K2 Design & Strategy S-1/A IPO registration (amended)

SUBSCRIPTION AGREEMENT “SA”

SubscriptionAgreement(this"Agreement"),datedasofApril4th,2014,byandamongK2 DESIGN&STRATEGY,INCaDelawarecorporation(the“Company”) andInvestor (the“Investor”).

WHEREAS, theparties desirethat, upon thetermsand subject to the conditionscontained herein, theInvestorshall invest up toUSD$45,000,000(the “CommitmentAmount”)to purchasetheCompany’scommon stock, $.001 parvaluepershare (the"Common Stock”);and

WHEREAS,suchinvestmentswillbemadeinrelianceupontheprovisionsof Section4(2)undertheSecuritiesActof1933,asamended(the“1933Act”),Rule506of RegulationD,and the rulesandregulations promulgated thereunder.

NOW THEREFORE, theCompanyand theInvestorherebyagree asfollows:

1.Definitions.AsusedinthisAgreement,thefollowingtermsshallhave thefollowingmeaningsspecifiedorindicated,andsuchmeaningsshallbeequallyapplicableto thesingularand pluralforms ofthedefined terms.

“1933ACT”shall meantheSecuritiesAct of1933,as it maybeamended.

“1934ACT”shall meantheSecuritiesExchangeAct of1934,as it maybeamended.“AFFILIATE”shall havethemeaningspecified in Section 5(e).

“AGREEMENT”shall mean this StandbyEquityPurchaseAgreement.“BUY-IN”shall havethemeaningspecified in Section 6.

“BUY-INADJUSTMENT AMOUNT”shallhavethemeaningspecified in Section 6.“CLOSING”shall havethemeaningspecified inSection 2(h).

“CLOSING DATE”shall havethemeaningspecified in Section 2(h).“CLOSINGSTATEMENT”shall havethemeaningspecified in Section 2(h).“COMMITMENT AMOUNT”shall meanUSD$45,000,000.

“COMMITMENTFEE”shallhavethemeaningsetforth in Section 12(b). “COMMONSTOCK”shall meantheCommonStock oftheCompany.“COMPANYINDEMNITEES”shall havethemeaningspecified in Section 10(b).

“CONTROL”or“CONTROLS”shall havethemeaningspecified in Section 5(e).“COVERINGSHARES”shall havethemeaningspecified in Section 6.

“DRAWDOWNAMOUNT”shallmeanuptoamaximumofthatnumberofSharesregisteredas theCommitmentFeeona rollingbasisfrom timeto time.

“DRAWDOWNNOTICE”shallmean awrittennoticesenttotheInvestorbythe CompanystatingtheDrawDownAmountpursuanttothetermsoftheAgreementand stating the current numberofShares issuedand outstanding on such date.

“DRAWDOWNNOTICEDATE”shallmeantheTradingDayimmediatelyfollowing thedayonwhichtheInvestorreceivesaDrawDownNotice,howeveraDrawDownNoticeshallbedeemeddeliveredon(x)theTradingDayitisreceivedbyfacsimileor otherwise by the Investor if such notice isreceived prior to 1:00 p.m.EasternTime(receipt being deemed to occur if theCompanypossess afacsimileconfirmation showingcompleted transmissionby such time),or (y) the immediately succeedingTradingDay if itisreceivedbyfacsimile or otherwiseafter 1:00p.m.EasternTime onaTradingDay(receiptbeingdocumentedasdescribedin(x)above).NoDrawDownNoticemaybe deemed delivered on aday that is not a fullTradingDay.

“EDGAR”shall mean the ElectronicDateGatheringAnalysisandRetrievedsystem.“EFFECTIVEDATE”shallmeanthedatetheSECdeclareseffectivetheRegistration

Statementcoveringthetransactions described in theAgreement.

“EXECUTIONDATE”shallmeanthedatethisAgreementisexecutedbytheCompanyandInvestor.

“INVESTORINDEMNITEES”shall havethemeaningspecified in Section 10(a).“INDEMNIFIEDLIABILITIES”shall havethemeaningspecified in Section 10(a).“INEFFECTIVEPERIOD”shallmeanany periodoftimethatthe RegistrationStatement

becomesineffectiveorunavailableforuseforthesaleorresale,asapplicable,ofanyoralloftheRegisterableSecuritiesforanyreason(orintheeventtheprospectusisnotcurrentand deliverable)duringany timeperiod.

“INVESTOR”shall mean theundersigned investor.

“MAJORTRANSACTION”shallhavethemeaning specifiedinSection2(g).“MARKETPRICE”shallmeanthelowestdailyVWAPoftheCommonStockonthe

Principal Market duringthePricingPeriod.

“MATERIALADVERSE EFFECT”shall havethemeaningspecified in Section 4(a).

“MAXIMUMCOMMONSTOCKISSUANCE”shallhavethemeaningspecifiedin Section 2(i).

“MINIMUMACCEPTABLEPRICE”withrespecttoanyDrawDownNoticeshallmeanthat priceselectedbytheCompanyand stated in the applicableDrawDownNotice.

“OPENPERIOD”shallmeantheperiodbeginningonandincludingthefirstTradingDayimmediatelyfollowingtheEffectiveDateandending on theearlierof(i)thedatewhichisthirty-six(36)monthsfrom theEffectiveDateand(ii)termination of theAgreement inaccordancewith Section 9.

“PAYMENT AMOUNT”shallhavethemeaning specified in Section 2(l).

“PERSON”shall meanan individual, a corporation, apartnership,anassociation, atrust orother entityororganization, includingagovernment orpolitical subdivision or anagencyorinstrumentalitythereof.

“PRICINGPERIOD”shallmeanthefifteen(15)consecutiveTradingDayscommencingwith the Draw DownNotice Date.

“PRINCIPALMARKET”shallhavethemeaning specified in Section 2(f).“PROSPECTUS”shallmeantheprospectus,preliminaryprospectusandsupplemental

prospectus used inconnectionwith theRegistration Statement.

“PURCHASEAMOUNT”shallmeanthetotalamountbeingpaidbytheInvestorona particularClosingDateto purchasetheShares.

"PURCHASEPRICE"shall mean 90%ofMarketPriceduringthePricing Period.“REGISTRABLESECURITIES”shallmeantheSharesbeingregisteredinthe

Registration Statement,which includes theCommitmentFeeShares.

“REGISTRATIONSTATEMENT”meanstheregistrationstatementoftheCompanyfiled underthe1933ActcoveringtheShares to beregistered in this transaction.

“RELATEDPARTY”shall havethemeaningspecified in Section 5(e).“REPURCHASE EVENT”shall havethemeaningspecified in Section 2(l).“RESOLUTIONS”shallhavethemeaningspecified in Section 8(d).

“SEC”shall mean theSecurities &ExchangeCommission.

“SECDOCUMENTS”shall havethemeaningspecified in Section 4(f).

“SECURITIES”or“SHARES”shallmeanthesharesofCommonStockissuedpursuant to theterms oftheAgreement.

“SOLDSHARES”shall havethemeaningspecified in Section 6.“SUBSIDIARIES”shallhavethemeaningspecified in Section 4(a).

“TRADING DAY”shallmeananydayonwhichthePrincipalMarketfortheCompany’scommon stock is openfortrading.

“VALUATIONEVENT”shallhavethemeaning specified in Section 2(j).

“VOLUMEWEIGHTEDAVERAGEPRICE”or“VWAP”shallbeasreportedbyBloombergFinancialMarkets(“Bloomberg”),orifnotavailable throughBloomberg because of delisting, then theaverageof the bid prices ofany market makersfor the Company’s Common Stockasreported in the“pink sheets”by theNationalQuotationBureau,Inc.orothersecurities tradingmarket.

2. PurchaseAnd SaleOf Common Stock

a.PurchaseandSaleofCommonStock.Uponthetermsandconditions setforthherein,theCompanyshallissueandselltotheInvestor,andtheInvestorshall purchasefromthe Company,thatnumberof ShareshavinganaggregatePurchasePrice ofup toUSD$45,000,000.

b.DeliveryofDrawDownNotices. Subject to thetermsandconditions ofthisAgreement theCompanymay, in its solediscretion, delivera DrawDownNotice to theInvestor which states thenumberofShareswhich theCompanyintends to sell to theInvestorduringthePricingPeriod.Acopyofthe form of Draw DownNoticeisattachedheretoandmadeapart hereofasExhibitA.Duringthe Open Period, the CompanymayissueDraw DownNotices ofup toUSD$4,000,000perPricingPeriod, but suchamount shall not bemorethan the128,572 Shares issued toInvestoras part ofits CommitmentFeeorsuchadditional numberofSharesas theparties mayagree onfrom timeto time as atrading buffertocoverSharedelivery.TheInvestor andtheCompanyagreethat 128,572 Shares shallrepresent theCommitmentFee. Priorto theissuanceofaDraw DownNoticetheCompanymusteitherhaveaneffectiveregistrationstatement onfile with theSECregisteringtheCommitmentFee Sharesand theresaleoftheCommon Stock pursuant to thisAgreement ormust provideInvestor withfreetrading unrestricted Shares supportedbyanacceptableopinion letter.If anylegal opinion letteris neededforanyaspectofthis transaction includinggettingthedrawdown orcommitmentfeeshares into the account oftheInvestortheCompanyshall payforit.Oncethe Draw Down NoticeisreceivedbytheInvestor, the Draw DownNoticeshall not beterminated,withdrawn orotherwiserevokedbytheCompanyexceptas setforth in thisAgreement.Duringthe Open Period,theCompanyshall not beentitled to submit a Draw DownNoticeuntilafterthepreviousclosinghas beencompletedand theSharessold duringthat

PricingPeriod havesettled.ThePurchasePriceshall be equal to 90%oftheMarket Price.TheMarket Priceshallbe equal to thelowest dailyVWAP oftheCommon Stock duringthePricingPeriod.

