SECURITIES PURCHASE AGREEMENT

 

This Securities Purchase Agreement (this “Agreement”) is dated as of June 7,
2012, between Searchlight Minerals Corp., a Nevada corporation (the “Company”),
and each purchaser identified on the signature pages hereto (each, including its
successors and assigns, a “Purchaser” and collectively the “Purchasers”).

 

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

 

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

 

ARTICLE I
DEFINITIONS

 

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

 

“Action” shall have the meaning ascribed to such term in Section 3.1(j).

 

“Affiliate” means any Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with a
Person as such terms are used in and construed under Rule 405 under the
Securities Act. With respect to a Purchaser, any investment fund or managed
account that is managed on a discretionary basis by the same investment manager
as such Purchaser will be deemed to be an Affiliate of such Purchaser.

 

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

 

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

 

“Closing Date” means the Trading Day when all of the Transaction Documents have
been executed and delivered by the applicable parties thereto, and all
conditions precedent to (i) the Purchasers’ obligations to pay the Subscription
Amount and (ii) the Company’s obligations to deliver the Shares have been
satisfied or waived, but in no event later than the third Trading Day following
the date hereof.

 

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

 

“Common Stock” means the common stock of the Company, $0.001 par value per
share, and any other class of securities into which such securities may
hereafter be reclassified or changed into.

 

 

 

 

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

 

“Company Counsel” means Baker & Hostetler LLP, with offices located at 12100
Wilshire Boulevard, Suite 1500, Los Angeles, California 90025-7120.

 

“Company Form 10-K” means the Annual Report on Form 10-K of Company for the year
ended December 31, 2011.

 

“Company SEC Filings” means the Company Form 10-K and the Quarterly Reports on
Form 10-Q and the Current Reports on Form 8-K of the Company, in each case,
filed from the date of the filing of the Company Form 10-K to the date of this
Agreement.

 

“Continuous Disclosure Reports” shall have the meaning ascribed to such term in
Section 3.1(h).

 

“Disclosure Schedules” means the Disclosure Schedules of the Company delivered
concurrently herewith.

 

“Effective Date” means the date that the initial Registration Statement filed by
the Company pursuant to the Registration Rights Agreement is first declared
effective by the Commission.

 

“Environmental Laws” shall have the meaning ascribed to such term in Section
3.1(ii).

 

“Evaluation Date” shall have the meaning ascribed to such term in
Section 3.1(r).

 

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

 

“GAAP” shall have the meaning ascribed to such term in Section 3.1(h).

 

“Hazardous Substances” shall have the meaning ascribed to such term in Section
3.1(ii).

 

“Intellectual Property Rights” shall have the meaning ascribed to such term in
Section 3.1(o).

 

“Liens” means a lien, charge, security interest, encumbrance, right of first
refusal, preemptive right or other restriction.

 

“Material Adverse Effect” shall have the meaning assigned to such term in
Section 3.1(b).

 

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“Material Permits” shall have the meaning ascribed to such term in
Section 3.1(m).

 

“OTCBB” means the OTC Bulletin Board on which the Common Stock is currently
quoted for trading.

 

“Per Share Purchase Price” equals $0.90, 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.

 

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

 

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

 

“Purchaser Party” shall have the meaning ascribed to such term in Section 4.8.

 

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

 

“Registration Statement” means a registration statement meeting the requirements
set forth in the Registration Rights Agreement and covering the resale by the
Purchasers of the Shares.

 

“Regulation D” means Regulation D as promulgated under the Securities Act.

 

“Required Approvals” shall have the meaning ascribed to such term in
Section 3.1(e).

 

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

 

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

 

“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 Common Stock).

 

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

 

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

 

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“Subsidiary” means any subsidiary of the Company as set forth on Exhibit 21.1 to
the Company Form 10-K, and shall, where applicable, include any subsidiary of
the Company formed or acquired after the date hereof.

 

“Trading Day” means (i) a day on which the Common Stock is traded on a Trading
Market or (ii) if the Common Stock is not listed or quoted on any Trading
Market, a day on which the Common Stock is quoted on the OTCBB; provided, that
in the event that the Common Stock is not listed or quoted as set forth in (i)
or (ii) hereof, then Trading Day shall mean a Business Day.

 

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

 

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

 

“Transfer Agent” means Empire Stock Transfer, Inc., with a mailing address of
1859 Whitney Mesa Drive, Henderson, Nevada 89014, and a facsimile number of
(702) 974-1444 and any successor transfer agent of the Company.

 

“Voting Agreement” means the Voting Agreement, dated the date hereof, between
the Company and the Purchaser, in the form of Exhibit B attached hereto.

 

ARTICLE II
PURCHASE AND SALE

 

2.1.          Closing. On the Closing Date, upon the terms and subject to the
conditions set forth herein, substantially concurrent with the execution and
delivery of this Agreement by the parties hereto, the Company agrees to sell,
and the Purchasers, severally and not jointly, agree to purchase, in the
aggregate, 4,500,000 Shares, each at the Per Share Purchase Price. Each
Purchaser shall deliver to the Company, via wire transfer, immediately available
funds equal to its Subscription Amount and the Company shall deliver to each
Purchaser its respective Shares, as determined pursuant to Section 2.2(b), and
the Company and each Purchaser shall deliver the other items set forth in
Section 2.2 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
Company Counsel, 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)     the Voting Agreement duly executed by the Company;

 

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(iii)     a certificate evidencing the formation and good standing of the
Company in the State of Nevada issued by the Secretary of State of Nevada (or
comparable office) as of a date within five (5) Business Days of the Closing
Date;

 

(iv)     a copy of the irrevocable instructions to the Transfer Agent
instructing the Transfer Agent to deliver, on an expedited basis, a certificate
evidencing a number of Shares equal to such Purchaser’s Subscription Amount
divided by the Per Share Purchase Price, registered in the name of such
Purchaser; and

 

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

 

(b)     In accordance with Section 4.14 herein, following the Closing Date,
Company shall deliver or cause to be delivered to each Purchaser the following:

 

(i)     a certificate evidencing a number of Shares equal to such Purchaser’s
Subscription Amount divided by the Per Share Purchase Price, registered in the
name of such Purchaser; and

 

(c)     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;

 

(ii)     the Voting Agreement duly executed by the Purchaser;

 

(iii)     such Purchaser’s Subscription Amount by wire transfer to the Company;
and

 

(iv)     the Registration Rights Agreement duly executed by such Purchaser,
including the Selling Stockholder Questionnaire attached thereto as Annex B.

 

2.3.          Closing Conditions.

 

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

 

(i)     the accuracy in all material respects on the Closing Date of the
representations and warranties of the Purchasers contained herein that have not
already been qualified by materiality, and the accuracy in all respects on the
Closing Date of the representations and warranties of the Purchasers contained
herein that have been qualified by materiality;

 

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

 

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

 

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

 

(i)     the accuracy in all material respects on the Closing Date of the
representations and warranties of the Company contained herein that have not
already been qualified by materiality, and the accuracy in all respects on the
Closing Date of the representations and warranties of the Company contained
herein that have been qualified by materiality;

 

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

 

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

 

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

 

(v)     from the date hereof to the Closing Date, trading in the Common Stock
shall not have been suspended by the Commission or the OTCBB, at any time prior
to the Closing Date, trading in securities generally as reported by Bloomberg
L.P. shall not have been suspended or limited, or minimum prices shall not have
been established on securities whose trades are reported by such service, or on
the OTCBB, nor shall a banking moratorium have been declared either by the
United States or New York State authorities nor shall there have occurred any
material outbreak or escalation of hostilities or other national or
international calamity of such magnitude in its effect on, or any material
adverse change in, any financial market which, in each case, in the reasonable
judgment of each Purchaser, makes it impracticable or inadvisable to purchase
the Shares at the Closing.

