IDS Industries (IDST) 8-K Entry into a Material Definitive Agreement

SECURITIESPURCHASEAGREEMENT

ThisSECURITIESPURCHASEAGREEMENT(the“Agreement”), datedasofApril 4,2013, byand betweenIDSSOLARTECHNOLOGIES, INC.,aNevadacorporation, with headquarters locatedat533BirchStreet,Lake Elsinore, CA92530(the“Company”),andASHERENTERPRISES, INC.,a Delawarecorporation, withitsaddressat 1LindenPlace,Suite207, Great Neck,NY 11021(the“Buyer”).

WHEREAS:

A.TheCompanyandtheBuyerareexecutinganddeliveringthisAgreementinrelianceupontheexemptionfromsecuritiesregistrationaffordedby therulesandregulationsas promulgatedby theUnitedStatesSecuritiesandExchangeCommission(the“SEC”)undertheSecurities Act of1933,asamended(the“1933 Act”);

B.BuyerdesirestopurchaseandtheCompanydesirestoissueandsell,uponthe termsandconditionssetforthinthisAgreementan8%convertiblenoteofthe Company,intheformattachedheretoasExhibitA,intheaggregate principalamountof$15,500.00(together withany note(s)issuedinreplacementthereoforasadividendthereonor otherwisewithrespect theretoinaccordancewiththe termsthereof,the“Note”),convertibleintosharesofcommon stock,$0.001parvalue pershare, oftheCompany(the“CommonStock”),uponthetermsand subject to thelimitationsandconditions setforth in such Note.

C.TheBuyerwishestopurchase,uponthe termsandconditionsstatedinthis Agreement,suchprincipalamountofNoteasissetforthimmediatelybelowitsnameonthe signaturepageshereto;and

NOWTHEREFORE,theCompanyandtheBuyerseverally(andnotjointly)herebyagreeasfollows:

1.Purchase andSaleofNote.

a.Purchaseof Note.Onthe Closing Date(asdefinedbelow),theCompany shallissueandselltotheBuyerandtheBuyeragreestopurchasefromtheCompany suchprincipalamountofNoteasissetforthimmediately belowtheBuyer’snameonthe signaturepageshereto.

b.FormofPayment.OntheClosingDate(asdefinedbelow),(i)theBuyershall pay thepurchasepricefortheNote to beissuedand sold to itat theClosing(as definedbelow)(the“PurchasePrice”)by wire transferofimmediatelyavailablefundstotheCompany,inaccordance withtheCompany’swrittenwiringinstructions,againstdelivery ofthe NoteintheprincipalamountequaltothePurchasePriceasissetforthimmediatelybelowtheBuyer’s name on the signature pages hereto,and(ii)theCompany shalldeliver such dulyexecuted Noteon behalfoftheCompany, to the Buyer,against deliveryofsuchPurchasePrice.

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c.Closing Date.Subjecttothesatisfaction(orwrittenwaiver)oftheconditionstheretosetforthinSection6andSection7below,thedateandtimeoftheissuance andsaleoftheNotepursuanttothisAgreement(the“ClosingDate”) shall be12:00noon, EasternStandardTime onorabout April8,2013,orsuchothermutuallyagreedupontime. Theclosingof the transactionscontemplatedby thisAgreement(the“Closing”) shalloccur ontheClosingDate at such locationas may be agreed to by theparties.

2.Buyer’sRepresentationsandWarranties. TheBuyerrepresentsand warrants to theCompanythat:

a.InvestmentPurpose.Asofthedatehereof,theBuyeris purchasing theNoteandthesharesofCommonStockissuableuponconversionoforotherwise pursuanttothe Note(including,withoutlimitation,suchadditionalsharesof Common Stock,ifany,asare issuable(i)onaccountof interestonthe Note,(ii) asaresultof theeventsdescribedinSections 1.3and 1.4(g)of the Noteor(iii)in payment of theStandard Liquidated Damages Amount(asdefinedin Section2(f) below) pursuanttothisAgreement,suchsharesofCommonStockbeingcollectivelyreferred tohereinasthe“ConversionShares”and,collectively withthe Note,the“Securities”)foritsownaccountandnotwitha presentviewtowardsthe public saleor distribution thereof,except pursuant to salesregistered orexemptedfromregistration under the

1933Act;provided,however,thatbymakingtherepresentationsherein,theBuyerdoesnotagreetoholdany oftheSecuritiesforany minimumorotherspecifictermandreservestheright todisposeoftheSecuritiesatany timeinaccordancewithorpursuanttoaregistrationstatement or anexemption underthe1933 Act.

b.AccreditedInvestorStatus.TheBuyerisan“accreditedinvestor”

as that term is defined inRule501(a)ofRegulation D(an“AccreditedInvestor”).

c.Reliance on Exemptions. TheBuyerunderstands that theSecuritiesarebeingofferedandsoldtoitinrelianceuponspecificexemptionsfromtheregistrationrequirementsof UnitedStatesfederalandstatesecuritieslawsand thattheCompany isrelyinguponthetruthandaccuracyof,andtheBuyer’scompliancewith,therepresentations, warranties,agreements,acknowledgmentsandunderstandings oftheBuyersetforthherein in ordertodetermine theavailabilityofsuchexemptionsandtheeligibilityoftheBuyertoacquire theSecurities.

d.Information.TheBuyeranditsadvisors,if any,havebeen,andfor solongastheNoteremainoutstandingwillcontinuetobe,furnishedwithallmaterialsrelating tothebusiness,financesandoperationsoftheCompanyandmaterialsrelating totheofferand saleoftheSecuritieswhichhavebeenrequestedby theBuyeroritsadvisors.TheBuyeranditsadvisors,ifany,havebeen,andforsolongastheNoteremainoutstanding willcontinuetobe,afforded the opportunity toask questions of theCompany. Notwithstanding theforegoing, theCompany hasnotdisclosedtotheBuyerany materialnonpublicinformationandwillnot disclose suchinformationunlesssuchinformationisdisclosedtothe public prior toor promptlyfollowing suchdisclosuretotheBuyer. Neithersuchinquiriesnorany otherduediligence investigationconducted by Buyeroranyofitsadvisors or representativesshall modify,amend oraffectBuyer’srighttorely onthe Company’srepresentationsand warrantiescontainedinSection3below.TheBuyerunderstandsthatitsinvestmentintheSecuritiesinvolvesa significantdegreeofrisk.TheBuyeris notawareof anyfacts thatmayconstituteabreach ofany oftheCompany'srepresentationsand warranties madeherein.

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e.Governmental Review.TheBuyerunderstands that no UnitedStatesfederalorstateagency orany othergovernmentorgovernmentalagency haspassedupon ormade anyrecommendation or endorsementoftheSecurities.

f.TransferorRe-sale.TheBuyerunderstandsthat(i)thesaleorre- saleoftheSecuritieshasnot beenandisnot beingregisteredunder the1933Act oranyapplicablestatesecurities laws,andtheSecuritiesmaynot betransferredunless(a)theSecurities are soldpursuanttoaneffectiveregistrationstatementunder the 1933Act,(b)theBuyer shall have deliveredtotheCompany,atthecostof theBuyer,anopinionofcounselthatshallbe inform,substanceandscopecustomaryfor opinionsofcounselincomparabletransactionstotheeffect that theSecuritiestobe soldor transferredmay be soldor transferredpursuant toanexemptionfrom suchregistration, which opinion shall beacceptedby theCompany,(c)theSecuritiesare soldor transferred toan“affiliate”(as defined inRule144promulgatedunder the

1933Act(orasuccessorrule)(“Rule144”))oftheBuyerwhoagreestosellorotherwise transfertheSecuritiesonlyinaccordancewith thisSection2(f)andwhoisanAccreditedInvestor,(d)theSecuritiesare sold pursuant toRule 144, or(e) theSecuritiesare sold pursuant to RegulationSunder the 1933Act(or a successorrule)(“Regulation S”),andtheBuyer shall have deliveredtotheCompany,atthecostof theBuyer,anopinionofcounselthatshallbe inform, substanceand scopecustomaryfor opinions ofcounsel incorporate transactions, which opinion shall beacceptedby theCompany;(ii)any sale of suchSecurities made inreliance onRule144maybemadeonlyinaccordancewiththetermsof saidRuleandfurther,if saidRuleis notapplicable,anyre-saleof suchSecuritiesundercircumstances in which theseller(or the person through whom the sale ismade) maybe deemed tobean underwriter(as that term is definedinthe1933 Act) mayrequire compliance withsomeotherexemptionunderthe1933 Act or therulesandregulations of theSEC thereunder;and(iii) neither the Companynorany other personisunderanyobligation toregistersuchSecuritiesunderthe1933Actoranystate securities lawsor tocomply with thetermsandconditions ofanyexemption thereunder(ineachcase).Notwithstandingtheforegoing oranythingelsecontainedhereintothecontrary,theSecurities may be pledgedascollateral inconnection with abonafidemarginaccount or other lendingarrangement.