TheCompanyshall set a(“MinimumAcceptablePrice”)ineachDrawDownNotice.IfthePurchasePriceonanyTradingDayin the correspondingPricingPeriod is less than theMinimumAcceptablePrice, then theInvestor’s purchaseobligation under thatDraw DownNoticeshall be reducedbyten percent(10%)ofthetradingvolumethat dayand thePurchasePrice forsuch dayshall bedeemed toequal theMinimumAcceptablePricesetbytheCompanyforthat PricingPeriod.TheInvestoragrees not to sell Shares belowtheMinimumAcceptablePriceatanytimeduringthe corresponding PricingPeriod.

c.Interest.ThepartiesagreethatanyinterestpayableunderthisAgreement shallnotexceed the maximumamountpermitted underanyapplicablelaw.If a law isfinally interpreted so that the interest inconnectionwith thisAgreementexceeds the permitted limits,then:(i)any such interest shall bereducedby theamount necessary toreducetheinterest to thepermitted limit;and(ii)anysumsalreadycollected (if any) from theCompanywhichexceed thepermitted limitswillbe refunded to theCompany.

d.Investor’sObligationtoPurchaseShares.SubjecttotheconditionssetforthinthisAgreement,followingtheInvestor'sreceiptofavalidlydeliveredDraw DownNotice, the Investor shall berequired to purchasefrom the Companyat theendof therelated Pricing Period that number of Shares havinganaggregate Purchase Priceequal to the lesser of(i) theDrawDownAmount setforth in theDrawDownNotice,and

(ii)notlessthan10%oftheaggregatedailyU.S.tradingvolume(excludingirregular tradingandblocktradesof5,000ormoreinwhichtheInvestorcouldnotparticipate) duringtheapplicablePricingPeriodmultipliedbythePurchasePrice,butonlyifsaid Sharesarefreelytradable,arenotsubjecttostoptransferinstructionsandaredeliveredto theInvestorperitswritteninstructions,pursuant toSection2(h).Subject totheconditions setforth in thisAgreement, the Company shall berequired to sell to theInvestorthat numberofSharesrequested by theInvestoroneach ClosingDate.

e.LimitationonInvestor'sObligationtoPurchaseShares.NotwithstandinganythingtothecontraryinthisAgreement,innoeventshall theInvestorberequiredto purchase,andthe Company shallinnoeventselltotheInvestor,thatnumber of Shares,whichwhenadded to the sum of the number of Sharesbeneficiallyowned,(as such term isdefinedunderSection13(d)andRule13d-3oftheSecuritiesExchangeActof1934,as maybeamended,(the“1934Act”)),by the Investorwouldexceed 4.99% of the number ofShares outstanding ontheDrawDownNoticeDateforsuch PricingPeriod,as determined inaccordancewith Rule 13d-1(j) under the 1934Act.EachDrawDown Notice shall include arepresentation of the Companyas to the number of Shares of Common Stock outstanding on therelatedDrawDownNoticeDateasdetermined inaccordancewith Section 13(d) of the 1934Act. In theevent that the number of Sharesof CommonStockoutstandingasdeterminedinaccordancewithSection13(d) of the 1934Act is different onanydate during a Pricing Period than on theDrawDownNoticeDate

associatedwithsuchPricingPeriod,thenthenumberofSharesofCommonStock outstandingonsuchdateduringsuchPricingPeriodshallgovernforpurposesof determiningwhethertheInvestorwouldbeacquiringbeneficialownershipofmorethan 4.99% of the number of Shares of Common Stock outstandingduringsuch period.Ifany legal opinion letter isneededforanyaspect of this transaction including getting the drawdownorcommitmentfeesharesintotheaccountof theInvestortheCompany shall payforit.

f.CommonStockListingRequirement.Atalltimesduringtheperiod beginningon therelatedDraw DownNoticeDateandendingonand includingtherelated ClosingDate,theCommonStockshallhavebeenlistedonTheAmericanStockExchange,Inc.orTheNewYorkStockExchange,Inc. ordesignated ontheNasdaq National Market,TheNasdaq SmallCap Market, ortheNationalAssociation ofSecuritiesDealer’s,Inc.OTCelectronicbulletinboard(the"PrincipalMarket")andshall not have been suspendedfrom trading thereonfor a period offive(5)consecutiveTradingDays during theOpen Periodand the Company shall not have been notified ofany pending or threatenedproceedingorother action to delist orsuspend theCommon Stock.

g.ForpurposesofthisAgreement,a"MajorTransaction"shallbedeemedto haveoccurredattheclosingofanyofthefollowingevents:(i)theconsolidation,merger orotherbusinesscombinationoftheCompanywithorintoanotherentity(otherthan pursuant to a migratory mergereffected solelyfor the purposes ofchanging the jurisdictionofincorporationoftheCompany)(ii)thesaleortransferofallor substantiallyalloftheCompany'sassets;or(iii)theconsummationofapurchase, tender orexchange offer made to,andacceptedby, the holders of more than 30% of theeconomic interest in, orthecombined voting power ofallclassesof voting stockof, the Company.

h.MechanicsofPurchaseofSharesbyInvestor.AttheendofeachPricing PeriodtheInvestorshallprepareandsendtheCompanya“ClosingStatement”(SeeExhibit Dattached hereto). Subject to the satisfaction of theconditions setforthin Sections 2(f), 7and 8,eachclosing of the purchase bytheInvestorof Shares(each a"Closing") shall occuron the date offinal settlement of the Shares soldby theInvestor during the Pricing Period(eacha"ClosingDate").The Company shall not beentitled to issueanotherDrawDownNoticeuntilafterthesettlement ofthepriorDrawDownNotice.On or prior toeach ClosingDate,(i) the Company shall deliver to the Investor peritswritteninstructions,certificatesrepresenting theSharestobeissued totheInvestor on such dateandregistered in the name of theInvestor or deposit such Shares into theaccount(s)(with theInvestorreceivingconfirmation that the Sharesare in suchaccount(s)) designatedby theInvestorfor the benefit of theInvestorand(ii) theInvestor shall delivertotheCompany thePurchasePriceto bepaidforsuchShares(afterreceipt ofconfirmation ofdelivery of such Shares),determinedasaforesaid, bywire transfer.In lieu of delivering physicalcertificatesrepresenting the Sharesand provided that theTransferAgentthenisparticipating inTheDepositoryTrustCompany(“DTC”)FastAutomated SecuritiesTransfer(“Fast”)program, uponrequest of the Investor, the Company shallcausetheTransferAgent toelectronically transmit theSharesbycrediting

theaccountofInvestors’brokerwithDTCthroughitsDeposit/WithdrawalatCustodian(“DWAC”)system,andprovideproofsatisfactoryto theInvestorofsuchdelivery.

i.OverallLimitonCommonStockIssuable.Notwithstandinganythingcontainedhereintothecontrary,ifduringtheOpenPeriodtheCompanybecomeslisted onanexchange that limits the number of shares of Common Stock that maybe issuedwithout shareholderapproval,thenthe number ofShares issuablebythe Company pursuant tothisAgreement,shall notexceedthat numberofthe shares ofCommonStock that maybe issuable without shareholderapproval,(the"Maximum Common StockIssuance"),unlessthe issuance of Shares, includingany Common Stock to be issued pursuant to thisAgreement, inexcess of theMaximum Common StockIssuance shallfirstbeapprovedbythe Company'sshareholders.The partiesunderstandandagree that the Company'sfailureto seek or obtain suchshareholderapproval shall in nowayadverselyaffect thevalidityand dueauthorization of the issuanceand sale of Shares hereunder or theInvestor's obligation inaccordancewith thetermsandconditions hereof to purchase a numberof Shares in theaggregate up to the Maximum Common StockIssuance limitation,andthatsuchapprovalpertainsonly totheapplicability ofthe Maximum Common StockIssuancelimitation provided in thisSection 2(i).

j."ValuationEvent"shall meananevent inwhichtheCompanyatanytime duringa“PricingPeriod”takesanyofthefollowingactions:

(i) subdivides or combines its CommonStock;

(ii) paysadividend in Common Stock ormakesanyotherpurchase

ofits Common Stock,exceptfordividends paidwithrespect to the Preferred Stock;

(iii) issuesanyoptions orother rights to subscribe fororpurchase Common Stockand thepricepershare for whichCommon Stock mayatanytimethereafterbeissuablepursuant to such options or other rights shall beless than the VWAPfor eachofthe five (5)TradingDays immediatelypriorto such issuance;

(iv) issuesanysecuritiesconvertibleinto or exchangeable forCommon Stockand the consideration pershare forwhich shares ofCommon Stock mayatanytimethereafterbeissuablepursuant totheterms ofsuchconvertibleor exchangeablesecurities shall beless thanthe VWAPfor eachofthe five (5)TradingDays immediatelyprior to such issuance; or

(v) issues shares ofCommon Stock otherwisethanasprovided in theforegoingsubsections(i)through(iv),at apricepershareless,orforother consideration lower, than theVWAPfor each ofthe five

(5) TradingDays immediatelypriorto such issuance, or withoutconsideration.

k.TheCompanyagrees that it shall not take anyaction thatwould result in aValuationEvent occurringduring aPricingPeriod.

l. Delisting; Suspension.IfatanytimeduringtheOpen Period or within thirty

(30) calendardaysafterthe end oftheOpen Period,(i)theRegistration Statement,afterit has been declaredeffective, shall notremaineffective andavailableforsaleof all the RegisterableSecurities,(ii)theCommon Stock shall notbelistedon thePrincipal Market orshall havebeen suspendedfrom tradingthereon(excludingsuspensionsofnot more than onetradingdayresultingfrom businessannouncementsbytheCompany)orthe Companyshall havebeen notified of anypending orthreatened proceeding orotheraction to delist orsuspend theCommon Stock or (iii)thereshall haveoccurred aMajorTransaction(as defined in Section 2(g))orthepublic announcement ofapendingMajorTransactionwhichhasnot beenabandoned orterminated, ortheCompanyshallrepurchase within thirty(30) calendardaysoftheoccurrenceofoneoftheevents listed inclauses(i),(ii)or (iii) above (each a“RepurchaseEvent”) and subject to thelimitations imposedbyapplicablefederaland statelaw,all oranypart oftheShares issued to theInvestor within thesixty(60) TradingDays precedingtheoccurrence oftheRepurchaseEventand then heldbytheInvestor atapriceperShare equal to thehighestVolumeWeightedAveragePriceduringtheperiod beginningon thedateoftheRepurchase Eventandendingonand includingthedateonwhich theInvestor is paidbytheCompanyfor the repurchaseoftheShares(the"PaymentAmount").IftheCompanyfails to payto theInvestorthe fullaggregatePaymentAmountwithinfive (5)calendardaysofthe occurrenceofaRepurchase Event, theCompany shall payto theInvestor,on the firstTradingDayfollowingsuchfifth(5th)calendarday, inaddition toand not in lieu ofthe PaymentAmount payablebytheCompanyto theInvestor,anamountequal to 2%oftheaggregatePaymentAmount then due and payableto theInvestor, incashbywire transfer, pluscompoundedannual interest of10%on such PaymentAmount duringthe period, beginningon thedayfollowingsuchfifthcalendarday, duringwhich such PaymentAmount, or anyportion thereof, is outstanding.

M.NeitherpartyshallbeliableindamagesorhavetherighttoterminatethisAgreementforanydelayordefaultinperforminghereunderifsuchdelayordefaultiscausedbyconditionsbeyonditscontrolincluding, butnot limited toActsofGod,Governmentrestrictions(including the denial orcancellation ofanyexport or other necessary license),wars, insurrectionsand/orany othercause beyond thereasonablecontrol ofthepartywhose performanceisaffected by severeeconomicconditions.

