Common use of Second Tranche Clause in Contracts

Second Tranche. Upon written notice (certifying compliance with all of the conditions set forth below, referred to as the "Second Tranche Notice", which notice shall be sent by the Company to each of the Investors at least five Business Days within five Business Days after the Effective Date), the Company will sell and the Investors will buy, in reliance upon the representations and warranties contained in this Agreement, and upon the terms and satisfaction of each of the conditions set forth below, $2,500,000 principal amount of Debentures and Warrants to purchase 375,000 Warrant Shares. Assuming the Company serves the Second Tranche Notice as indicated above the Second Tranche Closing Date shall occur on the tenth Business Day after the Effective Date. The conditions precedent to the Second Tranche Closing Date are as follows: (A) Delivery into escrow by the Company of the original Debentures and Warrants to be issued on the Second Tranche Closing Date, as more fully set forth in the Escrow Agreement attached hereto; (B) The Investors shall have received an opinion of counsel of the Company in the form as set forth in Exhibit F annexed to this Agreement, dated on the Second Tranche Closing Date; (C) The Registration Statement (which includes at 150% of the total number of Underlying Shares underlying the Debentures issued in the First Tranche, and 100% of the Warrant Shares underlying the Warrants that were issued in the First Tranche) has previously become effective and remains effective immediately prior to the Second Tranche Notice and the Second Tranche Closing Date, and (A) neither the Company nor any of the Investors shall have received notice that the SEC has issued or intends to issue a stop order with respect to the Registration Statement or that the SEC otherwise has suspended or withdrawn the effectiveness of the Registration Statement, either temporarily or permanently, or intends or has threatened to do so, and (B) no other suspension of the use or withdrawal of the effectiveness of the Registration Statement or related prospectus shall exist; (D) The Company shall have obtained all permits and qualifications required by any state for the offer and sale of the Warrants and Debentures issuable in connection with the Second Tranche, or shall have the availability of exemptions therefrom. All laws and regulations to which the Company is subject shall legally permit the sale and issuance of the Warrants and Debentures issuable in connection with the Second Tranche; (E) The Investors shall have received written certification that the representations, covenants, and warranties of the Company contained in this Agreement and all Exhibits annexed hereto are true and correct in all material respects as of the Second Tranche Closing Date as though made at each such time (except for representations and warranties specifically made as of a particular date) with respect to all periods, and as to all events and circumstances occurring or existing to and including the Second Tranche Closing Date; (F) The Company shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by this Agreement (including all Exhibits annexed hereto), to be performed, satisfied or complied with by the Company at or prior to the Second Tranche Closing Date; (G) No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction that prohibits or directly and adversely affects any of the transactions contemplated by this Agreement or the Exhibits annexed hereto, and no proceeding shall have been commenced that may have the effect of prohibiting or adversely affecting any of the transactions contemplated by this Agreement or the Exhibits annexed hereto; (H) The SEC or the Principal Market has not suspended the trading of the Common Stock, and the Common Stock shall not have been delisted from the Nasdaq National Market. The Company, as of the Second Tranche Closing Date meets all applicable listing requirements of the Nasdaq National Market; (I) No "Change of Control" in the Company shall have occurred since the First Tranche Closing Date. Change of Control shall mean the occurrence of any of (a) an acquisition after the Subscription Date by a Person of in excess of 50% of the voting securities of the Company, (b) a replacement of more than one half of the board of directors in place as of the Subscription Date which is not approved by those individuals who are members of the board of directors on the Subscription Date in one or a series of transactions, (c) the merger of the Company with, or into another entity, consolidation or sale of all or substantially all of the assets of the Company in one or a series of related transactions, or (d) the execution by the Company of an agreement to which the Company is a party or by which it is bound, providing for any of the events set forth in (a), (b) or (c) herein; (J) None of the Investors, in the event of the Closing of the Second Tranche would own or be beneficially be deemed to own, more than 4.99% of the outstanding shares of Common Stock; (K) No Material Adverse Effect shall have occurred since the First Tranche Closing Date; (L) The Company shall not have breached a material term of this Agreement or any Exhibit annexed hereto; (M) The Company shall be in full compliance with the bridge note (the "Bridge Note") held by GCA due October 12, 1999, shall not be in default of any agreement it may have with GCA, and GCA shall not have moved to enforce its interest on the Collateral; and (N) Receipt of proof that the financing statements and Security Agreement (as set forth in Section 4.37 below) remain in full force and effect (as originally filed on or prior to the First Tranche Closing Date) with the proper state authorities in the states of Nevada and Florida. Notwithstanding the foregoing, the Investors will not be obligated to purchase the Debentures and Warrants issuable in connection with the Second Tranche in the event the SEC has not declared the Registration Statement covering the Securities in the First Tranche effective within six months after the First Tranche Closing Date.

