Exhibit 10.1

SECURITIES PURCHASE AGREEMENT

This Securities Purchase Agreement (this “Agreement”) is dated as of
September 19, 2013, among GreenHunter Resources, Inc., a Delaware corporation
(the “Company”), and each of the purchasers identified on the signature pages
hereto (each, a “Purchaser” and collectively, the “Purchasers”).

WHEREAS, subject to the terms and conditions set forth in this Agreement and
pursuant to Section 4(2) of the Securities Act of 1933, as amended (the
“Securities Act”), and Rule 506 as promulgated by the U.S. Securities and
Exchange Commission (the “Commission”) under the Securities Act, the Company
desires to issue and sell to each Purchaser, and each Purchaser, severally and
not jointly, desires to purchase from the Company, the number of units (the
“Units”) set forth beneath such Purchaser’s name on the signature pages hereof,
with each unit consisting of (i) one (1) share of 10% Series C Cumulative
Preferred Stock, par value $0.001 per share (the “Series C Preferred Stock”),
and (ii) a warrant to purchase shares of common stock, par value $0.001 per
share (the “Common Stock”) in an amount equal to 20% of a Purchaser’s cash
investment, as more fully described in this Agreement (the “Offering”); and

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

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

ARTICLE I.

DEFINITIONS

1.1 Definitions. In addition to the terms defined elsewhere in this Agreement
(including in the preamble and recitals above), for all purposes of this
Agreement, the following terms have the meanings set forth in this Section 1.1:

“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 promulgated under
the Securities Act.

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

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

“Closing Date” means the Trading Day on which this Agreement has been executed
and delivered by the parties hereto, and all conditions precedent to (i) the
Purchaser’s obligations to pay the Subscription Amount and (ii) the Company’s
obligations to deliver the securities comprising the Units, in each case, have
been satisfied or waived.

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

“Liens” means any lien, charge, security interest, encumbrance, right of first
refusal, preemptive right or other restriction, other than restrictions imposed
by securities laws.

“Per Unit Purchase Price” equals $17.50.

“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.

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

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

“Trading Day” means a day on which the Principal Market (as defined in
Section 3.1(viii) below) is open for trading.

“Transaction Documents” means this Agreement and the schedules and exhibits
attached hereto, the Registration Rights Agreement and the schedules and
exhibits attached thereto, the Warrants, and any other agreement, instrument,
and other document executed and delivered pursuant hereto or thereto.

ARTICLE II.

PURCHASE AND SALE

2.1 Authorization of Securities; Closing.

(a) The Company has duly authorized the issuance and sale at the Closing of
(i) 181,786 Units at the Per Unit Purchase Price for an aggregate purchase price
of $3,181,255.00, (ii) 181,786 shares of the Company’s Series C Preferred Stock
(the “Series C Preferred Shares”), (iii) warrants to purchase an aggregate of
282,778 shares of Common Stock, substantially in the form attached hereto as
Exhibit B (each, a “Warrant” and collectively, the “Warrants”), and (iv) 282,778
shares of Common Stock issuable upon the exercise of the Warrants (collectively,
the “Warrant Shares”, and together with the Series C Preferred Shares and the
Warrants, the “Securities”).

(b) On the Closing Date, upon the terms and subject to the conditions set forth
herein, substantially concurrently with the execution and delivery of this
Agreement by the parties hereto, the Company shall sell, and each Purchaser
shall purchase, the number of Units specified beneath each such Purchaser’s name
on the signature pages hereto. At the Closing, each Purchaser shall deliver to
the Company, via wire transfer of immediately available funds, an amount equal
to such Purchaser’s Subscription Amount as set forth

 

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beneath such Purchaser’s name on the signature page hereto, and the Company
shall deliver to such Purchaser the securities represented by the Units so
purchased, and the Company and the Purchaser shall deliver the other items set
forth in Section 2.2 deliverable at the Closing. Upon satisfaction of the
covenants and conditions set forth in Sections 2.2 and 2.3, the Closing shall
occur at the offices of the Company or such other location as the parties shall
mutually agree.

2.2 Deliveries.

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

(i) This Agreement, duly executed by the Company;

(ii) A duly executed stock certificate representing the Series C Preferred
Shares purchased hereunder;

(iii) The Warrants purchased hereunder, duly executed by the Company;

(iv) The Registration Rights Agreement, duly executed by the Company;

(v) A legal opinion of Fulbright & Jaworski L.L.P, substantially in the form of
Exhibit C attached hereto;

(vi) A certificate, executed by the Secretary of the Company, dated as of the
Closing Date, certifying (i) the resolutions adopted by the Board of Directors
approving the transactions contemplated by this Agreement, the Registration
Rights Agreement and each of the other Transaction Documents, and the issuance
of the Securities to be issued at the Closing, and that such resolutions remain
in full force and effect, (ii) the current versions of the Company’s certificate
of incorporation and bylaws, each as amended, (iii) as to the signatures and
authority of Persons signing the Transaction Documents and related documents on
behalf of the Company, and (iv) a certificate evidencing the formation and good
standing of the Company issued by the Secretary of State of the State of
Delaware, as of a date within three (3) Trading Days of the Closing Date;

(vii) A certificate, executed by the President or Chief Executive Officer of the
Company, dated as of the Closing Date, certifying the matters set forth in
Section 2.3(a)(i) below; and

(viii) Such other documents relating to the transactions contemplated by this
Agreement as the Purchasers or their counsel may reasonably request.

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

(i) This Agreement, duly executed by such Purchaser;

 

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(ii) The Purchaser’s Subscription Amount by wire transfer to the account as
specified in writing by the Company;

(iii) The Warrants, duly executed by such Purchaser;

(iv) The Registration Rights Agreement, duly executed by such Purchaser; and

(v) A fully completed and duly executed Selling Securityholder Questionnaire.

2.3 Closing Conditions.

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

(i) each of the representations and warranties of the Purchasers contained
herein shall be true and correct in all respects (in the case of any
representation or warranty containing a materiality or Material Adverse Effect
qualification) or in all material respects (in the case of any representation or
warranty not containing a materiality or Material Adverse Effect qualification)
at the Closing Date as if made on and as of such date, and all covenants and
agreements contained herein to be performed on the part of the Purchasers and
all conditions contained herein to be fulfilled or complied with by the
Purchasers at or prior to the Closing Date shall have been duly performed,
fulfilled or complied with; and

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

(b) The obligations of each Purchaser hereunder in connection with the Closing
are subject to the following conditions being met by the Company or waived by
such Purchaser:

(i) each of the representations and warranties of the Company contained herein
shall be true and correct in all respects (in the case of any representation or
warranty containing a materiality or Material Adverse Effect qualification) or
in all material respects (in the case of any representation or warranty not
containing a materiality or Material Adverse Effect qualification) at the
Closing Date as if made on and as of such date, and all covenants and agreements
contained herein to be performed on the part of the Company and all conditions
contained herein to be fulfilled or complied with by the Company at or prior to
the Closing Date shall have been duly performed, fulfilled or complied with,
unless such conditions have been waived;

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

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

 

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(iv) from the date hereof to the Closing Date, trading in the Common Stock and
Series C Preferred Stock shall not have been suspended by the Commission or the
Principal Market (except for any suspension of trading of limited duration
agreed to by the Company, which suspension shall be terminated prior to the
Closing), and, at any time prior to the Closing Date, trading in securities
generally shall not have been suspended or limited, or minimum prices shall not
have been established on the New York Stock Exchange, the Nasdaq Capital Market,
the Nasdaq Global Market, the Nasdaq Global Select Market, the NYSE MKT or in
the over-the-counter market, nor shall a banking moratorium have been declared
either by the United States or New York State authorities nor shall there have
occurred any material outbreak or escalation of hostilities or other national or
international calamity of such magnitude in its effect on, or any material
adverse change in, any financial market which, in each case, in the reasonable
judgment of the Purchasers, makes it impracticable or inadvisable to purchase
the Securities at the Closing; and

(v) no action shall have been taken and no law, statute, rule, regulation or
order shall have been enacted, adopted or issued by any governmental agency or
body which would prevent the issuance or sale of the Securities or result in a
Material Adverse Effect on the Company; and no injunction, restraining order or
order of any other nature by any federal or state court of competent
jurisdiction shall have been issued which would prevent the issuance or sale of
the Securities or result in a Material Adverse Effect on the Company.