3. Investor’sRepresentationsand Warranties.

TheInvestorrepresentsandwarrants to theCompanythat:

a.SophisticatedInvestor.TheInvestorhassuchknowledge,sophisticationandexperienceinbusinessandfinancialmatterssoastobecapableofevaluatingthe meritsandrisks oftheprospectiveinvestment in theSecurities.

b.Authorization;Enforcement.ThisAgreementhasbeendulyandvalidlyauthorized,executedanddeliveredonbehalfoftheInvestorandisavalidandbindingagreementoftheInvestorenforceableagainsttheInvestorinaccordancewithits terms, subjectas toenforceability togeneral principles ofequityand toapplicable bankruptcy,

insolvency,reorganization,moratorium,liquidationandothersimilarlawsrelatingto,oraffecting generally, theenforcement of applicablecreditors'rightsandremedies.

c.Section9ofthe1934Act.DuringtheOpenPeriod,theInvestorwillcomplywiththeprovisionsofSection9ofthe1934Act,andtherulespromulgated thereunder,withrespect to transactions involvingtheCommon Stock.

d.AccreditedInvestor.Investorisan“AccreditedInvestor”asthattermis defined in Rule501(a) (3)ofRegulation Dofthe1933Act.

e.NoConflicts.Theexecution,deliveryandperformanceofthisAgreementbytheInvestorandtheconsummationbytheInvestorofthetransactionscontemplated herebyandtherebywillnot(i)resultina violationof theArticlesofIncorporation or theBy-laws oftheInvestoror(ii)conflictwith,orconstituteamaterialdefaultunder,orgive to othersanyrights of termination,amendment,acceleration orcancellation of,any materialagreement,contract,indenture mortgage, indebtednessor instrumenttoorresult in a violation ofany law,rule,regulation, order, judgment ordecreeapplicable to theInvestor.

f.NoFiduciaryRelationship.NothingcontainedinthisAgreementcreatesorestablishesafiduciaryrelationshiponthepartoftheInvestororitsprincipalswiththe Company.Nothingcontained in thisAgreement oranyagreements or documentsestablishes a dutyon the part of theInvestor or its principals not to tradeon or otherwise use anyinformation disclosed to theInvestorbytheCompany.

g.TradingActivities.TheInvestor’stradingactivitieswithrespecttothe Company’sCommonStockshallbeincompliancewithallapplicablefederalandstate securities laws,rulesandregulationsand therulesandregulations ofthePrincipal Market onwhichtheCompany’sCommonStockislistedortraded.TheInvestoragreesthatit shallnotengage inany shortsalesof or hedgingtransactionswithrespecttothe Shares duringthetermofthisAgreementandforaperiodoften(10)TradingDaysfollowing thetermination ofthisAgreement.

4. RepresentationsAndWarrantiesOfThe Company.

ExceptassetforthintheSchedulesattachedhereto,theCompanyrepresentsandwarrants to theInvestorthat:

a.OrganizationandQualification.TheCompanyandits“Subsidiaries”(whichforpurposesofthisAgreementmeansanyentityinwhichtheCompany,directly orindirectly,ownscapitalstockorholdsanequityorsimilarinterest)arecorporations dulyorganizedand validlyexisting ingood standing under the laws of therespective jurisdictionsof their incorporation,andhave not takenanyactionor omittedtotakeanyactionandagree thattheyshallnottakeanyactionoromittotakeanyactionduringtheOpen Period thatwould have a MaterialAdverseEffect on the Company or the trading price ofitsCommonStock.AsusedinthisAgreement,“MaterialAdverseEffect” means

anycondition,circumstance,situationoreffectonthebusiness,properties,assets, operations,resultsofoperationsorfinancialconditionoftheCompanythatismaterialandadversetotheCompanyanditsSubsidiaries,ifany,whichtakenas awhole,would prohibit orotherwise interferewiththeauthority orabilityofthe Companytoenterintoand performany ofits obligations underthisAgreement.

b.Authorization;Enforcement;CompliancewithOtherInstruments.(i)The CompanyhastherequisitecorporatepowerandauthoritytoenterintoandperformthisAgreement,inconnectionwiththe transactionscontemplatedbythisAgreementandto issuetheSharesinaccordancewiththetermshereofandthereof,(ii)theexecutionand deliveryof thisAgreementbythe Companyandtheconsummationbyit of the transactionscontemplatedherebyandthereby,includingwithoutlimitationthereservationforissuanceandtheissuanceoftheSharespursuanttothisAgreement,have been dulyand validlyauthorizedby the Company'sBoard ofDirectorsand nofurtherconsent orauthorizationisrequired by the Company, itsBoardofDirectors, orits shareholders,(iii) thisAgreementhasbeen dulyand validlyexecutedanddelivered by theCompany,and(iv)thisAgreementconstitutesthevalidandbinding obligationsofthe Company.

c.Capitalization.As ofthedatehereof, theauthorizedcapital stock ofthe Companyconsists of (i)100,000,000shares ofCommon Stock, of whichas ofthedate hereof, 19,350,000sharesareissuedand outstanding,-0sharesofPreferred Stock are issuedand outstandingandapproximately-84,650,000-sharesofCommon Stockare issuableupon the exerciseofoptions,warrantsandconversionrights.All ofsuch outstandingshares havebeen, orupon issuancewill be, validlyissuedandare fullypaidand nonassessable.Exceptas disclosed in this Section,(i)no sharesoftheCompany'scapital stockaresubjectto preemptive rights or anyothersimilarrights or anyliens orencumbrances sufferedorpermittedbytheCompany,(ii)thereareno outstandingdebt securities,(iii)there areno outstandingshares ofcapital stock, options,warrants, scrip,rights to subscribeto,calls or commitments of anycharacterwhatsoeverrelatingto, or securities or rightsconvertibleinto,anyshares ofcapital stock oftheCompanyor anyof its Subsidiaries,(iv)there arenoagreements orarrangementswith aPerson, otherthan theInvestorunder whichtheCompanyoranyofits Subsidiaries is obligated toregister thesaleof anyoftheirsecurities underthe1933Act,(v)there areno outstanding securities oftheCompanyoranyofits Subsidiarieswhichcontainanyredemption or similarprovisions,and therearenocontracts,commitments, understandings orarrangementsbywhichtheCompanyoranyofitsSubsidiaries is ormaybecomebound toredeem asecurityoftheCompanyor anyofitsSubsidiaries,(vi)therearenosecuritiesorinstrumentscontaininganti-dilution orsimilarprovisions thatwill betriggeredbythe issuanceoftheSecuritiesas described in thisAgreement,(vii) theCompanydoes not have anystockappreciationrights or"phantom stock"plansoragreementsor anysimilar plan oragreementand(viii)thereis no dispute as to the class of anysharesofthe Company'scapital stock. Priorto thesigningofthisAgreementbytheInvestor, the Companyshallfurnish totheInvestortrueandcorrectcopiesof anyoutstanding securitiesconvertibleinto or exercisable forCommon Stock.

d.IssuanceofShares. Asufficient numberofShares issuablepursuant to thisAgreement has beendulyauthorizedandreservedforissuance.Uponissuanceinaccordance with thisAgreement, theSecuritieswill be validlyissued,fullypaidand nonassessableandfree fromall taxes, liensandchargeswithrespect to theissuethereof.In theevent theCompanycannotregisterthe fullnumberofShares thepartiesanticipatedwould be registered, theCompanywill useits bestefforts toregisterthemaximum numberof Sharesallowable.

e.NoConflicts.Theexecution,deliveryandperformanceofthisAgreementbytheCompanyand theconsummationbytheCompanyofthetransactionscontemplated hereinwillnot(i)resultinaviolationoftheArticlesofIncorporation,any CertificateofDesignations,PreferencesandRightsofany outstanding seriesofpreferredstockofthe Company or theBy-laws or(ii)conflictwith, orconstitute a material default under, orgiveto othersanyrights oftermination,amendment,acceleration orcancellation of,any materialagreement,contract, or instrumenttowhich the Company oranyof its Subsidiaries is a party,orresult in a violation ofanylaw,rule,regulation, order, judgment or decree(includingUnited Statesfederaland state securities lawsandregulationsand therulesandregulations of the Principal Marketor principal securitiesexchangeortradingmarketonwhichtheCommonStockistradedorlisted)applicableto theCompanyoranyofitsSubsidiariesorbywhichanypropertyorassetoftheCompany or anyofits Subsidiaries is bound or affected.

NeithertheCompanynoritsSubsidiariesisinviolationofanytermof,orin defaultunder,theArticlesofIncorporation,anyCertificateofDesignations,Preferences and Rights ofanyoutstandingseries ofpreferred stock of the Company or its By-lawsoranycontract,agreement,indebtedness,instrument,judgment,decree,orderorany statute,rule orregulationapplicable to the Company or its Subsidiaries,exceptas setforth in the SECDocuments orpossibleconflicts, defaults, terminations,amendments,accelerations,cancellationsandviolations thatwouldnot individuallyorintheaggregatehave a MaterialAdverseEffect.Exceptas disclosed in the SECDocuments, the Companyand itsSubsidiariesareunawareofanyfactsorcircumstanceswhichmightgiverisetoany of theforegoing.The Company is not,andwill not be, in violation of the listingrequirements of the Principal Marketas ineffecton the date hereofand oneach of the ClosingDatesand is notaware ofanyfactswhichwouldreasonably leadto delistingof theCommon Stockby thePrincipal Market in theforeseeablefuture.

f.SECDocuments;FinancialStatements.TheCompanyisintheprocessoffilingitscurrentreports,schedules,forms,statementsandotherdocumentswiththeSEC pursuanttothereportingrequirementsofthe1934Act(alloftheforegoing, ifany,filed prior to the date hereofandall exhibits included thereinandfinancial statementsand schedules theretoanddocuments incorporated byreference therein being hereinafterreferred toas the"SECDocuments").

g.AbsenceofCertainChanges.ExceptasdisclosedintheSECDocuments, therehasbeennochangeordevelopmentinthebusiness,properties,assets,operations,financialcondition,resultsofoperationsorprospectsof theCompanyoritsSubsidiarieswhichhashadorreasonablycouldhaveaMaterialAdverseEffect.TheCompanyhasnot

takenanysteps,anddoesnotcurrentlyexpecttotakeanysteps,toseekprotection pursuanttoanybankruptcylawnordoestheCompanyoritsSubsidiarieshaveany knowledgeorreasonto believethatitscreditors intendto initiateinvoluntarybankruptcy proceedings.

h.AbsenceofLitigation.ExceptasdisclosedintheSECDocuments,there isnoaction,suit,proceeding,inquiryorinvestigationbeforeorbyanycourt,public board,governmentagency,self-regulatory organization or body pending or, to the knowledge of theexecutive officers of Company orany of its Subsidiaries, threatenedagainst oraffecting the Company, the Common Stock oranyof the Company's Subsidiaries oranyof the Company's or the Company's Subsidiaries'officers or directorsin theircapacitiesas such, inwhichanadversedecisioncould have a MaterialAdverseEffect.

i.AcknowledgmentRegardingInvestor'sPurchaseofShares.TheCompanyacknowledgesandagreesthattheInvestorisactingsolelyinthecapacityofarm'slength purchaserwithrespect to thisAgreementand thetransactionscontemplated herebyand thereby.TheCompanyfurtheracknowledgesthat theInvestorisnotactingas afinancialadvisor orfiduciaryof the Company(or inany similarcapacity)withrespect to thisAgreementand thetransactionscontemplated herebyand therebyandanyadvicegivenby theInvestor oranyof itsrespectiverepresentatives oragents inconnectionwith thisAgreementand the transactionscontemplated herebyand therebyis merely incidental to theInvestor's purchaseoftheSecurities.The Companyfurtherrepresents to theInvestor that the Company's decision toenter into thisAgreement has been based solely on the independentevaluation bytheCompanyand itsrepresentatives.

