EXHIBIT 10.1

SECURITIES PURCHASE AGREEMENT

This Securities Purchase Agreement (this “Agreement”) is dated as of June 2,
2009, between Hecla Mining Company, a Delaware corporation (the “Company”), and
each purchaser identified on the signature pages hereto (each, including its
successors and assigns, a “Purchaser” and collectively the “Purchasers”).

WHEREAS, subject to the terms and conditions set forth in this Agreement and
pursuant to Section 4(2) of the Securities Act of 1933, as amended (the
“Securities Act”) and Rule 506 promulgated thereunder, the Company desires to
issue and sell to each Purchaser, and each Purchaser, severally and not jointly,
desires to purchase from the Company, securities of the Company as more fully
described in this Agreement.

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 each Purchaser 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 have the meanings set
forth in this Section 1.1:

“Acquiring Person” shall have the meaning ascribed to such term in Section 4.5.

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

“Bloomberg L.P.” means Bloomberg L.P. or, if Bloomberg L.P. no longer reports
the applicable pricing or other information, such other data service as may in
the future replace Bloomberg L.P. as the primary industry source of stock market
data.

“Board of Directors” means the board of directors of the Company.

“Business Day” means any day except Saturday, Sunday, any day which is a federal
legal holiday in the United States or any day on which banking institutions in
the State of New York are authorized or required by law or other governmental
action to close.

“Closing” means the closing of the purchase and sale of the Securities pursuant
to Section 2.1.

“Closing Date” means the Trading Day on which all of the Transaction Documents
have been executed and delivered by the applicable parties thereto, and all
conditions precedent to (i) the Purchasers’ obligations to pay the Subscription
Amount and (ii) the Company’s obligations to deliver the Securities, in each
case, have been satisfied or waived.

 

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“Commission” means the United States Securities and Exchange Commission.

“Common Stock” means the common stock of the Company, par value $0.25 per share,
and any other class of securities into which such securities may hereafter be
reclassified or changed into.

“Common Stock Equivalents” means any securities of the Company or the
Subsidiaries which would entitle the holder thereof to acquire at any time
Common Stock, including, without limitation, any debt, preferred stock, rights,
options, warrants or other instrument that is at any time convertible into or
exercisable or exchangeable for, or otherwise entitles the holder thereof to
receive, Common Stock.

“Company Counsel” means Michael B. White, General Counsel of the Company and/or
K&L Gates LLP.

“Credit Agreement” shall have the meaning ascribed to such term in
Section 3.1(c).

“Disclosure Schedules” shall mean any schedule delivered by the Company to the
Purchasers setting forth any qualification or exception to any of the Company’s
representations or warranties in Article III of this Agreement.

“Effective Date” means the earlier of the date that (a) all of the Registrable
Securities (as defined in the Registration Rights Agreement) have been
registered for resale by the holders thereof pursuant to a registration
statement(s) declared effective by the Commission and (b) all of the Registrable
Securities have been sold pursuant to Rule 144 or may be sold pursuant to Rule
144 without the requirement for the Company to be in compliance with the current
public information required under Rule 144 and without volume or manner-of-sale
restrictions.

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

“Exempt Issuance” means the issuance of (a) shares of Common Stock or options to
former or current employees, officers, directors or other eligible recipients of
the Company pursuant to any stock or option plan duly adopted for such purpose,
by a majority of the non-employee members of the Board of Directors or a
majority of the members of a committee of non-employee directors established for
such purpose, (b) securities upon the exercise or exchange of or conversion of
any Securities issued hereunder and/or other securities exercisable or
exchangeable for or convertible into shares of Common Stock issued and
outstanding on the date of this Agreement, provided that such securities have
not been amended since the date of this Agreement to increase the number of such
securities or to decrease the exercise, exchange or conversion price of such
securities, (c) securities issued as dividends on shares of the Company’s 6.5%
Mandatory Convertible Preferred Stock issued and outstanding on the date of this
Agreement, (d) securities issued pursuant to the Credit Agreement, as it may be
amended or restated from time to time, and (e) securities issued pursuant to
acquisitions or

 

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strategic transactions approved by a majority of the disinterested directors of
the Company, provided that any such issuance shall only be to a Person which is,
itself or through its subsidiaries, an operating company in a business
synergistic with the business of the Company or the owner or lessee of real
property or mineral rights which the Company believes are usable in or related
to the Company’s existing lines of business, and in which the Company receives
benefits in addition to the investment of funds, but shall not include a
transaction in which the Company is issuing securities primarily for the purpose
of raising capital or to an entity whose primary business is investing in
securities.

“knowledge of the Company” means the actual knowledge of an executive officer of
the Company.

“Legend Removal Date” shall have the meaning ascribed to such term in
Section 4.1(c).

“Material Adverse Effect” means any event that (i) would reasonably be expected
to have a material adverse effect on the performance of this Agreement or the
consummation of any of the transactions contemplated hereby or (ii) would
reasonably be expected to have a material adverse effect on the condition
(financial or otherwise), business prospects, earnings, business or properties
of the Company and its subsidiaries, taken as a whole, whether or not arising
from transactions in the ordinary course of business.

“Per Share Purchase Price” equals $3.45, subject to appropriate adjustment for
reverse and forward stock splits, stock dividends, stock combinations and other
similar transactions of the Common Stock that occur after the date of this
Agreement but before the Closing.

“Person” means an individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or subdivision thereof) or other entity
of any kind.

“Placement Agent” means Rodman & Renshaw, LLC.

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

“Public Information Failure” shall have the meaning ascribed to such term in
Section 4.3(b).

“Public Information Failure Payments” shall have the meaning ascribed to such
term in Section 4.3(b).

“Purchaser Party” shall have the meaning ascribed to such term in Section 4.7.

 

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“Registration Rights Agreement” means the Registration Rights Agreement, dated
the date hereof, among the Company and the Purchasers, in the form of Exhibit A
attached hereto.

“Registration Statement” means a registration statement meeting the requirements
set forth in the Registration Rights Agreement and covering the resale of the
Shares and Warrant Shares by each Purchaser as provided for in the Registration
Rights Agreement.

“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.

“Rule 424” means Rule 424 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended or interpreted from time to time, or
any similar rule or regulation hereafter adopted by the Commission having
substantially the same purpose and effect as such Rule.

“SEC Reports” shall have the meaning ascribed to such term in Section 3.1(a).

“Securities” means the Shares, the Warrants and the Warrant Shares.

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

“Shares” means the shares of Common Stock issued or issuable to each Purchaser
pursuant to this Agreement.

“Short Sales” means all “short sales” as defined in Rule 200 of Regulation SHO
under the Exchange Act (but shall not be deemed to include the location and/or
reservation of borrowable shares of Common Stock).

“Significant Subsidiary” means each significant subsidiary of the Company as
defined by Rule 1-02 of Regulation S-X.

“Subscription Amount” means, as to each Purchaser, the aggregate amount to be
paid for Shares and Warrants purchased hereunder as specified below such
Purchaser’s name on the signature page of this Agreement and next to the heading
“Subscription Amount,” in United States dollars and in immediately available
funds.

“Subsidiary” means any subsidiary of the Company as set forth in the
Registration Statement and shall, where applicable, also include any direct or
indirect subsidiary of the Company formed or acquired after the date hereof.

“Trading Day” means a day on which the New York Stock Exchange is open for
trading.

 

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“Trading Market” means any of the following markets or exchanges on which the
Common Stock is listed or quoted for trading on the date in question: the NYSE
AMEX, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global
Select Market, or the New York Stock Exchange (or any successors to any of the
foregoing).

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

“Transfer Agent” means American Stock Transfer & Trust Company, the current
transfer agent of the Company, with a mailing address of 6201 15th Avenue, 3rd
Floor, Brooklyn, NY 11219 and a facsimile number of 718-921-8327, and any
successor transfer agent of the Company.

“VWAP” means, for any date, the price determined by the first of the following
clauses that applies: (a) if the Common Stock is then listed or quoted on a
Trading Market, the daily volume weighted average price of the Common Stock for
such date (or the nearest preceding date) on the Trading Market on which the
Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a
Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City
time)), (b) if the OTC Bulletin Board is not a Trading Market, the volume
weighted average price of the Common Stock for such date (or the nearest
preceding date) on the OTC Bulletin Board, (c) if the Common Stock is not then
listed or quoted for trading on the OTC Bulletin Board and if prices for the
Common Stock are then reported in the “Pink Sheets” published by Pink OTC
Markets, Inc. (or a similar organization or agency succeeding to its functions
of reporting prices), the most recent bid price per share of the Common Stock so
reported, or (d) in all other cases, the fair market value of a share of Common
Stock as determined by an independent appraiser selected in good faith by the
Purchasers of a majority in interest of the Securities then outstanding and
reasonably acceptable to the Company, the fees and expenses of which shall be
paid by the Company.

“Warrants” means, collectively, the Common Stock purchase warrants (delivered to
the Purchasers at the Closing in accordance with Section 2.2(a) hereof, which
Warrants shall be exercisable commencing on December 1, 2009 and have a term of
exercise equal to 181 days, in the form of Exhibit A attached hereto.

“Warrant Shares” means the shares of Common Stock issuable upon exercise of the
Warrants.

“WS” means Weinstein Smith LLP with offices located at 420 Lexington Avenue,
Suite 2620, New York, New York 10170-0002.

 

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ARTICLE II.

