EXHIBIT 10.1
 
 
 
SECURITIES PURCHASE AGREEMENT
 
This SECURITIES PURCHASE AGREEMENT (the “Agreement”), dated as of December 20,
2012, is by and among GeoGlobal Resources Inc., a Delaware corporation with
offices located at 200, 625 – 4th Avenue SW, Calgary, Alberta, Canada T2P 0K2
(the “Company”), and each of the investors listed on the Schedule of Buyers
attached hereto (individually, a “Buyer” and collectively, the “Buyers”)
(provided that if only one Buyer is listed on the Schedule of Buyers, then all
references to “Buyers” hereunder shall be treated as if a reference to a single
“Buyer” hereunder).

RECITALS
 
A.           The Company and each Buyer desire to enter into this transaction to
purchase the Common Shares and Warrants (as defined below) set forth herein
pursuant to a currently effective shelf registration statement on Form S-3,
which has at least 27,654,774 unallocated shares of common stock, $0.001 par
value per share, of the Company (the “Common Stock”) registered thereunder
(Registration Number 333-168031) (the “Registration Statement”), which
Registration Statement has been declared effective in accordance with the
Securities Act of 1933, as amended (the “1933 Act”), by the United States
Securities and Exchange Commission (the “SEC”).

B.           Each Buyer wishes to purchase, and the Company wishes to sell, upon
the terms stated in this Agreement, units (the “Units”) consisting of (i) the
aggregate number of shares of Common Stock set forth for such Buyer on the
Schedule of Buyers (the aggregate amount for all Buyers shall be collectively
referred to herein as the “Common Shares”) and (ii) warrants (the “Warrants”) to
initially acquire up to the aggregate number of shares of Common Stock set forth
for such Buyer on the Schedule of Buyers (all shares of Common Stock acquirable
upon exercise or exchange of the Warrants, collectively, the “Warrant Shares”),
as evidenced by the warrant certificate in the form attached hereto as Exhibit
A.  Notwithstanding that the Units being purchased hereunder consist of Common
Shares and Warrants, the Common Shares and Warrants shall be immediately
separable and independent from one another.

C.           The Common Shares, the Warrants and the Warrant Shares are
collectively referred to herein as the “Securities.”
 
D.           The parties hereto each understand that this Securities Purchase
Agreement and the purchase and sale contemplated hereby is unconditional and
binding on all parties hereto.
 
 
 
 
 

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AGREEMENT
 
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and each Buyer hereby
agree as follows:
 
1.
PURCHASE AND SALE OF COMMON SHARES AND WARRANTS.

 
(a)   Common Shares and Warrants. The Company shall issue and sell to each
Buyer, and each Buyer severally, but not jointly, shall purchase from the
Company on the Closing Date (as defined below), Units consisting of (i) the
number of Common Shares, as is set forth for such Buyer on the Schedule of
Buyers and (ii) Warrants, to initially acquire up to that number of Warrant
Shares as is set forth for such Buyer on the Schedule of
Buyers.  Notwithstanding that the Units being purchased hereunder consist of
Common Shares and Warrants, the Common Shares and Warrants shall be immediately
separable and shall be independent from one another.
 
(b)   Closing. The closing and settlement (the “Closing”) of the purchase of the
Units by the Buyers shall occur by exchange of documents via telefacsimile or
electronic delivery on the Trading Day immediately following the NYSE MKT
Approval (as defined below) as set forth in Section 7(b) hereof (the “Closing
Date”) and shall occur at 10:00 a.m., New York time (or such earlier date and
time as is mutually agreed to by the Company and each Buyer).  As used herein
“Business Day” means any day other than a Saturday, Sunday or other day on which
commercial banks in New York, New York are authorized or required by law to
remain closed.
 
(c)           Purchase Price. The aggregate purchase price for the Units to be
purchased by each Buyer (the “Purchase Price”) shall be the amount set forth for
such Buyer on the Schedule of Buyers.
 
(d)           Form of Payment; Deliveries. On the Closing Date, (i) each Buyer
shall pay its respective Purchase Price to the Company for the Units to be
issued and sold to such Buyer at the Closing, by wire transfer of immediately
available funds in accordance with the Company’s written wire instructions,
(less for Crede (as defined below), the amounts, if any, withheld pursuant to
Section 4(g)) and (ii) the Company shall (A) cause Computershare Trust Company
N.A. (together with any subsequent transfer agent, the “Transfer Agent”) through
the Depository Trust Company (“DTC”) Fast Automated Securities Transfer Program
to credit, without restriction, to such Buyer’s or its designee’s balance
account with DTC through its Deposit/Withdrawal at Custodian (“DWAC”) system
such aggregate number of Common Shares that such Buyer is purchasing as is set
forth for such Buyer on the Schedule of Buyers, (B) deliver to each Buyer a
warrant certificate, in the form attached hereto as Exhibit A, pursuant to which
such Buyer shall have the right to initially acquire up to the number of Warrant
Shares as is set forth for such Buyer on the Schedule of Buyers and (C) deliver
to such Buyer the other documents, instruments and certificates set forth in
Section 6.  Notwithstanding anything to the contrary contained in the Warrants,
all Warrant Shares shall be delivered via DWAC.
 
2.
BUYER’S REPRESENTATIONS AND WARRANTIES.

 
Each Buyer, severally and not jointly, represents and warrants to the Company
with respect to only itself that:
 
 
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(a)           Organization; Authority. Such Buyer is an entity duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization with the requisite power and authority to enter into and to
consummate the transactions contemplated by the Transaction Documents (as
defined below) to which it is a party and otherwise to carry out its obligations
hereunder and thereunder.
 
(b)           Validity; Enforcement. The execution and delivery of the
Transaction Documents to which Buyer is a party and the consummation by it of
the transactions contemplated hereby and thereby have been duly authorized by
all necessary company action on the part of Buyer and no further consent or
authorization of Buyer or its members is required.  Each Transaction Document to
which Buyer is a party has been (or will be) duly executed by Buyer, and when
delivered by Buyer in accordance with the terms hereof or thereof, will
constitute the valid and legally binding obligation of Buyer, enforceable
against Buyer in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting creditors’
rights and remedies.
 
(c)           No Conflicts.  The execution, delivery and performance by such
Buyer of this Agreement and the consummation by such Buyer of the transactions
contemplated hereby will not (i) result in a violation of the organizational
documents of such Buyer or (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 Buyer 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 Buyer, 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 Buyer to perform its obligations hereunder.
 
(d)           Certain Trading Activities.  Such Buyer has not directly or
indirectly, nor has any Person (as defined below) acting on behalf of or
pursuant to any understanding with such Buyer, engaged in any transactions in
the securities of the Company (including, without limitation, any Short Sales
(as defined below) involving the Company’s securities) during the period
commencing as of the time that such Buyer and the Company (or the Placement
Agent (as defined below) if any) first began discussions regarding the specific
investment in the Company contemplated by this Agreement and ending immediately
prior to the execution of this Agreement by such Buyer (it being understood and
agreed that for all purposes of this Agreement, and, without implication that
the contrary would otherwise be true, that neither transactions nor purchases
nor sales shall include the location and/or reservation of borrowable shares of
Common Stock). “Short Sales” means all “short sales” as defined in Rule 200
promulgated under Regulation SHO under the 1934 Act (as defined below).  Such
Buyer will not engage in Short Sales as further specified in Section 4(p)(ii)
below.
 
(e)           Not an Affiliate.  The Buyer is not an officer, director or
Affiliate of the Company and immediately prior to the execution of this
Agreement, did not beneficially own any Common Stock.
 
(f)           No Governmental Review. Buyer understands that no United States
federal or state agency or any other government or governmental agency has
passed on or made any
 
 
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recommendation or endorsement of the Securities or the fairness or suitability
of the investment in the Securities nor have such authorities passed upon or
endorsed the merits of the offering of the Securities.
 
(g)           Manipulation of Price.  Neither the Buyer nor any of its
Affiliates has, and, to the knowledge of the Buyer, no Person acting on their
behalf has, directly or indirectly, taken any action designed to cause or to
result in the stabilization or manipulation of the price of any security of the
Company or any of its Subsidiaries to facilitate the sale or resale of any of
the Securities.
 
(h)           Acknowledgment of Company NYSE MKT Non-Compliance.  Such Buyer is
aware of and acknowledges that: (i) on November 30, 2012, the Company received
notice from the NYSE MKT that the Company was not in compliance with two of the
continued listing standards as set forth in Part 10 of the NYSE MKT's Company
Guide (the “Company Guide”) and therefore, the Company has become subject to the
procedures and requirements of Section 1009 of the Company Guide; (ii) the
Company was notified that it is not in compliance with Section 1003(a)(iv) of
the Company Guide in that it has sustained losses that are so substantial in
relation to its overall operations or its existing financial resources, or its
financial condition has become so impaired that it appears questionable, in the
opinion of the NYSE MKT, as to whether the Company will be able to continue
operations and/or meet its obligations as they mature; and (iii) the Company was
also notified that, pursuant to Section 1003(f)(v) of the Company Guide, the
Company’s continued listing is predicated either on an increase in the price per
share of the Company's common stock or on the Company effecting a reverse stock
split of its common stock within a reasonable period of time and no later than
June 28, 2013 (the events and information contained in the foregoing clauses
(i), (ii) and (iii), the “NYSE MKT Non-Compliance”).
 
3.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

 
The Company represents and warrants to each of the Buyers that:
 
(a)           Organization and Qualification. Each of the Company and each of
its Subsidiaries are entities duly organized and validly existing and in good
standing under the laws of the jurisdiction in which they are formed, and have
the requisite power and authorization to own their properties and to carry on
their business as now being conducted and as presently proposed to be conducted.
Each of the Company and each of its Subsidiaries is duly qualified as a foreign
entity to do business and is in good standing in every jurisdiction in which its
ownership of property or the nature of the business conducted by it makes such
qualification necessary, except to the extent that the failure to be so
qualified or be in good standing would not have a Material Adverse Effect. As
used in this Agreement, “Material Adverse Effect” means any material adverse
effect on (i) the business, properties, assets, liabilities, operations
(including results thereof), condition (financial or otherwise) or prospects of
the Company or any Subsidiary, individually or taken as a whole, (ii) the
transactions contemplated hereby or in any of the other Transaction Documents or
(iii) the authority or ability of the Company to perform any of its obligations
under any of the Transaction Documents; other than, in the case of each of the
foregoing: (1) the effects of changes that are generally applicable to the
industries and markets in which the Company and its Subsidiaries operate, (2)
any change in general economic or political conditions, or in the financial,
banking or securities markets in the United States or Canada, (3) effects
arising from any changes in the law or generally accepted accounting principles,
and (4)
 
 
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failure of the Company or its Subsidiaries to meet any financial projections or
forecasts.  “Subsidiaries” means any Person in which the Company, directly or
indirectly, (I) owns any of the outstanding capital stock or holds any equity or
similar interest of such Person or (II) controls or operates all or any part of
the business, operations or administration of such Person.  Each of the
foregoing is individually referred to herein as a “Subsidiary.”

(b)           Authorization; Enforcement; Validity. The Company has the
requisite power and authority to enter into and perform its obligations under
this Agreement and the other Transaction Documents and to issue the Securities
in accordance with the terms hereof and thereof.  The execution and delivery of
this Agreement and the other Transaction Documents by the Company and the
consummation by the Company of the transactions contemplated hereby and thereby
(including, without limitation, the issuance of the Common Shares, the issuance
of the Warrants and the reservation for issuance and issuance of the Warrant
Shares issuable upon exercise of the Warrants) have been duly authorized by the
Company’s board of directors and (other than the filing with the SEC of the
prospectus supplement required by the Registration Statement pursuant to Rule
424(b) under the 1933 Act (the “Prospectus Supplement”) supplementing the base
prospectus forming part of the Registration Statement (the “Prospectus”) and any
other filings as may be required by any state securities agencies, all of which
shall be made prior to the Closing) no further filing, consent or authorization
is required by the Company, its board of directors or its stockholders or other
governing body. This Agreement has been, and the other Transaction Documents
will be prior to the Closing, duly executed and delivered by the Company, and
each constitutes the legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with its respective terms, except
as such enforceability may be limited by general principles of equity or
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally, the enforcement of applicable
creditors’ rights and remedies and except as rights to indemnification and to
contribution may be limited by federal or state securities law. “Transaction
Documents” means, collectively, this Agreement, the Warrants, the Irrevocable
Transfer Agent Instructions (as defined below) and each of the other agreements
and instruments entered into or delivered by any of the parties hereto in
connection with the transactions contemplated hereby and thereby, as may be
amended from time to time.
 
(c)           Issuance of Securities; Registration Statement. The issuance of
the Common Shares and the Warrants are duly authorized and, upon issuance in
accordance with the terms of the Transaction Documents, will be validly issued,
fully paid and non-assessable and free from all preemptive or similar rights,
taxes, liens, charges and other encumbrances with respect to the issue thereof.
As of the Closing, the Company shall have reserved from its duly authorized
capital stock the maximum number of shares of Common Stock issuable upon
exercise of the Warrants (without taking into account any limitations on the
exercise of the Warrants set forth therein). The issuance of the Warrant Shares
is duly authorized, and upon exercise in accordance with the Warrants, the
Warrant Shares, when issued, will be validly issued, fully paid and
non-assessable and free from all preemptive or similar rights, taxes, liens,
charges and other encumbrances with respect to the issue thereof, with the
holders being entitled to all rights accorded to a holder of Common Stock. The
issuance by the Company of the Securities has been registered under the 1933
Act, the Securities are being issued pursuant to the Registration Statement and
all of the Securities are freely transferable and freely tradable by each of the
Buyers without restriction. The Registration Statement is effective and
available for the issuance of the Securities thereunder and the Company has not
received any notice that the SEC has
 
 
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issued or intends to issue a stop-order with respect to the Registration
Statement or that the SEC otherwise has suspended or withdrawn the effectiveness
of the Registration Statement, either temporarily or permanently, or intends or
has threatened in writing to do so. The “Plan of Distribution” section under the
Registration Statement permits the issuance and sale of the Securities hereunder
and as contemplated by the other Transaction Documents. Upon receipt of the
Securities, each of the Buyers will have good and marketable title to the
Securities. The Registration Statement and any prospectus included therein,
including the Prospectus and the Prospectus Supplement, comply and complied in
all material respects with the requirements of the 1933 Act and the 1934 Act and
the rules and regulations of the SEC promulgated thereunder and all other
applicable laws and regulations. At the time the Registration Statement and any
amendments thereto became effective, at the date of this Agreement and at each
deemed effective date thereof pursuant to Rule 430B(f)(2) of the 1933 Act, the
Registration Statement and any amendments thereto complied and will comply in
all material respects with the requirements of the 1933 Act and did not and will
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading; and the Prospectus and any amendments or supplements
thereto (including, without limitation the Prospectus Supplement), at the time
the Prospectus or any amendment or supplement thereto was issued and at the
Closing Date, complied and will comply in all material respects with the
requirements of the 1933 Act and did not and will not contain an untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading.  The Company meets all of the requirements for the
use of Form S-3 under the 1933 Act for the offering and sale of the Securities
contemplated by this Agreement and the other Transaction Documents, and the SEC
has not notified the Company of any objection to the use of the form of the
Registration Statement pursuant to Rule 401(g)(1) under the 1933 Act. The
Registration Statement meets the requirements set forth in Rule 415(a)(1)(x)
under the 1933 Act. At the earliest time after the filing of the Registration
Statement that the Company or another offering participant made a bona fide
offer (within the meaning of Rule 164(h)(2) under the 1933 Act) relating to any
of the Securities, the Company was not and is not an “Ineligible Issuer” (as
defined in Rule 405 under the 1933 Act). The Company (i) has not distributed any
offering material in connection with the offering and sale of any of the
Securities and (ii) until no Buyer holds any of the Securities, shall not
distribute any offering material in connection with the offering and sale of any
of the Securities to, or by, any of the Buyers, in each case, other than the
Registration Statement, the Prospectus or the Prospectus Supplement.
 
(d)           No Conflicts. The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby (including, without limitation, the
issuance of the Common Shares, the Warrants and Warrant Shares and the
reservation for issuance of the Warrant Shares) will not (i) result in a
violation of the Articles of Incorporation (as defined below) (including,
without limitation, any certificates of designation contained therein) or other
organizational documents of the Company or any of its Subsidiaries, any capital
stock of the Company, or Bylaws (as defined below), (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 the Company or any of its Subsidiaries is a party, or (iii)
result in a violation of any law, rule, regulation, order, judgment or decree
(including, without limitation, federal and state and foreign securities laws
and regulations and the rules and regulations of the NYSE MKT)
 
 
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applicable to the Company or any of its Subsidiaries or by which any property or
asset of the Company or any of its Subsidiaries is bound or affected except, in
the case of clause (ii) above, to the extent such violations that could not
reasonably be expected to be material.
 
(e)           Consents.  Except for the NYSE MKT Approval (as defined below),
the Company is not required to obtain any consent from, authorization or order
of, or make any filing which has not already been obtained or made (including,
without limitation as to the listing on the NYSE MKT of the Common Shares and
the Warrant Shares upon issuance) or registration with (other than the filing
with the SEC of the Prospectus Supplement and any other filings as may be
required by any state securities agencies), any court, governmental agency or
any regulatory or self-regulatory agency or any other Person in order for it to
execute, deliver or perform any of its obligations under or contemplated by the
Transaction Documents, in each case, in accordance with the terms hereof or
thereof. Except for the NYSE MKT Approval, all consents, authorizations, orders,
filings and registrations which the Company is required to obtain at or prior to
the Closing will have been obtained or effected on or prior to the Closing Date,
and neither the Company nor any of its Subsidiaries are aware of any facts or
circumstances which might prevent the Company from obtaining or effecting any of
the registration, application or filings contemplated by the Transaction
Documents. Except for the NYSE MKT Non-Compliance, the Company is not in
violation of the requirements of the NYSE MKT or foreign, federal, state or
local securities laws, and has no knowledge of any facts or circumstances which
are material and could reasonably lead to such delisting or suspension of the
Common Stock in the foreseeable future. No statute, rule, regulation, executive
order, decree, ruling or injunction has been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction that
prohibits the consummation of any of any of the transactions contemplated by the
Transaction Documents, and no actions, suits or proceedings are pending or
threatened by any Person that seeks to enjoin, prohibit or otherwise adversely
affect any of the transactions contemplated by the Transaction Documents.
 
(f)           Acknowledgment Regarding Buyer’s Purchase of Securities. The
Company acknowledges and agrees that each Buyer is acting solely in the capacity
of an arm’s length purchaser with respect to the Transaction Documents and the
transactions contemplated hereby and thereby and that no Buyer is (i) an officer
or director of the Company or any of its Subsidiaries, (ii) an “affiliate” (as
defined in Rule 144 promulgated under the 1933 Act (or a successor rule thereto)
(collectively, “Rule 144”)) of the Company (an “Affiliate”) or any of its
Subsidiaries or (iii) to its knowledge, a “beneficial owner” of more than 10% of
the shares of Common Stock (as defined for purposes of Rule 13d-3 of the
Securities Exchange Act of 1934, as amended (the “1934 Act”)). The Company
further acknowledges that no Buyer is acting as a financial advisor or fiduciary
of the Company or any of its Subsidiaries (or in any similar capacity) with
respect to the Transaction Documents and the transactions contemplated hereby
and thereby, and any advice given by a Buyer or any of its representatives or
agents in connection with the Transaction Documents and the transactions
contemplated hereby and thereby is merely incidental to such Buyer’s purchase of
the Securities.  The Company further represents to each Buyer that the Company’s
decision to enter into the Transaction Documents has been based solely on the
independent evaluation by the Company and its representatives.  The Company has
never been a “shell” company under applicable rules of the SEC.
 
(g)           Placement Agent’s Fees. Neither the Company nor any of its
Subsidiaries has engaged any placement agent or other agent in connection with
the sale of the Securities.  The
 
 
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Company shall be responsible for the payment of any placement agent’s fees,
financial advisory fees, or brokers’ commissions (other than for Persons engaged
by any Buyer or its investment advisor) relating to or arising out of the
transactions contemplated hereby.
 
(h)           No Integrated Offering. None of the Company, its Subsidiaries or
any of their Affiliates, nor any Person acting on their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, under circumstances that would cause this offering of the
Securities to require approval of stockholders of the Company under any
applicable stockholder approval provisions, including, without limitation, under
the rules and regulations of any exchange or automated quotation system on which
any of the securities of the Company are listed or designated.  None of the
Company, its Subsidiaries, their Affiliates nor any Person acting on their
behalf will take any action or steps that would cause the offering of any of the
Securities to be integrated with other offerings except for registration
contemplated hereby pursuant to the Registration Statement.
 
(i)   Dilutive Effect. The Company understands and acknowledges that the number
of Warrant Shares may increase in certain circumstances. The Company further
acknowledges that its obligation to issue the Warrant Shares upon exercise of
the Warrants in accordance with this Agreement and the Warrants is absolute and
unconditional, regardless of the dilutive effect that such issuance may have on
the ownership interests of other stockholders of the Company.
 
(j)           Application of Takeover Protections; Rights Agreement. The Company
and its board of directors have taken all necessary action, if any, in order to
render inapplicable any control share acquisition, interested stockholder,
business combination, poison pill (including any distribution under a rights
agreement) or other similar anti-takeover provision under the Articles of
Incorporation, Bylaws or other organizational documents or the laws of the
jurisdiction of its incorporation or otherwise that can be waived by approval of
the board of directors and which is or could become applicable to any Buyer as a
result of the transactions contemplated by this Agreement, including, without
limitation, the Company’s issuance of the Securities and any Buyer’s ownership
of the Securities. The Company and its board of directors have taken all
necessary action, if any, in order to render inapplicable any stockholder rights
plan or similar arrangement relating to accumulations of beneficial ownership of
shares of Common Stock or a change in control of the Company or any of its
Subsidiaries.
 
(k)           SEC Documents; Financial Statements. During the two (2) years
prior to the date hereof, the Company has timely filed all reports, schedules,
forms, statements and other documents required to be filed by it with the SEC
pursuant to the reporting requirements of the 1934 Act (all of the foregoing
filed prior to the date hereof and all exhibits included therein and financial
statements, notes and schedules thereto and documents incorporated by reference
therein being hereinafter referred to as the “SEC Documents”). The Company has
delivered to each Buyer (or such Buyer’s representatives) true, correct and
complete copies of each of the SEC Documents not available on the EDGAR system.
As of their respective dates, the SEC Documents complied in all material
respects with the requirements of the 1934 Act and the rules and regulations of
the SEC promulgated thereunder applicable to the SEC Documents, and none of the
SEC Documents, at the time they were filed with the SEC, 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. As of
their respective dates, the financial statements of the Company
 
 
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included in the SEC Documents complied in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto as in effect as of the time of filing. Such financial statements
have been prepared in accordance with generally accepted accounting principles,
consistently applied, during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes thereto, or (ii)
in the case of unaudited interim statements, to the extent they may exclude
footnotes or may be condensed or summary statements) and fairly present in all
material respects the financial position of the Company as of the dates thereof
and the results of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments which will not be material, either individually or in the
aggregate). No other information provided by or on behalf of the Company to the
Buyers which is not included in the SEC Documents contains any untrue statement
of a material fact or omits to state any material fact necessary in order to
make the statements therein not misleading, in the light of the circumstance
under which they are or were made.
 