g.Legends.TheBuyer understands that theNoteand, until such timeastheConversionShareshavebeenregistered underthe1933Act may besoldpursuant toRule 144 orRegulation Swithoutanyrestrictionastothenumberofsecuritiesasofaparticulardate thatcanthen beimmediately sold,theConversionSharesmay bear arestrictive legendin substantially thefollowingform(andastop-transfer ordermaybeplacedagainst transfer ofthecertificatesforsuchSecurities):

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“NEITHERTHEISSUANCEANDSALEOFTHE SECURITIESREPRESENTEDBYTHISCERTIFICATENORTHE SECURITIES INTO WHICHTHESE SECURITIES ARE EXERCISABLE  HAVE  BEENREGISTERED  UNDERTHESECURITIESACTOF 1933,ASAMENDED,ORAPPLICABLE STATESECURITIESLAWS.THESECURITIES MAYNOTBEOFFERED FORSALE, SOLD,TRANSFERREDORASSIGNED(I)INTHEABSENCEOF(A)ANEFFECTIVEREGISTRATION STATEMENTFORTHESECURITIESUNDERTHE SECURITIESACTOF 1933,ASAMENDED,OR(B)AN OPINIONOFCOUNSEL(WHICHCOUNSEL SHALLBE SELECTEDBYTHEHOLDER),INAGENERALLYACCEPTABLEFORM,THATREGISTRATION ISNOTREQUIREDUNDER SAIDACTOR(II)UNLESS SOLDPURSUANTTORULE 144ORRULE 144AUNDER SAIDACT.NOTWITHSTANDINGTHE FOREGOING,THESECURITIES MAYBEPLEDGED INCONNECTION WITHA BONAFIDE MARGINACCOUNTOROTHERLOANOR FINANCINGARRANGEMENT SECUREDBYTHESECURITIES.”

ThelegendsetforthaboveshallberemovedandtheCompany shallissueacertificate withoutsuchlegendtotheholderofanySecurityuponwhichitisstamped,if,unlessotherwiserequired byapplicablestatesecuritieslaws,(a)suchSecurity isregisteredforsaleunderan effectiveregistrationstatementfiledunderthe1933Actorotherwisemaybesoldpursuant toRule144orRegulationSwithoutanyrestrictionastothenumberofsecuritiesasofaparticular datethatcanthen beimmediatelysold,or(b)suchholderprovidesthe Companywithanopinion ofcounsel,inform,substanceandscopecustomaryforopinionsofcounselincomparable transactions,totheeffectthatapublicsaleortransferofsuchSecuritymaybemadewithoutregistrationunderthe1933Act,whichopinionshallbeacceptedbythe Companysothatthesale or transfer iseffected. TheBuyeragrees tosellallSecurities, including thoserepresentedby acertificate(s)fromwhichthe legendhasbeenremoved,incompliance withapplicableprospectus deliveryrequirements,ifany.IntheeventthattheCompany doesnotaccepttheopinionofcounselprovidedbytheBuyerwithrespecttothetransfer ofSecuritiespursuanttoanexemptionfromregistration, suchasRule144 orRegulationS,at theDeadline, itwill beconsideredan Event ofDefault pursuant toSection 3.2 oftheNote.

h.Authorization;Enforcement.ThisAgreementhasbeendulyand validlyauthorized.ThisAgreementhasbeendulyexecutedanddeliveredonbehalfoftheBuyer,andthisAgreementconstitutesavalidandbindingagreementoftheBuyerenforceableinaccordancewith its terms.

i.Residency.TheBuyerisaresidentof the jurisdictionsetforth immediatelybelow the Buyer’s nameon thesignaturepageshereto.

3.RepresentationsandWarrantiesoftheCompany. TheCompanyrepresentsand warrantsto theBuyerthat:

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a.OrganizationandQualification.The Companyandeach ofitsSubsidiaries(asdefinedbelow),ifany,isacorporationduly organized,validlyexistingandingoodstanding underthelawsofthejurisdictioninwhichitisincorporated,withfullpowerandauthority(corporateandother)toown,lease,useandoperateitspropertiesandtocarry onits businessasandwherenowowned,leased,used,operatedandconducted.Schedule3(a)setsforthalistofalloftheSubsidiariesofthe Companyandthejurisdictioninwhicheachis incorporated. TheCompanyandeachof itsSubsidiaries is dulyqualifiedas aforeigncorporationtodobusinessandisingoodstandingineveryjurisdictioninwhichitsownershipor useofproperty orthenatureofthebusinessconductedby itmakessuchqualificationnecessaryexcept where thefailure to be so qualified or ingood standing would not have a Material Adverse Effect.“Material AdverseEffect”meansany materialadverseeffecton thebusiness, operations,assets,financialcondition or prospects of theCompany oritsSubsidiaries, ifany, takenasawhole,oronthetransactionscontemplated herebyorbythe agreements orinstruments tobeenteredintoinconnectionherewith.“Subsidiaries”meansanycorporationorotherorganization,whetherincorporatedorunincorporated,inwhichtheCompany owns,directly or indirectly,anyequityorotherownership interest.

b.Authorization;Enforcement.(i)TheCompany hasallrequisitecorporatepowerandauthority toenterintoandperformthisAgreement,theNoteandtoconsummatethetransactionscontemplatedherebyandtherebyandtoissuetheSecurities,inaccordancewiththetermshereofandthereof,(ii)theexecutionanddelivery ofthis Agreement, theNoteby the Companyandtheconsummationby itofthetransactionscontemplatedherebyandthereby(includingwithoutlimitation,theissuanceoftheNote and theissuanceandreservationfor issuance of theConversion Sharesissuable uponconversionorexercise thereof) havebeendulyauthorized by theCompany’sBoardofDirectorsandnofurtherconsentorauthorizationof theCompany,itsBoardof Directors,or itsshareholdersisrequired,(iii) this Agreementhasbeendulyexecutedanddeliveredby theCompanybyitsauthorizedrepresentative,andsuchauthorizedrepresentative isthe trueandofficialrepresentativewithauthority tosign thisAgreementandtheotherdocumentsexecutedinconnectionherewithand bindtheCompanyaccordingly,and(iv)thisAgreementconstitutes,anduponexecutionand deliverybytheCompanyoftheNote,eachofsuchinstrumentswillconstitute,alegal,validand bindingobligation of theCompanyenforceableagainst theCompanyinaccordance with its terms.

c.Capitalization.Asofthedatehereof,theauthorizedcapitalstock oftheCompanyconsistsof:(i)90,000,000sharesofCommonStock,$0.001parvalueper share,ofwhich2,583,333sharesare issuedandoutstanding;and(ii)10,000,000sharesofPreferredStock,$0.001par value per share,of whichnosharesare issuedandoutstanding;no sharesarereservedfor issuance pursuanttotheCompany’sstockoptionplans,nosharesarereservedfor issuancepursuanttosecurities(other thanthe Noteanda priorconvertible promissory note infavor of theBuyer dated March 20, 2013 in theamount of $32,500.00for which2,300,000shares of CommonStockarepresentlyreserved)exercisablefor, orconvertible into orexchangeablefor shares ofCommonStockand 2,410,0000 sharesarereservedfor issuance uponconversion of the Note. All of such outstanding sharesofcapital stockare, or upon issuance will be,dulyauthorized, validlyissued,fully paidand non-assessable. No sharesofcapitalstockofthe Companyaresubjecttopreemptiverightsoranyothersimilarrightsofthe shareholders of theCompany orany liensorencumbrances imposed through theactions or