ARTICLE III.

REPRESENTATIONS AND WARRANTIES

3.1 Representations and Warranties of the Company. The Company hereby represents
and warrants to each of the Purchasers as follows:

(a) The Company and each of its Subsidiaries (as defined below) are, and will
be, duly organized, validly existing and in good standing under the laws of
their respective jurisdictions of organization. The Company and each of its
Subsidiaries are, and will be, duly licensed or qualified as a foreign entity
for transaction of business and in good standing under the laws of each other
jurisdiction in which their respective ownership or lease of property or the
conduct of their respective businesses requires such license or qualification,
and have all corporate power and authority necessary to own or hold their
respective properties and to conduct their respective businesses as described in
the Commission Reports, except where the failure to be so qualified or in good
standing or have such power or authority would not, individually or in the
aggregate, have a Material Adverse Effect (as defined below) or would reasonably
be expected to have a Material Adverse Effect.

(b) GreenHunter Renewable Power, LLC, GreenHunter Wind Energy, LLC, GreenHunter
Mesquite Lake, LLC, GreenHunter Water, LLC, Hunter Disposal, LLC, Ritchie Hunter
Water Disposal, LLC, and Hunter Hauling, LLC (collectively, the “Subsidiaries”),
are the Company’s only significant subsidiaries (as such term is defined in Rule
1-02 of Regulation S-X promulgated by the Commission). Except as set forth in
the Commission Reports, the Company owns, directly or indirectly, all of the
equity interests of the Subsidiaries free and clear of any Lien, and all the
equity interests of the Subsidiaries are validly issued and are fully paid, non
assessable and free of preemptive and similar rights.

 

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(c) Neither the Company nor any of its Subsidiaries is (i) in violation of its
charter or by-laws or similar organizational documents; (ii) in default, and no
event has occurred that, with notice or lapse of time or both, would constitute
such a default, in the due performance or observance of any term, covenant or
condition contained in any indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument to which the Company or any of its Subsidiaries is
a party or by which the Company or any of its Subsidiaries is bound or to which
any of the property or assets of the Company or any of its Subsidiaries are
subject; or (iii) in violation of any law or statute or any judgment, order,
rule or regulation of any court or arbitrator or governmental or regulatory
authority, except, in the case of each of clauses (ii) and (iii) above, for any
such violation or default that would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. Except as described in
the Commission Reports, to the Company’s knowledge, no other party under any
material contract or other agreement to which it or any of its Subsidiaries is a
party is in default in any respect thereunder where such default would
reasonably be expected to have a Material Adverse Effect.

(d) Subsequent to the date of the Company’s Annual Report on Form 10-K for the
year ended December 31, 2012, there has not been (i) any Material Adverse
Effect, or any development involving a prospective Material Adverse Effect, in
or affecting the business, properties, management, financial, condition
(financial or otherwise), results of operations, or prospects of the Company and
the Subsidiaries taken as a whole, (ii) any transaction which is material to the
Company and the Subsidiaries taken as a whole, (iii) any obligation or
liability, direct or contingent (including any off-balance sheet obligations),
incurred by the Company or any Subsidiary, which is material to the Company and
the Subsidiaries taken as a whole, (iv) any material change in the capital stock
or outstanding long-term indebtedness of the Company or any of its Subsidiaries
or (v) any dividend or distribution of any kind declared, paid or made on the
capital stock of the Company or any Subsidiary, other than in each case above in
the ordinary course of business or as otherwise disclosed in the Commission
Reports.

(e) As of September 16, 2013, the authorized capital stock of the Company
consists of (i) 90,000,000 shares of Common Stock, of which (A) 33,436,112
shares are issued and outstanding; (B) 10,532,100 shares are reserved for
issuance upon exercise of stock options outstanding under the Company’s equity
compensation plans; (C) 2,485,000 shares are reserved for issuance upon exercise
of common stock purchase warrants granted prior to the date of this Agreement;
(D) and such additional stock options and shares of Common Stock which may be
issued from time to time in accordance with the terms of the Company’s 2013
Long-Term Incentive Compensation Plan, as amended; and (ii) 8,000,000 shares of
preferred stock, 2,000,000 of which are designated Series C Preferred Stock,
1,818,214 of which are issued and outstanding. All of the issued shares of
capital stock of the Company have been duly and validly authorized and issued,
are fully paid and non assessable, and have been issued in compliance with all
federal and state securities laws. All of the issued shares of capital stock of
each Subsidiary have been duly and validly authorized and issued, are fully paid
and non assessable and have been issued in compliance with all federal and state
securities laws and are owned directly by the Company or by another wholly owned
subsidiary of the Company free and clear of any

 

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Liens. Except as disclosed in this Agreement, neither the Company nor any
Subsidiary has outstanding any options or warrants to purchase, or any
preemptive rights or other rights to subscribe for or to purchase any securities
or obligations convertible into, or any contracts or commitments to issue or
sell, shares of its capital stock or any such options, warrants, rights,
convertible securities or obligations. The description of the Company’s equity
compensation plans and the options or other rights granted and exercised
thereunder set forth in the Commission Reports accurately and fairly presents in
all material respects the information required by the Securities Act or Exchange
Act, as applicable, to be shown with respect to such plans, options and rights.

(f) The Company has the full 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,
other than with respect to the Required Actions, no further consent or action is
required by the Company, its Board of Directors or its shareholders. Each of the
Transaction Documents has been (or upon delivery will be) duly executed by the
Company and is, or when delivered in accordance with the terms hereof, will
constitute, the valid and binding obligation of the Company enforceable against
the Company in accordance with its terms, except as such enforceability may be
limited by applicable (x) general equitable principles and bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or similar laws in
effect which affect creditors’ rights generally, or (y) laws relating to the
availability of specific performance, injunctive relief or other equitable
remedies or (z) insofar as indemnification and contribution provisions may be
limited by applicable law. The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby do not and will not: (i) conflict
with or violate any provision of the Company’s certificate of incorporation,
bylaws or other organizational or charter documents in effect as of the date of
execution of this Agreement, or (ii) subject to carrying out the Required
Actions, conflict with, breach, or constitute a default (or an event that with
notice or lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation (with or
without notice, lapse of time or both) of, any license, certificate, clearance,
authorization or permit issued by the appropriate governmental or regulatory
agencies or authorities (collectively, “Permits”), agreement, mortgage,
indenture, credit facility, indebtedness or other instrument (evidencing a
Company indebtedness or otherwise) or other understanding to which the Company
is a party or by which any property or asset of the Company is bound or
affected, or (iii) result in a violation of any law, rule, regulation, order,
judgment, injunction, decree or other restriction of any court or governmental
authority to which the Company is subject (including federal and state
securities laws and regulations), or by which any property or asset of the
Company is bound or affected, except in the case of each of clauses (ii) and
(iii) immediately above, such as could not, individually or in the aggregate:
(a) adversely affect the legality, validity or enforceability of this Agreement
and/or any other Transaction Documents, (b) could reasonably be expected to have
or result in a material adverse effect on the results of operations, assets,
business, management, operations or financial condition of the Company and its
Subsidiaries, taken as a whole, or (c) adversely impair the Company’s ability to
perform fully on a timely basis its obligations under any of the Transaction
Documents (any of foregoing clauses (a), (b) or (c), a “Material Adverse
Effect”).