Second Tranche. Upon At the Company's option (which must be in the form of written notice (certifying compliance with all of the conditions set forth below, referred to as the "Second Tranche Notice", which notice shall be sent by the Company to each of the Investors at least five Business Days within five Business Days after prior to the Effective Date), Closing of the Second Tranche setting forth the dollar amount which shall be a minimum of $1,000,000 and a maximum of $3,000,000) the Company will sell and the Investors will buy, in reliance upon the representations and warranties contained in this Agreement, and upon the terms and satisfaction of each of the conditions set forth below, $2,500,000 principal that number of Secondary Shares derived from dividing the dollar amount set forth in the Company's option notice by the Issuance Price (pro rata amongst the Investors based upon each Investor's First Tranche Purchase Price), after the earlier to occur of Debentures (y) 165 calendar days after the Subscription Date, and Warrants to purchase 375,000 Warrant (z) two Business Days after the expiration of the second Reset Period for the Initial Shares. Assuming , upon the satisfaction of each of the following conditions (the Company serves the Second Tranche Notice as indicated above the Second Tranche Closing Date shall occur on the tenth Business Day must exercise this option within 20 calendar days after the Effective Date. The conditions precedent to the Second Tranche Closing Date are as follows:earlier of (y) and (z) herein): (A) Delivery into escrow by the Company of the original Debentures and Warrants to be issued on the Second Tranche Closing DateSecondary Shares, as more fully set forth in the Escrow Agreement attached hereto; (B) The Investors shall have received an opinion of counsel of the Company in the form as set forth in Exhibit F D annexed to this Agreement, dated on the Second Tranche Closing Date; (C) The Registration Statement (which includes at least 150% of the total number Initial Shares which have not yet been subject to a Reset Period, 100% of Underlying the Initial Shares underlying that were subject to a Reset Period, 150% of the Debentures issued in the First TrancheSecondary Shares, and 100% of the Warrant Shares underlying the Warrants that were issued in the First TrancheShares) has previously become effective and remains effective for at least 40 calendar days and during the ten (10) Trading Days immediately prior to the Company's notice for the Second Tranche Notice and the Second Tranche Closing Date, and (A) neither the Company nor any of the Investors shall have received notice that the SEC has issued or intends to issue a stop order with respect to the Registration Statement or that the SEC otherwise has suspended or withdrawn the effectiveness of the Registration Statement, either temporarily or permanently, or intends or has threatened to do soso (unless the SEC's concerns have been addressed and the Investors are reasonably satisfied that the SEC no longer is considering or intends to take such action), and (B) no other suspension of the use or withdrawal of the effectiveness of the Registration Statement or related prospectus shall exist; (D) The Company shall have obtained all permits and qualifications required by any state for the offer and sale of the Warrants and Debentures issuable in connection with the Second TrancheSecondary Shares, or shall have the availability of exemptions therefrom. All The sale and issuance of the Secondary Shares shall be legally permitted by all laws and regulations to which the Company is subject shall legally permit the sale and issuance of the Warrants and Debentures issuable in connection with the Second Tranchesubject; (E) The Investors shall have received written certification that the representations, covenants, representations and warranties of the Company contained in this Agreement and all Exhibits annexed hereto are true and correct in all material respects as of the Second Tranche Closing Date as though made at each such time (except for representations and warranties specifically made as of a particular date) with respect to all periods, and as to all events and circumstances occurring or existing to and including the Second Tranche Closing Date; (F) The Company shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by this Agreement, the Escrow Agreement, the Registration Rights Agreement (including all Exhibits annexed hereto)and the Warrants, to be performed, satisfied or complied with by the Company at or prior to the Second Tranche Closing Date; (G) No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction that prohibits or directly and adversely affects any of the transactions contemplated by this Agreement or the Exhibits annexed hereto, and no proceeding shall have been commenced that may have the effect of prohibiting or adversely affecting any of the transactions contemplated by this Agreement or the Exhibits annexed hereto; (H) The trading of the Common Stock is not suspended by the SEC or the Principal Market has not suspended the trading of the Common StockMarket, and the Common Stock shall not have been delisted from the Nasdaq National Market. The Company, as of the Second Tranche Closing Date OTC Bulletin BoardThe Company currently meets all applicable listing requirements of the Nasdaq National Principal Market; (I) No "Change change of Control" control in the Company shall have occurred since the First Tranche Closing Dateoccurred. Change of Control shall mean the occurrence of any of (a) an acquisition after the Subscription Date by a Person of in excess of 50% of the voting securities of the Company, (b) a replacement of more than one half of the board of directors in place as of the Subscription Date which is not approved by those individuals who are members of the board of directors on the Subscription Date in one or a series of transactions, (c) the merger of the Company with, or into another entity, consolidation or sale of all or substantially all of the