Exhibit 10.1

SHARE PURCHASE AGREEMENT

This Share Purchase Agreement (this “Agreement”) is dated as of May [__], 2012,
by and among Saratoga Resources, Inc., a Texas corporation (the “Company”), and
each purchaser identified on the signature pages hereto (each, including its
successors and assigns, a “Purchaser” and collectively, the “Purchasers”).

RECITALS

A.

The Company and each Purchaser is executing and delivering this Agreement in
reliance upon the exemption from securities registration afforded by
Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”),
and Rule 506 of Regulation D (“Regulation D”) as promulgated by the United
States Securities and Exchange Commission (the “Commission”) under the
Securities Act.

B.

Each Purchaser, severally and not jointly, wishes to purchase, and the Company
wishes to sell, upon the terms and conditions stated in this Agreement, that
aggregate number of shares of common stock, $0.001 par value per share (the
“Common Stock”), of the Company, set forth below such Purchaser’s name on the
signature page of this Agreement (which aggregate amount for all Purchasers
together shall be [_______] shares of Common Stock and shall be collectively
referred to herein as the “Shares”).

        

C.

The Company has engaged C.K. Cooper & Company as its non-exclusive placement
agent (the “Placement Agent”) for the offering of the Shares.

   

D.

Contemporaneously with the execution and delivery of this Agreement, the parties
hereto are executing and delivering a Registration Rights Agreement,
substantially in the form attached hereto as Exhibit A (the “Registration Rights
Agreement”), pursuant to which, among other things, the Company will agree to
provide certain registration rights with respect to the Shares under the
Securities Act and the rules and regulations promulgated thereunder and
applicable state securities laws.

E.

In connection with the offering of shares of Common Stock of which this
Agreement is a part (the “Offering”), the Company has entered into, or intends
to enter into, subscription agreements, securities purchase agreements or
similar agreements (the “Other Agreements”) with investors other than the
Purchasers (the “Other Investors”) relating to purchases of Common Stock at a
price per share not less than the Purchase Price.

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Company and the Purchasers hereby
agree as follows:

ARTICLE I.
DEFINITIONS

     

1.1

Definitions. In addition to the terms defined elsewhere in this Agreement, for
all purposes of this Agreement, the following terms shall have the meanings
indicated in this Section 1.1:

          

“Action” means any Proceeding, inquiry, notice of violation, pending or, to the
Company’s Knowledge, threatened in writing against the Company, any Subsidiary
or any of their respective properties or any officer, director or employee of
the Company or any Subsidiary acting in his or her capacity as an officer,
director or employee before or by any federal, state, county, local or foreign
court, arbitrator, governmental or administrative agency, regulatory authority,
stock market, stock exchange or trading facility.

          

“Affiliate” means, with respect to any Person, any other Person that, directly
or indirectly through one or more intermediaries, Controls, is controlled by or
is under common control with such Person, as such terms are used in and
construed under Rule 405 under the Securities Act.

          

“Agreement” has the meaning ascribed to such term in the Preamble.

          

“Business Day” means a day, other than a Saturday or Sunday, on which banks in
New York City are open for the general transaction of business.

          

“Buy-In” has the meaning set forth in Section 4.1(e).

          

“Buy-In Price” has the meaning set forth in Section 4.1(e).

 

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“Closing” means the closing of the purchase and sale of the Shares pursuant to
this Agreement.

         

“Closing Bid Price” means, for any security as of any date, the last closing
price for such security on the Principal Trading Market, as reported by
Bloomberg, or, if the Principal Trading Market begins to operate on an extended
hours basis and does not designate the closing bid price then the last bid price
of such security prior to 4:00:00 p.m., New York City Time, as reported by
Bloomberg, or, if the Principal Trading Market is not the principal securities
exchange or trading market for such security, the last closing price of such
security on the principal securities exchange or trading market where such
security is listed or traded as reported by Bloomberg, or if the foregoing do
not apply, the last closing price of such security in the over-the-counter
market on the electronic bulletin board for such security as reported by
Bloomberg, or, if no closing bid price is reported for such security by
Bloomberg, the average of the bid prices of any market makers for such security
as reported in the “pink sheets” by OTC Markets Group Inc. If the Closing Bid
Price cannot be calculated for a security on a particular date on any of the
foregoing bases, the Closing Bid Price of such security on such date shall be
the fair market value as mutually determined by the Company and the holder. If
the Company and the holder are unable to agree upon the fair market value of
such security, then the Company shall, within two Business Days submit via
facsimile (a) the disputed determination to an independent, reputable investment
bank selected by the Company and approved by the holder or (b) the disputed
arithmetic calculation to the Company’s independent, outside accountant. The
Company shall cause at its expense the investment bank or the accountant, as the
case may be, to perform the determinations or calculations and notify the
Company and the holder of the results no later than ten Business Days from the
time it receives the disputed determinations or calculations. Such investment
bank’s or accountant’s determination or calculation, as the case may be, shall
be binding upon all parties absent demonstrable error. All such determinations
shall be appropriately adjusted for any stock dividend, stock split, stock
combination or other similar transaction during the applicable calculation
period.

          

“Closing Date” means the Trading Day when all of the Transaction Documents have
been executed and delivered by the applicable parties thereto, and all of the
conditions set forth in Sections 2.1, 2.2, 5.1 and 5.2 hereof are satisfied or
waived, as the case may be, or such other date as the parties may agree.

          

“Commission” has the meaning set forth in the Recitals.

          

“Common Stock” has the meaning set forth in the Recitals, and also includes any
securities into which the Common Stock may hereafter be reclassified or changed.

          

“Company Counsel” means Michael W. Sanders, Attorney at Law.

          

“Company Deliverables” has the meaning set forth in Section 2.2(a).

          

“Company’s Knowledge” means with respect to any statement made to the knowledge
of the Company, that the statement is based upon the actual knowledge of the
executive officers of the Company having responsibility for the matter or
matters that are the subject of the statement after reasonable investigation.

          

“Control” (including the terms “controlling”, “controlled by” or “under common
control with”) means the possession, direct or indirect, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or otherwise.

          

“Disclosure Materials” has the meaning set forth in Section 3.1(h).

          

“Effective Date” means the date on which the initial Registration Statement
required by Section 2(a) of the Registration Rights Agreement is first declared
effective by the Commission.

           

“Environmental Laws” has the meaning set forth in Section 3.1(l).

          

“Exchange Act” means the Securities Exchange Act of 1934, as amended, or any
successor statute, and the rules and regulations promulgated thereunder.

          

“GAAP” means U.S. generally accepted accounting principles, as applied by the
Company.

          

“Indemnified Person” has the meaning set forth in Section 4.8(a).

          

“Intellectual Property” has the meaning set forth in Section 3.1(r).

          

“Lien” means any lien, charge, claim, encumbrance, security interest, right of
first refusal, preemptive right or other restrictions of any kind.

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“Material Adverse Effect” means any of (i) a material and adverse effect on the
legality, validity or enforceability of any Transaction Document , (ii) a
material and adverse effect on the results of operations, assets, properties,
business, condition (financial or otherwise) or prospects of the Company and the
Subsidiaries, taken as a whole, or (iii) any adverse impairment to the Company’s
ability to perform in any material respect on a timely basis its obligations
under any Transaction Document.

          

“Material Contract” means any contract of the Company that was, or was required
to be, filed as an exhibit to the SEC Reports pursuant to Item 601 of Regulation
S-K.

          

“Material Permits” has the meaning set forth in Section 3.1(p).

“New York Courts” means the state and federal courts sitting in Borough of
Manhattan, the State of New York.

          

“Outside Date” means the fifteenth (15th) day following the date of this
Agreement; provided that if such day is not a Business Day, the first day
following such day that is a Business Day.

          

“Person” means an individual, corporation, partnership, limited liability
company, trust, business trust, association, joint stock company, joint venture,
sole proprietorship, unincorporated organization, governmental authority or any
other form of entity not specifically listed herein.

“Placement Agent” has the meaning set forth in the Recitals.

          

“Principal Trading Market” means the Trading Market on which the Common Stock is
primarily listed on and quoted for trading, which, as of the date of this
Agreement and the Closing Date, shall be the NYSE Amex.

          

“Proceeding” means an action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or threatened.

“Purchase Price” means $6.25 per Share.

          

“Purchaser Deliverables” has the meaning set forth in Section 2.2(b).

          

“Registration Rights Agreement” has the meaning set forth in the Recitals.

          

“Registration Statement” means a registration statement meeting the requirements
set forth in the Registration Rights Agreement and covering the resale by the
Purchasers of the Registrable Securities (as defined in the Registration Rights
Agreement).

“Regulation D” has the meaning set forth in the Recitals.

          

“Required Approvals” has the meaning set forth in Section 3.1(e).

          

“Rule 144” means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.

          

“SEC Reports” has the meaning set forth in Section 3.1(h).

          

“Secretary’s Certificate” has the meaning set forth in Section 2.2(a)(vi).

          

“Securities Act” means the Securities Act of 1933, as amended or any successor
statute, and the rules and regulations promulgated thereunder.

“Shares” has the meaning set forth in the Recitals.

          

“Subscription Amount” means with respect to each Purchaser, the aggregate amount
to be paid for the Shares purchased hereunder as indicated on such Purchaser’s
signature page to this Agreement next to the heading “Aggregate Purchase Price
(Subscription Amount)”.

          

“Subsidiary” means any entity in which the Company, directly or indirectly, owns
sufficient capital stock or holds a sufficient equity or similar interest such
that it is consolidated with the Company in the financial statements of the
Company.

          

“Trading Day” means (i) a day on which the Common Stock is listed or quoted and
traded on its Principal Trading Market (other than the OTC Bulletin Board), or
(ii) if the Common Stock is not listed on a Trading Market (other than the OTC
Bulletin Board), a day on which the Common Stock is traded in the
over-the-counter market, as reported by the OTC Bulletin Board, or (iii) if the
Common Stock is not quoted on any Trading Market, a day on which

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the Common Stock is quoted in the over-the-counter market as reported in the
“pink sheets” by OTC Markets Group Inc. (or any similar organization or agency
succeeding to its functions of reporting prices); provided , that in the event
that the Common Stock is not listed or quoted as set forth in (i), (ii) and
(iii) hereof, then Trading Day shall mean a Business Day.

          

“Trading Market” means whichever of the New York Stock Exchange, the NYSE Amex,
the NASDAQ Global Select Market, the NASDAQ Global Market, the NASDAQ Capital
Market or the OTC Bulletin Board on which the Common Stock is listed or quoted
for trading on the date in question.

          

“Transaction Documents” means this Agreement, the schedules and exhibits
attached hereto, the Registration Rights Agreement and any other documents or
agreements executed or delivered in connection with the transactions
contemplated hereunder.

          

“Transfer Agent” means Securities Transfer Corporation, or any successor
transfer agent for the Company.

ARTICLE II.
PURCHASE AND SALE

2.1

Closing.  

(a)

Purchase of Shares.  Subject to the terms and conditions set forth in this
Agreement, at the Closing the Company shall issue and sell to each Purchaser,
and each Purchaser shall, severally and not jointly, purchase from the Company,
the number of Shares set forth below such Purchaser’s name on the signature page
of this Agreement at a per Share price equal to the Purchase Price.

(b)

Closing.  The Closing of the purchase and sale of the Shares shall take place at
the offices of Michael W. Sanders, Attorney at Law, on the Closing Date or at
such other locations or remotely by facsimile transmission or other electronic
means as the parties may mutually agree.

(c)

Form of Payment.  Unless otherwise agreed to by the Company and a Purchaser (as
to itself only), on the Closing Date, (1) the Company shall deliver to each
Purchaser one or more stock certificates, evidencing the number of Shares set
forth on such Purchaser’s signature page to this Agreement and (2) upon receipt
thereof, each Purchaser shall wire its Subscription Amount, in United States
dollars and in immediately available funds, in accordance with the Company’s
written wire transfer instructions.

2.2

Closing Deliveries.   

          

(a) 

On or prior to the Closing, the Company shall issue, deliver or cause to be
delivered to each Purchaser the following (the “Company Deliverables”):

               

(i) 

this Agreement, duly executed by the Company;

               

(ii) 

one or more stock certificates, evidencing the Shares subscribed for by
Purchaser hereunder, registered in the name of such Purchaser or as otherwise
set forth on such Purchaser’s Stock Certificate Questionnaire included as
Exhibit B-2 hereto (the “Stock Certificates”);

               

(iii) 

a legal opinion of Company Counsel, dated as of the Closing Date and in the form
attached hereto as Exhibit C, executed by such counsel and addressed to the
Purchasers;

(iv)

the Registration Rights Agreement, duly executed by the Company;

               

(v) 

a certificate of the Secretary of the Company, in the form attached hereto as
Exhibit D (the “Secretary’s Certificate”), dated as of the Closing Date,
(a) certifying the resolutions adopted by the Board of Directors of the Company
or a duly authorized committee thereof approving the transactions contemplated
by this Agreement and the other Transaction Documents and the issuance of the
Shares, (b) certifying the current versions of the articles of incorporation, as
amended, and by-laws, as amended, of the Company and (c) certifying as to the
signatures and authority of persons signing the Transaction Documents and
related documents on behalf of the Company;

               

(vii) 

a certificate of the Chief Executive Officer, President or Chief Financial
Officer of the Company, in the form attached hereto as Exhibit E, dated as of
the Closing Date, certifying as to the fulfillment of the conditions specified
in Section 5.1(a) and 5.1(b); and

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(viii)

a Certificate of Good Standing for the Company from the Texas Secretary of State
as of a recent date.