j.NoUndisclosedEvents,Liabilities,DevelopmentsorCircumstances.Noevent,liability,developmentorcircumstancehasoccurredorexists,ortoitsknowledge iscontemplatedtooccur,withrespecttotheCompany oritsSubsidiariesortheirrespectivebusiness, properties,assets, prospects, operations orfinancialcondition, thatwould berequired tobe disclosedbythe Companyunderapplicablesecurities laws on aregistrationstatementfiledwiththeSECrelatingtoanissuanceand saleby the Company ofits Common Stockandwhich has not been publiclyannounced.

k.InternalAccountingControls.TheCompanyandeach ofits Subsidiariesagrees to maintainasystem ofinternalaccountingcontrols sufficient to providereasonable assurancethat(i)transactionsareexecuted inaccordance with management'sgeneralorspecific authorizations,(ii)transactionsarerecordedasnecessaryto permit preparation of financial statements inconformitywithgenerallyacceptedaccounting principlesand to maintainassetaccountability,(iii) access toassets is permitted onlyinaccordancewith management'sgeneral orspecificauthorizationand(iv)the recorded accountabilityforassets iscomparedwith theexistingassetsatreasonableintervalsandappropriateaction is takenwithrespect toanydifferences.

l.TaxStatus.TheCompanyandeachofitsSubsidiarieshasmadeorfiledallUnitedStatesfederalandstateincomeandallothertaxreturns,reportsand

declarationsrequiredbyanyjurisdictiontowhichitissubject(unlessandonlytotheextentthattheCompanyandeachofitsSubsidiarieshassetasideonitsbooksprovisionsreasonablyadequateforthepayment ofall unpaidand unreported taxes)and has paidall taxesandothergovernmentalassessmentsandchargesthatarematerialinamount, shownor determinedtobe due onsuchreturns,reportsanddeclarations,exceptthose beingcontested ingoodfaithand has setasideon its books provisionreasonablyadequatefor the payment ofalltaxesfor periodssubsequenttothe periodstowhichsuchreturns,reports or declarationsapply.Thereareno unpaid taxes inanymaterialamountclaimed to be duebythe taxingauthority ofany jurisdiction,and the officers of the Companyknowofnobasisfor anysuchclaim.

m.CertainTransactions.ExceptassetforthintheSECDocumentsandexceptforarm'slengthtransactionspursuanttowhichtheCompanymakespaymentsin the ordinarycourse of business upon terms no lessfavorable than the Companycould obtainfrom third parties, noneof the officers, directors,oremployees ofthe Companyis presently a party toany transactionwith the Company oranyof its Subsidiaries(other thanfor servicesasemployees, officersand directors), includinganycontract,agreement or otherarrangementprovidingfor thefurnishingof services toorby, providingforrental ofreal orpersonal propertyto orfrom, or otherwiserequiringpayments to orfromany officer, director or suchemployee or, to the knowledge of the Company,anycorporation, partnership, trust or otherentityinwhichanyofficer, director, oranysuchemployeehas asubstantial interest orisan officer, director, trusteeorpartner.

n.DilutiveEffect.TheCompanyunderstandsandacknowledgesthatthe numberofsharesofCommonStockissuableuponpurchasespursuanttothisAgreementwillincreaseincertaincircumstancesincluding,butnotnecessarily limitedto, thecircumstancewherein the tradingprice of the Common Stock declines duringtheperiod between theEffectiveDateand theend of theOpen Period.The Company’sexecutive officersand directors have studiedandfully understand the nature ofthe transactionscontemplated bythisAgreementandrecognizethat theyhave a potential dilutiveeffect.The board of directors of the Company hasconcluded, in itsgoodfaith business judgment that such issuanceis in thebest interests oftheCompany.

o.Right ofFirst Refusal.DuringtheOpen Period, theCompanyshall notenterintoanysubsequentfundingtransactions ofthetypesimilarto this transactionand ifthetotalamount of fundingis provided priortothe end ofthe Open Period the CompanyshallgiveInvestoraten(10)businessdaywrittenright of firstrefusal toenterinto asubsequentfundingtransaction.DuringtheOpen Periodandforaperiod oftwelve months thereafter, theCompanyshall not, directlyorindirectly,without theprior writtenconsent ofInvestoroffer,sell,grantanyoption to purchase,orotherwise disposeof any ofits Common Stock orsecuritiesconvertibleinto Common Stockat apricethat is less than themarket priceoftheCommon Stockat thetimeofissuanceofsuchsecurityor investment(a"SubsequentFinancing"),except(i)thegrantingofoptions or warrants toemployees, officers, directorsandconsultants,and theissuanceofsharesuponexercise ofoptionsgranted, underanystock option plan heretoforeorhereinafterdulyadoptedby theCompany,(ii)sharesissued uponexerciseofanycurrentlyoutstandingwarrants or

optionsand uponconversion of anycurrentlyoutstandingconvertibledebentureorconvertiblepreferred stock, ineachcasedisclosed pursuant to Section 4(c),(iii)securities issued inconnectionwith the capitalization or creation ofajoint venture with astrategic partner,(iv)shares issued to paypart or all ofthepurchasepricefortheacquisitionbythe Companyofanother entity,and(v)shares issuedin abona fidepublicofferingbythe Companyofits securities, unless(A)theCompanydelivers toInvestora written notice(the"SubsequentFinancingNotice")ofits intention toeffect such SubsequentFinancing,which SubsequentFinancingNoticeshall describeinreasonabledetail theproposed terms ofsuch SubsequentFinancing, the amountofproceeds intended tobe raised thereunder, thepersonwithwhom such SubsequentFinancingshall beeffected,andattached towhich shall beaterm sheet orsimilardocumentrelatingtheretoand(B)Investorshall not havenotified theCompanyby5:00 p.m.(New York time)on the fifth(5th) TradingDayafteritsreceipt oftheSubsequentFinancingNoticeofitswillingness to provide, subject tocompletion ofmutuallyacceptabledocumentation,financingto the Companyon substantiallytheterms setforth in theSubsequentFinancingNotice.If Investorshallfail to notifytheCompanyofits intention toenterinto such negotiationswithin such timeperiod, then theCompanymayeffect theSubsequentFinancing substantiallyupon theterms setforth in theSubsequentFinancingNotice.

p.Lock-up.TheCompanyagrees to useits bestefforts to haveits officers, directorsandaffiliatesrefrainfrom sellingCommon Stock duringeach PricingPeriod.

q.NoGeneralSolicitation.NeithertheCompany,noranyofitsaffiliates,norany personacting onitsbehalf,hasengagedinanyformofgeneralsolicitationorgeneraladvertising(withinthemeaningofRegulationD)inconnectionwiththeofferorsaleof theCommon Stock offered hereby.

s.Post-ClosingOpinionofCounsel.TheCompanywillobtainfortheInvestor,at theCompany’sexpense,anyandall opinionsofcounselwhich may bereasonablyrequiredinordertosellthesecuritiesissuablehereunderwithoutrestrictionaftertheEffectiveDate,which“Post-ClosingOpinion Letter” letter draft shall beattachedheretoand made a part hereofasExhibit B.The Companywillalso obtainfor the Investor,at theCompany’sexpense,anyandall opinionsofcounselwhich may bereasonablyrequiredto deposit thedrawdownorcommitmentfeeshares intofree trading sharesattheInvestors brokeragefirm.

t.Agreement CarefullyRead.Companyhasreadeachandeveryprovision ofthisAgreement,and understands that:(i)Companywill be considered to havemade eachandeveryagreement,representationandwarrantycontained herein;(ii)Investor will beentitled torelyupon suchagreements,representationsandwarranties inexecutingthisAgreement,and(iii)ifCompanydoes not believetheymeets arepresentation orwarranty, then Companyshould notexecute and deliverthisAgreement to theInvestorwithoutfirstrequestingtheInvestor, inwriting, towaivesuchrepresentation or warranty.

u.Experienced CompanyManagement.Companymanagement has sufficientfinancialand businessexperience and knowledgeconcerningtheaffairsandconditions of theCompanyso that Companymanagement isfullycapableofevaluating themeritsandrisks ofsellingtheSharesand ofmakingan informed investment decision,andcan makean independentandreasoned decisionwhethertoenterinto such transactionwithout theassistanceofalicensedbrokerorequivalent sellerrepresentative.

v.Independent Review.Companyhasbeenencouraged to seek theirownlegalandfinancialcounsel toassist theCompanyinevaluatingthetransactionconcerningthe saleoftheShares.

5. Covenants OfThe Company

a.BestEfforts.TheCompanyshalluseitsbesteffortstimely tosatisfyeach ofthe conditions to besatisfiedbyitas providedin Section 7 ofthisAgreement.

b.BlueSky.TheCompanyshall,at its sole costandexpense, beforethefirst ClosingDate,takesuchactionastheCompanyshallreasonablydetermineisnecessaryto qualifytheSecuritiesfor,orobtainexemptionfortheSecuritiesfor,saletotheInvestor pursuanttothisAgreementunderapplicablesecuritiesor"Blue Sky"lawsasmay beapplicable,and shall provideevidenceofany suchaction so taken to the Investoronor priorto the first ClosingDate.

c.ReportingStatus;RegistrationStatement.DuringtheOpenPeriod,the Companyshalluseitsbesteffortstotimelyfileallreportsrequiredtobefiledwiththe SECpursuanttothe1934ActandmaintaintheeffectivenessoftheRegistration Statement.

d.UseofProceeds.TheCompanywillusetheproceedsfromthesaleofthe Shares(excludingamounts paidbytheCompanyfor feesassociatedwith this transaction)forgeneralcorporate,workingcapital purposesand potentialacquisitions.

e.TransactionsWithAffiliates.Exceptas setforth in this Section, the Companyshallnot,andshallcauseeachofitsSubsidiariesnotto,enterinto,amend, modifyorsupplement,orpermitanySubsidiarytoenterinto,amend, modifyor supplement,anyagreement, transaction,commitment orarrangementwithany of its orany Subsidiary'sofficers,directors, personswhowere officersor directorsatany time duringtheprevioustwo years, shareholderswhobeneficiallyown5% ormoreofthe CommonStock,oraffiliatesorwithany individualrelatedby blood,marriage oradoption toanysuch individual orwithanyentity inwhichany suchentityor individual owns a 5% or morebeneficial interest(eacha“Related Party”),exceptfor(i)customaryemploymentarrangementsandbenefit programs onreasonableterms,(ii)anyagreement, transaction,commitment orarrangement onanarms-length basis on terms no lessfavorable than termswhichwould havebeen obtainablefrom a person other than such