 

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(g) The Securities, when issued and delivered pursuant to the terms approved by
the board of directors of the Company or a duly authorized committee thereof, or
a duly authorized executive committee, against payment therefor as provided
herein, will be duly and validly authorized and issued and fully paid and non
assessable, free and clear of any Lien, including any statutory or contractual
preemptive rights, resale rights, rights of first refusal or other similar
rights.

(h) The Company is not required to obtain any consent, approval, waiver,
authorization or order of, give any notice to, or make any filing or
registration with, or qualification of, 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) the filing of a Form 8-K disclosing the transactions contemplated
hereby, (ii) the notification for the listing of the Series C Preferred Shares
and Warrant Shares by the NYSE MKT (the “Principal Market”) for trading thereon
in the manner required thereby, (iii) applicable state securities filings,
(iv) such approval as may be required by the applicable rules and regulations of
the Principal Market (or any successor entity) from the stockholders of the
Company with respect to the transactions contemplated by the Transaction
Documents, including the issuance of all of the shares of Common Stock
underlying the Securities in excess of 19.99% of the issued and outstanding
Common Stock on the Closing Date (the “Stockholder Approval”), and (vi) the
filing with the Commission of one or more Registration Statements in accordance
with the requirements of the Registration Rights Agreement (collectively, the
actions and/or approvals specified in subclauses (i)-(vi) immediately above are
referred to herein as the “Required Actions”).

(i) Except for the Company Quarterly Report on Form 10-Q for the period ended
March 31, 2013 and the Company’s Current Report on Form 8-K filed with the
Commission on November 13, 2012, the Company has filed all reports required to
be filed by it under the Exchange Act, including pursuant to Section 13(a) or
15(d) thereof, for the two years preceding the date hereof (the foregoing
materials being collectively referred to herein as the “Commission Reports”) on
a timely basis or has received a valid extension of such time of filing and has
filed any such Commission Reports prior to the expiration of any such extension.
As of their respective dates, the Commission Reports complied in all material
respects with the requirements of the Exchange Act and the rules and regulations
promulgated thereunder, and none of the Commission 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.

(j) Except as set forth in the Commission Reports, (i) no Person has the right,
contractual or otherwise, to cause the Company to issue or sell to such Person
any Common Stock, Series C Preferred Stock or shares of any other capital stock
or other securities of the Company (other than upon the exercise of options or
warrants to purchase common shares or upon the exercise of options that may be
granted from time to time under the Company’s stock option plans), (ii) no
Person has any preemptive rights, rights of first refusal, or any other rights
(whether pursuant to a “poison pill” provision or otherwise) to

 

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purchase any Common Stock, Series C Preferred Stock or shares of any other
capital stock or other securities of the Company from the Company which have not
been duly waived with respect to the offering contemplated hereby, (iii) no
Person has the right to act as an underwriter or as a financial advisor to the
Company in connection with the offer and sale of the Series C Preferred Stock,
and (iv) no Person has the right, contractual or otherwise, to require the
Company to register under the Securities Act any Common Stock, Series C
Preferred Stock or shares of any other capital stock or other securities of the
Company.

(k) Hein & Associates LLP (the “Accountant”), whose report on the consolidated
financial statements of the Company is filed with the Commission as part of the
Company’s most recent Annual Report on Form 10-K filed with the Commission, are
and, during the periods covered by their report, were independent public
accountants within the meaning of the Securities Act and the Public Company
Accounting Oversight Board (United States). To the Company’s knowledge, after
due inquiry, the Accountant is not in violation of the auditor independence
requirements of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) with
respect to the Company.

(l) All agreements required to be filed as exhibits to all reports required to
be filed by the Company under the Securities Act and Exchange Act since the
Company’s most recent Annual Report on Form 10-K under Item 601 of Regulation
S-K to which the Company or any of its Subsidiaries is a party, have been filed
by Company as exhibits to such reports (the “Material Contracts”). The Material
Contracts have been duly authorized, executed and delivered by the Company or
its subsidiaries, constitute valid and binding agreements of the Company or its
subsidiaries (as applicable) and are enforceable against the Company or its
subsidiaries (as applicable) in accordance with their respective terms, except
as such enforceability may be limited by (i) general equitable principles and
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
similar laws in effect which affect creditors’ rights generally, (ii) 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, and, to the Company’s knowledge,
such Material Contracts are enforceable in accordance with their respective
terms by the Company or its subsidiaries (as applicable) against the other
parties thereto, except as such enforceability may be limited by (x) general
equitable principles and bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or similar laws in effect which affect creditors’ rights
generally, (y) laws relating to the availability of specific performance,
injunctive relief or other equitable remedies, and (z) insofar as
indemnification and contribution provisions may be limited by applicable law,
and such contracts are in full force and effect on the date hereof other than
those which have expired in accordance with their terms. Neither the Company nor
any of its subsidiaries, nor, to the Company’s knowledge, any other party
thereto, is in breach of or default under any of such Material Contracts, except
for such breaches or defaults that will not, individually or in the aggregate,
be reasonably expected to result in a Material Adverse Effect.

(m) Except as set forth in the Commission Reports, there are no legal,
governmental or regulatory actions, suits or proceedings pending, nor, to the
Company’s knowledge, any legal, governmental or regulatory investigations, to
which the Company or a Subsidiary is a party or to which any property of the
Company or any of its Subsidiaries is the subject that, individually or in the
aggregate, if determined adversely to the Company or any of its Subsidiaries,
would reasonably be expected to have a Material Adverse Effect

 

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or materially and adversely affect the ability of the Company to perform its
obligations under this Agreement; to the Company’s knowledge, no such actions,
suits or proceedings are threatened or contemplated by any governmental or
regulatory authority or threatened by others that, individually or in the
aggregate, if determined adversely to the Company or any of its Subsidiaries,
would reasonably be expected to have a Material Adverse Effect; or and (i) there
are no current or pending legal, governmental or regulatory investigations,
actions, suits or proceedings that are required under the Securities Act to be
described in the Commission Reports that are not disclosed therein; and
(ii) there are no contracts or other documents that are required under the
Securities Act to be filed as exhibits to the Commission Reports that are not so
filed.

(n) Except as set forth in the Commission Reports, the Company and each of its
Subsidiaries possess or have obtained, all Permits that are necessary for the
ownership or lease of their respective properties or the conduct of their
respective businesses as described in the Commission Reports, except where the
failure to possess, obtain or make the same would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. Except as
disclosed in the Commission Reports, neither the Company nor any of its
Subsidiaries have received written notice of any proceeding relating to
revocation or modification of any such Permit or has any reason to believe that
such Permit will not be renewed in the ordinary course, except where the failure
to obtain any such renewal would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.

(o) Neither the Company nor any of the Subsidiaries has defaulted on any
installment on indebtedness for borrowed money or on any rental on one or more
long-term leases, which defaults, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect. The Company has not
filed a report pursuant to Section 13(a) or 15(d) of the Exchange Act since the
filing of its last Annual Report on Form 10-K, indicating that it (i) has failed
to pay any dividend or sinking fund installment on preferred stock or (ii) has
defaulted on any installment on indebtedness for borrowed money or on any rental
on one or more long-term leases, which defaults, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.

(p) The Company and each of its Subsidiaries have filed all federal, state,
local and foreign tax returns which have been required to be filed and paid all
taxes shown thereon through the date hereof, to the extent that such taxes have
become due and are not being contested in good faith, except where the failure
to do so would not reasonably be expected to have a Material Adverse Effect.
Except as otherwise disclosed in or contemplated by the Commission Reports, no
tax deficiency has been determined adversely to the Company or any of its
Subsidiaries which has had, or would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect. The Company has no
knowledge of any federal, state or other governmental tax deficiency, penalty or
assessment which has been or might be asserted or threatened against it which
could have a Material Adverse Effect.