          

(b) 

On or prior to the Closing, each Purchaser shall deliver or cause to be
delivered to the Company the following (the “Purchaser Deliverables”):

               

(i) 

this Agreement, duly executed by such Purchaser;

               

(ii) 

its Subscription Amount, in U.S. dollars and in immediately available funds, in
the amount indicated below such Purchaser’s name on the applicable signature
page hereto under the heading “Aggregate Purchase Price (Subscription Amount)”
by wire transfer in accordance with the Company’s written instructions;

               

(iii) 

the Registration Rights Agreement, duly executed by such Purchaser; and

               

(iv) 

a fully completed and duly executed Accredited Investor Questionnaire and Stock
Certificate Questionnaire in the forms attached hereto as Exhibits B-1 and B-2 ,
respectively.

ARTICLE III.
REPRESENTATIONS AND WARRANTIES

     

3.1

Representations and Warranties of the Company. The Company hereby represents and
warrants as of the date hereof and the Closing Date (except for the
representations and warranties that speak as of a specific date, which shall be
made as of such date), to each of the Purchasers that:

          

(a)

Subsidiaries. The Company has no direct or indirect Subsidiaries other than
those listed in Schedule 3.1(a) hereto. The Company owns, directly or
indirectly, all of the capital stock or comparable equity interests of each
Subsidiary free and clear of any and all Liens, and all the issued and
outstanding shares of capital stock or comparable equity interest of each
Subsidiary are validly issued and are fully paid, non-assessable and free of
preemptive and similar rights to subscribe for or purchase securities.

          

(b)

Organization and Qualification. The Company and each of its Subsidiaries is an
entity duly incorporated or otherwise organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or organization
(as applicable), with the requisite power and authority to own or lease and use
its properties and assets and to carry on its business as currently conducted.
Neither the Company nor any Subsidiary is in violation of any of the provisions
of its respective certificate or articles of incorporation, bylaws or other
organizational or charter documents. The Company and each of its Subsidiaries is
duly qualified to conduct business and is in good standing as a foreign
corporation or other entity in each jurisdiction in which the nature of the
business conducted or property owned by it makes such qualification necessary,
except where the failure to be so qualified or in good standing, as the case may
be, would not be expected to have a Material Adverse Effect.

          

(c)

Authorization; Enforcement; Validity. The Company has the requisite corporate
power and authority to enter into and to consummate the transactions
contemplated by each of the Transaction Documents and the Other Agreements to
which it is a party and otherwise to carry out its obligations hereunder and
thereunder, including, without limitation, to issue the Shares and the shares
under the Other Agreements in accordance with the terms hereof and thereof. The
Company’s execution and delivery of each of the Transaction Documents and the
Other Agreements and the consummation by it of the transactions contemplated
hereby and thereby (including, but not limited to, the sale and delivery of the
Shares and the shares under the Other Agreements) have been duly authorized by
all necessary corporate action on the part of the Company, and no further
corporate action is required by the Company, its Board of Directors or its
stockholders in connection therewith. Each of the Transaction Documents and the
Other Agreements has been (or upon delivery will have been) duly executed by the
Company and is, or when delivered in accordance with the terms hereof or
thereof, will constitute the legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except (i) as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally the enforcement of, creditors’ rights and remedies or by
other equitable principles of general application, (ii) as limited by laws
relating to the availability of specific performance, injunctive relief or other
equitable remedies and (iii) insofar as indemnification and contribution
provisions may be limited by applicable law. There are no stockholder
agreements, voting agreements, voting trust agreements or similar arrangements
with respect to the Company’s capital stock to which the Company is a party or,
to the Company’s Knowledge, between or among any of the Company’s stockholders.
 

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(d)

No Conflicts. The execution, delivery and performance by the Company of the
Transaction Documents and the Other Agreements and the consummation by the
Company of the transactions contemplated hereby or thereby (including, without
limitation, the issuance of the Shares and the shares under the Other
Agreements) do not and will not (i) conflict with or violate any provisions of
the Company’s or any Subsidiary’s certificate or articles of incorporation,
bylaws or otherwise result in a violation of the organizational documents of the
Company or any Subsidiary, (ii) conflict with, or constitute a default (or an
event that with notice or lapse of time or both would result in a default)
under, result in the creation of any Lien upon any of the properties or assets
of the Company or any Subsidiary or give to others any rights of termination,
amendment, acceleration or cancellation (with or without notice, lapse of time
or both) of, any Material Contract, or (iii) subject to receipt of the Required
Approvals, conflict with or result in a violation of any law, rule, regulation,
order, judgment, injunction, decree or other restriction of any court or
governmental authority to which the Company is subject (including federal and
state securities laws and the rules and regulations thereunder, assuming the
correctness of the representations and warranties made by the Purchasers herein,
of any self-regulatory organization to which the Company or its securities are
subject, including the Principal Trading Market), or by which any property or
asset of the Company is bound or affected, except in the case of clauses
(ii) and (iii) such as would not have or reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.

          

(e)

Filings, Consents and Approvals. Neither the Company nor any of its Subsidiaries
is required to obtain any consent, waiver, authorization or order of, give any
notice to, or make any filing or registration with, any court or other federal,
state, local or other governmental authority, self-regulatory organization
(including the Principal Trading Market) or other Person in connection with the
execution, delivery and performance by the Company of the Transaction Documents
and the Other Agreements (including, without limitation, the issuance of the
Shares and the shares under the Other Agreements), other than (i) the filing
with the Commission of one or more Registration Statements in accordance with
the requirements of the Registration Rights Agreement, (ii) filings required by
applicable state securities laws, (iii) the filing of a Notice of Exempt
Offering of Securities on Form D with the Commission under Regulation D of the
Securities Act, (iv) the filings required in accordance with Section 4.6 of this
Agreement and (v) those that have been made or obtained prior to the date of
this Agreement (collectively, the “Required Approvals”).  The Company is unaware
of any facts or circumstances relating to the Company or its Subsidiaries which
would be likely to prevent the Company from obtaining or effecting any of the
foregoing.

          

(f)

Issuance of the Shares. The issuance of the Shares and the shares under the
Other Agreements has been duly authorized and the Shares and the shares under
the Other Agreements, when issued and paid for in accordance with the terms of
the Transaction Documents and the Other Agreements, will be duly and validly
issued, fully paid and non-assessable and free and clear of all Liens, other
than restrictions on transfer imposed by applicable securities laws, and shall
not be subject to preemptive or similar rights.   Assuming the accuracy of the
representations and warranties of the Purchasers in this Agreement, the Shares
and the shares under the Other Agreements will be issued in compliance with all
applicable federal and state securities laws.  

          

(g)

Capitalization. The number of shares and type of all authorized, issued and
outstanding capital stock, options and other securities of the Company (whether
or not presently convertible into or exercisable or exchangeable for shares of
capital stock of the Company) is set forth in Schedule 3.1(g) hereto. All of the
outstanding shares of capital stock of the Company are duly authorized, validly
issued, fully paid and non-assessable, have been issued in compliance in all
material respects with all applicable federal and state securities laws, and
none of such outstanding shares was issued in violation of any preemptive rights
or similar rights to subscribe for or purchase any capital stock of the Company.
No shares of the Company’s outstanding capital stock are subject to preemptive
rights or any other similar rights; there are no outstanding options, warrants,
scrip, rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, or exercisable or
exchangeable for, any shares of capital stock of the Company, or contracts,
commitments, understandings or arrangements by which the Company is or may
become bound to issue additional shares of capital stock of the Company or
options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into, or
exercisable or exchangeable for, any shares of capital stock of the Company,
other than those issued or granted pursuant to compensatory plans, contracts or
arrangements described in the SEC Reports; except as set forth in Schedule
3.1(g), there are no material outstanding debt securities, notes, credit
agreements, credit facilities or other agreements, documents or instruments
evidencing indebtedness of the Company or by which the Company is bound; except
for the Registration Rights Agreement and that certain Registration Rights
Agreement, dated as of July 12, 2011, there are no agreements or arrangements
under which the Company is obligated to register the sale of any of its
securities under the Securities Act; there are no outstanding securities or
instruments of the Company that contain any

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redemption or similar provisions, and there are no contracts, commitments,
understandings or arrangements by which the Company is or may become bound to
redeem a security of the Company or any of its Subsidiaries; the Company does
not have any stock appreciation rights or “phantom stock” plans or agreements or
any similar plan or agreement; and neither the Company nor any of its
Subsidiaries have any liabilities or obligations required to be disclosed in the
SEC Reports but not so disclosed in the SEC Reports, which, individually or in
the aggregate, will have or would reasonably be expected to have a Material
Adverse Effect.  There are no securities or instruments issued by or to which
the Company is a party containing anti-dilution or similar provisions that will
be triggered by the issuance of the Shares.

          

(h)

SEC Reports; Disclosure Materials. The Company has filed all reports, schedules,
forms, statements and other documents required to be filed by it under the
Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the
eighteen (18) months preceding the date hereof (the foregoing materials,
including the exhibits thereto and documents incorporated by reference therein,
being collectively referred to herein as the “SEC Reports” and together with
this Agreement and the schedules to this Agreement, the “Disclosure Materials”),
on a timely basis or has received a valid extension of such time of filing and
has filed any such SEC Reports prior to the expiration of any such extension. As
of their respective filing dates, the SEC Reports complied in all material
respects with the requirements of the Securities Act and the Exchange Act and
the rules and regulations of the Commission promulgated thereunder, and none of
the SEC Reports, when filed, contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading.  

          

(i)

Financial Statements. The financial statements of the Company included in the
SEC Reports comply in all material respects with applicable accounting
requirements and the rules and regulations of the Commission with respect
thereto as in effect at the time of filing. Such financial statements have been
prepared in accordance with GAAP applied on a consistent basis during the
periods involved, except as may be otherwise specified in such financial
statements or the notes thereto and except that unaudited financial statements
may not contain all footnotes required by GAAP, and fairly present in all
material respects the balance sheet of the Company and its Subsidiaries taken as
a whole as of and for the dates thereof and the results of operations and cash
flows for the periods then ended, subject, in the case of unaudited statements,
to normal, year-end audit adjustments, which would not be material, either
individually or in the aggregate.

          

(j)

Tax Matters. The Company (i) has prepared and filed all foreign, federal and
state income and all other tax returns, reports and declarations required by any
jurisdiction to which it is subject, (ii) has paid all taxes and other
governmental assessments and charges that are material in amount, shown or
determined to be due on such returns, reports and declarations, except those
being contested in good faith, with respect to which adequate reserves have been
set aside on the books of the Company and (iii) has set aside on its books
provisions reasonably adequate for the payment of all taxes for periods
subsequent to the periods to which such returns, reports or declarations apply,
except, in the case of clauses (i) and (ii) above, where the failure to so pay
or file any such tax, assessment, charge or return would not have or reasonably
be expected to have a Material Adverse Effect.

          

(k)

Material Changes. Since the date of the latest audited financial statements
included within the SEC Reports, except as disclosed in subsequent SEC Reports
filed prior to the date hereof, (i) there have been no events, occurrences or
developments that have had or would reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect, (ii) the Company
has not incurred any material liabilities (contingent or otherwise) other than
(A) trade payables, accrued expenses and other liabilities incurred in the
ordinary course of business consistent with past practice and (B) liabilities
not required to be reflected in the Company’s financial statements pursuant to
GAAP or required to be disclosed in filings made with the Commission, (iii) the
Company has not altered materially its method of accounting or the manner in
which it keeps its accounting books and records, (iv) the Company has not
declared or made any dividend or distribution of cash or other property to its
stockholders or purchased, redeemed or made any agreements to purchase or redeem
any shares of its capital stock, (v) the Company has not issued any equity
securities to any officer, director or Affiliate, except Common Stock issued
pursuant to existing Company stock option or stock purchase plans or executive
and director arrangements disclosed in the SEC Reports and (vi) there has not
been any material change or amendment to, or any waiver of any material right by
the Company under, any Material Contract under which the Company or any of its
Subsidiaries is bound or subject. Except for the transactions contemplated by
this Agreement, no event, liability or development has occurred or exists with
respect to the Company or its Subsidiaries or their respective business,
properties, operations or financial condition that would be required to be
disclosed by the Company under applicable securities laws at the time this
representation is made that has not been publicly disclosed at least one Trading
Day prior to the date of this Agreement.