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failure toactoftheCompany.Asof theeffective dateof thisAgreement,(i) thereare no outstanding options,warrants, scrip,rights tosubscribefor,puts,calls,rightsoffirstrefusal,agreements, understandings,claimsorothercommitments orrights ofanycharacter whatsoeverrelating to,orsecurities orrightsconvertible intoorexchangeableforany sharesofcapitalstock oftheCompanyoranyofitsSubsidiaries, orarrangementsbywhich theCompany oranyof itsSubsidiaries isormaybecomeboundtoissueadditionalsharesofcapitalstockoftheCompany or anyofitsSubsidiaries,(ii)therearenoagreements or arrangements underwhich theCompany orany ofitsSubsidiaries isobligated toregisterthesale ofanyofitsortheirsecurities underthe 1933Actand(iii)therearenoanti-dilutionor priceadjustmentprovisionscontained inany security issued by theCompany(orinanyagreement providingrights tosecurity holders)that willbetriggeredby theissuanceoftheNoteortheConversionShares.TheCompany hasfurnished totheBuyer trueandcorrectcopiesof theCompany’sCertificate of Incorporationas ineffect onthedate hereof(“Certificate ofIncorporation”), theCompany’sBy-laws,as in effectonthe date hereof(the“By-laws”),andthe terms ofallsecuritiesconvertible intoorexercisableforCommonStockoftheCompanyandthematerialrightsoftheholders thereofinrespect thereto. TheCompany shallprovide theBuyer witha written update of thisrepresentation signedby theCompany’sChiefExecutiveon behalfoftheCompanyas oftheClosingDate.

d.IssuanceofShares.TheConversionSharesaredulyauthorizedandreservedfor issuanceand,uponconversionof the Note inaccordance withitsrespective terms,willbevalidly issued,fully paidandnon-assessable,andfreefromall taxes,liens,claimsandencumbrances withrespect to the issue thereofand shall not be subject to preemptiverights or other similarrightsof shareholdersof theCompanyandwillnotimpose personalliability upon theholderthereof.

e.AcknowledgmentofDilution.TheCompany understandsandacknowledgesthepotentially dilutiveeffecttotheCommonStockupontheissuanceoftheConversionSharesuponconversionoftheNote. TheCompanyfurtheracknowledgesthatits obligationtoissueConversion SharesuponconversionoftheNote inaccordance withthis Agreement,the Note isabsoluteandunconditionalregardlessof the dilutiveeffectthatsuch issuancemay haveon theownership interests ofothershareholders oftheCompany.

f.NoConflicts.Theexecution,deliveryandperformanceofthis Agreement,theNotebytheCompanyand the consummationbytheCompanyofthetransactionscontemplatedherebyandthereby(including,withoutlimitation,theissuanceandreservationfor issuance of theConversion Shares) willnot(i)conflictwithorresultina violationofany provisionoftheCertificateofIncorporationorBy-laws,or(ii)violateorconflictwith,orresult inabreachofany provisionof,orconstituteadefault(oraneventwhichwithnoticeorlapseof timeorbothcouldbecomeadefault) under, orgivetoothersanyrightsof termination,amendment,accelerationor cancellationof,anyagreement,indenture,patent,patentlicenseor instrument to which theCompany orany of itsSubsidiaries is a party,or(iii)result in a violationofany law,rule,regulation,order,judgmentordecree(includingfederalandstate securitieslawsandregulationsandregulationsofany self-regulatoryorganizationstowhichtheCompanyor itssecuritiesare subject)applicable totheCompanyoranyofitsSubsidiariesorby whichanyproperty orasset of theCompanyoranyof itsSubsidiaries is bound oraffected(exceptfor suchconflicts, defaults, terminations,amendments,accelerations,cancellationsand

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violationsaswouldnot,individuallyorintheaggregate,haveaMaterialAdverseEffect). Neitherthe CompanynoranyofitsSubsidiariesisinviolationofitsCertificateofIncorporation,By-lawsorotherorganizational documentsandneithertheCompany norany of itsSubsidiaries isindefault(andnoeventhasoccurredwhichwithnotice or lapse of timeor bothcouldputtheCompany orany ofitsSubsidiariesindefault)under,andneithertheCompany norany ofitsSubsidiarieshastakenanyactionorfailed totakeanyactionthatwouldgivetoothersanyrights oftermination,amendment,accelerationorcancellationof,anyagreement,indentureor instrument to which theCompanyorany of itsSubsidiaries is a party orby whichany property orassetsoftheCompany orany of itsSubsidiariesisboundoraffected,exceptforpossible defaultsaswouldnot,individually orintheaggregate,haveaMaterial AdverseEffect.The businessesoftheCompanyanditsSubsidiaries,ifany,arenotbeingconducted,andshallnotbeconductedso longastheBuyerownsanyof theSecurities,inviolationofanylaw,ordinanceorregulation ofanygovernmentalentity. Exceptas specificallycontemplatedby this Agreementandasrequiredunderthe1933Actandanyapplicablestatesecuritieslaws,theCompany is notrequiredtoobtainanyconsent,authorizationororderof,ormakeanyfilingorregistrationwith,anycourt,governmentalagency,regulatoryagency, selfregulatory organizationorstockmarketorany thirdparty inorderforittoexecute,deliverorperformany ofitsobligationsunderthis Agreement,the Note in accordancewiththe termshereof orthereofor toissueandsellthe Note inaccordancewiththe terms hereofandtoissuetheConversion Sharesuponconversionof the Note.Allconsents,authorizations,orders,filingsandregistrationswhichtheCompany isrequired to obtain pursuant to theprecedingsentencehavebeen obtained oreffected on orprior tothedatehereof. TheCompany isnotinviolationofthelistingrequirementsoftheOver-the-CounterBulletinBoard(the“OTCBB”)anddoesnotreasonablyanticipatethattheCommonStock will be delistedby the OTCBBin theforeseeablefuture.TheCompanyand itsSubsidiariesareunawareofanyfacts orcircumstanceswhichmightgiverisetoanyoftheforegoing.

g.SECDocuments;FinancialStatements.TheCompanyhastimelyfiledallreports,schedules,forms,statementsandotherdocumentsrequiredtobefiledby itwith the SECpursuanttothereportingrequirementsofthe SecuritiesExchangeActof1934,asamended(the“1934Act”)(allof theforegoingfiledprior tothe date hereofandallexhibits included thereinandfinancialstatementsandschedulestheretoanddocuments(other thanexhibitsto such documents) incorporatedbyreference therein, beinghereinafterreferred to hereinas the“SECDocuments”). Upon writtenrequest theCompanywill deliver to theBuyertrueandcompletecopiesof theSECDocuments,exceptfor suchexhibitsandincorporated documents.As oftheirrespective dates, theSECDocumentscomplied inallmaterialrespects withtherequirementsofthe 1934ActandtherulesandregulationsoftheSECpromulgated thereunderapplicable totheSECDocuments,andnone of theSECDocuments,atthe time they werefiledwiththeSEC,containedany untrue statementof a materialfactor omittedtostate a materialfactrequiredtobe statedthereinor necessaryinorder tomake the statementstherein,in lightof thecircumstancesunder whichthey were made,notmisleading.None of the statements made inany suchSEC Documents is, or has been,required to beamended or updated underapplicable law(exceptfor such statementsashave beenamendedorupdated in subsequentfilingsprior the datehereof). Asof theirrespective dates,thefinancialstatementsof theCompany includedintheSECDocumentscompliedastoforminallmaterialrespectswithapplicableaccountingrequirementsand the publishedrulesandregulations of theSEC with

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respectthereto.Suchfinancialstatementshavebeenpreparedinaccordance withUnited Statesgenerallyacceptedaccountingprinciples,consistentlyapplied,duringtheperiodsinvolvedandfairly presentinallmaterialrespectstheconsolidatedfinancialpositionoftheCompanyanditsconsolidated Subsidiariesasof the datesthereofandtheconsolidatedresultsof their operationsandcashflowsforthe periodsthenended(subject,inthecase ofunauditedstatements,tonormalyear-endauditadjustments).Exceptassetforthinthefinancialstatementsof theCompany includedintheSEC Documents,theCompanyhasnoliabilities,contingent orotherwise,other than(i)liabilitiesincurredinthe ordinarycourse ofbusinesssubsequent toNovember 30,2012,and(ii)obligationsundercontractsandcommitmentsincurredintheordinarycourseofbusinessandnotrequiredundergenerallyacceptedaccounting principlestobe reflectedinsuchfinancialstatements,which,individually orintheaggregate,arenotmaterialtothefinancialconditionor operatingresultsoftheCompany.TheCompanyissubjecttothereportingrequirementsofthe