assets of the Company in one or a series of related transactions, or (d) the execution by the Company of an agreement to which the Company is a party or by which it is bound, providing for any of the events set forth in (a), (b) or (c) herein; (J) The average Bid Price for the 20 consecutive Trading Days immediately preceding the notice by the Company of its intention to proceed with the second tranche and the days immediately preceding the Second Tranche Closing Date shall be greater than $1.25; (K) The average daily trading volume for the Common Stock as reported by Bloomberg, LP for the 20 Trading Days immediately preceding the Company's notice for the Second Tranche and preceding the Closing for the second tranche shall be a minimum of 100,000; and (L) None of the InvestorsInvestor's, in the event of the Closing of the Second Tranche Secondary Shares would own or be deemed beneficially be deemed to own, more than 4.999.99% of the outstanding shares of Common Stock; (K) No Material Adverse Effect shall have occurred since the First Tranche Closing Date; (L) The Company shall not have breached a material term of this Agreement or any Exhibit annexed hereto; (M) The Company shall be in full compliance with the bridge note (the "Bridge Note") held by GCA due October 12, 1999, shall not be in default of any agreement it may have with GCA, and GCA shall not have moved to enforce its interest on the Collateral; and (N) Receipt of proof that the financing statements and Security Agreement (as set forth in Section 4.37 below) remain in full force and effect (as originally filed on or prior to the First Tranche Closing Date) with the proper state authorities in the states of Nevada and Florida. Notwithstanding the foregoing, the Investors will not be obligated to purchase the Debentures and Warrants issuable in connection with the Second Tranche in the event the SEC has not declared the Registration Statement covering the Securities in the First Tranche effective within six months after the First Tranche Closing Date.

Second Tranche. Upon written notice At the Company's sole option, as the Company has the option to terminate the second tranche for any reason, the Investors shall purchase (certifying compliance with all pro rata) an aggregate principal amount of the conditions set forth below, referred to as Five Hundred Thousand ($500,000) Dollars (the "Second Tranche NoticeInvestment Amount", which notice shall be sent by the Company to each of the Investors at least five Business Days within five Business Days after the Effective Date), the Company will sell and the Investors will buy, in reliance upon the representations and warranties contained in this Agreement, and upon the terms and satisfaction of each of the conditions set forth below, $2,500,000 ) principal amount of Debentures and Warrants to purchase 375,000 Warrant Shares. Assuming the Company serves the Second Tranche Notice as indicated above the Second Tranche Closing Date shall occur Preferred Stock, on the tenth Business Day after ninetieth (90th) day following the first tranche's Effective Date. The conditions precedent Date and at the Company's request in writing ten (10) days prior to the Second Tranche second tranche Closing Date are as followsDate, upon the satisfaction of the following conditions: (Ai) Delivery delivery into escrow by the Company of the an aggregate principal amount of Five Hundred Thousand ($500,000) Dollars of original Debentures and Warrants to be issued on the Second Tranche Closing DatePreferred Stock, as more fully set forth in the Escrow Agreement attached heretohereto as Exhibit E; (Bii) The the Investors shall have received an opinion of counsel of the Company in the form as set forth in Exhibit F annexed to this Agreement, dated on the Second Tranche Closing Date; (Ciii) The Registration Statement (which includes at 150% of the total number of Underlying Shares underlying the Debentures issued in the First Tranche, and 100% of the Warrant Shares underlying the Warrants that were issued in the First Tranche) has previously become effective and remains effective immediately prior to the Second Tranche Notice and the Second Tranche Closing Date, and (A) neither the Company nor any of the Investors shall have received notice certification from the Company that the SEC has issued or intends to issue a stop order with respect Certificate of Designation previously supplied to the Registration Statement or that Investors on the SEC otherwise Closing Date for the first tranche has suspended or withdrawn the effectiveness of the Registration Statement, either temporarily or permanently, or intends or has threatened to do so, not been altered and (B) no other suspension of the use or withdrawal of the effectiveness of the Registration Statement or related prospectus shall existremains in full force and effect; (Div) The the Company shall have obtained all permits and qualifications required by any state for the offer and sale of the Warrants and Debentures issuable in connection with the Second TranchePreferred Stock, or shall have the availability of exemptions therefrom. All The sale and issuance of the Preferred Stock shall be legally permitted by all laws and regulations to which the Company is subject shall legally permit the sale and issuance of the Warrants and Debentures issuable in connection with the Second Tranchesubject; (Ev) The the Investors shall have received written certification that the representations, covenants, representations and warranties of the Company contained in this Agreement and all Exhibits annexed hereto are true and correct in all material respects as of the Second Tranche Closing Date for the second tranche of the Preferred Stock as though made at each such time (except for representations and warranties specifically made as of a particular date) with respect to all periods, and as to all events and circumstances occurring or existing to and including the Second Tranche Closing DateDate for the second tranche of the Preferred Stock; (Fvi) The the Company shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by this Agreement, the Certificate of Designation, the Registration Rights Agreement (including all Exhibits annexed hereto)and the Warrants, to be performed, satisfied or complied with by the Company at or prior to the Second Tranche Closing DateDate for the second tranche of the Preferred Stock; (Gvii) No no statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction that prohibits or directly and adversely affects any of the transactions contemplated by this Agreement or the Exhibits annexed heretoAgreement, and no proceeding shall have been commenced that may have the effect of prohibiting or adversely affecting any of the transactions contemplated by this Agreement or the Exhibits annexed heretoAgreement; (Hviii) The since the date of filing of the Company's most recent SEC Document, no event that had or the Principal Market is reasonably likely to have a Material Adverse Effect has not suspended occurred; (ix) the trading of the Common StockStock is not suspended by the SEC or the Principal Market, and the Common Stock shall have been approved for listing or quotation on and shall not have been delisted from the Nasdaq National Principal Market. The Company, as issuance of the Second Tranche Securities with respect to the Closing Date meets all applicable listing for the first tranche of the Preferred Stock shall not violate the shareholder approval requirements of the Nasdaq National Principal Market; (I) No "Change of Control" in the Company shall have occurred since the First Tranche Closing Date. Change of Control shall mean the occurrence of any of (a) an acquisition after the Subscription Date by a Person of in excess of 50% of the voting securities of the Company, (b) a replacement of more than one half of the board of directors in place Except as of the Subscription Date which is not approved by those individuals who are members of the board of directors on the Subscription Date in one or a series of transactions, (c) the merger of the Company with, or into another entity, consolidation or sale of all or substantially all of the assets of the Company in one or a series of related transactions, or (d) the execution by the Company of an agreement to which the Company is a party or by which it is bound, providing for any of the events set forth in (a)on Schedule A attached hereto, (b) or (c) herein; (J) None of the Investors, in the event of the Closing of the Second Tranche would own or be beneficially be deemed to own, more than 4.99% of the outstanding shares of Common Stock; (K) No Material Adverse Effect shall have occurred since the First Tranche Closing Date; (L) The Company shall not have breached a material term been contacted by the NASD concerning the delisting of this Agreement or any Exhibit annexed heretothe Common Stock on the Principal Market, and the Company currently meets all listing requirements during the thirty (30) day period immediately preceding the Closing Date for the second tranche; (Mx) The Company shall be in full compliance with the bridge note (the "Bridge Note") held by GCA due October 12, 1999, shall not be in default payment of any agreement it may have with GCA, and GCA shall not have moved to enforce its interest on the Collateral; and (N) Receipt of proof that the financing statements and Security Agreement (fees as set forth in Section 4.37 12.7 below; and (xi) remain in full force and effect (as originally filed on or prior to the First Tranche Closing Date) with the proper state authorities in the states of Nevada and Florida. Notwithstanding the foregoing, the Investors will not be obligated shall have received and been reasonably satisfied with such other certificates and documents as shall have been reasonably requested by the Investors in order for the Investor to purchase confirm the Debentures and Warrants issuable Company's satisfaction of the conditions set forth in connection with the Second Tranche in the event the SEC has not declared the Registration Statement covering the Securities in the First Tranche effective within six months after the First Tranche Closing Date.this

Second Tranche. Upon (a) On the Second Tranche Closing Date, each Purchaser shall deposit with the Money Escrow Agent for future return or disbursement in accordance with this Section 2.3 and/or Section 2.5 (if applicable), an aggregate amount in United States dollars equal to the product of 50% of (x) the product of (1) 500,000 multiplied by (2) such Purchaser's First Tranche Percentage multiplied by (y) the Closing Price on the Trading Day immediately preceding the Second Tranche Closing Date. (b) Not later than the third Trading Day prior to the Second Tranche Closing Date, each Purchaser shall deliver a written notice (certifying compliance with "Second Tranche Purchase Notice") via facsimile to the Seller specifying the number of Shares to be purchased by such Purchaser on the Second Tranche Settlement Date (as defined below), which notice (1) will specify a minimum number of Shares equal to the product of (x) 500,000 multiplied by (y) such Purchaser's First Tranche Percentage and (2) may not specify a number of Shares greater than the product of (x) 750,000 multiplied by (y) such Purchaser's First Tranche Percentage. The Shares indicated on all of Second Tranche Purchase Notices or the conditions set forth belownotices delivered by the Purchasers under Section 2.3(d), as applicable, are collectively referred to as the "Second Tranche NoticeShares", which notice shall be sent by . (c) On the Company to each of the Investors at least five Business Days within five Business Days 19 th Trading Day after the Effective Date), the Company will sell and the Investors will buy, in reliance upon the representations and warranties contained in this Agreement, and upon the terms and satisfaction of each of the conditions set forth below, $2,500,000 principal amount of Debentures and Warrants to purchase 375,000 Warrant Shares. Assuming the Company serves the Second Tranche Notice as indicated