EXHIBIT 10.68
 
SECURITIES PURCHASE AGREEMENT
 
This Securities Purchase Agreement (this “Agreement”) is dated as of October 2,
2009 by and between Micro Imaging Technology, Inc., a California corporation
(the “Company”), Ascendiant Capital Group, LLC (the “Purchaser”). Capitalized
terms used in this Agreement and not otherwise defined shall have the meanings
ascribed to them in Article I.

WHEREAS, the parties desire that, upon the terms and subject to the conditions
contained herein, the Company shall have the right to issue and sell to
Purchaser from time to time as provided herein, and Purchaser shall be obligated
to purchase from the Company up to $3,000,000 worth of shares of Common Stock on
a private placement basis pursuant to an exemption from registration under
Section 4(2) of the Securities Act of 1933; and
 
WHEREAS, the Purchaser shall be entitled to resell shares of Common Stock
acquired hereunder pursuant to a resale registration statement established by
the Company pursuant to the terms of the Registration Rights Agreement between
the Company and the Purchaser which shall be declared effective by the
Commission prior to the delivery of the first Draw Down Notice.
 
NOW, THEREFORE, in consideration of the foregoing premises, and the promises and
covenants herein contained, the receipt and sufficiency of which are hereby
acknowledged by the parties hereto, the parties, intending to be legally bound,
hereby agree as follows:
 
ARTICLE I.
DEFINITIONS
 
1.1           Definitions.  In addition to the terms defined elsewhere in this
Agreement, for all purposes of this Agreement, the following terms have the
meanings indicated in this Section 1.1:
 
“Action” shall have the meaning ascribed to such term in Section 3.1(j).
 
“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 144 under the
Securities Act.  With respect to the Purchaser, any investment fund or managed
account that is managed on a discretionary basis by the same investment manager
as the Purchaser will be deemed to be an Affiliate of the Purchaser.
 
“Agreement” shall have the meaning ascribed to such term in the preamble.
 
“Business Day” means any day except Saturday, Sunday, any day which shall be 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.
 
 “Commission” means the Securities and Exchange Commission.
 

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“Commencement Date” shall mean the Trading Day immediately following the date on
which the applicable Draw Down Notice is delivered to the Purchaser.

“Commitment Amount” shall have the meaning assigned to such term in Section 2.1
hereof.
 
“Commitment Period” shall mean the period of 36 consecutive months commencing
immediately after the Effective Date.
 
“Common Stock” means the common stock of the Company, par value $0.01 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 Christopher H. Dieterich, Esq., Dieterich & Mazarei,
with offices located at 11300 West Olympic Blvd., Suite 800, Los Angeles, CA
90064.
 
“Consolidation Event” shall mean a sale of all or substantially all of the
Company’s assets or a merger pursuant to which the holders of the voting
securities of the Company prior to the merger do not own a majority of the
voting securities of the surviving entity.
 
“Disclosure Schedules” means the Disclosure Schedules of the Company delivered
concurrently herewith.
 
“Draw Down” shall have the meaning assigned to such term in Section 6.1(a)
hereof.
 
“Draw Down Notice” shall have the meaning assigned to such term in Section
6.1(e) hereof.
 
“Draw Down Pricing Period” shall mean each period of 9 consecutive Trading Days
following the delivery by the Company of a Draw Down Notice, the first of such
periods commencing on the date specified in the Draw Down Notice and subsequent
periods, if any, described in the Draw Down Notice, commencing  on the third
Trading Day following the immediately preceding Draw Down Pricing Period, such
subsequent periods, if any, continuing until such time that the Company delivers
to the Purchaser a subsequent suspension notice, which notice must be delivered
on or before the end of the prior Draw Down Pricing Period; provided, however,
the first Draw Down Pricing Period and any subsequent Draw Down Pricing Period
commencing after a suspension notice is delivered, shall not begin before the
day on which receipt of such notice is delivered to Purchaser pursuant to
Section 8.3 herein.
 
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“Draw Down Shares” or “Shares” shall mean the shares of Common Stock issued and
issuable pursuant to a Draw Down and the shares of Common Stock issued and
issuable pursuant to Section 2.2(a)(iii) and Section 4.16 hereof.
 
“DTC” shall have the meaning assigned to such term in Section 6.1(f).
 
“DWAC” shall have the meaning assigned to such term in Section 6.1(f).
 
“Effective Date” means the date that the initial Registration Statement filed by
the Company pursuant to the Registration Rights Agreement is first declared
effective by the Commission.
 
 “Equity Conditions” shall mean, during the period in question, (i) all
liquidated damages and other amounts owing to the Purchaser pursuant to the
Transaction Documents have been paid, (ii) there is an effective Registration
Statement pursuant to which the Purchaser is permitted to utilize the prospectus
thereunder to resell all of the Draw Down Shares (issued and to be issued
pursuant to the applicable Draw Down), the Shares (and the Company believes, in
good faith, that such effectiveness will continue uninterrupted for the
foreseeable future), (iii) the Common Stock is trading on the Trading Market and
all of the shares issuable pursuant to the Transaction Documents are listed or
quoted (if applicable) for trading on a Trading Market (and the Company
believes, in good faith, that trading of the Common Stock on a Trading Market
will continue uninterrupted for the foreseeable future), (iv) there is a
sufficient number of authorized but unissued and otherwise unreserved shares of
Common Stock for the issuance of all of the Draw Down Shares (issued and to be
issued pursuant to the applicable Draw Down), the Shares, (v) the issuance of
the Draw Down Shares subject to the applicable Draw Down would not violate the
limitations set forth in Section 4.12 and (vi) the Company, directly or
indirectly, has not provided the Purchaser with any material, non-public
information that has not been made publicly available in a widely disseminated
release.
 
“Evaluation Date” shall have the meaning ascribed to such term in Section
3.1(r).
 
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.

“GAAP” shall have the meaning ascribed to such term in Section 3.1(h).
 
“Initial Closing” shall have the meaning assigned to such term in Section 2.2
hereof.
 
“Initial Closing Date” shall have the meaning assigned to such term in Section
2.2 hereof.
 
 “Intellectual Property Rights” shall have the meaning ascribed to such term in
Section 3.1(o).
 
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“Investment Amount” shall have the meaning assigned to such term in Section
6.1(e) hereof.
 
“Legend Removal Date” shall have the meaning ascribed to such term in Section
4.1(c).
 
 “Liens” means a lien, charge, security interest, encumbrance, right of first
refusal, preemptive right or other restriction.
 
“Material Adverse Effect” shall have the meaning assigned to such term in
Section 3.1(b).
 
“Material Permits” shall have the meaning ascribed to such term in Section
3.1(m).
 
“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.
 
 “Proceeding” means an action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or threatened.
 
 “Purchase Price” shall mean, with respect to Draw Down Shares purchased during
each applicable Settlement Period, 90% of the VWAP on the date in question.
 
“Purchaser Party” shall have the meaning ascribed to such term in Section 4.7.
 
“Registration Rights Agreement” means the Registration Rights Agreement, dated
the date hereof, between the Company and the Purchaser, 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 by the Purchaser of the Shares and the shares of Common Stock issued and
issuable pursuant to Section 2.2(a)(iii) and Section 4.16 hereof.
 
“Required Approvals” shall have the meaning ascribed to such term in Section
3.1(e).
 
“Rule 144” means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.
 
“Rule 424” means Rule 424 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.
 
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“SEC Reports” shall have the meaning ascribed to such term in Section 3.1(h).
 
 “Securities” means the Shares and the shares of Common Stock issued and
issuable pursuant to Section 2.2(a)(iii) and Section 4.16 hereof.
 
“Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.
 
“Settlement” shall mean the delivery of the Draw Down Shares into the
Purchaser’s DTC account via DTC’s DWAC system and the Purchaser’s delivery of
payment therefor.
 
“Settlement Date” shall have the meaning assigned to such term in Section
6.1(b).
 
“Settlement Period” shall have the meaning assigned to such term in Section
6.1(b).
 
 “Short Sales” shall include all “short sales” as defined in Rule 200 of
Regulation SHO under the Exchange Act; provided, however, that in no event shall
either the sale of Draw Down Shares to be received but not yet delivered
pursuant to a pending Draw Down during a Draw Down Pricing Period be deemed a
Short Sale or the sale of any Securities issued under this Agreement after the
date hereof be deemed a Short Sale.
 
“Subsidiary” shall have the meaning ascribed to such term in Section 3.1(a).
 
 “Threshold Price” shall mean the price per Share designated by the Company in a
Draw Down Notice as the lowest VWAP during any Draw Down Pricing Period at which
the Company shall sell its Common Stock in accordance with this Agreement.
 
“Trading Cushion” shall mean the mandatory 2 Trading Days between Draw Down
Pricing Periods.
 
 “Trading Day” means a day on which the Common Stock is traded on a Trading
Market.
 
“Trading Market” means the following markets or exchanges on which the Common
Stock is listed or quoted for trading on the date in question: the Nasdaq
Capital Market, the NYSE Amex, the New York Stock Exchange, the Nasdaq National
Market or the OTC Bulletin Board.
 
“Transaction Documents” means this Agreement and the Registration Rights
Agreement and any other documents or agreements executed in connection with the
transactions contemplated hereunder.
 
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“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 for trading as reported by Bloomberg
Financial 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 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
Holder and reasonably acceptable to the Company.
 
“WS” means Weinstein Smith LLP with offices located at 420 Lexington Avenue,
Suite 2620, New York, New York 10170-0002.
 
ARTICLE II.
PURCHASE AND SALE
 
2.1           Purchase and Sale of Draw Down Shares. Upon the terms and subject
to the conditions of this Agreement, the Company may sell and issue to the
Purchaser and the Purchaser shall be obligated to purchase from the Company, up
to an aggregate of $3,000,000 worth of shares of Common Stock (the “Commitment
Amount”).
 
2.2           Initial Closing. The execution and delivery of this Agreement and
the other agreements referred to herein (the “Initial Closing”) shall take place
at the offices of WS, 420 Lexington Avenue, Suite 2620, New York, New York 10170
(i) at 10:00 a.m. local time within 5 Trading Days of the date hereof, or (ii)
at such other time and place or on such date as the Purchaser and the Company
may agree upon (the “Initial Closing Date”).  Each party shall deliver the
following documents, instruments and writings at or prior to the Initial
Closing:
 
(a)           the Company shall deliver or cause to be delivered to the
Purchaser the following:
 
(i)           this Agreement duly executed by the Company;
 
(ii)           a legal opinion of Company Counsel, in the form of Exhibit B
attached hereto;
 
(iii)           a certificate evidencing 1,071,429 shares of Common Stock
registered in the name of the Purchaser; and
 
(iv)           the Registration Rights Agreement duly executed by the Company.
 
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(b)           the Purchaser shall deliver or cause to be delivered to the
Company the following:
 
(i)           this Agreement duly executed by the Purchaser; and
 
(ii)           the Registration Rights Agreement duly executed by the Purchaser.
 
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
 
3.1           Representations and Warranties of the Company.  Except as set
forth under the corresponding section of the Disclosure Schedules which
Disclosure Schedules shall be deemed a part hereof and to qualify any
representation or warranty otherwise made herein to the extent of such
disclosure, the Company hereby makes the representations and warranties set
forth below to the Purchaser:
 
(a)           Subsidiaries.  All of the direct and indirect subsidiaries of the
Company are set forth on Schedule 3.1(a).  The Company owns, directly or
indirectly, all of the capital stock or other equity interests of each
Subsidiary free and clear of any Liens, and all the issued and outstanding
shares of capital stock of each Subsidiary are validly issued and are fully
paid, non-assessable and free of preemptive and similar rights to subscribe for
or purchase securities.  If the Company has no subsidiaries, then all other
references in the Transaction Documents to the Subsidiaries or any of them will
be disregarded.
 
(b)           Organization and Qualification.  The Company and each of the
Subsidiaries is an entity duly incorporated or otherwise organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization (as applicable), with the requisite power and
authority to own and use its properties and assets and to carry on its business
as currently conducted.  Neither the Company nor any Subsidiary is in violation
or default of any of the provisions of its respective certificate or articles of
incorporation, bylaws or other organizational or charter documents.  Each of the
Company and the Subsidiaries is duly qualified to conduct business and is in
good standing as a foreign corporation or other entity in each jurisdiction in
which the nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in good
standing, as the case may be, could not have or reasonably be expected to result
in (i) a material adverse effect on the legality, validity or enforceability of
any Transaction Document, (ii) a material adverse effect on the results of
operations, assets, business, prospects or condition (financial or otherwise) of
the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse
effect on the Company’s ability to perform in any material respect on a timely
basis its obligations under any Transaction Document (any of (i), (ii) or (iii),
a “Material Adverse Effect”) and no Proceeding has been instituted in any such
jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or
curtail such power and authority or qualification.
 
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(c)           Authorization; Enforcement.  The Company has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated by each of the Transaction Documents and otherwise to carry out its
obligations hereunder and thereunder.  The execution and delivery of each of the
Transaction Documents by the Company and the consummation by it of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary action on the part of the Company and no further action is required by
the Company, its board of directors or its stockholders in connection therewith
other than in connection with the Required Approvals.  Each Transaction Document
has been (or upon delivery will have been) duly executed by the Company and,
when delivered in accordance with the terms hereof and thereof, will constitute
the valid and binding obligation of the Company enforceable against the Company
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.
 
(d)           No Conflicts.  The execution, delivery and performance of the
Transaction Documents by the Company, the issuance and sale of the Shares and
the consummation by the Company of the other transactions contemplated hereby
and thereby do not and will not (i) conflict with or violate any provision of
the Company’s or any Subsidiary’s certificate or articles of incorporation,
bylaws or other organizational or charter documents, or (ii) conflict with, or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, result in the creation of any Lien upon any of
the properties or assets of the Company or any Subsidiary, or give to others any
rights of termination, amendment, acceleration or cancellation (with or without
notice, lapse of time or both) of, any agreement, credit facility, debt or other
instrument (evidencing a Company or Subsidiary debt or otherwise) or other
understanding to which the Company or any Subsidiary is a party or by which any
property or asset of the Company or any Subsidiary is bound or affected, or
(iii) subject to the Required Approvals, conflict with or result in a violation
of any law, rule, regulation, order, judgment, injunction, decree or other
restriction of any court or governmental authority to which the Company or a
Subsidiary is subject (including federal and state securities laws and
regulations), or by which any property or asset of the Company or a Subsidiary
is bound or affected; except in the case of each of clauses (ii) and (iii), such
as could not have or reasonably be expected to result in a Material Adverse
Effect.
 