(q) Except as set forth in the Commission Reports, the Company and its
Subsidiaries have good and valid title in fee simple to all items of real
property and good and valid title to all personal property described in the
Commission Reports as being owned by them that are material to the businesses of
the Company or such Subsidiary, in each case

 

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free and clear of all Liens, except those that (i) do not materially interfere
with the use made and proposed to be made of such property by the Company and
any of its Subsidiaries or (ii) would not reasonably be expected, individually
or in the aggregate, to have a Material Adverse Effect. Any real property
described in the Commission Reports as being leased by the Company and any of
its Subsidiaries is held by them under valid, existing and enforceable leases,
except those that (A) do not materially interfere with the use made or proposed
to be made of such property by the Company or any of its Subsidiaries or
(B) would not be reasonably expected, individually or in the aggregate, to have
a Material Adverse Effect.

(r) Except as set forth in the Commission Reports, the Company and its
Subsidiaries own or possess adequate enforceable rights to use all patents,
patent applications, trademarks (both registered and unregistered), service
marks, trade names, trademark registrations, service mark registrations,
copyrights, licenses and know-how (including trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, systems or
procedures) (collectively, the “Intellectual Property”), necessary for the
conduct of their respective businesses as conducted as of the date hereof,
except to the extent that the failure to own or possess adequate rights to use
such Intellectual Property would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect; the Company and any of
its Subsidiaries have not received any written notice of any claim of
infringement or conflict which asserted Intellectual Property rights of others,
which infringement or conflict, if the subject of an unfavorable decision, would
result in a Material Adverse Effect; there are no pending, or to the Company’s
knowledge, threatened judicial proceedings or interference proceedings
challenging the Company’s or its Subsidiaries’ rights in or to or the validity
of the scope of any of the Company’s or its Subsidiaries’ patents, patent
applications or proprietary information; no other entity or individual has any
right or claim in any of the Company’s or its Subsidiaries’ patents, patent
applications or any patent to be issued therefrom by virtue of any contract,
license or other agreement entered into between such entity or individual and
the Company or a Subsidiary or by any non-contractual obligation, other than by
written licenses granted by the Company or a Subsidiary; the Company and its
Subsidiaries have not received any written notice of any claim challenging the
rights of the Company or a Subsidiary in or to any Intellectual Property owned,
licensed or optioned by the Company or such Subsidiary which claim, if the
subject of an unfavorable decision would result in a Material Adverse Effect.

(s) Except as set forth in the Commission Reports, the Company and its
Subsidiaries (i) are in compliance with any and all applicable federal, state,
local and foreign laws, rules, regulations, decisions and orders relating to the
protection of human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants (collectively, “Environmental
Laws”); (ii) have received and are in compliance with all permits, licenses or
other approvals required of them under applicable Environmental Laws to conduct
their respective businesses as described in the Commission Reports; and
(iii) have not received notice of any actual or potential liability for the
investigation or remediation of any disposal or release of hazardous or toxic
substances or wastes, pollutants or contaminants, except, in the case of any of
clauses (i), (ii) or (iii) above, for any such failure to comply or failure to
receive required permits, licenses, other approvals or liability as would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

 

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(t) Except as set forth in the Commission Reports, the Company and each of its
Subsidiaries maintain systems of internal accounting controls designed 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 generally accepted accounting principles 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. The
Company is not aware of any material weaknesses in its internal control over
financial reporting. Since the date of the latest audited financial statements
of the Company, there has been no change in the Company’s internal control over
financial reporting that has materially affected, or is reasonably likely to
materially affect, the Company’s internal control over financial reporting. The
Company has established disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15 and 15d-15) for the Company and designed such
disclosure controls and procedures to ensure that material information relating
to the Company and each of its Subsidiaries is made known to the certifying
officers by others within those entities, particularly during the period in
which the Company’s Annual Report on Form 10-K or Quarterly Report on Form 10-Q,
as the case may be, is being prepared. The Company’s certifying officers have
evaluated the effectiveness of the Company’s controls and procedures as of a
date within 90 days prior to the filing date of the Form 10-K for the fiscal
year most recently ended (such date, the “Evaluation Date”). The Company
presented in its Form 10-K for the fiscal year most recently ended 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 significant changes in the
Company’s internal controls (as such term is defined in Item 307(b) of
Regulation S-K under the Securities Act) or, to the Company’s knowledge, in
other factors that could significantly affect the Company’s internal controls.
To the knowledge of the Company, the Company’s “internal controls over financial
reporting” and “disclosure controls and procedures” are effective.

(u) There is and has been no failure on the part of the Company or, to the
knowledge of the Company, any of the Company’s directors or officers, in their
capacities as such, to comply with any applicable provisions of the
Sarbanes-Oxley Act and the rules and regulations promulgated thereunder. Each of
the principal executive officer and the principal financial officer of the
Company (or each former principal executive officer of the Company and each
former principal financial officer of the Company as applicable) has made all
certifications required by Sections 302 and 906 of the Sarbanes-Oxley Act with
respect to all reports, schedules, forms, statements and other documents
required to be filed by it or furnished by it to the Commission. For purposes of
the preceding sentence, “principal executive officer” and “principal financial
officer” shall have the meanings given to such terms in the Sarbanes-Oxley Act.

(v) Neither the Company nor any of the Subsidiaries has incurred any liability
for any finder’s fees, brokerage commissions or similar payments in connection
with the transactions herein contemplated, except as may otherwise exist with
respect to MLV & Co., LLC (the “Placement Agent”).

 

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(w) No labor disturbance by or dispute with employees of the Company or any of
its Subsidiaries exists or, to the knowledge of the Company, is threatened which
would reasonably be expected to result in a Material Adverse Effect.

(x) Neither the Company nor any of the Subsidiaries is or, after giving effect
to the offering and sale of the Placement Shares, will be an “investment
company” or an entity “controlled” by an “investment company,” as such terms are
defined in the Investment Company Act of 1940, as amended (the “Investment
Company Act”).

(y) The operations of the Company and its Subsidiaries are and have been
conducted at all times in compliance with applicable financial record keeping
and reporting requirements of the Currency and Foreign Transactions Reporting
Act of 1970, as amended, the money laundering statutes of all jurisdictions to
which the Company or its Subsidiaries are subject, the rules and regulations
thereunder and any related or similar rules, regulations or guidelines, issued,
administered or enforced by any governmental agency (collectively, the “Money
Laundering Laws”), except as would not reasonably be expected to result in a
Material Adverse Effect; and no action, suit or proceeding by or before any
court or governmental agency, authority or body or any arbitrator involving the
Company or any of its Subsidiaries with respect to the Money Laundering Laws is
pending or, to the knowledge of the Company, threatened.

(z) There are no transactions, arrangements and other relationships between
and/or among the Company, and/or, to the knowledge of the Company, any of its
affiliates and any unconsolidated entity, including, but not limited to, any
structural finance, special purpose or limited purpose entity (each, an “Off
Balance Sheet Transaction”) that could reasonably be expected to affect
materially the Company’s liquidity or the availability of or requirements for
its capital resources, including those Off Balance Sheet Transactions described
in the Commission’s Statement about Management’s Discussion and Analysis of
Financial Conditions and Results of Operations (Release Nos. 33-8056; 34-45321;
FR-61), required to be described in the Commission Reports which have not been
described as required.

(aa) To the knowledge of the Company, each material employee benefit plan,
within the meaning of Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended (“ERISA”), that is maintained, administered or
contributed to by the Company or any of its affiliates for employees or former
employees of the Company and any of its Subsidiaries has been maintained in
material compliance with its terms and the requirements of any applicable
statutes, orders, rules and regulations, including but not limited to ERISA and
the Internal Revenue Code of 1986, as amended (the “Code”); no prohibited
transaction, within the meaning of Section 406 of ERISA or Section 4975 of the
Code, has occurred which would result in a material liability to the Company
with respect to any such plan excluding transactions effected pursuant to a
statutory or administrative exemption; and for each such plan that is subject to
the funding rules of Section 412 of the Code or Section 302 of ERISA, no
“accumulated funding deficiency” as defined in Section 412 of the Code has been
incurred, whether or not waived, and the fair market value of the assets of each
such plan (excluding for these purposes accrued but unpaid contributions)
exceeds the present value of all benefits accrued under such plan determined
using reasonable actuarial assumptions.