 

ARTICLE III
REPRESENTATIONS AND WARRANTIES

 

3.1.          Representations and Warranties of the Company. Except as set forth
in the Disclosure Schedules delivered to Purchaser by the Company on or prior to
the date of this Agreement, and except as disclosed in the Annual Report on Form
10-K of Company for the year ended December 31, 2011 (the “Company Form 10-K”)
and the Quarterly Reports on Form 10-Q and the Current Reports on Form 8-K of
the Company (the “Company SEC Filings”), in each case, filed from the date of
the filing of the Company Form 10-K to the date of this Agreement, which
Disclosure Schedules and Company SEC Filings shall be deemed a part hereof and,
with respect to the Company SEC Filings, shall qualify any representation or
otherwise made herein, and with respect to the Disclosure Schedules, shall
qualify any representation or otherwise made herein to the extent of the
disclosure contained in the corresponding section of the Disclosure Schedules,
the Company hereby makes the following representations and warranties to each
Purchaser:

 

(a)     Subsidiaries. All of the direct and indirect subsidiaries of the Company
are set forth on Exhibit 21.1 to the Company Form 10-K. The Company owns,
directly or indirectly, all of the capital stock or other equity interests of
each Subsidiary free and clear of any Liens, and all of the issued and
outstanding shares of capital stock of each Subsidiary are validly issued and
are fully paid, non-assessable and free of preemptive and similar rights to
subscribe for or purchase securities.

 

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(b)     Organization and Qualification. The Company and each of the Subsidiaries
is an entity duly incorporated or otherwise organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation or
organization (as applicable), with the requisite power and authority to own and
use its properties and assets and to carry on its business as is currently
conducted. Neither the Company nor any Subsidiary is in violation or default of
any of the provisions of its respective certificate or articles of
incorporation, bylaws or other organizational or charter documents. Each of the
Company and the Subsidiaries is duly qualified to conduct business and is in
good standing as a foreign corporation or other entity in each jurisdiction in
which the nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in good
standing, as the case may be, could not have or reasonably be expected to result
in (i) a material adverse effect on the legality, validity or enforceability of
any Transaction Document, (ii) a material adverse effect on the operations,
results of operations, assets, properties, business, prospects or condition
(financial or otherwise) of the Company and the Subsidiaries, taken as a whole,
or (iii) a material adverse effect on the Company’s ability to perform in any
material respect on a timely basis its obligations under any Transaction
Document (any of (i), (ii) or (iii), a “Material Adverse Effect” and no
Proceeding has been instituted in any such jurisdiction revoking, limiting or
curtailing or seeking to revoke, limit or curtail such power and authority or
qualification.

 

(c)     Authorization; Enforcement. The Company has the requisite corporate
power and authority to enter into and to consummate the transactions
contemplated by each of the Transaction Documents and otherwise to carry out its
obligations hereunder and thereunder. The execution and delivery of each of the
Transaction Documents by the Company and the consummation by it of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary action on the part of the Company and no further action is required by
the Company, its board of directors or its stockholders in connection therewith
other than in connection with the Required Approvals. Each Transaction Document
has been (or upon delivery will have been) duly executed by the Company and,
when delivered in accordance with the terms hereof and thereof, will constitute
the valid and binding obligations of the Company enforceable against the Company
in accordance with its terms except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting enforcement of creditors’ rights generally, (ii) as limited by general
equitable principles and laws relating to the availability of specific
performance, injunctive relief or other equitable remedies and (iii) insofar as
indemnification and contribution provisions may be limited by applicable law.

 

(d)     No Conflicts. The execution, delivery and performance of the Transaction
Documents by the Company, the issuance and sale of the Shares and the
consummation by the Company of the other transactions contemplated hereby and
thereby do not and will not (i) conflict with or violate any provision of the
Company’s or any Subsidiary’s certificate or articles of incorporation, bylaws
or other organizational or charter documents, or (ii) conflict with, or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, result in the creation of any Lien upon any of
the properties or assets of the Company or any Subsidiary, to the knowledge of
the Company, or give to others any rights of termination, amendment,
acceleration or cancellation (with or without notice, lapse of time or both) of,
any agreement, credit facility, debt or other instrument (evidencing a Company
or Subsidiary debt or otherwise) or other understanding to which the Company or
any Subsidiary is a party or by which any property or asset of the Company or
any Subsidiary is bound or affected, or (iii) subject to the Required Approvals,
conflict with or result in a violation of any law, rule, regulation, order,
judgment, injunction, decree or other restriction of any court or governmental
authority to which the Company or a Subsidiary is subject (including federal and
state securities laws and regulations), or by which any property or asset of the
Company or a Subsidiary is bound or affected; except in the case of each of
clauses (ii) and (iii), such as could not have or reasonably be expected to
result in a Material Adverse Effect.

 

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(e)     Filings, Consents and Approvals. The Company is not required to obtain
any consent, waiver, authorization or order of, give any notice to, or make any
filing or registration with, any court or other federal, state, local or other
governmental authority or other Person in connection with the execution,
delivery and performance by the Company of the Transaction Documents, other than
(i) filings required pursuant to Section 4.4 of this Agreement, (ii) the filing
with the Commission of the Registration Statement, and (iii) the filing of Form
D with the Commission and such filings as are required to be made under
applicable state securities laws (collectively, the “Required Approvals”).

 

(f)     Issuance of the Shares. The Shares are duly authorized and, when issued
and paid for in accordance with the applicable Transaction Documents, will be
duly and validly issued, fully paid and nonassessable, free and clear of all
Liens imposed by the Company other than restrictions on transfer provided for in
the applicable Transaction Documents. The Company has reserved from its duly
authorized capital stock the maximum number of shares of Common Stock issuable
pursuant to this Agreement.