(l)           Absence of Certain Changes. Since the date of the Company’s most
recent audited financial statements contained in a Form 10-K, except as
disclosed in the SEC Documents filed subsequent thereto, there has been no
material adverse change and no material adverse development in the business,
assets, liabilities, properties, operations (including results thereof),
condition (financial or otherwise) or prospects of the Company or any of its
Subsidiaries. Since the date of the Company’s most recent audited financial
statements contained in a Form 10-K, except as disclosed in the SEC Documents
filed subsequent thereto, neither the Company nor any of its Subsidiaries has
(i) declared or paid any dividends, (ii) sold any assets, individually or in the
aggregate, outside of the ordinary course of business or (iii) made any material
capital expenditures, individually or in the aggregate. Neither the Company nor
any of its Subsidiaries has taken any steps to seek protection pursuant to any
law or statute relating to bankruptcy, insolvency, reorganization, receivership,
liquidation or winding up, nor does the Company or any Subsidiary have any
knowledge or reason to believe that any of their respective creditors intend to
initiate involuntary bankruptcy proceedings or any actual knowledge of any fact
which would reasonably lead a creditor to do so. Except as disclosed in the SEC
Documents, the Company and its Subsidiaries, individually and on a consolidated
basis, are not as of the date hereof, and after giving effect to the
transactions contemplated hereby to occur at the Closing will not be, Insolvent
(as defined below). For purposes of this Section 3(l), “Insolvent” means, (I)
with respect to the Company and its Subsidiaries, on a consolidated basis, (i)
the present fair saleable value of the Company’s and its Subsidiaries’ assets is
less than the amount required to pay the Company’s and its Subsidiaries’ total
Indebtedness (as defined below), (ii) the Company and its Subsidiaries are
unable to pay their debts and liabilities, subordinated, contingent or
otherwise, as such debts and liabilities become absolute and matured or (iii)
the Company and its Subsidiaries intend to incur or believe that they will incur
debts that would be beyond their ability to pay as such debts mature; and (II)
with respect to the Company and each Subsidiary, individually, (i) the present
fair saleable value of the Company’s or such Subsidiary’s (as the case may be)
assets is less than the amount required to pay its respective total
Indebtedness, (ii) the Company or such Subsidiary (as the case may be) is unable
to pay its respective debts and liabilities, subordinated, contingent or
otherwise, as such debts and liabilities become absolute and matured or (iii)
the Company or such Subsidiary (as the case may be) intends to incur or believes
that it will incur debts that would be beyond its respective ability to pay as
such debts mature. Neither the Company nor any of its Subsidiaries has engaged
in any business or in any
 
 
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transaction, and is not about to engage in any business or in any transaction,
for which the Company’s or such Subsidiary’s remaining assets constitute
unreasonably small capital.
 
(m)           No Undisclosed Events, Liabilities, Developments or Circumstances.
No event, liability, development or circumstance has occurred or exists, or is
reasonably expected to exist or occur with respect to the Company, any of its
Subsidiaries or their respective business, properties, liabilities, prospects,
operations (including results thereof) or condition (financial or otherwise)
that (i) would be required to be disclosed by the Company under applicable
securities laws on a registration statement on Form S-1 filed with the SEC
relating to an issuance and sale by the Company of its Common Stock and which
has not been publicly announced, (ii) could have a material adverse effect on
any Buyer’s investment hereunder or (iii) could have a Material Adverse Effect.
 
(n)           Conduct of Business; Regulatory Permits. Neither the Company nor
any of its Subsidiaries is in violation of any term of or in default under its
Articles of Incorporation, any certificate of designation, preferences or rights
of any other outstanding series of preferred stock of the Company or any of its
Subsidiaries or Bylaws or their organizational charter, certificate of formation
or certificate of incorporation or bylaws, respectively. Except for the NYSE MKT
Non-Compliance, neither the Company nor any of its Subsidiaries is in violation
of any judgment, decree or order or any statute, ordinance, rule or regulation
applicable to the Company or any of its Subsidiaries, and neither the Company
nor any of its Subsidiaries will conduct its business in violation of any of the
foregoing, except in all cases for possible violations which could not,
individually or in the aggregate, have a Material Adverse Effect. Except for the
NYSE MKT Non-Compliance, since January 1, 2010, (i) the Common Stock has been
listed or designated for quotation on the NYSE MKT and (ii) trading in the
Common Stock has not been suspended by the SEC or the NYSE MKT. Except for the
NYSE MKT Non-Compliance, the Company and each of its Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate regulatory
authorities necessary to conduct their respective businesses, except where the
failure to possess such certificates, authorizations or permits would not have,
individually or in the aggregate, a Material Adverse Effect, and neither the
Company nor any such Subsidiary has received any notice of proceedings relating
to the revocation or modification of any such certificate, authorization or
permit.
 
(o)           Foreign Corrupt Practices; Certain Other Unlawful
Matters.  Neither the Company nor any of its Subsidiaries nor any director,
officer, agent, employee or other Person acting on behalf of the Company or any
of its Subsidiaries has, in the course of its actions for, or on behalf of, the
Company or any of its Subsidiaries (i) used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expenses relating to
political activity; (ii) made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate funds; (iii)
violated or is in violation of any provision of the U.S. Foreign Corrupt
Practices Act of 1977, as amended (or rules or regulations or interpretations
thereunder); or (iv) made any unlawful bribe, rebate, payoff, influence payment,
kickback or other unlawful payment to any foreign or domestic government
official or employee or otherwise.  The Company and its Subsidiaries are in
compliance with, and have not previously violated, the USA Patriot Act of 2001
and all other applicable U.S. and non-U.S. anti-money laundering laws and
regulations, including, without limitation, the laws, regulations and Executive
Orders and sanctions programs administered by the U.S. Office of Foreign Assets
Control, including, without limitation, (i) Executive Order 13224 of September
23, 2001 entitled,
 
 
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“Blocking Property and Prohibiting Transactions With Persons Who Commit,
Threaten to Commit, or Support Terrorism” (66 Fed. Reg. 49079 (2001)); and (ii)
any regulations contained in 31 CFR, Subtitle B, Chapter V.
 
(p)           Sarbanes-Oxley Act. The Company and each Subsidiary is in
compliance with all applicable requirements of the Sarbanes-Oxley Act of 2002
that are effective as of the date hereof, and all applicable rules and
regulations promulgated by the SEC thereunder that are effective as of the date
hereof.
 
(q)           Transactions With Affiliates. Except as disclosed in the SEC
Documents, none of the officers, directors or employees or affiliates of the
Company or any of its Subsidiaries is presently a party to any transaction with
the Company or any of its Subsidiaries (other than for ordinary course services
as employees, officers or directors), including any contract, agreement or other
arrangement providing for the furnishing of services to or by, providing for
rental of real or personal property to or from, or otherwise requiring payments
to or from any such officer, director or employee or, to the knowledge of the
Company or any of its Subsidiaries, any corporation, partnership, trust or other
Person in which any such officer, director or employee or affiliate has a
substantial interest or is an employee, officer, director, trustee or partner.
 
(r)           Equity Capitalization. As of the date hereof, the authorized
capital stock of the Company consists of (i) 250,000,000 shares of Common Stock,
of which 138,343,051 are issued and outstanding and 35,440,032 shares are
reserved for issuance pursuant to securities (other than the Warrants)
exercisable or exchangeable for, or convertible into, shares of Common Stock and
(ii) 1,000,000 shares of preferred stock, of which none are issued and
outstanding. Zero shares of Common Stock are held in treasury.  All of such
outstanding shares are duly authorized and have been, or upon issuance will be,
validly issued and are fully paid and non-assessable. 71,161,533 shares of the
Company’s issued and outstanding Common Stock on the date hereof are owned by
Persons who are “Affiliates” (as defined in Rule 405 of the 1933 Act and
calculated based on the assumption that only officers, directors and holders of
at least 10% of the Company’s issued and outstanding Common Stock are
“Affiliates” without conceding that any such Persons are “Affiliates” for
purposes of federal securities laws) of the Company or any of its Subsidiaries.
To the Company’s knowledge, except as set forth in the SEC Documents, no Person
owns 10% or more of the Company’s issued and outstanding shares of Common Stock
(calculated based on the assumption that all Convertible Securities (as defined
below), whether or not presently exercisable or convertible, have been fully
exercised or converted (as the case may be) taking account of any limitations on
exercise or conversion (including “blockers”) contained therein without
conceding that such identified Person is a 10% stockholder for purposes of
federal securities laws). (i) None of the Company’s or any Subsidiary’s capital
stock is subject to preemptive rights or any other similar rights or any liens
or encumbrances suffered or permitted by the Company or any Subsidiary; (ii)
except pursuant to the Stock Incentive Plans of the Company disclosed in the SEC
Documents (collectively, the “Company Stock Plans”) or as disclosed in the SEC
Documents, there are no outstanding options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, or exercisable or exchangeable for, any
capital stock of the Company or any of its Subsidiaries, or contracts,
commitments, understandings or arrangements by which the
 
 
 
 
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Company or any of its Subsidiaries is or may become bound to issue additional
capital stock of the Company or any of its Subsidiaries or options, warrants,
scrip, rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, or exercisable or
exchangeable for, any capital stock of the Company or any of its Subsidiaries,
and the participation right held by The Israel Land Development Company – Energy
Ltd. has been waived; (iii) there are no outstanding debt securities, notes,
credit agreements, credit facilities or other agreements, documents or
instruments evidencing Indebtedness of the Company or any of its Subsidiaries or
by which the Company or any of its Subsidiaries is or may become bound; (iv)
there are no financing statements securing obligations in any amounts filed in
connection with the Company or any of its Subsidiaries; (v) there are no
agreements or arrangements under which the Company or any of its Subsidiaries is
obligated to register the sale of any of their securities under the 1933 Act
(except pursuant to this Agreement); (vi) there are no outstanding securities or
instruments of the Company or any of its Subsidiaries which contain any
redemption or similar provisions, and there are no contracts, commitments,
understandings or arrangements by which the Company or any of its Subsidiaries
is or may become bound to redeem a security of the Company or any of its
Subsidiaries; (vii) except as disclosed in the SEC Documents, there are no
securities or instruments containing anti-dilution or similar provisions that
will be triggered by the issuance of the Securities; (viii) neither the Company
nor any Subsidiary has any stock appreciation rights or “phantom stock” plans or
agreements or any similar plan or agreement other than pursuant to the Company
Stock Plans; and (ix) neither the Company nor any of its Subsidiaries have any
liabilities or obligations required to be disclosed in the SEC Documents which
are not so disclosed in the SEC Documents, other than those incurred in the
ordinary course of the Company’s or its Subsidiaries’ respective businesses and
which, individually or in the aggregate, do not or could not have a Material
Adverse Effect. The SEC Documents contain true, correct and complete copies of
the Company’s Certificate of Incorporation, as amended and as in effect on the
date hereof (the “Articles of Incorporation”), and the Company’s bylaws, as
amended and as in effect on the date hereof (the “Bylaws”), and the terms of all
securities convertible into, or exercisable or exchangeable for, shares of
Common Stock and the material rights of the holders thereof in respect thereto.
 
(s)           Indebtedness and Other Contracts. Neither the Company nor any of
its Subsidiaries (i) except as disclosed in the SEC Documents, has any
outstanding Indebtedness, (ii) is a party to any contract, agreement or
instrument, the violation of which, or default under which, by the other party
or parties to such contract, agreement or instrument could reasonably be
expected to result in a Material Adverse Effect, (iii) is in violation of any
term of, or in default under, any contract, agreement or instrument relating to
any Indebtedness, except where such violations and defaults would not result,
individually or in the aggregate, in a Material Adverse Effect, or (iv) is a
party to any contract, agreement or instrument relating to any Indebtedness, the
performance of which, in the judgment of the Company’s officers, has or is
expected to have a Material Adverse Effect. For purposes of this Agreement: (x)
“Indebtedness” of any Person means, without duplication (A) all indebtedness for
borrowed money, (B) all obligations issued, undertaken or assumed as the
deferred purchase price of property or services (including, without limitation,
“capital leases” in accordance with generally accepted accounting principles)
(other than trade payables entered into in the ordinary course of business), (C)
all reimbursement or payment obligations with respect to letters of credit,
surety bonds and other similar instruments, (D) all obligations evidenced by
notes, bonds, debentures or similar instruments, including obligations so
evidenced incurred in connection with the acquisition of property, assets or
businesses, (E) all indebtedness created or arising under any conditional sale
or other title
 
 
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retention agreement, or incurred as financing, in either case with respect to
any property or assets acquired with the proceeds of such indebtedness (even
though the rights and remedies of the seller or bank under such agreement in the
event of default are limited to repossession or sale of such property), (F) all
monetary obligations under any leasing or similar arrangement which, in
connection with generally accepted accounting principles, consistently applied
for the periods covered thereby, is classified as a capital lease, (G) all
indebtedness referred to in clauses (A) through (F) above secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any mortgage, lien, pledge, charge, security
interest or other encumbrance upon or in any property or assets (including
accounts and contract rights) owned by any Person, even though the Person which
owns such assets or property has not assumed or become liable for the payment of
such indebtedness, and (H) all Contingent Obligations in respect of indebtedness
or obligations of others of the kinds referred to in clauses (A) through (G)
above; (y) “Contingent Obligation” means, as to any Person, any direct or
indirect liability, contingent or otherwise, of that Person with respect to any
indebtedness, lease, dividend or other obligation of another Person if the
primary purpose or intent of the Person incurring such liability, or the primary
effect thereof, is to provide assurance to the obligee of such liability that
such liability will be paid or discharged, or that any agreements relating
thereto will be complied with, or that the holders of such liability will be
protected (in whole or in part) against loss with respect thereto; and (z)
“Person” means an individual, a limited liability company, a partnership, a
joint venture, a corporation, a trust, an unincorporated organization, any other
entity and a government or any department or agency thereof.
 
(t)           Absence of Litigation. Except as disclosed in the SEC Documents,
there is no action, suit, proceeding, inquiry or investigation before or by
(other than, as to the NYSE MKT, the NYSE MKT Non-Compliance) any court, public
board, government agency, self-regulatory organization or body pending or, to
the knowledge of the Company, threatened against or affecting the Company or any
of its Subsidiaries, the Common Stock or any of the Company’s or its
Subsidiaries’ officers or directors which is outside of the ordinary course of
business or individually or in the aggregate material to the Company or any of
its Subsidiaries. There has not been, and to the knowledge of the Company, there
is not pending or contemplated, any investigation by the SEC involving the
Company, any of its Subsidiaries or any current of former director or officer of
the Company or any of its Subsidiaries. The SEC has not issued any stop order or
other order suspending the effectiveness of any registration statement filed by
the Company under the 1933 Act or the 1934 Act, including, without limitation,
the Registration Statement.
 
(u)           Insurance. The Company and each of its Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as management of the Company believes to be prudent and
customary in the businesses in which the Company and its Subsidiaries are
engaged. Neither the Company nor any such Subsidiary has been refused any
insurance coverage sought or applied for, and neither the Company nor any such
Subsidiary has any reason to believe that it will be unable to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not have a Material Adverse Effect.
 
(v)           Employee Relations.  Neither the Company nor any of its
Subsidiaries is a party to any collective bargaining agreement or employs any
member of a union. The Company
 
 
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believes that its and its Subsidiaries’ relations with their respective
employees are good.  Except for Sunil Karkera, to the extent any of the
following is material, no executive officer (as defined in Rule 501(f)
promulgated under the 1933 Act) or other key employee of the Company or any of
its Subsidiaries has notified the Company or any such Subsidiary that such
officer intends to leave the Company or any such Subsidiary or otherwise
terminate such officer’s employment with the Company or any such Subsidiary. No
executive officer or other key employee of the Company or any of its
Subsidiaries is, or is now expected to be, in violation of any material term of
any employment contract, confidentiality, disclosure or proprietary information
agreement, non-competition agreement, or any other contract or agreement or any
restrictive covenant, and the continued employment of each such executive
officer or other key employee (as the case may be) 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 respecting labor, employment and
employment practices and benefits, terms and conditions of employment and wages
and hours, except where failure to be in compliance would not, either
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect.
 
(w)           Title. The Company and its Subsidiaries have good and marketable
title in fee simple to all real property, and have good and marketable title to
all personal property, owned by them which is material to the business of the
Company and its Subsidiaries, in each case, free and clear of all liens,
encumbrances and defects except such as do not materially affect the value of
such property and do not interfere with the use made and proposed to be made of
such property by the Company and any of its Subsidiaries.  Any real property and
facilities held under lease by the Company or any of its Subsidiaries are held
by them under valid, subsisting and enforceable leases with such exceptions as
are not material and do not interfere with the use made and proposed to be made
of such property and buildings by the Company or any of its Subsidiaries.
 
(x)           Intellectual Property Rights. The Company and its Subsidiaries own
or possess adequate rights or licenses to use all trademarks, trade names,
service marks, service mark registrations, service names, patents, patent
rights, copyrights, original works, inventions, licenses, approvals,
governmental authorizations, trade secrets and other intellectual property
rights and all applications and registrations therefor (“Intellectual Property
Rights”) necessary to conduct their respective businesses as now conducted and
as presently proposed to be conducted.  None of the Company’s or its
Subsidiaries’ Intellectual Property Rights have expired, terminated or been
abandoned, or are expected to expire, terminate or be abandoned, within three
years from the date of this Agreement, except where the expiration, termination
or abandonment, either individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect.  The Company has no knowledge of any
infringement by the Company or any of its Subsidiaries of Intellectual Property
Rights of others.  There is no claim, action or proceeding being made or
brought, or to the knowledge of the Company or any of its Subsidiaries, being
threatened, against the Company or any of its Subsidiaries regarding their
Intellectual Property Rights.  The Company is not aware of any facts or
circumstances which might give rise to any of the foregoing infringements or
claims, actions or proceedings.  The Company and each of its Subsidiaries have
taken reasonable security measures to protect the secrecy, confidentiality and
value of all of their Intellectual Property Rights.
 
 
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(y)           Environmental Laws.  The Company and its Subsidiaries (i) are in
compliance with all Environmental Laws (as defined below), (ii) have received
all permits, licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (iii) are in
compliance with all terms and conditions of any such permit, license or approval
where, in each of the foregoing clauses (i), (ii) and (iii), the failure to so
comply could be reasonably expected to have, individually or in the aggregate, a
Material Adverse Effect.  The term “Environmental Laws” means all federal,
state, local or foreign laws of the applicable jurisdictions to which the
Company is subject relating to pollution or protection of human health or the
environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata), including, without limitation,
laws relating to emissions, discharges, releases or threatened releases of
chemicals, pollutants, contaminants, or toxic or hazardous substances or wastes
(collectively, “Hazardous Materials”) into the environment, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials, as well as all
authorizations, codes, decrees, demands or demand letters, injunctions,
judgments, licenses, notices or notice letters, orders, permits, plans or
regulations issued, entered, promulgated or approved thereunder.
 
(z)           Subsidiary Rights.  The Company or one of its Subsidiaries has the
unrestricted right to vote, and (subject to limitations imposed by applicable
law) to receive dividends and distributions on, all capital securities of its
Subsidiaries as owned by the Company or such Subsidiary.
 
(aa)           Tax Status.  The Company and each of its Subsidiaries (i) has
timely made or filed all foreign, federal and state income and all other tax
returns, reports and declarations required by any jurisdiction to which it is
subject, (ii) has paid all taxes and other governmental assessments and charges
that are material in amount, shown or determined to be due on such returns,
reports and declarations, except those being contested in good faith and (iii)
has set aside on its books provision reasonably adequate for the payment of all
taxes for periods subsequent to the periods to which such returns, reports or
declarations apply. There are no unpaid taxes in any material amount claimed to
be due by the taxing authority of any jurisdiction, and the officers of the
Company and its Subsidiaries know of no basis for any such claim.  The Company
is not operated in such a manner as to qualify as a passive foreign investment
company, as defined in Section 1297 of the U.S. Internal Revenue Code of 1986,
as amended.
 
(bb)           Internal Accounting and Disclosure Controls. The Company and each
of its Subsidiaries maintains internal control over financial reporting (as such
term is defined in Rule 13a-15(f) under the 1934 Act) that is effective to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles, including that (i) transactions
are executed in accordance with management’s general or specific authorizations,
(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain asset and liability accountability, (iii) access to assets or
incurrence of liabilities is permitted only in accordance with management’s
general or specific authorization and (iv) the recorded accountability for
assets and liabilities is compared with the existing assets and liabilities at
reasonable intervals and appropriate action is taken with respect to any
difference.  The Company maintains disclosure controls and procedures (as such
term is defined in Rule 13a-15(e) under the 1934 Act) that are effective in
ensuring that information required to be disclosed by the Company in the reports
that it files or submits under
 
 
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the 1934 Act is recorded, processed, summarized and reported, within the time
periods specified in the rules and forms of the SEC, including, without
limitation, controls and procedures designed to ensure that information required
to be disclosed by the Company in the reports that it files or submits under the
1934 Act is accumulated and communicated to the Company’s management, including
its principal executive officer or officers and its principal financial officer
or officers, as appropriate, to allow timely decisions regarding required
disclosure.  Neither the Company nor any of its Subsidiaries has received any
notice or correspondence from any accountant or other Person relating to any
potential material weakness or significant deficiency in any part of the
internal controls over financial reporting of the Company or any of its
Subsidiaries.
 
(cc)           Off Balance Sheet Arrangements.  There is no transaction,
arrangement, or other relationship between the Company or any of its
Subsidiaries and an unconsolidated or other off balance sheet entity that is
required to be disclosed by the Company in its 1934 Act filings and is not so
disclosed or that otherwise could be reasonably likely to have a Material
Adverse Effect.
 
(dd)           Investment Company Status.  The Company is not, and upon
consummation of the sale of the Securities will not be, an “investment company,”
an affiliate of an “investment company,” a company controlled by an “investment
company” or an “affiliated person” of, or “promoter” or “principal underwriter”
for, an “investment company” as such terms are defined in the Investment Company
Act of 1940, as amended.
 
(ee)           Acknowledgement Regarding Buyers’ Trading Activity.  It is
understood and acknowledged by the Company that following the public disclosure
of the transactions contemplated by the Transaction Documents, in accordance
with the terms thereof, except as set forth in Section 4(p)(ii) hereof, (i) none
of the Buyers have been asked by the Company or any of its Subsidiaries to
agree, nor has any Buyer agreed with the Company or any of its Subsidiaries, to
desist from effecting any transactions in or with respect to (including, without
limitation, purchasing or selling, long and/or short) any securities of the
Company, or “derivative” securities based on securities issued by the Company or
to hold the Securities for any specified term; (ii) any Buyer, and
counterparties in “derivative” transactions to which any such Buyer is a party,
directly or indirectly, presently may have a “short” position in the Common
Stock which was established prior to such Buyer’s knowledge of the transactions
contemplated by the Transaction Documents; and (iii) each Buyer shall not be
deemed to have any affiliation with or control over any arm’s length
counterparty in any “derivative” transaction. The Company further understands
and acknowledges that following the public disclosure of the transactions
contemplated by the Transaction Documents pursuant to the Press Release (as
defined below) one or more Buyers may engage, to the extent not prohibited by
Section 4(p)(ii) hereof, trading activities at various times during the period
that the Securities are outstanding, including, without limitation, during the
periods that the value and/or number of the Warrant Shares deliverable with
respect to the Securities are being determined or that such Warrants may be
measured for various provision related to exercisability and that trading
activities, if any, can have the effect of reducing the price of the Common
Stock and the applicability of certain rights of the Company under the Warrants
and/or the value of the existing stockholders’ equity interest in the Company
both at and after the time the trading activities are being conducted. The
Company acknowledges that such aforementioned trading activities, to the extent
not prohibited by Section 4(p)(ii) hereof, do not constitute a breach of this
Agreement or any other Transaction Document or any of the documents executed in
connection herewith or therewith.
 