(e)           Filings, Consents and Approvals.  The Company is not required to
obtain any consent, waiver, authorization or order of, give any notice to, or
make any filing or registration with, any court or other federal, state, local
or other governmental authority or other Person in connection with the
execution, delivery and performance by the Company of the Transaction Documents,
other than (i) filings required pursuant to Section 4.4 of this Agreement, (ii)
the filing with the Commission of the Registration Statement, (iii)
application(s) to each applicable Trading Market for the listing of the
Securities for trading thereon in the time and manner required thereby, and (iv)
the filing of Form D with the Commission and such filings as are required to be
made under applicable state securities laws (collectively, the “Required
Approvals”).
 
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(f)           Issuance of the Securities.  The Securities are duly authorized
and, when issued and paid for in accordance with the applicable Transaction
Documents, will be duly and validly issued, fully paid and nonassessable, free
and clear of all Liens imposed by the Company other than restrictions on
transfer provided for in the Transaction Documents.  The Company has reserved
from its duly authorized capital stock the maximum number of shares of Common
Stock issuable pursuant to this Agreement.
 
(g)           Capitalization.  The capitalization of the Company is as set forth
on Schedule 3.1(g).  Except as set forth on Schedule 3.1(g), the Company has not
issued any capital stock since its most recently filed periodic report under the
Exchange Act, other than pursuant to the exercise of employee stock options
under the Company’s stock option plans, the issuance of shares of Common Stock
to employees pursuant to the Company’s employee stock purchase plan and pursuant
to the conversion or exercise of Common Stock Equivalents outstanding as of the
date of the most recently filed periodic report under the Exchange Act.  No
Person has any right of first refusal, preemptive right, right of participation,
or any similar right to participate in the transactions contemplated by the
Transaction Documents.  Except as a result of the purchase and sale of the
Securities, and except as set forth on Schedules 3.1(g) and (i), there are no
outstanding options, warrants, script rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities, rights or
obligations convertible into or exercisable or exchangeable for, or giving any
Person any right to subscribe for or acquire, any shares of Common Stock, or
contracts, commitments, understandings or arrangements by which the Company or
any Subsidiary is or may become bound to issue additional shares of Common Stock
or Common Stock Equivalents.  The issuance and sale of the Securities will not
obligate the Company to issue shares of Common Stock or other securities to any
Person (other than the Purchaser) and will not result in a right of any holder
of Company securities to adjust the exercise, conversion, exchange or reset
price under any of such securities. All of the outstanding shares of capital
stock of the Company are validly issued, fully paid and nonassessable, have been
issued in compliance with all federal and state securities laws, and none of
such outstanding shares was issued in violation of any preemptive rights or
similar rights to subscribe for or purchase securities.  No further approval or
authorization of any stockholder, the Board of Directors of the Company or
others is required for the issuance and sale of the Securities.  There are no
stockholders agreements, voting agreements or other similar agreements with
respect to the Company’s capital stock to which the Company is a party or, to
the knowledge of the Company, between or among any of the Company’s
stockholders.
 
(h)           SEC Reports; Financial Statements.  The Company has filed all
reports, schedules, forms, statements, and other documents required to be filed
by it 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.  The financial statements of the Company included in the SEC Reports
comply in all material respects with applicable accounting requirements and the
rules and regulations of the Commission with respect thereto as in effect at the
time of filing.  Such financial statements have been prepared in accordance with
United States generally accepted accounting principles applied on a consistent
basis during the periods involved (“GAAP”), except as may be otherwise specified
in such financial statements or the notes thereto and except that unaudited
financial statements may not contain all footnotes required by GAAP, and fairly
present in all material respects the financial position of the Company and its
consolidated subsidiaries as of and for the dates thereof and the results of
operations and cash flows for the periods then ended, subject, in the case of
unaudited statements, to normal, immaterial, year-end audit adjustments.
 
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(i)           Material Changes; Undisclosed Events, Liabilities or
Developments.  Since the date of the latest audited financial statements
included within the SEC Reports, except as specifically disclosed in a
subsequent SEC Report, (i) there has been no event, occurrence or development
that has had or that could reasonably be expected to result in a Material
Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or
otherwise) other than (A) trade payables and accrued expenses incurred in the
ordinary course of business consistent with past practice and (B) liabilities
not required to be reflected in the Company’s financial statements pursuant to
GAAP or disclosed in filings made with the Commission, (iii) the Company has not
altered its method of accounting, (iv) the Company has not declared or made any
dividend or distribution of cash or other property to its stockholders or
purchased, redeemed or made any agreements to purchase or redeem any shares of
its capital stock and (v) the Company has not issued any equity securities to
any officer, director or Affiliate, except pursuant to existing Company stock
option plans or compensation agreements.  The Company does not have pending
before the Commission any request for confidential treatment of
information.  Except for the issuance of the Securities contemplated by this
Agreement or as set forth on Schedule 3.1(i), no event, liability or development
has occurred or exists with respect to the Company or its Subsidiaries or their
respective business, properties, operations or financial condition, that would
be required to be disclosed by the Company under applicable securities laws at
the time this representation is made that has not been publicly disclosed at
least 1 Trading Day prior to the date that this representation is made.
 
(j)           Litigation.  There is no action, suit, inquiry, notice of
violation, proceeding or investigation pending or, to the knowledge of the
Company, threatened against or affecting the Company, any Subsidiary or any of
their respective properties before or by any court, arbitrator, governmental or
administrative agency or regulatory authority (federal, state, county, local or
foreign) (collectively, an “Action”) which (i) adversely affects or challenges
the legality, validity or enforceability of any of the Transaction Documents or
the Securities or (ii) could, if there were an unfavorable decision, have or
reasonably be expected to result in a Material Adverse Effect.  Neither the
Company nor any Subsidiary, nor any director or officer thereof, is or has been
the subject of any Action involving a claim of violation of or liability under
federal or state securities laws or a claim of breach of fiduciary duty.  There
has not been, and to the knowledge of the Company, there is not pending or
contemplated, any investigation by the Commission involving the Company or any
current or former director or officer of the Company.  The Commission has not
issued any stop order or other order suspending the effectiveness of any
registration statement filed by the Company or any Subsidiary under the Exchange
Act or the Securities Act.
 
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(k)           Labor Relations.  No material labor dispute exists or, to the
knowledge of the Company, is imminent with respect to any of the employees of
the Company, which could reasonably be expected to result in a Material Adverse
Effect.  None of the Company’s or its Subsidiaries’ employees is a member of a
union that relates to such employee’s relationship with the Company, and neither
the Company or any of its Subsidiaries is a party to a collective bargaining
agreement, and the Company and its Subsidiaries believe that their relationships
with their employees are good.  No executive officer, to the knowledge of the
Company, is, or is now expected to be, in violation of any material term of any
employment contract, confidentiality, disclosure or proprietary information
agreement or non-competition agreement, or any other contract or agreement or
any restrictive covenant, and the continued employment of each such executive
officer does not subject the Company or any of its Subsidiaries to any liability
with respect to any of the foregoing matters.  The Company and its Subsidiaries
are in compliance with all U.S. federal, state, local and foreign laws and
regulations relating to employment and employment practices, terms and
conditions of employment and wages and hours, except where the failure to be in
compliance could not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect.
 
(l)           Compliance.  Neither the Company nor any Subsidiary (i) is in
default under or in violation of (and no event has occurred that has not been
waived that, with notice or lapse of time or both, would result in a default by
the Company or any Subsidiary under), nor has the Company or any Subsidiary
received notice of a claim that it is in default under or that it is in
violation of, any indenture, loan or credit agreement or any other agreement or
instrument to which it is a party or by which it or any of its properties is
bound (whether or not such default or violation has been waived), (ii) is in
violation of any order of any court, arbitrator or governmental body, or (iii)
is or has been in violation of any statute, rule or regulation of any
governmental authority, including without limitation all foreign, federal, state
and local laws applicable to its business and all such laws that affect the
environment, except in each case as could not have or reasonably be expected to
result in a Material Adverse Effect.
 
(m)           Regulatory Permits.  The Company and the Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to conduct their
respective businesses as described in the SEC Reports, except where the failure
to possess such permits could not have or reasonably be expected to result in a
Material Adverse Effect (“Material Permits”), and neither the Company nor any
Subsidiary has received any notice of proceedings relating to the revocation or
modification of any Material Permit.
 
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(n)           Title to Assets.  The Company and the Subsidiaries have good and
marketable title in fee simple to all real property owned by them that is
material to the business of the Company and the Subsidiaries and good and
marketable title in all personal property owned by them that is material to the
business of the Company and the Subsidiaries, in each case free and clear of all
Liens, except for Liens as do not materially affect the value of such property
and do not materially interfere with the use made and proposed to be made of
such property by the Company and the Subsidiaries and Liens for the payment of
federal, state or other taxes, the payment of which is neither delinquent nor
subject to penalties.  Any real property and facilities held under lease by the
Company and the Subsidiaries are held by them under valid, subsisting and
enforceable leases with which the Company and the Subsidiaries are in
compliance.
 
(o)           Patents and Trademarks.  The Company and the Subsidiaries have, or
have rights to use, all patents, patent applications, trademarks, trademark
applications, service marks, trade names, trade secrets, inventions, copyrights,
licenses and other intellectual property rights and similar rights necessary or
material for use in connection with their respective businesses as described in
the SEC Reports and which the failure to so have could have a Material Adverse
Effect (collectively, the “Intellectual Property Rights”).  Neither the Company
nor any Subsidiary has received a notice (written or otherwise) that the
Intellectual Property Rights used by the Company or any Subsidiary violates or
infringes upon the rights of any Person.  To the knowledge of the Company, all
such Intellectual Property Rights are enforceable and there is no existing
infringement by another Person of any of the Intellectual Property Rights.  The
Company and its Subsidiaries have taken reasonable security measures to protect
the secrecy, confidentiality and value of all of their intellectual properties,
except where failure to do so could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
 
(p)           Insurance.  Except as set forth on Schedule 3.1(p), The Company
and the 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 the Company and the Subsidiaries are
engaged, including, but not limited to, directors and officers insurance
coverage at least equal to the aggregate Commitment Amount.  Neither the Company
nor any 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 without a significant increase in cost.
 
(q)           Transactions With Affiliates and Employees.  Except as set forth
in the SEC Reports, none of the officers or directors of the Company and, to the
knowledge of the Company, none of the employees of the Company is presently a
party to any transaction with the Company or any Subsidiary (other than for
services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to the
knowledge of the Company, any entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director, trustee or
partner, in each case in excess of $120,000 other than (i) for payment of salary
or consulting fees for services rendered, (ii) reimbursement for expenses
incurred on behalf of the Company and (iii) for other employee benefits,
including stock option agreements under any stock option plan of the Company.
 
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(r)           Sarbanes-Oxley; Internal Accounting Controls.  Except as set forth
on Schedule 3.1(r), the Company is in material compliance with all provisions of
the Sarbanes-Oxley Act of 2002 which are applicable to it as of the Closing
Date.  Except as set forth on Schedule 3.1(r), the Company and the Subsidiaries
maintain a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with
management’s general or specific authorizations, (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
GAAP and to maintain asset accountability, (iii) access to assets is permitted
only in accordance with management’s general or specific authorization, and (iv)
the recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences. Except as set forth on Schedule 3.1(r), the Company has established
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) for the Company and designed such disclosure controls and
procedures to ensure that information required to be disclosed by the Company in
the reports it files or submits under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the Commission’s
rules and forms.  Except as set forth on Schedule 3.1(r), the Company’s
certifying officers have evaluated the effectiveness of the Company’s disclosure
controls and procedures as of the end of the period covered by the Company’s
most recently filed periodic report under the Exchange Act (such date, the
“Evaluation Date”).  Except as set forth on Schedule 3.1(r), the Company
presented in its most recently filed periodic report under the Exchange Act the
conclusions of the certifying officers about the effectiveness of the disclosure
controls and procedures based on their evaluations as of the Evaluation
Date.  Since the Evaluation Date, there have been no changes in the Company’s
internal control over financial reporting (as such term is defined in the
Exchange Act) that has materially affected, or is reasonably likely to
materially affect, the Company’s internal control over financial reporting.
 
(s)           Certain Fees.  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 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.
 
(t)           Private Placement. Assuming the accuracy of the Purchaser
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 Purchaser 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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(u)           Investment Company. The Company is not, and is not an Affiliate
of, and immediately after receipt of payment for the Securities, will not be or
be an Affiliate of, an “investment company” within the meaning of the Investment
Company Act of 1940, as amended.  The Company shall conduct its business in a
manner so that it will not become subject to the Investment Company Act.
 
(v)           Registration Rights.  Other than each of the Purchaser, no Person
has any right to cause the Company to effect the registration under the
Securities Act of any securities of the Company.
 
(w)           Listing and Maintenance Requirements.  The Common Stock is
registered pursuant to Section 12(b) or 12(g) 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 any Trading Market on
which the Common Stock is or has been listed or quoted to the effect that the
Company is not in compliance with the listing or maintenance requirements of
such Trading Market. 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.
 
(x)           Application of Takeover Protections.  The Company and its Board of
Directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination, poison pill
(including any distribution under a rights agreement) or other similar
anti-takeover provision under the Company’s Certificate of Incorporation (or
similar charter documents) or the laws of its state of incorporation that is or
could become applicable to the Purchaser as a result of the Purchaser and the
Company fulfilling their obligations or exercising their rights under the
Transaction Documents, including without limitation as a result of the Company’s
issuance of the Securities and the Purchaser’s ownership of the Securities.
 
