partial exercise of any right, power or privilege hereunder preclude
the exercise of any other right, power or privilege. No waiver of any breach of
any provision shall be deemed to be a waiver of any preceding or succeeding
breach of the same or any other provision, nor shall any waiver be implied from
any course of dealing between the parties. No extension of time for performance
of any obligations or other acts hereunder or under any other agreement shall be
deemed to be an extension of the time for performance of any other obligations
or any other acts. The rights and remedies of the parties under this Agreement
are in addition to all other rights and remedies, at law or equity, that they
may have against each other. </font></p>

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<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.7
<u>Binding Effect; Assignment</u>. The rights and obligations of this Agreement
shall bind and inure to the benefit of the parties and their respective
successors and legal assigns. The rights and obligations of this Agreement may
not be assigned by any party without the prior written consent of the other
party. </font></p>

<p><font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.8
<u>Counterparts; Facsimile Signature</u>. This Agreement may be executed by
facsimile signature and in any number of counterparts, each of which shall be an
original but all of which together shall constitute one and the same instrument.
</font></p>
<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.9
<u>Headings</u>. The headings contained in this Agreement are for convenience of
reference only and are not to be given any legal effect and shall not affect the
meaning or interpretation of this Agreement. </font></p>
<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.10
<u>Governing Law; Interpretation</u>. This Agreement shall be construed in
accordance with and governed for all purposes by the laws of the State of
Florida applicable to contracts executed and to be wholly performed within such
State. </font></p>
<p>
<font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.11
<u>Severability</u>. The parties stipulate that the terms and provisions of this
Agreement are fair and reasonable as of the date of this Agreement. However, if
any provision of this Agreement shall be determined by a court of competent
jurisdiction to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated. If,
moreover, any of those provisions shall for any reason be determined by a court
of competent jurisdiction to be unenforceable because excessively broad or vague
as to duration, activity or subject, it shall be construed by limiting, reducing
or defining it, so as to be enforceable. </font></p>

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