 

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(bb) No forward-looking statement (within the meaning of Section 27A of the
Securities Act and Section 21E of the Exchange Act) (a “Forward Looking
Statement”) contained in the Commission Reports has been made or reaffirmed
without a reasonable basis or has been disclosed other than in good faith. The
Forward Looking Statements from the Company’s Annual Report on Form 10-K for the
fiscal year most recently ended (i) except for any Forward Looking Statement
included in any financial statements and notes thereto, are within the coverage
of the safe harbor for forward looking statements set forth in Section 27A of
the Securities Act, Rule 175(b) under the Securities Act or Rule 3b-6 under the
Exchange Act, as applicable, (ii) were made by the Company with a reasonable
basis and in good faith and reflect the Company’s good faith commercially
reasonable best estimate of the matters described therein, and (iii) have been
prepared in accordance with Item 10 of Regulation S-K under the Securities Act.

(cc) The Company and each of its Subsidiaries carry, or are covered by,
insurance in such amounts and covering such risks as the Company and each of its
Subsidiaries reasonably believe are adequate for the conduct of their properties
and as is customary for companies of similar size engaged in similar businesses
in similar industries.

(dd) (i) Neither the Company nor, to the Company’s knowledge, the Subsidiaries,
nor to the Company’s knowledge, any of their respective executive officers has,
in the past five years, made any unlawful contributions to any candidate for any
political office (or failed fully to disclose any contribution in violation of
law) or made any contribution or other payment to any official of, or candidate
for, any federal, state, municipal, or foreign office or other person charged
with similar public or quasi-public duty in violation of any law or of the
character required to be disclosed in the Commission Reports; (ii) no
relationship, direct or indirect, exists between or among the Company or, to the
Company’s knowledge, any Subsidiary or any affiliate of any of them, on the one
hand, and the directors, officers and stockholders of the Company or, to the
Company’s knowledge, any Subsidiary, on the other hand, that is required by the
Securities Act to be described in the Commission Reports that is not so
described; (iii) no relationship, direct or indirect, exists between or among
the Company or any Subsidiary or any affiliate of them, on the one hand, and the
directors, officers, stockholders or directors of the Company or, to the
Company’s knowledge, any Subsidiary, on the other hand, that is required by the
rules of FINRA to be described in the Commission Reports that is not so
described; (iv) except as described in the Commission Reports, there are no
material outstanding loans or advances or material guarantees of indebtedness by
the Company or, to the Company’s knowledge, any Subsidiary to or for the benefit
of any of their respective officers or directors or any of the members of the
families of any of them; and (v) the Company has not offered, or caused any
placement agent to offer, Common Stock or Series C Preferred Stock to any person
with the intent to influence unlawfully (A) a customer or supplier of the
Company or any Subsidiary to alter the customer’s or supplier’s level or type of
business with the Company or any Subsidiary or (B) a trade journalist or
publication to write or publish favorable information about the Company or any
Subsidiary or any of their respective products or services, and, (vi) neither
the Company nor any Subsidiary nor, to the Company’s knowledge, any employee or
agent of the Company or any Subsidiary has made any payment of funds of the
Company or any Subsidiary or received or retained any funds in violation of any
law, rule or regulation (including, without limitation, the Foreign Corrupt
Practices Act of 1977), which payment, receipt or retention of funds is of a
character required to be disclosed in the Commission Reports.

 

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(ee) Neither the execution of this Agreement, nor the issuance, offering or sale
of the Securities, nor the consummation of any of the transactions contemplated
herein and therein, nor the compliance by the Company with the terms and
provisions hereof and thereof will conflict with, or will result in a breach of,
any of the terms and provisions of, or has constituted or will constitute a
default under, or has resulted in or will result in the creation or imposition
of any lien, charge or encumbrance upon any property or assets of the Company
pursuant to the terms of any contract or other agreement to which the Company
may be bound or to which any of the property or assets of the Company is
subject, except (i) such conflicts, breaches or defaults as may have been waived
and (ii) such conflicts, breaches and defaults that would not reasonably be
expected to have a Material Adverse Effect; nor will such action result (x) in
any violation of the provisions of the organizational or governing documents of
the Company, or (y) in any material violation of the provisions of any statute
or any order, rule or regulation applicable to the Company or of any court or of
any federal, state or other regulatory authority or other government body having
jurisdiction over the Company, except where such violation would not reasonably
be expected to have a Material Adverse Effect.

(ff) (i) The Company represents that, neither the Company nor any of its
Subsidiaries (collectively, the “Entity”) or any director, officer, employee,
agent, affiliate or representative of the Entity, is a government, individual,
or entity (in this paragraph (ff), “Person”) that is, or is owned or controlled
by a Person that is:

(A) the subject of any sanctions administered or enforced by the U.S. Department
of Treasury’s Office of Foreign Assets Control (“OFAC”), the United Nations
Security Council (“UNSC”), the European Union (“EU”), Her Majesty’s Treasury
(“HMT”), or other relevant sanctions authority (collectively, “Sanctions”), nor

(B) located, organized or resident in a country or territory that is the subject
of Sanctions (including, without limitation, Burma/Myanmar, Cuba, Iran, North
Korea, Sudan and Syria).

(ii) The Entity represents and covenants that it will not, directly or
indirectly, use the proceeds of the offering, or lend, contribute or otherwise
make available such proceeds to any subsidiary, joint venture partner or other
Person:

(A) to fund or facilitate any activities or business of or with any Person or in
any country or territory that, at the time of such funding or facilitation, is
the subject of Sanctions; or

(B) in any other manner that will result in a violation of Sanctions by any
Person (including any Person participating in the offering, whether as
underwriter, advisor, investor or otherwise).

(iii) The Entity represents and covenants that, except as detailed in the
Commission Reports, for the past 5 years, it has not knowingly engaged in, is
not now knowingly engaged in, and will not engage in, any dealings or
transactions with any Person, or in any country or territory, that at the time
of the dealing or transaction is or was the subject of Sanctions.

 

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3.2 Representations and Warranties of each Purchaser. Each Purchaser, severally
and not jointly, represents and warrants with respect to only itself, as of the
Closing Date, that:

(a) The Purchaser is either an individual or an entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization with full right, corporate, partnership or limited liability
company power and authority to enter into and to consummate the transactions
contemplated by this Agreement and otherwise to carry out its obligations
hereunder. The execution and delivery of the Transaction Documents to which it
is a party, and the performance by the Purchaser of the transactions
contemplated by such Transaction Documents, have been duly authorized by all
necessary corporate, partnership, limited liability company or similar action,
as applicable, on the part of the Purchaser. Each of the Transaction Documents
to which the Purchaser is a party has been duly executed by the Purchaser, and
when delivered by the Purchaser in accordance with the terms of such Transaction
Document, 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) The execution, delivery and performance by the Purchaser of each of the
Transaction Documents to which it is a party, and the consummation by the
Purchaser of the transactions contemplated by each such Transaction Document, do
not and will not (i) conflict with or violate any provision of the Purchaser’s
certificate of incorporation, bylaws or other organizational or charter
documents, or (ii) 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 Purchaser is subject (including
federal and state securities laws and regulations), or by which any property or
asset of the Purchaser is bound or affected.

(c) The Purchaser is acquiring the Securities as principal for its own account
and not with a view to or for distributing or reselling such Securities or any
part thereof in violation of the Securities Act or any applicable state
securities law, has no present intention of distributing any of such Securities
in violation of the Securities Act or any applicable state securities law and
has no direct or indirect arrangement or understandings with any other persons
to distribute or regarding the distribution of such Units in violation of the
Securities Act or any applicable state securities law (this representation and
warranty not limiting the Purchaser’s right to sell the Securities or any part
thereof in compliance with applicable federal and state securities laws). The
Purchaser is acquiring the Securities hereunder in the ordinary course of its
business.