(y)           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 Purchaser 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 Purchaser will rely
on the foregoing representation in effecting transactions in securities of the
Company.  All disclosure furnished by or on behalf of the Company to the
Purchaser regarding the Company, its business and the transactions contemplated
hereby, including the Disclosure Schedules to this Agreement, with respect to
the representations and warranties made herein are true and correct with respect
to such representations and warranties and do 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, 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.
 
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(z)           No Integrated Offering. Assuming the accuracy of the Purchaser’s
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 the Securities Act or any applicable shareholder approval
provisions of any Trading Market on which any of the securities of the Company
are listed or designated.
 
(aa)           Solvency.  Based on the financial condition of the Company, as of
the Closing Date after giving effect to the receipt by the Company of the
proceeds from the sale of the Securities hereunder, (i) the fair saleable value
of the Company’s assets exceeds the amount that will be required to be paid on
or in respect of the Company’s existing debts and other liabilities (including
known contingent liabilities) as they mature; (ii) the Company’s assets do not
constitute unreasonably small capital to carry on its business as now conducted
and as proposed to be conducted including its capital needs taking into account
the particular capital requirements of the business conducted by the Company,
and projected capital requirements and capital availability thereof; and (iii)
the current cash flow of the Company, together with the proceeds the Company
would receive, were it to liquidate all of its assets, after taking into account
all anticipated uses of the cash, would be sufficient to pay all amounts on or
in respect of its liabilities when such amounts are required to be paid.  The
Company does not intend to incur debts beyond its ability to pay such debts as
they mature (taking into account the timing and amounts of cash to be payable on
or in respect of its debt).  The Company has no knowledge of any facts or
circumstances which lead it to believe that it will file for reorganization or
liquidation under the bankruptcy or reorganization laws of any jurisdiction
within one year from the Closing Date.  The SEC Reports set forth as of the
dates thereof all outstanding secured and unsecured Indebtedness of the Company
or any Subsidiary, or for which the Company or any Subsidiary has
commitments.  For the purposes of this Agreement, “Indebtedness” shall mean (a)
any liabilities for borrowed money or amounts owed in excess of $50,000 (other
than trade accounts payable incurred in the ordinary course of business), (b)
all guaranties, endorsements and other contingent obligations in respect of
Indebtedness of others, whether or not the same are or should be reflected in
the Company’s balance sheet (or the notes thereto), except guaranties by
endorsement of negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business; and (c) the present value of
any lease payments in excess of $50,000 due under leases required to be
capitalized in accordance with GAAP.  Neither the Company nor any Subsidiary is
in default with respect to any Indebtedness.
 
(bb)           Tax Status.  Except for matters that would not, individually or
in the aggregate, have or reasonably be expected to result in a Material Adverse
Effect, the Company and each Subsidiary has filed all necessary federal, state
and foreign income and franchise tax returns and , except for as set forth on
Schedule 3.1(bb), has paid or accrued all taxes shown as due thereon, and the
Company has no knowledge of a tax deficiency which has been asserted or
threatened against the Company or any Subsidiary.
 
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(cc)           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 Purchaser and certain other “accredited
investors” within the meaning of Rule 501 under the Securities Act.
 
(dd)           Foreign Corrupt Practices.  Neither the Company, nor to the
knowledge of the Company, any agent or other person acting on behalf of the
Company, has (i) directly or indirectly, used any funds for unlawful
contributions, gifts, entertainment or other unlawful expenses related to
foreign or domestic political activity, (ii) made any unlawful payment to
foreign or domestic government officials or employees or to any foreign or
domestic political parties or campaigns from corporate funds, (iii) failed to
disclose fully any contribution made by the Company (or made by any person
acting on its behalf of which the Company is aware) which is  in violation of
law, or (iv) violated in any material respect any provision of the Foreign
Corrupt Practices Act of 1977, as amended.
 
(ee)           Accountants.  The Company’s accountants are set forth on Schedule
3.1(ee) of the Disclosure Schedule.  To the knowledge of the Company, such
accountants, who the Company expects will express their opinion with respect to
the financial statements to be included in the Company’s Annual Report on Form
10-K for the year ending October 31, 2009, are a registered public accounting
firm as required by the Exchange Act.
 
(ff)           Acknowledgment Regarding Purchaser’s Purchase of Securities.  The
Company acknowledges and agrees that the Purchaser 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 Purchaser is not 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 the Purchaser or any
of the Purchaser’s respective representatives or agents in connection with the
Transaction Documents and the transactions contemplated thereby is merely
incidental to the Purchaser’s purchase of the Securities.  The Company further
represents to the 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.
 
(gg)           Regulation M Compliance.  The Company has not, and will not
during the term of this Agreement, and to its knowledge no one acting on its
behalf has, or will during the term of this Agreement, (i) taken, directly or
indirectly, any action designed to cause or to result in the stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of any of the Securities, (ii) sold, bid for, purchased, or, paid any
compensation for soliciting purchases of, any of the Securities, or (iii) paid
or agreed to pay to any person any compensation for soliciting another to
purchase any other securities of the Company, other than, in the case of clauses
(ii) and (iii), compensation paid to the Company’s placement agent in connection
with the placement of the Securities.
 
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3.2           Representations and Warranties of the Purchaser.  Purchaser hereby
represents and warrants as of the date hereof and as of each Closing Date to the
Company as follows:
 
(a)           Organization; Authority.  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, delivery and performance by the Purchaser of the transactions
contemplated by this Agreement have been duly authorized by all necessary
corporate or similar action on the part of the Purchaser.  Each Transaction
Document to which it is a party has been duly executed by the Purchaser, and
when delivered by the Purchaser in accordance with the terms hereof, will
constitute the valid and legally binding obligation of the 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.  Purchaser understands that the Securities are
“restricted securities” and have not been registered under the Securities Act or
any applicable state securities law and is acquiring the Securities at the
Initial Closing 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 (this representation and warranty not
limiting the Purchaser’s right to sell the Securities pursuant to the
Registration Statement or otherwise in compliance with applicable federal and
state securities laws) in violation of the Securities Act or any applicable
state securities law.  Purchaser is acquiring the Securities hereunder in the
ordinary course of its business.
 
(c)           Purchaser Status.  At the time the Purchaser was offered the
Securities, it was, and at the date hereof it is, 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.
 
(d)           Experience of Purchaser.  Purchaser, either alone or together with
its representatives, has such knowledge, sophistication and experience in
business and financial matters so as to be capable of evaluating the merits and
risks of the prospective investment in the Securities, and has so evaluated the
merits and risks of such investment.  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.
 
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(e)           General Solicitation.  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 any other
general solicitation or general advertisement.
 
ARTICLE IV.
OTHER AGREEMENTS OF THE PARTIES
 
4.1           Transfer Restrictions.
 
(a)           The Securities may only be disposed of in compliance with state
and federal securities laws.  In connection with any transfer of Securities
other than pursuant to an effective registration statement or Rule 144, to the
Company or to an affiliate of the Purchaser or in connection with a pledge as
contemplated in Section 4.1(b), 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 shall have the rights of
the Purchaser under this Agreement and the Registration Rights Agreement, as to
issued Securities only.
 
(b)           The Purchaser agrees to the imprinting, so long as is required by
this Section 4.1, of a legend on any of the Securities in the following form:
 
THESE SECURITIES HAVE 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 AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO
THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY
ACCEPTABLE TO THE COMPANY.  THESE SECURITIES 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.
 
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The Company acknowledges and agrees that the Purchaser may 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, the Purchaser may transfer 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 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 thereunder.
 
(c)           Certificates evidencing the Shares shall not contain any legend
(including the legend set forth in Section 4.1(b)), (i) while a registration
statement (including the Registration Statement) covering the resale of such
security is effective under the Securities Act, or (ii) following any sale of
such Shares pursuant to Rule 144, or (iii) if such Shares are eligible for sale
under Rule 144, or (iv) if such legend is not required under applicable
requirements of the Securities Act (including judicial interpretations and
pronouncements issued by the staff of the Commission).  The Company shall cause
its counsel to issue a legal opinion to the Company’s transfer agent promptly
after the Effective Date if required by the Company’s transfer agent to effect
the removal of the legend hereunder.   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 the Purchaser to the Company or the Company’s transfer agent of a certificate
representing Shares as the case may be, issued with a restrictive legend (such
third Trading Day, the “Legend Removal Date”), deliver or cause to be delivered
to the Purchaser a certificate representing such shares that is free from all
restrictive and other legends. All Draw Down Shares shall be delivered without
any restrictive legends. The Company may not make any notation on its records or
give instructions to any transfer agent of the Company that enlarge the
restrictions on transfer set forth in this Section.  Certificates for Securities
subject to legend removal hereunder shall be transmitted by the transfer agent
of the Company to the Purchaser by crediting the account of the Purchaser’s
prime broker with the Depository Trust Company System.
 
(d)           In addition to the Purchaser’s other available remedies, the
Company shall pay to the Purchaser, in cash, as partial liquidated damages and
not as a penalty, for each $1,000 of Shares (based on the VWAP of the Common
Stock on the date such Securities are submitted to the Company’s transfer agent)
delivered for removal of the restrictive legend and subject to Section 4.1(c),
$10 per Trading Day (increasing to $20 per Trading Day five (5) Trading Days
after such damages have begun to accrue) for each Trading Day after the Legend
Removal Date until such certificate is delivered without a legend. Nothing
herein shall limit the Purchaser’s right to pursue actual damages for the
Company’s failure to deliver certificates representing any Securities as
required by the Transaction Documents, and the 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.
 
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(e)           Purchaser agrees 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 that the Purchaser will 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.
 
4.2           Furnishing of Information.  As long as Purchaser owns any
Securities, 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.  As long as the Purchaser owns any Securities, if the Company is
not required to file reports pursuant to the Exchange Act, it will prepare and
furnish to the Purchaser and make publicly available in accordance with Rule
144(c) such information as is required for the Purchaser 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.
 
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 to the Purchaser 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 8:30
a.m. Eastern time on the Trading Day immediately following the date hereof,
issue a Current Report on Form 8-K, disclosing the material terms of the
transactions contemplated hereby, and shall attach the Transaction Documents
thereto.  The Company and the Purchaser shall consult with each other in issuing
any other press releases with respect to the transactions contemplated hereby,
and neither the Company nor the Purchaser shall issue any such press release or
otherwise make any such public statement without the prior consent of the
Company, with respect to any press release of the Purchaser, or without the
prior consent of the 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, in which case the disclosing party shall
promptly provide the other party with prior notice of such public statement or
communication.
 
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4.5           Shareholder Rights Plan.  No claim will be made or enforced by the
Company or, with the consent of the Company, any other Person, that the
Purchaser is an “Acquiring Person” under any control share acquisition, business
combination, poison pill (including any distribution under a rights agreement)
or similar anti-takeover plan or arrangement in effect or hereafter adopted by
the Company, or that the Purchaser could be deemed to trigger the provisions of
any such plan or arrangement, by virtue of receiving Securities under the
Transaction Documents or under any other agreement between the Company and the
Purchaser.
 
4.6           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 the Purchaser or its agents or counsel with any
information that the Company believes constitutes material non-public
information, unless prior thereto the Purchaser shall have executed a written
agreement regarding the confidentiality and use of such information.  The
Company understands and confirms that the Purchaser shall be relying on the
foregoing representations in effecting transactions in securities of the
Company.
 
4.7           Indemnification of Purchaser.   Subject to the provisions of this
Section 4.7, the Company will indemnify and hold the 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 the 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 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 the Purchaser, or any
of its Affiliates, by any stockholder of the Company who is not an Affiliate of
the Purchaser, with respect to any of the transactions contemplated by the
Transaction Documents (unless such action is based upon a breach of the
Purchaser’s representations, warranties or covenants under the Transaction
Documents or any agreements or understandings the Purchaser may have with any
such stockholder or any violations by the Purchaser of state or federal
securities laws or any conduct by the Purchaser 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, the 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 the 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 the 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 (i) for any settlement by the
Purchaser Party effected without the Company’s prior written consent, which
shall not be unreasonably withheld or delayed; or (ii) 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 the Purchaser Party in this Agreement or in the other
Transaction Documents.
 
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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 rights, a sufficient number of shares of Common Stock
for the purpose of enabling the Company to issue Shares pursuant to this
Agreement.
 
4.9           Listing of Common Stock.  The Company hereby agrees to use best
efforts to maintain the listing or quotation of the Common Stock on a Trading
Market, and as soon as reasonably practicable following the Initial Closing (but
not later than the Effective Date of the initial Registration Statement) to list
or quote all of the Shares on such Trading Market. The Company further agrees,
if the Company applies to have the Common Stock traded on any other Trading
Market, it will include in such application all of the Shares, and will take
such other action as is necessary to cause all of the Shares to be listed or
quoted on such other Trading Market as promptly as possible.  The Company will
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           Confidentiality After the Date Hereof.  Purchaser covenants that
until such time as the transactions contemplated by this Agreement are publicly
disclosed by the Company as described in Section 4.4, the Purchaser will
maintain the confidentiality of all disclosures made to it in connection with
this transaction (including the existence and terms of this transaction.  
 
4.11           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
Purchaser 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 Purchaser.
 
4.12           The Shares.  Anything in this Agreement to the contrary
notwithstanding, (i) in no event shall the number of shares issuable to
Purchaser cause the Purchaser to own in excess of 9.99% of the then outstanding
Common Stock and (ii) at no time will the Company request a Draw Down which
would result in the issuance of an aggregate number of shares of Common Stock
pursuant to this Agreement which exceeds 19.9% of the number of shares of Common
Stock issued and outstanding on the date hereof without first obtaining
stockholder approval of such excess issuance, or such other amount as would
require stockholder approval under rules of the principal Trading Market or
otherwise without first obtaining stockholder approval of such excess issuance,
if any such is required.
 