above the Second Tranche Closing Date (such date, the "Second Tranche Settlement Date"), subject to the provisions of Section 2.6 and this Section 2.3: (1) If the Seller shall occur on have obtained and delivered to the tenth Business Day after Purchasers the Effective Date. The conditions precedent to Waiver by the Second Tranche Closing Date are as follows: (A) Delivery into escrow by the Company of the original Debentures and Warrants to be issued on the Second Tranche Closing Settlement Date, as more fully set forth in then if the Escrow Agreement attached hereto; (B) The Investors Seller shall have received an opinion of counsel either (x) notice from the Money Escrow Agent of the Company in the form as set forth in Exhibit F annexed to this Agreement, dated on the Second Tranche Closing Date; (C) The Registration Statement (which includes at 150% Money Escrow Agent's receipt of the total number of Underlying Shares underlying funds required to have been delivered by the Debentures issued in the First Tranche, and 100% of the Warrant Shares underlying the Warrants that were issued in the First TranchePurchasers pursuant to 2.3(a) has previously become effective and remains effective immediately prior to the Second Tranche Notice and the Second Tranche Closing Date, and (Aif applicable) neither the Company nor any of the Investors shall have received notice that the SEC has issued or intends to issue a stop order with respect to the Registration Statement or that the SEC otherwise has suspended or withdrawn the effectiveness of the Registration Statement, either temporarily or permanently, or intends or has threatened to do so, and (B) no other suspension of the use or withdrawal of the effectiveness of the Registration Statement or related prospectus shall exist; (D) The Company shall have obtained all permits and qualifications required by any state for the offer and sale of the Warrants and Debentures issuable in connection with the Second Tranche, or shall have the availability of exemptions therefrom. All laws and regulations to which the Company is subject shall legally permit the sale and issuance of the Warrants and Debentures issuable in connection with the Second Tranche; (E) The Investors shall have received written certification that the representations, covenants, and warranties of the Company contained in this Agreement and all Exhibits annexed hereto are true and correct in all material respects as of the Second Tranche Closing Date as though made at each such time (except for representations and warranties specifically made as of a particular date) with respect to all periods, and as to all events and circumstances occurring or existing to and including the Second Tranche Closing Date; (F) The Company shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by this Agreement (including all Exhibits annexed heretoSection 2.3(c)(2), to be performed, satisfied or complied with by the Company at or prior to the Second Tranche Closing Date; (G) No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction that prohibits or directly and adversely affects any of the transactions contemplated by this Agreement or the Exhibits annexed hereto, and no proceeding shall have been commenced that may have the effect of prohibiting or adversely affecting any of the transactions contemplated by this Agreement or the Exhibits annexed hereto; (H) The SEC or the Principal Market has not suspended the trading of the Common Stock, and the Common Stock shall not have been delisted from the Nasdaq National Market. The Company, as of the Second Tranche Closing Date meets all applicable listing requirements of the Nasdaq National Market; (I) No "Change of Control" in the Company shall have occurred since the First Tranche Closing Date. Change of Control shall mean the occurrence of any of (a) an acquisition after the Subscription Date by a Person of in excess of 50% of the voting securities of the Company, (b) a replacement of more than one half of the board of directors in place as of the Subscription Date which is not approved by those individuals who are members of the board of directors on the Subscription Date in one or a series of transactions, (c) the merger of the Company with, or into another entity, consolidation or sale of all or substantially all of the assets of the Company in one or a series of related transactions, or (dy) the execution by the Company of an agreement to which the Company is a party or by which it is bound, providing for any other reasonably acceptable evidence of the events set forth delivery of such funds to the Money Escrow Agent, the Seller shall deliver to each Purchaser's DTC Account through the Depository Trust Company DWAC system the number of Shares indicated in (a), (b) or (c) herein; (J) None of the Investors, in the event of the Closing of the such Purchaser's Second Tranche would own or be beneficially be deemed to own, more than 4.99% of the outstanding shares of Common Stock; (K) No Material Adverse Effect shall have occurred since the First Tranche Closing Date; (L) The Company shall not have breached a material term of this Agreement or any Exhibit annexed hereto; (M) The Company shall be in full compliance with the bridge note (the "Bridge Note") held by GCA due October 12, 1999, shall not be in default of any agreement it may have with GCA, and GCA shall not have moved to enforce its interest on the Collateral; and (N) Receipt of proof that the financing statements and Security Agreement (as set forth in Section 4.37 below) remain in full force and effect (as originally filed on or prior to the First Tranche Closing Date) with the proper state authorities in the states of Nevada and Florida. Notwithstanding the foregoing, the Investors will not be obligated to purchase the Debentures and Warrants issuable in connection with the Second Tranche in the event the SEC has not declared the Registration Statement covering the Securities in the First Tranche effective within six months after the First Tranche Closing DatePurchase Notice.