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(l)

Environmental Matters. Neither the Company nor any of its Subsidiaries (i) is in
violation of any statute, rule, regulation, decision or order of any
governmental agency or body or any court, domestic or foreign, relating to the
use, disposal or release of hazardous or toxic substances or relating to the
protection or restoration of the environment or human exposure to hazardous or
toxic substances (collectively, “Environmental Laws”), (ii) owns or operates any
real property contaminated with any substance that is in violation of any
Environmental Laws, (iii) is liable for any off-site disposal or contamination
pursuant to any Environmental Laws, or (iv) is subject to any claim relating to
any Environmental Laws; in each case, which violation, contamination, liability
or claim has had or would reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect; and, to the Company’s Knowledge, there is
no pending or threatened investigation that might lead to such a claim.

          

(m)

Litigation. There is no Action which (i) adversely affects or challenges the
legality, validity or enforceability of any of the Transaction Documents or the
issuance of the Shares or (ii) except as disclosed in the SEC Reports, is
reasonably likely to have a Material Adverse Effect, individually or in the
aggregate, if there were an unfavorable decision. Neither the Company nor any
Subsidiary, nor any director or officer thereof, is or has been the subject of
any Action involving a claim of violation of or liability under federal or state
securities laws or a claim of breach of fiduciary duty.  There has not been, and
to the Company’s Knowledge there is not pending or contemplated, any
investigation by the Commission involving the Company or any current or former
director or officer of the Company.  The Commission has not issued any stop
order or other order suspending the effectiveness of any registration statement
filed by the Company or any of its Subsidiaries under the Exchange Act or the
Securities Act. There are no outstanding orders, judgments, injunctions, awards
or decrees of any court, arbitrator or governmental or regulatory body against
the Company or any executive officers or directors of the Company in their
capacities as such, which individually or in the aggregate, would reasonably be
expected to have a Material Adverse Effect.

          

(n)

Employment Matters. No labor dispute exists or, to the Company’s Knowledge, is
imminent with respect to any of the employees of the Company or any Subsidiary
which would have or reasonably be expected to have a Material Adverse Effect.
None of the Company’s or Subsidiaries’ employees is a member of a union that
relates to such employee’s relationship with the Company or Subsidiary, and
neither the Company nor any of its Subsidiaries is a party to a collective
bargaining agreement, and the Company and each Subsidiary believes that its
relationship with its employees is good. To the Company’s Knowledge, no
executive officer is, or is now expected to be, in violation of any material
term of any employment contract, confidentiality, disclosure or proprietary
information agreement or non-competition agreement, or any other contract or
agreement or any restrictive covenant in favor of a third party, and to the
Company’s Knowledge, the continued employment of each such executive officer
does not subject the Company or any Subsidiary to any liability with respect to
any of the foregoing matters. The Company is in compliance with all U.S.
federal, state, local and foreign laws and regulations relating to employment
and employment practices, terms and conditions of employment and wages and
hours, except where the failure to be in compliance would not have or reasonably
be expected to have, individually or in the aggregate, a Material Adverse
Effect.

          

(o)

Compliance. Neither the Company nor any of its Subsidiaries (i) is in default
under or in violation of (and no event has occurred that has not been waived
that, with notice or lapse of time or both, would result in a default by the
Company or any of its Subsidiaries under), nor has the Company or any of its
Subsidiaries received written notice of a claim that it is in default under or
that it is in violation of, any Material Contract (whether or not such default
or violation has been waived), (ii) is in violation of any order of any court,
arbitrator or governmental body having jurisdiction over the Company, its
Subsidiaries or their respective properties or assets, or (iii) is in violation
of, or in receipt of written notice that it is in violation of, any statute,
rule, regulation, policy or guideline or order of any governmental authority,
self-regulatory organization (including the Principal Trading Market) applicable
to the Company or any of its Subsidiaries, except in each case set forth in (i),
(ii) and (iii) of this paragraph as would not have or reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect.

          

(p)

Regulatory Permits. The Company and each of its Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to conduct their
respective businesses as currently conducted and as described in the SEC
Reports, except where the failure to possess such permits, individually or in
the aggregate, has not and would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect (“Material
Permits”), and (i) neither the Company nor any of its Subsidiaries has received
any notice in writing of proceedings relating to the revocation or material
adverse modification of any such Material Permits and (ii) the Company is
unaware of any facts or circumstances that would give rise to the revocation or
material adverse modification of any Material Permits.

8

 

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(q)

Title to Assets. The Company and its Subsidiaries have good and marketable title
to all real property and tangible personal property owned by them which is
material to the business of the Company and its Subsidiaries, taken as a whole,
in each case free and clear of all Liens except such as do not materially affect
the value of such property or do not interfere with the use made and proposed to
be made of such property by the Company and any of its Subsidiaries. Any real
property and facilities held under lease by the Company and any of its
Subsidiaries are held by them under valid, subsisting and enforceable leases
with such exceptions as are not material and do not interfere with the use made
and proposed to be made of such property and facilities by the Company and its
Subsidiaries.

          

(r)

Patents and Trademarks. The Company and its Subsidiaries own, possess, license
or have other rights to use all foreign and domestic patents, patent
applications, trade and service marks, trade and service mark registrations,
trade names, copyrights, inventions, trade secrets, technology, Internet domain
names, know-how and other intellectual property (collectively, the “Intellectual
Property”) necessary for the conduct of their respective businesses as currently
conducted or as proposed to be conducted as disclosed in the SEC Reports except
where the failure to own, possess, license or have such rights would not have or
reasonably be expected to have a Material Adverse Effect.  Except as set forth
in the SEC Reports and except where such violations or infringements would not
have or reasonably be expected to have, either individually or in the aggregate,
a Material Adverse Effect, (a) there are no rights of third parties to any such
Intellectual Property; (b) there is no infringement by third parties of any such
Intellectual Property; (c) there is no pending or threatened Proceeding by
others challenging the Company’s and/or its Subsidiaries’ rights in or to any
such Intellectual Property; (d) there is no pending or threatened Proceeding by
others challenging the validity or scope of any such Intellectual Property; and
(e) there is no pending or threatened Proceeding by others that the Company
and/or any Subsidiary infringes or otherwise violates any patent, trademark,
service mark, trade name, copyright, invention, trade secret, technology,
Internet domain name, know-how or other proprietary rights of others.

          

(s)

Insurance. The Company and each of the Subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as the Company believes to be prudent and customary in the businesses
and locations in which and where the Company and the Subsidiaries are engaged.
Neither the Company nor any of its Subsidiaries has received any notice of
cancellation of any such insurance, nor, to the Company’s Knowledge, will it or
any Subsidiary be unable to renew their respective existing insurance coverage
as and when such coverage expires or to obtain similar coverage from similar
insurers as may be necessary to continue its business at a cost that would not
have a Material Adverse Effect.

          

(t)

Transactions With Affiliates and Employees. Except as set forth in the SEC
Reports and other than the grant of stock options or other equity awards that
are not individually or in the aggregate material in amount, none of the
officers or directors of the Company and, to the Company’s Knowledge, none of
the employees of the Company, is presently a party to any transaction with the
Company or to a presently contemplated transaction (other than for services as
employees, officers and directors) that would be required to be disclosed
pursuant to Item 404 of Regulation S-K promulgated under the Securities Act.

          

(u)

Internal Control Over Financial Reporting. The Company maintains internal
control over financial reporting (as such term is defined in Rule 13a-15(f)
under the Exchange Act) designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with GAAP and such internal control over
financial reporting is effective.

          

(v)

Sarbanes-Oxley; Disclosure Controls. The Company is in compliance in all
material respects with all of the provisions of the Sarbanes-Oxley Act of 2002
which are applicable to it. The Company maintains disclosure controls and
procedures (as such term is defined in Rule 13a-15(e) and 15d-15(e) under the
Exchange Act), and such disclosure controls and procedures are effective.

          

(w)

Certain Fees. No person or entity will have, as a result of the transactions
contemplated by this Agreement, any valid right, interest or claim against or
upon the Company or a Purchaser for any commission, fee or other compensation
pursuant to any agreement, arrangement or understanding entered into by or on
behalf of the Company, other than the Placement Agent with respect to the offer
and sale of the Shares (which placement agent fees are being paid by the
Company). The Company shall indemnify, pay, and hold each Purchaser harmless
against, any liability, loss or expense (including, without limitation,
attorneys’ fees and out-of-pocket expenses) arising in connection with any such
right, interest or claim.

          

(x)

Private Placement. Assuming the accuracy of the Purchasers’ representations and
warranties set forth in Section 3.2 of this Agreement and the accuracy of the
information disclosed in the Accredited Investor

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Questionnaires, no registration under the Securities Act is required for the
offer and sale of the Shares and the shares under the Other Agreements by the
Company to the Purchasers and the Other Investors under the Transaction
Documents and the Other Agreements.  The issuance and sale of the Shares
hereunder does not contravene the rules and regulations of the Principal Trading
Market.

          

(y)

Registration Rights. Other than each of the Purchasers and certain investors in
the Company’s April 2011 and July 2011 private placements, no Person has any
right to cause the Company to effect the registration under the Securities Act
of any securities of the Company.

          

(z)

No Integrated Offering. Assuming the accuracy of the Purchasers’ representations
and warranties set forth in Section 3.2, none of the Company, its Subsidiaries
nor, to the Company’s Knowledge, any of its Affiliates or any Person acting on
its behalf has, directly or indirectly, at any time within the past six months,
made any offers or sales of any Company security or solicited any offers to buy
any security under circumstances that would (i) cause such offers and sales to
be integrated for purposes of Regulation D with the offer and sale by the
Company of the Shares and the shares under the Other Agreements as contemplated
hereby and thereby or that otherwise would cause the exemption from registration
under Regulation D to be unavailable in connection with the offer and sale by
the Company of the Shares and the shares under the Other Agreements as
contemplated hereby and thereby or (ii) cause the offering of the Shares
pursuant to the Transaction Documents to be integrated with prior offerings by
the Company for purposes of any applicable law, regulation or stockholder
approval provisions, including, without limitation, under the rules and
regulations of any Trading Market on which any of the securities of the Company
are listed or designated.

          

(aa)

Listing and Maintenance Requirements. The Company’s Common Stock is registered
pursuant to Section 12(b) of the Exchange Act, and the Company has taken no
action designed to terminate the registration of the Common Stock under the
Exchange Act nor has the Company received any notification that the Commission
is contemplating terminating such registration. The Company has not, in the
12 months preceding the date hereof, received written notice from the Principal
Trading Market to the effect that the Company is not in compliance with the
listing or maintenance requirements of the Principal Trading Market. The Company
is, and has no reason  to believe that it will not in the foreseeable future
continue to be, in compliance in all material respects with the listing and
maintenance requirements for continued trading of the Common Stock on the
Principal Trading Market.

          

(bb)

Investment Company. The Company is not, and immediately after receipt of payment
for the Shares and the shares under the Other Agreements will not be, an
“investment company,” an “affiliated person” of, “promoter” for or “principal
underwriter” for, an entity “controlled” by an “investment company,” within the
meaning of the Investment Company Act of 1940, as amended.

          

(cc)

Unlawful Payments. Neither the Company nor any of its Subsidiaries, nor any
directors, officers, nor to the Company’s Knowledge, employees, agents or other
Persons acting at the direction of or on behalf of the Company or any of its
Subsidiaries has, in the course of its actions for, or on behalf of, the
Company: (a) directly or indirectly, used any corporate funds for unlawful
contributions, gifts, entertainment or other unlawful expenses relating to
foreign or domestic political activity; (b) made any direct or indirect unlawful
payments to any foreign or domestic governmental officials or employees or to
any foreign or domestic political parties or campaigns from corporate funds;
(c) violated any provision of the Foreign Corrupt Practices Act of 1977, as
amended; or (d) made any other unlawful bribe, rebate, payoff, influence
payment, kickback or other material unlawful payment to any foreign or domestic
government official or employee.

          

(dd)

Application of Takeover Protections; Rights Agreements. The Company has not
adopted any stockholder rights plan or similar arrangement relating to
accumulations of beneficial ownership of Common Stock or a change in control of
the Company.  The Company and its Board of Directors have taken all action
necessary in order to render inapplicable any control share acquisition,
business combination, poison pill (including any distribution under a rights
agreement) or other similar anti-takeover provision under the Company’s articles
of incorporation or other organizational documents or the laws of the
jurisdiction of its incorporation or otherwise which is or could become
applicable to any Purchaser as a direct consequence of the transactions
contemplated by this Agreement, including, without limitation, the Company’s
issuance of the Shares and any Purchaser’s ownership of the Shares.