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4.13           Accuracy of Registration Statement.  On each Settlement Date, the
Registration Statement and the prospectus therein (including any prospectus
supplement) shall not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein not misleading in light of the circumstances under
which they were made; and on such Settlement Date the Registration Statement and
the prospectus therein will not include any untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; provided, however, the Company makes no representations or
warranties as to the information contained in or omitted from the Registration
Statement and the prospectus therein in reliance upon and in conformity with the
information furnished in writing to the Company by the Purchaser specifically
for inclusion in the Registration Statement and the prospectus therein.
 
4.14           Notice of Certain Events Affecting Registration; Suspension of
Right to Request a Draw Down. The Company will promptly notify the Purchaser in
writing upon the occurrence of any of the events set forth in Section 3(d) of
the Registration Rights Agreement. The Company shall not deliver to the
Purchaser any Draw Down Notice during the continuation of any of the foregoing
events.  The Company shall promptly make available to the Purchaser any such
supplements or amendments to the related prospectus, at which time, provided
that the registration statement and any supplements and amendments thereto are
then effective, the Company may recommence the delivery of Draw Down Notices.
 
4.15           Short Sales.  After the date hereof and prior to the termination
of this Agreement, the Purchaser hereby agrees not to execute any Short Sales of
the Common Stock.
 
4.16           Commitment
Shares.                                                      In consideration
for agreeing to the terms of this Agreement and no additional consideration at
such time of issuance, the Company shall deliver to the Purchaser, a number of
shares of Common Stock equal to:
 
(a)           on 45th calendar day immediately following the Effective Date of
the initial Registration Statement (such date, the “Second Issuance Date”) (i)
$30,000 divided by the lesser of (y) closing bid price of the Common Stock on
the Trading Day immediately preceding the Second Issuance Date (such price, the
“Second Issuance Price”) and (z) the closing bid price of the Common Stock on
the Trading Day immediately preceding the date of this Agreement (such price,
the “First Issuance Price”), and (ii) if the Second Issuance Price is less than
the First Issuance Price, additional shares of Common Stock equal to the
difference between (A) $75,000 divided by the Second Issuance Price and (B) the
number of shares of Common Stock issued to the Purchaser pursuant to Section
2.2(a)(iii) on the date of this Agreement;
 
(b)           on the 90th calendar day immediately following the Effective Date
of the initial Registration Statement (such date, the “Third Issuance Date”),
$15,000 divided by the closing bid price of the Common Stock on the Trading Day
immediately preceding the Third Issuance Date;
 
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(c)           on the 120th calendar day immediately following the Effective Date
of the initial Registration Statement (such date, the “Fourth Issuance Date”),
$15,000 divided by the closing bid price of the Common Stock on the Trading Day
immediately preceding the Fourth Issuance Date; and
 
(d)           on the 150th calendar day immediately following the Effective Date
of the initial Registration Statement (such date, the “Fifth Issuance Date” and
together with the First Issuance Price, the Second Issuance Price, the Third
Issuance Price and the Fourth Issuance Price, the “Issuance Price”), $15,000
divided by the closing bid price of the Common Stock on the Trading Day
immediately preceding the Fifth Issuance Date.
 
All such shares issuable pursuant to this Section 4.16 (the “Commitment Shares”)
shall be delivered to the DTC account specified by the Purchaser in writing to
the Company.
 
ARTICLE V.
CONDITIONS TO INITIAL CLOSING AND DRAW DOWNS
 
5.1           Conditions Precedent to the Obligation of the Company to Sell the
Shares.  The obligation hereunder of the Company to proceed to close this
Agreement and to issue and sell the Shares to the Purchaser is subject to the
satisfaction or waiver, at or before the Initial Closing, and as of each
Settlement Date of each of the conditions set forth below.  These conditions are
for the Company’s sole benefit and may be waived by the Company in writing at
any time in its sole discretion.
 
(a)           Accuracy of the Purchaser’s Representations and Warranties.  The
representations and warranties of the Purchaser shall be true and correct in all
material respects as of the date when made and as of the Initial Closing and as
of each Settlement Date as though made at that time (except for representations
and warranties that speak as of a particular date, which shall be true and
correct in all material respects as of such dates).
 
(b)           Performance by the Purchaser.  The Purchaser shall have performed,
satisfied and complied in all material respects with all covenants, agreements
and conditions required by this Agreement to be performed, satisfied or complied
with by the Purchaser at or prior to the Initial Closing and as of each
Settlement Date.
 
(c)           No Injunction.  No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction which
prohibits the consummation of any of the transactions contemplated by this
Agreement.
 
(d)           No Proceedings or Litigation.  No material Action shall have been
commenced against the Purchaser or the Company or any Subsidiary, or any of the
officers, directors or affiliates of the Company or any Subsidiary, seeking to
restrain, prevent or change the transactions contemplated by this Agreement, or
seeking damages in connection with such transactions.
 
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(e)           Initial Closing Deliveries.  The delivery by the Purchaser of the
items set forth in Section 2.2(b) of this Agreement.
 
(f)           Threshold Price.  The Purchase Price for the applicable Draw Down
shall be equal to or greater than the Threshold Price.
 
5.2           Conditions Precedent to the Obligation of the Purchaser to
Close.  The obligation hereunder of the Purchaser to perform its obligations
under this Agreement and to purchase the Shares is subject to the satisfaction
or waiver, at or before the Initial Closing, of each of the conditions set forth
below.  These conditions are for the Purchaser’s sole benefit and may be waived
by the Purchaser in writing at any time in its sole discretion.
 
(a)           Accuracy of the Company’s Representations and Warranties.  Each of
the representations and warranties of the Company shall be true and correct in
all material respects as of the date when made and as of the Initial Closing as
though made at that time (except for representations and warranties that speak
as of a particular date, which shall be true and correct in all material
respects as of such date).
 
(b)           Performance by the Company.  The Company shall have performed,
satisfied and complied in all material respects with all material covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the Company at or prior to the Initial Closing.
 
(c)           No Injunction.  No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction which
prohibits the consummation of any of the transactions contemplated by this
Agreement.
 
(d)           No Proceedings or Litigation.  No material Action shall have been
commenced, against the Purchaser or the Company or any subsidiary, or any of the
officers, directors or affiliates of the Company or any subsidiary seeking to
restrain, prevent or change the transactions contemplated by this Agreement, or
seeking damages in connection with such transactions.
 
(e)           Initial Closing Deliveries.  The delivery by the Company of the
items set forth in Section 2.2(a) of this Agreement.
 
5.3           Conditions Precedent to the Obligation of the Purchaser to Accept
a Draw Down and Purchase the Shares.  The obligation hereunder of the Purchaser
to accept a Draw Down request and to acquire and pay for the Shares is subject
to the satisfaction at or before each Settlement Date, of each of the conditions
set forth below.
 
(a)           Satisfaction of Conditions to Initial Closing.  The Company shall
have satisfied at the Initial Closing, or the Purchaser shall have waived at the
Initial Closing, the conditions set forth in Section 5.2 hereof.
 
(b)           No Suspension.  Trading in the Common Stock shall not have been
suspended by the Commission or the 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 delivery of each Draw Down Notice),
and, at any time prior to such Draw Down Notice, trading in securities generally
as reported on the principal Trading Market shall not have been suspended or
limited, or minimum prices shall not have been established on securities whose
trades are reported on the principal Trading Market unless the general
suspension or limitation shall have been terminated prior to the delivery of
such Draw Down Notice.
 
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(c)           Material Adverse Effect.  No Material Adverse Effect and no
Consolidation Event where the successor entity has not agreed to deliver to the
Purchaser such shares of stock and/or securities as the Purchaser is entitled to
receive pursuant to this Agreement.
 
(d)           Opinion of Counsel.  The Purchaser shall have received a legal
opinion from Company Counsel, in the form of Exhibit B hereto.
 
(e)           Threshold Price.  The Purchase Price for the applicable Draw Down
shall be equal to or greater than the Threshold Price.
 
(f)            Equity Conditions.  During the Draw Down Pricing Period through
the Settlement Date, all of the Equity Conditions shall have been met.
 

ARTICLE VI.
DRAW DOWN TERMS
 
6.1           Draw Down Terms.  Subject to the satisfaction of the conditions
set forth in this Agreement, the parties agree as follows:
 
(a)           The Company may, in its sole discretion, issue and exercise draw
downs against the Commitment Amount (each a “Draw Down”) during the Commitment
Period, which Draw Downs the Purchaser shall be obligated to accept, subject to
the terms and conditions of this Agreement. Before the Company shall exercise a
Draw Down, the Company shall have caused a sufficient number of shares of Common
Stock to be registered to cover the resale of the Draw Down Shares to be issued
in connection with such Draw Down.
 
(b)           Only one Draw Down shall be allowed in each Draw Down Pricing
Period and any subsequent Draw Down Pricing Period shall not commence until the
Trading Cushion has elapsed since the end of the previous Draw Down Pricing
Period. The number of shares of Common Stock purchased by the Purchaser with
respect to each Draw Down shall be determined as set forth in Section 6.1(d)
herein. Each Draw Down Pricing Period shall be comprised of settlement periods
which shall each be comprised of three Trading Days (each such period, a
“Settlement Period”) whereby final Settlement Period shall consist of the first,
second and third Trading Days following the Draw Down Pricing Period, the second
Settlement Period shall consist of the fourth, fifth and sixth Trading Days of
the Draw Down Pricing Period and the third Settlement Period shall consist of
the seventh, eighth and ninth Trading Days of the Draw Down Pricing Period. Each
Draw Down shall be settled on the third Trading Day following the end of the
applicable Settlement Period (each such settlement date shall be referred to as
a “Settlement Date”).
 
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(c)           The maximum Investment Amount as to each Draw Down shall be equal
to A multiplied by B, where A equals a number of shares of Common Stock equal to
20% of the total trading volume during the 9 Trading Days immediately prior to
the applicable Draw Down Pricing Period and B equals the average of each of the
VWAPs during such 9 Trading Day period; provided, however, unless mutually
agreed upon by the Company and the Purchaser, no Draw Down shall exceed
$100,000.
 
(d)           The number of shares of Common Stock to be issued on each
Settlement Date shall be a number of shares equal to the sum of the quotients
(for each Trading Day within the Settlement Period) of (x) 10% of the Investment
Amount divided by (y) the Purchase Price on each Trading Day within the
Settlement Period, subject to the following adjustments:
 
(i)           if the Purchase Price on a given Trading Day is less than the
applicable Threshold Price, then such Trading Day shall be withdrawn from the
Draw Down Pricing Period; and
 
(ii)           if during any Trading Day during the Draw Down Pricing Period
trading of the Common Stock on the Trading Market is suspended for more than 3
hours, in the aggregate, or if any Trading Day during the Draw Down Pricing
Period is shortened because of a public holiday, then such Trading Day shall be
withdrawn from the Draw Down Pricing Period; and
 
(iii)           if during any Trading Day during the Draw Down Pricing Period
sales of Draw Down Shares pursuant to the Registration Statement are suspended
by the Company for more than three (3) hours, in the aggregate, then such
Trading Day shall be withdrawn from the Draw Down Pricing Period.
 
(e)           The Company must inform the Purchaser by delivering a draw down
notice, in the form of Exhibit C hereto (the “Draw Down Notice”), via facsimile
transmission in accordance with Section 8.3, as to the amount of the Draw Down
(the “Investment Amount”) the Company wishes to exercise. The Draw Down Notice
shall also inform the Purchaser of the first day of the Draw Down Pricing
Period, which, shall be the first Trading Day following the date such Draw Down
Notice is received (the “Commencement Date”).  At no time shall the Purchaser be
required to purchase more than the maximum Investment Amount for a given Draw
Down Pricing Period.  The Company shall have the right to notify the Purchaser
that Draw Downs shall be continuous pursuant to a Draw Down Notice until such
time that the Company elects to suspend such Draw Down Notice.  In the event of
a continuous Draw Down Notice, the Company must give at least 2 Trading Days’
written notice of suspension to the Purchaser and in no event shall a suspension
of a Draw Down occur prior to the end of any pending Draw Down Pricing
Periods.  On or before any Trading Day that a Draw Down Notice is delivered or
notice of suspension of Draw Downs is delivered, the Company shall have filed
with the Commission a prospectus supplement pursuant to Rule 424 under the
Securities Act setting forth the terms of the Draw Down Notice or suspension
notice.
 
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(f)           On the Trading Day immediately following the last day of the
Settlement Period, the Company shall deliver and the Purchaser shall acknowledge
a settlement statement (the “Settlement Statement”) setting forth the number of
Draw Down Shares issuable and the aggregate Purchase Price as to such Settlement
Period.  On the Settlement Date as to such Draw Down, the Draw Down Shares
purchased pursuant to such Settlement Statement shall be delivered to the
Depository Trust Company (“DTC”) account of the Purchaser, or its designees, as
designated by the Purchaser in the Settlement Statement, via DTC’s Deposit
Withdrawal Agent Commission system (“DWAC”).  Upon the Company electronically
delivering such Draw Down Shares to the DTC account of the Purchaser, or its
designees, via DWAC by 1:00 p.m. ET, the Purchaser shall, on the same day (or
the next Business Day if such day is not a Business Day) wire transfer
immediately available funds to the Company’s bank account, as designated by the
Company in the Settlement Statement, for the amount of the aggregate Purchase
Price of such Draw Down Shares. Upon the Company electronically delivering the
Draw Down Shares to the Purchaser or its designee’s DTC account via DWAC after
1:00 p.m. ET, the Purchaser shall wire transfer next day available funds to the
Company’s designated account on such day.  At the sole election of the
Purchaser, the Purchaser may elect to pay any broker fees disclosed in the
schedules attached to this Agreement directly to the brokers pursuant to written
instructions from any such broker.
 