 

(g)     Capitalization. The capitalization of the Company is as set forth on
Schedule 3.1(g). The Company has not issued any capital stock since its most
recently filed periodic report under the Exchange Act, other than pursuant to
the exercise of employee stock options under the Company’s stock option plans,
the issuance of shares of Common Stock to employees pursuant to the Company’s
employee stock purchase plans and pursuant to the conversion or exercise of
Common Stock Equivalents outstanding as of the date of the most recently filed
periodic report under the Exchange Act. No Person has any right of first
refusal, preemptive right, right of participation, or any similar right to
participate in the transactions contemplated by the Transaction Documents.
Except as set forth on Schedule 3.1(g) and as a result of the purchase and sale
of the Shares, there are no outstanding options, warrants, scrip rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities, rights or obligations convertible into or exercisable or
exchangeable for, or giving any Person any right to subscribe for or acquire,
any shares of Common Stock, or contracts, commitments, understandings or
arrangements by which the Company or any Subsidiary is or may become bound to
issue additional shares of Common Stock or Common Stock Equivalents other than
options with respect to options granted to employees, consultants, officers and
directors of the Company to purchase shares of Common Stock of the Company.
Except as set forth on Schedule 3.1(g), the issuance and sale of the Shares will
not obligate the Company to issue shares of Common Stock or other securities to
any Person (other than the Purchasers) and will not result in a right of any
holder of Company securities to adjust the exercise, conversion, exchange or
reset price under any of such securities. All of the outstanding capital stock
of the Company is validly issued, fully paid and nonassessable, have been issued
in compliance with all federal and state securities laws, and none of such
outstanding shares were issued in violation of any preemptive rights or similar
rights to subscribe for or purchase securities. Except as set forth in
Section 3.1(e) above, no further approval or authorization of any stockholder,
the board of directors of the Company or others is required for the issuance and
sale of the Shares. Except as set forth on Schedule 3.1(g), there are no
stockholder agreements, voting agreements or other similar agreements with
respect to the Company’s capital stock to which the Company is a party or, to
the knowledge of the Company, between or among any of the Company’s
stockholders.

 

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(h)     Continuous Disclosure Reports: Financial Statements. The Company has
filed all reports, schedules, forms, statements and other documents required to
be filed by the Company under the Securities Act and the Exchange Act, including
pursuant to Section 13(a) or 15(d) thereof, for the one year preceding the date
hereof (or such shorter period as the Company was required by law or regulation
to file such material) (the foregoing materials, including the exhibits thereto
and documents incorporated by reference therein, being collectively referred to
herein as the “Continuous Disclosure Reports”) on a timely basis or has received
a valid extension of such time of filing and has filed any such Continuous
Disclosure Reports prior to the expiration of any such extension. As of their
respective dates (or if amended or superseded by a filing prior to the date of
this Agreement, then on the date of such filing), the Continuous Disclosure
Reports complied in all material respects with the requirements of the
Securities Act and the Exchange Act, as applicable, and none of the Continuous
Disclosure Reports, when filed (or if amended or superseded by a filing prior to
the date of this Agreement, then on the date of such filing), contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading. The
financial statements of the Company included in the Continuous Disclosure
Reports complied in all material respects with applicable accounting
requirements and the rules and regulations of the Commission with respect
thereto as in effect at the time of filing (or if amended or superseded by a
filing prior to the date of this Agreement, then on the date of such filing).
Such financial statements have been prepared in accordance with United States
generally accepted accounting principles applied on a consistent basis during
the periods involved (“GAAP”), except as may be otherwise specified in such
financial statements or the notes thereto and except that unaudited financial
statements may not contain all footnotes required by GAAP, and fairly present in
all material respects the financial position of the Company and its consolidated
subsidiaries as of and for the dates thereof and the results of operations and
cash flows for the periods then ended, subject, in the case of unaudited
statements, to normal, immaterial, year-end audit adjustments.

 

(i)     Material Changes; Undisclosed Events, Liabilities or Developments. Since
December 31, 2011, except as specifically disclosed in a subsequent Continuous
Disclosure Report filed prior to the date hereof, (i) there has been no event,
occurrence or development that has had or that could reasonably be expected to
result in a Material Adverse Effect, (ii) the Company has not incurred any
liabilities (contingent or otherwise) other than (A) trade payables and accrued
expenses incurred in the ordinary course of business consistent with past
practice and (B) liabilities not required to be reflected in the Company’s
financial statements pursuant to GAAP or disclosed in filings made with the
Commission, (iii) the Company has not altered its method of accounting, (iv) the
Company has not declared or made any dividend or distribution of cash or other
property to its stockholders or purchased, redeemed or made any agreements to
purchase or redeem any capital stock and (v) the Company has not issued any
equity securities to any officer, director or Affiliate, except pursuant to
existing Company stock option plans. The Company does not have pending before
the Commission any request for confidential treatment of information. Except for
the issuance of the Shares contemplated by this Agreement, no event, liability
or development has occurred or exists with respect to the Company or its
Subsidiaries or their respective business, properties, operations or financial
condition, that would be required to be disclosed by the Company under
applicable securities laws at the time this representation is made or deemed
made that has not been publicly disclosed at least one (1) Trading Day prior to
the date that this representation is made.

 

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(j)     Litigation. There is no action, suit, inquiry, notice of violation,
proceeding or investigation pending or, to the knowledge of the Company,
threatened against or affecting the Company, any Subsidiary or any of their
respective properties before or by any court, arbitrator, governmental or
administrative agency or regulatory authority (federal, state, county, local or
foreign) (collectively, an “Action”) which (i) adversely affects or challenges
the legality, validity or enforceability of any of the Transaction Documents or
the Shares or (ii) could, if there were an unfavorable decision, have or
reasonably be expected to result in a Material Adverse Effect except as
disclosed in the Continuous Disclosure Reports. Neither the Company nor any
Subsidiary, nor any director or officer thereof, is or has been the subject of
any Action involving a claim of violation of or liability under federal or state
securities laws or a claim of breach of fiduciary duty. There has not been, and
to the knowledge of the Company, there is not pending or contemplated, any
investigation by the Commission involving the Company or any current or former
director or officer of the Company. The Commission has not issued any stop order
or other order suspending the effectiveness of any document or registration
statement filed by the Company or any Subsidiary under the Exchange Act or the
Securities Act.

 

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

 

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(l)     Compliance. Neither the Company nor any Subsidiary (i) is in default
under or in violation of (and no event has occurred that has not been waived
that, with notice or lapse of time or both, would result in a default by the
Company or any Subsidiary under), nor has the Company or any Subsidiary received
notice of a claim that it is in default under or that it is in violation of, any
indenture, loan or credit agreement or any other agreement or instrument to
which it is a party or by which it or any of its properties is bound (whether or
not such default or violation has been waived), (ii) is in violation of any
order of any court, arbitrator or governmental body, or (iii) is or has been in
violation of any statute, rule or regulation of any governmental authority,
including without limitation all foreign, federal, state and local laws
applicable to its business and all such laws that affect the environment, except
in each case as could not have or reasonably be expected to result in a Material
Adverse Effect.

 

(m)     Regulatory Permits. The Company and the Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to conduct their
respective businesses as described in the Continuous Disclosure Reports, except
where the failure to possess such certificates, authorizations and permits could
not reasonably be expected to result in a Material Adverse Effect, and neither
the Company nor any Subsidiary has received any notice of proceedings relating
to the revocation or modification of any such certificates, authorizations, and
permits.

 

(n)     Title to Assets. The Company and its Subsidiaries have good and
marketable title in fee simple to all real property owned by them and good and
marketable title in all personal property owned by them that is material to the
business of the Company and its Subsidiaries, in each case free and clear of all
Liens, except for Liens as do not materially affect the value of such property
and do not materially interfere with the use made and proposed to be made of
such property by the Company and its Subsidiaries and Liens for the payment of
federal, state or other taxes, for which appropriate reserves have been made
therefore in accordance with GAAP and the payment of which is neither delinquent
nor subject to penalties. Any real property and facilities held under lease by
the Company and its Subsidiaries are held by them under valid, subsisting and
enforceable leases with which the Company and the Subsidiaries are in
compliance.