(d) Other than consummating the transactions contemplated hereunder, the
Purchaser has not, nor has any Person acting on behalf of or pursuant to any
understanding with the Purchaser, directly or indirectly executed any purchases
or sales, including Short Sales, of the securities of the Company during the
period commencing as of the time that the Purchaser first became aware of the
proposed transactions contemplated hereunder and ending immediately prior to the
execution hereof. Notwithstanding the foregoing, in the case of a Purchaser that
is a multi-managed investment vehicle whereby separate portfolio managers manage
separate portions of the Purchaser’s assets and the portfolio managers have no
direct knowledge of the

 

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investment decisions made by the portfolio managers managing other portions of
the Purchaser’s assets, the representation set forth above shall only apply with
respect to the portion of assets managed by the portfolio manager that made the
investment decision to purchase the Units covered by this Agreement. Other than
to other Persons party to this Agreement and its Affiliates and their respective
investment advisors, agents, counsel and other advisors, the Purchaser has
maintained the confidentiality of all disclosures made to it in connection with
this transaction (including the existence and terms of this transaction).
Notwithstanding the foregoing, for avoidance of doubt, nothing contained herein
shall constitute a representation or warranty, or preclude any actions, with
respect to the identification of the availability of, or securing of, available
shares to borrow in order to effect Short Sales or similar transactions in the
future.

(e) At the time such Purchaser was offered the Securities, it was, and as of the
date hereof it is, and on each date on which it exercises any Warrants, it will
be either: (i) an “accredited investor” as defined in Rule 501 under the
Securities Act or (ii) a “qualified institutional buyer” as defined in Rule
144A(a) under the Securities Act. Such Purchaser is not required to be
registered as a broker-dealer under Section 15 of the Exchange Act. Such
Purchaser, either alone or together with its representatives, has such
knowledge, sophistication and experience in business and financial matters so as
to be capable of evaluating the merits and risks of the prospective investment
in the Securities and has so evaluated the merits and risks of such investment.
Such Purchaser is able to bear the economic risk of an investment in the
Securities and, at the present time, is able to afford a complete loss of such
investment.

(f) Such Purchaser understands that the Securities are being offered and sold to
it in reliance on specific exemptions from the registration requirements of
United States federal and state securities laws and that the Company is relying
in part upon the truth and accuracy of, and such Purchaser’s compliance with,
the representations, warranties, agreements, acknowledgments and understandings
of such Purchaser set forth herein in order to determine the availability of
such exemptions and the eligibility of such Purchaser to acquire the Securities.

(g) Such Purchaser and its advisors, if any, have been furnished with all
materials relating to the business, finances and operations of the Company and
materials relating to the offer and sale of the Securities that have been
requested by such Purchaser. Such Purchaser and its advisors, if any, have been
afforded the opportunity to ask questions of the Company. Neither such inquiries
nor any other due diligence investigations conducted by such Purchaser or its
advisors, if any, or its representatives shall modify, amend or affect such
Purchaser’s right to rely on the Company’s representations and warranties
contained herein. Such Purchaser understands that its investment in the
Securities involves a high degree of risk. Such Purchaser has sought such
accounting, legal and tax advice as it has considered necessary to make an
informed investment decision with respect to its acquisition of the Securities.

(h) Such Purchaser understands that no United States federal or state agency or
any other government or governmental agency has passed on or made any
recommendation or endorsement of the Securities or the fairness or suitability
of the investment in the Securities nor have such authorities passed upon or
endorsed the merits of the offering of the Securities.

(i) Such Purchaser is a resident of that jurisdiction specified beneath the
Purchaser’s name on the signature pages hereto.

 

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(j) Such Purchaser understands that except as provided in the Registration
Rights Agreement: (i) the Securities have not been and are not being registered
under the Securities Act or any state securities laws, and may not be offered
for sale, sold, assigned or transferred unless (A) subsequently registered
thereunder, (B) such Purchaser shall have delivered to the Company an opinion of
counsel, in a generally acceptable form, to the effect that such Securities to
be sold, assigned or transferred may be sold, assigned or transferred pursuant
to an exemption from such registration, or (C) such Purchaser provides the
Company with reasonable assurance that such Securities can be sold, assigned or
transferred pursuant to Rule 144 or Rule 144A promulgated under the Securities
Act (or a successor rule thereto) (collectively, “Rule 144”); (ii) any sale of
the Securities made in reliance on Rule 144 may be made only in accordance with
the terms of Rule 144 and further, if Rule 144 is not applicable, any resale of
the Securities under circumstances in which the seller (or the Person (through
whom the sale is made) may be deemed to be an underwriter (as that term is
defined in the Securities Act) may require compliance with some other exemption
under the Securities Act or the rules and regulations of the SEC thereunder; and
(iii) neither the Company nor any other Person is under any obligation to
register the Securities under the Securities Act or any state securities laws or
to comply with the terms and conditions of any exemption thereunder.
Notwithstanding the foregoing, the Securities may be pledged in connection with
a bona fide margin account or other loan or financing arrangement secured by the
Securities and such pledge of Securities shall not be deemed to be a transfer,
sale or assignment of the Securities hereunder, and no Purchaser effecting a
pledge of Securities shall be required to provide the Company with any notice
thereof or otherwise make any delivery to the Company pursuant to this Agreement
or any other Transaction Document (as defined below).

(k) Such Purchaser understands that the certificates or other instruments
representing the Securities shall, until such time as the resale of the Series C
Preferred Shares and Warrant Shares have been registered under the Securities
Act as contemplated by the Registration Rights Agreement, shall bear any
applicable legend as required by the “blue sky” laws of any state and a
restrictive legend in substantially the following form (and a stop-transfer
order may be placed against transfer of such stock certificates):

[NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN][THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN] REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES UNDER THE SECURITIES ACT, OR (B) AN OPINION OF COUNSEL, IN A
GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT (II)
UNLESS SOLD OR TRANSFERRED TO A “QUALIFIED INSTITUTIONAL BUYER” WITHIN THE
MEANING OF RULE 144A UNDER THE SECURITIES ACT OR (III) UNLESS SOLD PURSUANT TO
RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

 

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(l) Such Purchaser acknowledges to the Placement Agent that the Placement Agent
is acting as placement agent for the Units being offered hereby and will be
compensated by the Company for acting in such capacity. Such Purchaser further
acknowledges that the Placement Agent has acted solely as placement agent in
connection with the offering of the Units by the Company, that the information
and data provided to such Purchaser in connection with the transactions
contemplated hereby have not been subjected to independent verification or
investigation by the Placement Agent, and that the Placement Agent makes no
representation or warranty with respect to the accuracy or completeness of such
information, data or other related disclosure material, nor shall the Placement
Agent or any of its directors, officers, employees, representatives, controlling
persons or agents be liable for any loss or damages of any kind resulting from
the use of such information, data or related disclosure material except as set
forth below. Such Purchaser further acknowledges that in making its decision to
enter into this Agreement and purchase the Units, it has not relied on
information provided by the Placement Agent but has conducted its own
investigation and has relied on its own examination of the Company and the terms
of, and consequences, of holding the Securities. Such Purchaser further
acknowledges that the provisions of this Section 3.2(l) are for the benefit of,
and may be enforced by, and only by, the Placement Agent.

The Company acknowledges and agrees that the Purchaser does not make or has not
made any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in this Section 3.2.

ARTICLE IV.