(g)           The Company understands that a delay in the delivery of the Shares
to the Purchaser beyond the Settlement Date could result in economic loss to the
Purchaser.  In addition to the Purchaser’s other available remedies, the Company
shall pay to the Purchaser, in cash, as partial liquidated damages and not as a
penalty, for each $1,000 of Shares (based on the Closing Price of the Common
Stock on the applicable Settlement Date) required to be delivered on the
Settlement Date, $10 per Trading Day (increasing to $20 per Trading Day five (5)
Trading Days after such damages have begun to accrue) for each Trading Day after
the Settlement Date until such Shares are delivered pursuant to this Article
VI.  Nothing herein shall limit the Purchaser’s right to pursue actual damages
for the Company’s failure to deliver certificates representing any Securities as
required by the Transaction Documents, including but not limited to the cost of
any buy-in to the Purchaser, and the 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.
 
ARTICLE VII.
TERMINATION
 

7.1           Term.  The term of this Agreement shall begin on the date hereof
and shall end 24 months from the Effective Date or as otherwise set forth in
Section 7.2.
 
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7.2           Other Termination.
 
(a)           This Agreement shall terminate if (i) the Common Stock is
de-listed from the principal Trading Market unless such de-listing is in
connection with a subsequent listing on another principal Trading Market, (ii)
the Company files for protection from creditors under any applicable law or
(iii) the Registration Statement is not declared effective by the Commission on
the 9-month anniversary of the date hereof; provided, however, that upon such
date, the Company shall be required to deliver the shares of Common Stock
otherwise deliverable pursuant to Section 4.16 as if the Registration Statement
had gone effective on such date.
 
(b)           The Company may terminate this Agreement upon 10 Trading Day’s
notice if the Purchaser shall fail to fund a properly noticed Draw Down within
10 Trading Days of the end of the applicable Settlement Period.
 
7.3           Effect of Termination. In the event of termination of this
Agreement pursuant to Section 7.2 herein, written notice thereof shall forthwith
be given to the other party and the transactions contemplated by this Agreement
shall be terminated without further action by either party.  If this Agreement
is terminated as provided in Section 7.1 or 7.2 herein, this Agreement shall
become void and of no further force and effect, except for Section 4.7 and
Article 8 herein, which shall survive the termination of this
Agreement.  Nothing in this Section 7.3 shall be deemed to release the Company
or the Purchaser from any liability for any breach under this Agreement, or to
impair the rights of the Company or the Purchaser to compel specific performance
by the other party of its obligations under this Agreement.
 
ARTICLE VIII.
MISCELLANEOUS
 
8.1           Fees and Expenses.  At the Closing, the Company has agreed to
reimburse the Purchaser for its legal fees and expenses, $10,000 of which amount
was paid on or about September 24, 2009.  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 Purchaser.
 
8.2           Entire Agreement.  The Transaction Documents, together with the
exhibits and schedules thereto, contain the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules.
 
8.3           Notices.  Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be in writing
and shall be deemed given and effective on the earliest of (a) the date of
transmission, if such notice or communication is delivered via facsimile 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 transmission 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.
 
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8.4           Amendments; Waivers.  No provision of this Agreement may be waived
or amended except in a written instrument signed, in the case of an amendment,
by the Company and the Purchaser 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.
 
8.5           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.
 
8.6           Successors and Assigns.  This Agreement shall be binding upon and
inure to the benefit of the parties and their successors.  Neither party may
assign this Agreement or any rights or obligations hereunder (other than by
merger).
 
8.7           No Third-Party Beneficiaries.  This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person, except as otherwise set forth in Section 4.7.
 
8.8           Governing Law.  All questions concerning the construction,
validity, enforcement and interpretation of the Transaction Documents shall be
governed by and construed and enforced in accordance with the internal laws of
the State of New York, without regard to the principles of conflicts of law
thereof.  Each party agrees that all 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.  The
parties hereby waive all rights to a trial by jury.  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.
 
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8.9           Survival.  The representations and warranties contained herein
shall survive the Closing and the delivery of the Shares.
 
8.10           Execution.  This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been 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.
 
8.11           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.
 
8.12           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 indemnity)
associated with the issuance of such replacement Securities.
 
8.13           Remedies.  In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, each of the
Purchaser 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.
 
8.14           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.
 
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8.15           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 and shares of Common Stock 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.
 
(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.
 

MICRO IMAGING TECHNOLOGY, INC.      
Address for Notice:
            By:
/S/ Michael W. Brennan
  970 Calle Amanecer, Suite F  
Name:   Michael W. Brennan
Title:     Chairman and CEO
 
San Clemente, CA 92673
         
With a copy to (which shall not constitute notice):
 
Christopher H. Dieterich, Esq.
 
 
Dieterich & Associates
11300 West Olympic Boulevard,
Suite 800
Los Angeles, CA 90064

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOR PURCHASER FOLLOWS]
 
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[PURCHASER SIGNATURE PAGES TO MMTC 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: ______ASCENDIANT CAPITAL GROUP, LLC_____________________
 
Signature of Authorized Signatory of Purchaser: ___/S/ Bradley J.
Wilhite_________
 
Name of Authorized Signatory: _________Bradley J.
Wilhite_________________________
 
Title of Authorized Signatory: __________Managing
Member____________________________
 
Email Address of Purchaser:________________________________________________
 
Fax Number of Purchaser: ________________________________________________
 
Address for Notice of Purchaser:

18881 Von Karman Avenue, Suite 1600
Irvine, CA 92612

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

Brokerage Identification Code (if delivered via DWAC)

EIN Number:  [PROVIDE THIS UNDER SEPARATE COVER]

[SIGNATURE PAGES CONTINUE]
 
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EXHIBIT C
 
DRAW DOWN NOTICE/COMPLIANCE CERTIFICATE
 
MICRO IMAGING TECHNOLOGY, INC.
 
The undersigned hereby certifies, with respect to shares of Common Stock of
Micro Imaging Technology, Inc. (the “Company”) issuable in connection with this
Draw Down Notice and Compliance Certificate dated _____________ (the “Notice”),
delivered pursuant to the Securities Purchase Agreement dated as of October 2,
2009 (the “Agreement”), as follows:

1.           The undersigned is the duly appointed Chief Executive Officer or
Chief Financial Officer of the Company.
 
 
2.           Except as set forth on the schedules attached hereto or in the SEC
Reports (as defined in the Agreement), the representations and warranties of the
Company set forth in the Agreement are true and correct in all material respects
as though made on and as of the date hereof, except for representations and
warranties are expressly made as of a particular date.
 
3.           The Company has performed in all material respects all covenants
and agreements and conditions required under the Agreement to be performed by
the Company on or prior to the date of this Draw Down Notice.
 
4.           The Investment Amount is $___________.
 
5.           The Threshold Price is $____________.
 
6.           Draw Downs shall commence on ____________ and end after [check
one]:
 
a.           ______ the completion of ___ Draw Down Pricing Periods.
 
b.           ______ until written notice to you that Draw Downs have been
suspended provided that no pending Draw Down may be suspended.
 
The undersigned has executed this Certificate this ____ day of ________, _____.
 

  MICRO IMAGING TECHNOLOGY, INC.          
 
By:
      Name:        Title    

 
 
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SCHEDULE 3.1
TO
SECURITIES PURCHASE AGREEMENT

3.1           Representations and Warranties of the Company.
 
The Company hereby discloses exceptions to the disclosure contained in the
following sections of the Securities Purchase Agreement:
 
3.1(p)  Insurance.  The Company maintains business personal property insurance
for its facility located at 970 Calle Amanecer, Suite F, San Clemente, CA
92673.  The Company maintains no other forms of insurance coverage, including
directors and officers insurance coverage, at this time.
 
3.1(r)  Sarbanes-Oxley; Internal Accounting Controls.  The Company’s management
believes that its disclosure controls and procedures and its internal controls
over financial reporting are adequate and effective to ensure that information
required to be disclosed in its SEC Reports is processed, summarized and
reported within the time periods specified by the SEC rules and forms, and that
such information is accumulated and communicated to its management, including
the certifying officer, to allow timely decisions regarding the required
disclosure.  However, the Company is not currently in full compliance with
Section 404 of the Sarbanes-Oxley Act of 2002.
 
3.1(bb)  Tax Status.   The Company and its subsidiary are each subject to the
California minimum state income tax of $800 each year.  The Company has not paid
the minimum taxes. Totaling $3,200, for income years 2008 and 2009.
 
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SCHEDULE 3.1(a)
 
TO
 
SECURITIES PURCHASE AGREEMENT
 

 
3.1(a)      Subsidiaries
 
Micro Imaging Technology, Inc., a California corporation, (the “Company”) is the
parent company of Micro Imaging Technology, organized under the laws of the
State of Nevada in February 2000.  As of October 1, 2009, there are 14,865,000
and 1,000,000 shares of common stock and preferred stock issued and outstanding,
respectively.  The Company currently owns 80.73% of the outstanding common stock
and 100% of the preferred shares.
 
The total number of shares of capital stock which this corporation shall have
authority to issue is One Hundred Three Million (103,000,000) with a par value
of $.001 per share amounting to $103,000.  One Hundred Million (100,000,000) of
those shares are Common Stock and Three Million (3,000,000) of those shares as
Preferred Stock.  Each share of Common Stock shall entitle the holder thereof to
one vote, in person or by proxy, on any matter on which action of the
stockholders of his corporation is sought.  The holders of share of Preferred
Stock shall have no right to vote such shares, except (i) determined by the
Board of Directors of this corporation in accordance with the provisions of
Section (3) of ARTICLE FIFTH of the Articles of Incorporation, or (ii) as
otherwise provided by the Nevada General Corporation Law, as amended from time
to time.
 
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SCHEDULE 3.1(g)
TO
SECURITIES PURCHASE AGREEMENT

3.1(g)      Capitalization

As of October 1, 2009, Schedule, the Company had:
 
Common Stock, $0.01 par value;  500,000,000 shares authorized issued;
118,347,758 shares issued and outstanding
 
Redeemable Convertible Preferred Stock, $0.01 par value per share; 2,600,000
shares authorized, issued and outstanding.
 
Each share of common stock and redeemable convertible preferred stock is
entitled to one vote in connection with the Amendment.
 
As of October 1, 2009, there are:
 
 6,950,000 shares reserved for issuance upon conversion of issued and
outstanding options, warrants and other derivative securities;
 
415,528 shares reserved for issuance to employees, officers and directors under
the Company’s 2008 Employee Incentive Stock Program; and
 
1,250,000 shares reserved for issuance to employees, officers and directors
under the Company’s 2009 Employee Benefit Plan.
 
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--------------------------------------------------------------------------------

SCHEDULE 3.1(i)
TO
SECURITIES PURCHASE AGREEMENT

3.1(i)                                Material Changes; Undisclosed Events,
Liabilities or Developments
The Company has issued the following shares of common stock since July 31, 2009:

RECORDHOLDER
DATE OF ISSUANCE
REASON FOR ISSUANCE
NO. OF SHARES
 
Brennan, Michael
08/31/09
Consulting Fee
50,000
Maroka, Inc.
08/31/09
Consulting Fee
25,000
Divine Capital Investors
09/03/09
Lawsuit Settlement
5,889,997
Brennan, Michael
09/30/09
Consulting Fee
50,000
Maroka, Inc.
09/30/09
Consulting Fee
25,000
     
6,049,997

The Company has agreed to convert a June 10, 2009 $75,000 loan from Anthony M.
Frank, plus interest accrued at 6%, into common stock at the rate of $0.075 per
share.

On September 23, 2009, the Company borrowed $64,000 from Anthony M. Frank at 6%
interest.  The loan matures on March 10, 2010 or is payable from the proceeds of
any investment or financing received by the Company in an aggregate amount of
One Hundred Thousand ($100,000) Dollars.  The lender has the option to convert
the principal and interest into common stock at a per share price equal to the
average closing price of the Company’s common shares during the twenty day
period prior to the conversion date.
 
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SCHEDULE 3.1(ee)
TO
SECURITIES PURCHASE AGREEMENT

3.1(ee)    Accountants
 

Jeffrey S. Gilbert, CPA
921 Linda Flora Drive
Los Angeles, CA  90049
(310) 476-2998
jsgcpa@pacbell.net
 
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EXHIBIT A
 
REGISTRATION RIGHTS AGREEMENT
 
This Registration Rights Agreement (this “Agreement”) is made and entered into
as of October 2, 2009, among Micro Imaging Technology, Inc., a California
corporation (the “Company”) and the purchaser signatory hereto (“the
“Purchaser”).
 
This Agreement is made pursuant to the Securities Purchase Agreement, dated as
of the date hereof between the Company and the Purchaser (the “Purchase
Agreement”).
 
The Company and Purchaser hereby agree as follows:
 
ARTICLE IX.Definitions.  Capitalized terms used and not otherwise defined herein
that are defined in the Purchase Agreement shall have the meanings given such
terms in the Purchase Agreement.  As used in this Agreement, the following terms
shall have the following meanings:
 
“Advice” shall have the meaning set forth in Section 6(d).
 
“Effectiveness Date” means, with respect to the initial Registration Statement
required to be filed hereunder, the 120th calendar day following the date
hereof.
 
“Effectiveness Period” shall have the meaning set forth in Section 2(a).
 
“Filing Date” means, with respect to the Registration Statement required
hereunder, the 30th calendar day following the date hereof.
 
“Holder” or “Holders” means the holder or holders, as the case may be, from time
to time of Registrable Securities.
 
“Indemnified Party” shall have the meaning set forth in Section 5(c).
 
“Indemnifying Party” shall have the meaning set forth in Section 5(c).
 
“Losses” shall have the meaning set forth in Section 5(a).
 
“Plan of Distribution” shall have the meaning set forth in Section 2(a).
 
 “Prospectus” means the prospectus included in a Registration Statement
(including, without limitation, a prospectus that includes any information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated by the Commission pursuant to
the Securities Act), as amended or supplemented by any prospectus supplement,
with respect to the terms of the offering of any portion of the Registrable
Securities covered by a Registration Statement, and all other amendments and
supplements to the Prospectus, including post-effective amendments, and all
material incorporated by reference or deemed to be incorporated by reference in
such Prospectus.
 