 

(o)     Patents and Trademarks. The Company and the Subsidiaries have, or have
rights to use, all patents, patent applications, trademarks, trademark
applications, service marks, trade names, trade secrets, inventions, copyrights,
licenses and other intellectual property rights and similar rights necessary or
material for use in connection with their respective businesses as described in
the Continuous Disclosure Reports and which the failure to so have could have a
Material Adverse Effect (collectively, the “Intellectual Property Rights”).
Neither the Company nor any Subsidiary has received a notice (written or
otherwise) that any of the Intellectual Property Rights used by the Company or
any Subsidiary violates or infringes upon the rights of any Person, which could
reasonably be expected to result in a Material Adverse Effect. To the knowledge
of the Company, all such Intellectual Property Rights are enforceable and there
is no existing infringement by another Person of any of the Intellectual
Property Rights. The Company and its Subsidiaries have taken reasonable security
measures to protect the secrecy, confidentiality and value of all of their
intellectual properties, except where failure to do so could not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

11

 

 

(p)     Insurance. The Company and the Subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the businesses in which the Company and
the Subsidiaries are engaged, including, but not limited to, directors and
officers insurance coverage at least equal to $5,000,000. Neither the Company
nor any Subsidiary has any reason to believe that it will not be able to renew
its existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
respective business without a significant increase in cost. The Company and, if
applicable, each of the Subsidiaries has sufficiently provided for an adequate
reserve related to present or future abandonment and related costs.

 

(q)     Transactions With Affiliates and Employees. Except as set forth in the
Continuous Disclosure Reports, to the knowledge of the Company, none of the
officers, directors or employees of the Company is presently a party to any
transaction with the Company or any Subsidiary (other than for services as
consultants, employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, providing for
the borrowing of money from or lending of money to or otherwise requiring
payments to or from any such officer, director or employee or, to the knowledge
of the Company, any entity in which any such officer, director, or employee has
a substantial interest or is an officer, director, trustee or partner, in each
case in excess of $60,000 other than for (i) payment of salary or consulting
fees for services rendered, (ii) reimbursement for expenses incurred on behalf
of the Company and (iii) other employee benefits, including stock option
agreements under any stock option plan of the Company.

 

(r)     Sarbanes-Oxley; Internal Accounting Controls. Except as set forth in the
Continuous Disclosure Reports: (i) the Company is in material compliance with
all provisions of the Sarbanes-Oxley Act of 2002 which are effective and
applicable to it as of the Closing Date, (ii) the Company and the Subsidiaries
maintain a system of internal accounting controls designed to provide reasonable
assurance that (A) transactions are executed in accordance with management’s
general or specific authorizations, (B) transactions are recorded as necessary
to permit preparation of financial statements in conformity with GAAP and to
maintain asset accountability, (C) access to assets is permitted only in
accordance with management’s general or specific authorization, and (D) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences, (iii) the Company maintains disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and
reasonably designed such disclosure controls and procedures to ensure that
information required to be disclosed by the Company in the reports it files or
submits under the Exchange Act is recorded, processed, summarized and reported,
within the time periods specified in the Commission’s rules and forms, (iv) the
Company’s certifying officers have evaluated the effectiveness of the Company’s
disclosure controls and procedures as of the end of the period covered by the
Company’s most recently filed periodic report under the Exchange Act (such date,
the “Evaluation Date”), (v) the Company presented in its most recently filed
periodic report under the Exchange Act the conclusions of the certifying
officers about the effectiveness of the disclosure controls and procedures based
on their evaluations as of the Evaluation Date, and (vi) since the Evaluation
Date, there have been no changes in the Company’s internal control over
financial reporting (as such term is defined in the Exchange Act) that has
materially affected, or is reasonably likely to materially affect, the Company’s
internal control over financial reporting.

 

12

 

 

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

 

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

 

(u)     Investment Company. The Company is not, and is not an Affiliate of, and
immediately after receipt of payment for the Shares, will not be or be an
Affiliate of, an “investment company” within the meaning of the Investment
Company Act of 1940, as amended. The Company shall conduct its business in a
manner so that it will not become subject to the Investment Company Act of 1940,
as amended.

 

(v)     Listing and Maintenance Requirements. The Company’s Common Stock is
quoted on the OTCBB and registered pursuant to Section 12(g) of the Exchange
Act, and the Company has taken no action designed to, or which to its knowledge
is likely to have the effect of, terminating the registration of the Common
Stock under the Exchange Act nor has the Company received any notification that
the Commission is contemplating terminating such registration. The Company has
not, in the 12 months preceding the date hereof, received notice from the OTCBB
to the effect that the Company is not in compliance with the listing or
maintenance requirements of the OTCBB. The Company is, and has no reason to
believe that it will not in the foreseeable future continue to be, in compliance
with all such listing and maintenance requirements.

 

(w)     Application of Takeover Protections. The Company and its board of
directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination, poison pill
(including any distribution under a rights agreement) or other similar
anti-takeover provision under the Company’s certificate of incorporation (or
similar charter documents) or the laws of its state of incorporation that is or
could become applicable to the Purchasers as a result of the Purchasers and the
Company fulfilling their obligations or exercising their rights under the
Transaction Documents, including without limitation as a result of the Company’s
issuance of the Shares and the Purchasers’ ownership of the Shares.

 

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

 

13

 

 

(y)     No Integrated Offering. Assuming the accuracy of the Purchasers’
representations and warranties set forth in Section 3.2, none of the Company,
its Affiliates, or any Person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, under circumstances that would cause this offering of the
Shares to be integrated with prior offerings by the Company within the last six
months for purposes of the Securities Act which would require the registration
of any such securities under the Securities Act.

 

(z)     Tax Status. Except for matters that would not, individually or in the
aggregate, have or reasonably be expected to result in a Material Adverse
Effect, the Company and each Subsidiary has filed all necessary federal, state,
local and foreign income and franchise tax returns and has paid or accrued all
taxes shown as due thereon, and the Company has no knowledge of a tax deficiency
which has been asserted or threatened against the Company or any Subsidiary.

 

(aa)     No General Solicitation. Neither the Company nor any person acting on
behalf of the Company has offered or sold any of the Shares by any form of
“general solicitation” or “general advertising,” as such terms are defined in
Regulation D. The Company has offered the Shares for sale only to the Purchasers
and certain other “accredited investors” within the meaning of Rule 501(a) under
Regulation D.

 

(bb)     Foreign Corrupt Practices. To the knowledge of the Company, neither the
Company, nor any agent or other person acting on behalf of the Company, has (i)
directly or indirectly, used any corporate funds for unlawful contributions,
gifts, entertainment or other unlawful expenses related to foreign or domestic
political activity, (ii) made any unlawful payment to foreign or domestic
government officials or employees or to any foreign or domestic political
parties or campaigns from corporate funds, (iii) failed to disclose fully any
contribution made by the Company (or made by any person acting on its behalf of
which the Company is aware) which is in violation of law, or (iv) violated in
any material respect any provision of the Foreign Corrupt Practices Act of 1977,
as amended.

 

(cc)     Accountants. The Company’s auditor is Brown Armstrong Accountancy
Corporation, Certified Public Accountants. Such accounting firm (i) is a
registered public accounting firm as required by the Exchange Act and (ii) has
expressed its opinion with respect to the financial statements included in the
Company’s Annual Report on Form 10-K for the year ended December 31, 2011.