OTHER AGREEMENTS OF THE PARTIES

4.1 Securities Laws Disclosure; Publicity. The Company shall, by 9:00 a.m. (New
York City time) on the Trading Day immediately following the date hereof, issue
a press release disclosing the material terms of the transactions contemplated
hereby. The Company shall, by 9:00 a.m. (New York City time) on the second
Trading Day immediately following the date hereof, file a Current Report on Form
8-K disclosing the material terms of the transactions contemplated hereby and
including the form of this Agreement, the Registration Rights Agreement and the
Warrants as exhibits thereto. From and after the issuance of such press release
and Form 8-K, the Company shall have publicly disclosed all material, non-public
information delivered to any Purchaser by the Company or any of its
subsidiaries, or any of their respective officers, directors, employees or
agents in connection with the transactions contemplated by this Agreement. The
Company and the Purchasers shall consult with each other in issuing any other
press releases with respect to the transactions contemplated hereby, and neither
the Company nor the Purchasers shall issue any such press release nor otherwise
make any such public statement without the prior consent of the Company, with
respect to any press release of any of the Purchasers, or without the prior
consent of the Purchasers, 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.

4.2 Non-Public Information. Except with respect to the material terms and
conditions of the transactions contemplated by this Agreement which will
subsequently become public information in accordance with Section 4.1, the
Company covenants and agrees that neither it, nor any other Person acting on its
behalf, will provide the Purchasers or their agents or counsel with any
information that the Company believes constitutes material non-public
information, unless prior thereto each of the Purchasers shall have executed a
written agreement with the Company regarding the confidentiality and use of such
information. The Company understands and confirms that the Purchasers shall be
relying on the foregoing covenant in effecting transactions in securities of the
Company.

 

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4.3 Use of Proceeds. The Company shall use the net proceeds from the sale of the
Units hereunder for working capital purposes and to fund potential acquisitions.

4.4 Indemnification of Purchaser. Subject to the provisions of this Section 4.4
and to the extent permitted by law, the Company will indemnify and hold the
Purchaser, its Affiliates, and their respective directors, managers, 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, managers, officers,
shareholders, agents, 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) of such controlling
persons (each, a “Purchaser Party”) harmless from any and all losses,
liabilities, obligations, contingencies, damages, costs and expenses, including
all judgments, amounts paid in settlements, court costs and reasonable
attorneys’ fees and costs of investigation (“Damages”) that any Purchaser Party
may suffer or incur due to a claim by a third party 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 (b) any action instituted
against a Purchaser in any capacity, or any of them or their respective
Affiliates, by any shareholder of the Company who is not an Affiliate of the
Purchaser, with respect to any of the transactions contemplated by this
Agreement (except to the extent such Damages are based upon a breach of the
Purchaser’s representations, warranties or covenants under this Agreement or any
agreements or understandings the Purchaser may have with any such shareholder 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 the 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. The 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 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 (together with any necessary local counsel).
The Company will not be liable to the Purchaser Party under this Agreement
(y) for any settlement by a Purchaser Party effected without the Company’s prior
written consent, which shall not be unreasonably withheld or delayed; or (z) to
the extent, but only to the extent that a loss, claim, damage or liability is
attributable to the Purchaser Party’s breach of any of the representations,
warranties, covenants or agreements made by the Purchaser Party in this
Agreement. The Company will not settle any such claim, action or proceeding
without the prior written consent of the Purchaser Party, which will not be
unreasonably withheld or delayed; provided, however, that such consent shall not
be required if the settlement includes a full and unconditional release
satisfactory to the Purchaser Party from all liability arising or that may arise
out of such claim or proceeding and does not include a statement as to or an
admission of fault, culpability or a failure to act by or on behalf of the
Purchaser Party.

 

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4.5 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 any Liens, a sufficient number of shares of Common Stock for the purpose of
enabling the Company to issue shares of Common Stock issued upon the exercise of
the Warrants issued as part of the Units purchased pursuant to this Agreement.

4.6 Listing of Common Stock and Series C Preferred Stock. The Company hereby
agrees to use reasonable best efforts to maintain the listing of the Common
Stock and Series C Preferred Stock on the Principal Market, and as soon as
reasonably practicable (but not later than the Closing Date), to list all of the
shares of Common Stock and Series C Preferred Shares issued or issuable as part
of the Units or upon exercise of the Warrants on such Principal Market. The
Company further agrees, if the Company applies to have the Common Stock or
Series C Preferred Stock traded on any other securities exchange, it will
include in such application all of such shares of Common Stock, and will take
such other action as is necessary to cause all of such shares of Common Stock or
Series C Preferred Stock to be listed on such other securities exchange as
promptly as possible. The Company will take all action reasonably necessary to
continue the listing and trading of its Common Stock and Series C Preferred
Stock on such securities exchange and will comply in all respects with the
Company’s reporting, filing and other obligations under the bylaws or rules of
such securities exchange.

4.7 Reporting Status. Until the earlier of (i) the date on which the Purchaser
shall have sold all of the Securities and (ii) the date on which the Purchaser
may sell all of the Securities without restriction pursuant to Rule 144 and
without the requirement to be in compliance with Rule 144(c)(1) (or any
successor thereto) promulgated under the Securities Act (the “Reporting
Period”), the Company shall timely file all reports required to be filed with
the Commission pursuant to the Exchange Act, and the Company shall not terminate
its status as an issuer required to file reports under the Exchange Act even if
the Exchange Act or the rules and regulations thereunder would no longer require
or otherwise permit such termination, and the Company shall take all actions
necessary to maintain its eligibility to register the Warrant Shares for resale
by the Purchasers on Form S-3.

4.8 Equal Treatment of Purchaser. The sale and purchase of the Units to a
Purchaser under this Agreement is, and shall be, on the same terms and
conditions offered all other Purchasers of the Units in the Offering. If the
Company offers better terms to any other purchaser of Units in the Offering than
are being offered to the Purchasers under this Agreement, including, without
limitation, by amendment or modification to this Agreement or otherwise, then
the Company shall offer to sell the Units to the Purchaser on the same terms.

4.9 Certain Transactions and Confidentiality. Each Purchaser covenants that
neither it nor any Affiliate acting on its behalf or pursuant to any
understanding with it will execute any purchases or sales, including Short
Sales, of any of the Company’s securities during the period commencing with the
execution of this Agreement and ending at such time that the transactions
contemplated by this Agreement are first publicly announced pursuant to the
initial press release as described in Section 4.1. Each Purchaser covenants that
until such time as the transactions contemplated by this Agreement are publicly
disclosed by the Company pursuant to the initial press release as described in
Section 4.1, such Purchaser will maintain the confidentiality of the existence
and terms of this transaction. Notwithstanding the foregoing and notwithstanding
anything contained in this Agreement to the contrary, the Company expressly
acknowledges and agrees that (i) no Purchaser makes any representation, warranty
or covenant hereby that it will not engage in effecting

 

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transactions in any securities of the Company after the time that the
transactions contemplated by this Agreement are first publicly announced
pursuant to the initial press release as described in Section 4.1, (ii) no
Purchaser shall be restricted or prohibited from effecting any transactions in
any securities of the Company in accordance with applicable securities laws from
and after the time that the transactions contemplated by this Agreement are
first publicly announced pursuant to the initial press release as described in
Section 4.1 and (iii) no Purchaser shall have any duty of confidentiality to the
Company or its subsidiaries after the issuance of the initial press release as
described in Section 4.1. Notwithstanding the foregoing, in the case of a
Purchaser that is a multi-managed investment vehicle whereby separate portfolio
managers manage separate portions of the Purchaser’s assets and the portfolio
managers have no direct knowledge of the investment decisions made by the
portfolio managers managing other portions of the Purchaser’s assets, the
covenants and agreements set forth in the first two sentences of this
Section 4.9 shall only apply with respect to the portion of assets managed by
the portfolio manager that made the investment decision to purchase the
Securities covered by this Agreement.

4.10 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 to the Purchasers in a manner that would require the
registration under the Securities Act of the sale of the Securities to the
Purchasers or that would be integrated with the offer or sale of the Securities
for purposes of the rules and regulations, including, but not limited to, the
stockholder approval requirements, of the Principal Market.

ARTICLE V.

MISCELLANEOUS

5.1 Termination. This Agreement may be terminated by any Purchaser, as to such
Purchaser’s obligations hereunder only and without any effect whatsoever on the
obligations between the Company and the other Purchasers, by written notice to
the other parties, if the Closing has not been consummated on or before
September 30, 2013; provided, however, that such termination will not affect the
right of any party to sue for any breach by the other party (or parties).

5.2 Fees and Expenses. Except as expressly set forth in this Agreement 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.

5.3 Entire Agreement. This Agreement, together with the other Transaction
Documents and the exhibits and schedules hereto and thereto, contain the entire
understanding of the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings, oral or written, with respect
to such matters, which the parties acknowledge have been merged into such
documents, exhibits and schedules.

5.4 Notices. Any and all notices or other communications or deliveries required
or permitted to be provided hereunder shall be in writing and shall be deemed
given and effective on the earliest of: (a) the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile number set
forth on the signature pages attached hereto prior to 5:30 p.m. (New York City
time) on a Trading Day, (b) the next Trading Day after the date of transmission,
if such notice or communication is delivered via facsimile at the facsimile
number set forth on the signature pages attached hereto on a day that is not a
Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day,
(c) the next Trading Day following the date of mailing, if sent by U.S.
nationally recognized overnight courier service or (d) upon actual receipt by
the party to whom such notice is required to be given. The address for such
notices and communications shall be as set forth on the signature pages attached
hereto.

 

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5.5 Amendments; Waivers. Prior to Closing, no provision of this Agreement may be
waived, modified, supplemented or amended except in a written instrument signed,
in the case of an amendment, by the Company and the Purchasers obligated to
purchase at least 50% of the Units or, in the case of a waiver, by the party
against whom enforcement of any such waived provision is sought. After the
Closing, no provision of this Agreement may be waived, modified, supplemented or
amended except in a written instrument signed, in the case of an amendment, by
the Company and the Purchasers holding at least 50% of the outstanding
Securities or, in the case of a waiver, by the party against whom enforcement of
any such waived provision is sought. No waiver of any default with respect to
any provision, condition or requirement of this Agreement shall be deemed to be
a continuing waiver in the future or a waiver of any subsequent default or a
waiver of any other provision, condition or requirement hereof, nor shall any
delay or omission of any party to exercise any right hereunder in any manner
impair the exercise of any such right.

5.6 Headings. The headings herein are for convenience only, do not constitute a
part of this Agreement and shall not be deemed to limit or affect any of the
provisions hereof.

5.7 Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the parties and their successors and permitted assigns. The
Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of each Purchaser (other than by merger,
consolidation or sale of all or substantially all of the Company’s assets). A
Purchaser may assign any or all of its rights under this Agreement to any Person
to whom the Purchaser assigns or transfers any Securities, provided that such
transferee agrees in writing to be bound, with respect to the transferred
Securities, by the provisions of this Agreement that apply to the “Purchasers.”

5.8 No Third-Party Beneficiaries. This Agreement is intended for the benefit of
the parties hereto and their respective successors and permitted assigns and the
Purchaser Parties (with respect to Section 4.4) and the Placement Agent (with
respect to Section 3.2(l)) and is not for the benefit of, nor may any provision
hereof be enforced by, any other Person.

5.9 Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of New
York, without regard to the principles of conflicts of law thereof. Each party
agrees that all legal proceedings concerning the interpretations, enforcement
and defense of the transactions contemplated by this Agreement (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, Borough of Manhattan. 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, 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

 

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such suit, action or proceeding by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to such party
at the address in effect for notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any other manner permitted by law. If either party shall
commence an action or proceeding to enforce any provisions of this Agreement,
then the prevailing party in such action or proceeding shall be reimbursed by
the other party for its reasonable attorneys’ fees and other costs and expenses
incurred with the investigation, preparation and prosecution of such action or
proceeding.

5.10 Execution. This Agreement may be executed in two or more counterparts, all
of which when taken together shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party, it being understood that both parties need not
sign the same counterpart. In the event that any signature is delivered by
facsimile transmission or by e-mail delivery of a “.pdf” format data file, such
signature shall create a valid and binding obligation of the party executing (or
on whose behalf such signature is executed) with the same force and effect as if
such facsimile or “.pdf” signature page were an original thereof.

5.11 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.

5.12 Replacement of Certificates. If any certificate evidencing the securities
issued or issuable hereunder 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, but only upon receipt of evidence
reasonably satisfactory to the Company of such loss, theft or destruction and
customary and reasonable indemnity or security, if requested. The applicant for
a new certificate under such circumstances shall also pay any reasonable
third-party costs (including customary indemnity) associated with the issuance
of such replacement certificates.

5.13 Remedies. In addition to being entitled to exercise all rights provided
herein or granted by law, including recovery of damages, each of the Purchasers
and the Company will be entitled to specific performance under this Agreement.
The parties agree that monetary damages may not be adequate compensation for any
loss incurred by reason of any breach of obligations contained in this Agreement
and hereby agree to waive and not to assert in any action for specific
performance of any such obligation the defense that a remedy at law would be
adequate.

5.14 Construction. The parties agree that each of them and/or their respective
counsel has reviewed and had an opportunity to revise this Agreement 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 this Agreement or any amendments hereto. In addition, each and
every reference to share prices and shares of capital stock in this Agreement
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.

 

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

5.16 Survival of Representations, Warranties and Agreements. All representations
and warranties made by the Company and each of the Purchasers herein will
survive the execution of this Agreement, the Closing and the delivery to the
Purchasers of the Units being purchased and the payment therefor until the first
anniversary of the Closing Date. All covenants and other agreements set forth in
this Agreement shall survive the Closing for the respective periods set forth
therein and if no such period is specified until the first anniversary of the
Closing Date. Notwithstanding anything to the contrary contained herein,
Sections 4.1, 4.4, and 5.5 shall survive for the applicable statute of
limitations.

5.17 Independent Nature of Purchasers’ Obligations and Rights. The obligations
of each Purchaser under any Transaction Document are several and not joint with
the obligations of any other Purchaser, and no Purchaser shall be responsible in
any way for the performance or non-performance of the obligations of any other
Purchaser under any Transaction Document. Nothing contained herein or in any
other Transaction Document, and no action taken by any Purchaser pursuant
thereto, shall be deemed to constitute the Purchasers as a partnership, an
association, a joint venture or any other kind of entity, or create a
presumption that the Purchasers are in any way acting in concert or as a group
with respect to such obligations or the transactions contemplated by the
Transaction Documents. Each Purchaser shall be entitled to independently protect
and enforce its rights, including, without limitation, the rights arising out of
this Agreement or out of the other Transaction Documents, and it shall not be
necessary for any other Purchaser to be joined as an additional party in any
proceeding for such purpose. Each Purchaser has been represented by its own
separate legal counsel in their review and negotiation of the Transaction
Documents.

[Signature Page Follows]

 

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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.

 

GREENHUNTER RESOURCES, INC.     Address for Notice: By:         Fax:     Name:  
      Title:      

With a copy to (which shall not constitute notice):

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGE FOR PURCHASER FOLLOWS]

 

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[PURCHASER SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]

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

 

Name of Purchaser:                                                              
                                         
                                         
                                                                             

Signature of Authorized Signatory of Purchaser:            
                                         
                                         
                                                                       

Name of Authorized Signatory:                 
                                         
                                         
                                         
                                                          

Title of Authorized Signatory:                 
                                         
                                         
                                         
                                                            

Email Address of Authorized Signatory:               
                                         
                                         
                                         
                                           

Facsimile Number of Authorized Signatory:               
                                         
                                         
                                                                             

 

Address for Notices to Purchaser:                 

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

 

     

Subscription Amount: $                                             

No. of Units Purchased:                 , comprised of:

No. of Series C Preferred Shares:                                         

No. of Common Stock Warrants:                                         

EIN Number:                                                  

 

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Exhibit A

Registration Rights Agreement

 

28

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Exhibit B

Form of Warrant

 

29

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Exhibit C

Form of Legal Opinion

 

30