          

(ee)

Disclosure. The Company confirms that neither it nor any of its officers or
directors nor any other Person acting on its or their behalf has provided, and
it has not authorized the Placement Agent to provide, any Purchaser or its
respective agents or counsel with any information that it believes constitutes
or could reasonably be expected to constitute material, non-public information
except insofar as the existence, provisions and terms of the Transaction
Documents and the proposed transactions hereunder may constitute such
information, all of which will be

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disclosed by the Company in the Press Release as contemplated by Section 4.6
hereof. The Company understands and confirms that each of the Purchasers will
rely on the foregoing representations in effecting transactions in securities of
the Company. No event or circumstance has occurred or information exists with
respect to the Company or any of its Subsidiaries or its or their business,
properties, operations or financial conditions, which, under applicable law,
rule or regulation, requires public disclosure or announcement by the Company
but which has not been so publicly announced or disclosed, except for the
announcement of this Agreement and related transactions.  

          

(ff)

Off Balance Sheet Arrangements. There is no transaction, arrangement, or other
relationship between the Company (or any Subsidiary) and an unconsolidated or
other off balance sheet entity that is required to be disclosed by the Company
in its Exchange Act filings and is not so disclosed.

          

(gg)

Acknowledgment Regarding Purchase of Shares.  The Company acknowledges and
agrees that each of the Purchasers is acting solely in the capacity of an arm’s
length purchaser with respect to the Transaction Documents and the transactions
contemplated hereby and thereby.  The Company further acknowledges that no
Purchaser is acting as a financial advisor or fiduciary of the Company (or in
any similar capacity) with respect to the Transaction Documents and the
transactions contemplated thereby and any advice given by any Purchaser or any
of their respective representatives or agents in connection with the Transaction
Documents and the transactions contemplated thereby is merely incidental to the
Purchasers’ purchase of the Shares. 

          

(hh)

Absence of Manipulation.  The Company has not, and to the Company’s Knowledge no
one acting on its behalf has, taken, directly or indirectly, any action designed
to cause or to result in the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of any of the Shares.

          

(ii)

OFAC. Neither the Company nor any Subsidiary nor, to the Company’s Knowledge,
any director, officer, agent, employee, Affiliate or Person acting on behalf of
the Company or any Subsidiary is currently subject to any U.S. sanctions
administered by the Office of Foreign Assets Control of the U.S. Treasury
Department (“OFAC”); and the Company will not knowingly, directly or indirectly,
use the proceeds of the sale of the Shares, or lend, contribute or otherwise
make available such proceeds to any Subsidiary, joint venture partner or other
Person or entity, towards any sales or operations in any country sanctioned by
OFAC or for the purpose of financing the activities of any Person currently
subject to any U.S. sanctions administered by OFAC.

          

(jj)

Money Laundering Laws. The operations of each of the Company and any Subsidiary
are and have been conducted at all times in compliance with the money laundering
statutes of applicable jurisdictions, the rules and regulations thereunder and
any related or similar rules, regulations or guidelines, issued, administered or
enforced by any applicable governmental agency (collectively, the “Money
Laundering Laws”) and to the Company’s Knowledge, no action, suit or proceeding
by or before any court or governmental agency, authority or body or any
arbitrator involving the Company and/or any Subsidiary with respect to the Money
Laundering Laws is pending or threatened.

          

(kk)    No Additional Agreements. The Company has no other agreements or
understandings (including, without limitation, side letters) with any Purchaser
to purchase Shares on terms other than as set forth herein.

(ll)

No General Solicitation or General Advertising.  Neither the Company nor any
Person acting on its behalf has engaged or will engage in any form of general
solicitation or general advertising (within the meaning of Regulation D) in
connection with any offer or sale of the Shares.

(mm)

ERISA.  The Company is in compliance in all material respects with all presently
applicable provisions of the Employee Retirement Income Security Act of 1974, as
amended, including the regulations and published interpretations thereunder
(herein called “ERISA”); no “reportable event” (as defined in ERISA) has
occurred with respect to any “pension plan” (as defined in ERISA) for which the
Company would have any liability; the Company has not incurred and does not
expect to incur liability under (i) Title IV of ERISA with respect to
termination of, or withdrawal from, any “pension plan”; or (ii) Sections 412 or
4971 of the Internal Revenue Code of 1986, as amended, including the regulations
and published interpretations thereunder (the “Code”); and each “Pension Plan”
for which the Company would have liability that is intended to be qualified
under Section 401(a) of the Code is so qualified in all material respects and
nothing has occurred, whether by action or by failure to act, which would cause
the loss of such qualification.

(nn)

Shell Company Status. The Company is not, and has never been, an issuer
identified in Rule 144(i)(1).

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(oo)

Registration Eligibility.  The Company is eligible to register the resale of the
Shares by the Purchasers using Form S-3 promulgated under the Securities Act.

(pp)

Change in Control.  The issuance of the Shares to the Purchasers and the shares
under the Other Agreements to the Other Investors as contemplated by this
Agreement and the Other Agreements will not trigger any rights under any “change
of control” provision in any of the agreements to which the Company or any of
its Subsidiaries is a party, including any employment, “change in control,”
severance or other compensatory agreements and any benefit plan, which results
in payments to the counterparty or the acceleration of vesting of benefits.

     

3.2

Representations and Warranties of the Purchasers. Each Purchaser hereby, for
itself and for no other Purchaser, represents and warrants as of the date hereof
and as of the Closing Date to the Company as follows:

          

(a)

Organization; Authority. If such Purchaser is an entity, it is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization with the requisite corporate, partnership or other power and
authority to enter into and to consummate the transactions contemplated by the
applicable Transaction Documents and otherwise to carry out its obligations
hereunder and thereunder. If such Purchaser is an entity, the execution and
delivery of this Agreement and performance by such Purchaser of the transactions
contemplated by this Agreement have been duly authorized by all necessary
corporate or, if such Purchaser is not a corporation, such partnership, limited
liability company or other applicable like action, on the part of such
Purchaser. If such Purchaser is an entity, each of this Agreement and the
Registration Rights Agreement has been duly executed by such Purchaser, and when
delivered by such Purchaser in accordance with the terms hereof, will constitute
the valid and legally binding obligation of such Purchaser, enforceable against
it in accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally the enforcement of, creditors’
rights and remedies or by other equitable principles of general application.

          

(b)

Investment Intent. Such Purchaser understands that the Shares are “restricted
securities” and have not been registered under the Securities Act or any
applicable state securities law and is acquiring the Shares as principal for its
own account and not with a view to, or for distributing or reselling such Shares
or any part thereof in violation of the Securities Act or any applicable state
securities laws, provided, however, that by making the representations herein,
such Purchaser does not agree to hold any of the Shares for any minimum period
of time and reserves the right at all times to sell or otherwise dispose of all
or any part of such Shares pursuant to an effective registration statement under
the Securities Act or under an exemption from such registration and in
compliance with applicable federal and state securities laws. Such Purchaser is
acquiring the Shares hereunder in the ordinary course of its business. Such
Purchaser does not presently have any agreement, plan or understanding, directly
or indirectly, with any Person to distribute or effect any distribution of any
of the Shares to or through any person or entity.

          

(c)

Purchaser Status. At the time such Purchaser was offered the Shares, it was, and
at the date hereof it is, an “accredited investor” as defined in Rule 501(a)
under the Securities Act.

          

(d)

General Solicitation. Such Purchaser is not purchasing the Shares as a result of
any advertisement, article, notice or other communication regarding the Shares
published in any newspaper, magazine or similar media or broadcast over
television or radio or presented at any seminar or any other general
advertisement.

          

(e)

Experience of Such Purchaser. Such Purchaser, either alone or together with its
representatives, has such knowledge, sophistication and experience in business
and financial matters so as to be capable of evaluating the merits and risks of
the prospective investment in the Shares, and has so evaluated the merits and
risks of such investment. Such Purchaser is able to bear the economic risk of an
investment in the Shares and, at the present time, is able to afford a complete
loss of such investment.

          

(f)

Access to Information. Such Purchaser acknowledges that it has been afforded
(i) the opportunity to ask such questions as it has deemed necessary of, and to
receive answers from, representatives of the Company concerning the terms and
conditions of the offering of the Shares and the merits and risks of investing
in the Shares; (ii) access to information about the Company and the Subsidiaries
and their respective financial condition, results of operations, business,
properties, management and prospects sufficient to enable it to evaluate its
investment; and (iii) the opportunity to obtain such additional information that
the Company possesses or can acquire without unreasonable effort or expense that
is necessary to make an informed investment decision with respect to the

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investment. Neither such inquiries nor any other investigation conducted by or
on behalf of such Purchaser or its representatives or counsel shall modify,
amend or affect such Purchaser’s right to rely on the truth, accuracy and
completeness of the Disclosure Materials and the Company’s representations and
warranties contained in the Transaction Documents. Such Purchaser has sought
such accounting, legal and tax advice as it has considered necessary to make an
informed decision with respect to its acquisition of the Shares.

          

(g)

Brokers and Finders. Other than the Placement Agent with respect to the Company,
no Person will have, as a result of the transactions contemplated by this
Agreement, any valid right, interest or claim against or upon the Company or any
Purchaser for any commission, fee or other compensation pursuant to any
agreement, arrangement or understanding entered into by or on behalf of the
Purchaser.

          

(h)

Independent Investment Decision. Such Purchaser has independently evaluated the
merits of its decision to purchase Shares pursuant to the Transaction Documents,
and such Purchaser confirms that it has not relied on the advice of any other
Purchaser’s business and/or legal counsel in making such decision. Such
Purchaser understands that nothing in this Agreement or any other materials
presented by or on behalf of the Company to the Purchaser in connection with the
purchase of the Shares constitutes legal, tax or investment advice. Such
Purchaser has consulted such legal, tax and investment advisors as it, in its
sole discretion, has deemed necessary or appropriate in connection with its
purchase of the Shares. Such Purchaser understands that the Placement Agent has
acted solely as the agent of the Company in this placement of the Shares and
such Purchaser has not relied on the business or legal advice of the Placement
Agent or any of its agents, counsel or Affiliates in making its investment
decision hereunder, and confirms that none of such Persons has made any
representations or warranties to such Purchaser in connection with the
transactions contemplated by the Transaction Documents.

         

(i)

Reliance on Exemptions. Such Purchaser understands that the Shares being offered
and sold to it in reliance on specific exemptions from the registration
requirements of U.S. federal and state securities laws and that the Company is
relying in part upon the truth and accuracy of, and such Purchaser’s compliance
with, the representations, warranties, agreements, acknowledgements and
understandings of such Purchaser set forth herein in order to determine the
availability of such exemptions and the eligibility of such Purchaser to acquire
the Shares.

          

(j)

No Governmental Review. Such Purchaser understands that no U.S. federal or state
agency or any other government or governmental agency has passed on or made any
recommendation or endorsement of the Shares or the fairness or suitability of
the investment in the Shares nor have such authorities passed upon or endorsed
the merits of the offering of the Shares.

          

(k)

Residency. Such Purchaser’s residence (if an individual) or office in which its
investment decision with respect to the Shares was made (if an entity) are
located at the address immediately below such Purchaser’s name on its signature
page hereto.

3.3

The Company and each of the Purchasers acknowledge and agree that no party to
this Agreement has made or makes any representations or warranties with respect
to the transactions contemplated hereby other than those specifically set forth
in this Article III and the Transaction Documents.

ARTICLE IV.
OTHER AGREEMENTS OF THE PARTIES

     

4.1

Transfer Restrictions.

          

(a)

Compliance with Laws. Notwithstanding any other provision of this Article IV,
each Purchaser covenants that the Shares may be disposed of only pursuant to an
effective registration statement under, and in compliance with the requirements
of, the Securities Act, or pursuant to an available exemption from, or in a
transaction not subject to, the registration requirements of the Securities Act,
and in compliance with any applicable state, federal or foreign securities laws.
 In connection with any transfer of the Shares other than (i) pursuant to an
effective registration statement, (ii) to the Company, (iii) to a Affiliate of
such Purchaser pursuant to an available exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act or (iv) pursuant
to Rule 144 (provided that the transferor provides the Company with reasonable
assurances (in the form of seller and, if applicable, broker representation
letter(s)) that such securities may be sold pursuant to such rule), the Company
may require the transferor thereof to provide to the Company and the Transfer
Agent, at the transferor’s expense, an opinion of counsel selected by the
transferor and reasonably acceptable to the Company and the Transfer Agent, the
form and substance of which opinion shall be reasonably satisfactory to the
Company and the Transfer Agent, to the effect that

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such transfer does not require registration of such Shares under the Securities
Act.  As a condition of transfer (other than pursuant to clauses (i), (ii) or
(iv) of the preceding sentence), any such transferee shall agree in writing to
be bound by the terms of this Agreement and shall have the rights of a Purchaser
under this Agreement and the Registration Rights Agreement with respect to such
transferred Shares.

          

(b)

Legends. Certificates evidencing the Shares shall bear any legend as required by
the “blue sky” laws of any state and a restrictive legend in substantially the
following form, until such time as they are not required under Section 4.1(c) or
applicable law:

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), OR APPLICABLE STATE SECURITIES LAWS.  THE
SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE
ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
SECURITIES ACT OR (B) AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN
ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS AS EVIDENCED
BY A LEGAL OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY AND ITS
TRANSFER AGENT OR (II) UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT (PROVIDED
THAT THE TRANSFEROR PROVIDES THE COMPANY WITH REASONABLE ASSURANCES (IN THE FORM
OF SELLER AND BROKER REPRESENTATION LETTERS) THAT THE SECURITIES MAY BE SOLD
PURSUANT TO SUCH RULE).  NO REPRESENTATION IS MADE BY THE ISSUER AS TO THE
AVAILABILITY OF THE EXEMPTION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT FOR
RESALES OF THESE SECURITIES.