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“Registrable Securities” means all of (i) the Draw Down Shares, (ii) the shares
of Common Stock issued and issuable pursuant to Section 2.2(a)(iii) and Section
4.16 of the Purchase Agreement and (iii) any shares of Common Stock issued or
issuable upon any stock split, dividend or other distribution, recapitalization
or similar event with respect to the foregoing.
 
“Registration Statement” means the registration statement required to be filed
hereunder, including (in each case) the Prospectus, amendments and supplements
to such registration statement or Prospectus, including pre- and post-effective
amendments, all exhibits thereto, and all material incorporated by reference or
deemed to be incorporated by reference in such registration statement.
 
“Rule 415” means Rule 415 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.
 
“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.
 
“Selling Stockholder Questionnaire” shall have the meaning set forth in Section
3(a).
 
ARTICLE X.Shelf Registration.
 
10.1           On or prior to the Filing Date, the Company shall prepare and
file with the Commission a “Shelf” Registration Statement covering the resale of
the Registrable Securities for an offering to be made by the Holder(s) on a
continuous basis pursuant to Rule 415.  The Registration Statement shall be on
Form S-3 (except if the Company is not then eligible to register for resale the
Registrable Securities on Form S-3, in which case such registration shall be on
another appropriate form in accordance herewith) and shall contain substantially
the “Plan of Distribution” attached hereto as Annex A.  Subject to the terms of
this Agreement, the Company shall use its best efforts to cause a Registration
Statement to be declared effective under the Securities Act as promptly as
possible after the filing thereof, but in any event prior to the applicable
Effectiveness Date, and shall use its best efforts to keep such Registration
Statement continuously effective under the Securities Act until all Registrable
Securities covered by such Registration Statement (i) have been sold, thereunder
or pursuant to Rule 144, or (ii) (A) may be sold without volume or
manner-of-sale restrictions pursuant to Rule 144 and (B) (I) may be sold without
the requirement for the Company to be in compliance with the current public
information requirement under Rule 144 or (II) the Company is in compliance with
the current public information requirement under Rule 144, or (iii) the
Commitment Period has expired and no Registrable Securities are then
outstanding, as determined by the counsel to the Company pursuant to a written
opinion letter to such effect, addressed and acceptable to the Transfer Agent
and the affected Holders (the “Effectiveness Period”).  The Company shall
promptly notify the Holders via facsimile or by e-mail of the effectiveness of a
Registration Statement on the same Trading Day that the Company telephonically
confirms effectiveness with the Commission. The Company shall file a final
Prospectus with the Commission as required by Rule 424.
 
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--------------------------------------------------------------------------------

 
ARTICLE XI.Registration Procedures
 
In connection with the Company’s registration obligations hereunder, the Company
shall:
 
11.1           Not less than five Trading Days prior to the filing of the
Registration Statement and not less than 1 Trading Day prior to the filing of
any related Prospectus or any amendment or supplement thereto (including any
document that would be incorporated or deemed to be incorporated therein by
reference), the Company shall, (i) furnish to Holder copies of all such
documents proposed to be filed, which documents (other than those incorporated
or deemed to be incorporated by reference) will be subject to the review of
Holder, and (ii) cause its officers and directors, counsel and independent
registered public accountants to respond to such inquiries as shall be
necessary, in the reasonable opinion of respective counsel to Holder to conduct
a reasonable investigation within the meaning of the Securities Act. The Company
shall not file a Registration Statement or any such Prospectus or any amendments
or supplements thereto to which the Holder shall reasonably object in good
faith, provided that, the Company is notified of such objection in writing no
later than 5 Trading Days after the Holder has been so furnished copies of a
Registration Statement or 1 Trading Day after the Holder has been so furnished
copies of any related Prospectus or amendments or supplements thereto. Holder
agrees to furnish to the Company a completed questionnaire in the form attached
to this Agreement as Annex B (a “Selling Stockholder Questionnaire”) on a date
that is not less than two Trading Days prior to the Filing Date or by the end of
the fourth Trading Day following the date on which the Holder receives draft
materials in accordance with this Section.
 
11.2           (i) Prepare and file with the Commission such amendments,
including post-effective amendments, to the Registration Statement and the
Prospectus used in connection therewith as may be necessary to keep the
Registration Statement continuously effective as to the applicable Registrable
Securities for the Effectiveness Period and prepare and file with the Commission
such additional Registration Statements in order to register for resale under
the Securities Act all of the Registrable Securities; (ii) cause the related
Prospectus to be amended or supplemented by any required Prospectus supplement
(subject to the terms of this Agreement), and as so supplemented or amended to
be filed pursuant to Rule 424; (iii) respond as promptly as reasonably possible
to any comments received from the Commission with respect to the Registration
Statement or any amendment thereto and as promptly as reasonably possible
provide the Holder true and complete copies of all correspondence from and to
the Commission relating to the Registration Statement (provided that the Company
may excise any information contained therein which would constitute material
non-public information as to Holder); and (iv) comply in all material respects
with the applicable provisions of the Securities Act and the Exchange Act with
respect to the disposition of all Registrable Securities covered by a
Registration Statement during the applicable period in accordance (subject to
the terms of this Agreement) with the intended methods of disposition by the
Holder set forth in such Registration Statement as so amended or in such
Prospectus as so supplemented.
 
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--------------------------------------------------------------------------------

 
11.3           If during the Effectiveness Period, the number of Registrable
Securities at any time exceeds 100% of the number of shares of Common Stock then
registered in a Registration Statement, then the Company shall file as soon as
reasonably practicable but in any case prior to the applicable Filing Date, an
additional Registration Statement covering the resale by the Holder of not less
than 100% of the number of such Registrable Securities.
 
11.4           Notify the Holder of Registrable Securities to be sold (which
notice shall, pursuant to clauses (iii) through (vi) hereof, be accompanied by
an instruction to suspend the use of the Prospectus until the requisite changes
have been made) as promptly as reasonably possible (and, in the case of (i)(A)
below, not less than 1 Trading Day prior to such filing) and (if requested by
any such Person) confirm such notice in writing no later than one Trading Day
following the day (i)(A) when a Prospectus or any Prospectus supplement or
post-effective amendment to a Registration Statement is proposed to be filed;
(B) when the Commission notifies the Company whether there will be a “review” of
such Registration Statement and whenever the Commission comments in writing on
such Registration Statement; and (C) with respect to a Registration Statement or
any post-effective amendment, when the same has become effective; (ii) of any
request by the Commission or any other federal or state governmental authority
for amendments or supplements to a Registration Statement or Prospectus or for
additional information; (iii) of the issuance by the Commission or any other
federal or state governmental authority of any stop order suspending the
effectiveness of a Registration Statement covering any or all of the Registrable
Securities or the initiation of any Proceedings for that purpose; (iv) of the
receipt by the Company of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction, or the initiation or threatening of any
Proceeding for such purpose; (v) of the occurrence of any event or passage of
time that makes the financial statements included in a Registration Statement
ineligible for inclusion therein or any statement made in a Registration
Statement or Prospectus or any document incorporated or deemed to be
incorporated therein by reference untrue in any material respect or that
requires any revisions to a Registration Statement, Prospectus or other
documents so that, in the case of a Registration Statement or the Prospectus, as
the case may be, it will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading; and (vi) of the occurrence or existence of any pending
corporate development with respect to the Company that the Company believes may
be material and that, in the determination of the Company, makes it not in the
best interest of the Company to allow continued availability of a Registration
Statement or Prospectus; provided that any and all of such information shall
remain confidential to Holder until such information otherwise becomes public,
unless disclosure by Holder is required by law; provided, further, that
notwithstanding Holder’s agreement to keep such information confidential, the
Holder makes no acknowledgement that any such information is material,
non-public information.
 
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11.5           Use its best efforts to avoid the issuance of, or, if issued,
obtain the withdrawal of (i) any order stopping or suspending the effectiveness
of a Registration Statement, or (ii) any suspension of the qualification (or
exemption from qualification) of any of the Registrable Securities for sale in
any jurisdiction, at the earliest practicable moment.
 
11.6           Furnish to Holder, without charge, at least one conformed copy of
each such Registration Statement and each amendment thereto, including financial
statements and schedules, all documents incorporated or deemed to be
incorporated therein by reference to the extent requested by such Person, and
all exhibits to the extent requested by such Person (including those previously
furnished or incorporated by reference) promptly after the filing of such
documents with the Commission; provided, that any such item which is available
on the EDGAR system (or successor thereto) need not be furnished in physical
form.
 
11.7           Subject to the terms of this Agreement, the Company hereby
consents to the use of such Prospectus and each amendment or supplement thereto
by the Holder in connection with the offering and sale of the Registrable
Securities covered by such Prospectus and any amendment or supplement thereto,
except after the giving of any notice pursuant to Section 3(d).
 
11.8           The Company shall cooperate with any broker-dealer through which
a Holder proposes to resell its Registrable Securities in effecting a filing
with the FINRA Corporate Financing Department pursuant to FINRA Rule 5110, as
requested by the Holder, and the Company shall pay the filing fee required by
such filing within two (2) Business Days of request therefor.
 
11.9           Prior to any resale of Registrable Securities by Holder, use its
commercially reasonable efforts to register or qualify or cooperate with the
Holder in connection with the registration or qualification (or exemption from
the Registration or qualification) of such Registrable Securities for the resale
by the Holder under the securities or Blue Sky laws of such jurisdictions within
the United States as Holder reasonably requests in writing, to keep each
registration or qualification (or exemption therefrom) effective during the
Effectiveness Period and to do any and all other acts or things reasonably
necessary to enable the disposition in such jurisdictions of the Registrable
Securities covered by the Registration Statement; provided, that the Company
shall not be required to qualify generally to do business in any jurisdiction
where it is not then so qualified, subject the Company to any material tax in
any such jurisdiction where it is not then so subject or file a general consent
to service of process in any such jurisdiction.
 
11.10                      If requested by the Holder, cooperate with the Holder
to facilitate the timely preparation and delivery of certificates representing
Registrable Securities to be delivered to a transferee pursuant to the
Registration Statement, which certificates shall be free, to the extent
permitted by the Purchase Agreement, of all restrictive legends, and to enable
such Registrable Securities to be in such denominations and registered in such
names as Holder may request.
 
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11.11                      Upon the occurrence of any event contemplated by this
Section 3, as promptly as reasonably possible under the circumstances taking
into account the Company’s good faith assessment of any adverse consequences to
the Company and its stockholders of the premature disclosure of such event,
prepare a supplement or amendment, including a post-effective amendment, to the
Registration Statement or a supplement to the related Prospectus or any document
incorporated or deemed to be incorporated therein by reference, and file any
other required document so that, as thereafter delivered, neither the
Registration Statement nor such Prospectus will contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.  If the Company notifies the Holder in
accordance with clauses (iii) through (vi) of Section 3(d) above to suspend the
use of any Prospectus until the requisite changes to such Prospectus have been
made, then the Holder shall suspend use of such Prospectus.  The Company will
use its best efforts to ensure that the use of the Prospectus may be resumed as
promptly as is practicable.
 
11.12                      Comply with all applicable rules and regulations of
the Commission.
 
11.13                      The Company may require the Holder to furnish to the
Company a certified statement as to the number of shares of Common Stock
beneficially owned by the Holder and, if required by the Commission, the natural
persons thereof that have voting and dispositive control over the Shares. The
Holder acknowledges that it will be named as an “underwriter” of the Registrable
Securities in the Prospectus, as required by Commission policies.
 
ARTICLE XII.Registration Expenses.  All fees and expenses incident to the
performance of or compliance with this Agreement by the Company shall be borne
by the Company whether or not any Registrable Securities are sold pursuant to
the Registration Statement.  The fees and expenses referred to in the foregoing
sentence shall include, without limitation, (i) all registration and filing fees
(including, without limitation, fees and expenses (of the Company’s counsel and
independent registered public accountants) (A) with respect to filings made with
the Commission, (B) with respect to filings required to be made with any Trading
Market on which the Common Stock is then listed for trading, (C) in compliance
with applicable state securities or Blue Sky laws reasonably agreed to by the
Company in writing (including, without limitation, fees and disbursements of
counsel for the Company in connection with Blue Sky qualifications or exemptions
of the Registrable Securities) and (D) if not previously paid by the Company in
connection with an Issuer Filing, with respect to any filing that may be
required to be made by any broker through which a Holder intends to make sales
of Registrable Securities with FINRA pursuant to FINRA Rule 5110, so long as the
broker is receiving no more than a customary brokerage commission in connection
with such sale, (ii) printing expenses (including, without limitation, expenses
of printing certificates for Registrable Securities), (iii) messenger, telephone
and delivery expenses, (iv) fees and disbursements of counsel for the Company,
(v) Securities Act liability insurance, if the Company so desires such
insurance, and (vi) fees and expenses of all other Persons retained by the
Company in connection with the consummation of the transactions contemplated by
this Agreement.  In addition, the Company shall be responsible for all of its
internal expenses incurred in connection with the consummation of the
transactions contemplated by this Agreement (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit and the fees and expenses
incurred in connection with the listing of the Registrable Securities on any
securities exchange as required hereunder. In no event shall the Company be
responsible for any broker or similar commissions of Holder or, except to the
extent provided for in the Transaction Documents, any legal fees or other costs
of the Holder.
 