 
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(ff)           Manipulation of Price.  Neither the Company nor any of its
Subsidiaries has, and, to the knowledge of the Company, no Person acting on
their behalf has, directly or indirectly, (i) taken any action designed to cause
or to result in the stabilization or manipulation of the price of any security
of the Company or any of its Subsidiaries to facilitate the sale or resale of
any of the Securities, (ii) sold, bid for, purchased, or paid any compensation
for soliciting purchases of, any of the Securities (other than the Placement
Agent), or (iii) paid or agreed to pay to any Person any compensation for
soliciting another to purchase any other securities of the Company or any of its
Subsidiaries.
 
(gg)           U.S. Real Property Holding Corporation.  Neither the Company nor
any of its Subsidiaries is, or has ever been, and so long as any of the
Securities are held by any of the Buyers, shall become, a U.S. real property
holding corporation within the meaning of Section 897 of the Internal Revenue
Code of 1986, as amended, and the Company and each Subsidiary shall so certify
upon any Buyer’s request.
 
(hh)           Registration Eligibility.  The Company is eligible to register
the issuance and sale of the Securities to the Buyers using Form S-3 promulgated
under the 1933 Act.
 
(ii)           Transfer Taxes.  On the Closing Date, all stock transfer or other
taxes (other than income or similar taxes) which are required to be paid in
connection with the issuance and sale of the Securities to be sold to each Buyer
hereunder will be, or will have been, fully paid or provided for by the Company,
and all laws imposing such taxes will be or will have been complied with.
 
(jj)           Bank Holding Company Act.  Neither the Company nor any of its
Subsidiaries is subject to the Bank Holding Company Act of 1956, as amended (the
“BHCA”) or to regulation by the Board of Governors of the Federal Reserve System
(the “Federal Reserve”).  Neither the Company nor any of its Subsidiaries or
Affiliates owns or controls, directly or indirectly, five percent (5%) or more
of the outstanding shares of any class of voting securities or twenty-five
percent (25%) or more of the total equity of a bank or any equity that is
subject to the BHCA or to regulation by the Federal Reserve.  Neither the
Company nor any of its Subsidiaries or Affiliates exercises a controlling
influence over the management or policies of a bank or any entity that is
subject to the BHCA or to regulation by the Federal Reserve.
 
(kk)           Registration Rights.  No holder of securities of the Company has
rights to the registration of any securities of the Company because of the
filing of the Registration Statement or the issuance of the Securities hereunder
that could expose the Company to material liability or any Buyer to any
liability or that could impair the Company’s ability to consummate the issuance
and sale of the Securities in the manner, and at the times, contemplated hereby,
which rights have not been waived by the holder thereof as of the date hereof.
 
(ll)           Public Utility Holding Act.  None of the Company nor any of its
Subsidiaries is a “holding company,” or an “Affiliate” of a “holding company,”
as such terms are defined in the Public Utility Holding Act of 2005.
 
(mm)        Federal Power Act.  None of the Company nor any of its Subsidiaries
is subject to regulation as a “public utility” under the Federal Power Act, as
amended.
 
 
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(nn)           Disclosure.  The Company confirms that neither it nor, to its
knowledge, any other Person acting on its behalf has provided any of the Buyers
or their agents or counsel with any information that constitutes or could
reasonably be expected to constitute material, non-public information concerning
the Company or any of its Subsidiaries, other than the existence of the
transactions contemplated by this Agreement and the other Transaction Documents.
The Company understands and confirms that each of the Buyers will rely on the
foregoing representations in effecting transactions in securities of the
Company.  All disclosure provided to the Buyers regarding the Company and its
Subsidiaries, their businesses and the transactions contemplated hereby,
including the schedules to this Agreement, furnished by or on behalf of the
Company or any of its Subsidiaries 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 the light of the circumstances
under which they were made, not misleading.  Each material press release issued
by the Company or any of its Subsidiaries during the twelve (12) months
preceding the date of this Agreement did not at the time of release contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they are made, not misleading.  No event
or circumstance has occurred or information exists with respect to the Company
or any of its Subsidiaries or its or their business, properties, liabilities,
prospects, operations (including results thereof) or conditions (financial or
otherwise), which, under applicable law, rule or regulation, requires public
disclosure at or before the date hereof or announcement by the Company but which
has not been so publicly disclosed.  The Company acknowledges and agrees that no
Buyer makes or has made any representations or warranties with respect to the
transactions contemplated hereby other than those specifically set forth in
Section 2.
 
4.
COVENANTS.

 
(a)           Maintenance of Registration Statement  For so long as any of the
Warrants remain outstanding, the Company shall use its reasonable best efforts
to maintain the effectiveness of the Registration Statement for the issuance
thereunder of the Warrant Shares, provided that, if at any time while the
Warrants are outstanding the Company shall be ineligible to utilize Form S-3 (or
any successor form) for the purpose of issuance of the Warrant Shares, the
Company shall promptly amend the Registration Statement on such other form as
may be necessary to maintain the effectiveness of the Registration Statement for
this purpose.  If at any time following the date hereof the Registration
Statement is not effective or is not otherwise available for the issuance of the
Securities or any prospectus contained therein is not available for use, the
Company shall immediately notify the holders of the Securities in writing that
the Registration Statement is not then effective or a prospectus contained
therein is not available for use and thereafter shall promptly notify such
holders when the Registration Statement is effective again and available for the
issuance of the Securities or such prospectus is again available for use.
 
(b)           Prospectus Supplement and Blue Sky.  Immediately prior to
execution of this Agreement, the Company shall have delivered, and as soon as
practicable after execution of this Agreement the Company shall file, the
Prospectus Supplement with respect to the Securities as required under, and in
conformity with, the 1933 Act, including Rule 424(b) thereunder.  The Company
shall have taken immediately upon execution of this Agreement such action, if
any, as required in order to obtain an exemption for, or to, qualify the
Securities for sale to the Buyers at the Closing pursuant to this Agreement
under applicable securities or “Blue Sky” laws of the
 
 
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states of the United States (or to obtain an exemption from such qualification),
and shall provide evidence of any such action so taken to the Buyers on or prior
to the Closing Date. Without limiting any other obligation of the Company under
this Agreement, the Company shall timely make all filings and reports relating
to the offer and sale of the Securities required under all applicable securities
laws (including, without limitation, all applicable federal securities laws and
all applicable “Blue Sky” laws), and the Company shall comply with all
applicable federal, state and local laws, statutes, rules, regulations and the
like relating to the offering and sale of the Securities to the Buyers.  The
Company shall take all necessary action to ensure the compliance with all
applicable securities laws (including without limitation “Blue Sky” laws) of the
issuance of any Warrant Shares from time to time upon exercise of the Warrants.
 
(c)           Reporting Status.  Until the date on which no Warrants are
outstanding (the “Reporting Period”), the Company shall timely file all reports
required to be filed with the SEC pursuant to the 1934 Act, and the Company
shall not terminate its status as an issuer required to file reports under the
1934 Act even if the 1934 Act or the rules and regulations thereunder would no
longer require or otherwise permit such termination.
 
(d)           [Intentionally Omitted].
 
(e)           Financial Information.  The Company agrees to send the following
to each Buyer during the Reporting Period (i) unless the following are filed
with the SEC through EDGAR and are available to the public through the EDGAR
system, within one (1) Business Day after the filing thereof with the SEC, a
copy of its Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q, any
interim reports or any consolidated balance sheets, income statements,
stockholders’ equity statements and/or cash flow statements for any period other
than annual, any Current Reports on Form 8-K and any registration statements
(other than on Form S-8) or amendments filed pursuant to the 1933 Act, (ii) on
the same day as the release thereof, facsimile copies of all press releases
issued by the Company or any of its Subsidiaries and (iii) copies of any notices
and other information made available or given to the stockholders of the Company
generally, contemporaneously with the making available or giving thereof to the
stockholders.
 
(f)           Listing.  The Company has secured the listing of all of the Common
Shares and Warrant Shares (subject to notice of issuance) on the NYSE MKT in
connection with the transactions contemplated hereby and by the Warrants.  In
addition, the Company shall secure the listing or designation for quotation (as
the case may be) of all of the Common Shares and Warrant Shares upon each other
national securities exchange and automated quotation system, if any, upon which
the Common Stock is from time to time listed or designated for quotation (as the
case may be) (subject to official notice of issuance). The Company shall
maintain the Common Stock’s listing or designation for quotation (as the case
may be) on the OTC Bulletin Board, the NYSE MKT, The New York Stock Exchange,
the Nasdaq Capital Market or the Nasdaq Global Select Market (each, an “Eligible
Market”). The Company and its Subsidiaries shall use reasonable efforts to
resolve the NYSE MKT Non-Compliance. The Company shall pay all fees and expenses
in connection with satisfying its obligations under this Section 4(f).
 
(g)           Fees.  Prior to the date hereof, the Company has paid, for the
benefit of Crede CG II, Ltd.  (“Crede”), a non-refundable, non-accountable
document preparation fee in the amount of $30,000 (the “Document Preparation
Fee”).  In addition, by virtue of the execution of this Agreement by Crede, the
Company shall be obligated pay to Crede an additional amount equal to
 
 
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$101,631.30 as an investment fee (the “Investment Fee”) hereunder, which shall
be paid by the Company to Crede at the Closing by Crede withholding such amount
from the Purchase Price to be paid by it at the Closing.  In the event of the
termination of this Agreement, so long as such termination did not occur as a
result of a material breach by Crede of any of its obligations hereunder or
pursuant to Section 7(b), then the foregoing amounts shall be payable in cash by
the Company to Crede immediately following such termination.  Except as set
forth above, or as may otherwise be set forth in this Agreement or the other
Transaction Documents, each party to this Agreement shall bear its own expenses
in connection with the sale of the Securities to the Buyers.
 
(h)           Pledge of Securities.  Notwithstanding anything to the contrary
contained in this Agreement, the Company acknowledges and agrees that the
Securities may be pledged by a Buyer in connection with a bona fide margin
agreement or other loan or financing arrangement that is secured by the
Securities.  The pledge of Securities shall not be deemed to be a transfer, sale
or assignment of the Securities hereunder, and no Buyer effecting a pledge of
Securities shall be required to provide the Company with any notice thereof or
otherwise make any delivery to the Company pursuant to this Agreement or any
other Transaction Document.  The Company hereby agrees to execute and deliver
such documentation as a pledgee of the Securities may reasonably request in
connection with a pledge of the Securities to such pledgee by a Buyer.
 
(i)           Disclosure of Transactions and Other Material Information. The
Company shall, on or before 9:30 a.m. (but in no event prior to 9:15 a.m.), New
York time, on the first (1st) Trading Day after the date hereof, issue a press
release (the “Press Release”) reasonably acceptable to the Buyers disclosing all
the material terms of the transactions contemplated by the Transaction
Documents.  On or before 9:30 a.m. (but in no event prior to 9:15 a.m.), New
York time, on the first (1st) Trading Day after the date hereof, the Company
shall file a Current Report on Form 8-K describing all the material terms of the
transactions contemplated by the Transaction Documents in the form required by
the 1934 Act and attaching all the material Transaction Documents (including,
without limitation, this Agreement (and all schedules to this Agreement) and the
form of Warrants) (including all attachments, the “8-K Filing”).  From and after
the issuance of the Press Release, the Company shall have disclosed all
material, non-public information (if any) delivered to any of the Buyers by the
Company or any of its Subsidiaries, or any of their respective officers,
directors, employees or agents in connection with the transactions contemplated
by the Transaction Documents.  The Company shall not, and the Company shall
cause each of its Subsidiaries and each of its and their respective officers,
directors, employees and agents, not to, provide any Buyer with any material,
non-public information regarding the Company or any of its Subsidiaries from and
after the issuance of the Press Release without the express prior written
consent of such Buyer.  In the event of a breach of any of the foregoing
covenants or any of the covenants contained in Section 4(n) by the Company, any
of its Subsidiaries, or any of its or their respective officers, directors,
employees and agents (as determined in the reasonable good faith judgment of
such Buyer), in addition to any other remedy provided herein or in the
Transaction Documents, such Buyer shall have the right to make a public
disclosure, in the form of a press release, public advertisement or otherwise,
of such material, non-public information without the prior approval by the
Company, any of its Subsidiaries, or any of its or their respective officers,
directors, employees or agents.  No Buyer shall have any liability to the
Company, any of its Subsidiaries, or any of its or their
 
 
 
 
 
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respective officers, directors, employees, stockholders or agents, for any such
disclosure.  Subject to the foregoing, neither the Company, its Subsidiaries nor
any Buyer shall issue any press releases or any other public statements with
respect to the transactions contemplated hereby; provided, however, the Company
shall be entitled, without the prior approval of any Buyer, to make any press
release or other public disclosure with respect to such transactions (i) in
substantial conformity with the 8-K Filing and contemporaneously therewith and
(ii) as is required by applicable law and regulations (provided that in the case
of clause (i) each Buyer shall be consulted by the Company in connection with
any such press release or other public disclosure prior to its release). Unless
required by regulatory authority or in response to any subpoena, court order or
similar legal demand of any governmental entity to whose authority it is
subject, including, but not limited to, the filing of documents with the SEC as
required by the rules and regulations of the SEC, without the prior written
consent of the applicable Buyer, the Company shall not (and shall cause each of
its Subsidiaries and Affiliates to not) disclose the name of such Buyer in any
announcement, release or otherwise.
 
(j)           Additional Issuance of Securities.  The Company agrees that for
the period commencing on the date hereof and ending on the date immediately
following the ninetieth (90th) day anniversary of the date hereof (provided that
such period shall be extended by the number of days during such period and any
extension thereof contemplated by this proviso on which the Registration
Statement is not effective or any prospectus contained therein is not available
for use) (the “Restricted Period”), neither the Company nor any of its
Subsidiaries shall directly or indirectly issue, offer, sell, grant any option
or right to purchase, or otherwise dispose of (or announce any issuance, offer,
sale, grant of any option or right to purchase or other disposition of) any
Common Stock or any security or any debt or other instrument convertible or
exchangeable or exercisable into Common Stock or which constitutes (or would
constitute but for lack of a fixed exercise or conversion or similar price or if
it were not solely cash settled) a “derivative security” (as defined under the
rules and regulations under Section 16 of the 1934 Act) or otherwise an
equity-linked or related security (including, without limitation, any “equity
security” (as that term is defined under Rule 405 promulgated under the 1933
Act) or which does or would otherwise constitute any Option or Convertible
Security (as defined in the Warrants) (any such issuance, offer, sale, grant,
disposition or announcement (whether occurring during the Restricted Period or
at any time thereafter) is referred to as a “Subsequent Placement”).
Notwithstanding the foregoing, the immediately preceding sentence in this
Section 4(j) shall not apply in respect of the issuance of (A) shares of Common
Stock or standard options to purchase Common Stock or other standard equity
linked securities (e.g., stock appreciation rights) to directors, officers or
employees of the Company in their capacity as such pursuant to an Approved Share
Plan (as defined below), provided that (1) all such issuances (taking into
account the shares of Common Stock issuable upon exercise of such options) after
the date hereof pursuant to this clause (A) do not, in the aggregate, exceed
more than 2% of the shares of Common Stock and (2) the exercise price of any
such options is not lowered, none of such options are amended to increase the
number of shares issuable thereunder and none of the terms or conditions of any
such options are otherwise materially changed in any manner that adversely
affects any of the Buyers; (B) shares of Common Stock issued upon the conversion
or exercise of Convertible Securities (other than standard options to purchase
Common Stock issued pursuant to an Approved Share Plan that are covered by
clause (A) above) issued prior to the date hereof, provided that the conversion
price of any such Convertible Securities (other than standard options to
purchase Common Stock issued pursuant to an Approved Share Plan that are covered
by clause (A) above) is not lowered beyond the price determined by the
anti-dilution provision in
 
 
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such outstanding Convertible Security and none of such Convertible Securities
(other than standard options to purchase Common Stock issued pursuant to an
Approved Share Plan that are covered by clause (A) above) are otherwise
materially changed in any manner that adversely affects any of the Buyers; (C)
the Warrants; (D) the Warrant Shares; (E) issuances of equity to a seller, or in
the case of a merger, the shareholders of the target company in such merger, or
the officers or employees thereof, in each case in connection with a bona fide
merger, business combination transaction or acquisition of stock or assets
outside of the ordinary course; or (F) a stock split or other subdivision or
combination, or a stock dividend made to all holders of any Company equity on a
pro rata basis (each of the foregoing in clauses (A) through (F), collectively
the “Excluded Securities”). “Approved Share Plan” means any employee benefit
plan which has been approved by the board of directors of the Company prior to
or subsequent to the date hereof pursuant to which shares of Common Stock and
standard options to purchase Common Stock may be issued to any employee, officer
or director for services provided to the Company in their capacity as such.
 
(k)           Reservation of Shares.  So long as any of the Warrants remain
outstanding, the Company shall take all action necessary to at all times have
authorized, and reserved for the purpose of issuance, the maximum number of
shares of Common Stock issuable upon exercise of all the Warrants (without
regard to any limitations on the exercise of the Warrants set forth therein).
 
(l)           Conduct of Business.  The business of the Company and its
Subsidiaries shall not be conducted in violation of any law, ordinance or
regulation of any governmental entity in any jurisdiction to which the Company
is subject, except where such violations would not result, either individually
or in the aggregate, in a Material Adverse Effect.
 
(m)           Variable Rate Transaction.  Until none of the Warrants are
outstanding, the Company and each Subsidiary shall be prohibited from effecting,
or entering into an agreement to effect, any Subsequent Placement involving a
Variable Rate Transaction.  “Variable Rate Transaction” means a transaction in
which the Company or any Subsidiary (i) issues or sells any Convertible
Securities either (A) at a conversion, exercise or exchange rate or other price
that is based upon and/or varies with the trading prices of, or quotations for,
the shares of Common Stock at any time after the initial issuance of such
Convertible Securities, or (B) with a conversion, exercise or exchange price
that is subject to being reset at some future date after the initial issuance of
such Convertible Securities or upon the occurrence of specified or contingent
events directly or indirectly related to the business of the Company or the
market for the Common Stock, other than pursuant to a customary “weighted
average” anti-dilution provision or (ii) enters into any agreement (including,
without limitation, an equity line of credit) whereby the Company or any
Subsidiary may sell securities at a future determined price (other than standard
and customary “preemptive” or “participation” rights).  Each Buyer shall be
entitled to obtain injunctive relief against the Company and its Subsidiaries to
preclude any such issuance, which remedy shall be in addition to any right to
collect damages.
 
(n)           Participation Right.  From the date hereof until the six-month
anniversary of the Closing Date, neither the Company nor any of its Subsidiaries
shall, directly or indirectly, effect any Subsequent Placement unless the
Company shall have first complied with this Section 4(n).  The Company
acknowledges and agrees that the right set forth in this Section 4(n) is a right
 
 
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granted by the Company, separately, to each Buyer.  The restrictions contained
in this Section 4(n) shall not apply in connection with the issuance of any
Excluded Securities.
 
(i)           The Company shall deliver to such Buyer, via facsimile or via
e-mail to the e-mail address provided in writing by such Buyer to the Company, a
written notice of its proposal or intention to effect a Subsequent Placement
(each such notice, a “Pre-Notice”), which Pre-Notice shall not contain any
information (including, without limitation, material, non-public information)
other than: (i) a statement that the Company proposes or intends to effect a
Subsequent Placement, (ii) a statement that the statement in clause (i) above
does not constitute material, non-public information and (iii) a statement
informing such Buyer that it is entitled to receive an Offer Notice (as defined
below) with respect to such Subsequent Placement upon its written request.  Upon
the written request of a Buyer within two (2) Business Days after the Company’s
delivery to such Buyer of such Pre-Notice, and only upon a written request by
such Buyer, the Company shall promptly, but no later than one (1) Business Day
after such request, deliver to such Buyer an irrevocable written notice (the
“Offer Notice”) of any proposed or intended issuance or sale or exchange (the
“Offer”) of the securities being offered (the “Offered Securities”) in a
Subsequent Placement, which Offer Notice shall (w) identify and describe the
Offered Securities, (x) describe the price and other terms upon which they are
to be issued, sold or exchanged, and the number or amount of the Offered
Securities to be issued, sold or exchanged, (y) identify the Persons (if known)
to which or with which the Offered Securities are to be offered, issued, sold or
exchanged and (z) offer to issue and sell to or exchange with such Buyer in
accordance with the terms of the Offer 100% of the Offered Securities, provided
that the number of Offered Securities which such Buyer shall have the right to
subscribe for under this Section 4(n) shall be (a) based on such Buyer’s pro
rata portion of the aggregate number of Common Shares purchased hereunder by all
Buyers (the “Basic Amount”), and (b) with respect to each Buyer that elects to
purchase its Basic Amount, any additional portion of the Offered Securities
attributable to the Basic Amounts of other Buyers as such Buyer shall indicate
it will purchase or acquire should the other Buyers subscribe for less than
their Basic Amounts (the “Undersubscription Amount”).

(ii)           To accept an Offer, in whole or in part, such Buyer must deliver
a written notice to the Company on or prior to the second (2nd) Business Day
following the receipt of such Offer Notice by Buyer (the “Offer Period”),
setting forth the portion of such Buyer’s Basic Amount that such Buyer elects to
purchase and, if such Buyer shall elect to purchase all of its Basic Amount, the
Undersubscription Amount, if any, that such Buyer elects to purchase (in either
case, the “Notice of Acceptance”).  If the Basic Amounts subscribed for by all
Buyers are less than the total of all of the Basic Amounts, then such Buyer who
has set forth an Undersubscription Amount in its Notice of Acceptance shall be
entitled to purchase, in addition to the Basic Amounts subscribed for, the
Undersubscription Amount it has subscribed for; provided, however, if the
Undersubscription Amounts subscribed for exceed the difference between the total
of all the Basic Amounts and the Basic Amounts subscribed for (the “Available
Undersubscription Amount”), such Buyer who has subscribed for any
Undersubscription Amount shall be entitled to purchase only that portion of the
Available Undersubscription Amount as the Basic Amount of such Buyer bears to
the total Basic Amounts of all Buyers that have subscribed for Undersubscription
Amounts, subject to
 
 
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rounding by the Company to the extent it deems reasonably necessary.
Notwithstanding the foregoing, if the Company desires to modify or amend the
terms and conditions of the Offer prior to the expiration of the Offer Period,
the Company shall deliver to each Buyer a new Offer Notice subject hereto.

(iii)           The Company shall have three (3) days from the expiration of the
Offer Period above (i) to offer, issue, sell or exchange all or any part of such
Offered Securities as to which a Notice of Acceptance has not been given by a
Buyer (the “Refused Securities”) pursuant to a definitive agreement(s) (the
“Subsequent Placement Agreement”), but only to the offerees described in the
Offer Notice (if so described therein) and only upon terms and conditions
(including, without limitation, unit prices and interest rates) that are not
more favorable to the acquiring Person or Persons or less favorable to the
Company than those set forth in the Offer Notice and (ii) to publicly announce
(a) the execution of such Subsequent Placement Agreement, and (b) either (x) the
consummation of the transactions contemplated by such Subsequent Placement
Agreement or (y) the termination of such Subsequent Placement Agreement, which
shall be filed with the SEC on a Current Report on Form 8-K with such Subsequent
Placement Agreement and any documents contemplated therein filed as exhibits
thereto.

(iv)           In the event the Company shall propose to sell less than all the
Refused Securities (any such sale to be in the manner and on the terms specified
in Section 4(n)(iii) above), then such Buyer may, at its sole option and in its
sole discretion, reduce the number or amount of the Offered Securities specified
in its Notice of Acceptance to an amount that shall be not less than the number
or amount of the Offered Securities that such Buyer elected to purchase pursuant
to Section 4(n)(ii) above multiplied by a fraction, (i) the numerator of which
shall be the number or amount of Offered Securities the Company actually
proposes to issue, sell or exchange (including Offered Securities to be issued
or sold to Buyers pursuant to this Section 4(n) prior to such reduction) and
(ii) the denominator of which shall be the original amount of the Offered
Securities.  In the event that any Buyer so elects to reduce the number or
amount of Offered Securities specified in its Notice of Acceptance, the Company
may not issue, sell or exchange more than the reduced number or amount of the
Offered Securities unless and until such securities have again been offered to
the Buyers in accordance with Section 4(n)(i) above.

(v)           Upon the closing of the issuance, sale or exchange of all or less
than all of the Refused Securities, such Buyer shall acquire from the Company,
and the Company shall issue to such Buyer, the number or amount of Offered
Securities specified in its Notice of Acceptance.  The purchase by such Buyer of
any Offered Securities is subject in all cases to the preparation, execution and
delivery by the Company and such Buyer of a separate purchase agreement relating
to such Offered Securities reasonably satisfactory in form and substance to such
Buyer and its counsel.

(vi)           Any Offered Securities not acquired by a Buyer or other Persons
in accordance with this Section 4(n) may not be issued, sold or exchanged until
they are again offered to such Buyer under the procedures specified in this
Agreement.
 
 
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(vii)           The Company and each Buyer agree that if any Buyer elects to
participate in the Offer, neither the Subsequent Placement Agreement with
respect to such Offer nor any other transaction documents related thereto
(collectively, the “Subsequent Placement Documents”) shall include any term or
provision whereby such Buyer shall be required to agree to any restrictions on
trading as to any securities of the Company or be required to consent to any
amendment to or termination of, or grant any waiver, release or the like under
or in connection with, any agreement previously entered into with the Company or
any instrument received from the Company.

(viii)           Notwithstanding anything to the contrary in this Section 4(n)
and unless otherwise agreed to by such Buyer, the Company shall either confirm
in writing to such Buyer that the transaction with respect to the Subsequent
Placement has been abandoned or shall publicly disclose its intention to issue
the Offered Securities, in either case in such a manner such that such Buyer
will not be in possession of any material, non-public information, by the third
(3rd) day following delivery of the Offer Notice.  If by such third (3rd) day,
no public disclosure regarding a transaction with respect to the Offered
Securities has been made, and no notice regarding the abandonment of such
transaction has been received by such Buyer, such transaction shall be deemed to
have been abandoned and such Buyer shall not be in possession of any material,
non-public information with respect to the Company or any of its
Subsidiaries.  Should the Company decide to pursue such transaction with respect
to the Offered Securities, the Company shall provide such Buyer with another
Offer Notice in accordance with, and subject to, the terms of this Section 4(n)
and such Buyer will again have the right of participation set forth in this
Section 4(n).  The Company shall not be permitted to deliver more than two Offer
Notices to such Buyer in any sixty (60) day period, except as expressly
contemplated by the last sentence of Section 4(n)(ii).
 
(ix)           The Company shall not circumvent the provisions of this Section
4(n) by providing terms or conditions to one Buyer that are not provided to
all.  Notwithstanding anything to the contrary contained herein, no Buyer shall
have the right to participate in an Offer Notice or acquire any securities
subject thereto to the extent that to do so would result in such Buyer
beneficially owning (as defined in Section 13(d) under the 1934 Act and the
rules and regulations thereunder) more than 9.9% of the Common Stock.
 
(o)           Passive Foreign Investment Company.  The Company shall conduct its
business in such a manner as will ensure that the Company will not be deemed to
constitute a passive foreign investment company within the meaning of Section
1297 of the U.S. Internal Revenue Code of 1986, as amended.
 
(p)           Certain Restrictions as to Buyer.
 
(i)           For so long as the Buyer or any of its Affiliates holds any
Securities, neither the Buyer nor any Affiliate will:  (i) vote any shares of
Common Stock beneficially owned by it, solicit any proxies, or seek to advise or
influence any Person with respect to any voting securities of the Company; (ii)
engage or participate in any actions, plans or proposals which relate to or
would result in (a) acquiring additional securities of the Company, alone or
together with any other Person, which would result in Buyer or its Affiliates
beneficially owning (within the meaning of Section 13(d) under the 1934 Act)
more than 9.9% of the Common Stock,
 
 
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(b) an extraordinary corporate transaction, such as a merger, reorganization or
liquidation, involving Company or any of its Subsidiaries, (c) a sale or
transfer of a material amount of assets of the Company or any of its
Subsidiaries, (d) any change in the present board of directors or management of
the Company, including any plans or proposals to change the number or term of
directors or to fill any existing vacancies on the board, (e) any material
change in the present capitalization or dividend policy of the Company, (f) any
other material change in the Company’s business or corporate structure,
including but not limited to, if the Company is a registered closed-end
investment company, any plans or proposals to make any changes in its investment
policy for which a vote is required by Section 13 of the Investment Company Act
of 1940, (g) changes in the Company’s charter, bylaws or instruments
corresponding thereto or other actions which may impede the acquisition of
control of the Company by any Person, (h) causing a class of securities of the
Company to be delisted from a national securities exchange or to cease to be
authorized to be quoted in an inter-dealer quotation system of a registered
national securities association, (i) a class of equity securities of the Company
becoming eligible for termination of registration pursuant  to Section 12(g)(4)
of the Act, or (j) any action, intention, plan or arrangement similar to any of
those enumerated above; or (iii) request the Company or its directors, officers,
employees, agents or representatives to amend or waive any provision of this
paragraph.  The restrictions contained in this paragraph (i) shall not limit
Buyer’s rights to enforce its rights or exercise its rights as to the Securities
or under the Transaction Documents.
 
(ii)           Provided that the Company is in compliance with its obligations
under this Agreement and the other Transaction Documents, each Buyer covenants
and agrees that during the period beginning on the date hereof and ending on the
Trading Day immediately following the date on which Buyer no longer owns any
Common Stock, neither Buyer nor any of its Affiliates nor any entity managed or
controlled by each such Buyer will, directly or indirectly, or cause or assist
any Person to (x) enter into or execute any “short sale” (as such term is
defined in Rule 200 of Regulation SHO, or any successor regulation, promulgated
by the SEC under the Exchange Act) of the Common Stock or (y)  trade in
derivative securities to the same effect; provided, however, that this Section
4(p)(ii) shall not restrict or limit Buyer or such Affiliate or entity from
effectuating “short sale” transactions of a number of shares of Common Stock in
anticipation of the exercise and/or exchange of the Warrant for an equivalent
number of Warrant Shares (it being understood and agreed that effectuating
“short sales” during a Trading Day of shares of Common Stock shall be deemed to
be made in anticipation of the exercise and/or exchange of the Warrant for an
equivalent number of Warrant Shares so long as exercises and/or exchanges for
such aggregate number of Warrant Shares are made within three Trading Days after
such “short sale”).
 
5.
REGISTER; TRANSFER AGENT INSTRUCTIONS; LEGEND.

 
(a)           Register.  The Company shall maintain at its principal executive
offices (or such other office or agency of the Company as it may designate by
notice to each holder of Securities), a register for the Common Shares and the
Warrants in which the Company shall record the name and address of the Person in
whose name the Common Shares and the Warrants have been issued (including the
name and address of each transferee), the number of Common Shares held by such
Person and the number of Warrant Shares issuable upon exercise of the Warrants
held by such Person. The Company shall keep the register open and available at
all times during business hours for inspection of any Buyer or its legal
representatives.
 
 
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(b)           Transfer Agent Instructions.  The Company shall issue irrevocable
instructions to the Transfer Agent in the form previously provided to the
Company (the “Irrevocable Transfer Agent Instructions”) to issue certificates or
credit shares to the applicable balance accounts at DTC, without restriction and
registered in the name of each Buyer or its respective nominee(s), for the
Common Shares and the Warrant Shares in such amounts as specified from time to
time by each Buyer to the Company upon delivery of the Common Shares or the
exercise of the Warrants (as the case may be). The Company represents and
warrants that no instruction other than the Irrevocable Transfer Agent
Instructions referred to in this Section 5(b) will be given by the Company to
the Transfer Agent with respect to the Securities, and that the Securities shall
otherwise be freely transferable on the books and records of the Company. If a
Buyer effects a sale, assignment or transfer of the Securities, the Company
shall permit the transfer and shall promptly instruct the Transfer Agent to
issue one or more certificates or credit shares to the applicable balance
accounts at DTC in such name and in such denominations as specified by such
Buyer to effect such sale, transfer or assignment. The Company acknowledges that
a breach by it of its obligations hereunder will cause irreparable harm to each
Buyer. Accordingly, the Company acknowledges that the remedy at law for a breach
of its obligations under this Section 5(b) will be inadequate and agrees, in the
event of a breach or threatened breach by the Company of the provisions of this
Section 5(b), that each Buyer shall be entitled, in addition to all other
available remedies, to an order and/or injunction restraining any breach and
requiring immediate issuance and transfer, without the necessity of showing
economic loss and without any bond or other security being required.
 
(c)           Certificates and any other instruments evidencing the Securities
shall not bear any restrictive or other legend.
 
6.
ADDITIONAL CLOSING DELIVERIES OF THE COMPANY.

 
At the Closing, in addition to its other deliveries required under this
Agreement, the Company shall deliver the following:
 
(i)           The opinion of Paul, Weiss, Rifkind, Wharton & Garrison LLP, the
Company’s counsel, dated as of the Closing Date, in the form substantially
similar to that provided in Exhibit B hereto;
 
(ii)           A copy of the Irrevocable Transfer Agent Instructions, in the
form provided in Exhibit C hereto, and which have been delivered to and
acknowledged in writing by the Transfer Agent;
 
(iii)           A certificate evidencing the formation and good standing of the
Company in the Company’s jurisdiction of formation issued by the Secretary of
State (or comparable office) of such jurisdiction of formation as of a date
within ten (10) days of the Closing Date;
 
(iv)           A certified copy of the Articles of Incorporation within ten (10)
days of the Closing Date;
 
(v)           A certificate executed by the Secretary of the Company on behalf
of the company, and not in his or her personal capacity, and dated as of the
Closing Date, as to (i) the resolutions consistent with Section 3(b) as adopted
by the Company’s board of
 
 
27

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directors and as necessary or appropriate with respect to the issuance of the
Securities and the approval of this Agreement and the other Transaction
Documents and the terms and conditions hereof and thereof and otherwise in order
to give effect hereto and thereto, (ii) the Articles of Incorporation and (iii)
the Bylaws, each as in effect at the Closing.
 
(vi)           A letter from the Transfer Agent certifying the number of shares
of Common Stock outstanding on the Closing Date immediately prior to the
Closing.
 
(vii)          A certificate executed by the Chief Executive Officer of the
Company, dated as of the Closing Date, stating on behalf of the company, and not
in his or her personal capacity, that as of the Closing (i) each and every
representation and warranty of the Company herein is true and correct in all
material respects as of the date when made and as of the Closing as though
originally made at that time, and (ii) that the Company has performed, satisfied
and complied in all respects with the covenants, agreements and conditions
required to be performed, satisfied or complied with by the Company at or
prior  Closing.
 
(viii)         Such other documents, instruments or certificates relating to the
transactions contemplated by this Agreement as necessary or appropriate to
accomplish the purposes or intents of the issuance of the Securities, and the
consummation of the transactions contemplated by this Agreement and the other
Transaction Documents.
 
7.
DAMAGES IN CERTAIN CIRCUMSTANCE AND CERTAIN RELATED MATTERS; CONDITION TO
CLOSING.

 
(a)           In the event that the Company shall fail to consummate the Closing
as called for by Section 1(b) hereof, for any reason (other than material breach
by Buyer hereunder or failure to obtain NYSE MKT Approval (as defined below), as
per Section 7(b)), the Company shall indemnify and hold harmless such Buyer from
any and all costs, expenses, damages, losses and otherwise, with respect to the
failure of the Company to effectuate the Closing and the transactions
contemplated hereby.  Without limiting the foregoing, in such event, such Buyer
shall have the right to terminate its obligations under this Agreement with
respect to itself at any time on or after such failure by the Company, without
liability of such Buyer to the Company or any other Person.  No such failure or
termination of obligations of Buyer shall affect any obligation of the Company
under this Agreement to reimburse such Buyer for the expenses otherwise called
for by this Agreement.  Nothing contained in this Section shall be deemed to
release any party from any liability for any breach by such party of the terms
and provisions of this Agreement or the other Transaction Documents or to impair
the right of any party to compel specific performance by any other party of its
obligations under this Agreement or the other Transaction Documents.

(b)           Notwithstanding Section 7(a) or any other provisions of this
Agreement, the obligation of the Company to consummate the Closing as called for
by Section 1(b), is subject to approval of the Transaction Documents and the
transactions contemplated thereby by the Listing and Compliance Committee of the
NYSE MKT by close of business on Friday, December 21, 2012 (“NYSE MKT
Approval”). The Company shall use its reasonable best efforts to obtain such
NYSE MKT Approval. Failure to obtain NYSE MKT Approval by such time shall result
in the immediate termination of this Agreement and each other Transaction
Document and shall
 
 
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release the Company and each Buyer of their respective obligations thereunder
without liability to the other party or any other Person; provided, however,
that the Company shall, notwithstanding the foregoing, remain obligated to pay
the Document Preparation Fee.

8.
MISCELLANEOUS.

 
(a)           Governing Law; Jurisdiction; Jury Trial.  All questions concerning
the construction, validity, enforcement and interpretation of this Agreement
shall be governed by the internal laws of the State of New York, without giving
effect to any choice of law or conflict of law provision or rule (whether of the
State of New York or any other jurisdictions) that would cause the application
of the laws of any jurisdictions other than the State 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, 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 brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper.  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 to such
party at the address for such 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 (i) limit or be deemed to limit in any
way any right to serve process in any manner permitted by law, or (ii) operate,
or be deemed to operate, to preclude any Buyer or the Company from bringing suit
or taking other legal action against the Company or any Buyer in any other
jurisdiction to collect on the Company’s obligations to such Buyer or a Buyer’s
obligations to the Company or to enforce a judgment or other court ruling in
favor of such Buyer or the Company, or (iii) limit, or be deemed to limit, any
provision of the Warrants which is contrary to the above. EACH PARTY HEREBY
IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY
TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR
ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
 
(b)           Counterparts.  This Agreement may be executed in two or more
identical counterparts, all of which 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.  In the event that any signature is
delivered by facsimile transmission or by an e-mail which contains a portable
document format (.pdf) file of an executed signature page, such signature page
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
signature page were an original thereof.
 
(c)           Headings; Gender; Certain Meanings.  The headings of this
Agreement are for convenience of reference and shall not form part of, or affect
the interpretation of, this Agreement.  Unless the context clearly indicates
otherwise, each pronoun herein shall be deemed to include the masculine,
feminine, neuter, singular and plural forms thereof.  The terms “including,”
“includes,” “include” and words of like import shall be construed broadly as if
followed by the words “without limitation.”  The terms “herein,” “hereunder,”
“hereof” and words of like import refer to this entire Agreement instead of just
the provision in which they are
 
 
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found.  When used herein, the words “law,” “rule,” “regulation” and the like
means all applicable laws, rules and regulations, domestic or foreign, state,
provincial, local or self-regulatory, including without limitation as to all
applicable laws, rules and regulations of or related to the United States,
applicable states, the SEC, and the NYSE MKT.
 
(d)           Severability.  If any provision of this Agreement is prohibited by
law or otherwise determined to be invalid or unenforceable by a court of
competent jurisdiction, the provision that would otherwise be prohibited,
invalid or unenforceable shall be deemed amended to apply to the broadest extent
that it would be valid and enforceable, and the invalidity or unenforceability
of such provision shall not affect the validity of the remaining provisions of
this Agreement so long as this Agreement as so modified continues to express,
without material change, the original intentions of the parties as to the
subject matter hereof and the prohibited nature, invalidity or unenforceability
of the provision(s) in question does not substantially impair the respective
expectations or reciprocal obligations of the parties or the practical
realization of the benefits that would otherwise be conferred upon the parties.
The parties will endeavor in good faith negotiations to replace the prohibited,
invalid or unenforceable provision(s) with a valid provision(s), the effect of
which comes as close as possible to that of the prohibited, invalid or
unenforceable provision(s).
 
(e)           Entire Agreement; Amendments.  This Agreement, the other
Transaction Documents and the schedules and exhibits attached hereto and thereto
and the instruments referenced herein and therein supersede all other prior oral
or written agreements between the Buyers, the Company, their Affiliates and
Persons acting on their behalf solely with respect to the matters contained
herein and therein, and this Agreement, the other Transaction Documents, the
schedules and exhibits attached hereto and thereto and the instruments
referenced herein and therein contain the entire understanding of the parties
solely with respect to the matters covered herein and therein; provided,
however, nothing contained in this Agreement or any other Transaction Document
shall (or shall be deemed to), (i) have any effect on any agreements any Buyer
has entered into with the Company or any of its Subsidiaries prior to the date
hereof with respect to any prior investment made by such Buyer in the Company or
(ii) waive, alter, modify or amend in any respect any obligations of the Company
or any of its Subsidiaries, or any rights of or benefits to any Buyer or any
other Person, in any agreement entered into prior to the date hereof between or
among the Company and/or any of its Subsidiaries and any Buyer and all such
agreements shall continue in full force and effect.  Except as specifically set
forth herein or therein, neither the Company nor any Buyer makes any
representation, warranty, covenant or undertaking with respect to such
matters.  For clarification purposes, the Recitals are part of this
Agreement.  No provision of this Agreement may be amended other than by an
instrument in writing signed by the Company and each of the Buyers.  No waiver
shall be effective unless it is in writing and signed by an authorized
representative of the waiving party.  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 also is
offered to all of the parties to the Transaction Documents, all holders of
Common Shares or all holders of the Warrants (as the case may be).  The Company
has not, directly or indirectly, made any agreements with any Buyers relating to
the terms or conditions of the transactions contemplated by the Transaction
Documents except as set forth in the Transaction Documents.  Without limiting
the foregoing, the Company confirms that, except as set forth in this Agreement,
no Buyer has made any commitment or promise or has any other obligation to
provide any financing to the Company, any Subsidiary or otherwise.  As a
material inducement for each
 
 
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Buyer to enter into this Agreement, the Company expressly acknowledges and
agrees that (i) no due diligence investigation conducted by a Buyer or its
advisors, if any, or its representatives shall affect such Buyer’s right to rely
on, or modify or qualify any of, the Company’s representations and warranties
contained in this Agreement or any other Transaction Document, (ii) nothing
contained in the Registration Statement, the Prospectus or the Prospectus
Supplement shall affect such Buyer’s right to rely on, or modify or qualify any
of, the Company’s representations and warranties contained in this Agreement or
any other Transaction Document and (iii) unless a provision of this Agreement or
any other Transaction Document is expressly preceded by “except as disclosed in
the SEC Documents,” nothing contained in any of the SEC Documents shall affect
such Buyer’s right to rely on, or modify or qualify any of, the Company’s
representations and warranties contained in this Agreement or any other
Transaction Document.
 
(f)           Notices.  Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this Agreement must be in
writing and will be deemed to have been delivered: (i) upon receipt, when
delivered personally; (ii) upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party); (iii) when sent, if sent by e-mail (provided
that such sent e-mail is kept on file (whether electronically or otherwise) by
the sending party and the sending party does not receive an automatically
generated message from the recipient’s e-mail server that such e-mail could not
be delivered to such recipient); and (iv) one (1) Business Day after deposit
with an overnight courier service with next day delivery specified, in each
case, properly addressed to the party to receive the same.  The addresses and
facsimile numbers and email addresses for such communications shall be:
 
If to the Company:
 
GeoGlobal Resources, Inc.
Suite 200, 625 - 4th Ave. S.W.
Calgary, Alberta
T2P 0K2
Facsimile:    (403) 777-9199
Email:           paul.miller@geoglobal.com
Attention:     Paul Miller

With a copy (for informational purposes only) to:
 

Paul, Weiss, Rifkind, Wharton & Garrison LLP
1285 Avenue of the Americas
New York, New York 10019
Telephone:    212-373-3078
Facsimile:     212-492-0078
Email:            afoley@paulweiss.com
Attention:      Andrew J. Foley, Esq.

 
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If to the Transfer Agent:
 
Computershare Trust Company, N.A.
350 Indiana Street, Suite 750
Golden, CO 80401
Telephone: 303-262-0702
Facsimile:    303-262-0609
Email:           Jennifer.Harla@computershare.com
Attention:   Jennifer Harla

If to a Buyer, to its address and facsimile number set forth on the Schedule of
Buyers, with copies to such Buyer’s representatives as set forth on the Schedule
of Buyers,
 
with a copy (for informational purposes only) to:
 
Greenberg Traurig, LLP
77 W. Wacker Drive, Suite 3100
Chicago, Illinois 60601
Telephone:   (312) 456-8400
Facsimile:    (312) 456-8435
Email:           liebermanp@gtlaw.com
mazure@gtlaw.com
Attention:     Peter H. Lieberman, Esq.
Eric Mazur, Esq.
 
or to such other address and/or facsimile number and/or to the attention of such
other Person as the recipient party has specified by written notice given to
each other party five (5) days prior to the effectiveness of such change,
provided that Greenberg Traurig, LLP shall only be provided copies of notices
sent to Crede.  Written confirmation of receipt (A) given by the recipient of
such notice, consent, waiver or other communication, (B) mechanically or
electronically generated by the sender’s facsimile machine containing the time,
date, recipient facsimile number and an image of the first page of such
transmission or (C) provided by an overnight courier service shall be rebuttable
evidence of personal service, receipt by facsimile or receipt from an overnight
courier service in accordance with clause (i), (ii) or (iii) above,
respectively.  A copy of the e-mail transmission containing the time, date and
recipient e-mail address shall be rebuttable evidence of receipt by e-mail in
accordance with clause (iii) above.
 
(g)           Successors and Assigns.  This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and assigns,
including, as contemplated below, any assignee of any of the Securities. The
Company shall not assign this Agreement or any rights or obligations hereunder
without the prior written consent of each of the Buyers, including, without
limitation, by way of a Fundamental Transaction (as defined in the Warrants)
(unless the Company is in compliance with the applicable provisions governing
Fundamental Transactions set forth in the Warrants).  A Buyer may assign some or
all of its rights hereunder in connection with any transfer of any of its
Securities without the consent of the Company, in which event such assignee
shall be deemed to be a Buyer hereunder with respect to such assigned rights.
 
(h)           No Third Party Beneficiaries.  This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person, other than the Buyer Indemnitees referred to in Section
8(k).
 
 
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(i)           Survival.  The representations, warranties, agreements and
covenants shall survive the Closing. Each Buyer shall be responsible only for
its own representations, warranties, agreements and covenants hereunder.
 
(j)           Further Assurances.  Each party shall do and perform, or cause to
be done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
any other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
 
(k)           Indemnification.
 
(i)           In consideration of each Buyer’s execution and delivery of the
Transaction Documents and acquiring the Securities thereunder and in addition to
all of the Company’s other obligations under the Transaction Documents, the
Company shall defend, protect, indemnify and hold harmless each Buyer and each
holder of any Securities and all of their stockholders, partners, members,
officers, directors, employees and direct or indirect investors and any of the
foregoing Persons’ agents or other representatives (including, without
limitation, those retained in connection with the transactions contemplated by
this Agreement) (collectively, the “Indemnitees”) from and against any and all
actions, causes of action, suits, claims, losses, costs, penalties, fees,
liabilities and damages, and expenses in connection therewith (irrespective of
whether any such Indemnitee is a party to the action for which indemnification
hereunder is sought), and including reasonable attorneys’ fees and disbursements
(the “Indemnified Liabilities”), incurred by any Indemnitee as a result of, or
arising out of, or relating to (a) any misrepresentation or breach of any
representation or warranty made by the Company in any of the Transaction
Documents, (b) any breach of any covenant, agreement or obligation of the
Company contained in any of the Transaction Documents (c) any cause of action,
suit or claim brought or made against such Indemnitee by a third party
(including for these purposes a derivative action brought on behalf of the
Company) and arising out of or resulting from (i) the execution, delivery,
performance or enforcement of any of the Transaction Documents, (ii) any
transaction financed or to be financed in whole or in part, directly or
indirectly, with the proceeds of the issuance of the Securities, (iii) any
disclosure properly made by such Buyer pursuant to Section 4(i), or (iv) the
status of such Buyer or holder of the Securities as an investor in the Company
pursuant to the transactions contemplated by the Transaction Documents.  To the
extent that the foregoing undertaking by the Company may be unenforceable for
any reason, the Company shall make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities which is permissible under
applicable law, or (d) any legal fees and expenses incurred by an Indemnitee
after the date hereof in connection with the Transaction Documents (or any of
the transactions or matters contemplated thereby) and/or any the transactions
contemplated by this Agreement.
 
(ii)           Promptly after receipt by an Indemnitee under this Section 8(k)
of notice of the commencement of any action or proceeding (including any
governmental action or proceeding) involving an Indemnified Liability, such
Indemnitee shall, if a claim in respect thereof is to be made against the
Company under this Section 8(k), deliver to the Company a written notice of the
commencement thereof, and the Company shall have the
 
 
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right to participate in, and, to the extent the Company so desires, to assume
control of the defense thereof with counsel mutually satisfactory to the Company
and the Indemnitee; provided, however, that an Indemnitee shall have the right
to retain its own counsel with the fees and expenses of such counsel to be paid
by the Company if: (i) the Company has agreed in writing to pay such fees and
expenses; (ii) the Company shall have failed promptly to assume the defense of
such Indemnified Liability and to employ counsel reasonably satisfactory to such
Indemnitee in any such Indemnified Liability; or (iii) the named parties to any
such Indemnified Liability (including any impleaded parties) include both such
Indemnitee and the Company, and such Indemnitee shall have been advised by
counsel that a conflict of interest is likely to exist if the same counsel were
to represent such Indemnitee and the Company (in which case, if such Indemnitee
notifies the Company in writing that it elects to employ separate counsel at the
expense of the Company, then the Company shall not have the right to assume the
defense thereof and such counsel shall be at the expense of the Company),
provided further, that in the case of clause (iii) above the Company shall not
be responsible for the reasonable fees and expenses of more than one (1)
separate legal counsel for such Indemnitee.  The Indemnitee shall reasonably
cooperate with the Company in connection with any negotiation or defense of any
such action or Indemnified Liability by the Company and shall furnish to the
Company all information reasonably available to the Indemnitee which relates to
such action or Indemnified Liability.  The Company shall keep the Indemnitee
reasonably apprised at all times as to the status of the defense or any
settlement negotiations with respect thereto.  The Company shall not be liable
for any settlement of any action, claim or proceeding effected without its prior
written consent, provided, however, that the Company shall not unreasonably
withhold, delay or condition its consent.  The Company shall not, without the
prior written consent of the Indemnitee, consent to entry of any judgment or
enter into any settlement or other compromise which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnitee of a release from all liability in respect to such Indemnified
Liability or litigation, and such settlement shall not include any admission as
to fault on the part of the Indemnitee.  Following indemnification as provided
for hereunder, the Company shall be subrogated to all rights of the Indemnitee
with respect to all third parties, firms or corporations relating to the matter
for which indemnification has been made.  The failure to deliver written notice
to the Company within a reasonable time of the commencement of any such action
shall not relieve the Company of any liability to the Indemnitee under this
Section 8(k), except to the extent that the Company is materially and adversely
prejudiced in its ability to defend such action.
 
(iii)           The indemnification required by this Section 8(k) shall be made
by periodic payments of the amount thereof during the course of the
investigation or defense, as and when bills are received or Indemnified
Liabilities are incurred.
 
(iv)           The indemnity agreement contained herein shall be in addition to
(A) any cause of action or similar right of the Indemnitee against the Company
or others, and (B) any liabilities the Company may be subject to pursuant to the
law.
 
(l)           Construction.  The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent, and no
rules of strict construction
 
 
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will be applied against any party.  No specific representation or warranty shall
limit the generality or applicability of a more general representation or
warranty.
 
(m)           Remedies.  Each Buyer and each holder of any Securities shall have
all rights and remedies set forth in the Transaction Documents and all rights
and remedies which such holders have been granted at any time under any other
agreement or contract and all of the rights which such holders have under any
law.  Any Person having any rights under any provision of this Agreement shall
be entitled to enforce such rights specifically (without posting a bond or other
security), to recover damages by reason of any breach of any provision of this
Agreement and to exercise all other rights granted by law. Furthermore, the
Company recognizes that in the event that it fails to perform, observe, or
discharge any or all of its obligations under the Transaction Documents, any
remedy at law may prove to be inadequate relief to the Buyers. The Company
therefore agrees that the Buyers shall be entitled to seek specific performance
and/or temporary, preliminary and permanent injunctive or other equitable relief
from any court of competent jurisdiction in any such case without the necessity
of proving actual damages and without posting a bond or other security.
 
(n)           Withdrawal Right.  Notwithstanding anything to the contrary
contained in (and without limiting any similar provisions of) the Transaction
Documents, whenever any Buyer 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 Buyer 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.
 
(o)           Payment Set Aside; Currency.  To the extent that the Company makes
a payment or payments to any Buyer hereunder or pursuant to any of the other
Transaction Documents or any of the Buyers enforce or exercise their rights
hereunder or 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, foreign, 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.  Unless otherwise expressly
indicated, all dollar amounts referred to in this Agreement and the other
Transaction Documents are in United States Dollars (“U.S. Dollars”), and all
amounts owing under this Agreement and all other Transaction Documents shall be
paid in U.S. Dollars.  All amounts denominated in other currencies (if any)
shall be converted in the U.S. Dollar equivalent amount in accordance with the
Exchange Rate on the date of calculation.  “Exchange Rate” means, in relation to
any amount of currency to be converted into U.S. Dollars pursuant to this
Agreement, the U.S. Dollar exchange rate as published in the Wall Street Journal
on the relevant date of calculation.
 
 [signature pages follow]
 

 
 
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IN WITNESS WHEREOF, Buyer and the Company have caused their respective signature
page to this Agreement to be duly executed as of the date first written above.
 
 

 
COMPANY:
         
GEOGLOBAL RESOURCES INC.
 
    /s/ Paul B. Miller  
 
By:
Paul B. Miller     Its: President and Chief Executive Officer                   

 
 
 

 
 
 

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IN WITNESS WHEREOF, Buyer and the Company have caused their respective signature
page to this Agreement to be duly executed as of the date first written above.
 
 

 
BUYER:
         
CREDE CG II, LTD.
 
    /s/ Terren Peizer  
 
By:
Terren Peizer     Its: Managing Director                  

 
 
 

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SCHEDULE OF BUYERS (include page for each Buyer)
 
Name of Buyer: Crede CG II, Ltd., an entity organized under the laws of Bermuda
 
UNITS EQUAL TO ONE SHARE OF COMMON STOCK AND ONE WARRANT TO PURCHASE ONE SHARE
OF COMMON STOCK:
 
PURCHASE PRICE PER UNIT EQUAL TO $0.067.
 
AGGREGATE NUMBER OF UNITS TO BE PURCHASED: 13,827,387 UNITS FOR AN AGGREGATE
PURCHASE PRICE EQUAL TO $926,434.93.
 
As a result: 13,827,387 shares of Common Stock will be issued and warrants to
initially purchase 13,827,387 shares of Common Stock will be purchased.  Initial
warrant exercise price per share will be equal to $0.0804. Each Warrant shall
contain a 9.9% beneficial ownership blocker provision.
 
The Company represents and warrants to the above Buyer that based upon the above
and the number of outstanding shares of Common Stock as set forth in Section
3(r) hereof, upon execution of this Agreement Buyer will beneficially own
(within the meaning of Section 13(d) of the 1934 Act and the rules and
regulations thereunder) no more than 9.9% of the Company’s Common Stock.
 
The address and facsimile number for communications shall be:
 
Crede CG II, Ltd.
11150 Santa Monica Boulevard, Suite 1500
Los Angeles, CA 90025
Telephone: (310) 444-4300
Facsimile: (310) 444-5300

Attention: Administrator
 
 
 
 
 
 

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EXHIBIT A TO 
EXHIBIT 10.1
 
 
[FORM OF WARRANT]
 
GEOGLOBAL RESOURCES INC.
 
Warrant To Purchase Common Stock
 
Warrant No.:                                           
Date of Issuance: December [__], 2012 (“Issuance Date”)
 
GeoGlobal Resources Inc., a Delaware corporation (the “Company”), hereby
certifies that, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Crede CG II, Ltd., the registered holder
hereof or its permitted assigns (the “Holder”), is entitled, subject to the
terms set forth below, to purchase from the Company, at the Exercise Price (as
defined below) then in effect, upon exercise of this Warrant to Purchase Common
Stock (including any Warrants to Purchase Common Stock issued in exchange,
transfer or replacement hereof, the “Warrant”), at any time or times on or after
the Issuance Date but not after 11:59 p.m., New York time, on the Expiration
Date (as defined below), 13,827,387 (subject to adjustment as provided herein)
fully paid and non-assessable shares of Common Stock (as defined below) (the
“Warrant Shares”). Except as otherwise defined herein, capitalized terms in this
Warrant shall have the meanings set forth in Section 17. This Warrant is one of
the Warrants to Purchase Common Stock (the “SPA Warrants”) issued pursuant to
that certain Securities Purchase Agreement, dated as of December 20, 2012, by
and among the Company and the investor(s) thereunder (the “Buyer” or “Buyers” as
applicable) referred to therein (the “Securities Purchase Agreement”).
 
1.
EXERCISE OF WARRANT.

 
(a)           Mechanics of Exercise. Subject to the terms and conditions hereof
(including, without limitation, the limitations set forth in Section 1(f)), this
Warrant may be exercised by the Holder on any day on or after the Issuance Date
in whole or in part, by delivery (whether via facsimile or otherwise) of a
written notice, in the form attached hereto as Exhibit A (the “Exercise
Notice”), of the Holder’s election to exercise this Warrant. Within one (1)
Trading Day following an exercise of this Warrant as aforesaid, the Holder shall
deliver payment to the Company of an amount equal to the Exercise Price in
effect on the date of such exercise multiplied by the number of Warrant Shares
as to which this Warrant was so exercised (in respect of such specific exercise,
the “Aggregate Exercise Price”) in cash or via wire transfer of immediately
available funds if the Holder did not notify the Company in such Exercise Notice
that such exercise was made pursuant to a Cashless Exercise (as defined in
Section 1(d)). The Holder shall not be required to deliver the original of this
Warrant in order to effect an exercise hereunder. Execution and delivery of an
Exercise Notice with respect to less than all of the Warrant Shares shall have
the same effect as cancellation of the original of this Warrant certificate and
issuance of a new Warrant certificate evidencing the right to purchase the
 
 
 
 
 
 

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remaining number of Warrant Shares. Execution and delivery of an Exercise Notice
for all of the then-remaining Warrant Shares shall have the same effect as
cancellation of the original of this Warrant certificate after delivery of the
Warrant Shares in accordance with the terms hereof. On or before the first (1st)
Trading Day following the date on which the Company has received an Exercise
Notice, the Company shall transmit by facsimile an acknowledgment of
confirmation of receipt of such Exercise Notice, in the form attached hereto as
Exhibit C, to the Holder and the Company’s transfer agent (the “Transfer
Agent”). On or before the third (3rd) Trading Day following the date on which
the Company has received such Exercise Notice, the Company shall (X) provided
that the Transfer Agent is participating in The Depository Trust Company (“DTC”)
Fast Automated Securities Transfer Program (which the Company shall cause the
Transfer Agent to do at Holder’s request), upon the request of the Holder,
credit such aggregate number of shares of Common Stock to which the Holder is
entitled pursuant to such exercise to the Holder’s or its designee’s balance
account with DTC through its Deposit/ Withdrawal at Custodian system, or (Y) if
the Transfer Agent is not participating in the DTC Fast Automated Securities
Transfer Program, issue and deliver to the Holder or, at the Holder’s
instruction pursuant to the Exercise Notice, the Holder’s agent or designee, in
each case, sent by reputable overnight courier to the address as specified in
the applicable Exercise Notice, a certificate, registered in the Company’s share
register in the name of the Holder or its designee (as indicated in the
applicable Exercise Notice), for the number of shares of Common Stock to which
the Holder is entitled pursuant to such exercise. Upon delivery of an Exercise
Notice, the Holder shall be deemed for all corporate purposes to have become the
holder of record of the Warrant Shares with respect to which this Warrant has
been exercised, irrespective of the date such Warrant Shares are credited to the
Holder’s DTC account or the date of delivery of the certificates evidencing such
Warrant Shares (as the case may be). If this Warrant is submitted in connection
with any exercise pursuant to this Section 1(a) and the number of Warrant Shares
represented by this Warrant submitted for exercise is greater than the number of
Warrant Shares being acquired upon an exercise, then, at the request of the
Holder and upon surrender hereof by the Holder at the principal office of the
Company, the Company shall as soon as practicable and in no event later than
three (3) Business Days after any exercise and at its own expense, issue and
deliver to the Holder (or its designee) a new Warrant (in accordance with
Section 8(d)) representing the right to purchase the number of Warrant Shares
purchasable immediately prior to such exercise under this Warrant, less the
number of Warrant Shares with respect to which this Warrant is exercised. No
fractional shares of Common Stock are to be issued upon the exercise of this
Warrant, but rather the number of shares of Common Stock to be issued shall be
rounded up to the nearest whole number. The Company shall pay any and all taxes
and fees in the nature of taxes which may be payable with respect to the
issuance and delivery of Warrant Shares upon exercise of this Warrant.  The
Holder and any assignee, by acceptance of this Warrant, acknowledge and agree
that, by reason of the provisions of this paragraph, following the purchase of a
portion of the Warrant Shares hereunder, the number of Warrant Shares available
for purchase hereunder at any given time may be less than the amount stated on
the face hereof.
 
 
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(b)           Exercise Price. For purposes of this Warrant, “Exercise Price”
means $0.0804, subject to adjustment as provided herein.
 
(c)           Company’s Failure to Timely Deliver Securities. If the Company
shall fail, for any reason or for no reason, to issue to the Holder within three
(3) Trading Days after receipt of the applicable Exercise Notice or Exchange
Notice, as applicable, a certificate for the number of shares of Common Stock to
which the Holder is entitled and register such shares of Common Stock on the
Company’s share register or to credit the Holder’s balance account with DTC for
such number of shares of Common Stock to which the Holder is entitled upon the
Holder’s exercise of this Warrant (as the case may be), then, in addition to all
other remedies available to the Holder, the Company shall pay in cash to the
Holder on each day after such third (3rd) Trading Day that the issuance of such
shares of Common Stock is not timely effected an amount equal to 2% of the
product of (A) the aggregate number of shares of Common Stock not issued to the
Holder on a timely basis and to which the Holder is entitled and (B) the Closing
Sale Price of the Common Stock on the Trading Day immediately preceding the last
possible date on which the Company could have issued such shares of Common Stock
to the Holder without violating Section 1(a).  In addition to the foregoing, if
within three (3) Trading Days after the Company’s receipt of the applicable
Exercise Notice or Exchange Notice, as applicable, the Company shall fail to
issue and deliver a certificate to the Holder and register such shares of Common
Stock on the Company’s share register or to credit the Holder’s balance account
with DTC for the number of shares of Common Stock to which the Holder is
entitled upon the Holder’s exercise or exchange hereunder (as the case may be),
and if on or after such third (3rd) Trading Day the Holder (or any other Person
in respect, or on behalf, of the Holder) purchases (in an open market
transaction or otherwise) shares of Common Stock to deliver in satisfaction of a
sale by the Holder to a third party that is not an Affiliate of the Holder of
all or any portion of the number of shares of Common Stock, or a sale by the
Holder to a third party that is not an Affiliate of the Holder of a number of
shares of Common Stock equal to all or any portion of the number of shares of
Common Stock, issuable upon such exercise or exchange that the Holder so
anticipated receiving from the Company, then, in addition to all other remedies
available to the Holder, the Company shall, within three (3) Business Days after
the Holder’s request and in the Holder’s discretion, either (i) pay cash to the
Holder in an amount equal to the Holder’s total purchase price (including
brokerage commissions and reasonable out-of-pocket expenses, if any) for the
shares of Common Stock so purchased (including, without limitation, by any other
Person in respect, or on behalf, of the Holder) (the “Buy-In Price”), at which
point the Company’s obligation to so issue and deliver such certificate or
credit the Holder’s balance account with DTC for the number of shares of Common
Stock to which the Holder is entitled upon the Holder’s exercise or exchange
hereunder (as the case may be) (and to issue such shares of Common Stock) shall
terminate, or (ii) promptly honor its obligation to so issue and deliver to the
Holder a certificate or certificates representing such shares of Common Stock or
credit the Holder’s balance account with DTC for the number of shares of Common
Stock to which the Holder is entitled upon the Holder’s exercise or exchange
hereunder (as the case may be) and pay cash to the Holder in an amount equal to
the excess (if any) of the Buy-In Price over the product of (A) such number of
shares of Common Stock multiplied by (B) the lowest Closing
 
 
 
 
 
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Sale Price of the Common Stock on any Trading Day during the period commencing
on the date of the applicable Exercise Notice or Exchange Notice, as the case
may be, and ending on the date of such issuance and payment under this clause
(ii).
 
(d)           Cashless Exercise.  Notwithstanding anything contained herein to
the contrary (other than Section 1(f) below), if at the time of an exercise
hereof any Equity Conditions Failure shall then exist, then the Holder may, in
its sole discretion, exercise this Warrant in whole or in part and, in lieu of
making the cash payment otherwise contemplated to be made to the Company upon
such exercise in payment of the Aggregate Exercise Price, elect instead to make
a cashless exercise (each a “Cashless Exercise”) under this paragraph (d). A
Cashless Exercise under this paragraph (d) may be made, at the election of the
Holder from time to time and irrespective of any other election to make a
Cashless Exercise, so that upon such exercise Holder shall receive the “Net
Number” of shares of Common Stock determined according to the following formula:
 
Net Number = (A x B) - (A x C)
 
            B
 
For purposes of the foregoing formula:
 
A= the total number of shares with respect to which this Warrant is then being
exercised.
 
B= as applicable: (i) the Closing Sale Price of the Common Stock on the Trading
Day immediately preceding the date of the applicable Exercise Notice if such
Exercise Notice is (1) both executed and delivered pursuant to Section 1(a)
hereof on a day that is not a Trading Day or (2) both executed and delivered
pursuant to Section 1(a) hereof on a Trading Day prior to the opening of
“regular trading hours” (as defined in Rule 600(b)(64) of Regulation NMS
promulgated under the federal securities laws) on such Trading Day, (ii) the Bid
Price of the Common Stock as of the time of the Holder’s execution of the
applicable Exercise Notice if such Exercise Notice is executed during “regular
trading hours” on a Trading Day and is delivered within two (2) hours thereafter
pursuant to Section 1(a) hereof or (iii) the Closing Sale Price of the Common
Stock on the date of the applicable Exercise Notice if the date of such Exercise
Notice is a Trading Day and such Exercise Notice is both executed and delivered
pursuant to Section 1(a) hereof after the close of “regular trading hours” on
such Trading Day.
 
C= the Exercise Price then in effect for the applicable Warrant Shares at the
time of such exercise.
 
Notwithstanding anything to the contrary contained herein, exercise of this
Warrant on a cashless basis may also be made from time to time at the election
of the Holder (and irrespective of any election to make a Cashless Exercise
under this paragraph (d)), pursuant to the exchange provisions of Section 5 of
this Warrant.
 
(e)           Disputes.  In the case of a dispute as to the determination of the
Exercise Price or the arithmetic calculation of the number of Warrant Shares to
be issued pursuant to the terms
 
 
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hereof (including, without limitation, the Net Number), the Company shall
promptly issue to the Holder the number of Warrant Shares that are not disputed,
provided that following such issuance to Holder such dispute shall be resolved
in accordance with Section 14.
 
(f)           Limitations on Exercises and Exchanges.
 
(i)           Beneficial Ownership. Notwithstanding anything to the contrary
contained in this Warrant, this Warrant shall not be exercisable or exchangeable
by the Holder hereof to the extent (but only to the extent) that the Holder or
any of its affiliates would beneficially own in excess of 9.9% (the “Maximum
Percentage”) of the Common Stock. To the extent the above limitation applies,
the determination of whether this Warrant shall be exercisable or exchangeable
(vis-à-vis other convertible, exercisable or exchangeable securities owned by
the Holder or any of its affiliates) and of which such securities shall be
exercisable or exchangeable (as among all such securities owned by the Holder)
shall, subject to such Maximum Percentage limitation, be determined on the basis
of the first submission to the Company for conversion, exercise or exchange (as
the case may be). No prior inability to exercise or exchange this Warrant
pursuant to this paragraph shall have any effect on the applicability of the
provisions of this paragraph with respect to any subsequent determination of
exercisability or exchangeability. For the purposes of this paragraph,
beneficial ownership and all determinations and calculations (including, without
limitation, with respect to calculations of percentage ownership) shall be
determined in accordance with Section 13(d) of the 1934 Act (as defined in the
Securities Purchase Agreement) and the rules and regulations promulgated
thereunder. The provisions of this paragraph shall be implemented in a manner
otherwise than in strict conformity with the terms of this paragraph to correct
this paragraph (or any portion hereof) which may be defective or inconsistent
with the intended Maximum Percentage beneficial ownership limitation herein
contained or to make changes or supplements necessary or desirable to properly
give effect to such Maximum Percentage limitation. The limitations contained in
this paragraph shall apply to a successor Holder of this Warrant. The holders of
Common Stock shall be third party beneficiaries of this paragraph and the
Company may not waive this paragraph without the consent of holders of a
majority of its Common Stock. For any reason at any time, upon the written or
oral request of the Holder, the Company shall within one (1) Business Day
confirm orally and in writing to the Holder the number of shares of Common Stock
then outstanding, including by virtue of any prior conversion or exercise or
exchange of convertible or exercisable or exchangeable securities into Common
Stock, including, without limitation, pursuant to this Warrant or securities
issued pursuant to the Securities Purchase Agreement.
 
(ii)           Principal Market Regulation. In order to comply with the rules
and regulations of the NYSE MKT (the Principal Market), the Company shall not
issue any shares of Common Stock upon exercise or exchange of this Warrant if
the issuance of such shares of Common Stock would, when added to the number of
Common Shares (as defined in the Securities Purchase Agreement) issued pursuant
to the Securities Purchase Agreement, exceed 27,654,775 shares in the aggregate
(the “Exchange Cap”), except that such limitation shall not apply in the event
that the Company (A) obtains the approval of its stockholders as required by the
applicable rules of the Principal Market for
 
 
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issuances of shares of Common Stock in excess of such amount, (B) is no longer
traded on the Principal Market, or (C) obtains a written opinion from outside
counsel to the Company that such approval is not required, which opinion shall
be reasonably satisfactory to the Holder. In the event that the Company shall
seek to issue Warrant Shares under this Warrant which, when added to the number
of Common Shares (as defined in the Securities Purchase Agreement) issued
pursuant to the Securities Purchase Agreement, exceeds the Exchange Cap, and
such limitation applies as aforesaid, then the Company shall provide each
shareholder entitled to vote at a meeting of shareholders of the Company (a
“Shareholder Meeting”) a proxy statement, substantially in a form which has been
previously reviewed by the Holder and its counsel at the expense of the Company,
soliciting each such shareholder’s affirmative vote at the Shareholder Meeting
for approval of a resolution (the “Resolution”) making the Exchange Cap
inapplicable with respect to issuances of Common Stock in excess of the Exchange
Cap in accordance with applicable law and the rules and regulations of Principal
Market (such affirmative approval is referred to herein as the “Shareholder
Approval”), and in such event the Company shall use its best efforts to solicit
its shareholders’ approval of the Resolution and the Shareholder Approval (which
efforts shall include, without limitation, the requirement to hire a reputable
proxy solicitor) and to cause the board of directors of the Company to recommend
to the shareholders that they approve the Resolution and the Shareholder
Approval.  Notwithstanding anything to the contrary contained herein, until such
time as Shareholder Approval has been obtained or the Exchange Cap no longer
applies as aforesaid, the Company shall not issue (or take any action whereby it
would be deemed hereunder to issue) shares of Common Stock in a Dilutive
Issuance which would result in the Exchange Cap being triggered if the
adjustments under Section 2 hereof were made in respect of such Dilutive
Issuance (without regard to any limitations hereunder, including without
limitation the Exchange Cap) and this Warrant were exercised in full thereafter
(without regard to any limitations on exercise hereunder, including without
limitation the Exchange Cap and the Maximum Percentage).
 
(g)           Insufficient Authorized Shares. The Company shall at all times
keep reserved for issuance under this Warrant a number of shares of Common Stock
as shall be necessary to satisfy the Company’s obligation to issue shares of
Common Stock hereunder (without regard to any limitation otherwise contained
herein with respect to the number of shares of Common Stock that may be
acquirable upon exercise or exchange of this Warrant). If, notwithstanding the
foregoing, and not in limitation thereof, at any time while any of the SPA
Warrants remain outstanding the Company does not have a sufficient number of
authorized and unreserved shares of Common Stock to satisfy its obligation to
reserve for issuance upon exercise or exchange of the SPA Warrants at least a
number of shares of Common Stock equal to the number of shares of Common Stock
as shall from time to time be necessary to effect the exercise or exchange of
all of the SPA Warrants then outstanding (the “Required Reserve Amount”) (an
“Authorized Share Failure”), then the Company shall immediately take all action
necessary to increase the Company’s authorized shares of Common Stock to an
amount sufficient to allow the Company to reserve the Required Reserve Amount
for all the SPA Warrants then outstanding. Without limiting the generality of
the foregoing sentence, as soon as practicable after the date of the occurrence
of an Authorized Share Failure, but in no event later than ninety (90) days
after the occurrence of such Authorized Share Failure, the Company shall hold a
meeting of its shareholders for the approval of an increase in the number of
authorized shares of Common
 
 
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Stock. In connection with such meeting, the Company shall provide each
shareholder with a proxy statement and shall use its reasonable efforts to
solicit its shareholders’ approval of such increase in authorized shares of
Common Stock.
 
(h)           Activity Restrictions.  (i) For so long as Holder or any of its
Affiliates holds any Warrants or any Warrant Shares, neither Holder nor any
Affiliate will:  (i) vote any shares of Common Stock beneficially owned by it,
solicit any proxies, or seek to advise or influence any Person with respect to
any voting securities of the Company; (ii) engage or participate in any actions,
plans or proposals which relate to or would result in (a) acquiring additional
securities of the Company, alone or together with any other Person, which would
result in Buyer or its Affiliates beneficially owning (within the meaning of
Section 13(d) under the 1934 Act) more than 9.9% of the Common Stock, (b) an
extraordinary corporate transaction, such as a merger, reorganization or
liquidation, involving Company or any of its Subsidiaries, (c) a sale or
transfer of a material amount of assets of the Company or any of its
Subsidiaries, (d) any change in the present board of directors or management of
the Company, including any plans or proposals to change the number or term of
directors or to fill any existing vacancies on the board, (e) any material
change in the present capitalization or dividend policy of the Company, (f) any
other material change in the Company’s business or corporate structure,
including but not limited to, if the Company is a registered closed-end
investment company, any plans or proposals to make any changes in its investment
policy for which a vote is required by Section 13 of the Investment Company Act
of 1940, (g) changes in the Company’s charter, bylaws or instruments
corresponding thereto or other actions which may impede the acquisition of
control of the Company by any Person, (h) causing a class of securities of the
Company to be delisted from a national securities exchange or to cease to be
authorized to be quoted in an inter-dealer quotation system of a registered
national securities association, (i) a class of equity securities of the Company
becoming eligible for termination of registration pursuant to Section 12(g)(4)
of the Act, or (j) any action, intention, plan or arrangement similar to any of
those enumerated above; or (iii) request the Company or its directors, officers,
employees, agents or representatives to amend or waive any provision of this
paragraph.  The restrictions contained in this paragraph (i) shall not limit
Holder’s rights to enforce its rights or exercise its rights as to the
Securities or under this Warrant or the Transaction Documents.
 
(ii)           Provided that the Company is in compliance with its obligations
under this Warrant and the other Transaction Documents and no Equity Condition
Failure shall have occurred, if the trading price on the Principal Market at the
time of an exercise of this Warrant is greater than the then applicable Exercise
Price then in effect, then in respect of such particular exercise Holder may
only exercise this Warrant for a cash exercise price (and not by means of a
Cashless Exercise under Section 1(d) above or on a cashless basis under Section
5 below).
 
2.           ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES. The
Exercise Price and number of Warrant Shares issuable upon exercise of this
Warrant are subject to adjustment from time to time as set forth in this Section
2.
 
(a)           Stock Dividends and Splits. Without limiting any provision of
Section 4, if the Company, at any time on or after the date of the Securities
Purchase Agreement, (i) pays a stock dividend on one or more classes of its then
outstanding shares of Common Stock or otherwise makes a distribution on any
class of capital stock that is payable in shares of Common Stock, (ii)
 
 
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subdivides (by any stock split, stock dividend, recapitalization or otherwise)
one or more classes of its then outstanding shares of Common Stock into a larger
number of shares or (iii) combines (by combination, reverse stock split or
otherwise) one or more classes of its then outstanding shares of Common Stock
into a smaller number of shares, then in each such case the Exercise Price shall
be multiplied by a fraction of which the numerator shall be the number of shares
of Common Stock outstanding immediately before such event and of which the
denominator shall be the number of shares of Common Stock outstanding
immediately after such event.  Any adjustment made pursuant to clause (i) of
this paragraph shall become effective immediately after the record date for the
determination of shareholders entitled to receive such dividend or distribution,
and any adjustment pursuant to clause (ii) or (iii) of this paragraph shall
become effective immediately after the effective date of such subdivision or
combination. If any event requiring an adjustment under this paragraph occurs
during the period that an Exercise Price is calculated hereunder, then the
calculation of such Exercise Price shall be adjusted appropriately to reflect
such event.
 
(b)           Adjustment Upon Issuance of Shares of Common Stock. If and
whenever on or after the date of the Securities Purchase Agreement, the Company
issues or sells, or in accordance with this Section 2 is deemed to have issued
or sold, any shares of Common Stock (including the issuance or sale of shares of
Common Stock owned or held by or for the account of the Company, but excluding
any Excluded Securities (as defined in the Securities Purchase Agreement) issued
or sold or deemed to have been issued or sold) for a consideration per share
(the “New Issuance Price”) less than a price equal to the Exercise Price in
effect immediately prior to such issue or sale or deemed issuance or sale (such
Exercise Price then in effect is referred to as the “Applicable Price”) (the
foregoing a “Dilutive Issuance”), then immediately after such Dilutive Issuance,
the Exercise Price then in effect shall be reduced to an amount equal to “EP1”
below:
 
      OB + (AC / EP)
EP1 =    EP   x    _________________

                OA

EP = the Exercise Price in effect immediately prior to such Dilutive Issuance

OB = the number of shares of Common Stock Deemed Outstanding (as defined below)
immediately prior to such Dilutive Issuance

AC = the consideration, if any, received by the Company upon such Dilutive
Issuance

OA = the number of shares of Common Stock Deemed Outstanding immediately after
such Dilutive Issuance.

For all purposes of the foregoing (including, without limitation, determining
the adjusted Exercise Price and consideration per share under this Section
2(b)), the following shall be applicable:
 
 
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(i)           Issuance of Options. If the Company in any manner grants or sells
any Options and the lowest price per share for which one share of Common Stock
is issuable upon the exercise of any such Option or upon conversion, exercise or
exchange of any Convertible Securities issuable upon exercise of any such Option
is less than the Applicable Price, then such share of Common Stock shall be
deemed to be outstanding and to have been issued and sold by the Company at the
time of the granting or sale of such Option for such price per share. For
purposes of this Section 2(b)(i), the “lowest price per share for which one
share of Common Stock is issuable upon the exercise of any such Options or upon
conversion, exercise or exchange of any Convertible Securities issuable upon
exercise of any such Option” shall be equal to (1) the lower of (x) the sum of
the lowest amounts of consideration (if any) received or receivable by the
Company with respect to any one share of Common Stock upon the granting or sale
of such Option, upon exercise of such Option and upon conversion, exercise or
exchange of any Convertible Security issuable upon exercise of such Option and
(y) the lowest exercise price set forth in such Option for which one share of
Common Stock is issuable upon the exercise of any such Options or upon
conversion, exercise or exchange of any Convertible Securities issuable upon
exercise of any such Option minus (2) the sum of all amounts paid or payable to
the holder of such Option (or any other Person) upon the granting or sale of
such Option, upon exercise of such Option and upon conversion, exercise or
exchange of any Convertible Security issuable upon exercise of such Option plus
the value of any other consideration received or receivable by, or benefit
conferred on, the holder of such Option (or any other Person).  Except as
contemplated below, no further adjustment of the Exercise Price shall be made
upon the actual issuance of such shares of Common Stock or of such Convertible
Securities upon the exercise of such Options or upon the actual issuance of such
shares of Common Stock upon conversion, exercise or exchange of such Convertible
Securities.
 
(ii)           Issuance of Convertible Securities. If the Company in any manner
issues or sells any Convertible Securities and the lowest price per share for
which one share of Common Stock is issuable upon the conversion, exercise or
exchange thereof is less than the Applicable Price, then such share of Common
Stock shall be deemed to be outstanding and to have been issued and sold by the
Company at the time of the issuance or sale of such Convertible Securities for
such price per share.  For the purposes of this Section 2(b)(ii), the “lowest
price per share for which one share of Common Stock is issuable upon the
conversion, exercise or exchange thereof” shall be equal to (1) the lower of (x)
the sum of the lowest amounts of consideration (if any) received or receivable
by the Company with respect to one share of Common Stock upon the issuance or
sale of the Convertible Security and upon conversion, exercise or exchange of
such Convertible Security and (y) the lowest conversion price set forth in such
Convertible Security for which one share of Common Stock is issuable upon
conversion, exercise or exchange thereof minus (2) the sum of all amounts paid
or payable to the holder of such Convertible Security (or any other Person) upon
the issuance or sale of such Convertible Security plus the value of any other
consideration received or receivable by, or benefit conferred on, the holder of
such Convertible Security (or any other Person)..  Except as contemplated below,
no further adjustment of the Exercise Price shall be made upon the actual
issuance of such shares of Common Stock upon conversion, exercise or exchange of
such Convertible Securities, and if any such issue or sale of such Convertible
Securities is made
 
 
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upon exercise of any Options for which adjustment of this Warrant has been or is
to be made pursuant to other provisions of this Section 2(b), except as
contemplated below, no further adjustment of the Exercise Price shall be made by
reason of such issue or sale.
 
(iii)           Change in Option Price or Rate of Conversion. If the purchase or
exercise price provided for in any Options, the additional consideration, if
any, payable upon the issue, conversion, exercise or exchange of any Convertible
Securities, or the rate at which any Convertible Securities are convertible into
or exercisable or exchangeable for shares of Common Stock increases or decreases
at any time, the Exercise Price in effect at the time of such increase or
decrease shall be adjusted to the Exercise Price which would have been in effect
at such time had such Options or Convertible Securities provided for such
increased or decreased purchase price, additional consideration or increased or
decreased conversion rate, as the case may be, at the time initially granted,
issued or sold. For purposes of this Section 2(b)(iii), if the terms of any
Option or Convertible Security that was outstanding as of the date of issuance
of this Warrant are increased or decreased in the manner described in the
immediately preceding sentence, then such Option or Convertible Security and the
shares of Common Stock deemed issuable upon exercise, conversion or exchange
thereof shall be deemed to have been issued as of the date of such increase or
decrease. No adjustment pursuant to this Section 2(b) shall be made if such
adjustment would result in an increase of the Exercise Price then in effect.
 
(iv)           Calculation of Consideration Received. If any Option or
Convertible Security is issued in connection with the issuance or sale or deemed
issuance or sale of any other securities of the Company, together comprising one
integrated transaction, (x) such Option or Convertible Security (as applicable)
will be deemed to have been issued for consideration equal to the Black Scholes
Consideration Value thereof and (y) the other securities issued or sold or
deemed to have been issued or sold in such integrated transaction shall be
deemed to have been issued for consideration equal to the difference of (I) the
aggregate consideration received by the Company minus (II) the Black Scholes
Consideration Value of each such Option or Convertible Security (as
applicable).  If any shares of Common Stock, Options or Convertible Securities
are issued or sold or deemed to have been issued or sold for cash, the
consideration received therefor will be deemed to be the net amount of
consideration received by the Company therefor. If any shares of Common Stock,
Options or Convertible Securities are issued or sold for a consideration other
than cash, the amount of such consideration received by the Company will be the
fair value of such consideration, except where such consideration consists of
publicly traded securities, in which case the amount of consideration received
by the Company for such securities will be the arithmetic average of the VWAPs
of such security for each of the five (5) Trading Days immediately preceding the
date of receipt. If any shares of Common Stock, Options or Convertible
Securities are issued to the owners of the non-surviving entity in connection
with any merger in which the Company is the surviving entity, the amount of
consideration therefor will be deemed to be the fair value of such portion of
the net assets and business of the non-surviving entity as is attributable to
such shares of Common Stock, Options or Convertible Securities, as the case may
be. The fair value of any consideration other than cash or publicly traded
securities will be determined jointly by the Company and the Holder.  If such
parties are unable to reach agreement within ten (10) days after the occurrence
of an event requiring valuation (the “Valuation
 
 
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Event”), the fair value of such consideration will be determined within five (5)
Trading Days after the tenth (10th) day following such Valuation Event by an
independent, reputable appraiser jointly selected by the Company and the Holder.
The determination of such appraiser shall be final and binding upon all parties
absent manifest error and the fees and expenses of such appraiser shall be borne
by the Company.
 
(v)             Record Date. If the Company takes a record of the holders of
shares of Common Stock for the purpose of entitling them (A) to receive a
dividend or other distribution payable in shares of Common Stock, Options or in
Convertible Securities or (B) to subscribe for or purchase shares of Common
Stock, Options or Convertible Securities, then such record date will be deemed
to be the date of the issue or sale of the shares of Common Stock deemed to have
been issued or sold upon the declaration of such dividend or the making of such
other distribution or the date of the granting of such right of subscription or
purchase (as the case may be).
 
(c)           Number of Warrant Shares. Simultaneously with any adjustment to
the Exercise Price pursuant to paragraph (a) or (b) of this Section 2, the
number of Warrant Shares that may be purchased upon exercise of this Warrant
shall be increased or decreased proportionately, so that after such adjustment
the aggregate Exercise Price payable hereunder for the adjusted number of
Warrant Shares shall be the same as the aggregate Exercise Price in effect
immediately prior to such adjustment (without regard to any limitations on
exercise contained herein).  In addition, and notwithstanding anything to the
contrary contained herein, upon an Exchange as set forth in Section 5 hereof,
the number of Warrant Shares for which this Warrant is exercisable immediately
following such Exchange shall be equal to (i) the number of Warrant Shares for
which this Warrant was exercisable immediately prior to such Exchange less (ii)
the number of Warrant Shares under the portion of the Warrant exchanged in
Exchange (e.g., if this Warrant is exercisable (without regard to limitations
hereunder) for 100 shares immediately prior to an Exchange and 30% of the
Warrant is submitted for Exchange (i.e., the Warrant to acquire 30 Warrant
Shares is submitted for Exchange), then this Warrant will be exercisable for 70
Warrant Shares immediately following the completion of such Exchange), and the
number of such Warrant Shares issuable hereunder shall automatically be
adjusted, as necessary, to enable to the Company to comply with its obligations
to issue the full Exchange Number under Section 5 hereof upon any Exchange
hereunder.
 
(d)           Calculations. All calculations under this Section 2 shall be made
by rounding to the nearest 1/10000th of cent and the nearest 1/100th of a share,
as applicable. The number of shares of Common Stock outstanding at any given
time shall not include shares owned or held by or for the account of the
Company, and the disposition of any such shares shall be considered an issue or
sale of Common Stock.
 
(e)           Other Events. In the event that the Company (or any Subsidiary (as
defined in the Securities Purchase Agreement)) shall take any action to which
the provisions hereof are not strictly applicable, or, if applicable, would not
operate to protect the Holder from dilution or if any event occurs of the type
contemplated by the provisions of this Section 2 but not expressly provided for
by such provisions (including, without limitation, the granting of stock
appreciation rights, phantom stock rights or other rights with equity features),
then the Company’s board of directors shall in good faith determine and
implement an appropriate adjustment in the Exercise
 
 
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Price and the number of Warrant Shares (if applicable) so as to protect the
rights of the Holder, provided that no such adjustment pursuant to this Section
2(e) will increase the Exercise Price or decrease the number of Warrant Shares
as otherwise determined pursuant to this Section 2, provided further that if the
Holder does not accept such adjustments as appropriately protecting its
interests hereunder against such dilution, then the Company’s board of directors
and the Holder shall agree, in good faith, upon an independent investment bank
of nationally recognized standing to make such appropriate adjustments, whose
determination shall be final and binding and whose fees and expenses shall be
borne by the Company.
 
3.           RIGHTS UPON DISTRIBUTION OF ASSETS. In addition to any adjustments
pursuant to Section 2 above, if the Company shall declare or make any dividend
or other distribution of its assets (or rights to acquire its assets) to holders
of shares of Common Stock, by way of return of capital or otherwise (including,
without limitation, any distribution of cash, stock or other securities,
indebtedness, property or options by way of a dividend, spin off,
reclassification, corporate rearrangement, scheme of arrangement or other
similar transaction, other than a distribution of Common Stock covered by
Section 2(a)) (a “Distribution”), at any time after the issuance of this
Warrant, then, in each such case, the Holder shall be entitled to participate in
such Distribution to the same extent that the Holder would have participated
therein if the Holder had held the number of shares of Common Stock acquirable
upon complete exercise of this Warrant (without regard to any limitations on
exercise hereof, including without limitation, the Maximum Percentage)
immediately before the date on which a record is taken for such Distribution,
or, if no such record is taken, the date as of which the record holders of
shares of Common Stock are to be determined for the participation in such
Distribution (provided, however, to the extent that the Holder’s right to
participate in any such Distributions would result in the Holder exceeding the
Maximum Percentage, then the Holder shall not be entitled to participate in such
Distribution to such extent (or the beneficial ownership of any such shares of
Common Stock as a result of such Distribution to such extent) and such
Distribution to such extent shall be held in abeyance for the benefit of the
Holder until such time, if ever, as its right thereto would not result in the
Holder exceeding the Maximum Percentage).
 
4.
PURCHASE RIGHTS; FUNDAMENTAL TRANSACTIONS.

 
(a)           Purchase Rights.  In addition to any adjustments pursuant to
Section 2 above, if at any time the Company grants, issues or sells any Options,
Convertible Securities or rights to purchase stock, warrants, securities or
other property pro rata to the record holders of any class of shares of Common
Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon
the terms applicable to such Purchase Rights, the aggregate Purchase Rights
which the Holder could have acquired if the Holder had held the number of shares
of Common Stock acquirable upon complete exercise of this Warrant (without
regard to any limitations on exercise hereof, including without limitation, the
Maximum Percentage) immediately before the date on which a record is taken for
the grant, issuance or sale of such Purchase Rights, or, if no such record is
taken, the date as of which the record holders of shares of Common Stock are to
be determined for the grant, issue or sale of such Purchase Rights (provided,
however, to the extent that the Holder’s right to participate in any such
Purchase Right would result in the Holder exceeding the Maximum Percentage, then
the Holder shall not be entitled to participate in such Purchase Right to such
extent (or beneficial ownership of such shares of Common Stock as a result of
such Purchase Right to such extent) and such Purchase Right to such extent shall
be
 
 
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held in abeyance for the Holder until such time, if ever, as its right thereto
would not result in the Holder exceeding the Maximum Percentage).
 
(b)           Fundamental Transactions.  The Company shall not enter into or be
party to a Fundamental Transaction unless the Successor Entity assumes in
writing all of the obligations of the Company under this Warrant and the other
Transaction Documents related to this Warrant in accordance with the provisions
of this Section 4(b) pursuant to written agreements in form and substance
reasonably satisfactory to the Holder and approved by the Holder prior to such
Fundamental Transaction, including agreements confirming the obligations of the
Successor Entity as set forth in this paragraph (b) and (c) and elsewhere in
this Warrant and an obligation to deliver to the Holder in exchange for this
Warrant a security of the Successor Entity evidenced by a written instrument
substantially similar in form and substance to this Warrant, including, without
limitation, which is exercisable for a corresponding number of shares of capital
stock equivalent to the shares of Common Stock acquirable and receivable upon
exercise of this Warrant (without regard to any limitations on the exercise of
this Warrant) prior to such Fundamental Transaction, and with an exercise price
which applies the exercise price hereunder to such shares of capital stock (but
taking into account the relative value of the shares of Common Stock pursuant to
such Fundamental Transaction and the value of such shares of capital stock, such
adjustments to the number of shares of capital stock and such exercise price
being for the purpose of protecting the economic value of this Warrant
immediately prior to the consummation of such Fundamental
Transaction).  Notwithstanding the foregoing, at the election of the Holder upon
exercise of this Warrant following a Fundamental Transaction, the Successor
Entity shall deliver to the Holder, in lieu of the shares of Common Stock (or
other securities, cash, assets or other property (except such items still
issuable under Sections 3 and 4(a) above, which shall continue to be receivable
thereafter)) issuable upon the exercise of this Warrant prior to the applicable
Fundamental Transaction, such shares of common stock (or its equivalent) of the
Successor Entity (including its Parent Entity), or other securities, cash,
assets or other property, which the Holder would have been entitled to receive
upon the happening of the applicable Fundamental Transaction had this Warrant
been exercised immediately prior to the applicable Fundamental Transaction
(without regard to any limitations on the exercise of this Warrant).
 
(c)           Black Scholes Value -- FT. Notwithstanding the foregoing and the
provisions of Section 4(b) above, at the request of the Holder delivered at any
time commencing on the earliest to occur of (x) the public disclosure of any
Fundamental Transaction, (y) the consummation of any Fundamental Transaction and
(z) the Holder first becoming aware of any Fundamental Transaction through the
date that is thirty (30) days after the public disclosure of the consummation of
such Fundamental Transaction by the Company pursuant to a Current Report on Form
8-K filed with the SEC, the Company or the Successor Entity, at the election of
the Holder, shall purchase this Warrant from the Holder on the date of the
consummation of such Fundamental Transaction by paying to the Holder cash in an
amount equal to the Black Scholes Value -- FT.
 
(d)           Application. The provisions of this Section 4 shall apply
similarly and equally to successive Fundamental Transactions and shall be
applied as if this Warrant (and any such subsequent warrants issued hereunder)
were fully exercisable and without regard to any limitations on the exercise of
this Warrant (provided that the Holder shall continue to be entitled
 
 
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to the benefit of the Maximum Percentage, applied however with respect to shares
of capital stock registered under the 1934 Act and thereafter receivable upon
exercise of this Warrant (or any such other warrant)).
 
5.           EXCHANGE RIGHTS.  In addition to the rights of the Holder under
Section 1 hereof, this Warrant shall be exchangeable by the Holder on a cashless
basis as further set forth below (and subject to the limitations set forth in
Section 1(h)(ii) hereof).
 
(a)           Exchange Right.  Subject to the provisions of Section 1(h)(ii),
the Holder shall be entitled at any time and from time to time from and after
the date of Issuance and prior to the Expiration Date, by written notice to the
Company in the form of Exhibit B attached hereto (an “Exchange Notice”) to
exchange (an “Exchange”) all or any portion of this Warrant for cash or, if
elected by the Company in compliance with Section 1(f)(ii), fully paid and
non-assessable shares of Common Stock, all as further set forth in this Section
5.  If the Company does not elect to honor such Exchange in shares of Common
Stock (or is not permitted to elect to honor such Exchange in shares of Common
Stock due to Section 1(f)(i) or Section 1(f)(ii)), then the Company shall pay to
the holder, within two (2) Business Days after receipt of the applicable
Exchange Notice, the Exchange Amount (as defined below) in cash in respect of
such Exchange.  Notwithstanding anything to the contrary above, Holder shall be
limited (the “Warrant Exchange Limitation”) in the exercise of its exchange
right under this Section 5(a) at such time and to such extent (but only at such
time and to such extent) that such exercise by Holder would, if the Company were
permitted to and did elect to issue shares of Common Stock in response thereto,
be limited by Section 1(f)(i) hereof.  No Warrant Exchange Limitation under the
immediately preceding sentence shall apply to or limit any prior or subsequent
exercise under this Section 5(a) and the application of the Warrant Exchange
Limitation shall be evaluated and applied independent to each exercise under
this Section 5(a).  Notwithstanding the foregoing, the Warrant Exchange
Limitation shall not apply to any exercise under this Section 5(a) if the
limitation under Section 1(f)(ii) is in effect at the time of such exercise or
if there is an Equity Conditions Failure at such time.
 
(b)           Exchange Number.  If the Company is permitted to honor an Exchange
by issuing shares of Common Stock in respect thereof, then the number of shares
of Common Stock issuable in respect of such Exchange shall be determined by
dividing (x) the Exchange Amount (as defined below) in respect of such Exchange
by (y) the Exchange Price (as defined below) in respect of such Exchange (such
number of shares of Common Stock so issuable being the “Exchange Number”).
 
(c)           Definitions.
 
(i)           “Exchange Amount” means the Black-Scholes Exchange Value of the
portion of the Warrant being exchanged pursuant to Section 5(a), determined as
of the applicable Exchange Date (as defined below).
 
(ii)           “Exchange Price” means the Closing Bid Price as of two (2)
Trading Days prior to the Exchange Date.
 
 
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(d)           Mechanics of Exchange.
 
(i)           Optional Exchange.  To exchange any Exchange Amount on any date
(an “Exchange Date”), the Holder shall transmit by facsimile (or otherwise
deliver), for receipt on such date, a copy of an executed Exchange Notice.  The
Holder shall not be required to deliver the original of this Warrant in order to
effect an exchange hereunder. Execution and delivery of an Exchange Notice with
respect to less than all of the Warrant Shares shall have the same effect as
cancellation of the original of this Warrant and issuance of a new Warrant
evidencing the right to purchase the remaining number of Warrant Shares.
Execution and delivery of an Exchange Notice for all of the then-remaining
Warrant Shares shall have the same effect as cancellation of the original of
this Warrant after delivery of the Warrant Shares in accordance with the terms
hereof.
 
(ii)           Exchange for Shares of Common Stock.  If the Company is permitted
to elect, and has elected, to pay the Exchange Amount in shares of Common Stock
in respect of a specific Exchange Notice, which election shall be made on or
before the first (1st) Trading Day following the date on which the Company has
received such Exchange Notice, the Company shall transmit by facsimile an
acknowledgment of confirmation of receipt of such Exchange Notice, in the form
attached hereto as Exhibit C, to the Holder and the Transfer Agent and stating
that such Exchange Notice shall be honored in shares of Common Stock. In such
event, then on or before the third (3rd) Trading Day following the date on which
the Company has received such Exchange Notice, the Exchange Number of shares of
Common Stock shall be issued to Holder, or at Holder’s instruction, as if such
shares of Common Stock were issuable upon an exercise under Section 1 hereof.
 
(iii)           Equity Condition Failure.  Notwithstanding the above, if at the
time on an Exchange Date, an Equity Condition Failure is reasonably likely to
occur or has occurred and is still then continuing, then the Company shall not
be permitted to elect to honor such Exchange in shares of Common Stock and shall
instead honor such Exchange in cash.
 
(iv)           Disputes.  Dispute as to the determination of the Exchange
Amount, the Exchange Price or the arithmetic calculation of the number of
Warrant Shares to be issued pursuant to the terms hereof, and shares subject to
such dispute, shall be handled in the same manner as for disputes under Section
1(e) hereof.
 
6.           NONCIRCUMVENTION. The Company hereby covenants and agrees that the
Company will not, by amendment of its Articles of Incorporation (as defined in
the Securities Purchase Agreement), Bylaws (as defined in the Securities
Purchase Agreement) or through any reorganization, transfer of assets,
consolidation, merger, scheme of arrangement, dissolution, issue or sale of
securities, or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms of this Warrant, and will at all times in
good faith carry out all the provisions of this Warrant and take all action as
may be required to protect the rights of the Holder. Without limiting the
generality of the foregoing, the Company (i) shall not increase the par value of
any shares of Common Stock receivable upon the exercise of this Warrant above
the Exercise Price then in effect, (ii) shall take all such actions as may be
necessary or appropriate in order that the Company may validly and legally issue
fully paid and non-assessable shares of Common Stock upon the exercise of this
Warrant, and (iii) shall, so long as any of the SPA Warrants are outstanding,
take all action necessary to reserve and keep available out of its authorized
and unissued shares of Common Stock, solely for the purpose of effecting the
exercise of the SPA
 
 
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Warrants, the maximum number of shares of Common Stock as shall from time to
time be necessary to effect the exercise of the SPA Warrants then outstanding
(without regard to any limitations on exercise).
 
7.           WARRANT HOLDER NOT DEEMED A STOCKHOLDER. Except as otherwise
specifically provided herein, the Holder, solely in its capacity as a holder of
this Warrant, shall not be entitled to vote or receive dividends or be deemed
the holder of share capital of the Company for any purpose, nor shall anything
contained in this Warrant be construed to confer upon the Holder, solely in its
capacity as the Holder of this Warrant, any of the rights of a stockholder of
the Company or any right to vote, give or withhold consent to any corporate
action (whether any reorganization, issue of stock, reclassification of stock,
consolidation, merger, conveyance or otherwise), receive notice of meetings,
receive dividends or subscription rights, or otherwise, prior to the issuance to
the Holder of the Warrant Shares which it is then entitled to receive upon the
due exercise of this Warrant.  In addition, nothing contained in this Warrant
shall be construed as imposing any liabilities on the Holder to purchase any
securities (upon exercise of this Warrant or otherwise) or as a stockholder of
the Company, whether such liabilities are asserted by the Company or by
creditors of the Company. Notwithstanding this Section 7, the Company shall
provide the Holder with copies of the same notices and other information given
to the stockholders of the Company generally, contemporaneously with the giving
thereof to the stockholders.
 
8.           REISSUANCE OF WARRANTS.
 
(a)           Transfer of Warrant. If this Warrant is to be transferred, the
Holder shall surrender this Warrant to the Company at the principal office of
the Company together with a written assignment of this Warrant substantially in
the form attached hereto as Exhibit D duly executed by the Holder or its agent
or attorney, whereupon the Company will forthwith issue and deliver upon the
order of the Holder a new Warrant (in accordance with Section 8(d)), registered
as the Holder may request, representing the right to purchase the number of
Warrant Shares being transferred by the Holder and, if less than the total
number of Warrant Shares then underlying this Warrant is being transferred, a
new Warrant (in accordance with Section 8(d)) to the Holder representing the
right to purchase the number of Warrant Shares not being transferred.
 
(b)           Lost, Stolen or Mutilated Warrant. Upon receipt by the Company of
evidence reasonably satisfactory to the Company of the loss, theft, destruction
or mutilation of this Warrant (as to which a written certification and the
indemnification contemplated below shall suffice as such evidence), and, in the
case of loss, theft or destruction, of any indemnification undertaking by the
Holder to the Company in customary and reasonable form and, in the case of
mutilation, upon surrender and cancellation of this Warrant, the Company shall
execute and deliver to the Holder a new Warrant (in accordance with Section
8(d)) representing the right to purchase the Warrant Shares then underlying this
Warrant.
 
(c)           Exchangeable for Multiple Warrants. This Warrant is exchangeable,
upon the surrender hereof by the Holder at the principal office of the Company,
for a new Warrant or
 
 
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Warrants (in accordance with Section 8(d)) representing in the aggregate the
right to purchase the number of Warrant Shares then underlying this Warrant, and
each such new Warrant will represent the right to purchase such portion of such
Warrant Shares as is designated by the Holder at the time of such surrender;
provided, however, no warrants for fractional shares of Common Stock shall be
given.
 
(d)           Issuance of New Warrants. Whenever the Company is required to
issue a new Warrant pursuant to the terms of this Warrant, such new Warrant (i)
shall be of like tenor with this Warrant, (ii) shall represent, as indicated on
the face of such new Warrant, the right to purchase the Warrant Shares then
underlying this Warrant (or in the case of a new Warrant being issued pursuant
to Section 8(a) or Section 8(c), the Warrant Shares designated by the Holder
which, when added to the number of shares of Common Stock underlying the other
new Warrants issued in connection with such issuance, does not exceed the number
of Warrant Shares then underlying this Warrant), (iii) shall have an issuance
date, as indicated on the face of such new Warrant which is the same as the
Issuance Date, and (iv) shall have the same rights and conditions as this
Warrant.
 
(e)           Warrant Register. The Company shall register this Warrant, upon
records to be maintained by the Company for that purpose (the “Warrant
Register”), in the name of the record Holder hereof from time to time.
 
9.           NOTICES.  Whenever notice is required to be given under this
Warrant, unless otherwise provided herein, such notice shall be given in
accordance with Section 9(f) of the Securities Purchase Agreement. The Company
shall provide the Holder with prompt written notice of all actions taken
pursuant to this Warrant, including in reasonable detail a description of such
action and the reason therefor. Without limiting the generality of the
foregoing, the Company will give written notice to the Holder (i) as soon as
practicable upon each adjustment of the Exercise Price and the number of Warrant
Shares, setting forth in reasonable detail, and certifying, the calculation of
such adjustment(s) and (ii) at least fifteen (15) days prior to the date on
which the Company closes its books or takes a record (A) with respect to any
dividend or distribution upon the shares of Common Stock, (B) with respect to
any grants, issuances or sales of any Options, Convertible Securities or rights
to purchase stock, warrants, securities, indebtedness, or other property pro
rata to holders of shares of Common Stock or (C) for determining rights to vote
with respect to any Fundamental Transaction, dissolution or liquidation,
provided in each case that such information (to the extent it constitutes, or
contains, material, non-public information regarding the Company or any of its
Subsidiaries) shall be made known to the public prior to or in conjunction with
such notice being provided to the Holder.  To the extent that any notice
provided hereunder (whether under this Section 9 or otherwise) constitutes, or
contains, material, non-public information regarding the Company or any of its
Subsidiaries, the Company shall simultaneously file such notice with the SEC (as
defined in the Securities Purchase Agreement) pursuant to a Current Report on
Form 8-K.
 
10.           AMENDMENT AND WAIVER.  Except as otherwise provided herein, the
provisions of this Warrant (other than Section 1(f)) may be amended and the
Company may take any action herein prohibited, or omit to perform any act herein
required to be performed by it, only if the Company has obtained the written
consent of the Holder. No waiver shall be effective unless it is in writing and
signed by an authorized representative of the waiving party.
 
 
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11.           SEVERABILITY.  If any provision of this Warrant is prohibited by
law or otherwise determined to be invalid or unenforceable by a court of
competent jurisdiction, the provision that would otherwise be prohibited,
invalid or unenforceable shall be deemed amended to apply to the broadest extent
that it would be valid and enforceable, and the invalidity or unenforceability
of such provision shall not affect the validity of the remaining provisions of
this Warrant so long as this Warrant as so modified continues to express,
without material change, the original intentions of the parties as to the
subject matter hereof and the prohibited nature, invalidity or unenforceability
of the provision(s) in question does not substantially impair the respective
expectations or reciprocal obligations of the parties or the practical
realization of the benefits that would otherwise be conferred upon the parties.
The parties will endeavor in good faith negotiations to replace the prohibited,
invalid or unenforceable provision(s) with a valid provision(s), the effect of
which comes as close as possible to that of the prohibited, invalid or
unenforceable provision(s).
 
12.           GOVERNING LAW. This Warrant shall be governed by and construed and
enforced in accordance with, and all questions concerning the construction,
validity, interpretation and performance of this Warrant shall be governed by,
the internal laws of the State of New York, without giving effect to any choice
of law or conflict of law provision or rule (whether of the State of New York or
any other jurisdictions) that would cause the application of the laws of any
jurisdictions other than the State of New York. Each of the Holder and the
Company hereby irrevocably submits to the exclusive jurisdiction of the state
and federal courts sitting in The City of New York, Borough of Manhattan, for
the adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any manner
permitted by law. Nothing contained herein shall be deemed or operate to
preclude either the Holder or the Company from bringing suit or taking other
legal action against the Holder or the Company in any other jurisdiction to
enforce a judgment or other court ruling in favor of such Holder or the Company.
EACH OF THE HOLDER AND THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY
HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY
DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS WARRANT OR ANY
TRANSACTION CONTEMPLATED HEREBY.
 
13.           CONSTRUCTION; HEADINGS. This Warrant shall be deemed to be jointly
drafted by the Company and the Holder and shall not be construed against any
Person as the drafter hereof.  The headings of this Warrant are for convenience
of reference and shall not form part of, or affect the interpretation of, this
Warrant. Terms used in this Warrant but defined in the other Transaction
Documents shall have the meanings ascribed to such terms on the Closing Date (as
defined in the Securities Purchase Agreement) in such other Transaction
Documents unless otherwise consented to in writing by the Holder.
 
14.           DISPUTE RESOLUTION. In the case of a dispute as to the
determination of the Exercise Price, the Exchange Amount, the Exchange Price,
the Closing Sale Price, the Closing Bid Price, the Bid Price or fair market
value or the arithmetic calculation of the Warrant Shares (as the case may be),
the Company or the Holder (as the case may be) shall submit the disputed
determinations or arithmetic calculations (as the case
 
 
18

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may be) via facsimile (i) within two (2) Business Days after receipt of the
applicable notice giving rise to such dispute to the Company or the Holder (as
the case may be) or (ii) if no notice gave rise to such dispute, at any time
after the Holder or the Company (as the case may be) learned of the
circumstances giving rise to such dispute.  If the Holder and the Company are
unable to agree upon such determination or calculation (as the case may be) of
the Exercise Price, the Exchange Amount, the Exchange Price, the Closing Sale
Price, the Closing Bid Price, the Bid Price or fair market value or the number
of Warrant Shares (as the case may be) within three (3) Business Days of such
disputed determination or arithmetic calculation being submitted to the Company
or the Holder (as the case may be), then the Company shall, within two (2)
Business Days submit via facsimile (a) the disputed arithmetic calculation of
the Warrant Shares, the disputed determination of the Exercise Price, the
Exchange Amount, the Exchange Price, the Closing Sale Price, the Closing Bid
Price, the Bid Price or fair market value (as the case may be) to an
independent, reputable investment bank selected by the Holder or (b) if
acceptable to the Holder, the disputed arithmetic calculation of the Warrant
Shares to the Company’s independent, outside accountant.  The Company shall
cause at its expense the investment bank or the accountant (as the case may be)
to perform the determinations or calculations (as the case may be) and notify
the Company and the Holder of the results no later than ten (10) Business Days
from the time it receives such disputed determinations or calculations (as the
case may be). Such investment bank’s or accountant’s determination or
calculation (as the case may be) shall be binding upon all parties absent
demonstrable error.
 
15.           REMEDIES, CHARACTERIZATION, OTHER OBLIGATIONS, BREACHES AND
INJUNCTIVE RELIEF. The remedies provided in this Warrant shall be cumulative and
in addition to all other remedies available under this Warrant and the other
Transaction Documents, at law or in equity (including a decree of specific
performance and/or other injunctive relief), and nothing herein shall limit the
right of the Holder to pursue its actual damages for any failure by the Company
to comply with the terms of this Warrant. The Company covenants to the Holder
that there shall be no characterization concerning this instrument other than as
expressly provided herein. Amounts set forth or provided for herein with respect
to payments, exercises and the like (and the computation thereof) shall be the
amounts to be received by the Holder and shall not, except as expressly provided
herein, be subject to any other obligation of the Company (or the performance
thereof). The Company acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to the Holder and that the remedy at law
for any such breach may be inadequate. The Company therefore agrees that, in the
event of any such breach or threatened breach, the holder of this Warrant shall
be entitled, in addition to all other available remedies, to an injunction
restraining any breach, without the necessity of showing economic loss and
without any bond or other security being required. The Company shall provide all
information and documentation to the Holder that is requested by the Holder to
enable the Holder to confirm the Company’s compliance with the terms and
conditions of this Warrant (including, without limitation, compliance with
Section 2 hereof). The issuance of shares and certificates for shares as
contemplated hereby upon the exercise of this Warrant shall be made without
charge to the Holder or such shares for any issuance tax or other costs in
respect thereof, provided that the Company shall not be required to pay any tax
which may be payable in respect of any transfer involved in the issuance and
delivery of any certificate in a name other than the Holder or its agent on its
behalf.
 
 
19

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16.           TRANSFER. This Warrant may be offered for sale, sold, transferred
or assigned without the consent of the Company; provided such transfer complies
with applicable law.
 
17.           CERTAIN DEFINITIONS.  For purposes of this Warrant, the following
terms shall have the following meanings:
 
(a)           “Bid Price” means, for any security as of the particular time of
determination, the bid price for such security on the Principal Market as
reported by Bloomberg as of such time of determination, or, if the Principal
Market is not the principal securities exchange or trading market for such
security, the bid price of such security on the principal securities exchange or
trading market where such security is listed or traded as reported by Bloomberg
as of such time of determination, or if the foregoing does not apply, the bid
price of such security in the over-the-counter market on the electronic bulletin
board for such security as reported by Bloomberg as of such time of
determination, or, if no bid price is reported for such security by Bloomberg as
of such time of determination, the average of the bid prices of all of the
market makers for such security as reported in the “pink sheets” by OTC Markets
Group Inc. (formerly Pink Sheets LLC) (the “Pink Sheets”) as of such time of
determination. If the Bid Price cannot be calculated for a security as of the
particular time of determination on any of the foregoing bases, the Bid Price of
such security as of such time of determination shall be the fair market value as
mutually determined by the Company and the Holder. If the Company and the Holder
are unable to agree upon the fair market value of such security, then such
dispute shall be resolved in accordance with the procedures in Section 14. All
such determinations shall be appropriately adjusted for any stock dividend,
stock split, stock combination or other similar transaction during such period.
 
(b)           “Black Scholes Exchange Value” means the value of an option for
the number of shares equal to the portion of the Warrant being exchanged at the
applicable Exchange Date as set forth in the applicable Exchange Notice as such
value is determined calculated using the Black Scholes Option Pricing Model
obtained from the “OV” function on Bloomberg utilizing (i) an underlying price
per share equal to the Closing Sale Price of the Common Stock as of the Issuance
Date (adjusted upward to the same extent that the Exercise Price hereunder has
been adjusted upward pursuant to Section 2(a) hereof), (ii) a risk-free interest
rate corresponding to the U.S. Treasury rate for a period equal to the remaining
term of the Warrant as of such Exchange Date, (iii) a strike price equal to the
Exercise Price in effect at the time of the applicable Exchange, (iv) an
expected volatility equal to 135% and (v) a deemed remaining term of the Warrant
of five (5) years (regardless of the actual remaining term of the Warrant).
 
(c)            “Black Scholes Value -- FT” means the value of the unexercised
portion of this Warrant remaining on the date of the Holder’s request pursuant
to Section 4(c), which value is calculated using the Black Scholes Option
Pricing Model obtained from the “OV” function on Bloomberg utilizing (i) an
underlying price per share equal to the greater of (1) the highest Closing Sale
Price of the Common Stock during the period beginning on the Trading Day
immediately preceding the earliest to occur of (x) the public disclosure of the
applicable Fundamental Transaction, (y) the consummation of the applicable
Fundamental Transaction and (z) the date on which the Holder first became aware
of the applicable Fundamental Transaction and ending on the Trading Day of the
Holder’s request pursuant to Section 4(c) and (2) the sum of the price per share
being offered in cash in the applicable Fundamental Transaction (if any)
 
 
20

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plus the value of the non-cash consideration being offered in the applicable
Fundamental Transaction (if any), (ii) a strike price equal to the Exercise
Price in effect on the date of the Holder’s request pursuant to Section 4(c),
(iii) a risk-free interest rate corresponding to the U.S. Treasury rate for a
period equal to the greater of (1) the remaining term of this Warrant as of the
date of the Holder’s request pursuant to Section 4(c) and (2) the remaining term
of this Warrant as of the date of consummation of the applicable Fundamental
Transaction or as of the date of the Holder’s request pursuant to Section 4(c)
if such request is prior to the date of the consummation of the applicable
Fundamental Transaction and (iv) an expected volatility equal to the greater of
135% and the 100 day volatility obtained from the HVT function on Bloomberg
(determined utilizing a 365 day annualization factor) as of the Trading Day
immediately following the earliest to occur of (x) the public disclosure of the
applicable Fundamental Transaction, (y) the consummation of the applicable
Fundamental Transaction and (z) the date on which the Holder first became aware
of the applicable Fundamental Transaction.
 
(d)           “Bloomberg” means Bloomberg, L.P.
 
(e)           “Business Day” means any day other than Saturday, Sunday or other
day on which commercial banks in The City of New York are authorized or required
by law to remain closed.
 
(f)           “Closing Bid Price” and “Closing Sale Price” means, for any
security as of any date, the last closing bid price and the last closing trade
price, respectively, for such security on the Principal Market, as reported by
Bloomberg, or, if the Principal Market begins to operate on an extended hours
basis and does not designate the closing bid price or the closing trade price
(as the case may be) then the last bid price or last trade price, respectively,
of such security prior to 4:00:00 p.m., New York time, as reported by Bloomberg,
or, if the Principal Market is not the principal securities exchange or trading
market for such security, the last closing bid price or last trade price,
respectively, of such security on the principal securities exchange or trading
market where such security is listed or traded as reported by Bloomberg, or if
the foregoing do not apply, the last closing bid price or last trade price,
respectively, of such security in the over-the-counter market on the electronic
bulletin board for such security as reported by Bloomberg, or, if no closing bid
price or last trade price, respectively, is reported for such security by
Bloomberg, the average of the bid prices, or the ask prices, respectively, of
all of the market makers for such security as reported in the Pink Sheets. If
the Closing Bid Price or the Closing Sale Price cannot be calculated for a
security on a particular date on any of the foregoing bases, the Closing Bid
Price or the Closing Sale Price (as the case may be) of such security on such
date shall be the fair market value as mutually determined by the Company and
the Holder. If the Company and the Holder are unable to agree upon the fair
market value of such security, then such dispute shall be resolved in accordance
with the procedures in Section 14. All such determinations shall be
appropriately adjusted for any stock dividend, stock split, stock combination or
other similar transaction during such period.
 
(g)           “Common Stock” means (i) the Company’s shares of common stock,
$0.001 par value per share, and (ii) any capital stock into which such common
stock shall have been changed or any share capital resulting from a
reclassification of such common stock.
 
 
21

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(h)           “Common Stock Deemed Outstanding” means, as of the particular time
of determination, the number of shares of Common Stock actually issued and
outstanding at such time (but excluding any issued and outstanding shares of
Common Stock owned or held by or for the account of the Company).
 
(i)           “Convertible Securities” means any stock or other security (other
than Options) that is at any time and under any circumstances, directly or
indirectly, convertible into, exercisable or exchangeable for, or which
otherwise entitles the holder thereof to acquire, any shares of Common Stock.
 
(j)           “Eligible Market” means the OTC Bulletin Board, the New York Stock
Exchange, the Nasdaq Global Select Market, the Nasdaq Global Market, or the
Principal Market.
 
(k)   “Equity Conditions” means: (i) the Company shall have complied in all
respects with all applicable securities laws and regulations and all rules and
regulations of the Eligible Markets in respect of the offer, sale and issuance
of the Securities under the Transaction Documents, (ii) (A) the Common Stock
(including all shares of Common Stock to be received by Holder) shall be listed
or designated for quotation (as applicable) on an Eligible Market and (B) no
Trading Market Event (or event which with notice or passage of time would be a
Trading Market Event) has occurred, nor shall there be any material
deterioration in the Company’s NYSE MKT Non-Compliance (as defined in the
Securities Purchase Agreement) that would reasonably be expected to make
delisting or suspension by the NYSE MKT materially more likely (it being
understood that a decrease in the share price of Common Stock would not be
deemed a material deterioration) or there shall be pending or threatened any
other delisting or suspension or Trading Market Event, (iii) the Company shall
be in compliance in all material respects with all of its obligations under all
of the Transaction Documents, (iv) the Holder shall not be in possession of any
material, non-public information provided to it by the Company, any of its
affiliates or any of their respective officers, employees, directors,
representatives, agents or the like for more than one (1) Business Day or for
three (3) Business Days if provided to it pursuant to and in accordance
with Section 4(m) of the Securities Purchase Agreement, (v) each of the
Registration Statement and the Prospectus contained therein (each as defined in
the Securities Purchase Agreement) shall continue to be effective and fully
available for use with respect to issuance of all of the Securities, including,
without limitation, any issuance of Warrant Shares pursuant to a cash exercise
hereof, including without limitation a Mandatory Exercise under Section 18, (vi)
all Common Shares and Warrant Shares (including any Warrant Shares to be
received upon exercise or exchange of this Warrant and including any Warrant
Shares to be issued in a cash exercise) shall be then (or upon such issuance (as
the case may be)) freely tradeable by Holder without restriction of any kind or
nature (and the Company shall have no knowledge of any fact which would
reasonably be expected to negate the foregoing in the foreseeable future), (vii)
no limitation shall be applicable with respect to the issuance of any Warrant
Shares hereunder (other than under Section 1(f)(i) and Section 1(f)(ii)), (viii)
the Company is fully reporting under the 1934 and Rule 144 and has been such on
a timely basis for the 15 months immediately preceding the date of
determination, and (viii) all Common Shares and all Warrant Shares shall have
been properly and timely delivered under the Securities Purchase Agreement and
this Warrant, including without limitation, all Warrant Shares issuable under
Section 5 hereof and all Common Shares and Warrant Shares have been, and will
be, delivered via DWAC.  For purposes hereof a “Trading Market Event” shall mean
if the Company or the Common Stock or any shares of Common Stock issued or
issuable hereunder or under any other Transaction Document shall cease or fail
to be listed for trading or quoted on an Eligible Market or shall fall below any
dollar
 
 
 
22

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threshold for listing or qualification; provided, that such Trading Market Event
shall only apply for so long as the Common Stock fails to be listed for trading
or quoted on an Eligible Market or is below any dollar threshold for listing or
qualification.
 
(l)           “Equity Conditions Failure” means that on any applicable date of
determination, any of the Equity Conditions have not been satisfied then or
within the past three months or is then reasonably expected to occur; provided,
however, that if, as of the applicable date of determination, the Common Stock
had ceased or failed to be listed for trading or quoted on an Eligible Market
within the past three months, but as of such date of determination has since
been listed or designated for quotation (as applicable) on an Eligible Market
and is then trading on such Eligible Market (including all Common Shares and all
Warrant Shares (whether previously issued or issuable in the future), then the
prior failure to be so listed for trading shall no longer be deemed an Equity
Conditions Failure in respect of such applicable date of determination.
 
(m)           “Expiration Date” means the date that is the fifth (5th)
anniversary of the Issuance Date or, if such date falls on a day other than a
Business Day or on which trading does not take place on the Principal Market (a
“Holiday”), the next date that is not a Holiday.
 
(n)           “Fundamental Transaction” means that (i) the Company shall,
directly or indirectly, in one or more related transactions, (1) consolidate or
merge with or into (whether or not the Company is the surviving corporation) any
other Person unless the shareholders of the Company immediately prior to such
consolidation or merger continue to hold more than 50% of the outstanding shares
of Voting Stock after such consolidation or merger, or (2) sell, lease, license,
assign, transfer, convey or otherwise dispose of all or substantially all of its
properties or assets to any other Person, or (3) allow any other Person to make
a purchase, tender or exchange offer that is accepted by the holders of more
than 50% of the outstanding shares of Voting Stock of the Company (not including
any shares of Voting Stock of the Company held by the Person or Persons making
or party to, or associated or affiliated with the Persons making or party to,
such purchase, tender or exchange offer), or (4) consummate a stock or share
purchase agreement or other business combination (including, without limitation,
a reorganization, recapitalization, spin-off or scheme of arrangement) with any
other Person whereby such other Person acquires more than 50% of the outstanding
shares of Voting Stock of the Company (not including any shares of Voting Stock
of the Company held by the other Person or other Persons making or party to, or
associated or affiliated with the other Persons making or party to, such stock
or share purchase agreement or other business combination), or (ii) any “person”
or “group” (as these terms are used for purposes of Sections 13(d) and 14(d) of
the 1934 Act and the rules and regulations promulgated thereunder) is or shall
become the “beneficial owner” (as defined in Rule 13d-3 under the 1934 Act),
directly or indirectly, of 50% of the aggregate ordinary voting power
represented by issued and outstanding Voting Stock of the Company; provided that
a sale of any or all of the properties or assets held by the Company in India
shall not be deemed a Fundamental Transaction for the purposes of this Warrant.
 
(o)           “Options” means any rights, warrants or options to subscribe for
or purchase shares of Common Stock or Convertible Securities.
 
(p)           “Parent Entity” of a Person means an entity that, directly or
indirectly, controls the applicable Person and whose common stock or equivalent
equity security is quoted or listed on an Eligible Market, or, if there is more
than one such Person or Parent Entity, the Person or Parent Entity with the
largest public market capitalization as of the date of consummation of the
Fundamental Transaction.
 
 
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(q)           “Person” means an individual, a limited liability company, a
partnership, a joint venture, a corporation, a trust, an unincorporated
organization, any other entity or a government or any department or agency
thereof.
 
(r)           “Principal Market” means the NYSE MKT.
 
(s)           “Successor Entity” means the Person (or, if so elected by the
Holder, the Parent Entity) formed by, resulting from or surviving any
Fundamental Transaction or the Person (or, if so elected by the Holder, the
Parent Entity) with which such Fundamental Transaction shall have been entered
into.
 
(t)           “Trading Day” means, as applicable, (x) with respect to all price
determinations relating to the Common Stock, any day on which the Common Stock
is traded on the Principal Market, or, if the Principal Market is not the
principal trading market for the Common Stock, then on the principal securities
exchange or securities market on which the Common Stock is then traded, provided
that “Trading Day” shall not include any day on which the Common Stock is
scheduled to trade on such exchange or market for less than 4.5 hours or any day
that the Common Stock is suspended from trading during the final hour of trading
on such exchange or market (or if such exchange or market does not designate in
advance the closing time of trading on such exchange or market, then during the
hour ending at 4:00:00 p.m., New York time) unless such day is otherwise
designated as a Trading Day in writing by the Holder or (y) with respect to all
determinations other than price determinations relating to the Common Stock, any
day on which The New York Stock Exchange (or any successor thereto) is open for
trading of securities.
 
(u)           “Voting Stock” of a Person means capital stock of such Person of
the class or classes pursuant to which the holders thereof have the general
voting power to elect, or the general power to appoint, at least a majority of
the board of directors, managers or trustees of such Person (irrespective of
whether or not at the time capital stock of any other class or classes shall
have or might have voting power by reason of the happening of any contingency).
 
(v)           “VWAP” means, for any security as of any date, the dollar
volume-weighted average price for such security on the Principal Market (or, if
the Principal Market is not the principal trading market for such security, then
on the principal securities exchange or securities market on which such security
is then traded) during the period beginning at 9:30:01 a.m., New York time, and
ending at 4:00:00 p.m., New York time, as reported by Bloomberg through its
“Volume at Price” function or, if the foregoing does not apply, the dollar
volume-weighted average price of such security in the over-the-counter market on
the electronic bulletin board for such security during the period beginning at
9:30:01 a.m., New York time, and ending at 4:00:00 p.m., New York time, as
reported by Bloomberg, or, if no dollar volume-weighted average price is
reported for such security by Bloomberg for such hours, the average of the three
highest closing bid prices and the three lowest closing ask prices of all of the
market makers for such security as reported in the Pink Sheets. If VWAP cannot
be calculated for such security on such date on any of the foregoing bases, the
VWAP of such security on such date shall be the fair market value as mutually
determined by the Company and the Holder. If the Company and the Holder are
unable to agree upon the fair market value of such security, then such dispute
shall be resolved in accordance with the procedures in Section 14. All such
determinations shall be
 
 
24

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

 
 
appropriately adjusted for any stock dividend, stock split, stock combination or
other similar transaction during such period.
 
18.           MANDATORY EXERCISE. If at any time after the date of issuance of
this Warrant, for twenty (20) consecutive Trading Days the Closing Bid Price of
the Common Stock for each Trading Day during such period is at a price greater
than or equal to 25% above the Exercise Price as in effect at the end of such
Trading Day, and the average daily dollar volume during such twenty (20)
consecutive Trading Days is equal to or exceeds $150,000 (such period being the
“Trigger Period”), then (provided no Equity Conditions Failure shall have
occurred or be continuing at any time during such period), the Company shall
have the right to require the Holder to exercise for cash all, but not less than
all, of this Warrant for all of the then-remaining Warrant Shares as further set
forth below. The Company may exercise its right to require exercise under this
Section 18 (the “Mandatory Exercise Right”) on one occasion (or, if the Holder
delivers to the Company a Blocker Notice (as defined below), such number of
additional occasions as necessary to permit a Mandatory Exercise with respect to
the entire amount of Warrant Shares issuable hereunder). The Company shall
exercise its Mandatory Exercise Right (to the extent permitted hereby) by
delivering, within ten (10) Trading Days following the end of the Trigger
Period, a written notice thereof by facsimile and overnight courier to the
Holder (the “Mandatory Exercise Notice” and the date such notice by facsimile is
deemed to be delivered in accordance with Section 9(f) of the Securities
Purchase Agreement is referred to as the “Mandatory Exercise Notice Date”). The
Mandatory Exercise Notice shall be irrevocable. The Mandatory Exercise Notice
shall (1) state the Trading Day selected for the Mandatory Exercise in
accordance with this Section 18, which Trading Day shall be at least five (5)
Trading Days but not more than fifteen (15) Trading Days following the Mandatory
Exercise Notice Date (the “Mandatory Exercise Date”), (2) state the number of
shares of Common Stock to be issued to the Holder on the Mandatory Exercise Date
and (3) contain a certification from the Chief Executive Officer of the Company
that there has been no Equity Conditions Failure as of the Mandatory Exercise
Notice Date. Any portion of this Warrant exercised by the Holder after the
Mandatory Exercise Notice Date shall reduce the number of Warrant Shares for
which this Warrant is required to be exercised on the Mandatory Exercise Date.
If the Company has elected a Mandatory Exercise, the mechanics of exercise set
forth in Section 1 shall apply, to the extent applicable, as if the Company had
received from the Holder on the Mandatory Exercise Date an Exercise Notice with
respect to all of the then-remaining Warrant Shares (or the Permitted Exercise
Amount (as defined below) of Warrant Shares, as applicable). Notwithstanding
anything contained in this Section 18 to the contrary (but subject to the last
sentence of this Section 18), if (I) the Closing Bid Price of the Common Stock
on any Trading Day during the period commencing on the Mandatory Exercise Notice
Date and ending on the Trading Day immediately preceding the Mandatory Exercise
Date is less than the Exercise Price then in effect at the end of trading on
such day; (II) the daily dollar trading volume (as reported on Bloomberg) of the
Common Stock on the applicable Eligible Market on any Trading Day during the
period commencing on the Mandatory Exercise Notice Date and ending on the
Trading Day immediately preceding the Mandatory Exercise Date is less than
$150,000; or (III) an Equity Conditions Failure occurs on any day since the
occurrence of the Trigger Period and prior to the Mandatory Exercise Date, then
the Mandatory Exercise Notice delivered to the Holder shall be null and void ab
initio and the Mandatory Exercise shall not occur and the Mandatory Exercise
Right shall expire and no longer be exercisable. If the Company elects to cause
a mandatory exercise of this Warrant pursuant to this Section 18, then it must
simultaneously take the same
 
 
25

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action with respect to all of the other SPA Warrants, if any, held by any person
other than Holder. Notwithstanding anything contained in this Section 18 to the
contrary, an effort by the Company to exercise its right under this Section 18
shall be stayed to the extent the Holder delivers a written notice to the
Company stating that such exercise would result in a violation of Section 1(f)
(a “Blocker Notice”), which Blocker Notice may be delivered at any time prior to
the Mandatory Exercise Date, in which case the Company shall have the right to
require the Holder to exercise this Warrant for such number of Warrant Shares
that may be exercise hereunder without violating Section 1(f) (the “Permitted
Exercise Amount”) and from time to time thereafter the Holder shall exercise
this Warrant (so long as no Equity Conditions Failure has occurred from and
after the Mandatory Exercise Notice Date) in such amounts and from time to time
until fully exercised, subject to ongoing compliance with Section 1(f) hereof
and subject to Holder’s rights hereunder and the other terms and conditions
hereof following the Mandatory Exercise Date.  For clarification, if an Equity
Condition Failure shall occur, this Section 18 shall thereafter no longer be
effective and Holder shall thereafter have no obligations under this Section 18.
 
[signature page follows]
 

  
 
 
 
 
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IN WITNESS WHEREOF, the Company has caused this Warrant to Purchase Common Stock
to be duly executed as of the Issuance Date set out above.
 
 

 
GEOGLOBAL RESOURCES INC.
 
         
 
By:
      Name:       Title:            

 
 
 
 
 
 
 
 
 
 
 
 
 
 

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EXHIBIT A TO EXHIBIT A
TO EXHIBIT 10.1
 
EXERCISE NOTICE
TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS
WARRANT TO PURCHASE COMMON STOCK
 
GEOGLOBAL RESOURCES INC.
 
The undersigned holder hereby exercises the right to purchase _________________
of the shares of Common Stock (“Warrant Shares”) of GeoGlobal Resources Inc., a
Delaware corporation (the “Company”), evidenced by Warrant to Purchase Common
Stock No. _______ (the “Warrant”). Capitalized terms used herein and not
otherwise defined shall have the respective meanings set forth in the Warrant.
 
1.           Form of Exercise Price.  The Holder intends that payment of the
Exercise Price shall be made as:
 
 
____________
a “Cash Exercise” with respect to _________________ Warrant Shares; and/or

 
 
____________
a “Cashless Exercise” with respect to _______________ Warrant Shares.

 
In the event that the Holder has elected a Cashless Exercise with respect to
some or all of the Warrant Shares to be issued pursuant hereto, the Holder
hereby represents and warrants that (i) this Exercise Notice was executed by the
Holder at __________ [a.m.][p.m.] on the date set forth below and (ii) if
applicable, the Bid Price as of such time of execution of this Exercise Notice
was $________.
 
2.           Payment of Exercise Price. In the event that the Holder has elected
a Cash Exercise with respect to some or all of the Warrant Shares, the Holder
shall pay the Aggregate Exercise Price in the sum of $___________________ to the
Company in accordance with the terms of the Warrant.
 
3.           Delivery of Warrant Shares and Net Number of shares of Common
Stock.  The Company shall deliver to Holder, or its designee or agent as
specified below, __________ shares of Common Stock in respect of the exercise
contemplated hereby.  Delivery shall be made to Holder, or for its benefit, to
the following address:
 
_______________________
_______________________
_______________________
_______________________
 
Date: _______________ __, ______
 
 
 
 

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

 

 
Name of Registered Holder
 
By:         ___________________________  
Name:
Title:
 
Account
Number:_________________________________________________________________________________                                      
          (if electronic book entry transfer)
 
Transaction Code
Number:__________________________________________________________________________
          (if electronic book entry transfer)
 

 
 
 

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

 
 
EXHIBIT B TO EXHIBIT A
TO EXHIBIT 10.1
 
EXCHANGE NOTICE
TO BE EXECUTED BY THE REGISTERED HOLDER TO EXCHANGE THIS
WARRANT TO PURCHASE COMMON STOCK
 
GEOGLOBAL RESOURCES INC.
 
The undersigned holder hereby exercises the right to exchange the Warrant to
Purchase Common Stock No. _______ (the “Warrant”) of GeoGlobal Resources Inc., a
Delaware corporation (the “Company”) as described. Capitalized terms used herein
and not otherwise defined shall have the respective meanings set forth in the
Warrant.
 
Date of Exchange:   ___________________
 
1.
The total number of shares with respect to which this Warrant is being
exchanged: _________________

 
2.
Black Scholes Exchange Value (as defined in Section 17) for an option to
purchase _________________________ [SAME # AS FROM 1 ABOVE] shares of Common
Stock: $ ______________.

 
Resulting Exchange Amount: $______________ [insert from item 2 above]
 
3.
Exchange Price: Closing Bid Price of the Common Stock as of two (2) Trading Days
prior to the date of Exchange (as such Closing Bid Price is defined in Section
17 herein): $______________.

 
Resulting Exchange Number [Exchange Amount/Exchange Price as set forth in 3
above] (if issuer is permitted to elect to issue shares of Common
Stock):_____________ shares of Common Stock
 
 
Account for Wire Transfer:__________________________________________________
 
Account for Share issuance (if Company is permitted to elect and so
elects):___________
 
________________________________________________________________________
 
Date: _______________ __, ______
 

Name of Registered Holder
 
By:         ___________________________  
Name:
Title:
 
 
 
 

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EXHIBIT C TO EXHIBIT A
TO EXHIBIT 10.1
 
ACKNOWLEDGMENT
 
The Company hereby acknowledges this [Exercise Notice][Exchange Notice] and
hereby directs ______________ to issue the above indicated number of shares of
Common Stock in accordance with the Transfer Agent Instructions dated _________,
20__, from the Company and acknowledged and agreed to by _______________.
 
 

 
GEOGLOBAL RESOURCES INC.
 
         
 
By:
      Name:       Title:            

 
 
 
 
 
 

 

 
 
 

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

 
 
 
EXHIBIT D TO EXHIBIT A
TO EXHIBIT 10.1
 
ASSIGNMENT FORM

(To assign the foregoing warrant, execute
this form and supply required information.
Do not use this form to exercise the warrant.)

FOR VALUE RECEIVED, [____] all of or [_______] shares of the foregoing Warrant
and all rights evidenced thereby are hereby assigned to
 

_______________________________________________ whose address is

_______________________________________________________________.

_______________________________________________________________

Dated:  ______________, _______

 
Holder’s Signature:            _____________________________

Holder’s Address:              _____________________________

_____________________________

 
 
 
 

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EXHIBIT B TO
EXHIBIT 10.1
 
 
 
 
[FORM OF OPINION OF PAUL, WEISS, RIFKIND, WHARTON & GARRISON LLP]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

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EXHIBIT C TO
EXHIBIT 10.1
 
 
 
 
 
[TRANSFER AGENT INSTRUCTIONS]
 
 
 
 
 
 
 
 
 
 
 
 
 

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