          

(c)

Removal of Legends. The restrictive legend set forth in Section 4.1(b) above
shall be removed and the Company shall issue a certificate without such
restrictive legend or any other restrictive legend to the holder of the
applicable Shares upon which it is stamped or issue to such holder by electronic
delivery at the applicable balance account at the Depository Trust Company
(“DTC”), if (i) such Shares are registered for resale under the Securities Act,
(ii) such Shares are sold or transferred pursuant to Rule 144 (if the transferor
is not an Affiliate of the Company), or (iii) such Shares are eligible for sale
under Rule 144, without the requirement for the Company to be in compliance with
the current public information required under Rule 144(c)(1) (or Rule 144(i)(2),
if applicable) as to such securities and without volume or manner-of-sale
restrictions.  Following the earlier of (i) the Effective Date or (ii) Rule 144
becoming available for the resale of Shares, without the requirement for the
Company to be in compliance with the current public information required under
Rule 144(c)(1) (or Rule 144(i)(2), if applicable) as to the Shares and without
volume or manner-of-sale restrictions, the Company shall instruct the Transfer
Agent to remove the legend from the Shares and shall cause its counsel to issue
any legend removal opinion required by the Transfer Agent.  Any fees (with
respect to the Transfer Agent, Company counsel or otherwise) associated with the
issuance of such opinion or the removal of such legend shall be borne by the
Company.  If a legend is no longer required pursuant to the foregoing, the
Company will no later than three (3) Trading Days following the delivery by a
Purchaser to the Transfer Agent (with notice to the Company) of a legended
certificate or instrument representing such Shares (endorsed or with stock
powers attached, signatures guaranteed, and otherwise in form necessary to
affect the reissuance and/or transfer) and a representation letter to the extent
required by Section 4.1(a), deliver or cause to be delivered to such Purchaser a
certificate or instrument (as the case may be) representing such Shares that is
free from all restrictive legends.  The Company may not make any notation on its
records or give instructions to the Transfer Agent that enlarge the restrictions
on transfer set forth in this Section 4.1(c).  Certificates for Shares free from
all restrictive legends may be transmitted by the Transfer Agent to the
Purchasers by crediting the account of the Purchaser’s prime broker with DTC as
directed by such Purchaser.

          

(d)

Acknowledgement. Each Purchaser hereunder acknowledges its primary
responsibilities under the Securities Act and accordingly will not sell or
otherwise transfer the Shares or any interest therein without complying with the
requirements of the Securities Act. Except as otherwise provided below, while
the Registration Statement remains effective, each Purchaser hereunder may sell
the Shares in accordance with the plan of distribution contained in the
registration statement and if it does so it will comply therewith and with the
related prospectus delivery

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requirements unless an exemption therefrom is available or unless the Shares are
sold pursuant to Rule 144.  Each Purchaser, severally and not jointly with the
other Purchasers, agrees that if it is notified by the Company in writing at any
time that the registration statement registering the resale of the Shares is not
effective or that the prospectus included in such registration statement no
longer complies with the requirements of Section 10 of the Securities Act, the
Purchaser will refrain from selling such Shares until such time as the Purchaser
is notified by the Company that such registration statement is effective or such
prospectus is compliant with Section 10 of the Exchange Act, unless such
Purchaser is able to, and does, sell such Shares pursuant to an available
exemption from the registration requirements of Section 5 of the Securities Act.

          

(e)

Buy-In. If the Company shall fail for any reason or for no reason to issue to a
Purchaser unlegended certificates within three (3) Trading Days of receipt of
all documents necessary for the removal of the legend set forth above (the
“Deadline Date”), then, in addition to all other remedies available to such
Purchaser, if on or after the Trading Day immediately following such three
(3) Trading Day period, such Purchaser purchases (in an open market transaction
or otherwise) shares of Common Stock (or a broker or trading counterparty
through which the Purchaser has agreed to sell shares makes such purchase) to
deliver in satisfaction of a sale by the holder of shares of Common Stock that
such Purchaser anticipated receiving from the Company without any restrictive
legend (a “Buy-In”), then the Company shall, within three (3) Trading Days after
such Purchaser’s request and in such Purchaser’s sole discretion, either (i) pay
cash to the Purchaser in an amount equal to such Purchaser’s total purchase
price (including brokerage commissions, if any) for the shares of Common Stock
so purchased (the “Buy-In Price”), at which point the Company’s obligation to
deliver such certificate (and to issue such shares of Common Stock) shall
terminate, or (ii) promptly honor its obligation to deliver to such Purchaser a
certificate or certificates representing such shares of Common Stock and pay
cash to the Purchaser in an amount equal to the excess (if any) of the Buy-In
Price over the product of (a) such number of shares of Common Stock, times
(b) the Closing Bid Price per share on the Deadline Date.

     

4.2

Acknowledgment of Dilution.  The Company acknowledges that the issuance of the
Shares may result in dilution of the outstanding shares of Common Stock.  The
Company further acknowledges that its obligations under the Transaction
Documents, including without limitation its obligation to issue the Shares
pursuant to the Transaction Documents, are unconditional and absolute and not
subject to any right of set off, counterclaim, delay or reduction, regardless of
the effect of any such dilution or any claim the Company may have against any
Purchaser and regardless of the dilutive effect that such issuance may have on
the ownership of the other stockholders of the Company.

     

4.3

Furnishing of Information. In order to enable the Purchasers to sell the Shares
under Rule 144 of the Securities Act, for a period of one year from the Closing,
the Company shall maintain the registration of the Common Stock under Section
12(b) or 12(g) of the Exchange Act and timely file (or obtain extensions in
respect thereof and file within the applicable grace period) all reports
required to be filed by the Company after the date hereof pursuant to the
Exchange Act.  During such one year period, if the Company is not required to
file reports pursuant to such laws, it will prepare and furnish to the
Purchasers and make publicly available the information described in Rule
144(c)(2), if the provision of such information will allow resales of the Shares
pursuant to Rule 144.  

     

4.4

Form D and Blue Sky. The Company agrees to timely file a Form D with respect to
the Shares as required under Regulation D.  The Company, on or before the
Closing Date, shall take such action as the Company shall reasonably determine
is necessary in order to obtain an exemption for or to qualify the Shares for
sale to the Purchasers at the Closing pursuant to this Agreement under
applicable securities or “Blue Sky” laws of the states of the United States (or
to obtain an exemption from such qualification). The Company shall make all
filings and reports relating to the offer and sale of the Shares required under
applicable securities or “Blue Sky” laws of the states of the United States
following the Closing Date.

     

4.5

No Integration. The Company shall not, and shall use its commercially reasonable
efforts to ensure that no Affiliate of the Company shall, sell, offer for sale
or solicit offers to buy or otherwise negotiate in respect of any security (as
defined in Section 2 of the Securities Act) that will be integrated with the
offer or sale of the Shares in a manner that would require the registration
under the Securities Act of the sale of the Shares to the Purchasers, or that
will be integrated with the offer or sale of the Shares for purposes of the
rules and regulations of any Trading Market such that it would require
stockholder approval prior to the closing of such other transaction unless
stockholder approval is obtained before the closing of such subsequent
transaction.

     

4.6

Securities Laws Disclosure; Publicity. The Company shall, by 9:00 a.m., New York
City time, on the first (1st) Business Day after the date of this Agreement,
issue one or more press releases (collectively, the “Press Release”) reasonably
acceptable to the Purchasers disclosing all material terms of the transactions
contemplated hereby and any other material, nonpublic information that the
Company may have provided any Purchaser at any time prior to

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the filing of the Press Release.  On or before 9:00 a.m., New York City time, on
the first (1st) Business Day after the date of this Agreement, the Company will
file a Current Report on Form 8-K with the Commission describing the terms of
the Transaction Documents (and including as exhibits to such Current Report on
Form 8-K the material Transaction Documents (including, without limitation, this
Agreement and the Registration Rights Agreement)). If this Agreement terminates
prior to Closing, by the end of the first Business Day following the date of
such termination, the Company shall issue a press release disclosing such
termination.  Notwithstanding the foregoing, the Company shall not publicly
disclose the name of any Purchaser or any Affiliate or investment adviser of any
Purchaser, or include the name of any Purchaser or any Affiliate or investment
adviser of any Purchaser in any press release or in any filing with the
Commission (other than a Registration Statement) or any regulatory agency or
Trading Market, without the prior written consent of such Purchaser, except
(i) as required by the federal securities law in connection with (A) any
registration statement contemplated by the Registration Rights Agreement and
(B) the filing of final Transaction Documents with the Commission and (ii) to
the extent such disclosure is required by law, at the request of the staff of
the Commission or regulatory agency or Trading Market regulations, in which case
the Company shall provide the Purchasers with prior written notice of such
disclosure permitted under this subclause (ii).  From and after the issuance of
the Press Release, no Purchaser shall be in possession of any material,
non-public information received from the Company, any Subsidiary or any of their
respective officers, directors or employees, that is not disclosed in the Press
Release.

     

4.7

Non-Public Information. Except with the express written consent of such
Purchaser and unless prior thereto such Purchaser shall have executed a written
agreement regarding the confidentiality and use of such information, the Company
shall not, and shall cause each Subsidiary and each of their respective
officers, directors, employees and agents, not to, and each Purchaser shall not
directly solicit the Company, any of its Subsidiaries or any of their respective
officers, directors, employees or agents to provide any Purchaser with any
material, non-public information regarding the Company or any of its
Subsidiaries from and after the filing of the Press Release.

     

4.8

Indemnification.

          

(a)

Indemnification of Purchasers. In addition to the indemnity provided in the
Registration Rights Agreement, the Company will indemnify and hold each
Purchaser and its directors, officers, shareholders, members, partners,
employees and agents (and any other Persons with a functionally equivalent role
of a Person holding such titles notwithstanding a lack of such title or any
other title), each Person who controls such Purchaser (within the meaning of
Section 15 of the Securities Act and Section 20 of the Exchange Act), and the
directors, officers, shareholders, agents, members, partners or employees (and
any other Persons with a functionally equivalent role of a Person holding such
titles notwithstanding a lack of such title or any other title) of such
controlling person (each, an “Indemnified Person”) harmless from any and all
losses, liabilities, obligations, claims, contingencies, damages, costs and
expenses, including all judgments, amounts paid in settlements, court costs and
reasonable attorneys’ fees and costs of investigation that any such Indemnified
Person may suffer or incur as a result of (i) any breach of any of the
representations, warranties, covenants or agreements made by the Company in this
Agreement or in the other Transaction Documents or (ii) any action instituted
against an Indemnified Person in any capacity, or any of them or their
respective Affiliates, by any shareholder of the Company or other third party
who is not an Affiliate of such Indemnified Person, with respect to any of the
transactions contemplated by this Agreement.    The Company will not be liable
to any Indemnified Person under this Agreement to the extent, but only to the
extent that a loss, claim, damage or liability is directly attributable solely
to any Indemnified Person’s breach of any of the representations, warranties,
covenants or agreements made by such Indemnified Person in this Agreement or in
the other Transaction Documents.    

          

(b)

Conduct of Indemnification Proceedings. Promptly after receipt by any
Indemnified Person of notice of any demand, claim or circumstances which would
or might give rise to a claim or the commencement of any Proceeding in respect
of which indemnity may be sought pursuant to Section 4.8(a), such Indemnified
Person shall promptly notify the Company in writing and the Company shall assume
the defense thereof, including the employment of counsel reasonably satisfactory
to such Indemnified Person, and shall assume the payment of all fees and
expenses; provided, however, that the failure of any Indemnified Person so to
notify the Company shall not relieve the Company of its obligations hereunder
except to the extent that the Company is actually and materially and adversely
prejudiced by such failure to notify (as determined by a court of competent
jurisdiction, which determination is not subject to appeal or further review).
In any such Proceeding, any Indemnified Person shall have the right to retain
its own counsel, but the fees and expenses of such counsel shall be at the
expense of such Indemnified Person unless: (i) the Company and the Indemnified
Person shall have mutually agreed to the retention of such counsel; (ii) the
Company shall have failed promptly to assume the defense of such Proceeding and
to employ counsel reasonably satisfactory to such Indemnified Person in such
Proceeding; or (iii) in the reasonable judgment of counsel to such Indemnified
Person, representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them. The

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Company shall not be liable for any settlement of any Proceeding effected
without its written consent, which consent shall not be unreasonably withheld,
delayed or conditioned. Without the prior written consent of the Indemnified
Person, the Company shall not effect any settlement of any pending or threatened
Proceeding in respect of which any Indemnified Person is or could have been a
party and indemnity could have been sought hereunder by such Indemnified Party,
unless such settlement includes an unconditional release of such Indemnified
Person from all liability arising out of such Proceeding.