1934 Act.

h.AbsenceofCertainChanges.SinceNovember30,2012,therehasbeennomaterialadversechangeandnomaterialadversedevelopmentintheassets,liabilities, business,properties,operations,financialcondition,resultsof operations,prospects or 1934Actreportingstatus oftheCompanyoranyofitsSubsidiaries.

i.AbsenceofLitigation.Thereisnoaction,suit,claim,proceeding, inquiry orinvestigationbeforeorbyanycourt,publicboard,governmentagency,self-regulatory organizationorbody pendingor,tothe knowledge oftheCompanyoranyofitsSubsidiaries, threatenedagainst oraffectingtheCompanyorany ofitsSubsidiaries,ortheirofficersor directorsintheircapacityassuch,thatcould haveaMaterialAdverse Effect.Schedule3(i)contains acomplete listand summary description ofany pending or, to the knowledge of theCompany, threatenedproceedingagainst oraffecting theCompanyoranyof itsSubsidiaries, withoutregardtowhetheritwouldhaveaMaterialAdverseEffect.The CompanyanditsSubsidiariesareunawareofanyfactsorcircumstances whichmightgiverisetoanyoftheforegoing.

j.Patents,Copyrights,etc.TheCompanyandeachofitsSubsidiariesownsorpossessestherequisite licensesorrightstouseallpatents,patentapplications,patentrights,inventions,know-how,trade secrets,trademarks,trademarkapplications,service marks,service names,tradenamesandcopyrights(“Intellectual Property”)necessary toenableittoconductitsbusinessasnowoperated(and,aspresentlycontemplatedto beoperatedinthefuture);thereisnoclaim oractionbyany personpertainingto,orproceeding pending,or totheCompany’sknowledge threatened,whichchallengestherightoftheCompany orofaSubsidiary withrespecttoanyIntellectualPropertynecessary toenableittoconductits businessasnow operated(and,aspresentlycontemplatedtobe operated inthefuture);tothe bestoftheCompany’sknowledge,theCompany’s oritsSubsidiaries’currentandintended products,servicesand processesdonotinfringeonanyIntellectualProperty orotherrightsheldbyanyperson;and theCompanyis unawareofanyfacts orcircumstanceswhich mightgiverise toany of theforegoing. TheCompanyandeach of itsSubsidiaries have takenreasonable securitymeasures to protect thesecrecy,confidentialityand valueoftheirIntellectualProperty.

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k.NoMateriallyAdverseContracts,Etc.NeithertheCompanynorany ofitsSubsidiariesissubjecttoanycharter,corporateorotherlegalrestriction, orany judgment,decree,order,rule orregulationwhichinthe judgmentof theCompany’sofficershas or isexpected in thefuture to have a Material Adverse Effect.Neither theCompanynoranyof itsSubsidiariesisapartytoanycontractoragreementwhichinthejudgmentoftheCompany’s officershas orisexpected to haveaMaterial AdverseEffect.

l.TaxStatus. TheCompanyandeachofitsSubsidiaries hasmadeorfiledallfederal,stateandforeignincomeandallother taxreturns,reportsanddeclarationsrequiredbyanyjurisdiction to which it is subject(unlessand onlyto theextent that theCompanyandeachofitsSubsidiarieshassetasideonitsbooksprovisionsreasonablyadequateforthe paymentofallunpaidandunreportedtaxes)andhaspaidalltaxesandothergovernmental assessmentsandchargesthatare materialinamount,shownor determinedtobe due onsuchreturns,reportsanddeclarations,except thosebeingcontested ingoodfaithand hassetasideon itsbooksprovisionsreasonablyadequatefor the payment ofall taxesfor periodssubsequent to theperiods to whichsuchreturns,reports ordeclarationsapply.Thereareno unpaid taxes inany materialamountclaimed to be dueby the taxingauthorityofanyjurisdiction,and the officers of theCompany know ofno basisforany suchclaim.TheCompany hasnotexecuted awaiver withrespecttothestatuteoflimitationsrelatingtotheassessmentorcollectionofanyforeign,federal,stateor localtax. NoneoftheCompany’staxreturnsispresentlybeingaudited byany taxingauthority.

m.CertainTransactions.Exceptforarm’slengthtransactions pursuanttowhichthe CompanyoranyofitsSubsidiariesmakespaymentsintheordinarycourse ofbusinessupontermsnolessfavorablethantheCompanyoranyofitsSubsidiariescould obtainfromthirdpartiesandotherthanthe grantofstockoptionsdisclosedon Schedule 3(c), noneofthe officers,directors,oremployeesoftheCompany ispresentlyapartytoany transactionwiththeCompanyoranyofitsSubsidiaries(otherthanfor servicesasemployees, officersanddirectors),includinganycontract,agreementorotherarrangementprovidingforthefurnishingofservicestoorby,providingforrentalofrealorpersonalproperty toorfrom,or otherwiserequiringpaymentstoorfromany officer,directororsuchemployeeor,tothe knowledgeof theCompany,anycorporation,partnership,trustorotherentity in whichany officer,director,oranysuchemployeehasasubstantialinterestorisanofficer,director,trustee orpartner.

n.Disclosure. All informationrelatingtoor concerning theCompany orany ofitsSubsidiaries setforth inthisAgreementandprovided totheBuyer pursuanttoSection2(d)hereofandotherwise inconnection withthetransactionscontemplatedhereby is trueandcorrect inallmaterialrespectsandtheCompany hasnotomittedtostateany materialfactnecessary inorder tomakethestatements madeherein or therein, inlightofthecircumstances underwhich they were made, notmisleading. Noeventorcircumstance has occurred orexists withrespect to theCompanyorany of itsSubsidiaries or its or their business, properties, prospects, operationsorfinancialconditions,which,underapplicable law,ruleorregulation,requires publicdisclosureorannouncementby theCompanybutwhich hasnotbeen so publiclyannouncedor disclosed(assumingfor this purpose that theCompany’sreportsfiled under the 1934Actare being incorporated intoaneffectiveregistration statementfiledbytheCompany underthe1933Act).

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o.Acknowledgment RegardingBuyer’PurchaseofSecurities.TheCompanyacknowledgesandagreesthattheBuyerisacting solelyinthe capacityofarm’slength purchaserswithrespecttothisAgreementandthe transactionscontemplatedhereby.TheCompanyfurtheracknowledgesthattheBuyerisnotactingasafinancialadvisororfiduciaryof theCompany(orinanysimilarcapacity) withrespect to thisAgreementand thetransactionscontemplated herebyandany statement madeby theBuyer orany of itsrespectiverepresentativesor agentsinconnectionwiththisAgreementandthe transactionscontemplated hereby isnotadviceorarecommendationandismerely incidentaltotheBuyer’purchase oftheSecurities. TheCompanyfurtherrepresents to theBuyer that theCompany’s decision toenter intothisAgreementhas beenbasedsolely ontheindependentevaluationoftheCompanyanditsrepresentatives.

p.NoIntegratedOffering.Neitherthe Company,noranyofitsaffiliates,noranypersonactingonitsortheirbehalf,hasdirectlyorindirectlymadeanyoffers orsales inany securityorsolicitedany offers tobuyanysecurity under circumstances that wouldrequireregistrationunder the 1933Actof theissuance of theSecuritiestotheBuyer. The issuanceoftheSecuritiestotheBuyerwillnotbeintegratedwithany otherissuanceoftheCompany’s securities(past,currentorfuture)for purposes ofany shareholderapproval provisionsapplicableto theCompanyorits securities.

q.NoBrokers.TheCompanyhastakennoactionwhichwouldgiverisetoanyclaimbyanypersonforbrokeragecommissions,transactionfeesorsimilarpaymentsrelatingto thisAgreement orthetransactionscontemplated hereby.

r.Permits;Compliance.TheCompanyandeach ofitsSubsidiaries is in possession ofallfranchises,grants,authorizations, licenses,permits,easements,variances,exemptions,consents,certificates,approvalsandordersnecessary toown,leaseandoperateits propertiesandtocarryonitsbusinessasitisnowbeingconducted(collectively,the“CompanyPermits”),andthereisnoactionpending or,totheknowledgeoftheCompany,threatenedregarding suspensionorcancellationofanyoftheCompanyPermits.NeithertheCompany noranyofitsSubsidiariesisinconflictwith,orindefaultorviolationof,any oftheCompanyPermits,exceptforanysuchconflicts,defaultsorviolationswhich,individually orintheaggregate,wouldnotreasonablybeexpected tohave a MaterialAdverse Effect.SinceNovember30,2012,neithertheCompany noranyofitsSubsidiarieshasreceivedany notification withrespectto possible conflicts, defaults orviolations of applicablelaws,exceptfor noticesrelating topossibleconflicts,defaultsorviolations,whichconflicts,defaultsorviolations would not haveaMaterial AdverseEffect.