Second Tranche. Upon written notice (certifying compliance a) Subject to Section 9.1(b), at the Lender's sole discretion, the Lender may increase the amount of outstanding Principal under this Loan by an additional Two Million Dollars ($2,000,000), which additional amount shall comprise the Second Tranche, by providing this amount to the Borrower in cash or readily available funds, and the Borrower shall issue to the Lender two million (2,000,000) warrants for the purchase of an aggregate Two Million (2,000,000) shares of the Borrower's common stock (the "Additional Warrants"). The Additional Warrants shall be exercisable until 5:00 PM Pacific Time three (3) years from the Effective Date and shall be evidenced by one or more warrant certificates substantially in the form of Schedule B, attached hereto, with an exercise price of Twenty-One Cents ($0.21) per share. The Borrower expressly agrees that the Loan may be increased by the Second Tranche at the sole discretion of the Lender, and Borrower agrees to accept the additional principal amount of the Second Tranche on the terms and conditions set forth herein, provided that the Loan shall also be increased by the Second Tranche pursuant to the terms of Subsection 9.1(b). (b) Subject to Section 10 hereof, in the event that the Borrower achieves the Benchmarks (defined below) on or before December 31, 2008, and the full amount of the Second Tranche shall not have already been provided to Borrower by Lender, then the Lender shall increase the amount of outstanding Principal under the Loan by the amount of the Second Tranche. The Second Tranche shall be subject to all of the terms and conditions contained in this Agreement with respect to the First Tranche. For the purpose of this Section 9.1, the Borrower shall have achieved the "Benchmarks" if all of the following have been accomplished (as determined by the Lender in its reasonable discretion): 9.1.1 The Borrower has sold at least one million (1,000,000) gallons of its Alderox product during calendar year 2008; 9.1.2 The Borrower has signed orders or contracts for the sale of at least one million (1,000,000) gallons of Alderox during calendar year 2009, or the Borrower has the reasonable expectation of selling at least one million (1,000,000) gallons of Alderox during calendar year 2009 based on signed orders for the sale of Alderox in calendar year 2009 and/or existing customer accounts; and 9.1.3 The Borrower has reached a gross profit margin of Five Dollars ($5.00) per gallon on its total sales of Alderox as calculated according to U.S. Generally Accepted Accounting Procedures in effect at the time in calendar year 2008. At the time of the drawdown of the Second Tranche the Borrower shall complete a "Drawdown Certificate" in the form of Schedule I, attached hereto, and return to the Lender. The Drawdown Certificate shall confirm that all of the conditions set forth below, referred to as precedent in Section 10 have been satisfied at the "Second Tranche Notice", which notice shall be sent by the Company to each time of the Investors at least five Business Days within five Business Days after the Effective Date), the Company will sell and the Investors will buy, in reliance upon the representations and warranties contained in this Agreement, and upon the terms and satisfaction of each of the conditions set forth below, $2,500,000 principal amount of Debentures and Warrants to purchase 375,000 Warrant Shares. Assuming the Company serves the Second Tranche Notice as indicated above the Second Tranche Closing Date shall occur on the tenth Business Day after the Effective Date. The conditions precedent to the Second Tranche Closing Date are as follows: (A) Delivery into escrow by the Company of the original Debentures and Warrants to be issued on the Second Tranche Closing Date, as more fully set forth in the Escrow Agreement attached hereto; (B) The Investors shall have received an opinion of counsel of the Company in the form as set forth in Exhibit F annexed to this Agreement, dated on the Second Tranche Closing Date; (C) The Registration Statement (which includes at 150% of the total number of Underlying Shares underlying the Debentures issued in the First Tranche, and 100% of the Warrant Shares underlying the Warrants that were issued in the First Tranche) has previously become effective and remains effective immediately prior to the Second Tranche Notice and the Second Tranche Closing Date, and (A) neither the Company nor any of the Investors shall have received notice that the SEC has issued or intends to issue a stop order with respect to the Registration Statement or that the SEC otherwise has suspended or withdrawn the effectiveness of the Registration Statement, either temporarily or permanently, or intends or has threatened to do so, and (B) no other suspension of the use or withdrawal of the effectiveness of the Registration Statement or related prospectus shall exist; (D) The Company shall have obtained all permits and qualifications required by any state for the offer and sale of the Warrants and Debentures issuable in connection with the Second Tranche, or shall have the availability of exemptions therefrom. All laws and regulations to which the Company is subject shall legally permit the sale and issuance of the Warrants and Debentures issuable in connection with the Second Tranche; (E) The Investors shall have received written certification that the representations, covenants, and warranties of the Company contained in this Agreement and all Exhibits annexed hereto are true and correct in all material respects as of the Second Tranche Closing Date as though made at each such time (except for representations and warranties specifically made as of a particular date) with respect to all periods, and as to all events and circumstances occurring or existing to and including the Second Tranche Closing Date; (F) The Company shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by this Agreement (including all Exhibits annexed hereto), to be performed, satisfied or complied with by the Company at or prior to the Second Tranche Closing Date; (G) No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction that prohibits or directly and adversely affects any of the transactions contemplated by this Agreement or the Exhibits annexed hereto, and no proceeding shall have been commenced that may have the effect of prohibiting or adversely affecting any of the transactions contemplated by this Agreement or the Exhibits annexed hereto; (H) The SEC or the Principal Market has not suspended the trading of the Common Stock, and the Common Stock shall not have been delisted from the Nasdaq National Market. The Company, as of the Second Tranche Closing Date meets all applicable listing requirements of the Nasdaq National Market; (I) No "Change of Control" in the Company shall have occurred since the First Tranche Closing Date. Change of Control shall mean the occurrence of any of (a) an acquisition after the Subscription Date by a Person of in excess of 50% of the voting securities of the Company, (b) a replacement of more than one half of the board of directors in place as of the Subscription Date which is not approved by those individuals who are members of the board of directors on the Subscription Date in one or a series of transactions, (c) the merger of the Company with, or into another entity, consolidation or sale of all or substantially all of the assets of the Company in one or a series of related transactions, or (d) the execution by the Company of an agreement to which the Company is a party or by which it is bound, providing for any of the events set forth in (a), (b) or (c) herein; (J) None of the Investors, in the event of the Closing of the Second Tranche would own or be beneficially be deemed to own, more than 4.99% of the outstanding shares of Common Stock; (K) No Material Adverse Effect shall have occurred since the First Tranche Closing Date; (L) The Company shall not have breached a material term of this Agreement or any Exhibit annexed hereto; (M) The Company shall be in full compliance with the bridge note (the "Bridge Note") held by GCA due October 12, 1999, shall not be in default of any agreement it may have with GCA, and GCA shall not have moved to enforce its interest on the Collateral; and (N) Receipt of proof that the financing statements and Security Agreement (as set forth in Section 4.37 below) remain in full force and effect (as originally filed on or prior to the First Tranche Closing Date) with the proper state authorities in the states of Nevada and Florida. Notwithstanding the foregoing, the Investors will not be obligated to purchase the Debentures and Warrants issuable in connection with the Second Tranche in the event the SEC has not declared the Registration Statement covering the Securities in the First Tranche effective within six months after the First Tranche Closing Datedrawdown.

Second Tranche. Upon written notice The Investors shall purchase (certifying compliance with all pro rata) an aggregate principal amount of the conditions set forth below, referred to as Six Hundred Thousand ($600,000) Dollars (the "Second Tranche NoticeInvestment Amount", which notice shall be sent by the Company to each of the Investors at least five Business Days within five Business Days after the Effective Date), the Company will sell and the Investors will buy, in reliance upon the representations and warranties contained in this Agreement, and upon the terms and satisfaction of each of the conditions set forth below, $2,500,000 ) principal amount of Debentures and Warrants to purchase 375,000 Warrant Shares. Assuming the Company serves the Second Tranche Notice as indicated above the Second Tranche Closing Date shall occur Preferred Stock, on the tenth Business Day after ninetieth (90th) day following the Effective Date. The conditions precedent to effective date of a Registration Statement covering the Second Tranche Closing Date are as followsUnderlying Shares, upon the satisfaction of the following conditions: (Ai) Delivery the Investors shall have received certification that the Company has obtained shareholder approval for the Company's issuance of more than twenty (20%) percent of its Common Stock in connection with the transactions contemplated hereby; (ii) delivery into escrow by the Company of the an aggregate principal amount of Six Hundred Thousand ($600,000) Dollars of original Debentures and Warrants to be issued on the Second Tranche Closing DatePreferred Stock, as more fully set forth in the Escrow Agreement attached heretohereto as Exhibit F; (Biii) The the Investors shall have received an opinion of counsel of the Company in the form as set forth in Exhibit F annexed to this Agreement, dated on the Second Tranche Closing Date; (Civ) The the Investors shall have received certification from the Company that the Certificate of Designation previously supplied to the Investors on the Closing Date for the Initial Shares has not been altered and remains in full force and effect. (v) the Investors shall have received written proof that the Registration Statement (which includes at 150% of the total number of all Underlying Shares underlying the Debentures issued in the First Tranche, and 100% of the Warrant Shares underlying the Warrants that were issued in the First TrancheShares) has previously become effective and remains effective for at least ninety days and is effective during the three Trading Days immediately prior to the Second Tranche Notice and Closing Date for the Second Tranche Closing Datesecond tranche, and (A) neither the Company nor any of the Investors shall have received notice that the SEC has issued or intends to issue a stop order with respect to the Registration Statement or that the SEC otherwise has suspended or withdrawn the effectiveness of the Registration Statement, either temporarily or permanently, or intends or has threatened to do soso (unless the SEC's concerns have been addressed and the Investors are reasonably satisfied that the SEC no longer is considering or intends to take such action), and (B) no other suspension of the use or withdrawal of the effectiveness of the Registration Statement or related prospectus shall exist;. (Dvi) The the Company shall have obtained all permits