PURCHASE AND SALE

2.1 Closing. On the Closing Date, upon the terms and subject to the conditions
set forth herein, substantially concurrent with the execution and delivery of
this Agreement by the parties hereto, the Company agrees to sell, and the
Purchasers, severally and not jointly, agree to purchase, up to an aggregate of
17,391,302 of Shares and Warrants to purchase up to 12,173,913 shares of Common
Stock; provided, however, that such securities shall not be issued until
compliance with the covenant set forth in Section 4.9. Each Purchaser shall
deliver to the Company, via wire transfer, immediately available funds equal to
its Subscription Amount and the Company shall deliver to each Purchaser its
respective Shares and Warrants as determined pursuant to Section 2.2(a), and the
Company and each Purchaser shall deliver the other items set forth in
Section 2.2 deliverable at the Closing. Upon satisfaction of the covenants and
conditions set forth in Sections 2.2 and 2.3, the Closing shall occur at the
offices of WS or such other location as the parties shall mutually agree.

2.2 Deliveries.

(a) On or prior to the Closing Date, the Company shall deliver or cause to be
delivered to each Purchaser the following:

(i) this Agreement duly executed by the Company;

(ii) a legal opinion of Company Counsel, substantially in the form of Exhibit B
attached hereto;

(iii) a copy of the irrevocable instructions to the Company’s transfer agent
instructing the transfer agent to deliver to each Purchaser Shares equal to such
Purchaser’s Subscription Amount divided by the Per Share Purchase Price,
registered in the name of such Purchaser;

(iv) a Warrant registered in the name of such Purchaser to purchase up to a
number of shares of Common Stock equal to 70% of the number of Shares purchased
by such Purchaser, with an exercise price equal to $3.68, subject to adjustment
therein (such Warrant certificate may be delivered within three Trading Days of
the Closing Date);

(v) receipt of a waiver in the form satisfactory to the Company from each
purchaser of the Company securities pursuant to the Securities Purchase
Agreement dated December 10, 2008 (the “December SPA”); and

(vi) the Registration Rights Agreement duly executed by the Company.

(b) On or prior to the Closing Date, each Purchaser shall deliver or cause to be
delivered to the Company the following:

(i) this Agreement duly executed by such Purchaser;

 

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(ii) the Registration Rights Agreement duly executed by such Purchaser; and

(iii) such Purchaser’s Subscription Amount by wire transfer to the account as
specified in writing by the Company.

2.3 Closing Conditions.

(a) The obligations of the Company hereunder in connection with the Closing are
subject to the following conditions being met:

(i) the accuracy in all material respects on the Closing Date (without giving
effect to the transactions contemplated by this Agreement) of the
representations and warranties of the Purchasers contained herein (unless as of
a specific date therein);

(ii) all obligations, covenants and agreements of each Purchaser required to be
performed at or prior to the Closing Date shall have been performed; and

(iii) the delivery by each Purchaser of the items set forth in Section 2.2(b) of
this Agreement.

(b) The respective obligations of the Purchasers hereunder in connection with
the Closing are subject to the following conditions being met:

(i) the accuracy in all material respects on the Closing Date of the
representations and warranties of the Company contained herein (unless as of a
specific date therein);

(ii) all obligations, covenants and agreements of the Company required to be
performed at or prior to the Closing Date shall have been performed;

(iii) the delivery by the Company of the items set forth in Section 2.2(a) of
this Agreement;

(iv) the approval of the Listing of Additional Shares application by The New
York Stock Exchange upon notice of issuance;

(v) there shall have been no Material Adverse Effect with respect to the Company
since the date hereof; and

(vi) from the date hereof to the Closing Date, trading in the Common Stock shall
not have been suspended by the Commission or the Company’s principal Trading
Market (except for any suspension of trading of limited duration agreed to by
the Company, which suspension shall be terminated prior to the Closing), and, at
any time prior to the Closing Date, trading in securities generally as reported
by Bloomberg L.P. shall not have been suspended or limited, or

 

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minimum prices shall not have been established on securities whose trades are
reported by such service, or on any Trading Market, nor shall a banking
moratorium have been declared either by the United States or New York State
authorities nor shall there have occurred any material outbreak or escalation of
hostilities or other national or international calamity of such magnitude in its
effect on, or any material adverse change in, any financial market which, in
each case, in the reasonable judgment of each Purchaser, makes it impracticable
or inadvisable to purchase the Securities at the Closing.

ARTICLE III.

REPRESENTATIONS AND WARRANTIES

3.1 Representations and Warranties of the Company. Except as set forth in any
publicly issued press release, SEC Report (or as is not required to be disclosed
in any SEC Report) or Disclosure Schedule, which press releases, SEC Reports and
Disclosure Schedules shall qualify any representation or otherwise made herein
to the extent of the disclosure contained in the SEC Reports or Disclosure
Schedules, as shall the fact that disclosure of any item is not required by an
SEC Report, the Company hereby makes the following representations and
warranties to each Purchaser:

(a) SEC Reports; Financial Statements. The Company has filed all reports,
schedules, forms, statements and other documents required to be filed by the
Company under the Securities Act and the Exchange Act, including pursuant to
Section 13(a) or 15(d) thereof, for the two years preceding the date hereof (or
such shorter period as the Company was required by law or regulation to file
such material) (the foregoing materials, including the exhibits thereto and
documents incorporated by reference therein being collectively referred to
herein as the “SEC Reports”) 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 dates, the SEC Reports
complied in all material respects with the requirements of the Securities Act
and the Exchange Act, as applicable, 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 the light of the circumstances under which they were made, not
misleading.

(b) Due Incorporation. Each of the Company and its material domestic
Subsidiaries has been duly incorporated and is validly existing as a corporation
in good standing under the laws of the jurisdiction in which it is chartered or
organized with full corporate power and authority to own or lease, as the case
may be, and to operate its properties and conduct its business as described in
the SEC Reports, and is duly qualified to do business as a foreign corporation
and is in good standing under the laws of each jurisdiction which requires such
qualification, except where the failure to qualify would not have a Material
Adverse Effect.

(c) Subsidiaries. All the outstanding shares of capital stock of each subsidiary
of the Company have been duly and validly authorized and issued and are fully
paid and nonassessable, and all outstanding shares of capital stock of the

 

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Company’s Subsidiaries (other than qualifying shares for foreign Subsidiaries)
are owned by the Company either directly or through wholly owned subsidiaries
free and clear of any security interests, claims, liens or encumbrances, except
for the interests of the Company’s Subsidiaries that have been pledged on a term
facility pursuant to an amended and restated credit agreement, dated as of
April 16, 2008, as amended to the date hereof, among the Company, the various
Lenders named therein, The Bank of Nova Scotia and Scotia Capital (the “Credit
Agreement”), as disclosed in the SEC Reports.

(d) Capitalization. The Company’s authorized equity capitalization is materially
as set forth in the SEC Reports as of the dates therein referenced, and without
giving effect to the transactions contemplated by this Agreement. The share
capital of the Company conforms in all material respects to the description
thereof contained in the SEC Reports as of the dates therein referenced, and
without giving effect to the transactions contemplated by this Agreement. The
outstanding shares of capital stock have been duly and validly authorized and
issued and are fully paid and nonassessable. The holders of outstanding shares
of capital stock of the Company are not entitled to preemptive or other rights
to subscribe for the Securities (except for the Prior Purchasers); and except as
set forth in the SEC Reports or subsequent issuance, if any, pursuant to this
Agreement, the December SPA, the Credit Agreement, pursuant to reservations,
agreements or employee benefit plans referred to in the SEC Reports or pursuant
to the exercise of warrants, convertible securities or options referred to in
the SEC Reports, no options, warrants or other rights to purchase, agreements or
other obligations to issue, or rights to convert any obligations into or
exchange any securities for, shares of capital stock of or ownership interests
in the Company are outstanding as of the date of the information set forth in
the SEC Reports in respect of the capitalization of the Company.

(e) Due Authorization. This Agreement has been duly authorized, executed and
delivered by the Company.

(f) Validity of Securities. The Securities being sold hereunder by the Company
have been duly and validly authorized, and, when issued and delivered to and
paid for by the Purchasers pursuant to this Agreement, will be fully paid and
nonassessable and conform in all material respects with the description of the
Securities set forth in the SEC Reports. The certificates for the Securities are
in valid and sufficient form.

(g) No Material Adverse Events. Neither the Company nor any of its subsidiaries
has sustained since the date of the latest audited financial statements included
or incorporated by reference in the SEC Reports any material loss or
interference with its business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute or court or
governmental action, order or decree, material to the Company taken as a whole,
otherwise than as set forth as set forth as have occurred or may occur or
contemplated in the SEC Reports; and, except as disclosed in the SEC Reports,
there has not been any material change in the capital stock (other than employee
benefit plan issuances or conversion or exercise of outstanding securities of
the Company) or long-term debt of the Company or any of its subsidiaries or any
material

 

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adverse change, in or affecting the general affairs, management, financial
position, stockholders’ equity or results of operations of the Company and its
subsidiaries, except as set forth as have occurred or may occur or contemplated
in the SEC Reports.

(h) Material Contracts. There is no franchise, contract or other document of a
character required to be described in the SEC Reports, or to be filed as an
exhibit thereto, which is not described or filed as required.

(i) Investment Company. The Company is not and, after giving effect to the
offering and sale of the Securities will not be an “investment company” as
defined in the Investment Company Act of 1940, as amended.

(j) Regulatory Approvals. No consent, approval, authorization, filing with or
order of any court or governmental agency or body is required in connection with
the transactions contemplated herein, except (1) such as have been obtained or
may be required under the Act, (2) such as may be required by the Financial
Industry Regulatory Authority and the New York Stock Exchange, and (3) such as
may be required under the blue sky laws of any jurisdiction in connection with
the purchase and distribution of the Shares in the manner contemplated herein.