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s.Environmental Matters.

(i) Thereare, totheCompany’s knowledge, withrespect to theCompany oranyofitsSubsidiaries orany predecessor oftheCompany, nopastorpresent violationsofEnvironmentalLaws(asdefined below),releasesofany materialintotheenvironment,actions,activities,circumstances,conditions,events, incidents, orcontractual obligations which may give risetoanycommon lawenvironmental liabilityor anyliability under theComprehensive EnvironmentalResponse,CompensationandLiability Act of1980 orsimilarfederal, state,localorforeign lawsand neither theCompany norany ofitsSubsidiaries hasreceivedanynotice withrespect toanyof theforegoing, nor isanyaction pending or, to theCompany’s knowledge, threatened inconnection withany of theforegoing. The term“Environmental Laws”meansallfederal, state,local orforeign laws relating topollutionor protectionof humanhealthor theenvironment(including, withoutlimitation,ambientair, surface water,groundwater, landsurface orsubsurface strata),including,withoutlimitation, lawsrelating toemissions, discharges,releases orthreatenedreleases ofchemicals, pollutantscontaminants, or toxic or hazardous substancesor wastes(collectively,“Hazardous Materials”) intotheenvironment, orotherwiserelating tothemanufacture, processing, distribution,use, treatment, storage, disposal, transport or handlingofHazardous Materials,aswellasallauthorizations,codes,decrees,demands ordemand letters, injunctions, judgments, licenses, noticesornoticeletters, orders,permits,plans orregulations issued,entered, promulgated orapproved thereunder.

(ii) Other thanthose thatareor were stored,usedordisposed ofincompliancewithapplicablelaw,noHazardousMaterialsarecontainedonoraboutanyreal propertycurrently owned,leasedorusedby theCompanyoranyofitsSubsidiaries,andno HazardousMaterialswerereleasedonoraboutanyrealpropertypreviouslyowned,leasedor used bythe CompanyoranyofitsSubsidiariesduring theperiodthepropertywasowned,leased orusedbytheCompany or anyofitsSubsidiaries,except in thenormalcourseoftheCompany’s or anyofitsSubsidiaries’business.

(iii)Therearenoundergroundstoragetanksonorunderanyrealproperty owned,leasedorusedby theCompany orany ofitsSubsidiariesthatarenotincompliancewithapplicablelaw.

t.TitletoProperty.TheCompanyanditsSubsidiarieshavegoodandmarketabletitleinfeesimpletoallrealpropertyandgoodandmarketable titletoall personal property ownedby them whichismaterial tothe businessof theCompanyanditsSubsidiaries, ineachcasefreeandclearofallliens,encumbrancesanddefectsexceptsuchasare describedinSchedule3(t) or suchas wouldnothave a MaterialAdverse Effect. Anyreal propertyandfacilitiesheld under leaseby the Companyand itsSubsidiariesareheldby themundervalid, subsistingandenforceableleases with suchexceptionsas would not haveaMaterial AdverseEffect.

u.Insurance.TheCompanyandeach ofitsSubsidiariesareinsuredby insurers ofrecognizedfinancialresponsibilityagainst suchlossesandrisksandinsuchamountsasmanagement oftheCompany believes tobeprudentandcustomary inthebusinesses inwhichtheCompanyanditsSubsidiariesareengaged. Neither theCompany norany suchSubsidiary hasanyreason tobelieve thatitwillnotbeabletorenew itsexistinginsurancecoverageasand when suchcoverageexpires orto obtain similarcoveragefrom similar insurersasmay benecessary tocontinueitsbusinessat acostthatwouldnothaveaMaterial Adverse Effect.UponwrittenrequesttheCompany willprovide to theBuyer trueandcorrectcopiesof allpoliciesrelating todirectors’andofficers’ liabilitycoverage,errorsandomissionscoverage,andcommercial general liabilitycoverage.

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v.InternalAccountingControls.The Companyandeach ofitsSubsidiariesmaintainasystemofinternalaccountingcontrolssufficient,inthejudgmentoftheCompany’sboardofdirectors,toprovidereasonableassurancethat(i)transactionsareexecutedinaccordancewithmanagement’sgeneral orspecificauthorizations,(ii)transactionsarerecordedasnecessary topermitpreparationoffinancialstatementsinconformity withgenerallyacceptedaccounting principlesandtomaintainassetaccountability,(iii)accesstoassetsis permittedonly inaccordancewithmanagement’s generalorspecificauthorizationand(iv)therecordedaccountabilityforassetsiscompared withtheexistingassetsatreasonableintervalsandappropriateaction is taken withrespect toanydifferences.

w.ForeignCorruptPractices.NeithertheCompany,norany ofitsSubsidiaries,norany director, officer,agent,employeeorotherpersonacting onbehalfoftheCompanyoranySubsidiaryhas,inthecourseofhisactionsfor,oronbehalfof,theCompany, usedanycorporatefundsforany unlawfulcontribution,gift,entertainmentorotherunlawfulexpensesrelatingto politicalactivity;madeanydirector indirectunlawfulpayment toanyforeignor domesticgovernmentofficialoremployeefromcorporatefunds;violatedor isin violation ofany provision of the U.S.ForeignCorruptPractices Act of 1977,asamended, or madeany bribe,rebate,payoff,influencepayment,kickbackorother unlawfulpaymenttoanyforeign ordomesticgovernment official oremployee.

x.Solvency.TheCompany(aftergivingeffecttothetransactionscontemplated by thisAgreement)issolvent(i.e.,itsassetshaveafairmarketvalueinexcessof theamountrequiredtopay itsprobableliabilitiesonitsexisting debtsastheybecomeabsoluteandmatured)andcurrently theCompanyhasnoinformationthatwould leadittoreasonablyconcludethattheCompany wouldnot,aftergivingeffecttothetransactioncontemplatedby this Agreement,havetheability to,nordoes itintendtotakeanyactionthatwouldimpairitsability to, pay its debtsfromtime to time incurred inconnection therewithas such debts mature. TheCompany didnotreceiveaqualifiedopinionfromitsauditorswithrespecttoits mostrecentfiscalyearendand,aftergivingeffecttothetransactionscontemplatedby thisAgreement,does notanticipateorknowofanybasisuponwhichitsauditorsmightissueaqualifiedopinioninrespect ofitscurrentfiscalyear.

y.NoInvestmentCompany.TheCompanyisnot,anduponthe issuanceandsaleoftheSecuritiesascontemplated by thisAgreementwillnotbean“investmentcompany”requiredtoberegisteredundertheInvestmentCompany Act of1940(an“InvestmentCompany”). TheCompanyis notcontrolledbyanInvestmentCompany.

z.BreachofRepresentationsandWarrantiesby theCompany.IftheCompanybreachesanyoftherepresentationsorwarrantiessetforthinthisSection3,andinadditiontoany otherremediesavailable totheBuyerpursuanttothisAgreement,itwillbeconsideredan Event ofdefault underSection 3.4 oftheNote.