RelatedParty,or(iii)anyagreement,transaction,commitmentorarrangementwhichisapprovedbyamajority ofthedisinteresteddirectorsoftheCompany. Forpurposes hereof,any directorwho isalsoan officer ofthe Company orany Subsidiaryof the Companyshall not be a disinterested directorwithrespect toanysuchagreement, transaction,commitmentorarrangement.“Affiliate”for purposeshereof means,withrespect toanyperson orentity,another person orentity that, directlyor indirectly,(i) has a 5% or moreequity interestinthatperson orentity,(ii) has5% or morecommon ownershipwith thatperson orentity,(iii)controls that personorentity, or(iv) sharescommoncontrolwith that person orentity.“Control” or "Controls"for purposes hereof meansthata personorentity hasthe power,director indirect,toconductorgovernthe policies of anotherperson or entity.

f.FilingofForm8-K.Onorbeforethedate whichis three(3)TradingDaysaftertheExecutionDate,theCompanyshallfileaCurrentReportonForm8-Kwiththe SECdescribingthetermsofthetransactioncontemplatedbythisAgreementintheformrequiredbythe1934Act, ifsuchfilingisrequired.

g.NoticeofCertainEventsAffectingRegistration;SuspensionofRighttoMakeaDrawDown.TheCompanyshallpromptlynotifyInvestorupontheoccurrenceofany of thefollowingevents inrespect of a Registration Statement orrelated prospectus inrespect ofanofferingofthe Shares:(i)receipt ofanycommentsor arequestforadditional information by the SEC orany otherfederal or stategovernmentalauthorityeither prior toor during the period ofeffectiveness of the Registration Statementforamendments or supplements to the Registration Statement orrelated prospectus;(ii) the issuanceby the SEC orany otherfederalor stategovernmentalauthority ofany stop ordersuspendingtheeffectiveness ofanyRegistrationStatement ortheinitiationofany proceedingsfor thatpurpose;(iii)receipt ofany notificationwithrespect to the suspension of the qualification orexemptionfrom qualification ofanyof the Sharesfor saleinany jurisdiction ortheinitiation orthreateningofany proceedingforsuch purpose;

(iv)thehappeningofanyeventthatmakesanystatementmadeinsuchRegistration Statementorrelatedprospectusoranydocumentincorporatedordeemedtobe incorporatedthereinbyreference untrue inany materialrespect or thatrequires the makingofanychanges in the Registration Statement,related prospectus or documents so that, in thecase of a Registration Statement, itwill notcontainanyuntrue statement of a materialfactoromit to state anymaterialfactrequired tobestatedthereinornecessary to make the statements thereinnot misleading,andthat inthecase oftherelatedprospectus, itwill notcontainany untruestatementofamaterialfactoromit to stateanymaterialfactrequired to be stated therein or necessary to make the statements therein, in the light of thecircumstances underwhich theywere made, not misleading;and(v)the Company'sreasonable determination that a post-effectiveamendment to the Registration Statementwould beappropriate,and the Company shallpromptly makeavailable to Investorany such supplement oramendment to therelated prospectus.The Company shall not deliver to InvestoranyDrawDownNotice during thecontinuation ofanyof theforegoingevents.

h.Registration Statement.TheCompanyisawareandacknowledges that it may not be ableto issue DrawDownNotices underthisAgreement ifitcannotobtainaneffectiveRegistration Statement orif anyissuances ofCommon Stock pursuant toanyDraw DownNoticeswould violate anyrules ofthePrincipal Market.TheCompanyfurtherisawareandacknowledges thatanyfeespaid orshares issued pursuant to thisAgreement shall be earned on thedatehereofandnotrefundableor returnableunder anycircumstances.

TheCompanyshall initiallyregisterinaForm S-1 Registration Statement asufficientamount ofsharesofitscommon stockfor funding pursuant to theterms ofthisAgreementand that numberofSharesrepresentingtheCommon Stock underlyingtheWarrants.Afterthelaterof (i)onehundredeighty(180) calendardaysafterthetimethatInvestorshall haveresold substantiallyall ofthesharesregisteredfor resaleunderthe initial Registration Statement, or (ii)one-hundredeighty(180) calendardaysaftertheeffectivedateoftheinitial Registration Statement, theCompanyshallregister forresaleadditional sharesas maybe requiredforadditionalfundingpursuant to theterms ofthisAgreement.Thisregistration process shallcontinueuntil suchtime as theentireUSD$45,000,000,basedon shares ofcommon stock issuablepursuant to theterms ofthisAgreement,havebeenregisteredforresaleoneffective registration statements.

i.Reimbursement.If(i)Investor,otherthanbyreasonofitsgrossnegligenceorwillfulmisconduct,becomesinvolvedinanycapacity inanyaction,proceedingor investigationbroughtbyany shareholder of the Company,inconnectionwithoras aresult of theconsummation of the transactionscontemplatedbythisAgreement, or ifInvestor is impleaded inanysuchaction, proceedingor investigationbyanyperson, or

(ii)Investor,otherthanbyreasonofitsgrossnegligenceorwillfulmisconductorbyreasonofitstradingoftheCommonStockinamannerthatisillegalunderthefederal securitieslaws,becomesinvolvedinanycapacity inanyaction,proceedingor investigation broughtby theSECagainst orinvolvingtheCompanyorinconnectionwith or asaresult oftheconsummation ofthetransactionscontemplatedby thisAgreement, or if Investor is impleaded inanysuchaction,proceedingor investigationbyanyperson, then inany suchcase, the Companywillreimburse Investorfor itsreasonable legaland otherexpenses(including thecost ofany investigationandpreparation) incurred inconnection therewith,as suchexpensesare incurred. Inaddition, other thanwithrespect toany matter inwhichInvestor is a named party, the Companywill pay toInvestor thecharges,asreasonablydeterminedby Investor,for the time ofany officers oremployeesofInvestordevotedtoappearingandpreparing toappearaswitnesses,assisting in preparationfor hearings, trials or pretrial matters, or otherwisewithrespect to inquiries, hearing, trials,and otherproceedingsrelatingto the subject matter of thisAgreement.Thereimbursement obligations of the Companyunder this section shall be inaddition toany liabilitywhich the Companymay otherwise have, shallextend uponthe same termsandconditions toanyAffiliates ofInvestor thatareactually namedin suchaction, proceedingor investigation,andpartners,directors,agents,employees,attorneys,accountants,auditorsandcontrollingpersons(ifany),as thecase maybe,ofInvestorandanysuchAffiliate,andshallbebinding uponandinuretothebenefitofany successors of theCompany,Investorandany suchAffiliate andany such person.

j.TransferAgentInstructions.UponeffectivenessoftheRegistrationStatement theCompany,at its solecostandexpense, shall deliverinstructions to its transferagent to issuesharesofCommonStocktotheInvestorfreeofrestrictivelegendsonorbeforeeachClosingDatepursuanttotheblanketlegalopiniontobedeliveredtotheCompany’s transfer agentbytheCompany’slegalcounsel.

k. Non-disclosureofNon-publicInformation.

(a)TheCompanycovenantsandagreesthatneitheritnoranyother Personactingonitsbehalfwill providethe Investororitsagentsorcounselwithany information that the Company believesconstitutes material non-public information, unlesspriortheretotheCompany identifiessuchinformationasbeingmaterialnon- public informationandprovides one ofthe principals ofthe Investorwiththe opportunity toaccept orrefuse toaccept such material non-public informationforreview.The Companyacknowledges that only the Investor’s signatory to thisAgreement shall have theauthority toaccept thereceipt of material non-public informationfrom the Company.The Companyacknowledges thatany information provided to the Investorwithoutfirst beingacceptedby the designated signatorywill be deemed not to be material non-public informationand the Investor shall be under no dutyto maintain theconfidentialityof such information.The Company understandsandconfirms that the Investor shall berelyingontheforegoingrepresentationsineffectingtransactionsinsecuritiesofthe Company.

(b)NothinghereinshallrequiretheCompanytodisclosenon-public informationtotheInvestororitsadvisorsorrepresentatives.TheCompanyrepresents thatitdoesnotdisseminate non-public information toany investorswho purchase stock inthe Companyinapublic offering,to moneymanagers ortosecuritiesanalysts, provided,however,that notwithstandinganythinghereintothecontrary, theCompanywill immediately notifyInvestor’sdesignated signatory ofanyeventortheexistenceofanycircumstance(withoutany obligation to disclose the specificevent orcircumstance)of which it becomesaware,constitutingnon-publicinformation(whetherornotrequested of the Company specificallyorgenerally during thecourse of due diligenceby suchpersons orentities),which, if not disclosed in the prospectus included in the Registration Statementwouldcausesuch prospectus to include a material misstatement or to omit a materialfactrequiredtobestatedthereininordertomakethestatements, therein,inlight ofthe circumstances inwhich theyweremade, notmisleading.

(c)NeithertheCompanynoranyofitsSubsidiariesoranyoftheir officers,directors,employeesoragentshaveprovidedtheInvestorwithany material, nonpublic informationwhichwas not publicly disclosed prior to thedatehereofandany material, nonpublic information provided to the Investorby the Company or its Subsidiaries orany of their officers, directors,employeesoragents prior toany ClosingDate shall bepubliclydisclosedby the Company prior to such ClosingDate.Nothingcontained hereincreates orestablishes afiduciaryrelationship on the part of the Investor or its principalswith the Company.The Companyagrees that it shall not disclose to the

Investor,itsprincipalsorAffiliatesanyconfidentialnon-publicinformationforanyreason.NothingcontainedhereinestablishesadutyonthepartoftheInvestororits principalsnottotradeonorotherwiseuseanyinformation disclosedto theInvestorby theCompany.

6.Cover.If,thenumberofSharesrepresentedbyanyDrawDownNotices becomerestrictedorarenolongerfreely tradingforanyreason,andaftertheapplicable ClosingDate,theInvestorpurchases,inan openmarket transactionorotherwise,the Company’s Common Stock(the“CoveringShares”) in order to make delivery in satisfaction of a sale of Common Stockby theInvestor(the“Sold Shares”),which deliverysuchInvestoranticipatedtomakeusingtheSharesrepresentedbytheDrawDownNotice(a“Buy-In”), the Companyshall pay to theInvestor the Buy-InAdjustmentAmount.The“Buy-InAdjustmentAmount” is theamountequal to theexcess, ifany, of(a)theInvestor’s total purchaseprice(including brokeragecommissions, ifany)for the CoveringShares over(b) the net proceeds(after brokeragecommissions, ifany)receivedby theInvestorfrom the sale of the Sold Shares.The Company shall pay the Buy-InAdjustmentAmount tothe Investor inimmediatelyavailable fundsimmediately upondemandby theInvestor.Bywayofillustrationand not in limitation of theforegoing, if the Investor purchases Common Stock having a total purchaseprice(includingbrokeragecommissions)of$11,000tocover a Buy-Inwithrespect to the Common Stock it soldfor net proceeds of $10,000, the Buy-InAdjustmentAmountwhich theCompanywill be required to pay to theInvestor will be$1,000.