(k) No Conflicts. Other than breaches, conflicts, violations and encumbrances
which singly or in the aggregate are not reasonably expected to have a Material
Adverse Effect under clauses (ii), (iii) and (iv) below, none of the issue and
sale of the Securities, the execution and delivery by the Company of this
Agreement and the consummation of any other of the transactions herein
contemplated nor the fulfillment of the terms hereof will conflict with, result
in a breach or violation of, or result in the imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any of its
subsidiaries pursuant to: (i) the organizational documents of the Company or any
of its subsidiaries, (ii) the terms of any indenture, contract, lease, mortgage,
deed of trust, note agreement, loan agreement or other agreement, obligation,
condition, covenant or instrument to which the Company or any of its
subsidiaries is a party or bound or to which its or their property is subject,
(iii) any statute, law, rule, or regulation, or (iv) any judgment, writ,
injunction, ruling, order or decree of any court, regulatory body,
administrative agency, governmental body, arbitrator or other authority having
jurisdiction over the Company or any of its subsidiaries or any of its or their
properties.

(l) Financial Statements. The consolidated historical financial statements of
the Company and its subsidiaries and the Greens Creek Joint Venture included or
incorporated by reference in the Company’s most recent annual report on Form
10-K present fairly in all material respects the consolidated financial
condition, results of operations and cash flows of the Company and its
subsidiaries as of the dates and for the periods indicated in such report,
comply as to form with the applicable accounting requirements of the Securities
Act and the Exchange Act and have been prepared in conformity with United States
generally accepted accounting principles applied on a consistent basis
throughout the periods involved (except as otherwise noted therein).

 

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(m) No Litigation. No action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the Company
or any of its subsidiaries or its or their property is pending or, to the
knowledge of the Company, overtly threatened that are reasonably expected to
have a Material Adverse Effect, except as set forth in the SEC Reports.

(n) Title to Assets. Each of the Company and each of its Significant
Subsidiaries owns or leases all such properties as are necessary to the conduct
of its operations as presently conducted; the Company and its Significant
Subsidiaries have good and marketable title to all real property owned by them,
and good and marketable title to all personal property owned by them, in each
case free and clear of all liens, encumbrances and defects except as provided
for in the Credit Agreement or as set forth in the SEC Reports or such as do not
materially affect the value of such property and do not interfere with the use
made and proposed to be made of such property by the Company and its Significant
Subsidiaries; and any real property and buildings held under lease by the
Company and its Significant 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
buildings by the Company and its Significant Subsidiaries.

(o) No Default. Neither the Company nor any subsidiary of the Company is in
violation or default of (1) any provision of its organizational documents,
(2) the terms of any indenture, contract, lease, mortgage, deed of trust, note
agreement, loan agreement or other agreement, obligation, condition, covenant or
instrument to which it is a party or bound or to which its property is subject,
or (3) any statute, law, rule, regulation, judgment, order or decree of any
court, regulatory body, administrative agency, governmental body, arbitrator or
other authority having jurisdiction over the Company or such subsidiary or any
of its properties, as applicable, any of which defaults or violations described
in clauses (2) through (3) will have, or after any required notice and passage
of any applicable grace period, is reasonably expected to have a Material
Adverse Effect.

(p) Accountants. Each of BDO Seidman, LLP and PricewaterhouseCoopers LLP, who
have audited certain financial statements of the Company and its consolidated
subsidiaries and delivered their report with respect to the audited consolidated
financial statements and schedules included or incorporated by reference in the
SEC Reports, is an independent registered public accounting firm with respect to
the Company within the meaning of the Securities Act and the Exchange Act and
the applicable published rules and regulations thereunder.

(q) Taxes. Except as described in the SEC Reports and except as would not singly
or in the aggregate reasonably be expected to result in a Material Adverse
Effect, the Company has filed all foreign, federal, state and local tax returns
that are required to be filed or has requested extensions thereof, and has paid
all taxes required to be paid by it and any other assessment, fine or penalty
levied against it, to the extent that any of the foregoing is due and payable,
except for any such assessment, fine or penalty that is currently being
contested in good faith.

 

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(r) Labor Relations. Except as described in the SEC Reports, no labor problem or
dispute with the employees of the Company or any of its Significant Subsidiaries
exists or to the knowledge of the Company is overtly threatened or imminent, and
the Company is not aware of any existing or imminent labor disturbance by the
employees of any of its or its Significant Subsidiaries’ principal suppliers,
contractors or customers, that is reasonably expected to result in a Material
Adverse Effect.

(s) Insurance. The Company and each of its Significant Subsidiaries are insured
by insurers of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the businesses in which they
are engaged; all policies of insurance and fidelity or surety bonds insuring the
Company or any of its Significant Subsidiaries or their respective businesses,
assets, employees, officers and directors are in full force and effect, except
where the failure to be in full force and effect would not, singly or in the
aggregate, reasonably be expected to result in a Material Adverse Effect; the
Company and its Significant Subsidiaries are in compliance with the terms of
such policies and instruments in all material respects; and except as described
in the SEC Reports and except as would not, singly or in the aggregate,
reasonably be expected to result in a Material Adverse Effect, there are no
claims by the Company or any of its subsidiaries under any such policy or
instrument as to which any insurance company is denying liability or defending
under a reservation of rights clause; neither the Company nor any such
Significant Subsidiary has been refused any insurance coverage sought or applied
for; and neither the Company nor any such Significant Subsidiary has any reason
to believe that it will not be able to renew its 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 is not
reasonably expected to have a Material Adverse Effect.

(t) Rights in Subsidiaries. No subsidiary of the Company is currently
prohibited, directly or indirectly, from paying any dividends to the Company,
from making any other distribution on such subsidiary’s capital stock, from
repaying to the Company any loans or advances to such subsidiary from the
Company or, except as prohibited by the Credit Agreement and as disclosed in the
SEC Reports, from transferring any of such subsidiary’s property or assets to
the Company or any other subsidiary of the Company.

(u) Permits etc. The Company and its subsidiaries possess all licenses,
concessions, certificates, permits and other authorizations issued by the
appropriate federal, state or foreign regulatory authorities necessary to
conduct their respective businesses (“Permits”); the Company and its
subsidiaries have fulfilled and performed in all material respects all of their
respective obligations with respect to such Permits and neither the Company nor
any such subsidiary has received any notice of proceedings relating to the
revocation or modification of any such Permit which, singly or in the aggregate,
is reasonably expected to have a Material Adverse Effect, except as set forth in
the SEC Reports (exclusive of any supplement thereto).

 

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(v) Internal Controls. The Company and each of its subsidiaries maintains and
will maintain a system of internal accounting controls sufficient to provide
reasonable assurance that (1) transactions are executed in accordance with
management’s general or specific authorizations; (2) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
United States generally accepted accounting principles and to maintain asset
accountability; (3) access to assets is permitted only in accordance with
management’s general or specific authorization; and (4) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences. The
Company and its subsidiaries’ internal controls over financial reporting are
effective and the Company and its subsidiaries are not aware of any material
weakness in their internal controls over financial reporting. The Company
maintains and will maintain disclosure controls and procedures (as defined as
Rule 13a-15 and 15d-15(e) of the Exchange Act); such disclosure controls and
procedures are effective.

(w) Regulation M Compliance. The Company has not taken, directly or indirectly,
any action designed to or that would constitute or that might reasonably be
expected to cause or result in, under the Exchange Act or otherwise,
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Securities.

(x) Compliance with Laws. Except as described in the SEC Reports and except as
is not, singly or in the aggregate, reasonably expected to result in a Material
Adverse Effect, (A) neither the Company nor any of its subsidiaries is in
violation of any federal, state, local or foreign statute, law, rule,
regulation, ordinance, code, policy or rule of common law or any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent, decree or judgment, relating to pollution or protection of human
health, the environment (including, without limitation, ambient air, surface
water, groundwater, land surface or subsurface strata) or wildlife, including,
without limitation, laws and regulations relating to the release or threatened
release of chemicals, pollutants, contaminants, wastes, toxic substances,
hazardous substances, petroleum or petroleum products (collectively, “Hazardous
Materials”) or to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous Materials (collectively,
“Environmental Laws”), (B) the Company and its subsidiaries have all permits,
authorizations and approvals required under any applicable Environmental Laws
and are each in compliance with their requirements, (C) there are no pending or
threatened administrative, regulatory or judicial actions, suits, demands,
demand letters, claims, liens, notices of noncompliance or violation,
investigation or proceedings relating to any Environmental Law against the
Company or any of its subsidiaries and (D) there are no events or circumstances
that are reasonably expected to form the basis of an order for clean-up or
remediation, or an action, suit or proceeding by any private party or
governmental body or agency, against or affecting the Company or any of its
subsidiaries relating to Hazardous Materials or any Environmental Laws.

(y) ERISA. The minimum funding standard under Section 302 of the Employee
Retirement Income Security Act of 1974, as amended, and the regulations and

 

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published interpretations thereunder (“ERISA”), has been satisfied by each
“pension plan” (as defined in Section 3(2) of ERISA) which has been established
or maintained by the Company and/or one or more of its subsidiaries, and the
trust forming part of each such plan which is intended to be qualified under
Section 401 of the Code is so qualified except in any case in which the failure
to maintain such minimum funding standard or such qualification is not
reasonably expected to have a Material Adverse Effect; each of the Company and
its subsidiaries has fulfilled its obligations, if any, under Section 515 of
ERISA; neither the Company nor any of its subsidiaries maintains or is required
to contribute to a “welfare plan” (as defined in Section 3(1) of ERISA) which
provides for retiree or other post-employment welfare benefits or insurance
coverage as to which the Company has not reserved its right to amend or
terminate the plan in its discretion (other than “continuation coverage” (as
defined in Section 602 of ERISA)); each pension plan and welfare plan
established or maintained by the Company and/or one or more of its subsidiaries
is in compliance in all material respects with the currently applicable
provisions of ERISA; and neither the Company nor any of its subsidiaries has
incurred or is reasonably expected to incur any withdrawal liability under
Section 4201 of ERISA, any liability under Section 4062, 4063, or 4064 of ERISA,
or any other liability under Title IV of ERISA.

(z) Sarbanes Oxley Compliance. There is and has been no failure on the part of
the Company and any of the Company’s directors or officers, in their capacities
as such, to comply with any provision of the Sarbanes Oxley Act of 2002 and the
rules and regulations promulgated in connection therewith, including Section 402
related to loans and Sections 302 and 906 related to certifications.

(aa) Foreign Corrupt Practices Act. Neither the Company nor any of its
Significant Subsidiaries nor, to the knowledge of the Company, any director,
officer, agent, employee or affiliate of the Company or any of its Significant
Subsidiaries is aware of or has taken any action, directly or indirectly, that
would result in a violation by such persons of the Foreign Corrupt Practices Act
of 1977, as amended, and the rules and regulations thereunder (“FCPA”),
including, without limitation, making use of the mails or any means or
instrumentality of interstate commerce corruptly in furtherance of an offer,
payment, promise to pay or authorization of the payment of any money, or other
property, gift, promise to give, or authorization of the giving of anything of
value to any “foreign official” (as such term is defined in the FCPA) or any
foreign political party or official thereof or any candidate for foreign
political office, in contravention of the FCPA and the Company and its
Significant Subsidiaries have conducted their businesses in compliance with the
FCPA and have instituted and maintain policies and procedures designed to
ensure, and which are reasonably expected to continue to ensure, continued
compliance therewith.

(bb) AML Compliance. The operations of the Company and its Significant
Subsidiaries are and have been conducted at all times in compliance in all
material respects with applicable financial recordkeeping and reporting
requirements of the Currency and Foreign Transactions Reporting Act of 1970, as
amended, the money laundering statutes of all jurisdictions, the rules and
regulations thereunder and any related or similar rules, regulations or
guidelines, issued, administered or enforced by any

 

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governmental agency (collectively, the “Money Laundering Laws”) and no action,
suit or proceeding by or before any court or governmental agency, authority or
body or any arbitrator involving the Company or any of its Significant
Subsidiaries with respect to the Money Laundering Laws is pending or, to the
knowledge of the Company, overtly threatened.

(cc) OFAC. Neither the Company nor any of its Significant Subsidiaries nor, to
the knowledge of the Company, any director, officer, agent or employee of the
Company or any of its Significant Subsidiaries 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 directly or indirectly
use the proceeds of the offering, or lend, contribute or otherwise make
available such proceeds to any subsidiary, joint venture partner or other person
or entity, for the purpose of financing the activities of any person currently
subject to any U.S. sanctions administered by OFAC.

(dd) Intellectual Property. The Company and its subsidiaries own, possess,
license or have other rights to use or can acquire, on reasonable terms, all
patents, patent applications, trade and service marks, trade and service mark
registrations, trade names, copyrights, licenses, inventions, trade secrets,
technology, know-how and other intellectual property (collectively, the
“Intellectual Property”) necessary for the conduct of the Company’s business as
now conducted or as proposed in the SEC Reports to be conducted. (1) To the
Company’s knowledge, there are no rights of third parties to any such
Intellectual Property (other than licensors of such Intellectual Property and
their affiliates); (2) to the Company’s knowledge, there is no material
infringement by third parties of any such Intellectual Property; (3) there is no
pending or, to the Company’s knowledge, threatened action, suit, proceeding or
claim by others challenging the Company’s rights in or to any such Intellectual
Property, and the Company is unaware of any facts which would form a reasonable
basis for any such claim; (4) there is no pending or, to the Company’s
knowledge, threatened action, suit, proceeding or claim by others challenging
the validity or scope of any such Intellectual Property, and the Company is
unaware of any facts which would form a reasonable basis for any such claim;
(5) there is no pending or, to the Company’s knowledge, threatened action, suit,
proceeding or claim by others that the Company infringes or otherwise violates
any patent, trademark, copyright, trade secret or other proprietary rights of
others.

(ee) Registration Rights. Other than pursuant to the Registration Rights
Agreement, no Person has any right to cause the Company to effect the
registration under the Securities Act of any securities of the Company.

(ff) Listing and Maintenance Requirements. The Common Stock is registered
pursuant to Section 12(b) of the Exchange Act, and the Company has taken no
action designed to, or which to its knowledge is likely to have the effect of,
terminating 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 notice from the Trading Market to the effect that the
Company is not in compliance with the listing or maintenance requirements of
such Trading Market. Other than with respect to the trading

 

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price of the Common Stock, the Company is, and has no reason to believe that it
will not in the foreseeable future continue to be, in compliance with all such
listing and maintenance requirements.

(gg) Acknowledgment Regarding Purchasers’ Purchase of Securities. 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 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 Securities. The Company further represents to each
Purchaser that the Company’s decision to enter into this Agreement and the other
Transaction Documents has been based solely on the independent evaluation of the
transactions contemplated hereby by the Company and its representatives.

(hh) Acknowledgment Regarding Purchaser’s Trading Activity. Anything in this
Agreement or elsewhere herein to the contrary notwithstanding (except for
Sections 3.2(f) and 4.13 hereof), it is understood and acknowledged by the
Company that: (i) none of the Purchasers have been asked by the Company to
agree, nor has any Purchaser agreed, to desist from purchasing or selling, long
and/or short, securities of the Company, or “derivative” securities based on
securities issued by the Company or to hold the Securities for any specified
term; (ii) past or future open market or other transactions by any Purchaser,
specifically including, without limitation, Short Sales or “derivative”
transactions, before or after the closing of this or future private placement
transactions, may negatively impact the market price of the Company’s
publicly-traded securities; (iii) any Purchaser, and counter-parties in
“derivative” transactions to which any such Purchaser is a party, directly or
indirectly, presently may have a “short” position in the Common Stock, and
(iv) each Purchaser shall not be deemed to have any affiliation with or control
over any arm’s length counter-party in any “derivative” transaction. The Company
further understands and acknowledges that (y) one or more Purchasers may engage
in hedging activities at various times during the period that the Securities are
outstanding, including, without limitation, during the periods that the value of
the Warrant Shares deliverable with respect to Securities are being determined,
and (z) such hedging activities (if any) could reduce the value of the existing
stockholders’ equity interests in the Company at and after the time that the
hedging activities are being conducted. The Company acknowledges that such
aforementioned hedging activities do not constitute a breach of any of the
Transaction Documents.

(ii) Disclosure. Except with respect to the material terms and conditions of the
transactions contemplated by the Transaction Documents, the Company confirms
that neither it nor any other Person acting on its behalf has provided any of
the Purchasers or their agents or counsel with any information that it believes
constitutes or might constitute material, non-public information. The Company
understands and confirms that the Purchasers will rely on the foregoing
representation in effecting transactions in

 

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securities of the Company. All of the disclosure furnished by or on behalf of
the Company to the Purchasers regarding the Company, its business and the
transactions contemplated hereby, including the Disclosure Schedules to this
Agreement, is true and correct and does not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading. The press releases disseminated by the Company during the
twelve months preceding the date of this Agreement taken as a whole do not
contain any untrue statement of a material fact or omit 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 and when made,
not misleading. The Company acknowledges and agrees that no Purchaser makes or
has made any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in Section 3.2
hereof.

(jj) No Integrated Offering. Assuming the accuracy of the Purchasers’
representations and warranties set forth in Section 3.2, neither the Company,
nor any of its Affiliates, nor any Person acting on its or their behalf has,
directly or indirectly, made any offers or sales of any security or solicited
any offers to buy any security, under circumstances that would cause this
offering of the Securities to be integrated with prior offerings by the Company
for purposes of (i) the Securities Act which would require the registration of
any such securities under the Securities Act, or (ii) any applicable shareholder
approval provisions of any Trading Market on which any of the securities of the
Company are listed or designated.

(kk) No General Solicitation. Neither the Company nor any person acting on
behalf of the Company has offered or sold any of the Securities by any form of
general solicitation or general advertising. The Company has offered the
Securities for sale only to the Purchasers and certain other “accredited
investors” within the meaning of Rule 501 under the Securities Act.

(ll) Certain Fees. Other than the fees payable to the Placement Agent, no
brokerage or finder’s fees or commissions are or will be payable by the Company
to any broker, financial advisor or consultant, finder, placement agent,
investment banker, bank or other Person with respect to the transactions
contemplated by the Transaction Documents. The Purchasers shall have no
obligation with respect to any fees or with respect to any claims made by or on
behalf of other Persons for fees of a type contemplated in this Section that may
be due in connection with the transactions contemplated by the Transaction
Documents.

(mm) Private Placement. Assuming the accuracy of the Purchasers’ representations
and warranties set forth in Section 3.2, no registration under the Securities
Act is required for the offer and sale of the Securities by the Company to the
Purchasers as contemplated hereby. The issuance and sale of the Securities
hereunder does not contravene the rules and regulations of the Trading Market.

 

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3.2 Representations and Warranties of the Purchasers. Each Purchaser, for itself
and for no other Purchaser, hereby represents and warrants as of the date hereof
and as of the Closing Date to the Company as follows (unless as of a specific
date therein):

(a) Organization; Authority. Such Purchaser is an entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization with full right, corporate or partnership power and authority to
enter into and to consummate the transactions contemplated by the Transaction
Documents and otherwise to carry out its obligations hereunder and thereunder.
The execution and delivery of the Transaction Documents and performance by such
Purchaser of the transactions contemplated by the Transaction Documents have
been duly authorized by all necessary corporate, partnership, limited liability
company or similar action, as applicable, on the part of such Purchaser. Each
Transaction Document to which it is a party 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: (i) as
limited by general equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors’ rights generally, (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.

(b) Own Account. Such Purchaser understands that the Securities are “restricted
securities” and have not been registered under the Securities Act or any
applicable state securities laws and is acquiring the Securities as principal
for its own account and not with a view to or for distributing or reselling such
Securities or any part thereof in violation of the Securities Act or any
applicable state securities law, has no present intention of distributing any of
such Securities in violation of the Securities Act or any applicable state
securities law and has no direct or indirect arrangement or understandings with
any other persons to distribute or regarding the distribution of such Securities
in violation of the Securities Act or any applicable state securities law (this
representation and warranty not limiting such Purchaser’s right to sell the
Securities pursuant to the Registration Statement or otherwise in compliance
with applicable federal and state securities laws). Such Purchaser is acquiring
the Securities hereunder in the ordinary course of its business. Such Purchaser
understands that the Securities are not immediately free tradable and that the
Purchaser may be required to hold such Securities for a period of time.

(c) Purchaser Status. At the time such Purchaser was offered the Securities, it
was, and as of the date hereof it is, and on each date on which it exercises any
Warrants, it will be either: (i) an “accredited investor” as defined in Rule
501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act or (ii) a
“qualified institutional buyer” as defined in Rule 144A(a) under the Securities
Act. Such Purchaser is not required to be registered as a broker-dealer under
Section 15 of the Exchange Act.

(d) Experience of Such Purchaser. Such Purchaser, either alone or together with
its representatives, has such knowledge, sophistication and experience in
business

 

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and financial matters so as to be capable of evaluating the merits and risks of
the prospective investment in the Securities, 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 Securities and, at the present time, is able to afford a
complete loss of such investment.

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

(f) Certain Transactions and Confidentiality. Other than consummating the
transactions contemplated hereunder, such Purchaser has not directly or
indirectly, nor has any Person acting on behalf of or pursuant to any
understanding with such Purchaser, executed any purchases or sales, including
Short Sales, of the securities of the Company during the period commencing as of
the time that such Purchaser first received a term sheet (written or oral) as of
the Company or any other Person representing the Company setting forth the
material terms of the transactions contemplated hereunder and ending immediately
prior to the execution hereof. Notwithstanding the foregoing, in the case of a
Purchaser that 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 decisions made by the
portfolio managers managing other portions of such Purchaser’s assets, the
representation set forth above shall only apply with respect to the portion of
assets managed by the portfolio manager that made the investment decision to
purchase the Securities covered by this Agreement. Other than to other Persons
party to this Agreement, such Purchaser has maintained the confidentiality of
all disclosures made to it in connection with this transaction (including the
existence and terms of this transaction). Notwithstanding the foregoing, for
avoidance of doubt, nothing contained herein shall constitute a representation
or warranty, or preclude any actions, with respect to the identification of the
availability of, or securing of, available shares to borrow in order to effect
Short Sales or similar transactions in the future.

(g) Certain Fees. Other than the fees payable to the Placement Agent, no
brokerage or finder’s fees or commissions are or will be payable by the Company
or such Purchaser to any broker, financial advisor or consultant, finder,
placement agent, investment banker, bank or other Person with respect to the
transactions contemplated by the Transaction Documents. Such Purchaser shall
have no obligation with respect to any fees or with respect to any claims made
by or on behalf of other Persons for fees of a type contemplated in this Section
that may be due in connection with the transactions contemplated by the
Transaction Documents.

(h) Access to Information. Such Purchaser acknowledges that Purchaser has had
access to and has reviewed all information, documents and records included in
the SEC Reports that Purchaser has deemed necessary in order to make an informed
investment decision with respect to an investment in the Securities. Purchaser
has had the opportunity to ask representatives of the Company certain questions
and request certain

 

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additional information regarding the terms and conditions of such investment and
the finances, operations, business and prospects of the Company and has had any
and all such questions and requests answered to Purchaser’s satisfaction; and
that Purchaser understands the risk and other considerations relating to such
investment.

(i) Due Diligence. Purchaser acknowledges that it has sole responsibility for
its own due diligence investigation and its own investment decision. Purchaser
understands that nothing in this Agreement or any other materials presented to
such Purchaser in connection with the purchase and sale of the Securities
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 Securities.

ARTICLE IV.

OTHER AGREEMENTS OF THE PARTIES

4.1 Transfer Restrictions.

(a) The Securities may only be pledged, transferred, secured or disposed of in
compliance with state and federal securities laws. In connection with any
transfer of Securities other than pursuant (i) to an effective registration
statement or Rule 144, (ii) to the Company or (iii) to an Affiliate of a
Purchaser or in connection with a pledge as contemplated in Section 4.1(b), in
either case to the extent permitted by law (including Rule 144) the Company may
require the transferor thereof to provide to the Company an opinion of counsel
selected by the transferor and reasonably acceptable to the Company, the form
and substance of which opinion shall be reasonably satisfactory to the Company,
to the effect that such transfer does not require registration of such
transferred Securities under the Securities Act. As a condition of transfer, any
such transferee shall agree in writing to be bound by the terms of this
Agreement and the Registration Rights Agreement and shall have the rights and
obligations of a Purchaser under this Agreement and the Registration Rights
Agreement.

(b) The Purchasers agree to the imprinting, so long as is required by this
Section 4.1, of a legend on any of the Securities in substantially the following
form:

[NEITHER] THIS SECURITY [NOR THE SECURITIES INTO WHICH THIS SECURITY IS
[EXERCISABLE] [CONVERTIBLE]] HAS [NOT] BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON
AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER 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 ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS AND, UNLESS SOLD PURSUANT TO RULE 144 OR RULE
144A UNDER SAID ACT, AS

 

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EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE
SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY
[AND THE SECURITIES ISSUABLE UPON [EXERCISE] [CONVERSION] OF THIS SECURITY] MAY
BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED
BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED
INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN
SECURED BY SUCH SECURITIES.

The Company acknowledges and agrees that a Purchaser may, if done in compliance
with all applicable laws and rules, from time to time pledge pursuant to a bona
fide margin agreement with a registered broker-dealer or grant a security
interest in some or all of the Securities to a financial institution that is an
“accredited investor” as defined in Rule 501(a) under the Securities Act and who
agrees to be bound by the provisions of this Agreement and the Registration
Rights Agreement and, if required under the terms of such arrangement, such
Purchaser may transfer, if done in compliance with all applicable laws and
rules, pledged or secured Securities to the pledgees or secured parties. Such a
pledge or transfer would not be subject to approval of the Company and no legal
opinion of legal counsel of the pledgee, secured party or pledgor shall be
required in connection therewith. Further, no notice shall be required of such
pledge. At the appropriate Purchaser’s expense, the Company will execute and
deliver such reasonable documentation as a pledgee or secured party of
Securities may reasonably request in connection with a pledge or transfer of the
Securities, including, if the Securities are subject to registration pursuant to
the Registration Rights Agreement, the preparation and filing of any required
prospectus supplement under Rule 424(b)(3) under the Securities Act or other
applicable provision of the Securities Act to appropriately amend the list of
Selling Stockholders (as defined in the Registration Rights Agreement)
thereunder.

(c) Certificates evidencing the Shares and Warrant Shares shall not contain any
legend (including the legend set forth in Section 4.1(b) hereof): (i) while a
registration statement (including the Registration Statement) covering the
resale of such security is effective under the Securities Act, (ii) following
any sale of such Shares or Warrant Shares pursuant to and in compliance with
Rule 144 or (iii) if such Shares or Warrant 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 as to such Shares and Warrant
Shares and without volume or manner-of-sale restrictions. The Company shall
cause its counsel to issue a legal opinion to the Transfer Agent promptly after
the Effective Date if required by the Transfer Agent to effect the removal of
the legend hereunder. If all or any portion of a Warrant is exercised at a time
when there is an effective registration statement to cover the resale of the
Warrant Shares, or if such Warrant Shares may be sold under Rule 144 and the
Company is then in compliance with the current public information required under
Rule 144, or if the Warrant Shares may be sold under Rule 144 without the
requirement for the Company to be in compliance with the current public
information required under Rule 144 as to such Warrant Shares and without volume
or manner-of-sale restrictions then such Warrant

 

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Shares shall be issued free of all legends. The Company agrees that following
the Effective Date or at such time as such legend is no longer required under
this Section 4.1(c), it will, no later than three Trading Days following the
delivery by a Purchaser to the Company or the Transfer Agent of a certificate
representing Shares and Warrant Shares, as applicable, issued with a restrictive
legend (such third Trading Day, the “Legend Removal Date”), deliver or cause to
be delivered to such Purchaser a certificate representing such shares that is
free from all restrictive and other 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. Certificates for
Shares and Warrant Shares subject to legend removal hereunder shall be
transmitted by the Transfer Agent to the Purchaser by crediting the account of
the Purchaser’s prime broker with the Depository Trust Company System as
directed by such Purchaser.