and qualifications required by any state for the offer and sale of the Warrants and Debentures issuable in connection with the Second TranchePreferred Stock, or shall have the availability of exemptions therefrom. All The sale and issuance of the Preferred Stock shall be legally permitted by all laws and regulations to which the Company is subject shall legally permit the sale and issuance of the Warrants and Debentures issuable in connection with the Second Tranchesubject; (Evii) The the Investors shall have received written certification that the representations, covenants, representations and warranties of the Company contained in this Agreement and all Exhibits annexed hereto are true and correct in all material respects as of the Second Tranche Closing Date for the second tranche of the Preferred Stock as though made at each such time (except for representations and warranties specifically made as of a particular date) with respect to all periods, and as to all events and circumstances occurring or existing to and including the Second Tranche Closing DateDate for the second tranche of the Preferred Stock; (Fviii) The the Company shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by this Agreement, the Certificate of Designation, the Registration Rights Agreement (including all Exhibits annexed hereto)and the Warrants, to be performed, satisfied or complied with by the Company at or prior to the Second Tranche Closing DateDate for the second tranche of the Preferred Stock; (Gix) No no statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction that prohibits or directly and adversely affects any of the transactions contemplated by this Agreement or the Exhibits annexed heretoAgreement, and no proceeding shall have been commenced that may have the effect of prohibiting or adversely affecting any of the transactions contemplated by this Agreement or the Exhibits annexed heretoAgreement; (Hx) The since the date of filing of the Company's most recent SEC Document, no event that had or the Principal Market is reasonably likely to have a Material Adverse Effect has not suspended occurred; (xi) the trading of the Common StockStock is not suspended by the SEC or the Principal Market, and the Common Stock shall have been approved for listing or quotation on and shall not have been delisted from the Nasdaq National Principal Market. The Company, as issuance of shares of Common Stock with respect to the Closing for the first tranche of the Second Tranche Closing Date meets all applicable listing Preferred Stock shall not violate the shareholder approval requirements of the Nasdaq National Principal Market; (I) No "Change of Control" in the Company shall have occurred since the First Tranche Closing Date. Change of Control shall mean the occurrence of any of (a) an acquisition after the Subscription Date by a Person of in excess of 50% of the voting securities of the Company, (b) a replacement of more than one half of the board of directors in place as of the Subscription Date which is not approved by those individuals who are members of the board of directors on the Subscription Date in one or a series of transactions, (c) the merger of the Company with, or into another entity, consolidation or sale of all or substantially all of the assets of the Company in one or a series of related transactions, or (d) the execution by the Company of an agreement to which the Company is a party or by which it is bound, providing for any of the events set forth in (a), (b) or (c) herein; (J) None of the Investors, in the event of the Closing of the Second Tranche would own or be beneficially be deemed to own, more than 4.99% of the outstanding shares of Common Stock; (K) No Material Adverse Effect shall have occurred since the First Tranche Closing Date; (L) The Company shall not have breached a material term been contacted by the NASD concerning the delisting of this Agreement or any Exhibit annexed heretothe Common Stock on the Principal Market, and the Company currently meets all listing requirements during the thirty (30) day period immediately preceding the Closing Date for the second tranche; (Mxii) The Company shall be in full compliance with the bridge note (the "Bridge Note") held by GCA due October 12, 1999, shall not be in default payment of any agreement it may have with GCA, and GCA shall not have moved to enforce its interest on the Collateral; and (N) Receipt of proof that the financing statements and Security Agreement (fees as set forth in Section 4.37 13.7 below; and (xiii) remain the Investors shall have received and been reasonably satisfied with such other certificates and documents as shall have been reasonably requested by the Investors in full force order for the Investor to confirm the Company's satisfaction of the conditions set forth in this Section, including, without limitation, a certificate in substantially the form and effect (as originally filed on or prior substance of Exhibit C hereto, executed in either case by an executive officer of the Company and to the First Tranche effect that all the conditions to such Closing Date) with shall have been satisfied as at the proper state authorities in the states date of Nevada and Floridaeach such certificate. Notwithstanding the foregoing, In no event shall the Investors will not be obligated to purchase any shares of Preferred Stock if a Registration Statement including the Debentures and Warrants issuable in connection with the Second Tranche in the event the SEC has Underlying Shares, is not declared effective prior to eighteen (18) months after the Subscription Date. Notwithstanding Sections 2.11 (a) and (b) herein, the Company has the sole option of terminating its obligations to issue the Preferred Stock in these Sections, by giving written notice to the Placement Agent and each of the Investors at any time prior to twenty (20) days after the effective date of a Registration Statement covering the Securities in Underlying Shares. The Preferred Stock shall be convertible pursuant to the First Tranche effective within six months after terms and conditions of the First Tranche Closing DateCertificate of Designation.