7. Conditionsofthe Company's Obligationto SellInvestor theShares.

TheobligationhereunderoftheCompanytoissueandselltheSharestotheInvestorisfurthersubjecttothesatisfaction,atorbeforeeachClosingDate,ofeachof thefollowingconditions setforth below.TheseconditionsarefortheCompany's sole benefitand maybe waivedby theCompanyatanytimein its solediscretion.

a.TheInvestorshallhaveexecutedthisAgreementanddeliveredthesame to theCompany.

b.TheInvestorshallhavedeliveredtotheCompanythePurchasePricefor theSharesbeingpurchasedbytheInvestorat theClosing(afterreceipt ofconfirmation of deliveryofsuchfreelytradable Shares)bywiretransfer ofimmediatelyavailablefunds pursuant to the wireinstructions providedbytheCompany.

c.TherepresentationsandwarrantiesoftheInvestorshallbetrueandcorrect asofthedatewhenmadeandasoftheapplicableClosingDateasthoughmadeatthattime(exceptforrepresentationsandwarrantiesthatspeakasofaspecificdate),andtheInvestorshallhaveperformed, satisfiedandcompliedwith the covenants,agreementsandconditionsrequiredbythisAgreementtobe performed,satisfiedorcompliedwithby theInvestor at orpriorto such ClosingDate.

d.Nostatute,rule,regulation,executiveorder,decree,rulingorinjunction shallhavebeenenacted,entered,promulgatedorendorsedbyanycourtorgovernmentalauthorityofcompetent jurisdictionwhich prohibits theconsummation ofany of the transactionscontemplatedby thisAgreement.

e. NoValuationEvent shallhaveoccurred sincetheapplicablePricingPeriod.

8. ConditionsoftheInvestor's ObligationtoPurchase theShares.

TheobligationoftheInvestorhereundertopurchaseSharesissubjecttothe satisfaction,onorbeforeeachClosingDate,ofeachofthefollowingconditionssetforth below.Notwithstandinganythingtothecontrary inthisAgreement,theCompany shall not beentitled to deliveraDrawDownNoticeandrequirethe Investorto purchaseany Sharesat aClosing(as defined in Section 2(h)) unlesseach of thefollowingconditionsaresatisfied:

a.theCompany shallhavecompliedwithitsobligationsandisotherwisenot in breachofamaterial provision, orin default under, thisAgreement;

b.noinjunctionshallhavebeenissued,oractioncommencedbyagovernmentalauthority,prohibitingthepurchaseortheissuanceoftheCommon Stock;

c.TheCommonStockshallbeauthorizedforquotationonthePrincipal Marketandtradingin theCommon Stock shall nothavebeen suspendedbythePrincipal MarketortheSEC,atanytimebeginningonthedatehereofandthroughandincluding the respective ClosingDate;

d.Therepresentationsandwarranties oftheCompanyshall betrueandcorrectasofthedatewhenmadeandas oftheapplicableClosingDateasthoughmadeatthattime(exceptfor(i) representationsandwarranties thatspeakasofaspecificdateand

(ii)withrespecttotherepresentationsmadeinSections4(g),(h)and(j)eventswhich occuronorafterthedateofthisAgreementandaredisclosedinSECfilingsmadeby the CompanypriortotheapplicableDrawDownNoticeDate)andtheCompanyshall have performed,satisfiedandcompliedwiththecovenants,agreementsandconditionsrequiredby thisAgreementtobe performed,satisfiedorcompliedwithby the Company onorbefore such ClosingDate.The Investor mayrequestan updateasof suchClosingDate regardingtherepresentationcontained in Section 4(c) above;

e.TheBoardofDirectorsoftheCompanyshallhaveadoptedresolutionsconsistentwithSection4(b)(ii)aboveandinaformreasonablyacceptabletotheInvestor(the“Resolutions”)andsuchResolutionsshallnothavebeenamended orrescindedprior to such ClosingDateand theInvestor shall have been providedwith acopyof those ResolutionsWhich shall be attached heretoasExhibitC;

f.TheCompanyshallhaveexecutedanddeliveredtotheInvestorthecertificatesrepresenting,orhaveexecutedelectronicbook-entrytransferof,theShares

(insuchdenominationsassuchInvestorshallrequest)beingpurchasedbytheInvestorat such Closingandall previousDraw Downshavesettled.;

g.Nostatute,rule,regulation,executiveorder,decree,rulingorinjunction shallhavebeenenacted,entered,promulgatedorendorsedbyanycourtorgovernmentalauthorityofcompetent jurisdictionwhich prohibits theconsummation ofany of the transactionscontemplatedby thisAgreement;

h.TheRegistrationStatementcoveringtheSharesissuedasacommitmentfeeandtheSharesbeingsoldtotheInvestorpursuanttoaDrawDownNoticeshallbeeffective oneach ClosingDateand no stop order suspending theeffectiveness of the Registration Statementshall be ineffect or shall be pendingor threatened. Furthermore,oneachClosingDate(i)neithertheCompanynorInvestorshallhavereceivednotice that the SEC has issued or intends to issue a stop orderwithrespect to such Registration StatementorthattheSECotherwisehassuspendedorwithdrawntheeffectivenessof suchRegistrationStatement,either temporarilyorpermanently,orintendsorhas threatened to do so(unless the SEC'sconcerns have beenaddressedandInvestor isreasonablysatisfied thatthe SEC no longer isconsidering or intendsto take suchaction),and(ii) no othersuspension of the useorwithdrawalof theeffectiveness of such Registration Statement orrelated prospectus shallexist;

i.AtthetimeofeachClosing,theRegistrationStatement(including informationordocumentsincorporatedbyreferencetherein)andanyamendmentsor supplementstheretoshallnotcontainanyuntruestatementofamaterialfactoromitto stateanymaterialfactrequired to be stated therein or necessary to makethe statements therein not misleading orwhichwouldrequire public disclosure oran update supplement to theprospectus;

j.Thereshallhavebeennofilingofapetitioninbankruptcy,either voluntarilyorinvoluntarily,withrespecttotheCompanyandthereshallnothavebeencommencedanyproceedings underany bankruptcy or insolvency laws, oranylawsrelating to thereliefof debtors,readjustment of indebtedness orreorganization of debtors,andthereshallhavebeennocallingof ameeting ofcreditorsof theCompany orappointment of acommittee ofcreditorsor liquidatingagentsor offeringof acomposition orextension tocreditors by,for,with orwithout theconsent oracquiescenceoftheCompany;

k.Ifapplicable,theshareholdersoftheCompanyshallhaveapprovedthe issuanceofanySharesinexcessoftheMaximumCommonStockIssuanceinaccordance with Section2(i);and

l.TheCompanyshallhavedeliveredtosuchInvestorsuchotherdocumentsrelatingtothetransactionscontemplatedbythisAgreementassuchInvestororitscounsel mayreasonablyrequest uponreasonableadvancenotice.

Ifanyoftheeventsdescribedinclauses(a)through(l)aboveoccursduringa PricingPeriodoratanytimeonorbeforethedeliveryofthefreelytradingCommon Stocktothe Investorcoveredby thatPricing Period, thentheInvestor shallhave no obligation to purchasetheDrawDownAmount of Common Stock setforth in theapplicableDrawDownNoticeandif suchanevent occursafter the deliveryof thefreely tradingCommonStockandbefore theInvestor hassoldsuchCommon Stockthenthe Company shallberequired torepurchase that number of shares still heldby theInvestorat thesamepricepaidbytheInvestor forsuch purchase.

9.Termination.ThisSectionshallgovernterminationoftheAgreement betweentheparties.Upontheoccurrenceofoneoftheeventsdescribedbelow,the Companyshall send promptwritten noticeofsuchevent to theInvestor.

(a) ThisAgreement shall terminateuponanyofthefollowingevents:

(i)theearlierofthedateuponwhichtheInvestorhaspurchasedpursuant tothisAgreementalltheRegistrableSecuritiestoberegisteredpursuant totheRegistrationStatementortheCommitmentAmount;providedthat theCompany’srepresentations,warrantiesandcovenantscontainedinthisAgreement insofarasapplicabletothetransactionsconsummated hereunderprior to such termination, shall survive thetermination of thisAgreementfortheperiodof anyapplicablestatuteoflimitations;

(ii)iftheCompanyshallfileor consentbyanswerorotherwiseto theentryof an orderfor reliefor approving apetitionfor relief,reorganization or arrangement oranyotherpetition in bankruptcyforliquidation orto take advantageofanybankruptcyorinsolvencylawof anyjurisdiction, or shall make anassignmentforthebenefit ofitscreditors, orshallconsent to the appointment ofa custodian,receiver, trusteeorotherofficer with similarpowers ofitselforof anysubstantial partofits property, orshall be adjudicatedabankrupt orinsolvent, orshall take corporateactionfor thepurposeofanyoftheforegoing; or

(iii)iftheCompanyshall issueorsellanyequitysecurities orsecuritiesconvertibleinto, or exchangeable for,equitysecurities or enterintoany other equityfinancingfacilityduringthe Open Period, otherthan incompliance with Section4(o).

10. Indemnification.

(a)InconsiderationoftheInvestor’sexecutionanddeliveryofthisAgreement,andinadditiontoalloftheCompany’sotherobligationsunderthisAgreement,theCompanyshall defend,protect,indemnifyandhold harmless theInvestor,andall of its officers, directors, partners,employeesandagents(including,without limitation, thoseretained inconnectionwith the transactionscontemplatedby thisAgreement)(collectively,the“InvestorIndemnitees”)fromandagainstanyandall

actions,causesofaction,suits,claims,losses,costs,penalties,fees,liabilitiesand damages,andexpensesinconnectiontherewith(irrespectiveofwhetheranysuchInvestorIndemniteeisaparty to theactionforwhich indemnification hereunder is sought),and includingreasonableattorneys’feesand disbursements(the“IndemnifiedLiabilities”),incurredbytheInvestorIndemnitees oranyofthemas a resultof,orarising outof,orrelating to(i)anymisrepresentationorbreachofanyrepresentation orwarranty madebythe Companyin thisAgreement or the Registration RightsAgreement orany othercertificate, instrument or documentcontemplated hereby or thereby,(ii)anybreachofanycovenant,agreement orobligationofthe CompanycontainedinthisAgreement or the RegistrationRightsAgreement orany othercertificate,instrument ordocumentcontemplated herebyor thereby, or(iii)anycause ofaction, suit orclaim brought or madeagainst suchInvestor Indemnitee notarising out ofanyaction or inaction ofanInvestorIndemnitee,andarisingoutoforresultingfrom theexecution,delivery, performance orenforcement of thisAgreement orany other instrument, document oragreementexecuted pursuant heretobyanyof the InvestorIndemnitees.To theextent that theforegoingundertakingby the Companymaybe unenforceableforanyreason, the Company shall make the maximumcontributionto the paymentand satisfaction ofeachoftheIndemnifiedLiabilities,which is permissibleunder applicablelaw.