     

4.9

Listing of Common Stock. The Company will use its reasonable best efforts to
list the Shares for quotation on the NYSE Amex and maintain the listing of the
Common Stock on the NYSE Amex.

     

4.10

Use of Proceeds. The Company intends to use the net proceeds from the sale of
the Shares hereunder for general corporate purposes.

4.11

Certain Transactions.  The Company will not merge or consolidate into, or sell,
transfer or lease all or substantially all of its property or assets to, any
other party unless the successor, transferee or lessee party, as the case may be
(if not the Company), expressly assumes the due and punctual performance and
observance of each and every covenant and condition of this Agreement to be
performed and observed by the Company.

4.12

No Change of Control.  The Company shall use reasonable best efforts to obtain
all necessary irrevocable waivers, adopt any required amendments and make all
appropriate determinations so that the issuance of the Shares to the Purchasers
will not trigger a “change of control” or other similar provision in any of the
agreements to which the Company or any of its Subsidiaries is a party, including
without limitation any employment, “change in control,” severance or other
agreements and any benefit plan, which results in payments to the counterparty
or the acceleration of vesting of benefits.

4.13

No Additional Issuances.  Between the date of this Agreement and the Closing
Date, except for the issuance of shares of Common Stock issuable as of the date
hereof as set forth in Schedule 3.1(g) and the Shares being issued pursuant to
this Agreement, the Company shall not issue or agree to issue any additional
shares of Common Stock or other securities which provide the holder thereof the
right to convert such securities into, or acquire, shares of Common Stock.

4.14

Short Sales.  Each Purchaser agrees that it will not directly or indirectly make
or participate in any “short sales,” as defined in Rule 200 under Regulation
SHO, of the Company’s Common Stock, whether or not exempt, until the earlier of
(i) the effective date of the Registration Statement covering the resale of the
Shares purchased by such Purchaser hereunder, (ii) the date that the Shares may
be sold pursuant to Rule 144 or (iii) one year after the Closing Date.
Notwithstanding the foregoing, in the event that a Purchaser is a multi-managed
investment vehicle whereby separate portfolio managers manage separate portions
of such Purchaser’s assets and the portfolio managers have no direct knowledge
of the investment decision made by the portfolio managers managing other
portions of such Purchaser’s assets, the representation set forth above shall
apply only with respect to the portion of assets managed by the portfolio
manager that has knowledge about the financing transaction contemplated by this
agreement. Each Purchaser will not use any of the restricted Shares acquired
pursuant to this Agreement to cover any short position in the Common Stock if
doing so would be in violation of applicable securities laws and otherwise will
comply with federal securities laws in the holding and sale of the Shares.

4.15

Most Favored Terms.  In connection with the Offering, the Company has not
entered into and shall not enter into any agreements, or modify any existing
agreements, with any existing or future investors in the Company (including any
Other Agreements entered into with the Other Investors) that have the effect of
establishing rights or otherwise benefiting such investor in a manner more
favorable in any material respect to such investor than the rights and benefits
established in favor of the Purchasers by this Agreement, unless, in any such
case, each Purchaser has been provided with such rights and benefits.  In
connection with such Offering, under no circumstances will the Company agree
that an investor may pay a price per share that is lower than the Purchase Price
unless the Company reduces the Purchase Price being paid by the Purchasers to
the lowest price per share of Common Stock being paid by any investor.

4.16

Preemptive Rights.

(a)

If, at any time during a period of 12 months commencing on the Closing Date, the
Company offers to sell Covered Securities (as defined below) in a private
offering of Covered Securities for cash (a “Qualified Offering”), each Purchaser
shall be afforded the opportunity to acquire from the Company, for the same
price and on the same terms as such Covered Securities are offered, in the
aggregate up to the amount of Covered Securities required to enable it to
maintain its Qualified Purchaser Percentage Interest (measured immediately prior
to such offering).  

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“Qualified Purchaser Percentage Interest” means, as of any date of
determination, the percentage equal to (i) the number of shares of Common Stock
then held by such Purchaser as of the date of determination, divided by (ii) the
total number of outstanding shares of Common Stock as of such date. “Covered
Securities” means Common Stock and any rights, options or warrants to purchase
or securities convertible into or exercisable or exchangeable for Common Stock,
other than securities that are (A) issuable upon the exercise or conversion of
any securities of the Company issued and outstanding as of the date hereof; or
(B) issued by the Company pursuant to any employment contract, employee
incentive or benefit plan, stock purchase plan, stock ownership plan, stock
option or equity compensation plan or other similar plan approved by the
Company’s board of directors where stock is being issued or offered to a trust,
other entity to or for the benefit of any employees, consultants, officers or
directors of the Company.

(b)

Prior to making any Qualified Offering of Covered Securities, the Company shall
give each Purchaser written notice of its intention to make such an offering,
describing, to the extent then known, the anticipated amount of securities, and
other material terms then known to the Company upon which the Company proposes
to offer the same (such notice, a “Qualified Offering Notice”).  The Company
shall deliver such notice only to the individuals identified on such Purchaser’s
signature page hereto, and shall not communicate the information to anyone else
acting on behalf of the Purchaser without the consent of one of the designated
individuals.  Each Purchaser shall then have 5 days after receipt of the
Qualified Offering Notice (the “Offer Period”) to notify the Company in writing
that it intends to exercise such preemptive right and as to the amount of
Covered Securities the Purchaser desires to purchase, up to the maximum amount
calculated pursuant to Section 4.16(a) (the “Designated Securities”).  Such
notice constitutes a non-binding indication of interest of such Purchaser to
purchase the amount of Designated Securities specified by such Purchaser (or a
proportionately lesser amount if the amount of Covered Securities to be offered
in such Qualified Offering is subsequently reduced) at the price (or range of
prices) established in the Qualified Offering and other terms set forth in the
Company’s notice to it.  The failure to respond during the Offer Period
constitutes a waiver of such Purchaser’s preemptive right in respect of such
offering.  The sale of the Covered Securities in the Qualified Offering,
including any Designated Securities, shall be closed not later than 30 days
after the end of the Offer Period.  The Covered Securities to be sold to other
investors in such Qualified Offering shall be sold at a price not less than, and
upon terms no more favorable to such other investors than, those specified in
the Qualified Offering Notice.  If the Company does not consummate the sale of
Covered Securities to other investors within such 30-day period, the right
provided hereunder shall be revived and such securities shall not be offered
unless first reoffered to the Purchasers in accordance herewith.
 Notwithstanding anything to the contrary set forth herein and unless otherwise
agreed by the Purchasers, by not later than the end of such 30-day period, the
Company shall either confirm in writing to the Purchasers that the Qualified
Offering has been abandoned or shall publicly disclose its intention to issue
the Covered Securities in the Qualified Offering, in either case in such a
manner that the Purchasers will not be in possession of any material, non-public
information thereafter.

(c)

If a Purchaser exercises its preemptive right provided in this Section 4.16 with
respect to a Qualified Offering, the Company shall offer and sell such
Purchaser, if any such offering is consummated, the Designated Securities (as
adjusted, upward to reflect the actual size of such offering when priced) at the
same price as the Covered Securities are offered to third persons in such
offering and shall provide written notice of such price upon the determination
of such price.

(d)

In addition to the pricing provision of Section 4.16(c), the Company will offer
and sell the Designated Securities to each Purchaser upon terms and conditions
not less favorable than the most favorable terms and conditions offered to other
persons or entities in a Qualified Offering.

ARTICLE V.
CONDITIONS PRECEDENT TO CLOSING

5.1

Conditions Precedent to the Obligations of the Purchasers to Purchase Shares.
The obligation of each Purchaser to acquire Shares at the Closing is subject to
the fulfillment to such Purchaser’s satisfaction, on or prior to the Closing
Date, of each of the following conditions, any of which may be waived by such
Purchaser (as to itself only):

          

(a)

Representations and Warranties. The representations and warranties of the
Company contained herein shall be true and correct as of the date when made and
as of the Closing Date, as though made on and as of such date, except for such
representations and warranties that speak as of a specific date.

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(b)

Performance. The Company shall have performed, satisfied and complied in all
material respects with all covenants, agreements and conditions required by the
Transaction Documents to be performed, satisfied or complied with by it at or
prior to the Closing.

          

(c)

No Injunction. 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 the
consummation of any of the transactions contemplated by the Transaction
Documents.

          

(d)

Consents. The Company shall have obtained in a timely fashion any and all
consents, permits, approvals, registrations and waivers necessary for
consummation of the purchase and sale of the Shares, all of which shall be and
remain so long as necessary in full force and effect.

          

(e)

No Suspensions of Trading in Common Stock; Listing . The Common Stock (i) shall
be designated for listing and quotation on the Principal Trading Market and
(ii) shall not have been suspended, as of the Closing Date, by the Commission or
the Principal Trading Market from trading on the Principal Trading Market nor
shall suspension by the Commission or the Principal Trading Market have been
threatened, as of the Closing Date, either (A) in writing by the Commission or
the Principal Trading Market or (B) by falling below the minimum listing
maintenance requirements of the Principal Trading Market.  The Company shall
have obtained approval of the Principal Trading Market to list the Shares.

          

(f)

Company Deliverables . The Company shall have delivered the Company Deliverables
in accordance with Section 2.2(a).

          

(g)

Termination . This Agreement shall not have been terminated as to such Purchaser
in accordance with Section 6.16 herein.

(h)

Material Adverse Effect.  No Material Adverse Effect shall have occurred since
the date of this Agreement.

(i)

Minimum Gross Proceeds.  The Company shall receive at the Closing aggregate
gross proceeds from the sales of Shares to the Purchasers and the sale of shares
of Common Stock to the Other Investors of at least $18.0 million, at a price per
share not less than the Purchase Price.

(j)

No Short Sales.  Each Other Investor shall have agreed in writing that it will
not directly or indirectly make or participate in any “short sales,” as defined
in Rule 200 under Regulation SHO, of the Company’s Common Stock, whether or not
exempt, until the earlier of (i) the effective date of the Registration
Statement covering the resale of the Shares, (ii) the date that the Shares may
be sold pursuant to Rule 144 or (iii) one year after the Closing Date.

     

5.2

Conditions Precedent to the Obligations of the Company to sell Shares. The
Company’s obligation to sell and issue the Shares to each Purchaser at the
Closing is subject to the fulfillment to the satisfaction of the Company on or
prior to the Closing Date of the following conditions, any of which may be
waived by the Company:

          

(a)

Representations and Warranties. The representations and warranties made by such
Purchaser in Section 3.2 hereof shall be true and correct as of the date when
made, and as of the Closing Date as though made on and as of such date, except
for representations and warranties that speak as of a specific date.

          

(b)

Performance. Such Purchaser shall have performed, satisfied and complied in all
material respects with all covenants, agreements and conditions required by the
Transaction Documents to be performed, satisfied or complied with by such
Purchaser at or prior to the Closing Date.

          

(c)

No Injunction. 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 the
consummation of any of the transactions contemplated by the Transaction
Documents.

          

(d)

Purchasers Deliverables. Such Purchaser shall have delivered its Purchaser
Deliverables in accordance with Section 2.2(b).

          

(e)

Termination. This Agreement shall not have been terminated as to such Purchaser
in accordance with Section 6.16 herein.

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ARTICLE VI.
MISCELLANEOUS

6.1

Fees and Expenses.  The Company shall pay the reasonable legal fees and expenses
of Greenberg Traurig, LLP, counsel to certain Purchasers, and Latham & Watkins
LLP, counsel to certain of the Purchasers, incurred by such Purchasers in
connection with the transactions contemplated by the Transaction Documents,
which amount shall be paid directly by the Company to Greenberg Traurig, LLP and
Latham & Watkins LLP, respectively, at the Closing or paid by the Company to
Greenberg Traurig, LLP and Latham & Watkins LLP, respectively, upon termination
of this Agreement so long as such termination did not occur as a result of a
material breach by such Purchasers of any of their obligations hereunder (as the
case may be).  Except as set forth elsewhere in the Transaction Documents, the
parties hereto shall be responsible for the payment of all expenses incurred by
them in connection with the preparation and negotiation of the Transaction
Documents and the consummation of the transactions contemplated hereby.  The
Company shall pay all amounts owed to the Placement Agent relating to or arising
out of the transactions contemplated hereby.  The Company shall pay all Transfer
Agent fees, stamp taxes and other taxes and duties levied in connection with the
sale and issuance of the Shares to the Purchasers.

6.2

Entire Agreement. The Transaction Documents, together with the exhibits and
schedules thereto, contain the entire understanding of the parties with respect
to the subject matter hereof and supersede all prior agreements, understandings,
discussions and representations, oral or written, with respect to such matters,
which the parties acknowledge have been merged into such documents, exhibits and
schedules. At or after the Closing, and without further consideration, the
Company and the Purchasers will execute and deliver to the other such further
documents as may be reasonably requested in order to give practical effect to
the intention of the parties under the Transaction Documents.