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--------------------------------------------------------------------------------

 
ARTICLE XIII.Indemnification
 
13.1           Indemnification by the Company.  The Company shall,
notwithstanding any termination of this Agreement, indemnify and hold harmless
Holder, the officers, directors, members, partners, agents, brokers (including
brokers who offer and sell Registrable Securities as principal as a result of a
pledge or any failure to perform under a margin call of Common Stock),
investment advisors and 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 Holder, each Person who controls Holder (within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act)
and the officers, directors, members, stockholders, partners, agents and
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
each such controlling Person, to the fullest extent permitted by applicable law,
from and against any and all losses, claims, damages, liabilities, costs
(including, without limitation, reasonable attorneys’ fees) and expenses
(collectively, “Losses”), as incurred, arising out of or relating to (1) any
untrue or alleged untrue statement of a material fact contained in a
Registration Statement, any Prospectus or any form of prospectus or in any
amendment or supplement thereto or in any preliminary prospectus, or arising out
of or relating to any omission or alleged omission of a material fact required
to be stated therein or necessary to make the statements therein (in the case of
any Prospectus or form of prospectus or supplement thereto, in light of the
circumstances under which they were made) not misleading, or (2) any violation
or alleged violation by the Company of the Securities Act, Exchange Act or any
state securities law, or any rule or regulation thereunder, in connection with
the performance of its obligations under this Agreement, except to the extent,
but only to the extent, that (i) such untrue statements or omissions are based
solely upon information regarding Holder furnished in writing to the Company by
Holder expressly for use therein, or to the extent that such information relates
to Holder or Holder’s proposed method of distribution of Registrable Securities
and was reviewed and expressly approved in writing by Holder expressly for use
in a Registration Statement, such Prospectus or such form of Prospectus or in
any amendment or supplement thereto (it being understood that the Holder has
approved Annex A hereto for this purpose) or (ii) in the case of an occurrence
of an event of the type specified in Section 3(d)(iii)-(vi), the use by Holder
of an outdated, defective or otherwise unavailable Prospectus after the Company
has notified Holder in writing that the Prospectus is outdated, defective or
otherwise unavailable for use by the Holder and prior to the receipt by Holder
of the Advice contemplated in Section 6(d).  The Company shall notify the Holder
promptly of the institution, threat or assertion of any Proceeding arising from
or in connection with the transactions contemplated by this Agreement of which
the Company is aware.
 
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13.2           Indemnification by Holder. Holder shall, severally and not
jointly, indemnify and hold harmless the Company, its directors, officers,
agents and employees, each Person who controls the Company (within the meaning
of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the
directors, officers, agents or employees of such controlling Persons, to the
fullest extent permitted by applicable law, from and against all Losses, as
incurred, to the extent arising out of or based solely upon: (x) Holder’s
failure to comply with the prospectus delivery requirements of the Securities
Act or (y) any untrue or alleged untrue statement of a material fact contained
in any Registration Statement, any Prospectus, or any form of prospectus, or in
any amendment or supplement thereto or in any preliminary prospectus, or arising
out of or relating to any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein not
misleading (i) to the extent, but only to the extent, that such untrue statement
or omission is contained in any information so furnished in writing by Holder to
the Company specifically for inclusion in such Registration Statement or such
Prospectus or (ii) to the extent that such information relates to Holder’s
proposed method of distribution of Registrable Securities and was reviewed and
expressly approved in writing by Holder expressly for use in a Registration
Statement (it being understood that the Holder has approved Annex A hereto for
this purpose), such Prospectus or such form of Prospectus or in any amendment or
supplement thereto or (iii) in the case of an occurrence of an event of the type
specified in Section 3(d)(iii)-(vi), the use by Holder of an outdated, defective
or otherwise unavailable for use by the Holder Prospectus after the Company has
notified Holder in writing that the Prospectus is outdated, defective or
otherwise unavailable for use by the Holder and prior to the receipt by Holder
of the Advice contemplated in Section 6(d).  In no event shall the liability of
Holder hereunder be greater in amount than the dollar amount of the net proceeds
received by Holder upon the sale of the Registrable Securities giving rise to
such indemnification obligation.
 
13.3           Conduct of Indemnification Proceedings. If any Proceeding shall
be brought or asserted against any Person entitled to indemnity hereunder (an
“Indemnified Party”), such Indemnified Party shall promptly notify the Person
from whom indemnity is sought (the “Indemnifying Party”) in writing, and the
Indemnifying Party shall have the right to assume the defense thereof, including
the employment of counsel reasonably satisfactory to the Indemnified Party and
the payment of all fees and expenses incurred in connection with defense
thereof; provided, that the failure of any Indemnified Party to give such notice
shall not relieve the Indemnifying Party of its obligations or liabilities
pursuant to this Agreement, except (and only) to the extent that it shall be
finally determined by a court of competent jurisdiction (which determination is
not subject to appeal or further review) that such failure shall have prejudiced
the Indemnifying Party.
 
An Indemnified Party shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or Parties
unless:  (1) the Indemnifying Party has agreed in writing to pay such fees and
expenses; (2) the Indemnifying Party shall have failed promptly to assume the
defense of such Proceeding and to employ counsel reasonably satisfactory to such
Indemnified Party in any such Proceeding; or (3) the named parties to any such
Proceeding (including any impleaded parties) include both such Indemnified Party
and the Indemnifying Party, and counsel to the Indemnified Party shall
reasonably believe that a material conflict of interest is likely to exist if
the same counsel were to represent such Indemnified Party and the Indemnifying
Party (in which case, if such Indemnified Party notifies the Indemnifying Party
in writing that it elects to employ separate counsel at the expense of the
Indemnifying Party, the Indemnifying Party shall not have the right to assume
the defense thereof and the reasonable fees and expenses of no more than one
separate counsel shall be at the expense of the Indemnifying Party).  The
Indemnifying Party shall not be liable for any settlement of any such Proceeding
effected without its written consent, which consent shall not be unreasonably
withheld or delayed.  No Indemnifying Party shall, without the prior written
consent of the Indemnified Party, effect any settlement of any pending
Proceeding in respect of which any Indemnified Party is a party, unless such
settlement includes an unconditional release of such Indemnified Party from all
liability on claims that are the subject matter of such Proceeding.
 
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Subject to the terms of this Agreement, all reasonable fees and expenses of the
Indemnified Party (including reasonable fees and expenses to the extent incurred
in connection with investigating or preparing to defend such Proceeding in a
manner not inconsistent with this Section) shall be paid to the Indemnified
Party, as incurred, within ten Trading Days of written notice thereof to the
Indemnifying Party; provided, that the Indemnified Party shall promptly
reimburse the Indemnifying Party for that portion of such fees and expenses
applicable to such actions for which such Indemnified Party is judicially
determined not to be entitled to indemnification hereunder.
 
13.4           Contribution.  If the indemnification under Section 5(a) or 5(b)
is unavailable to an Indemnified Party or insufficient to hold an Indemnified
Party harmless for any Losses, then each Indemnifying Party shall contribute to
the amount paid or payable by such Indemnified Party, in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party and
Indemnified Party in connection with the actions, statements or omissions that
resulted in such Losses as well as any other relevant equitable considerations.
The relative fault of such Indemnifying Party and Indemnified Party shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission of a material fact, has been taken or made by, or relates to
information supplied by, such Indemnifying Party or Indemnified Party, and the
parties’ relative intent, knowledge, access to information and opportunity to
correct or prevent such action, statement or omission.  The amount paid or
payable by a party as a result of any Losses shall be deemed to include, subject
to the limitations set forth in this Agreement, any reasonable attorneys’ or
other fees or expenses incurred by such party in connection with any Proceeding
to the extent such party would have been indemnified for such fees or expenses
if the indemnification provided for in this Section was available to such party
in accordance with its terms.
 
The parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 5(d) were determined by pro rata allocation or by any
other method of allocation that does not take into account the equitable
considerations referred to in the immediately preceding
paragraph.  Notwithstanding the provisions of this Section 5(d), the Holder
shall not be required to contribute pursuant to this Section 5(d), in the
aggregate, any amount in excess of the amount by which the net proceeds actually
received by Holder from the sale of the Registrable Securities subject to the
Proceeding exceeds the amount of any damages that Holder has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission, except in the case of fraud by Holder.
 
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The indemnity and contribution agreements contained in this Section are in
addition to any liability that the Indemnifying Parties may have to the
Indemnified Parties.
 
ARTICLE XIV.Miscellaneous
 
14.1           Remedies.  In the event of a breach by the Company or by the
Holder, of any of their respective obligations under this Agreement, Holder or
the Company, as the case may be, in addition to being entitled to exercise all
rights granted by law and under this Agreement, including recovery of damages,
will be entitled to specific performance of its rights under this
Agreement.  The Company and Holder agree that monetary damages would not provide
adequate compensation for any losses incurred by reason of a breach by it of any
of the provisions of this Agreement and hereby further agrees that, in the event
of any action for specific performance in respect of such breach, it shall not
assert or shall waive the defense that a remedy at law would be adequate.
 
14.2           No Piggyback on Registrations.  Neither the Company nor any of
its security holders (other than the Holder in such capacity pursuant hereto)
may include securities of the Company in the Registration Statement other than
the Registrable Securities.
 
14.3           Compliance.  Holder covenants and agrees that it will comply with
the prospectus delivery requirements of the Securities Act as applicable to it
in connection with sales of Registrable Securities pursuant to a Registration
Statement.
 
14.4           Discontinued Disposition.  Holder agrees by its acquisition of
Registrable Securities that, upon receipt of a notice from the Company of the
occurrence of any event of the kind described in Section 3(d), Holder will
forthwith discontinue disposition of such Registrable Securities under a
Registration Statement until it is advised in writing (the “Advice”) by the
Company that the use of the applicable Prospectus (as it may have been
supplemented or amended) may be resumed.  The Company will use its best efforts
to ensure that the use of the Prospectus may be resumed as promptly as it
practicable.
 
14.5           Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the same shall be in writing and signed by the Company
and each Holder of the then outstanding Registrable Securities.  Notwithstanding
the foregoing, a waiver or consent to depart from the provisions hereof with
respect to a matter that relates exclusively to the rights of Holders and that
does not directly or indirectly affect the rights of other Holders may be given
by Holders of all of the Registrable Securities to which such waiver or consent
relates; provided, however, that the provisions of this sentence may not be
amended, modified, or supplemented except in accordance with the provisions of
the immediately preceding sentence.
 
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14.6           Notices. Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be delivered as
set forth in the Purchase Agreement.
 
14.7           Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors.  Neither party may
assign this Agreement or any rights or obligations hereunder (other than by
merger).
 
14.8           No Inconsistent Agreements. Neither the Company nor any of its
Subsidiaries has entered, as of the date hereof, nor shall the Company or any of
its Subsidiaries, on or after the date of this Agreement, enter into any
agreement with respect to its securities, that would have the effect of
impairing the rights granted to the Holder in this Agreement or otherwise
conflicts with the provisions hereof.  Except as set forth on Schedule 6(h),
neither the Company nor any of its Subsidiaries has previously entered into any
agreement granting any registration rights with respect to any of its securities
to any Person that have not been satisfied in full.
 
14.9           Execution and Counterparts.  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.
 
14.10                      Governing Law.  All questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall
be determined in accordance with the provisions of the Purchase Agreement.
 
14.11                      Cumulative Remedies.  The remedies provided herein
are cumulative and not exclusive of any other remedies provided by law.
 
14.12                      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.
 
14.13                      Headings.  The headings in this Agreement 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.
 
*************************
 
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IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement
as of the date first written above.
 

  MICRO IMAGING TECHNOLOGY, INC.          
 
By:
/s/ Michael W. Brennan       Name:  Michael W. Brennan       Title:    Chairman
and CEO  

[SIGNATURE PAGE OF HOLDERS FOLLOWS]
 
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[SIGNATURE PAGE OF HOLDERS TO MMTC RRA]
 

 
Name of Holder:
ASCENDIANT CAPITAL GROUP, LLC
 
Signature of Authorized Signatory of Holder:
/S/  Bradley J. Wilhite
 
Name of Authorized Signatory:
 Bradley J. Wilhite
 
Title of Authorized Signatory:
Managing Member
 

[SIGNATURE PAGES CONTINUE]
 
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ANNEX A
 
Plan of Distribution
 
The Selling Stockholder (the “Selling Stockholder”) of the common stock and any
of their pledgees, assignees and successors-in-interest may, from time to time,
sell any or all of their shares of common stock on the principal Trading Market
or any other stock exchange, market or trading facility on which the shares are
traded or in private transactions.  These sales may be at fixed or negotiated
prices.  The Selling Stockholder may use any one or more of the following
methods when selling shares:
 
 
·
ordinary brokerage transactions and transactions in which the broker-dealer
solicits purchasers;

 
 
·
block trades in which the broker-dealer will attempt to sell the shares as agent
but may position and resell a portion of the block as principal to facilitate
the transaction;

 
 
·
purchases by a broker-dealer as principal and resale by the broker-dealer for
its account;

 
 
·
an exchange distribution in accordance with the rules of the applicable
exchange;

 
 
·
privately negotiated transactions;

 
 
·
settlement of short sales entered into after the effective date of the
registration statement of which this prospectus is a part;

 
 
·
broker-dealers may agree with the Selling Stockholder to sell a specified number
of such shares at a stipulated price per share;

 
 
·
through the writing or settlement of options or other hedging transactions,
whether through an options exchange or otherwise;

 
 
·
a combination of any such methods of sale; or

 
 
·
any other method permitted pursuant to applicable law.

 
The Selling Stockholder may also sell shares under Rule 144 under the Securities
Act of 1933, as amended (the “Securities Act”), if available, rather than under
this prospectus.
 
Broker-dealers engaged by the Selling Stockholder may arrange for other
brokers-dealers to participate in sales.  Broker-dealers may receive commissions
or discounts from the Selling Stockholder (or, if any broker-dealer acts as
agent for the purchaser of shares, from the purchaser) in amounts to be
negotiated, but, except as set forth in a supplement to this Prospectus, in the
case of an agency transaction not in excess of a customary brokerage commission
in compliance with FINRA Rule 2440; and in the case of a principal transaction a
markup or markdown in compliance with FINRA IM-2440.
 
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In connection with the sale of the common stock or interests therein, the
Selling Stockholder may enter into hedging transactions with broker-dealers or
other financial institutions, which may in turn engage in short sales of the
common stock in the course of hedging the positions they assume.  The Selling
Stockholder may also sell shares of the common stock short and deliver these
securities to close out its short position, or loan or pledge the common stock
to broker-dealers that in turn may sell these securities.  The Selling
Stockholder may also enter into option or other transactions with broker-dealers
or other financial institutions or create one or more derivative securities
which require the delivery to such broker-dealer or other financial institution
of shares offered by this prospectus, which shares such broker-dealer or other
financial institution may resell pursuant to this prospectus (as supplemented or
amended to reflect such transaction).
 