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4.COVENANTS.

a.BestEfforts.Thepartiesshallusetheirbesteffortstosatisfy timelyeach oftheconditions described inSection6and 7 ofthis Agreement.

b.FormD;BlueSkyLaws.TheCompanyagreestofileaFormD withrespecttothe SecuritiesasrequiredunderRegulationDandtoprovideacopythereoftotheBuyerpromptlyaftersuchfiling.TheCompanyshall,onorbefore theClosingDate,take such actionas theCompanyshallreasonablydetermine is necessary to qualify theSecuritiesforsale totheBuyerattheapplicableclosing pursuanttothisAgreementunderapplicablesecuritiesor“blue sky” lawsof thestatesof the UnitedStates(or toobtainanexemptionfromsuch qualification),andshallprovideevidence ofany suchactionsotakentotheBuyeronorpriorto theClosingDate.

c.UseofProceeds.TheCompany shallusetheproceedsforgeneralworkingcapital purposes.

d.RightofFirstRefusal.Unlessitshallhavefirst deliveredtotheBuyer,atleast twentyfour(24)hours priortotheclosingofsuchFutureOffering(asdefined herein),writtennoticedescribing theproposedFutureOffering, including thetermsandconditionsthereofandproposeddefinitive documentation tobeentered intoinconnection therewith,and providingtheBuyeranoptionduringthetwentyfour(24)hourperiodfollowing delivery ofsuchnoticetopurchase thesecurities beingoffered intheFuture Offering on the sametermsascontemplatedby suchFutureOffering(thelimitationsreferred tointhissentenceand the preceding sentencearecollectivelyreferred toas the“Right ofFirstRefusal”)(and subject totheexceptions described below), theCompany willnotconductanyequityfinancing(includingdebtwithanequitycomponent)(“Future Offerings”) duringtheperiodbeginning on theClosing Dateandending twelve(12) monthsfollowing theClosing Date or uponPayof orfullconversion of the Note. Intheevent the termsandconditions of a proposedFuture Offeringareamended inanyrespectafterdelivery of the notice to theBuyerconcerning the proposed Future Offering, theCompany shalldeliveranewnoticetotheBuyerdescribing theamendedtermsandconditionsoftheproposedFuture OfferingandtheBuyer thereafter shallhave an optionduring thetwentyfour(24) hourperiodfollowing delivery ofsuch newnotice topurchase itsproratashareofthesecuritiesbeing offered onthe same termsascontemplatedby suchproposedFutureOffering,asamended. Theforegoing sentence shallapply tosuccessiveamendments to the termsandconditions ofany proposedFutureOffering. TheRightofFirstRefusal shallnotapplytoany transaction involving(i) issuances ofsecurities inafirmcommitmentunderwritten publicoffering(excluding acontinuousoffering pursuanttoRule415 under the 1933Act) or(ii) issuances of securitiesasconsiderationfor a merger,consolidationor purchaseofassets,orinconnectionwithany strategic partnership or jointventure(theprimary purposeofwhichis nottoraiseequitycapital),orinconnection withthedispositionoracquisition of a business, product or licensebytheCompany. TheRight ofFirstRefusalalso shallnotapply tothe issuance ofsecurities uponexercise orconversion oftheCompany’s options, warrantsor otherconvertible securitiesoutstandingas of the date hereof or to thegrant ofadditional optionsorwarrants, ortheissuance ofadditional securities, underanyCompany stockoptionorrestricted stockplanapprovedbythe shareholders oftheCompany.The RightofFirstrefusal shall be limited to like transactions(i.e.convertible debentures) that do notexceed $75,000.00 in the aggregate.

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e.Expenses.TheCompany’sobligationwithrespecttothis transactionistoreimburseBuyer’expensesshallbe $500,whichwillbedeductedfromtheloan proceeds.

f.FinancialInformation.UponwrittenrequesttheCompanyagrees tosendormakeavailablethefollowingreportstotheBuyeruntiltheBuyertransfers,assigns,or sellsallof theSecurities:(i)withinten(10) daysafter thefiling withtheSEC,acopy of its AnnualReport onForm 10-KitsQuarterlyReportsonForm 10-QandanyCurrentReportsonForm8-K;(ii)withinone(1) dayafterrelease,copiesofallpressreleasesissuedby theCompanyoranyof itsSubsidiaries;and(iii) contemporaneously with the makingavailable orgivingto the shareholders of theCompany,copies ofany notices or other information theCompanymakesavailableorgives to such shareholders.

g.[INTENTIONALLYDELETED]

h.Listing.TheCompanyshallpromptlysecurethelistingoftheConversionShares uponeachnational securitiesexchangeor automated quotationsystem, if any, uponwhichsharesofCommonStockare thenlisted(subjecttoofficialnotice ofissuance)and, solongastheBuyer ownsany of theSecurities,shallmaintain,solongasany other sharesofCommonStock shallbe so listed, suchlisting ofallConversionSharesfrom time to time issuableuponconversionofthe Note. TheCompany willobtainand,solongastheBuyer ownsany of theSecurities,maintain the listingand tradingof itsCommonStock on the OTCBB oranyequivalentreplacementexchange,theNasdaqNationalMarket(“Nasdaq”),the NasdaqSmallCapMarket(“Nasdaq SmallCap”),the NewYork StockExchange(“NYSE”),orthe AmericanStockExchange(“AMEX”)andwillcomply inallrespectswiththeCompany’sreporting,filingandother obligationsunderthebylawsorrulesoftheFinancialIndustryRegulatoryAuthority(“FINRA”)andsuchexchanges,asapplicable. TheCompany shall promptlyprovidetotheBuyercopiesofanynoticesitreceivesfromtheOTCBBandanyotherexchangesorquotationsystemsonwhichtheCommonStockisthenlistedregarding thecontinuedeligibilityoftheCommonStockforlistingon suchexchangesand quotationsystems.

i.CorporateExistence.SolongastheBuyerbeneficiallyownsany Note,theCompanyshallmaintainitscorporateexistenceandshallnotsellallorsubstantiallyall ofthe Company’sassets,exceptin theeventofamergerorconsolidationorsaleofallor substantiallyall of theCompany’sassets, where the survivingor successorentity in such transaction(i)assumestheCompany’sobligationshereunderandunder theagreementsand instrumentsenteredinto inconnectionherewithand(ii)isapublicly tradedcorporationwhoseCommonStockis listedfor trading on the OTCBB,Nasdaq, NasdaqSmallCap, NYSE or AMEX.

j.NoIntegration.TheCompany shallnotmakeany offers orsales ofany security(otherthantheSecurities) undercircumstances thatwouldrequireregistration of theSecurities beingoffered orsoldhereunder underthe1933Act orcause theoffering oftheSecurities to be integrated withany otheroffering of securitiesby theCompanyfor the purpose of any stockholderapproval provisionapplicable to theCompany orits securities.

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k.BreachofCovenants.IftheCompanybreachesanyofthecovenantssetforthinthisSection4,andinadditiontoanyotherremediesavailabletotheBuyer pursuanttothisAgreement,itwillbeconsideredaneventofdefaultunderSection3.4of the Note.

l.FailuretoComply withthe1934Act.SolongastheBuyer beneficiallyownstheNote,theCompanyshallcomplywiththereportingrequirementsofthe

1934Act;andtheCompanyshallcontinuetobesubjecttothereportingrequirementsofthe

1934 Act.

m.TradingActivities.NeithertheBuyernoritsaffiliateshasanopenshort position in the common stock oftheCompanyand theBuyeragreethat it shall not,and that itwillcauseitsaffiliatesnotto,engageinany shortsalesofor hedging transactionswithrespect to the common stock oftheCompany.

5.TransferAgentInstructions.TheCompanyshallissueirrevocable instructionstoitstransferagent toissuecertificates,registered inthe name of theBuyer or its nominee,for theConversionSharesinsuchamountsasspecifiedfromtime totimeby theBuyer totheCompany uponconversion oftheNoteinaccordance withtheterms thereof(the“Irrevocable TransferAgentInstructions”).Intheevent that theBorrower proposes toreplace itstransferagent, theBorrower shallprovide, prior totheeffective dateof suchreplacement, afullyexecutedIrrevocable TransferAgentInstructions inaformasinitially deliveredpursuant to thePurchaseAgreement(includingbutnotlimited totheprovision toirrevocablyreserve shares ofCommonStockinthe Reserved Amount)signedby thesuccessor transferagenttoBorrowerand theBorrower.Prior toregistration of theConversionShares under the 1933 Act or the date onwhichtheConversionSharesmay besoldpursuanttoRule144withoutanyrestrictionasto thenumberofSecuritiesasofaparticular datethatcan thenbeimmediately sold,allsuch certificates shallbear therestrictive legend specified in Section2(g)ofthisAgreement.TheCompany warrantsthat:(i) noinstruction otherthan theIrrevocable TransferAgentInstructionsreferred tointhisSection 5,andstoptransferinstructionstogiveeffect toSection 2(f)hereof(in thecase of theConversionShares, prior toregistration of theConversionShares under the 1933 Actorthedate onwhichtheConversionSharesmaybesoldpursuant toRule144withoutanyrestrictionas to the number ofSecuritiesas of a particular date thatcan then be immediately sold), will begivenbytheCompany to its transferagentand that theSecurities shall otherwise befreelytransferable onthebooksandrecords of theCompanyasand totheextent providedin thisAgreementandthe Note;(ii) itwillnotdirectitstransferagentnottotransferor delay, impair,and/or hinderitstransferagent intransferring(orissuing)(electronically orincertificatedform)anycertificateforConversionSharestobeissued totheBuyeruponconversion ofor otherwise pursuant tothe Noteasandwhenrequiredby the Noteand thisAgreement;and(iii) it willnotfailtoremove(ordirects itstransferagent nottoremove orimpairs, delays,and/or hindersitstransferagentfromremoving)anyrestrictive legend(or towithdrawany stoptransfer instructions inrespect thereof) onanycertificateforanyConversionShares issued totheBuyer uponconversion of or otherwise pursuant to the Noteasand whenrequiredbythe Noteand this