(d) In addition to any other rights available to a Purchaser, if the Company
fails to cause the Transfer Agent to transmit to such Purchaser a certificate or
the certificates representing the Shares or Warrant Shares without restrictive
legend as required by this Section 4.1 on or before the Legend Removal Date
(provided that such Purchaser has provided the Company with at least 1 Trading
Day’s prior written notice of such failure to deliver certificates without
legends), and if after such date such Purchaser is required by its broker to
purchase (in an open market transaction or otherwise) or such Purchaser’s
brokerage firm otherwise purchases, shares of Common Stock to deliver in
satisfaction of a sale by such Purchaser of the Shares or Warrant Shares, as the
case may be, which such Purchaser anticipated receiving upon such exercise (a
“Buy-In”), then the Company shall (A) pay in cash to such Purchaser the amount
by which (x) such Purchaser’s total purchase price (including brokerage
commissions, if any) for the shares of Common Stock so purchased exceeds (y) the
amount obtained by multiplying (1) the number of Shares or Warrant Shares, as
the case may be, that the Company was required to deliver to such Purchaser in
connection with the exercise at issue times (2) the price per share at which the
sell order giving rise to such purchase obligation was executed, and (B) if
applicable and at the option of such Purchaser, either reinstate the portion of
the Warrant and equivalent number of Warrant Shares for which such exercise was
not honored or deliver to such Purchaser the number of shares of Common Stock
that would have been issued had the Company timely complied with its exercise
and delivery obligations hereunder against payment of the Exercise Price. For
example, if such Purchaser purchases Common Stock having a total purchase price
of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of
Common Stock with an aggregate sale price giving rise to such purchase
obligation of $10,000, under clause (1) of the immediately preceding sentence
the Company shall be required to pay such Purchaser $1,000. Such Purchaser shall
provide the Company written notice indicating the amounts payable to such
Purchaser in respect of the Buy-In and evidence of the amount of such loss.
Nothing herein shall limit a Purchaser’s right to pursue any other remedies
available to it hereunder, at law or in equity including, without limitation, a
decree of specific performance and/or injunctive relief with respect to the
Company’s failure to timely deliver certificates without legend as required
pursuant to the terms hereof.

 

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(e) Each Purchaser, severally and not jointly with the other Purchasers, agrees
with the Company that such Purchaser will pledge, secure, transfer or sell any
Securities pursuant to either the registration requirements of the Securities
Act, including any applicable prospectus delivery requirements, or an exemption
therefrom, and that if Securities are sold pursuant to a Registration Statement,
they will be sold in compliance with the plan of distribution set forth therein,
and acknowledges that the removal of the restrictive legend from certificates
representing Securities as set forth in this Section 4.1 is predicated upon the
Company’s reliance upon this understanding.

4.2 Furnishing of Information; Public Information.

(a) Until the earliest of the time that (i) no Purchaser owns Securities or
(ii) the Warrant Shares may be sold without registration or the availability of
current public information under Rule 144, the Company covenants to 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 even if the Company is not then subject to the
reporting requirements of the Exchange Act. As long as any Purchaser owns
Securities, if the Company is not required to file reports pursuant to the
Exchange Act, it will prepare and furnish to the Purchasers and make publicly
available in accordance with Rule 144(c) such information as is required for the
Purchasers to sell the Securities under Rule 144. The Company further covenants
that it will take such further action as any holder of Securities may reasonably
request, to the extent required from time to time to enable such Person to sell
such Securities without registration under the Securities Act within the
requirements of the exemption provided by Rule 144.

(b) At any time during the period commencing from the six (6) month anniversary
of the date hereof and ending at such time that all of the Securities may be
sold without the requirement for the Company to be in compliance with Rule
144(c)(1) and otherwise without restriction or limitation pursuant to Rule 144,
including, without limitation, Rule 144(i), if the Company shall fail for any
reason to satisfy the current public information requirement under Rule 144(c)
(a “Public Information Failure”) then, in addition to such Purchaser’s other
available remedies, the Company shall pay to a Purchaser, in cash, as partial
liquidated damages and not as a penalty, by reason of any such delay in or
reduction of its ability to sell the Securities, an amount in cash equal to one
percent (1.0%) of the aggregate Subscription Amount of such Purchaser’s
Securities (not to exceed, in the aggregate, 3.0% of such Purchaser’s
Subscription Amount) plus any amount paid by such Purchaser upon exercise of any
of the Warrants on the day of a Public Information Failure and on every
thirtieth (30th) day (pro rated for periods totaling less than thirty days)
thereafter until the earlier of (a) the date such Public Information Failure is
cured and (b) such time that such public information is no longer required for
the Purchasers to transfer the Shares and Warrant Shares pursuant to Rule
144. The payments to which a Purchaser shall be entitled pursuant to this
Section 4.2(b) are referred to herein as “Public Information Failure
Payments.” Public Information Failure Payments shall be paid on the earlier of
(i) the last day of the calendar month during which such Public Information
Failure Payments are incurred and (ii) the third (3rd) Business Day after the
event or failure giving rise to the Public Information Failure

 

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Payments is cured. In the event the Company fails to make Public Information
Failure Payments in a timely manner, such Public Information Failure Payments
shall bear interest at the rate of 1.5% per month (prorated for partial months)
until paid in full. Nothing herein shall limit such Purchaser’s right to pursue
actual damages for the Public Information Failure, and such Purchaser shall have
the right to pursue all remedies available to it at law or in equity including,
without limitation, a decree of specific performance and/or injunctive relief.

4.3 Integration. The Company shall not 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 would be integrated with the offer or sale of the
Securities in a manner that would require the registration under the Securities
Act of the sale of the Securities or that would be integrated with the offer or
sale of the Securities for purposes of the rules and regulations of any Trading
Market such that it would require shareholder approval prior to the closing of
such other transaction unless shareholder approval is obtained before the
closing of such subsequent transaction.

4.4 Securities Laws Disclosure; Publicity. The Company shall, by 9:30 a.m. (New
York City time) on the Trading Day immediately following the date hereof, issue
a press release disclosing the material terms of the transactions contemplated
hereby, and within 4 Trading Days of the date hereof file a Current Report on
Form 8-K, including the Transaction Documents as exhibits thereto. From and
after the issuance of such press release, the Company shall have publicly
disclosed all material, non-public information delivered to any of the
Purchasers by the Company or any of its subsidiaries, or any of their respective
officers, directors, employees or agents in connection with the transactions
contemplated by the Transaction Documents. The Company and each Purchaser shall
consult with each other in issuing any other press releases with respect to the
transactions contemplated hereby, and neither the Company nor any Purchaser
shall issue any such press release nor otherwise make any such public statement
without the prior consent of the Company, with respect to any press release of
any Purchaser, or without the prior consent of each Purchaser, with respect to
any press release of the Company, which consent shall not unreasonably be
withheld or delayed, except if such disclosure is required by law or Trading
Market regulation, in which case the disclosing party shall promptly provide the
other party with prior notice of such public statement or communication.
Notwithstanding the foregoing, the Company shall not publicly disclose the name
of any Purchaser, or include the name of any Purchaser in any filing with the
Commission or any regulatory agency or Trading Market, without the prior written
consent of such Purchaser, except (a) as required by federal securities law in
connection with (i) any registration statement contemplated by the Registration
Rights Agreement and (ii) the filing of final Transaction Documents (including
signature pages thereto) with the Commission and (b) to the extent such
disclosure is required by law or Trading Market regulations, in which case the
Company shall provide the Purchasers with prior notice of such disclosure
permitted under this clause (b).

4.5 Non-Public Information. Except with respect to the material terms and
conditions of the transactions contemplated by the Transaction Documents, the
Company covenants and agrees that neither it, nor any other Person acting on its
behalf will provide any Purchaser or its agents or counsel with any information
that the Company believes constitutes material non-public information, unless
prior thereto such Purchaser shall have executed a written agreement regarding
the confidentiality and use of such information. The Company understands and
confirms that each Purchaser shall be relying on the foregoing covenant in
effecting transactions in securities of the Company.

 

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4.6 RESERVED.

4.7 Indemnification of Purchasers. Subject to the provisions of this
Section 4.8, 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 persons (each, a
“Purchaser Party”) 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 Purchaser Party may suffer or incur as a
result of or relating to (a) 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 (b) any action instituted against a Purchaser
in any capacity, or any of them or their respective Affiliates, by any
stockholder of the Company who is not an Affiliate of such Purchaser, with
respect to any of the transactions contemplated by the Transaction Documents
(unless such action is based upon a breach of any Purchaser Party’s
representations, warranties or covenants under the Transaction Documents or any
agreements or understandings such Purchaser may have with any such stockholder
or any violations by any Purchaser Party of state or federal securities laws or
any conduct by any Purchaser Party which constitutes fraud, gross negligence,
willful misconduct or malfeasance). If any action shall be brought against any
Purchaser Party in respect of which indemnity may be sought pursuant to this
Agreement, such Purchaser Party shall promptly notify the Company in writing,
and the Company shall have the right to assume the defense thereof with counsel
of its own choosing reasonably acceptable to the Purchaser Party. Any Purchaser
Party shall have the right to employ separate counsel in any such action and
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of such Purchaser Party except to the extent that
(i) the employment thereof has been specifically authorized by the Company in
writing, (ii) the Company has failed after a reasonable period of time to assume
such defense and to employ counsel or (iii) in such action there is, in the
reasonable opinion of such separate counsel, a material conflict on any material
issue between the position of the Company and the position of such Purchaser
Party, in which case the Company shall be responsible for the reasonable fees
and expenses of no more than one such separate counsel. The Company will not be
liable to any Purchaser Party under this Agreement (y) for any settlement by a
Purchaser Party effected without the Company’s prior written consent, which
shall not be unreasonably withheld or delayed; or (z) to the extent, but only to
the extent that a loss, claim, damage or liability is attributable to any
Purchaser Party’s breach of any of the representations, warranties, covenants or
agreements made by such Purchaser Party in this Agreement or in the other
Transaction Documents.

4.8 Reservation of Common Stock. As of the date hereof, the Company has reserved
and the Company shall continue to reserve and keep available at all times, free
of preemptive

 

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rights, a sufficient number of shares of Common Stock for the purpose of
enabling the Company to issue Shares pursuant to this Agreement and Warrant
Shares pursuant to any exercise of the Warrants.

4.9 Listing of Common Stock. The Company hereby agrees to use its best efforts
to cause the Shares and Warrant Shares to be approved for listing upon notice of
issuance by The New York Stock Exchange as promptly as practicable, but in no
later than the close of trading on the Closing Date and shall use best efforts
to maintain the listing and quotation of the Common Stock on a Trading Market.
The Company further agrees, if the Company applies to have the Common Stock
traded on any other Trading Market, it will then include in such application all
of the Shares and Warrant Shares, and will take such other action as is
necessary to cause all of the Shares and Warrant Shares to be listed or quoted
on such other Trading Market as promptly as possible. The Company will then take
all action reasonably necessary to continue the listing and trading of its
Common Stock on a Trading Market and will comply in all respects with the
Company’s reporting, filing and other obligations under the bylaws or rules of
the Trading Market.

4.10 Equal Treatment of Purchasers. No consideration shall be offered or paid to
any Person to amend or consent to a waiver or modification of any provision of
this Agreement (but only to the extent such waiver or modification effects the
right of such Purchaser) unless the same consideration is also offered to all of
the parties to this Agreement. For clarification purposes, this provision
constitutes a separate right granted to each Purchaser by the Company and
negotiated separately by each Purchaser, and is intended for the Company to
treat the Purchasers as a class and shall not in any way be construed as the
Purchasers acting in concert or as a group with respect to the purchase,
disposition or voting of Securities or otherwise.

4.11 RESERVED.

4.12 Subsequent Equity Sales.

(a) From the date hereof until 30 days after the Effective Date, neither the
Company nor any Subsidiary shall issue, enter into any agreement to issue or
announce the issuance or proposed issuance of any shares of Common Stock or
Common Stock Equivalents, other than Exempt Issuances.

(b) Notwithstanding the foregoing, this Section 4.12 shall not apply in respect
of an Exempt Issuance.

4.13 Certain Transactions and Confidentiality. Each Purchaser, severally and not
jointly with the other Purchasers, covenants that neither it, nor any Affiliate
acting on its behalf or pursuant to any understanding with it will execute any
purchases or sales, including Short Sales, of any of the Company’s securities
during the period commencing with the execution of this Agreement and ending at
such time that the transactions contemplated by this Agreement are first
publicly announced pursuant to the initial press release as described in
Section 4.4. Each Purchaser, severally and not jointly with the other
Purchasers, covenants that until such time as the transactions contemplated by
this Agreement are publicly disclosed by the Company pursuant to the initial
press release as described in Section 4.4, such Purchaser will maintain the

 

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confidentiality of the existence and terms of this transaction and the
information included in the Transaction Documents and the Disclosure
Schedules. Notwithstanding the foregoing, and notwithstanding anything contained
in this Agreement to the contrary, the Company expressly acknowledges and agrees
that (i) no Purchaser makes any representation, warranty or covenant hereby that
it will not engage in effecting transactions in any securities of the Company
after the time that the transactions contemplated by this Agreement are first
publicly announced pursuant to the initial press release as described in
Section 4.4, (ii) no Purchaser shall be restricted or prohibited by the terms of
this Agreement from effecting any transactions in any securities of the Company
in accordance with applicable securities laws from and after the time that the
transactions contemplated by this Agreement are first publicly announced
pursuant to the initial press release as described in Section 4.4 and (iii) no
Purchaser shall have any duty of confidentiality to the Company or its
Subsidiaries after the issuance of the initial press release as described in
Section 4.4. Notwithstanding the foregoing, in the case of a Purchaser that 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 decisions made by the portfolio managers
managing other portions of such Purchaser’s assets, the covenant set forth above
shall only apply with respect to the portion of assets managed by the portfolio
manager that made the investment decision to purchase the Securities covered by
this Agreement.

4.14 Form D; Blue Sky Filings. The Company agrees to timely file a Form D with
respect to the Securities as required under Regulation D and to provide a copy
thereof, promptly upon request of any Purchaser. The Company shall take such
action as the Company shall reasonably determine is necessary in order to obtain
an exemption for, or to qualify the Securities for, sale to the Purchasers at
the Closing under applicable securities or “Blue Sky” laws of the states of the
United States, and shall provide evidence of such actions promptly upon request
of any Purchaser.

ARTICLE V.

MISCELLANEOUS

5.1 Termination. This Agreement may be terminated by any Purchaser, as to such
Purchaser’s obligations hereunder only and without any effect whatsoever on the
obligations between the Company and the other Purchasers, by written notice to
the other parties, if the Closing has not been consummated on or before June 9,
2009; provided, however, that no such termination will affect the right of any
party to sue for any breach by the other party (or parties).

5.2 Fees and Expenses. Except as expressly set forth in the Transaction
Documents to the contrary, each party shall pay the fees and expenses of its
advisers, counsel, accountants and other experts, if any, and all other expenses
incurred by such party incident to the negotiation, preparation, execution,
delivery and performance of this Agreement. The Company shall pay all Transfer
Agent fees, stamp taxes and other taxes and duties levied in connection with the
delivery of any Securities to the Purchasers, including but not limited to in
connection with the removal of the Legend pursuant to Section 4.1 and electronic
delivery of Shares and Warrant Shares.

 

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5.3 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 and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules.

5.4 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 at the facsimile number set
forth on the signature pages attached hereto prior to 5:30 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 set forth on the signature pages attached hereto on a day that is not a
Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day,
(c) the 2nd Trading Day following the date of mailing, if sent by U.S.
nationally recognized overnight courier service 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 set forth on the signature pages attached
hereto.

5.5 Amendments; Waivers. No provision of this Agreement may be waived, modified,
supplemented or amended except in a written instrument signed, in the case of an
amendment, by the Company and all of the Purchasers holding at least 67% of the
Shares then outstanding or, in the case of a waiver, by the party against whom
enforcement of any such waived provision is sought. No waiver of any default
with respect to any provision, condition or requirement of this Agreement shall
be deemed to be a continuing waiver in the future or a waiver of any subsequent
default or a waiver of any other provision, condition or requirement hereof, nor
shall any delay or omission of any party to exercise any right hereunder in any
manner impair the exercise of any such right.

5.6 Headings. 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.

5.7 Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the parties and their successors and permitted assigns. The
Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of each Purchaser (other than by merger). Any
Purchaser may assign any or all of its rights under this Agreement to any Person
to whom such Purchaser assigns or transfers any Warrants, upon notice to the
Company, provided such transferee is an “accredited investor” and agrees in
writing to be bound, with respect to the transferred Warrants, by the provisions
of the Transaction Documents that apply to the “Purchasers.”

5.8 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, except as otherwise set forth in Section 4.8.

5.9 Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of the Transaction Documents shall be governed by
and construed and

 

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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
legal proceedings concerning the interpretations, 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, directors,
officers, shareholders, employees or agents) shall be commenced exclusively in
the state and federal courts sitting in the City of New York. Each party hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in the City of New York, borough of Manhattan 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 suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is improper or is an inconvenient venue for such
proceeding. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or 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 other
manner permitted by law. If either party shall commence an action or proceeding
to enforce any provisions of the Transaction Documents, then the prevailing
party in such action or proceeding shall be reimbursed by the other party for
its reasonable attorneys’ fees and other costs and expenses incurred with the
investigation, preparation and prosecution of such action or proceeding.

5.10 Survival. The representations and warranties contained herein shall survive
the Closing and the delivery of the Securities for the applicable statute of
limitations under the Securities Act or the Exchange Act.

5.11 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 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 or “.pdf” signature page were an original thereof.

5.12 Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated, and the parties hereto shall use
their commercially reasonable efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.

 

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5.13 Replacement of Securities. If any certificate or instrument evidencing any
Securities is mutilated, lost, stolen or destroyed, the Company shall issue or
cause to be issued in exchange and substitution for and upon cancellation
thereof (in the case of mutilation), or in lieu of and substitution therefor, a
new certificate or instrument, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction. The applicant
for a new certificate or instrument under such circumstances shall also pay any
reasonable third-party costs (including customary bond or indemnity) associated
with the issuance of such replacement Securities.

5.14 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
contained in the Transaction Documents and hereby agrees to waive and not to
assert in any action for specific performance of any such obligation the defense
that a remedy at law would be adequate.

5.15 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.

5.16 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 the performance or non-performance of the obligations of any other
Purchaser under any Transaction Document. Nothing contained herein or in any
other Transaction Document, and no action taken by any Purchaser pursuant
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 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. Each Purchaser has been represented by its own
separate legal counsel in their review and negotiation of the Transaction
Documents. For reasons of administrative convenience only, Purchasers and their
respective counsel have chosen to communicate with the Company through WS. WS
does not represent all of the Purchasers but only Rodman & Renshaw, LLC, the
placement agent for the transactions contemplated hereby. The Company has
elected to provide all Purchasers with the same terms and Transaction Documents
for the convenience of the Company and not because it was required or requested
to do so by the Purchasers.

 

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5.17 Liquidated Damages. The Company’s obligations to pay any partial liquidated
damages or other amounts owing under the Transaction Documents is a continuing
obligation of the Company and shall not terminate until all unpaid partial
liquidated damages and other amounts have been paid notwithstanding the fact
that the instrument or security pursuant to which such partial liquidated
damages or other amounts are due and payable shall have been canceled.

5.18 Saturdays, Sundays, Holidays, etc. If the last or appointed day for the
taking of any action or the expiration of any right required or granted herein
shall not be a Business Day, then such action may be taken or such right may be
exercised on the next succeeding Business Day.

5.19 Construction. The parties agree that each of them and/or their respective
counsel has reviewed and had an opportunity to revise the Transaction Documents
and, therefore, the normal rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall not be employed
in the interpretation of the Transaction Documents or any amendments hereto. In
addition, each and every reference to share prices in any Transaction Document
shall be subject to adjustment for reverse and forward stock splits, stock
dividends, stock combinations and other similar transactions of the Common Stock
that occur after the date of this Agreement.

5.20 WAIVER OF JURY TRIAL. IN ANY ACTION, SUIT, OR PROCEEDING IN ANY
JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH
KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW,
HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES FOREVER
TRIAL BY JURY.

(Signature Pages Follow)

 

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

 

HECLA MINING COMPANY     Address for Notice: By:  

/s/ James A. Sabala

    Fax: Name:   James A. Sabala     Title:   Senior Vice President and CFO    
With a copy to (which shall not constitute notice):    

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGE FOR PURCHASER FOLLOWS]

 

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[PURCHASER SIGNATURE PAGES TO HL SECURITIES PURCHASE AGREEMENT]

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

Name of Purchaser: BAM Opportunity Fund, L.P.

Signature of Authorized Signatory of Purchaser:
                                                             

Name of Authorized Signatory:                                          
                                                

Title of Authorized Signatory:                                          
                                                  

Email Address of Authorized Signatory:                                          
                                 

Fax Number of Authorized Signatory:                                          
                                     

Address for Notice of Purchaser:

Address for Delivery of Securities for Purchaser (if not same as address for
notice):

Subscription Amount: $5,000,000

Shares: 1,449,275

Warrant Shares: 1,014,493

EIN Number: [PROVIDE THIS UNDER SEPARATE COVER]

[SIGNATURE PAGES CONTINUE]

 

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[PURCHASER SIGNATURE PAGES TO HL SECURITIES PURCHASE AGREEMENT]

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

Name of Purchaser: Capital Ventures International

Signature of Authorized Signatory of Purchaser:
                                                             

Name of Authorized Signatory:                                          
                                                

Title of Authorized Signatory:                                          
                                                  

Email Address of Authorized Signatory:                                          
                                 

Fax Number of Authorized Signatory:                                          
                                     

Address for Notice of Purchaser:

Address for Delivery of Securities for Purchaser (if not same as address for
notice):

Subscription Amount: $20,000,000

Shares: 5,797,101

Warrant Shares: 4,057,971

EIN Number: [PROVIDE THIS UNDER SEPARATE COVER]

[SIGNATURE PAGES CONTINUE]

 

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[PURCHASER SIGNATURE PAGES TO HL SECURITIES PURCHASE AGREEMENT]

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

Name of Purchaser: Cranshire Capital, L.P.

Signature of Authorized Signatory of Purchaser:
                                                             

Name of Authorized Signatory:                                          
                                                

Title of Authorized Signatory:                                          
                                                  

Email Address of Authorized Signatory:                                          
                                 

Fax Number of Authorized Signatory:                                          
                                     

Address for Notice of Purchaser:

Address for Delivery of Securities for Purchaser (if not same as address for
notice):

Subscription Amount: $5,999,998.50

Shares: 1,739,130

Warrant Shares: 1,217,391

EIN Number: [PROVIDE THIS UNDER SEPARATE COVER]

[SIGNATURE PAGES CONTINUE]

 

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[PURCHASER SIGNATURE PAGES TO HL SECURITIES PURCHASE AGREEMENT]

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

Name of Purchaser: Hartz Capital Investments, LLC

Signature of Authorized Signatory of Purchaser:
                                                             

Name of Authorized Signatory:                                          
                                                

Title of Authorized Signatory:                                          
                                                  

Email Address of Authorized Signatory:                                          
                                 

Fax Number of Authorized Signatory:                                          
                                     

Address for Notice of Purchaser:

Address for Delivery of Securities for Purchaser (if not same as address for
notice):

Subscription Amount: $5,000,000

Shares: 1,449,275

Warrant Shares: 1,014,493

EIN Number: [PROVIDE THIS UNDER SEPARATE COVER]

[SIGNATURE PAGES CONTINUE]

 

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[PURCHASER SIGNATURE PAGES TO HL SECURITIES PURCHASE AGREEMENT]

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

Name of Purchaser: Hudson Bay Fund LP

Signature of Authorized Signatory of Purchaser:
                                                             

Name of Authorized Signatory:                                          
                                                

Title of Authorized Signatory:                                          
                                                  

Email Address of Authorized Signatory:                                         
                                  

Fax Number of Authorized Signatory:                                          
                                     

Address for Notice of Purchaser:

Address for Delivery of Securities for Purchaser (if not same as address for
notice):

Subscription Amount: $1,799,999.55

Shares: 521,739

Warrant Shares: 365,217

EIN Number: [PROVIDE THIS UNDER SEPARATE COVER]

[SIGNATURE PAGES CONTINUE]

 

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[PURCHASER SIGNATURE PAGES TO HL SECURITIES PURCHASE AGREEMENT]

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

Name of Purchaser: Hudson Bay Overseas Fund, LTD.

Signature of Authorized Signatory of Purchaser:
                                                             

Name of Authorized Signatory:                                          
                                                

Title of Authorized Signatory:                                          
                                                  

Email Address of Authorized Signatory:                                          
                                 

Fax Number of Authorized Signatory:                                          
                                     

Address for Notice of Purchaser:

Address for Delivery of Securities for Purchaser (if not same as address for
notice):

Subscription Amount: $3,200,002.65

Shares: 927,537

Warrant Shares: 649,276

EIN Number: [PROVIDE THIS UNDER SEPARATE COVER]

[SIGNATURE PAGES CONTINUE]

 

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[PURCHASER SIGNATURE PAGES TO HL SECURITIES PURCHASE AGREEMENT]

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

Name of Purchaser: Ramius Enterprise Master Fund Ltd

Signature of Authorized Signatory of Purchaser:
                                                             

Name of Authorized Signatory:                                          
                                                

Title of Authorized Signatory:                                          
                                                  

Email Address of Authorized Signatory:                                          
                                 

Fax Number of Authorized Signatory:                                          
                                     

Address for Notice of Purchaser:

Address for Delivery of Securities for Purchaser (if not same as address for
notice):

Subscription Amount: $1,799,999.55

Shares: 521,739

Warrant Shares: 365,217

EIN Number: [PROVIDE THIS UNDER SEPARATE COVER]

[SIGNATURE PAGES CONTINUE]

 

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[PURCHASER SIGNATURE PAGES TO HL SECURITIES PURCHASE AGREEMENT]

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

Name of Purchaser: RCG PB, Ltd

Signature of Authorized Signatory of Purchaser:
                                                             

Name of Authorized Signatory:                                          
                                                

Title of Authorized Signatory:                                          
                                                  

Email Address of Authorized Signatory:                                          
                                 

Fax Number of Authorized Signatory:                                          
                                     

Address for Notice of Purchaser:

Address for Delivery of Securities for Purchaser (if not same as address for
notice):

Subscription Amount: $4,199,998.95

Shares: 1,217,391

Warrant Shares: 852,174

EIN Number: [PROVIDE THIS UNDER SEPARATE COVER]

[SIGNATURE PAGES CONTINUE]

 

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[PURCHASER SIGNATURE PAGES TO HL SECURITIES PURCHASE AGREEMENT]

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

Name of Purchaser: Rockmore Investment Master Fund Ltd

Signature of Authorized Signatory of Purchaser:
                                                             

Name of Authorized Signatory:                                          
                                                

Title of Authorized Signatory:                                          
                                                  

Email Address of Authorized Signatory:                                          
                                 

Fax Number of Authorized Signatory:                                          
                                     

Address for Notice of Purchaser:

Address for Delivery of Securities for Purchaser (if not same as address for
notice):

Subscription Amount: $6,000,000

Shares: 1,739,130

Warrant Shares: 1,217,391

EIN Number: [PROVIDE THIS UNDER SEPARATE COVER]

[SIGNATURE PAGES CONTINUE]

 

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[PURCHASER SIGNATURE PAGES TO HL SECURITIES PURCHASE AGREEMENT]

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

Name of Purchaser: Sprott Asset Management

Signature of Authorized Signatory of Purchaser:
                                                             

Name of Authorized Signatory:                                          
                                                

Title of Authorized Signatory:                                          
                                                  

Email Address of Authorized Signatory:                                          
                                 

Fax Number of Authorized Signatory:                                          
                                     

Address for Notice of Purchaser:

Address for Delivery of Securities for Purchaser (if not same as address for
notice):

Subscription Amount: $2,000,000

Shares: 579,710

Warrant Shares: 405,797

EIN Number: [PROVIDE THIS UNDER SEPARATE COVER]

[SIGNATURE PAGES CONTINUE]

 

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[PURCHASER SIGNATURE PAGES TO HL SECURITIES PURCHASE AGREEMENT]

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

Name of Purchaser: Visium Equity Global Master Fund, LTD

Signature of Authorized Signatory of Purchaser:
                                                             

Name of Authorized Signatory:                                          
                                                

Title of Authorized Signatory:                                          
                                                  

Email Address of Authorized Signatory:                                          
                                 

Fax Number of Authorized Signatory:                                          
                                     

Address for Notice of Purchaser:

Address for Delivery of Securities for Purchaser (if not same as address for
notice):

Subscription Amount: $5,000,000

Shares: 1,449,275

Warrant Shares: 1,014,493

EIN Number: [PROVIDE THIS UNDER SEPARATE COVER]

[SIGNATURE PAGES CONTINUE]

 

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