The Selling Stockholder is an underwriter within the meaning of the Securities
Act and any broker-dealers or agents that are involved in selling the shares may
be deemed to be “underwriters” within the meaning of the Securities Act in
connection with such sales.  In such event, any commissions received by such
broker-dealers or agents and any profit on the resale of the shares purchased by
them may be deemed to be underwriting commissions or discounts under the
Securities Act.  The Selling Stockholder has informed the Company that it does
not have any written or oral agreement or understanding, directly or indirectly,
with any person to distribute the Common Stock. In no event shall any
broker-dealer receive fees, commissions and markups which, in the aggregate,
would exceed eight percent (8%).
 
The Company is required to pay certain fees and expenses incurred by the Company
incident to the registration of the shares.  The Company has agreed to indemnify
the Selling Stockholder against certain losses, claims, damages and liabilities,
including liabilities under the Securities Act.
 
Because the Selling Stockholder is an “underwriter” within the meaning of the
Securities Act, it will be subject to the prospectus delivery requirements of
the Securities Act including Rule 172 thereunder.  In addition, any securities
covered by this prospectus which qualify for sale pursuant to Rule 144 under the
Securities Act may be sold under Rule 144 rather than under this
prospectus.  There is no underwriter or coordinating broker acting in connection
with the proposed sale of the resale shares by the Selling Stockholder.
 
We agreed to keep this prospectus effective until the earlier of (i) the date on
which the shares may be resold by the Selling Stockholder without registration
and without regard to any volume or manner-of-sale limitations by reason of Rule
144, without the requirement for the Company to be in compliance with the
current public information under Rule 144 under the Securities Act or any other
rule of similar effect or (ii) all of the shares have been sold pursuant to this
prospectus or Rule 144 under the Securities Act or any other rule of similar
effect.  The resale shares will be sold only through registered or licensed
brokers or dealers if required under applicable state securities laws. In
addition, in certain states, the resale shares may not be sold unless they have
been registered or qualified for sale in the applicable state or an exemption
from the registration or qualification requirement is available and is complied
with.
 
Under applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of the resale shares may not simultaneously engage
in market making activities with respect to the common stock for the applicable
restricted period, as defined in Regulation M, prior to the commencement of the
distribution.  In addition, the Selling Stockholder will be subject to
applicable provisions of the Exchange Act and the rules and regulations
thereunder, including Regulation M, which may limit the timing of purchases and
sales of shares of the common stock by the Selling Stockholder or any other
person.  We will make copies of this prospectus available to the Selling
Stockholder and have informed them of the need to deliver a copy of this
prospectus to each purchaser at or prior to the time of the sale.
 
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Annex B
 
MICRO IMAGING TECHNOLOGY, INC.
 
Selling Securityholder Notice and Questionnaire
 
The undersigned beneficial owner of common stock, par value $0.01 per share (the
“Common Stock”), of Micro Imaging Technology, Inc., a California corporation
(the “Company”), (the “Registrable Securities”) understands that the Company has
filed or intends to file with the Securities and Exchange Commission (the
“Commission”) a registration statement on Form S-3 (the “Registration
Statement”) for the registration and resale under Rule 415 of the Securities Act
of 1933, as amended (the “Securities Act”), of the Registrable Securities, in
accordance with the terms of the Registration Rights Agreement, dated as of
October 2, 2009 (the “Registration Rights Agreement”), among the Company and the
Purchasers named therein.  A copy of the Registration Rights Agreement is
available from the Company upon request at the address set forth below.  All
capitalized terms not otherwise defined herein shall have the meanings ascribed
thereto in the Registration Rights Agreement.
 
Certain legal consequences arise from being named as a selling securityholder in
the Registration Statement and the related prospectus.  Accordingly, holders and
beneficial owners of Registrable Securities are advised to consult their own
securities law counsel regarding the consequences of being named or not being
named as a selling securityholder in the Registration Statement and the related
prospectus.
 
NOTICE
 
The undersigned beneficial owner (the “Selling Securityholder”) of Registrable
Securities hereby elects to include the Registrable Securities owned by it and
listed below in Item 3 (unless otherwise specified under such Item 3) in the
Registration Statement.
 
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The undersigned hereby provides the following information to the Company and
represents and warrants that such information is accurate:
 
QUESTIONNAIRE
 
1.
Name.
 

 
 
(a)
Full Legal Name of Selling Securityholder
           

 
 
(b)
Full Legal Name of Registered Holder (if not the same as (a) above) through
which Registrable Securities Listed in Item 3 below are held:
           

 
 
(c)
Full Legal Name of Natural Control Person (which means a natural person who
directly or indirectly alone or with others has power to vote or dispose of the
securities covered by the questionnaire):
           

 
2.  
Address for Notices to Selling Securityholder:

 

     

Telephone:
 
Fax:
 
Contact Person:
 

 
3.
Beneficial Ownership of Registrable Securities:

 
 
(a)
Type and Number of Registrable Securities beneficially owned (not including the
Registrable Securities that are issuable pursuant to the Purchase Agreement):
                       

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4. 
Broker-Dealer Status:

 
 
(a)
Are you a broker-dealer?

 
Yes   o                      No   o
 
 
(b)
If “yes” to Section 4(a), did you receive your Registrable Securities as
compensation for investment banking services to the Company.

 
Yes   o                      No   o
 

 
Note:
If no, the Commission’s staff has indicated that you should be identified as an
underwriter in the Registration Statement.
     
 
(c)
Are you an affiliate of a broker-dealer?

 
Yes   o                      No   o
 
 
(d)
If you are an affiliate of a broker-dealer, do you certify that you bought the
Registrable Securities in the ordinary course of business, and at the time of
the purchase of the Registrable Securities to be resold, you had no agreements
or understandings, directly or indirectly, with any person to distribute the
Registrable Securities?

 
Yes   o                      No   o
 
 
Note:
If no, the Commission’s staff has indicated that you should be identified as an
underwriter in the Registration Statement.

 
 
5.  
Beneficial Ownership of Other Securities of the Company Owned by the Selling
Securityholder.

 
Except as set forth below in this Item 5, the undersigned is not the beneficial
or registered owner of any securities of the Company other than the Registrable
Securities listed above in Item 3.
 
 
(a)
Type and Amount of Other Securities beneficially owned by the Selling
Securityholder:
                 

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6. 
Relationships with the Company:

 

  Except as set forth below, neither the undersigned nor any of its affiliates,
officers, directors or principal equity holders (owners of 5% of more of the
equity securities of the undersigned) has held any position or office or has had
any other material relationship with the Company (or its predecessors or
affiliates) during the past three years.    
 
State any exceptions here:
           

 
 
The undersigned agrees to promptly notify the Company of any inaccuracies or
changes in the information provided herein that may occur subsequent to the date
hereof at any time while the Registration Statement remains effective.
 
By signing below, the undersigned consents to the disclosure of the information
contained herein in its answers to Items 1 through 6 and the inclusion of such
information in the Registration Statement and the related prospectus and any
amendments or supplements thereto.  The undersigned understands that such
information will be relied upon by the Company in connection with the
preparation or amendment of the Registration Statement and the related
prospectus.
 
IN WITNESS WHEREOF the undersigned, by authority duly given, has caused this
Notice and Questionnaire to be executed and delivered either in person or by its
duly authorized agent.
 

Dated:      Beneficial Owner:                  
 
  By:
 
   
 
   
Name:
   
 
   
Title:
 

PLEASE FAX A COPY OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE, AND
RETURN THE ORIGINAL BY OVERNIGHT MAIL, TO:
 
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SCHEDULE 6(h)
TO
REGISTRATION RIGHTS AGREEMENT

6(h)          No Inconsistent Agreements.
 
None
 
 
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EXHIBIT B
 

 
FORM OF LEGAL OPINION
 
 
The Company is a corporation duly organized, validly existing and in good
standing under the laws of California.  The Company has all requisite power and
authority, and all material governmental licenses, authorizations, consents and
approvals that are required to own and operate its properties and assets and to
carry on its business as now conducted and as proposed to be conducted (all as
described in the Company's SEC Reports filed in the last 12 months). The Company
is duly qualified to transact business and is in good standing in each
jurisdiction in which the failure to qualify could have a Material Adverse
Effect on the Company.
 
Each of the following subsidiaries of the Company (the “Subsidiaries”) is a
corporation, duly organized and in good standing under the laws of its state of
organization, as noted: Micro Imaging Technology, a Nevada corporation.
 
The Company has all requisite power and authority to (i) execute, deliver and
perform the Transaction Documents, (ii) to issue, sell and deliver the
Securities pursuant to the Transaction Documents and (iii) to carry out and
perform its obligations under, and to consummate the transactions contemplated
by, the Transaction Documents.
 
All action on the part of the Company, its directors and its stockholders
necessary for the authorization, execution and delivery by the Company of the
Transaction Documents, the authorization, issuance, sale and delivery of the
Securities pursuant to the Agreement, and the consummation by the Company of the
transactions contemplated by the Transaction Documents has been duly taken.  The
Transaction Documents have been duly and validly executed and delivered by the
Company and constitute the legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with their terms, except that (a)
such enforceability may be limited by bankruptcy, insolvency or other similar
laws affecting the enforcement of creditors' rights in general and (b) the
remedies of specific performance and injunctive and other forms of injunctive
relief may be subject to equitable defenses.
 
After giving effect to the transactions contemplated by the Agreement, and
immediately after the Closing, the authorized capital stock of the Company will
consist of: an aggregate of 121,084,715 shares of Common Stock, of which
119,419,187 shares will be issued and outstanding and 6,950,000 shares will be
reserved for issuance upon conversion of issued and outstanding options,
warrants and other derivative securities, 415,528 shares will be reserved for
issuance to employees, officers and directors under the Company's 2008 Employee
Incentive Stock Program and 1,250,000 shares will be reserved for issuance to
employees, officers and directors under the Company’s 2009 Employee Benefit
Plan.  All presently issued and outstanding shares of Common Stock have been
duly authorized and validly issued and are fully paid and nonassessable and free
of any preemptive or similar rights, and have been issued in compliance with
applicable securities laws and regulations.  The shares of Common Stock which
are being issued on the date hereof pursuant to the Agreement have been duly
authorized and validly issued and are fully paid and nonassessable and free of
preemptive or similar rights, and have been issued in compliance with applicable
securities laws, rules and regulations.  To our knowledge, except for rights
described in Schedules 3.1(g) and (i) of the Agreement, there are no other
options, warrants, conversion privileges or other rights presently outstanding
to purchase or otherwise acquire from the Company any capital stock or other
securities of the Company, or any other agreements to issue any such securities
or rights.  The rights, privileges and preferences of the Common Stock are as
stated in the Company’s Articles of Incorporation, as amended.
 
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Based in part upon the representations of the Purchasers contained in the
Agreement, the Shares may be issued to the Purchasers without registration under
the Securities Act of 1933, as amended.
 
To our knowledge, the Company has filed all reports (the "SEC Reports") required
to be filed by it under Sections 13(a) and 15(d) of the Exchange Act of 1934, as
amended (the "Exchange Act").  As of their respective filing dates, the SEC
Reports complied in all material respects as to form with the requirements of
the Exchange Act and the rules and regulations of the Commission promulgated
thereunder.
 
The execution, delivery and performance by the Company of, and the compliance by
the Company with the terms of, the Transaction Documents and the issuance, sale
and delivery of the Securities pursuant to the Agreement do not (a) conflict
with or result in a violation of any provision of law, rule or regulation or any
rule or regulation of any Trading Market applicable to the Company or its
Subsidiaries or of the certificate of incorporation or by-laws or other similar
organizational documents of the Company or its Subsidiaries, (b) conflict with,
result in a breach of or constitute a default (or an event which with notice or
lapse of time or both would become a default) under, or result in or permit the
termination or modification of, any agreement, instrument, order, writ, judgment
or decree known to us to which the Company of its Subsidiaries is a party or is
subject or (c) result in the creation or imposition of any lien, claim or
encumbrance on any of the assets or properties of the Company or its
Subsidiaries.
 
To our knowledge, there is no claim, action, suit, proceeding, arbitration,
investigation or inquiry, pending or threatened, before any court or
governmental or administrative body or agency, or any private arbitration
tribunal, against the Company or its Subsidiaries, or any of its officers,
directors or employees (in connection with the discharge of their duties as
officers, directors and employees), of the Company or its Subsidiaries, or
affecting any of its properties or assets.
 
In connection with the valid execution, delivery and performance by the Company
of the Transaction Documents, or the offer, sale, issuance or delivery of the
Securities or the consummation of the transactions contemplated thereby, no
consent, license, permit, waiver, approval or authorization of, or designation,
declaration, registration or filing with, any court, governmental or regulatory
authority, or self-regulatory organization, is required.
 
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The Company is not, and after the consummation of the transactions contemplated
by the Transaction Documents shall not be, an Investment Company within the
meaning of the Investment Company Act of 1940, as amended.
 
 
[Items 12 and 13 to be included in Opinion pursuant to Section 5.3 at each Draw
Down.]
 
 
The Registration Statement is effective by the Commission and no stop order is
in effect with respect to the Registration Statement. Assuming compliance by the
Purchaser with the “Plan of Distribution” caption of the Registration Statement
and timely compliance by the Purchaser with all prospectus delivery
requirements, the Shares shall be freely transferable by Purchaser.
 
Nothing has come to our attention that has caused us to believe that the
Registration Statement and the prospectus at the time the Registration Statement
became effective and as of the date of this opinion contained or contains an
untrue statement of a material fact or omitted or omits to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading; however,
we express no opinion with respect to the financial statements and the notes
thereto and the schedules and other financial and statistical data derived
therefrom included or incorporated by reference in the Registration Statement or
the prospectus.

 
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