 

(dd)     No Disagreements with Accountants and Lawyers. There are no
disagreements of any kind presently existing, or reasonably anticipated by the
Company to arise, between the Company and the accountants and lawyers formerly
or presently employed by the Company which could affect the Company’s ability to
perform any of its obligations under any of the Transaction Documents, and the
Company is current with respect to any fees owed to its accountants and lawyers.

 

14

 

 

(ee)     Acknowledgment Regarding Purchasers’ Purchase of Shares. The Company
acknowledges and agrees that each of the Purchasers is acting solely in the
capacity of an arm’s length purchaser with respect to the Transaction Documents
and the transactions contemplated thereby. The Company further acknowledges that
no Purchaser is acting as a financial advisor or fiduciary of the Company (or in
any similar capacity) with respect to the Transaction Documents and the
transactions contemplated thereby and any advice given by any Purchaser or any
of their respective representatives or agents in connection with the Transaction
Documents and the transactions contemplated thereby is merely incidental to the
Purchasers’ purchase of the Shares. The Company further represents to each
Purchaser that the Company’s decision to enter into this Agreement and the other
Transaction Documents has been based solely on the independent evaluation of the
transactions contemplated hereby by the Company and its representatives.

 

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

 

(gg)     Regulation M Compliance. The Company has not, and to its knowledge no
one acting on its behalf has, (i) taken, directly or indirectly, any action
designed to cause or to result in the stabilization or manipulation of the price
of any security of the Company to facilitate the sale or resale of any of the
Shares, (ii) sold, bid for, purchased, or, paid any compensation for soliciting
purchases of, any of the Shares, or (iii) paid or agreed to pay to any Person
any compensation for soliciting another to purchase any other securities of the
Company, other than, in the case of clauses (ii) and (iii), compensation paid to
the Company’s placement agent in connection with the placement of the Shares.

 

15

 

 

(hh)     Form S-3 Eligibility. The Company reasonably believes that, on the date
of this Agreement, it is eligible to register the resale of the Shares for
resale by the Purchasers on Form S-3 promulgated under the Securities Act;
provided, that if any regulatory authority shall advise the Company that it is
not so eligible, the Company will be eligible to register the resale of the
Shares for resale by the Purchasers on Form S-1 promulgated under the Securities
Act.

 

(ii)     Environmental Matters. With respect to the Company and each of the
Subsidiaries, except to the extent that any violation or other matter referred
to in this subparagraph does not have a Material Adverse Effect: (i) the Company
and its Subsidiaries are in material compliance with all applicable federal,
state or local laws, regulations, orders, government decrees or ordinances with
respect to environmental, health or safety matters (collectively, “Environmental
Laws”); (ii) the Company and its Subsidiaries have operated its business at all
times and have received, handled, used, stored, treated, shipped and disposed of
all Hazardous Substances in material compliance with Environmental Laws; (iii)
the Company and its Subsidiaries have had no spills, releases, deposits or
discharges of Hazardous Substances into the ground, air or into any body of
water that are the subject of any outstanding cleanup order by a governmental
authority; (iv) no orders, directives or notices have been issued and remain
outstanding with respect to a material violation of any Environmental Laws
relating to the business or assets of the Company and its Subsidiaries; (v) the
Company and its Subsidiaries have not failed to report to the proper federal,
state, local or other political subdivision, government, department, commission,
board, bureau, agency or instrumentality, domestic or foreign the occurrence of
any material violation of any Environmental Laws which is required to be so
reported under Environmental Laws; (vi) the Company and its Subsidiaries hold
all licenses, permits and approvals required under any Environmental Laws in
connection with the operation of its business and the ownership and use of its
assets, all such licenses, permits and approvals are in full force and effect,
and except for (1) notifications and conditions of general application to assets
of the type owned by the Company or its Subsidiaries, and (2) notifications
relating to reclamation, remediation or similar obligations under Environmental
Laws, the Company and its Subsidiaries have not received any notification
pursuant to any Environmental Laws that any work, repairs, construction or
capital expenditures are required to be made by it as a condition of continued
compliance with any Environmental Laws, or any license, permit or approval
issued pursuant thereto, or that any license, permit or approval referred to
above is about to be reviewed, made subject to limitation or conditions,
revoked, withdrawn or terminated; and (vii) except as allowed by law, the assets
and properties of the Company and each Subsidiary do not contain any chemical or
other substance that is prohibited or limited by law, or that might pose a
hazard to health or safety (including, but not limited to, asbestos,
asbestos−containing materials, radon gas, urea formaldehyde foam insulation and
polychlorinated biphenyls; or any other substance deemed to be a “hazardous
material,” “toxic substance,” “hazardous substance” or “hazardous waste”
(collectively “Hazardous Substances”), by, without limiting the generality of
the foregoing, the United States Environmental Protection Agency or in the
Resource Conservation and Recovery Act of 1976, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, the Hazardous Materials
Transportation Act, the Clean Air Act, the Clean Water Act, the Safe Drinking
Water Act, the National Environmental Policy Act of 1969, the Superfund
Amendment and Reauthorization Act of 1986 and Title III of the Superfund
Amendment and Rehabilitation Act, Nevada Revised Statutes Chapter 40 and Chapter
459, or any and all regulations promulgated under any such law; or any and all
similar or successor laws.

 

16

 

 

(jj)     Solvency. The Company has no knowledge of any facts or circumstances
which lead it to believe that it will file for reorganization or liquidation
under the bankruptcy or reorganization laws of any jurisdiction within one year
from the Closing Date. For the purposes of this Agreement, “Indebtedness” means
(x) any liabilities for borrowed money or amounts owed in excess of $50,000
(other than trade accounts payable incurred in the ordinary course of business),
(y) all guaranties, endorsements and other contingent obligations in respect of
indebtedness of others, whether or not the same are or should be reflected in
the Company’s consolidated balance sheet (or the notes thereto), except
guaranties by endorsement of negotiable instruments for deposit or collection or
similar transactions in the ordinary course of business; and (z) the present
value of any lease payments in excess of $50,000 due under leases required to be
capitalized in accordance with GAAP. Neither the Company nor any Subsidiary is
in default with respect to any Indebtedness

 

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

 

(a)     Organization; Authority. Such Purchaser is an entity duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization with full right, corporate or partnership power and authority to
enter into and to consummate the transactions contemplated by the Transaction
Documents and otherwise to carry out its obligations hereunder and thereunder.
The execution and delivery of the Transaction Documents and performance by such
Purchaser of the transactions contemplated by the Transaction Documents have
been duly authorized by all necessary corporate or similar action on the part of
such Purchaser. Each Transaction Document to which it is a party has been duly
executed by such Purchaser, and when delivered by such Purchaser in accordance
with the terms hereof, will constitute the valid and legally binding obligations
of such Purchaser, enforceable against it in accordance with its terms, except
(i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium
and other laws of general application affecting enforcement of creditors’ rights
generally, (ii) as limited by general equitable principles and laws relating to
the availability of specific performance, injunctive relief or other equitable
remedies and (iii) insofar as indemnification and contribution provisions may be
limited by applicable law.

 

(b)     Own Account. Such Purchaser understands that the Shares are “restricted
securities” and have not been registered under the Securities Act or any
applicable state securities law and is acquiring the Shares as principal for its
own account and not with a view to or for distributing or reselling such Shares
or any part thereof in violation of the Securities Act or any applicable state
securities law, has no present intention of distributing any of the Shares 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 the Shares (this representation and
warranty not requiring such Purchaser to hold the Shares for any minimum or
other specific term nor limiting such Purchaser’s right to sell the Shares at
any time pursuant to the Registration Statement or otherwise in compliance with
federal and state securities laws) in violation of the Securities Act or any
applicable state securities law. Such Purchaser is acquiring the Shares
hereunder in the ordinary course of its business.

 

(c)     Purchaser Status. At the time such Purchaser was offered the Shares, it
was, and at the date hereof it is an “accredited investor” as defined in Rule
501(a) of Regulation D under the Securities Act. Such Purchaser is not required
to be registered as a broker-dealer under Section 15 of the Exchange Act.

 

17

 

 

(d)     Residence. The Purchaser is a resident of the jurisdiction disclosed
under “Address for Notice of Purchaser” on the Purchaser’s signature page to
this Agreement and has received and accepted the offer to purchase the Shares in
such jurisdiction.

 

(e)     Experience of Such Purchaser. Such Purchaser, either alone or together
with its representatives, has such knowledge, sophistication and experience in
business and financial matters so as to be capable of evaluating the merits and
risks of the prospective investment in the Shares, and has so evaluated the
merits and risks of such investment. Such Purchaser is able to bear the economic
risk of an investment in the Shares and, at the present time, is able to afford
a complete loss of such investment. Such Purchaser acknowledges that it has been
encouraged to obtain independent legal, income tax and investment advice with
respect to its subscription for, and the restrictions on resale of, the Shares
and accordingly, has had the opportunity to acquire an understanding of the
meanings of all terms contained herein relevant to such Purchaser for purposes
of giving representations, warranties and covenants under this Agreement.

 

(f)     General Solicitation. Such Purchaser is not purchasing the Shares as a
result of any “general solicitation” or “general advertising,” as such terms are
defined in Regulation D, which includes, but is not limited to, any
advertisement, article, notice or other communication regarding the Shares
published in any newspaper, magazine or similar media or on the internet or
broadcast over television, radio or the internet or presented at any seminar or
any other general solicitation or general advertisement.

 

(g)     Short Sales and Confidentiality Prior To The Date Hereof. Other than
consummating the transactions contemplated hereunder, such Purchaser has not,
nor has any Person acting on behalf of or pursuant to any understanding with
such Purchaser, directly or indirectly executed any purchases or sales,
including Short Sales, of the securities of the Company during the period
commencing from the time that such Purchaser first received a term sheet
(written or oral) from the Company or any other Person representing the Company
setting forth the material terms of the transactions contemplated hereunder
until the date hereof (“Discussion Time”). Notwithstanding the foregoing, in the
case of a Purchaser that is a multi-managed investment vehicle whereby separate
portfolio managers manage separate portions of such Purchaser's assets and the
portfolio managers have no direct knowledge of the investment decisions made by
the portfolio managers managing other portions of such Purchaser's assets, the
representation set forth above shall only apply with respect to the portion of
assets managed by the portfolio manager that made the investment decision to
purchase the Shares covered by this Agreement. Other than to other Persons party
to this Agreement, such Purchaser has maintained the confidentiality of all
disclosures made to it in connection with this transaction (including the
existence and terms of this transaction).

 

(h)     Reliance on Exemptions. Such Purchaser understands that the Shares are
being offered, sold and issued to it in reliance on specific exemptions from the
prospectus and registration requirements of federal and state securities laws
and that the Company is relying 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 Shares.

 

18

 

 

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

 

(j)     No Conflicts. The execution, delivery and performance by such Purchaser
of Transaction Documents and the consummation by such Purchaser of the
transactions contemplated hereby and thereby will not (i) result in a violation
of the organizational documents of such Purchaser (to the extent applicable)
(ii) conflict with, or constitute a default (or an event which 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 of, any
agreement, indenture or instrument to which such Purchaser is a party, or
(iii) result in a violation of any law, rule, regulation, order, judgment or
decree (including federal and state securities laws) applicable to such
Purchaser, except in the case of clauses (ii) and (iii) above, for such
conflicts, defaults, rights or violations which would not, individually or in
the aggregate, reasonably be expected to have a material adverse effect on the
ability of such Purchaser to perform its obligations hereunder.

 

(k)     Brokers and Finders. No Person will have, as a result of the
transactions contemplated by the Transaction Documents, any valid right,
interest or claim against or upon the Company or such Purchaser for any
commission, fee or other compensation pursuant to any agreement, arrangement or
understanding with a placement agent entered into by or on behalf of such
Purchaser.

 

(l)     Prior Arrangements. No Person has made to such Purchaser any written or
oral representations (i) that any Person will resell or repurchase the Shares,
(ii) that any person will refund the purchase price of the Shares, or (iii) as
to the future price or value of the Shares.

 

ARTICLE IV
OTHER AGREEMENTS OF THE PARTIES

 

4.1.          Transfer Restrictions.

 

(a)     The Shares may only be disposed of in compliance with federal and state
securities laws. In connection with any transfer of Shares other than pursuant
to an effective registration statement or Rule 144, to the Company, to an
Affiliate of a Purchaser or in connection with a pledge as contemplated in
Section 4.1(b), the Company may require the transferor thereof to provide to the
Company an opinion of counsel selected by the transferor and reasonably
acceptable to the Company, the form and substance of which opinion shall be
reasonably satisfactory to the Company, to the effect that such transfer does
not require registration of such transferred Shares under the Securities Act. As
a condition of transfer and pursuant to Section 5.7, any such transferee shall
agree in writing to be bound by the terms of this Agreement and shall have the
rights of a Purchaser under Transaction Documents.

 

19

 

 

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

 

THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND APPLICABLE STATE SECURITIES LAWS AND, ACCORDINGLY, MAY
NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL OF RECOGNIZED
STANDING TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE
TO THE COMPANY. THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE
MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITY, PROVIDED, HOWEVER, ANY
TRANSFER OF THE SECURITY RESULTING FROM SUCH PLEDGE MUST COMPLY WITH THE
FOREGOING.

 

The Company acknowledges and agrees that a Purchaser may from time to time
pledge pursuant to a bona fide margin agreement with a registered broker-dealer
or grant a security interest in some or all of the Shares to a financial
institution that is an “accredited investor” as defined in Rule 501(a) of
Regulation D and who agrees to be bound by the provisions of the Transaction
Documents and, if required under the terms of such arrangement, such Purchaser
may transfer pledged or secured Shares to the pledgees or secured parties as
long as such transfer complies with applicable federal and state securities
laws. Except as set forth herein, such a pledge or transfer would not be subject
to approval of the Company and no legal opinion of legal counsel of the pledgee,
secured party or pledgor shall be required in connection therewith; provided,
however, with respect to any such transfer, the Company may reasonably request
information from such transferee in order to satisfy itself that such transfer
is exempt from registration under the applicable federal and state securities
laws. Notice shall be required of such pledge. At the appropriate Purchaser’s
expense, the Company will execute and deliver such reasonable documentation as a
pledgee or secured party of Shares may reasonably request in connection with a
pledge or transfer of the Shares, including, if the Shares are subject to
registration pursuant to the Registration Rights Agreement, the preparation and
filing of any required prospectus supplement under Rule 424(b)(3) under the
Securities Act or other applicable provision of the Securities Act to
appropriately amend the list of selling stockholders thereunder.

 

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

 

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4.2.          Furnishing of Information. Until the earliest of the time that no
Purchaser owns any Shares, the Company covenants to timely file (or obtain
extensions in respect thereof and file within the applicable grace period) all
reports required to be filed by the Company after the date hereof pursuant to
the Exchange Act even if the Company is not then subject to the reporting
requirements of the Exchange Act. As long as any Purchaser owns any Shares, if
the Company is not required to file reports pursuant to the Exchange Act, it
will prepare and furnish to the Purchasers and make publicly available in
accordance with Rule 144(c) such information as is required for the Purchasers
to sell the Shares, including without limitation, under Rule 144. The Company
further covenants that it will take such further action as any holder of Shares
may reasonably request, to the extent required from time to time to enable such
Person to sell such Securities without registration under the Securities Act,
including without limitation, within the requirements of the exemption provided
by Rule 144.

 

4.3.          Integration. The Company shall not sell, offer for sale or solicit
offers to buy or otherwise negotiate in respect of any security (as defined in
Section 2 of the Securities Act) that would be integrated with the offer, sale
or issuance of the Shares in a manner within six months following the close of
this offering that would require the registration under the Securities Act of
the sale of the Shares to the Purchasers.

 

4.4.          Securities Laws Disclosure; Publicity. The Company shall, by 8:30
a.m. (New York City time) on the Trading Day immediately following the date
hereof, issue (i) a Current Report on Form 8-K disclosing the material terms of
the transactions contemplated hereby, and filing the Transaction Documents as
exhibits thereto. The Company and Luxor Capital Group, LP (Attn: Norris Nissim,
General Counsel) shall consult with each other in issuing any other press
releases with respect to the transactions contemplated hereby, and neither the
Company nor any Purchaser shall issue any such press release or otherwise make
any such public statement without the prior consent of the Company, with respect
to any press release of any Purchaser, or without the prior consent of Luxor
Capital Group, LP (Attn: Norris Nissim, General Counsel), which shall be the
designated representative of each Purchaser for such purpose, 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. Further, the parties acknowledge and
agree that all such press releases shall conform with the requirements of Rule
135c of the Securities Act. Notwithstanding the foregoing, the Company shall not
publicly disclose the name of any Purchaser, or include the name of any
Purchaser in any filing with the Commission or any regulatory agency or Trading
Market, without the prior written consent of such Purchaser, except (i) as
required by federal securities law in connection with the registration statement
contemplated by the Registration Rights Agreement and (ii) to the extent such
disclosure is required by law or Trading Market regulations, in which case the
Company shall provide the Purchasers with prior notice of such disclosure
permitted under this clause (ii).

 

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4.5.          Stockholder Rights Plan. No claim will be made or enforced by the
Company or, with the consent of the Company, any other Person, that any
Purchaser is an “Acquiring Person” under any control stock acquisition, business
combination, poison pill (including any distribution under a rights agreement)
or similar anti-takeover plan or arrangement in effect or hereafter adopted by
the Company, or that any Purchaser could be deemed to trigger the provisions of
any such plan or arrangement, by virtue of receiving Securities under the
Transaction Documents or under any other agreement between the Company and the
Purchasers.

 

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

 

4.7.          Use of Proceeds. The Company shall use the net proceeds from the
sale of the Shares hereunder for working capital purposes and shall not use such
proceeds for the satisfaction of any portion of the Company’s debt (other than
payment of trade payables in the ordinary course of the Company’s business and
prior practices), or to redeem any shares of Common Stock or Common Stock
Equivalents or to settle any outstanding litigation.

 

4.8.          Indemnification of Purchasers. Subject to the provisions of this
Section 4.8, the Company will indemnify and hold each Purchaser and its
directors, officers, stockholders, members, partners, employees and agents (and
any other Persons with a functionally equivalent role of a Person holding such
titles notwithstanding a lack of such title or any other title), each Person who
controls such Purchaser (within the meaning of Section 15 of the Securities Act
and Section 20 of the Exchange Act), and the directors, officers, stockholders,
agents, members, partners or employees (and any other Persons with a
functionally equivalent role of a Person holding such titles notwithstanding a
lack of such title or any other title) of such controlling persons (each, a
“Purchaser Party”) harmless from any and all losses, liabilities, obligations,
claims, contingencies, damages, costs and expenses, including all judgments,
amounts paid in settlements, court costs and reasonable attorneys’ fees and
costs of investigation that any such Purchaser Party may suffer or incur as a
result of or relating to (a) any breach of any of the representations,
warranties, covenants or agreements made by the Company in this Agreement or in
the other Transaction Documents or (b) any action instituted against a Purchaser
in any capacity, or any of them or their respective Affiliates, by any
stockholder of the Company who is not an Affiliate of such Purchaser, with
respect to any of the transactions contemplated by the Transaction Documents
(unless such action is based upon a breach of such Purchaser’s representations,
warranties or covenants under the Transaction Documents or any agreements or
understandings such Purchaser may have with any such stockholder or any
violations by the Purchaser of state or federal securities laws or any conduct
by such Purchaser which constitutes fraud, gross negligence, willful misconduct
or malfeasance).

 

4.9.          Reservation of Shares of Common Stock. As of the date hereof, the
Company has reserved and the Company shall continue to reserve and keep
available at all times, free of preemptive rights, a sufficient number of shares
of Common Stock for the purpose of enabling the Company to issue Shares pursuant
to this Agreement. The Company is authorized to issue 400,000,000 shares of
Common Stock. If after the Closing Date, the Company amends its articles or
certificate of incorporation or similar charter document to limit the number of
shares of Common Stock that the Company is authorized to issue, it shall
maintain a reserve from its duly authorized shares of Common Stock for issuance
pursuant to the Transaction Documents in such amount as may be required to
fulfill its obligations in full under the Transaction Documents.

 

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4.10.          Listing of Common Stock. The Company hereby agrees to use best
efforts to maintain the quotation of the Common Stock on the OTCBB. The Company
further agrees, if the Company applies to have the Common Stock traded on any
Trading Market, it will include in such application all of the Shares, and will
take such other action as is necessary to cause all of the Shares to be listed
or quoted on such Trading Market as promptly as possible. The Company will take
all action reasonably necessary to continue the quotation and trading of its
Common Stock on the OTCBB and will comply in all respects with the Company’s
reporting, filing and other obligations under the bylaws or rules of the OTCBB.

 

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

 

4.12.          Short Sales and Confidentiality After The Date Hereof. Each
Purchaser severally and not jointly with the other Purchasers, covenants that
neither it nor any Affiliate acting on its behalf or pursuant to any
understanding with it will execute any Short Sales during the period commencing
at the Discussion Time and ending at the time that the transactions contemplated
by this Agreement are first publicly announced following their consummation as
described in Section 4.4. Each Purchaser, severally and not jointly with the
other Purchasers, covenants that until such time as the transactions
contemplated by this Agreement are publicly disclosed by the Company as
described in Section 4.4, such Purchaser will maintain the confidentiality of
the existence and terms of this transaction and the information included in the
Disclosure Schedules. Each Purchaser understands and acknowledges, and agrees,
severally and not jointly with any other Purchaser, to act in a manner that will
not violate the positions of the Commission as set forth in Item 65, Section 5
under Section A, of the Manual of Publicly Available Telephone Interpretations,
dated July 1997, compiled by the Office of Chief Counsel, Division of
Corporation Finance. Notwithstanding the foregoing, no Purchaser makes any
representation, warranty or covenant hereby that it will not engage in Short
Sales in the securities of the Company after the time that the transactions
contemplated by this Agreement are first publicly announced following their
consummation as described in Section 4.4. Notwithstanding the foregoing, in the
case of a Purchaser that is a multi-managed investment vehicle whereby separate
portfolio managers manage separate portions of such Purchaser’s assets and the
portfolio managers have no direct knowledge of the investment decisions made by
the portfolio managers managing other portions of such Purchaser’s assets, the
covenant set forth above shall only apply with respect to the portion of assets
managed by the portfolio manager that made the investment decision to purchase
the Shares covered by this Agreement.

 

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4.13.          Delivery of Shares After Closing. The Company shall deliver, or
cause to be delivered, the respective Shares purchased by each Purchaser to such
Purchaser within three (3) Trading Days of the Closing Date.

 

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

 

ARTICLE V
MISCELLANEOUS

 

5.1.          Termination. This Agreement may be terminated by any Purchaser, as
to such Purchaser’s obligations hereunder only and without any effect whatsoever
on the obligations between the Company and the other Purchasers, by written
notice to the other parties, if the Closing has not been consummated on or
before June 15, 2012; provided, however, that no such termination will affect
the right of any party to sue for any breach by the other party (or parties).

 

5.2.          Fees and Expenses. Except as expressly set forth in the
Transaction Documents to the contrary, each party shall pay the fees and
expenses of its advisers, counsel, accountants and other experts, if any, and
all other expenses incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of this Agreement. The Company
shall pay all Transfer Agent fees, stamp taxes and other taxes and duties levied
in connection with the delivery of any Shares to the Purchasers. Each Purchaser
acknowledges and agrees that all costs incurred by such Purchaser (including any
fees and disbursements of any special counsel retained by such Purchaser)
relating to the sale of the Shares to such Purchaser are to be borne by such
Purchaser. Each Purchaser, on its own behalf and, if applicable, on behalf of
others for whom it is contracting hereunder, agrees that this subscription is
made for valuable consideration and may not be withdrawn, cancelled, terminated
or revoked by such Purchaser, on its own behalf and, if applicable, on behalf of
others for whom it is contracting hereunder.

 

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

 

5.4.          Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of (a) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile number
set forth on the signature pages attached hereto prior to 5:30 p.m. (New York
City time) on a Trading Day, (b) the next Trading Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number set forth on the signature pages attached hereto on a day that
is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading
Day, (c) the 2nd Trading Day following the date of mailing, if sent by U.S.
nationally recognized overnight courier service, or (d) upon actual receipt by
the party to whom such notice is required to be given. The address for such
notices and communications shall be as set forth on the signature pages attached
hereto.

 

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5.5.          Amendments; Waivers. No provision of this Agreement may be waived
or amended except in a written instrument signed, in the case of an amendment,
by the Company and the Purchasers of at least 50% of the Shares still held by
the Purchasers 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;
provided, however, the rights under this Agreement shall not be assignable if
the applicable securities are transferred pursuant to (i) an effective
registration statement under the Securities Act, or (ii) Rule 144 under the
Securities Act. 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). Except as set forth herein, any Purchaser may assign any or all
of its rights under this Agreement to any Person to whom such Purchaser assigns
or transfers any Shares provided such transferee agrees in writing to be bound,
with respect to the transferred Shares, by the provisions of the Transaction
Documents that apply to the “Purchasers.”

 

5.8.          No Third-Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person, except as otherwise set forth in Section 4.8.

 

5.9.          Governing Law. All questions concerning the construction,
validity, enforcement and interpretation of the Transaction Documents shall be
governed by and construed and enforced in accordance with the internal laws of
the State of New York, without regard to the principles of conflicts of law
thereof. Each party agrees that all legal proceedings concerning the
interpretations, enforcement and defense of the transactions contemplated by
this Agreement and any other Transaction Documents (whether brought against a
party hereto or its respective affiliates, directors, officers, stockholders,
employees or agents) shall be commenced exclusively in the state and federal
courts sitting in the City of New York. Each party hereby irrevocably submits to
the exclusive jurisdiction of the state and federal courts sitting in the City
of New York, borough of Manhattan for the adjudication of any dispute hereunder
or in connection herewith or with any transaction contemplated hereby or
discussed herein (including with respect to the enforcement of any of the
Transaction Documents), and hereby irrevocably waives, and agrees not to assert
in any suit, action or proceeding, any claim that it is not personally subject
to the jurisdiction of any such court, that such suit, action or proceeding is
improper or is an inconvenient venue for such proceeding. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof via
registered or certified mail or overnight delivery (with evidence of delivery)
to such party at the address in effect for notices to it under this Agreement
and agrees that such service shall constitute good and sufficient service of
process and notice thereof. Nothing contained herein shall be deemed to limit in
any way any right to serve process in any other manner permitted by law. If
either party shall commence an action or proceeding to enforce any provisions of
the Transaction Documents, then the prevailing party in such action or
proceeding shall be reimbursed by the other party for its reasonable attorneys’
fees and other costs and expenses incurred with the investigation, preparation
and prosecution of such action or proceeding.

 

25

 

 

5.10.          Survival. The representations and warranties contained herein
shall survive the Closing and the delivery of the Shares.

 

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

 

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

 

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

 

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

 

26

 

 

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

 

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

 

5.17.          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.

 

5.18.          Construction. The parties agree that each of them and/or their
respective counsel has reviewed and had an opportunity to revise the Transaction
Documents and, therefore, the normal rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall not be employed
in the interpretation of the Transaction Documents or any amendments hereto.

 

5.19.          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

 

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

 

(Signature Pages Follow)

 

27

 

 

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.

 

SEARCHLIGHT MINERALS CORP.   Address for Notice:       By:     2441 W. Horizon
Ridge Parkway   Name: Martin B. Oring   Suite 120   Title:   Chief Executive
Officer   Henderson, NV  89052 With a copy to (which shall not constitute
notice):   Fax:  (702) 451-4939

 

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGE FOR PURCHASER FOLLOWS]

 

28

 

 

[PURCHASER SIGNATURE PAGES TO SECURITIES PURCHASE AGREEMENT] 

 

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

 

Name of Purchaser:
________________________________________________________________________________________________

 

Signature of Authorized Signatory of Purchaser:
________________________________________________________________________

 

Name of Authorized Signatory:
_______________________________________________________________________________________

 

Title of Authorized Signatory:
________________________________________________________________________________________

 

Email Address of Purchaser:
_________________________________________________________________________________________

 

Fax Number of Purchaser:
___________________________________________________________________________________________

 

Address for Notice of Purchaser:

 

 

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

 

Subscription Amount: $

Number of shares of Common Stock:
__________________________________________________

EIN Number: [PROVIDE THIS UNDER SEPARATE COVER]

 

29