     

6.3

Notices. Any and all notices or other communications or deliveries required or
permitted to be provided hereunder shall be in writing and shall be deemed given
and effective on the earliest of (a) the date of transmission, if such notice or
communication is delivered via facsimile (provided the sender receives a
machine-generated confirmation of successful transmission) at the facsimile
number specified in this Section prior to 5:00 p.m., New York City time, on a
Trading Day, (b) the next Trading Day after the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile number
specified in this Section on a day that is not a Trading Day or later than 5:00
p.m., New York City time, on any Trading Day, (c) the Trading Day following the
date of mailing, if sent by U.S. nationally recognized overnight courier service
with next day delivery specified, or (d) upon actual receipt by the party to
whom such notice is required to be given. The address for such notices and
communications shall be as follows:

If to the Company:

Saratoga Resources, Inc.

7500 San Felipe, Suite 675

Houston, Texas 77063

Telephone No.: (713) 458-1560

Facsimile No.:  (713) 458-1561

Attention:  Thomas Cooke

Chief Executive Officer

With a copy to:

Michael W. Sanders

Attorney at Law

20333 S.H. 249, Suite 600

Houston, Texas 77070

Telephone No.: (832) 446-2599

Facsimile No.: (832) 446-2424

If to a Purchaser:

To the address set forth under such Purchaser’s name on the signature page
hereof;

20

 

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With a copy to:

Greenberg Traurig, LLP

One International Place

Boston, Massachusetts 02110

Telephone No.: (617) 310-6205

Facsimile No.: (617) 279-8402

Attention:  Bradley A. Jacobson

or such other address as may be designated in writing hereafter, in the same
manner, by such Person.

     

6.4

Amendments; Waivers; No Additional Consideration. No amendment or waiver of any
provision of this Agreement will be effective with respect to any party unless
made in writing and signed by a duly authorized representative of such party.
 No consideration shall be offered or paid to any Purchaser to amend or consent
to a waiver or modification of any provision of any Transaction Document unless
the same consideration is also offered to all Purchasers who then hold Shares.

     

6.5

Construction. The headings herein are for convenience only, do not constitute a
part of this Agreement and shall not be deemed to limit or affect any of the
provisions hereof. The language used in this Agreement will be deemed to be the
language chosen by the parties to express their mutual intent, and no rules of
strict construction will be applied against any party. This Agreement shall be
construed as if drafted jointly by the parties, and no presumption or burden of
proof shall arise favoring or disfavoring any party by virtue of the authorship
of any provisions of this Agreement or any of the Transaction Documents.

     

6.6

Successors and Assigns. The provisions of this Agreement shall inure to the
benefit of and be binding upon the parties and their successors and permitted
assigns. This Agreement, or any rights or obligations hereunder, may not be
assigned by the Company without the prior written consent of the Purchasers. Any
Purchaser may assign its rights hereunder in whole or in part to any Person to
whom such Purchaser assigns or transfers any Shares in compliance with the
Transaction Documents and applicable law, provided such transferee shall agree
in writing to be bound, with respect to the transferred Shares, by the terms and
conditions of this Agreement that apply to the “Purchasers”.

     

6.7

No Third-Party Beneficiaries. This Agreement is intended for the benefit of the
parties hereto and their respective successors and permitted assigns and is not
for the benefit of, nor may any provision hereof be enforced by, any other
Person, other than the Indemnified Persons.

     

6.8

Governing Law. All questions concerning the construction, validity, enforcement
and interpretation of this Agreement shall be governed by and construed and
enforced in accordance with the internal laws of the State of New York, without
regard to the principles of conflicts of law thereof. Each party agrees that all
Proceedings concerning the interpretation, enforcement and defense of the
transactions contemplated by this Agreement and any other Transaction Documents
(whether brought against a party hereto or its respective Affiliates, employees
or agents) may be commenced on a non-exclusive basis in the New York Courts.
Each party hereto hereby irrevocably submits to the non-exclusive jurisdiction
of the New York Courts for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed
herein (including with respect to the enforcement of any of the Transaction
Documents), and hereby irrevocably waives, and agrees not to assert in any
Proceeding, any claim that it is not personally subject to the jurisdiction of
any such New York Court, or that such Proceeding has been commenced in an
improper or inconvenient forum. Each party hereto hereby irrevocably waives
personal service of process and consents to process being served in any such
Proceeding by mailing a copy thereof via registered or certified mail or
overnight delivery (with evidence of delivery) to such party at the address in
effect for notices to it under this Agreement and agrees that such service shall
constitute good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to serve process
in any manner permitted by law. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY
JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.

     

6.9

Survival. Subject to applicable statute of limitations, the representations,
warranties, agreements and covenants contained herein shall survive the Closing
and the delivery of the Shares.

     

6.10

Execution. This Agreement may be executed in two or more counterparts, all of
which when taken together shall be considered one and the same agreement and
shall become effective when counterparts have been

21

 

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

signed by each party and delivered to the other party, it being understood that
both parties need not sign the same counterpart. In the event that any signature
is delivered by facsimile transmission, or by e-mail delivery of a “.pdf” format
data file, such signature shall create a valid and binding obligation of the
party executing (or on whose behalf such signature is executed) with the same
force and effect as if such facsimile signature page were an original thereof.

     

6.11

Severability. If any provision of this Agreement is held to be invalid or
unenforceable in any respect, the validity and enforceability of the remaining
terms and provisions of this Agreement shall not in any way be affected or
impaired thereby and the parties will attempt to agree upon a valid and
enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.

     

6.12

Replacement of Shares.  If any certificate or instrument evidencing any Shares
is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be
issued in exchange and substitution for and upon cancellation thereof, or in
lieu of and substitution therefor, a new certificate or instrument, but only
upon receipt of evidence reasonably satisfactory to the Company and the Transfer
Agent of such loss, theft or destruction and the execution by the holder thereof
of a customary lost certificate affidavit of that fact and an agreement to
indemnify and hold harmless the Company and the Transfer Agent for any losses in
connection therewith or, if required by the Transfer Agent, a bond in such form
and amount as is required by the Transfer Agent. The applicants for a new
certificate or instrument under such circumstances shall also pay any reasonable
third-party costs associated with the issuance of such replacement Shares. If a
replacement certificate or instrument evidencing any Shares is requested due to
a mutilation thereof, the Company may require delivery of such mutilated
certificate or instrument as a condition precedent to any issuance of a
replacement.

     

6.13

Remedies. In addition to being entitled to exercise all rights provided herein
or granted by law, including recovery of damages, each of the Purchasers and the
Company will be entitled to specific performance under the Transaction
Documents. The parties agree that monetary damages may not be adequate
compensation for any loss incurred by reason of any breach of obligations
described in the foregoing sentence and hereby agree to waive in any action for
specific performance of any such obligation (other than in connection with any
action for a temporary restraining order) the defense that a remedy at law would
be adequate.

     

6.14

Payment Set Aside. To the extent that the Company makes a payment or payments to
any Purchaser pursuant to any Transaction Document or a Purchaser enforces or
exercises its rights thereunder, and such payment or payments or the proceeds of
such enforcement or exercise or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside, recovered from, disgorged
by or are required to be refunded, repaid or otherwise restored to the Company,
a trustee, receiver or any other person under any law (including, without
limitation, any bankruptcy law, state or federal law, common law or equitable
cause of action), then to the extent of any such restoration the obligation or
part thereof originally intended to be satisfied shall be revived and continued
in full force and effect as if such payment had not been made or such
enforcement or setoff had not occurred.

     

6.15

Independent Nature of Purchasers’ Obligations and Rights. The obligations of
each Purchaser under any Transaction Document are several and not joint with the
obligations of any other Purchaser, and no Purchaser shall be responsible in any
way for any representations and warranties of or the performance of the
obligations of any other Purchaser under any Transaction Document.  The decision
of each Purchaser to purchase Shares pursuant to the Transaction Documents has
been made by such Purchaser independently of any other Purchaser and
independently of any information, materials, statements or opinions as to the
business, affairs, operations, assets, properties, liabilities, results of
operations, condition (financial or otherwise) or prospects of the Company or
any Subsidiary which may have been made or given by any other Purchaser or by
any agent or employee of any other Purchaser, and no Purchaser and none of its
agents or employees shall have any liability to any other Purchaser (or any
other Person) relating to or arising from any such information, materials,
statements or opinions.  Nothing contained herein or in any other Transaction
Document, and no action taken by any Purchaser pursuant hereto or thereto, shall
be deemed to constitute the Purchasers as a partnership, an association, a joint
venture or any other kind of entity, or create a presumption that the Purchasers
are in any way acting in concert or as a group with respect to such obligations
or the transactions contemplated by the Transaction Documents.  Each Purchaser
acknowledges that no other Purchaser has acted as agent for such Purchaser in
connection with making its investment hereunder and that no Purchaser will be
acting as agent of such Purchaser in connection with monitoring its investment
in the Shares or enforcing its rights under the Transaction Documents.  Each
Purchaser shall be entitled to independently protect and enforce its rights,
including without limitation the rights arising out of this Agreement or out of
the other Transaction Documents, and it shall not be necessary for any other
Purchaser to be joined as an additional party in any Proceeding for such
purpose.  It is expressly

22

 

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understood and agreed that each provision contained in this Agreement is between
the Company and a Purchaser, solely, and not between the Company and the
Purchasers collectively and not between and among the Purchasers.

     

6.16

Termination. This Agreement may be terminated and the sale and purchase of the
Shares abandoned at any time prior to the Closing by either the Company or any
Purchaser (with respect to itself only) upon written notice to the other, if the
Closing has not been consummated on or prior to 5:00 p.m., New York City time,
on the Outside Date; provided, however, that the right to terminate this
Agreement under this Section 6.16 shall not be available to any Person whose
failure to comply with its obligations under this Agreement has been the cause
of or resulted in the failure of the Closing to occur on or before such time.
 The Company shall give prompt notice of any such termination to each other
Purchaser, and, as necessary, work in good faith to restructure the transaction
to allow each Purchaser that does not exercise a termination right to purchase
the full number of securities set forth below such Purchaser’s name on the
signature page of this Agreement while remaining in compliance with Section
4.11. Nothing in this Section 6.16 shall be deemed to release any party from any
liability for any breach by such party of the terms and provisions of this
Agreement or the other Transaction Documents or to impair the right of any party
to compel specific performance by any other party of its obligations under this
Agreement or the other Transaction Documents. In the event of a termination
pursuant to this Section, the Company shall promptly notify all non-terminating
Purchasers. Upon a termination in accordance with this Section, the Company and
the terminating Purchaser(s) shall not have any further obligation or liability
(including arising from such termination) to the other, and no Purchaser will
have any liability to any other Purchaser under the Transaction Documents as a
result therefrom.

     

6.17

Rescission and Withdrawal Right. Notwithstanding anything to the contrary
contained in (and without limiting any similar provisions of) the Transaction
Documents, whenever any Purchaser exercises a right, election, demand or option
under a Transaction Document and the Company does not timely perform its related
obligations within the periods therein provided, then such Purchaser may rescind
or withdraw, in its sole discretion from time to time upon written notice to the
Company, any relevant notice, demand or election in whole or in part without
prejudice to its future actions and rights.

6.18

Adjustments in Common Stock Numbers and Prices . In the event of any stock
split, subdivision, dividend or distribution payable in shares of Common Stock
(or other securities or rights convertible into, or entitling the holder thereof
to receive directly or indirectly shares of Common Stock), combination or other
similar recapitalization or event occurring after the date hereof and prior to
the Closing, each reference in any Transaction Document to a number of shares or
a price per share shall be deemed to be amended to appropriately account for
such event.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

[SIGNATURE PAGE FOR COMPANY FOLLOWS]

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IN WITNESS WHEREOF, the parties hereto have caused this Share Purchase Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.

SARATOGA RESOURCES, INC.

 

 

 

 

By:

 

 

Name:

 

Title:

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
[SIGNATURE PAGES FOR PURCHASERS FOLLOW]

 

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NAME OF PURCHASER:

 

 

 

 

 

 

 

 

 

By:

 

Name:

 

Title:

 

Aggregate Purchase Price (Subscription Amount):

$

 

 

Number of Shares to be Acquired:

 

 

 

Tax ID No.:

 

 

 

Address for Notice:

 

 

 

 

 

 

 

 

 

 

 

Telephone No.:

 

 

 

Facsimile No.:

 

 

 

E-mail Address:

 

 

 

Attention:

 

Delivery Instructions:

(if different than above)

c/o  _______________________________

Street:   ____________________________

City/State/Zip: ______________________

Attention: __________________________

Telephone No.: ____________________________

 

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EXHIBITS

A:

Form of Registration Rights Agreement

B-1:

Accredited Investor Questionnaire

B-2:

Stock Certificate Questionnaire

C:

Form of Opinion of Company Counsel

D:

Form of Secretary’s Certificate

E:

Form of Officer’s Certificate

SCHEDULES

3.1(a) Subsidiaries

 

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

EXHIBIT A

Form of Registration Rights Agreement

 

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

EXHIBIT B-1

ACCREDITED INVESTOR QUESTIONNAIRE

(ALL INFORMATION WILL BE TREATED CONFIDENTIALLY)

To:

Saratoga Resources, Inc.

This Investor Questionnaire (“Questionnaire”) must be completed by each
potential investor in connection with the offer and sale of shares of common
stock, $0.001 par value per share (the “Shares”), of Saratoga Resources, Inc., a
Texas corporation (the “Company”).  The Shares are being offered and sold by the
Company without registration under the Securities Act of 1933, as amended (the
“Act”), and the securities laws of certain states, in reliance on the exemptions
contained in Section 4(2) of the Act and on Regulation D promulgated thereunder
and in reliance on similar exemptions under applicable state laws.  The Company
must determine that a potential investor meets certain suitability requirements
before offering or selling Shares to such investor.  The purpose of this
Questionnaire is to assure the Company that each investor will meet the
applicable suitability requirements.  The information supplied by you will be
used in determining whether you meet such criteria, and reliance upon the
private offering exemptions from registration is based in part on the
information herein supplied.

This Questionnaire does not constitute an offer to sell or a solicitation of an
offer to buy any security.  Your answers will be kept strictly confidential.
 However, by signing this Questionnaire, you will be authorizing the Company to
provide a completed copy of this Questionnaire to such parties as the Company
deems appropriate in order to ensure that the offer and sale of the Shares will
not result in a violation of the Act or the securities laws of any state and
that you otherwise satisfy the suitability standards applicable to purchasers of
the Shares.  All potential investors must answer all applicable questions and
complete, date and sign this Questionnaire.  Please print or type your responses
and attach additional sheets of paper if necessary to complete your answers to
any item.

PART A.

BACKGROUND INFORMATION

Name of Beneficial Owner of the
Shares:____________________________________________________________

Business
Address:_______________________________________________________________________________

(Number and Street)

______________________________________________________________________________________________

(City)

(State)

(Zip Code)

Telephone Number: (___)
_________________________________________________________________________

If a corporation, partnership, limited liability company, trust or other entity:

Type of
entity:__________________________________________________________________________________

Were you formed for the purpose of investing in the securities being offered?

Yes ____

No ____

If an individual:

Residence
Address:______________________________________________________________________________

(Number and Street)

______________________________________________________________________________________________

(City)

(State)

(Zip Code)

 

Telephone Number: (___)
_________________________________________________________________________

Age:­­­­­­­­ ­__________

Citizenship: ____________

Where registered to vote: _______________

 

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

If an individual, set forth in the space provided below the state in the United
States in which you maintain your residence:

If an entity, set forth in the space provided below the state in the United
States in which you made your investment decision:

Are you a director or executive officer of the Company?

Yes ____

No ____

Social Security or Taxpayer Identification
No._________________________________________________________

PART B.

ACCREDITED INVESTOR QUESTIONNAIRE

In order for the Company to offer and sell the Shares in conformance with state
and federal securities laws, the following information must be obtained
regarding your investor status. Please initial each category applicable to you
as a Purchaser of Shares.

__ (1)

A bank as defined in Section 3(a)(2) of the Securities Act, or any savings and
loan

association or other institution as defined in Section 3(a)(5)(A) of the
Securities Act   whether acting in its individual or fiduciary capacity;

__ (2)

A broker or dealer registered pursuant to Section 15 of the Securities Exchange
Act

of 1934;

__ (3)

An insurance company as defined in Section 2(13) of the Securities Act;

__ (4)

An investment company registered under the Investment Company Act of 1940 or a
business development company as defined in Section 2(a)(48) of that Act;

__ (5)

A Small Business Investment Company licensed by the U.S. Small Business
Administration under Section 301(c) or (d) of the Small Business Investment Act
of 1958;

__ (6)

 A plan established and maintained by a state, its political subdivisions, or
any agency or instrumentality of a state or its political subdivisions, for the
benefit of its employees, if such plan has total assets in excess of $5,000,000;

__ (7)

An employee benefit plan within the meaning of the Employee Retirement Income
Security Act of 1974, if the investment decision is made by a plan fiduciary, as
defined in Section 3(21) of such act, which is either a bank, savings and loan
association, insurance company, or registered investment adviser, or if the
employee benefit plan has total assets in excess of $5,000,000 or, if a
self-directed plan, with investment decisions made solely by persons that are
accredited investors;

__ (8)

A private business development company as defined in Section 202(a)(22) of the
Investment Advisers Act of 1940;

 

__ (9)

An organization described in Section 501(c)(3) of the Internal Revenue Code, a
corporation, Massachusetts or similar business trust, or partnership, not formed
for the specific purpose of acquiring the Shares, with total assets in excess of
$5,000,000;

__ (10) A trust, with total assets in excess of $5,000,000, not formed for the
specific purpose of acquiring the Shares, whose purchase is directed by a
sophisticated person who has such

 

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

knowledge and experience in financial and business matters that such person is
capable of evaluating the merits and risks of investing in the Company;

 

___(11)

 A natural person whose individual net worth, or joint net worth with that
person’s spouse, at the time of his purchase exceeds $1,000,000, excluding the
value of the primary residence of such natural person;

___(12)

 A natural person who had an individual income in excess of $200,000 in each of
the

two most recent years, or joint income with that person’s spouse in excess of
        $300,000, in each of those years, and has a reasonable expectation of
reaching the       same income level in the current year;

___(13)

  An executive officer or director of the Company;

___(14) An entity in which all of the equity owners qualify under any of the
above subparagraphs. If the undersigned belongs to this investor category only,
list the equity owners of the undersigned, and the investor category which each
such equity owner satisfies.

A.

FOR EXECUTION BY AN INDIVIDUAL:

 

 

By

 

Date

 

 

 

 

 

Print Name:

 

B.

FOR EXECUTION BY AN ENTITY:

 

Entity Name:

 

 

 

 

 

 

 

 

 

 

 

 

By

 

Date

 

 

 

 

 

Print Name:

 

 

 

Title:

 

C.

ADDITIONAL SIGNATURES (if required by partnership, corporation or trust
document):

 

Entity Name:

 

 

 

 

 

 

 

 

 

 

 

 

By

 

Date

 

 

 

 

 

Print Name:

 

 

 

Title:

 

 

Entity Name:

 

 

 

 

 

 

 

 

 

 

 

 

By

 

Date

 

 

 

 

 

Print Name:

 

 

 

Title:

 

 

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

EXHIBIT B-2

Stock Certificate Questionnaire

Pursuant to Section 2.2(b) of the Agreement, please provide us with the
following information:

1.

The exact name that the Shares are to be registered in (this is the name that
will appear on the stock certificate(s) and warrant(s)).  You may use a nominee
name if appropriate:

 

2.

The relationship between the Purchaser of the Shares and the Registered Holder
listed in response to Item 1 above:

 

3.

The mailing address, telephone and telecopy number of the Registered Holder
listed in response to Item 1 above:

 

 

 

 

 

 

 

 

 

 

 

 

 

4.

The Tax Identification Number (or, if an individual, the Social Security Number)
of the Registered Holder listed in response to Item 1 above:

 

 

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

EXHIBIT C

Form of Opinion of Company Counsel*

1.

The Company is validly existing as a corporation in good standing under the laws
of the State of Texas.

2.

The Company has the corporate power and authority to execute and deliver and to
perform its obligations under the Transaction Documents, including, without
limitation, to issue the Shares under the Share Purchase Agreement.

3.

Each of the Transaction Documents has been duly authorized, executed and
delivered by the Company and, assuming due authorization, execution and delivery
by the Purchasers (to the extent they are a party), each of the Transaction
Documents constitutes a valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms.  

4.

The execution and delivery by the Company of each of the Transaction Documents
and the performance by the Company of its obligations under such agreements,
including its issuance and sale of the Shares, do not and will not: (a) require
any consent, approval, license or exemption by, order or authorization of, or
filing, recording or registration by the Company with any federal or state
governmental authority, except (1) as may be required by federal securities laws
with respect to the Company’s obligations under the Registration Rights
Agreement, (2) the filing of Form D pursuant to Securities and Exchange
Commission Regulation D and (3) the filings required in accordance with Section
4.6 of the Share Purchase Agreement, (b) violate any federal or state statute,
rule or regulation, or any rule or regulation of the NYSE Amex, or any court
order, judgment or decree, if any, listed in Exhibit A hereto, which Exhibit
lists all court orders, judgments and decrees that the Company has certified to
us are applicable to it, (c) result in any violation of the Articles of
Incorporation, as amended, or Amended and Restated Bylaws of the Company or (c)
result in a breach of, or constitute a default under, any Material Contract.

5.

Assuming the accuracy of the representations, warranties and compliance with the
covenants and agreements of the Purchasers and the Company contained in the
Share Purchase Agreement, it is not necessary, in connection with the offer,
sale and delivery of the Shares to the Purchasers to register the Shares under
the Securities Act.

6.

The Shares being delivered to the Purchasers pursuant to the Share Purchase
Agreement have been duly and validly authorized and, when issued, delivered and
paid for as contemplated in the Share Purchase Agreement, will be duly and
validly issued, fully paid and non-assessable, and free of any preemptive right
or similar rights contained in the Company’s Articles of Incorporation, as
amended, or Amended and Restated By-laws.

7.

The Company is not, and immediately after receipt of payment for the Shares will
not be, an “investment company,” or an entity “controlled” by an “investment
company,” within the meaning of the Investment Company Act of 1940, as amended.

*  The opinion letter of Company Counsel will be subject to customary
limitations and carveouts.  

 

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EXHIBIT D

Form of Secretary’s Certificate

The undersigned hereby certifies that he is the duly elected, qualified and
acting Secretary of Saratoga Resources, Inc., a Texas corporation (the
"Company"), and that as such he is authorized to execute and deliver this
certificate in the name and on behalf of the Company and in connection with the
Share Purchase Agreement, dated as of May [__], 2012, by and among the Company
and the investors party thereto (the "Share Purchase Agreement"), and further
certifies in his official capacity, in the name and on behalf of the Company,
the items set forth below.  Capitalized terms used but not otherwise defined
herein shall have the meaning set forth in the Share Purchase Agreement.

1.

Attached hereto as Exhibit A is a true, correct and complete copy of the
resolutions duly adopted by the Board of Directors of the Company at a meeting
held on [_______], 2012, which represent all of the resolutions approving the
transactions contemplated by the Purchase Agreement and the issuance of the
Shares.  Such resolutions have not in any way been amended, modified, revoked or
rescinded, have been in full force and effect since their adoption to and
including the date hereof and are now in full force and effect.

2.

Attached hereto as Exhibit B is a true, correct and complete copy of the
Articles of Incorporation of the Company, together with any and all amendments
thereto currently in effect, and no action has been taken to further amend,
modify or repeal such Articles of Incorporation, the same being in full force
and effect in the attached form as of the date hereof.

3.

Attached hereto as Exhibit C is a true, correct and complete copy of the Amended
and Restated Bylaws of the Company and any and all amendments thereto currently
in effect, and no action has been taken to further amend, modify or repeal such
Amended and Restated Bylaws, the same being in full force and effect in the
attached form as of the date hereof.

4.

Each person listed below has been duly elected or appointed to the position(s)
indicated opposite his name and is duly authorized to sign the Share Purchase
Agreement and each of the Transaction Documents on behalf of the Company, and
the signature appearing opposite such person’s name below is such person’s
genuine signature.

Name

Position

Signature

 

 

 

 

 

 

IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of this ___ day
of May, 2012.

 

[_____________]

Secretary

I, [_____________], Chief [_________] Officer of the Company, hereby certify
that [_____________] is the duly elected, qualified and acting Secretary of the
Company and that the signature set forth above is his true signature.

 

[_____________]

Chief [__________] Officer

 

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EXHIBIT E

Form of Officer’s Certificate

The undersigned, the [_______________] of Saratoga Resources, Inc., a Texas
corporation (the "Company"), pursuant to Section 2.2(a)(vi) of the Share
Purchase Agreement, dated as of May [__], 2012, by and among the Company and the
investors signatory thereto (the "Share Purchase Agreement"), hereby represents,
warrants and certifies as follows (capitalized terms used but not otherwise
defined herein shall have the meaning set forth in the Share Purchase
Agreement):

1.

The representations and warranties of the Company contained in the Share
Purchase Agreement are true and correct as of the date when made and as of the
Closing Date, as though made on and as of such date, except for such
representations and warranties that speak as of a specific date.

2.

The Company has performed, satisfied and complied in all material respects with
all covenants, agreements and conditions required by the Transaction Documents
to be performed, satisfied or complied with by it at or prior to the Closing.

IN WITNESS WHEREOF, the undersigned has executed this certificate this ___ day
of May, 2012.

 

[_____________]

Chief [__________] Officer

 

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Schedule 3.1(a)

Subsidiaries