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Agreement.NothinginthisSectionshallaffectinanyway theBuyer’sobligationsandagreementsetforthinSection2(g)hereoftocomply withallapplicableprospectusdeliveryrequirements,ifany,uponre-sale of theSecurities.If theBuyerprovidestheCompany,atthecostoftheBuyer, with(i)an opinion ofcounselinform, substanceand scopecustomaryfor opinionsincomparable transactions,totheeffectthata public sale or transfer of such Securities maybemadewithoutregistrationunderthe1933Actandsuchsaleortransferiseffectedor(ii) theBuyerprovidesreasonableassurances thattheSecuritiescan be sold pursuant toRule 144, theCompany shallpermitthetransfer,and,inthecase oftheConversionShares,promptly instructitstransferagent toissue one or morecertificates,freefromrestrictive legend,insuchnameandinsuchdenominationsasspecifiedbytheBuyer.TheCompanyacknowledgesthata breachbyitofitsobligationshereunderwillcauseirreparableharmtotheBuyer,byvitiating the intentandpurposeofthe transactionscontemplatedhereby.Accordingly,theCompanyacknowledgesthattheremedyatlawforabreach ofitsobligationsunderthisSection5may be inadequateandagrees,intheeventofabreachorthreatenedbreachby theCompany ofthe provisionsofthisSection,thattheBuyershallbeentitled,inaddition toallotheravailableremedies,toaninjunctionrestrainingany breachandrequiringimmediatetransfer,withoutthe necessityofshowingeconomiclossand withoutanybond orothersecuritybeingrequired.

6.Conditions tothe Company’s ObligationtoSell.Theobligation oftheCompany hereunder toissueand selltheNotetotheBuyerattheClosingissubjecttothe satisfaction,atorbefore theClosing Date ofeach ofthefollowingconditionsthereto, provided thattheseconditionsarefortheCompany’s solebenefitandmay bewaivedby theCompanyatany timein its solediscretion:

a. TheBuyer shallhaveexecuted thisAgreementanddelivered the sameto theCompany.

b. TheBuyer shallhavedelivered thePurchasePrice inaccordance withSection 1(b)above.

c. Therepresentationsandwarranties oftheBuyer shallbetrueandcorrect inallmaterialrespectsasofthe datewhenmadeandasoftheClosing Dateasthough madeatthattime(exceptforrepresentationsandwarranties thatspeakasof a specific date),and theBuyer shallhaveperformed,satisfiedandcompliedinallmaterialrespectswiththecovenants,agreementsandconditionsrequiredby thisAgreement tobeperformed,satisfied orcomplied withby theBuyerat orprior to theClosingDate.

d. Nolitigation,statute,rule,regulation,executiveorder,decree,rulingorinjunctionshall havebeenenacted,entered, promulgated orendorsedbyorinanycourt orgovernmentalauthorityofcompetent jurisdictionoranyself-regulatoryorganization havingauthority overthematterscontemplated herebywhichprohibitstheconsummationofanyofthe transactionscontemplatedbythisAgreement.

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7.Conditions toTheBuyer’s ObligationtoPurchase.Theobligation oftheBuyerhereunder topurchase theNoteat the Closing issubject tothesatisfaction,atorbeforetheClosingDate ofeachofthefollowingconditions, providedthattheseconditionsareforthe Buyer’s solebenefitandmaybewaivedbytheBuyeratany timein its solediscretion:

a. TheCompany shall haveexecuted this Agreementand delivered the same to theBuyer.

b. TheCompanyshallhavedeliveredtotheBuyerthedulyexecuted

Note (in such denominationsas theBuyershallrequest)inaccordancewithSection 1(b) above.

c.TheIrrevocableTransfer AgentInstructions, informand substance satisfactoryto amajority-in-interest oftheBuyer,shall havebeen deliveredtoandacknowledged in writingbytheCompany’sTransferAgent.

d. TherepresentationsandwarrantiesoftheCompanyshallbetrueandcorrectinallmaterialrespectsasofthedatewhenmadeandasoftheClosingDateasthoughmadeatsuchtime(exceptforrepresentationsandwarrantiesthatspeakasof a specific date)andtheCompanyshallhave performed, satisfiedandcompliedinall materialrespects with thecovenants,agreementsandconditionsrequiredby thisAgreement to be performed, satisfied orcompliedwith by theCompanyatorpriortothe Closing Date. The Buyer shallhavereceived acertificate orcertificates,executedby thechiefexecutive officer of theCompany, datedas of theClosing Date, to theforegoingeffectandas to such other matters as maybereasonablyrequested by the Buyer including, but not limited tocertificates withrespect to theCompany’sCertificate of Incorporation,By-lawsand BoardofDirectors’ resolutionsrelating tothe transactionscontemplated hereby.

e.Nolitigation,statute,rule,regulation,executive order,decree,rulingorinjunctionshallhavebeenenacted,entered,promulgatedorendorsedbyorinanycourt orgovernmentalauthority ofcompetentjurisdiction oranyself-regulatory organizationhavingauthority overthematterscontemplatedherebywhichprohibitstheconsummationofanyofthe transactionscontemplatedbythisAgreement.

f.Noeventshallhaveoccurredwhichcouldreasonablybeexpected tohaveaMaterialAdverseEffectontheCompanyincludingbutnotlimitedtoachangeinthe

1934ActreportingstatusoftheCompanyorthefailureoftheCompanytobetimelyinits1934

Actreportingobligations.

g.TheConversion Sharesshallhave beenauthorizedforquotationon the OTCBBandtradingintheCommon Stockonthe OTCBB shallnothave beensuspendedby theSECortheOTCBB.

h. TheBuyershallhavereceivedanofficer’scertificatedescribedin

Section 3(c) above, datedas oftheClosingDate.

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8.GoverningLaw; Miscellaneous.

a.GoverningLaw.ThisAgreementshallbegovernedbyandconstruedinaccordancewiththe laws oftheState ofNewYorkwithout regardtoprinciples ofconflictsof laws. Anyactionbroughtbyeither partyagainstthe otherconcerning the transactionscontemplatedbythisAgreementshallbebroughtonly in thestatecourtsof New Yorkorinthefederalcourtslocatedinthestateandcounty of Nassau. Thepartiestothis Agreementhereby irrevocably waiveany objectiontojurisdictionandvenueofanyaction institutedhereunderand shallnotassertany defensebasedonlackofjurisdictionorvenueor baseduponforumnonconveniens. TheCompanyandBuyer waivetrialby jury. Theprevailing party shallbeentitledtorecoverfromtheotherparty itsreasonableattorney'sfeesandcosts. In theeventthatany provisionofthisAgreementorany otheragreementdeliveredinconnection herewithisinvalidorunenforceableunderanyapplicablestatuteorruleoflaw,thensuch provisionshallbedeemedinoperative totheextentthatitmayconflict therewithandshallbe deemedmodified toconformwithsuchstatuteorruleof law. Any such provisionwhichmay proveinvalidorunenforceableunderanylawshallnotaffectthevalidityorenforceabilityofany other provision ofanyagreement.Each partyherebyirrevocablywaives personal serviceof processandconsentsto processbeingservedinany suit,actionorproceeding inconnectionwith thisAgreement oranyotherTransactionDocumentby mailingacopy thereofviaregisteredorcertifiedmailorovernightdelivery(withevidenceofdelivery)tosuchpartyattheaddressineffectfornotices to itunder thisAgreementandagrees that suchservice shallconstitutegoodand sufficientserviceofprocessandnoticethereof. Nothingcontainedherein shall bedeemed to limit inanywayanyright to serveprocess inanyothermannerpermittedbylaw.

b.Counterparts.ThisAgreementmay beexecutedinoneormorecounterparts,eachof whichshallbe deemedanoriginalbutallof whichshallconstitute oneand thesameagreementandshallbecomeeffectivewhencounterpartshavebeensignedbyeachpartyand delivered to theotherparty.

c.Headings.The headingsof thisAgreementare forconvenienceofreferenceonlyand shallnotform part of, oraffecttheinterpretation of, thisAgreement.

d.Severability.IntheeventthatanyprovisionofthisAgreementis invalidorunenforceableunderanyapplicablestatuteorruleoflaw,thensuchprovisionshallbe deemedinoperativetotheextentthatitmayconflicttherewithandshallbedeemedmodifiedtoconformwithsuchstatuteorruleoflaw.Anyprovisionhereofwhichmay proveinvalidor unenforceableunderanylawshall notaffect thevalidity orenforceabilityofany otherprovision hereof.

e.Entire Agreement;Amendments.ThisAgreementandthe instrumentsreferencedhereincontaintheentire understanding ofthepartieswithrespecttothe matterscoveredhereinandthereinand,exceptasspecificallysetforthherein ortherein,neither theCompany northeBuyermakesanyrepresentation,warranty,covenantorundertakingwithrespecttosuchmatters. NoprovisionofthisAgreementmaybe waivedoramendedother thanbyan instrument in writingsignedby themajorityin interest oftheBuyer.

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f.Notices.Allnotices,demands,requests,consents,approvals,and othercommunicationsrequiredorpermittedhereundershall be inwritingand,unlessotherwise specifiedherein,shallbe(i)personallyserved,(ii)depositedinthe mail,registeredorcertified,returnreceiptrequested,postageprepaid,(iii) deliveredbyreputableaircourierservicewithchargesprepaid,or(iv)transmittedby handdelivery,telegram,orfacsimile,addressedasset forthbelowortosuchotheraddressassuchpartyshallhavespecifiedmostrecentlybywrittennotice. Any noticeorothercommunicationrequiredorpermittedtobegivenhereundershallbe deemedeffective(a)upon hand deliveryor deliverybyfacsimile, withaccurateconfirmationgeneratedby thetransmittingfacsimilemachine,attheaddressornumberdesignatedbelow(if delivered onabusinessdayduringnormal business hours wheresuchnoticeis to bereceived),or thefirstbusinessdayfollowingsuchdelivery(if deliveredotherthan on abusinessday during normal business hours where such notice is to bereceived) or(b) on the second business dayfollowingthedateofmailing byexpresscourierservice,fullyprepaid,addressedtosuchaddress,or uponactualreceiptof suchmailing, whichever shallfirst occur.Theaddressesfor suchcommunications shall be:

Ifto theCompany, to:

IDS SOLARTECHNOLOGIES,INC.

533BirchStreet

LakeElsinore,CA 92530

Attn:BRUCER. KNOBLICH,ChiefExecutiveOfficerfacsimile:[enter faxnumber]

With a copybyfaxonlyto(whichcopyshall notconstitutenotice):[enternameoflawfirm]

Attn:[attorneyname][enter address line1][enter city, state,zip]

facsimile:[enter faxnumber]

Ifto theBuyer:

ASHERENTERPRISES,INC.

1LindenPl.,Suite207

GreatNeck,NY. 11021

Attn:Curt Kramer,Presidentfacsimile: 516-498-9894

With a copybyfaxonlyto(whichcopyshall notconstitutenotice): NaidichWurmanBirnbaum &MadayLLP

80CuttermillRoad,Suite410

GreatNeck,NY 11021

Attn:BernardS.Feldman, Esq.facsimile: 516-466-3555

Each partyshall providenoticeto theotherpartyof anychangeinaddress.

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g.SuccessorsandAssigns.ThisAgreementshallbebindinguponandinuretothebenefitofthepartiesandtheirsuccessorsandassigns.Neitherthe Company nor theBuyershallassignthisAgreementoranyrightsorobligations hereunderwithouttheprior writtenconsentoftheother. Notwithstanding theforegoing, subjecttoSection 2(f), theBuyer mayassignitsrightshereundertoanypersonthatpurchasesSecuritiesinaprivatetransactionfrom theBuyeror toanyof its“affiliates,”as that term is defined under the 1934Act, without the consent oftheCompany.

h.ThirdPartyBeneficiaries.ThisAgreementis intendedforthe benefitof the partiesheretoandtheirrespectivepermittedsuccessorsandassigns,andisnotfor thebenefit of, normayanyprovision hereofbe enforcedby,anyotherperson.

i.Survival.TherepresentationsandwarrantiesoftheCompanyand theagreementsandcovenantssetforthinthisAgreementshallsurvivetheclosinghereunder notwithstandinganyduediligence investigationconductedbyor onbehalf oftheBuyer.TheCompanyagreestoindemnifyandholdharmlesstheBuyerandalltheirofficers,directors,employeesandagentsforlossordamagearisingasaresultoforrelatedtoanybreachoralleged breachby theCompanyofany of itsrepresentations,warrantiesandcovenantssetforthinthis Agreementorany ofitscovenantsandobligationsunderthisAgreement,includingadvancement of expensesas theyareincurred.

j.Publicity.TheCompany,andtheBuyershallhavetherighttoreview areasonableperiod of time before issuanceofanypressreleases,SEC, OTCBBorFINRAfilings,orany other public statementswithrespecttothe transactionscontemplated hereby;provided,however,thattheCompany shallbeentitled,withoutthepriorapprovalof theBuyer, to makeanypressrelease orSEC, OTCBB(or otherapplicable tradingmarket) orFINRAfilingswithrespecttosuchtransactionsasisrequired byapplicablelawandregulations(although theBuyer shall beconsultedbytheCompanyinconnectionwithanysuch pressrelease prior toitsreleaseandshall be provided withacopy thereofandbegivenanopportunity tocomment thereon).

k.FurtherAssurances.Eachpartyshalldoandperform,orcauseto be doneandperformed,allsuchfurtheractsandthings,andshallexecuteanddeliverallsuch otheragreements,certificates,instrumentsanddocuments,astheotherparty mayreasonablyrequestinordertocarry outtheintentandaccomplishthepurposesofthisAgreementandtheconsummation ofthetransactionscontemplatedhereby.

l.NoStrictConstruction.ThelanguageusedinthisAgreementwill bedeemedtobethelanguagechosenbythepartiestoexpresstheirmutualintent,andnorulesof strictconstruction will be appliedagainstanyparty.

m.Remedies.TheCompanyacknowledgesthatabreachbyitofits obligations hereunderwillcauseirreparableharmto theBuyerbyvitiatingtheintentand purpose ofthetransactioncontemplatedhereby.Accordingly,theCompanyacknowledges thattheremedyatlawforabreachofitsobligationsunderthisAgreementwillbeinadequateandagrees, intheeventofabreachorthreatenedbreachby theCompany oftheprovisionsofthis Agreement,thattheBuyershallbeentitled,inadditiontoallotheravailableremediesatlawor inequity,andinadditiontothepenaltiesassessable herein,toaninjunctionorinjunctionsrestraining,preventingorcuringany breachof thisAgreementandtoenforce specifically the termsandprovisionshereof,withoutthe necessity of showingeconomic lossandwithoutany bond orothersecuritybeingrequired.

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INWITNESSWHEREOF, theundersignedBuyerandtheCompanyhavecaused this Agreement to bedulyexecutedasofthedatefirstabove written.

IDS SOLARTECHNOLOGIES, INC.

By:/s/ BRUCER. KNOBLICH

BRUCER. KNOBLICH ChiefExecutive Officer

ASHERENTERPRISES, INC.

By:/s/ Curt Kramer

Name:Curt Kramer

Title:President

1LindenPl.,Suite207

GreatNeck,NY. 11021

AGGREGATESUBSCRIPTION AMOUNT:

AggregatePrincipal Amount ofNote: $15,500.00

AggregatePurchasePrice: $15,500.00

3274(2)4-4-13

bruce.knoblich@idssolartech.com

patrick.gaynes@gmail.com

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