(b)InconsiderationoftheCompany’sexecutionanddeliveryofthisAgreement,andinadditiontoalloftheInvestor’sotherobligationsunderthisAgreement,theInvestor shall defend,protect,indemnifyandholdharmless the Companyandall of its officers, directors, shareholders,employeesand agents(including,without limitation, thoseretained inconnectionwith the transactionscontemplatedby thisAgreement)(collectively, the“CompanyIndemnitees”)fromandagainstanyandallIndemnifiedLiabilities incurredby the CompanyIndemnitees oranyof themas aresult of,orarisingoutof, orrelatingto(i)anymisrepresentationor breachofanyrepresentation orwarrantymadebytheInvestor in thisAgreement, the Registration Rights Agreement, or anyinstrumentor documentcontemplatedherebyor therebyexecutedbytheInvestor,(ii) anybreach ofany covenant, agreement orobligation of theInvestor(s)contained inthisAgreement, the Registration Rights Agreement oranyothercertificate, instrument or documentcontemplated hereby or therebyexecutedby theInvestor, or(iii) anycauseofaction, suit or claim broughtormade against such CompanyIndemnitee based on misrepresentations or due to a breachby theInvestorandarising outoforresulting fromtheexecution,delivery,performanceorenforcementofthisAgreement orany other instrument, document oragreementexecuted pursuant heretobyany of the CompanyIndemnitees.To theextent that theforegoing undertakingby theInvestor may be unenforceableforanyreason,theInvestor shall make the maximumcontribution to the paymentand satisfaction ofeach of theIndemnifiedLiabilities,whichis permissibleunder applicablelaw.

(b)Theobligationsofthepartiestoindemnifyormakecontributionunderthis Section 10 shall survivetermination ofthisAgreement.

11.Issuanceof theWarrants.

AsaninducementtoInvestortoenterintothisAgreementandasconsiderationfortheInvestormakingtheinvestmenttheInvestorshallreceive100%Warrantcoverage.TheWarrants shall havea5 yeartermand theexercisepriceshall beequal to

(a)thelesserof$7.70or(b)110%ofthelowestdailyVWAPfortheCommonStockasreportedbyBloombergduringthethirty(30)tradingdayspriortothedatethe Investorexercises theWarrant.TheWarrants shall haveacashlessexerciseprovision.

NoadditionalconsiderationshallbepayablebythePurchaserfortheissuanceoftheWarrants.ThepartiesacknowledgethattheWarrantsarepartoftheinvestmentstructureandarenota feepaidforservices.

12. Governing Law; Miscellaneous.

a.GoverningLaw.ThisAgreementshallbegovernedbyandinterpretedinaccordancewiththelawsoftheStateofCaliforniawithoutregardtotheprinciplesofconflictoflaws.Eachpartyhereby irrevocably submitstothe exclusive jurisdictionof the statecourts sitting in the Countyof Santa Barbarafor theadjudication ofanydispute hereunder or inconnection herewith orwithanytransactioncontemplated herebyor discussed herein,and herebyirrevocablywaives,andagrees not toassert inany suit,action or proceeding,anyclaim that it is not personally subject to the jurisdiction ofany suchcourt,thatsuchsuit,actionorproceeding isbroughtinaninconvenientforumor that the venue of such suit,actionor proceeding is improper.Each partyhereby irrevocablywaivespersonal service ofprocessandconsents to processbeingservedinanysuch suit,action or proceeding bymailingacopythereof to such partyat theaddressforsuchnoticestoitunderthisAgreementandagreesthatsuchservice shallconstitutegoodand sufficient service of processand notice thereof.Nothingcontained herein shall bedeemedtolimitinanywayanyrighttoserve processinanymannerpermitted bylaw. Ifany provision of thisAgreement shall be invalid or unenforceable inany jurisdiction, such invalidityor unenforceabilityshall notaffect the validityorenforceabilityof theremainder of thisAgreement in thatjurisdictionor thevalidity orenforceabilityofany provision of thisAgreement inany other jurisdiction.The Companyand Investor herebywaiveatrialbyjuryinanyaction,proceedingorcounterclaimbroughtbyeitherofthe parties heretoagainst the other inrespect ofany matterarising out or inconnectionwith thisAgreement.The partiesagree that in theevent ofanyaction, litigation or proceeding between thepartiesarisingout ofor inrelationto thisAgreement, the prevailing partyin afinal judgmentaftertheappeal periodhas passed shall beawarded, inaddition toany damages, injunctions orotherrelief, such party’scostsandexpenses, includingbut not limited toallrelatedcostsandreasonableattorneys’,accountants’andexperts’feesincurredinbringing suchaction,litigationorproceedingand/orenforcingany judgment orordergranted therein.

b. CommitmentFees; Registration StatementFees

(i)Asan inducement toInvestortoenterinto thisAgreementandasconsiderationfortheInvestormaking theinvestment,theCompany hasagreedtoissuetoInvestorasa CommitmentFee2%oftheCommitmentAmountinShares,butsubjecttothelimitation setforthinSection2(e)ofthisAgreement.InitiallytheCompanyshallissueInvestor 128,572 Shareswhich shall beregistered in thecurrent offeringand shall be issuedand delivered perInvestorswritteninstructionspriortotheInvestorexecutingthisagreement.The partiesacknowledgethatthe CommitmentFee ispart of the investmentstructureand is not afeepaidforservices.TheCompanyalsoagrees thatit shall not issue apressreleaseregarding thefundingsetforth inthisAgreementuntil three(3) business daysfollowing the date the Company issues the CommitmentFee inanamountapproved by the Purchaser inwriting.The Company shallhave the Shares deposited inescrow into acustodialaccountdesignated by Purchaser that shall bereleased to Purchaser’sown proprietaryaccountswhen the company becomes listed on astockexchange.

Attheendofthethird(3rd)calendarmonthafterthefirstdatethattheCompany’sshares tradeinthepublicmarket,theCompanyandPurchaseragreetoadjustthenumberof sharesissuedtothePurchaserastheCommitmentFeebyeitherincreasing or decreasing the numberof shares the Purchaserreceived based on a share priceequal to the volumeweightedaveragepriceforthat third(3rd)calendarmonth.TheCompanyand Purchaseragree to make thatadjustment not later thanfifteen(15)calendar daysfollowingthe last dayofthat third(3rd)calendarmonth.

(ii)TheCompanyshall,atitssolecostandexpense,useitsreasonable besteffortstohavetheRegistrationStatementfiledwithinninety(90)calendardaysfollowingthe ExecutionDate.

(iii)TheCompanyshall useitsreasonablebestefforts tohave draft aregistration statement prepared uponclosingfor filingwithin onehundredeighty

(180) calendardaysfollowingsigningoftheSA.TheCompanyshall initiallyregisterin aForm S-1registration statement asufficient numberofsharesofitscommon stockfordrawdowns that itwillrequest oftheInvestorduringthe CommitmentPeriodand that numberof sharesrepresentingtheCommitmentFee.Afterthelaterof (i)one hundredeighty(180) calendardaysafterthetime thatInvestorshall have resold substantiallyall ofthesharesregisteredforresale undertheinitialregistration statement, or (ii)onehundredeighty(180)calendar monthsaftertheeffectivedateoftheinitialregistration statement, theCompany shallregister forresaleadditional shares oftheCompany'scommon stockforDraw Downsand sharesin thenameofInvestorequal to 10%ofthatamountasanadditional CommitmentFee.Thisregistration processfor Draw Downsharesand Commitment Shares shallcontinueuntil such time as sharesrepresentingtheentire USD$45,000,000havebeenregisteredfor resale.

c.Counterparts.ThisAgreementmaybeexecutedintwoormoreidenticalcounterparts,allofwhichshallbeconsideredoneandthesameagreementandshall becomeeffectivewhencounterpartshavebeensignedbyeachpartyand deliveredtothe other party; provided that afacsimile signature shall beconsidered dueexecutionand shall be binding uponthe signatorytheretowith the sameforceandeffectas if the signature were anoriginal, not a facsimilesignature.

d.Headings;Singular/Plural.TheheadingsofthisAgreementareforconvenienceofreferenceandshallnotformpartof,oraffecttheinterpretationof,thisAgreement.Wheneverrequiredbythecontext ofthisAgreement,thesingularshall includethepluraland masculineshall includethefeminine.

e.Severability.IfanyprovisionofthisAgreementshallbeinvalidor unenforceableinanyjurisdiction,suchinvalidityorunenforceabilityshallnotaffectthe validityorenforceability of theremainder of thisAgreement in that jurisdiction or the validity or enforceabilityof anyprovision ofthisAgreement inanyotherjurisdiction.

f.EntireAgreement;Amendments.ThisAgreementsupersedesallother priororalorwrittenagreementsbetweentheInvestor,theCompany,theiraffiliatesand personsacting on their behalfwithrespecttothe mattersdiscussed herein,and thisAgreementcontains theentireunderstanding of the partieswithrespect to the matterscoveredhereinand,exceptas specificallysetforth herein, neitherthe Company nor theInvestor makesanyrepresentation,warranty,covenant or undertakingwithrespect to such matters.No provision of thisAgreement may beamended other thanbyan instrumentinwriting signedby theCompanyandtheInvestor,andnoprovisionhereof may bewaived other thanbyan instrument inwriting signedby thepartyagainstwhomenforcement is sought.

g.Notices.AnynoticesorothercommunicationsrequiredorpermittedtobegivenunderthetermsofthisAgreementmustbeinwritingandwillbedeemedtohave beendelivered(i)uponreceipt,whendeliveredpersonally;(ii)uponreceipt,whensentbyfacsimile(providedconfirmation iselectronicallygeneratedandkept onfilebythe sendingparty);or(iii)one(1) dayafter depositwitha nationallyrecognizedovernight deliveryservice, ineachcase properlyaddressed to the partytoreceivethe same.Theaddressesandfacsimilenumbersforsuchcommunications shall be:

Ifto theCompany:

Nameofperson signing:GeorgePellTelephone: 312-231-3573

Mobile: 312-231-3573

Email:George.Pell@k2-sb.com

Ifto theInvestor:

At the address listed in the Questionnaire.

Eachpartyshallprovidefive(5)days'priorwrittennoticetotheotherpartyofanychangeinaddressorfacsimilenumber.

h. NoAssignment.ThisAgreement shall not beassignedbyeitherparty.

i.NoThirdPartyBeneficiaries.ThisAgreementisintendedforthebenefit ofthepartiesheretoandisnotforthebenefitof,normayany provisionhereofbeenforced by,any otherperson.

j.Survival.TherepresentationsandwarrantiesoftheCompanyand theInvestor contained in Sections 2and 3, the agreementsandcovenants setforth in Sections 4and5,andtheindemnificationprovisionssetforthinSection10,shallsurviveeachof theClosings.TheInvestorshallberesponsibleonlyforitsownrepresentations,warranties,agreementsandcovenants hereunder.

k.Publicity.TheCompanyandInvestorshallconsultwitheach otherin issuinganypressreleases orotherwisemakingpublicstatementswithrespect to the transactionscontemplated herebyandno partyshall issue anysuch pressreleaseor otherwisemakeanysuch publicstatementwithout theprior writtenconsent oftheother parties,whichconsent shall not beunreasonablywithheld ordelayed,except that no priorconsent shall be requiredifsuch disclosureisrequiredbylaw, inwhich suchcasethe disclosingpartyshall providetheotherpartieswith priornotice ofsuch publicstatement.Inaddition, theCompanyalsoagrees that it shall not discussanyaspect ofthisagreementwithanythird parties normake anystatements toanythirdparties, normake anyinternet postingsaboutanyaspect ofthisagreementwithout theprior writtenconsent oftheInvestor.TheCompanyalsoagrees that it shall not issueapressrelease regardingthefundingsetforth in thisAgreement until three (3)business daysfollowing thedatethe Companyissues theCommitmentFeeinanamountapprovedbythePurchaserinwriting.Notwithstandingthe foregoing, theCompanyshall not publiclydisclosethenameofInvestor without theprior writtenconsent ofsuchInvestor,except to the extentrequiredbylaw.Investoracknowledges that thisAgreement maybedeemed tobea"material contract"as that term is definedbyItem 601(b)(10)ofRegulation S-K,andthat the Companymaythereforebe required tofilesuchdocumentsasexhibits toreports orregistration statementsfiled undertheSecurities1933Act orthe1934Act.Investorfurtheragrees that thestatus ofsuch documentsand materialsas materialcontracts shall bedetermined solelybytheCompany, inconsultationwith itscounsel.

l.FurtherAssurances.Each partyshall doand perform, or causetobedoneand performed,all suchfurtheractsand things,and shallexecute and deliver all such otheragreements,certificates, instrumentsand documents,as theotherpartymayreasonablyrequest in ordertocarryout theintentandaccomplish thepurposes ofthisAgreementand the consummation ofthetransactionscontemplated hereby.

m.OtherFees.TheInvestorshallhavenoobligationwithrespecttoanyfees orwithrespect toanyclaimsmadeby oronbehalfofotherpersonsorentitiesforfees

thatmaybedueinconnectionwiththetransactionscontemplatedbythisAgreement.TheCompanyshallindemnifyandholdharmlesstheInvestor,theiremployees,officers, directors,agents,andpartners,andtheirrespectiveaffiliates,fromandagainstallclaims, losses,damages,costs(includingreasonableattorney’sfees)andexpensesincurredinrespect ofanysuchclaim.

n.No Strict Construction.Thelanguageused inthisAgreementwillbe deemedtobethelanguagechosenbythepartiestoexpresstheirmutualintent,andnorules ofstrictconstructionwill be appliedagainstanyparty.

o. List of Exhibits.

Exhibit ADraw DownNotice (page4andattachedaspage31). Exhibit B Post-closingOpinionLetter (page14andattached)Exhibit CBoard Resolution(page20andattached)

Exhibit D ClosingStatement(page6andattachedas page32)Exhibit EWarrants(page23andattached)

[Balanceofthis pageintentionallyleft blank.]

K2 DESIGN & STRATEGY,INC QUESTIONNAIRE

TheinformationcontainedinthisQuestionnaireisbeingfurnishedinorderto determinewhethertheundersigned’ssubscriptiontopurchasetheSharesdescribedinthisAgreement maybeaccepted.

AllInformationContainedInThisQuestionnaireWillBeTreatedConfidentially.The undersignedunderstands,however,thattheCompanymaypresentthisQuestionnairetosuch partiesasitdeemsappropriate ifcalledupontoestablishthat the proposedofferandsale of the Securities isexemptfromregistration under the 1933Act,asamended.Further, the undersignedunderstandsthat theofferingmay berequiredtobereportedtotheSecuritiesandExchangeCommission,NASDAQ and to various statesecuritiesand“blue sky”regulators.

InAdditionToSigningTheSignaturePage,IfRequestedByTheCompany,TheUndersigned Must CompleteFormW-9.

I.PleaseCheckEachOfTheStatementsBelow ThatApplies.

X 1.Theundersigned:(a)hastotalassetsinexcessof$5,000,000;(b)was notformedforthespecificpurposeofacquiringthesecuritiesand(c)hasits principal placeofbusiness in SolvangCalifornia.

X 2.Theundersignedisanaturalpersonwhoseindividualnetworth*or joint networthwith hisorherspouseexceeds $1,000,000.

3.Theundersignedisanaturalpersonwhohadanindividualincome*inexcessof$200,000ineachofthetwomostrecentyearsandwhoreasonablyexpectsanindividualincomeinexcessof$200,000inthecurrentyear. Such income is solely that of the undersignedandexcludes the income of the undersigned’s spouse.

4.Theundersigned is anatural personwho, togetherwith his orher spouse,hashadajointincome*inexcessof$300,000ineachofthetwomostrecentyearsandwhoreasonablyexpectsajointincomeinexcessof$300,000 in the currentyear.

*ForpurposesofthisQuestionnaire,theterm“networth”meanstheexcessoftotalassets(excludingthevalueofanindividual’spersonalresidence)overtotalliabilities.In determining“income”,an investor shouldadd to his or heradjustedgross incomeanyamountsattributableto tax-exempt income received,lossesclaimedas alimited partnerinany limited partnership, deductionsclaimedfordepletion,contributions to IRA orKeoghretirement plan,alimony paymentsandanyamountbywhich incomefrom long-termcapitalgains hasbeenreduced inarrivingatadjustedgross in

5. Theundersigned is:

(a)abankas defined in Section 3(a)(2)ofthe1933Act; or

(b)asavingsandloanassociationorotherinstitutionasdefinedin Section3(a)(5)(A)ofthe1933Actwhetheractinginitsindividualorfiduciarycapacity; or

(c)abrokerordealerregisteredpursuanttoSection15ofthe1934Act; or

(d)aninsurancecompanyasdefinedinSection2(13)ofthe1933Act; or

(e)AninvestmentcompanyregisteredundertheInvestment CompanyActof1940orabusinessdevelopmentcompanyasdefined in Section 2(a)(48)oftheInvestment CompanyAct of1940; or

(f)asmallbusinessinvestmentcompanylicensedbytheU.S. SmallBusinessAdministrationunderSection 301(c)or(d)ofthe SmallBusinessInvestmentAct of1958; or

X 6.Theundersignedisanentityinwhichalloftheequityownersare“accreditedinvestors”,asthattermisdefinedinRule501(a)(3)of Regulation Dofthe1933Act.

INVESTORINFORMATION:

Nameof Entity:LambertPrivate EquityLLC

Person’sName:JosephLambertTitle: Managing MemberState/Countyof Organization:Delaware

PrincipalBusinessAddress: 1332 SantaBarbaraStreetCity, State,Zip Code: SantaBarbara, CA93101 Phone: 805 617 3197

Send Correspondenceto:

Lambert Private EquityLLCJosephLambert

ManagingMember

1332 SantaBarbaraStreet SantaBarbara, CA93101

K2 Design&Strategy,IncSIGNATUREPAGE

YoursignatureonthisSignaturePageevidencesyouragreementtobeboundbythis AgreementandtheQuestionnaire.

1.Theundersignedherebyrepresentsthat(a)theinformationcontainedinthe Questionnaireiscompleteandaccurateand(b)theundersignedwillnotify K2 DESIGN&STRATEGY, INC immediatelyif any material changeinany of the informationoccurs prior to the acceptance oftheundersigned's subscription and will promptlysendK2 DESIGN&STRATEGY, INCwritten confirmation of such change.

2.Theundersignedsignatoryherebycertifiesthathe/shehasreadand understandsthisAgreementandQuestionnaire, andtherepresentationsmade bythe undersigned in this Agreement andQuestionnaire are trueandaccurate.

LambertPrivate EquityLLC

Date

By:

Name: Title:

Date

---------------------------------------

COMPANYACCEPTANCEPAGE

ThisAgreementacceptedandagreed tothis4April2014

K2 Design&Strategy,Inc

31

EXHIBIT A

K2 DESIGN&STRATEGY, INC–DRAWDOWN NOTICENO.

Theundersignedherebycertifies,withrespect tothesaleoftheCommon Stock of K2DESIGN&STRATEGY,INC(the “Company”)issuableinconnectionwith thisDrawDownNotice, deliveredpursuant to theSubscriptionAgreement(the “Agreement”),as follows:

1.Thereareno fundamentalchangestotheinformation setforthintheRegistrationStatementwhichwouldrequiretheCompanytofileaposteffectiveamendmenttotheRegistrationStatement.TheRegistrationStatementiscurrentlyeffectiveandIhavenocause,reasonorinformationtobelievethat theRegistrationStatementwillbedeclaredineffective duringthe nextthirty(30)calendardays.

2.TheCompanyhasperformedinallmaterialrespectsallcovenantsandagreementstobe performedbytheCompanyandhascompliedinallmaterialrespectswithallobligationsand conditionscontainedintheAgreementonorpriortotheDrawDownNoticeDate,andshallcontinuetoperforminallmaterial respectsall covenantsand agreementstobeperformedbytheCompanythroughthe end ofthe applicablePricingPeriod.All conditionstothe delivery ofthisDrawDownNoticearesatisfiedasofthedate hereof.

3.Theundersignedherebyrepresents,warrantsandcovenantsthatithasmadeallfilings (“SECFilings”)requiredtobemadebyitpursuanttoapplicablesecuritieslaws(including,withoutlimitation,allfilingsrequiredundertheSecuritiesExchangeActof1934,whichincludeForms10-Q or 10-QSB, 10-K or 10-KSB,8-K, etc.).AllSECFilings andotherpublicdisclosuresmade bytheCompany,including,withoutlimitation, allpress releases, analystsmeetings andcalls, etc. (collectively,the“PublicDisclosures”),have been reviewedandapproved forrelease bytheCompany’s attorneys and,ifcontaining financialinformation,theCompany’sindependent certified publicaccountants.NoneoftheCompany’sPublicDisclosurescontainanyuntruestatementofamaterial factor omittostate anymaterial fact requiredto bestatedthereinor necessarytomakethe statementstherein,inthelightof thecircumstancesunderwhichtheyweremade,notmisleading.

4.AllcapitalizedtermsnototherwisedefinedhereinshallhavethemeaningascribedtothemintheAgreement.

5.TheDrawDownAmountrequestedis$

andtheCompany

currentlyhassharesofCommonStockissuedand outstanding.

6.TheMinimumAcceptablePriceis _.

7.The beginningdate ofthePricingPeriodis andtheendingdateis

_,inclusive of the beginningandendingdates.

K2Design&Strategy,Inc

By:Name:Title:Date:

EXHIBITDCLOSINGSTATEMENT

To:K2Design &Strategy,IncAttention:

WerefertotheSubscriptionAgreement(the"Agreement")betweenInvestor,andK2DESIGN&STRATEGY,INCTerms not otherwise defined herein shall have themeaningsascribed to them in theAgreement.

WeherebygiveyounoticepursuanttotheAgreementthatweaccepttheDrawDownNoticeforShares.

ThelowestVWAP in thePricingPeriod is $and the resultingPurchasePriceof 90%ofthelowestVWAP is $.The aggregatePurchasePricepursuant to this ClosingNoticeis therefore$.

PleasedeliversuchSharesinaccordancewiththefollowinginstructions:Electronicbookentrytransferrequested(check one) (1)YES_NO_SecuritiesSub-AccountNo.:

Electronicbookentrytransferrequested(checkone) (1)YESNO

AccountInformation:Lambert Private EquityLLC

Signedby:

Date:

Signedby:

��

Date: