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PREFERRED STOCK PURCHASE AGREEMENT

This Preferred Stock Purchase Agreement (“Agreement”) is entered into and
effective as of August 25, 2010 (“Effective Date”), by and between Revonergy
Inc., a Nevada corporation (“Company”), and Kodiak Capital Group, LLC, a
Delaware limited liability company (including its designees, successors and
assigns, “Investor”).

RECITALS

A.           The parties desire that, upon the terms and subject to the
conditions contained herein, the Company shall issue to Investor, and Investor
shall purchase from the Company, from time to time as provided herein, up to
$500,000.00 of shares of Series A Preferred Stock; and

B.            The offer and sale of the Securities provided for herein are being
made without registration under the Act, in reliance upon the provisions of
Section 4(2) of the Act, Regulation D promulgated under the Act, and such other
exemptions from the registration requirements of the Act as may be available
with respect to any or all of the purchases of Securities to be made hereunder.

AGREEMENT

In consideration of the premises, the mutual provisions of this Agreement, and
other good and valuable consideration the receipt and adequacy of which are
hereby acknowledged, Company and Investor agree as follows:

ARTICLE 1
DEFINITIONS

In addition to the terms defined elsewhere in this Agreement:  (a) capitalized
terms that are not otherwise defined herein have the meanings given to such
terms in the Certificate of Designations, and (b) the following terms have the
meanings indicated in this ARTICLE 1:

“Act” means the Securities Act of 1933, as amended.

“Affiliate” means any Person that, directly or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control with a
Person, as such terms are used in and construed under Rule 144 under the
Act.  With respect to Investor, without limitation, any Person owning, owned by,
or under common ownership with Investor, and any investment fund or managed
account that is managed on a discretionary basis by the same investment manager
as Investor will be deemed to be an Affiliate.

“Agreement” means this Preferred Stock Purchase Agreement.

“Bloomberg” means Bloomberg Financial Markets.

“Change in Control” has the meaning set forth within the definition of
Fundamental Transaction, below.

“Certificate of Designations” means the certificate to be filed with the
Secretary of State of the State of Nevada, in the form attached hereto as
Exhibit B.

“Closing” means any one of (i) the Commitment Closing and (ii) each Tranche
Closing.

“Closing Bid Price” and “Closing Sale Price” means, for any security as of any
date, the last closing bid price and last closing trade price, respectively, for
such security on the Trading Market, as reported by Bloomberg, or, if the
Trading 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 p.m., Eastern time, as reported by Bloomberg, or, if the Trading
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
 
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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 any market makers
for such security as reported in the “pink sheets” by Pink Sheets LLC (formerly
the National Quotation Bureau, Inc.).  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 Investor.  If the Company and Investor
are unable to agree upon the fair market value of such security, then such
dispute shall be resolved pursuant to Section 6.7.  All such determinations to
be appropriately adjusted for any stock dividend, stock split, stock combination
or other similar transaction during the applicable calculation period.

“Commitment Closing” has the meaning set forth in Section 2.2

“Commitment Fee” means a non-refundable fee of $25,000.00 (5% of the Maximum
Placement), payable by the Company to Investor in consideration of Investor’s
commitment to fund the investment contemplated by this Agreement.  The
Commitment Fee is payable in cash on the earlier of 1) the initial Investment
Date, in which case the Commitment Fee shall be deducted from the initial
Investment Amount, or 2) 3 months from the execution of the Term Sheet.

“Common Shares” means the Warrant Shares.

“Common Stock” means the common stock, par value $0.001 per share, of the
Company, and any replacement or substitute thereof, or any share capital into
which such Common Stock shall have been changed or any share capital resulting
from a reclassification of such Common Stock.

“Company Termination” has the meaning set forth in Section 3.2.

“Delisting Event” means any time during the term of this Agreement, that the
Common Stock is not listed for and actively and/or regularly trading on a
Trading Market, or is suspended or delisted with respect to the trading of the
shares of Common Stock on a Trading Market.

“Disclosure Schedules” means the disclosure schedules of the Company delivered
concurrently herewith, attached hereto, and incorporated herein by
reference.  The Disclosure Schedules shall contain no material non-public
information.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Fundamental Transaction” means and shall be deemed to have occurred at such
time upon any of the following events:

(i)           a consolidation, merger or other business combination or event or
transaction, except for the transactions set forth on Schedule A to the
Disclosure Schedule, following which the holders of Common Stock immediately
preceding such consolidation, merger, combination or event either (a) no longer
hold a majority of the shares of Common Stock or (b) no longer have the ability
to elect a majority of the board of directors of the Company (a “Change in
Control”);

(ii)          the sale or transfer of all or substantially all of the Company’s
assets, other than in the ordinary course of business; or
 
 
(iii)         a purchase, tender or exchange offer made to the holders of the
outstanding shares of Common Stock.
 
 
“GAAP” means United States generally accepted accounting principles applied on a
consistent basis during the periods involved.
 
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“Indebtedness” means (a) any liabilities for borrowed money or amounts owed in
excess of $100,000 (other than trade accounts payable incurred in the ordinary
course of business), (b) all guaranties, endorsements and other contingent
obligations in respect of Indebtedness of others, whether or not the same are or
should be reflected in the Company’s balance sheet (or the notes thereto),
except guaranties by endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business; and (c)
the present value of any lease payments in excess of $100,000 due under leases
required to be capitalized in accordance with GAAP.
 
“Liens” means a lien, charge, security interest, encumbrance, right of first
refusal, preemptive right or other restriction.
 
“Lock-Up Agreements” means an agreement in the form attached as Exhibit C,
executed by each of the Company’s officers, directors and beneficial owners of
10% or more of the Common Stock, precluding each such Person from participating
in any sale of the Common Stock from the Tranche Notice Date through the Tranche
Closing Date.
 
“Material Adverse Effect” means any material adverse effect on (i) the legality,
validity or enforceability of any Transaction Document, (ii) the results of
operations, assets, business, prospects or financial condition of the Company
and the Subsidiaries, taken as a whole, or (iii) a the Company’s ability to
perform in any material respect on a timely basis its obligations under any
Transaction Document.
 
“Material Agreement” means any material loan agreement, financing agreement,
equity investment agreement or securities instrument to which Company is a
party, any agreement or instrument to which Company and Investor or any
Affiliate of Investor is a party, and any other material agreement listed, or
required to be listed, on any of Company’s reports filed or required to be filed
with the SEC, including without limitation Forms 10-K, 10-Q or 8-K.
 
“Maximum Placement” means $500,000.00.
 
“Maximum Tranche Amount” means, subject to any other applicable limitations set
forth in this Agreement, the Maximum Placement less the amount of any previously
noticed and funded Tranches.

“Officer’s Closing Certificate” means a certificate in customary form reasonably
acceptable to Investor, executed by an authorized officer of the Company.
 
“Opinion” means an opinion from Company’s independent legal counsel, in the form
attached as Exhibit D or in such other form agreed upon by the parties, to be
delivered in connection with the Commitment Closing and any Tranche Closing.
 
“Person” means an individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or subdivision thereof) or other entity
of any kind.
 
“Preferred Shares” means shares of Series A Preferred Stock of the Company
provided for in the Certificate of Designations, to be issued to Investor
pursuant to this Agreement.
 
“Prospectus” includes each prospectus and prospectus supplement (within the
meaning of the Act) related to the sale or offering of any Common Shares,
including without limitation any prospectus or prospectus supplement contained
within the Registration Statement.
 
“Registration Statement” means a valid, current and effective registration
statement registering for resale the shares of Common Stock to be issued as
Warrant Shares hereunder, and except where the context otherwise requires, means
such registration statement, as amended, including (i) all documents filed as a
part thereof or incorporated by reference therein, and (ii) any information
contained or incorporated by reference in a prospectus filed with the SEC in
connection with such registration statement, to the extent such information is
deemed under the Act to be part of such registration statement.
 
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“Regulation D” means Regulation D promulgated under the Act.
 
“Required Approval” means any approval of the Trading Market or the Company’s
stockholders required to be obtained by Company prior to issuing the Securities
pursuant to any applicable rules of the Trading Market.
 
“Required Tranche Documents” has the meaning set forth in Section 2.3(e).
 
“Rule 144” means Rule 144 promulgated by the SEC pursuant to the Act, as such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the SEC having substantially the same effect.
 
“Rule 144 Eligible” means eligible for immediate resale under Rule 144 without
limitation on the amount of securities sold under Rule 144(e) and without
requiring discharge by payment in full of any promissory notes given to the
Company prior to the sale of the securities under Rule 144(d)(2)(iii).
 
“SEC” means the United States Securities and Exchange Commission.
 
“SEC Reports” includes all reports required to be filed by the Company under the
Act and/or the Exchange Act, including pursuant to Section 13(a) or 15(d)
thereof, for the two years preceding the Effective Date (or such shorter period
as the Company was required by law to file such material) and for the period in
which this Agreement is in effect.

 “Securities” includes the Warrant, the Common Shares and the Preferred Shares
issuable pursuant to this Agreement.
 
“Subsidiary” means any Person the Company owns or controls, or in which the
Company, directly or indirectly, owns a majority of the capital stock or similar
interest that would be disclosable pursuant to Regulation S-K, Item 601(b)(21).
 
“Term Sheet” means shall mean an executed instrument between the parties hereto
containing the terms of this and other agreements between the parties, and is
hereby incorporated by reference.

“Termination” has the meaning set forth in Section 3.1.
 
“Termination Date” means the earlier of (i) the date that is the six-month
anniversary of the Effective Date, or (ii) the Tranche Closing Date on which the
sum of the aggregate Tranche Purchase Price for all Tranche Shares equals the
Maximum Placement.
 
“Termination Notice” has the meaning as set forth in Section 3.2.

“Trading Day” means any day on which the Common Stock is traded on the Trading
Market; provided that it shall not include any day on which the Common Stock is
(a) scheduled to trade for less than 5 hours, or (b) suspended from trading.
 
“Trading Market” means the OTC Bulletin Board, the NASDAQ Capital Market, the
NASDAQ Global Market, the NASDAQ Global Select Market, the NYSE Amex, or the New
York Stock Exchange, whichever is at the time the principal trading system,
exchange or market for the Common Stock, but does not include the Pink Sheets
inter-dealer electronic quotation and trading system.
 
“Tranche” has the meaning set forth in Section 2.3(a).
 
“Tranche Amount” means the amount of any individual purchase of Preferred Shares
under this Agreement, as specified by the Company, and shall not exceed the
Maximum Tranche Amount.
 
“Tranche Closing” has the meaning set forth in Section 2.3(f)(iv).
 
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“Tranche Closing Date” has the meaning set forth in Section 2.3(f)(i).
 
“Tranche Notice” has the meaning set forth in Section 2.3(b).
 
“Tranche Notice Date” has the meaning set forth in Section 2.3(b).
 
“Tranche Purchase Price” has the meaning set forth in Section 2.3(b), and shall
be specified in writing by the Company.
 
“Tranche Share Price” means $10.00 per Preferred Share.  The Company may not
issue fractional Preferred Shares.

“Tranche Shares” means the Preferred Shares that are purchased by Investor
pursuant to a Tranche.  For the Maximum Placement, the Company shall issue
50,000 Preferred Shares to Investor.
 
“Transaction Documents” means this Agreement, the other agreements and documents
referenced herein, and the exhibits and schedules hereto and thereto.
 
“Transfer Agent” means Empire Stock Transfer Inc. or any successor transfer
agent for the Common Stock.
 
“VWAP” means, for any date, the volume-weighted average price, calculated by
dividing the aggregate value of Common Stock traded on the Trading Market (price
multiplied by number of shares traded) by the total volume (number of shares) of
Common Stock traded on the Trading Market for such date, or the nearest
preceding Trading Day.
 
“Warrant Shares” means the shares of Common Stock issuable upon exercise of the
Warrant.
 
“Warrant” means the warrant issuable under this Agreement, in the form attached
hereto as Exhibit A, to purchase shares of Common Stock with an aggregate
exercise price equal to 135% of the Maximum Placement (subject to adjustment as
set forth therein).
 
 
ARTICLE 2
PURCHASE AND SALE
 
 
2.1           Agreement to Purchase.  Subject to the terms and conditions herein
and the satisfaction of the conditions to closing set forth in this ARTICLE 2:
 
(a)          Investor hereby agrees to purchase such amounts of Preferred Shares
as the Company may, in its sole and absolute discretion, from time to time elect
to issue and sell to Investor according to one or more Tranches pursuant to
Section 2.3 below; and
 
(b)          The Company agrees to pay the Commitment Fee and to issue the
Preferred Shares, the Common Shares and the Warrant to Investor as provided
herein.
 
2.2           Investment Commitment
 
(a)          Investment Commitment.  The closing of this Agreement (the
“Commitment Closing”) shall be deemed to occur when this Agreement has been duly
executed by both Investor and the Company, and the other Conditions to the
Commitment Closing set forth in Section 2.2(c) have been met.

(b)          Commitment Fee Shares.

INTENTIONALLY OMITTED FROM THIS DOCUMENT
 
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(c)          Conditions to Investment Commitment.  As a condition precedent to
the Commitment Closing, all of the following (the “Conditions to Commitment
Closing”) shall have been satisfied prior to or concurrently with the Company’s
execution and delivery of this Agreement:

 
(i)           the following documents shall have been delivered to
Investor:  (A) this Agreement, executed by the Company; (B) a Secretary’s
Certificate as to (x) the resolutions of the Company’s board of directors
authorizing this Agreement and the Transaction Documents, and the transactions
contemplated hereby and thereby, and (y) a copy of the Company’s current
Articles of Incorporation and other governing documents; (C) the Certificate of
Designations executed by the Company and filed with the Nevada Secretary of
State; (D) the Opinion; and (E) a copy of (1) the Company’s press release (if
any) announcing the transactions contemplated by this Agreement; and (F) a copy
of the Company’s Current Report on Form 8-K, as filed with the SEC, describing
the transaction contemplated by, and attaching a complete copy of, the
Transaction Documents;

(ii)          other than for losses incurred in the ordinary course of business,
there has not been any Material Adverse Effect on the Company since the date of
the last SEC Report filed by the Company, including but not limited to incurring
material liabilities;

(iii)         the representations and warranties of the Company in this
Agreement shall be true and correct in all material respects and the Company
shall have delivered an Officer’s Closing Certificate to such effect to
Investor, signed by an officer of the Company;

(iv)         the Warrant to purchase shares of Common Stock with an aggregate
exercise price equal to 135% of the Maximum Placement (subject to adjustment as
set forth therein) shall have been delivered to Investor; and

(v)          any Required Approval has been obtained.

(d)          Investor’s Obligation to Purchase.  Subject to the prior
satisfaction of all conditions set forth in this Agreement, following Investor’s
receipt of a validly delivered Tranche Notice, Investor shall be required to
purchase from the Company a number of Tranche Shares equal to the permitted
Tranche Share Amount, in the manner described below.

2.3           Tranches to Investor

(a)          Procedure to Elect a Tranche.  Subject to the Maximum Tranche
Amount, the Maximum Placement and the other conditions and limitations set forth
in this Agreement, at any time beginning on the effective date of this
Agreement, the Company may, in its sole and absolute discretion, elect to
exercise one or more individual purchases of Preferred Shares under this
Agreement (each a “Tranche”) according to the following procedure.

(b)          Delivery of Tranche Notice.  The Company shall deliver an
irrevocable written notice (the “Tranche Notice”), in the form attached hereto
as Exhibit E, to Investor stating that the Company shall exercise a Tranche and
stating the number of Preferred Shares which the Company will sell to Investor
at the Tranche Share Price, and the aggregate purchase price for such Tranche
(the “Tranche Purchase Price”).  A Tranche Notice delivered by the Company to
Investor by 4:30 p.m. Eastern time on any Trading Day shall be deemed delivered
on the same day.  A Tranche Notice delivered by the Company to Investor after
4:30 p.m. Eastern time on any Trading Day, or at any time on a non-Trading Day,
shall be deemed delivered on the next Trading Day.  The date that the Tranche
Notice is deemed delivered is the “Tranche Notice Date.”  Each Tranche Notice
shall be delivered via facsimile or electronic mail, with confirming copy by
overnight carrier, in each case to the address set forth in Section 6.2.  Except
for the first Tranche Closing, the Company may not give a Tranche Notice unless
the Tranche Closing for the prior Tranche has occurred or has been cancelled by
the Company pursuant to Section 2.3(g).

(c)          Warrant.  On each Tranche Notice Date, that portion of the Warrant
equal to 135% of the Tranche Amount shall vest and become exercisable, and such
vested portion may be exercised at any time on or after such Tranche Notice
Date.  Any portion of the Warrant that becomes exercisable in connection with
the delivery of the
 
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Tranche Notice and is exercised by Investor in accordance with Section 1.1 of
the Warrant shall be deemed exercised (i) on the applicable Tranche Notice Date,
if the Company receives the Exercise Delivery Documents from Investor by 6:30
p.m. Eastern time on the Tranche Notice Date, or (ii) on the next Trading Day,
if the Company receives the Exercise Delivery Documents from Investor after 6:30
p.m. Eastern Time on the applicable Tranche Notice Date or on any subsequent
date.

(d)          Conditions Precedent to Right to Deliver a Tranche Notice.  The
right of the Company to deliver a Tranche Notice is subject to the satisfaction
(or written waiver by Investor in its sole discretion), on the date of delivery
of such Tranche Notice, of each of the following conditions:

(i)           the Common Stock shall be listed for and currently trading on the
Trading Market, and to the Company’s knowledge there is no notice of any
suspension or delisting with respect the trading of the shares of Common Stock
on such Trading Market;

(ii)          the representations and warranties of the Company set forth in
this Agreement shall be true and correct in all material respects as if made on
such date (except for any representations and warranties that are expressly made
as of a particular date, in which case such representations and warranties shall
be true and correct as of such particular date), and no default shall have
occurred under this Agreement, or any other agreement with Investor or any
Affiliate of Investor, or any other Material Agreement, and the Company shall
deliver an Officer’s Closing Certificate to such effect to Investor, signed by
an officer of the Company;

(iii)         other than losses incurred in the ordinary course of business,
there has been no Material Adverse Effect on the Company since the Commitment
Closing;

(iv)         the Company is not, and will not be as a result of the applicable
Tranche, in default of this Agreement, any other agreement with Investor or any
Affiliate of Investor, or any other Material Agreement;

(v)          there is not then in effect any law, rule or regulation prohibiting
or restricting the transactions contemplated in this Agreement or any other
Transaction Document, or requiring any consent or approval which shall not have
been obtained, nor is there any pending or threatened proceeding or
investigation which may have the effect of prohibiting or adversely affecting
any of the transactions contemplated by this Agreement; no statute, rule,
regulation, executive order, decree, ruling or injunction shall have been
enacted, entered, promulgated or adopted by any court or governmental authority
of competent jurisdiction that prohibits the transactions contemplated by this
Agreement, and no actions, suits or proceedings shall be in progress, pending
or, to the Company’s knowledge threatened, by any person (other than Investor or
any Affiliate of Investor), that seek to enjoin or prohibit the transactions
contemplated by this Agreement;

(vi)         all Common Shares shall have been timely delivered at the times
provided for in this Agreement, including all Warrant Shares issuable pursuant
to any Exercise Notice delivered to Company prior to the Tranche Notice Date;

(vii)        Company is in compliance with all requirements to maintain its
then-current listing on the Trading Market;

(viii)       Company has a sufficient number of duly authorized shares of Common
Stock reserved for issuance in such amount as may be required to fulfill its
obligations pursuant to the Transaction Documents and any outstanding agreements
with Investor and any Affiliate of Investor, including without limitation all
Warrant Shares issuable upon exercise of the Warrant issued in connection with
such Tranche;

(ix)         Company has provided notice of its delivery of the Tranche Notice
to all signatories of a Lock-Up Agreement as required under the Lock-Up
Agreement;
 
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(x)           for any Tranche Notice delivered after the earlier of (A) the
first Tranche Closing, or (B) the one-month anniversary of the Effective Date,
Investor shall have previously received the Commitment Fee.

(e)          Documents to be Delivered at Tranche Closing.  The Closing of any
Tranche and Investor’s obligations hereunder shall additionally be conditioned
upon the delivery to Investor of each of the following (the “Required Tranche
Documents”) on or before the applicable Tranche Closing Date:

(i)           a number of Preferred Shares equal to the Tranche Purchase Price
divided by the Tranche Share Price shall have been delivered to Investor or an
account specified by Investor for the Tranche Shares;

(ii)          the following executed documents:  Opinion, Officer’s Certificate
and Lock-Up Agreements;

(iii)         all Warrant Shares shall have been timely delivered in accordance
with any Exercise Notice delivered to Company prior to the Tranche Closing Date;
and

(iv)         all documents, instruments and other writings required to be
delivered by the Company to Investor on or before the Tranche Closing Date
pursuant to any provision of this Agreement or in order to implement and effect
the transactions contemplated herein.

(f)           Mechanics of Tranche Closing.

(i)           Each of the Company and Investor shall deliver all documents,
instruments and writings required to be delivered by either of them pursuant to
Section 2.3(e) of this Agreement at or prior to each Tranche Closing.  Subject
to such delivery and the satisfaction of the conditions set forth in Section
2.3(c) as of the Tranche Closing Date, the closing of the purchase by Investor
of Preferred Shares shall occur by 5:00 p.m. Eastern time, on the date which is
10 (ten) Trading Days following (and not counting) the Tranche Notice Date (each
a “Tranche Closing Date”) at the offices of Investor.

(ii)          If any portion of the Warrant is exercised by Investor on or after
the Tranche Notice Date and prior to or on the Tranche Closing Date (which
exercise shall be effected by Investor sending the Exercise Delivery Documents
to the Company in accordance with Section 1.1 of the Warrant), the Company shall
send Investor an electronic copy of its share issuance instructions to the
Transfer Agent and shall cause the requisite number of Warrant Shares to be
credited to Investor’s account with DTC as DWAC Shares by 12:00 p.m. Eastern
time on the Trading Day after the date the Company receives the Exercise
Delivery Documents from Investor.

(iii)         On or before each Tranche Closing Date, Investor shall deliver to
the Company, in cash or immediately available funds, the Tranche Purchase Price
to be paid for such Tranche Shares.

(iv)         The closing (each a “Tranche Closing”) for each Tranche shall occur
on the date that both (i) the Company has delivered to Investor all Required
Tranche Documents, and (ii) Investor has delivered to the Company the Tranche
Purchase Price.

2.4           Limitation on Obligations to Purchase and Sell.  Notwithstanding
any other provision, in the event the Closing Bid Price of the Common Stock
during any one or more of the 10 Trading Days following the Tranche Notice Date
is below 20.0% of the initial exercise price of the Warrant issued on the
Effective Date, except as otherwise agreed in writing between the Company and
Investor, the Investor may, at its option, decline to purchase any Tranche
Shares on the Tranche Closing Date.
 
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2.4           Maximum Placement.  Investor shall not be obligated to purchase
any additional Tranche Shares once the aggregate Tranche Purchase Price paid by
Investor equals the Maximum Placement.

2.5           Share Sufficiency.  On or before the date on which any portion of
the Warrant become exercisable, the Company shall have a sufficient number of
duly authorized shares of Common Stock for issuance in such amount as may be
required to fulfill its obligations pursuant to the Transaction Documents and
any outstanding agreements with Investor and any Affiliate of Investor.

ARTICLE 3
TERMINATION

3.1           Termination.  The Investor may elect to terminate this Agreement
and the Company’s right to initiate subsequent Tranches to Investor under this
Agreement (each, a “Termination”) upon the occurrence of any of the following:

(a)          if, at any time, either the Company or any director or executive
officer of the Company has engaged in a transaction or conduct related to the
Company that has resulted in (i) a SEC enforcement action, including without
limitation such director or executive officer being sanctioned by the SEC, or
(ii) a civil judgment or criminal conviction for fraud or misrepresentation, or
for any other offense that, if prosecuted criminally, would constitute a felony
under applicable law;

(b)          on any date after a Delisting Event that lasts for an aggregate of
20 Trading Days during any calendar year;

(c)          if at any time the Company has filed for and/or is subject to any
bankruptcy, insolvency, reorganization or liquidation proceedings or other
proceedings for relief under any bankruptcy law or any law for the relief of
debtors instituted by or against the Company or any Subsidiary of the Company;

(d)          the Company is in breach or default of any Material Agreement,
which breach or default could have a Material Adverse Effect;

(e)          the Company is in breach or default of this Agreement, any
Transaction Document, or any agreement with Investor or any Affiliate of
Investor;

(f)           upon the occurrence of a Fundamental Transaction;

(g)          so long as any Preferred Shares are outstanding, the Company
effects or publicly announces its intention to create a security senior to the
Series A Preferred Stock, or substantially altering the capital structure of the
Company in a manner that materially adversely affects the rights or preferences
of the Series A Preferred Stock except as disclosed in this Agreement or in a
schedule; and
 
(h)          on the Termination Date.

3.2           Company Termination.  The Company may at any time in its sole
discretion terminate (a “Company Termination”) this Agreement and its right to
initiate future Tranches by providing thirty (30) days advance written notice
(“Termination Notice”) to Investor.

3.3           Effect of Termination.  Except as otherwise provided herein, the
termination of this Agreement will have no effect on any Common Shares,
Preferred Shares, Warrant, or Warrant Shares previously issued, delivered or
credited, or on any then-existing rights of any holder thereof; provided,
however, upon termination of this Agreement, any outstanding but unexercised
portions of the Warrant shall be automatically cancelled.  Notwithstanding any
other provision of this Agreement and regardless of whether the first Tranche
has closed, the Commitment Fee is payable despite any termination of this
Agreement and all fees paid to Investor or its counsel are non-refundable.
 
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES

4.1           Representations and Warranties of the Company.  Except as set
forth under the corresponding section of the Disclosure Schedules, which shall
be deemed a part hereof and which shall not contain any material non-public
information, the Company hereby represents and warrants to, and as applicable
covenants with, Investor as of each Closing:

(a)          Subsidiaries.  All of the direct and indirect subsidiaries of the
Company are set forth on Section 4.1(a) to the Disclosure Schedule.  All
entities with which the Company is presently in discussion with regarding a
potential acquisition or similar transaction are set forth under Section 4.1(a)
to the Disclosure Schedule.  The Company owns, directly or indirectly, all of
the capital stock or other equity interests of each Subsidiary, and all of such
directly or indirectly owned capital stock or other equity interests are owned
free and clear of any Liens.  All the issued and outstanding shares of capital
stock of each Subsidiary are duly authorized, validly issued, fully paid,
non-assessable and free of preemptive and similar rights to subscribe for or
purchase securities.

(b)          Organization and Qualification.  Each of the Company and each
Subsidiary is an entity duly incorporated or otherwise organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization, as applicable, with the requisite power and
authority to own and use its properties and assets and to carry on its business
as currently conducted.  Neither the Company nor any Subsidiary is in violation
or default of any of the provisions of its respective certificate or articles of
incorporation, bylaws or other organizational or charter documents.  Each of the
Company and each Subsidiary is duly qualified to conduct business and is in good
standing as a foreign corporation or other entity in each jurisdiction in which
the nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in good
standing, as the case may be, could not have or reasonably be expected to result
in a Material Adverse Effect and no proceeding has been instituted in any such
jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or
curtail such power and authority or qualification.

(c)          Authorization; Enforcement.  The Company has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated by each of the Transaction Documents and otherwise to carry out its
obligations hereunder or thereunder.  The execution and delivery of each of the
Transaction Documents by the Company and the consummation by it of the
transactions contemplated hereby or thereby have been duly authorized by all
necessary action on the part of the Company and no further consent or action is
required by the Company other than the filing of the Certificate of
Designations.  Each of the Transaction Documents has been, or upon delivery will
be, duly executed by the Company and, when delivered in accordance with the
terms hereof, will constitute the valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except (i) as
limited by general equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors’ rights generally, (ii) as limited by laws relating to
the availability of specific performance, injunctive relief or other equitable
remedies and (iii) insofar as indemnification and contribution provisions may be
limited by applicable law.  Neither the Company nor any Subsidiary is in
violation of any of the provisions of its respective certificate or articles of
incorporation, by-laws or other organizational or charter documents.
 
(d)          No Conflicts.  The execution, delivery and performance of the
Transaction Documents by the Company, the issuance and sale of the Securities
and the consummation by the Company of the other transactions contemplated
thereby do not and will not (i) conflict with or violate any provision of the
Company’s or any Subsidiary’s certificate or articles of incorporation, articles
of association, bylaws, or other organizational or charter documents, or (ii)
conflict with, or constitute a default (or an event that with notice or lapse of
time or both would become a default) under, result in the creation of any Lien
upon any of the properties or assets of the Company or any Subsidiary, or give
to others any rights of termination, amendment, acceleration or cancellation
(with or without notice, lapse of time or both) of, any agreement, credit
facility,
 
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debt or other instrument (evidencing a Company or Subsidiary debt or otherwise)
or other understanding to which the Company or any Subsidiary is a party or by
which any property or asset of the Company or any Subsidiary is bound or
affected, or (iii) conflict with or result in a violation of any law, rule,
regulation, order, judgment, injunction, decree or other restriction of any
court or governmental authority to which the Company or a Subsidiary is subject
(including federal and state securities laws and regulations), or by which any
property or asset of the Company or a Subsidiary is bound or affected, or (iv)
conflict with or violate the terms of any agreement by which the Company or any
Subsidiary is bound or to which any property or asset of the Company or any
Subsidiary is bound or affected; except in the case of each of clauses (ii) and
(iii), such as could not have or reasonably be expected to result in a Material
Adverse Effect.

(e)          Filings, Consents and Approvals.  Neither the Company nor any
Subsidiary is required to obtain any consent, waiver, authorization or order of,
give any notice to, or make any filing or registration with, any court or other
federal, state, local or other governmental authority or other Person in
connection with the execution, delivery and performance by the Company of the
Transaction Documents, other than the filing of the Certificate of Designations
and required federal and state securities filings and such filings and approvals
as are required to be made or obtained under the applicable Trading Market rules
in connection with the transactions contemplated hereby, each of which has been,
or (if not yet required to be filed) shall be, timely filed.

(f)           Issuance of the Securities.  The Securities are duly authorized
and, when issued and paid for in accordance with the applicable Transaction
Documents, will be duly and validly issued, fully paid and nonassessable, free
and clear of all Liens.  The Company has reserved from its duly authorized
capital stock a number of shares of Common Stock and Preferred Stock for
issuance of the Securities at least equal to the number of Securities which
could be issued pursuant to the terms of the Transaction Documents, based on the
then-anticipated exercise prices of the Warrant.

(g)          Capitalization.  The Company is currently authorized to issue
100,000,000 shares of Common Stock, 58,508,333 of which are currently issued and
outstanding.  When the Company’s Amended and Restated Articles of Incorporation,
which have been approved by the Company’s Board of Directors and stockholders
and filed with the Secretary of State of the State of Nevada, become effective
on September 6, 2010, the Company will be authorized to issue 500,000,000 shares
of Common Stock and 50,000,000 shares of preferred stock.  There are no shares
of preferred stock issued or outstanding.  Other than as set forth in Section
4.1(g) to the Disclosure Schedule, the Company has not issued any capital stock
since the date of filing of the Company’s most recent quarterly report on Form
10-Q.  No Person has any right of first refusal, preemptive right, right of
participation, or any similar right to participate in the transactions
contemplated by the Transaction Documents.  Except as a result of the purchase
and sale of the Securities or as set forth in the SEC Reports or on Section
4.1(g) to the Disclosure Schedule, there are no outstanding options, warrants,
scrip rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities, rights or obligations convertible into or
exchangeable for, or giving any Person any right to subscribe for or acquire,
any shares of Common Stock, or contracts, commitments, understandings or
arrangements by which the Company or any Subsidiary is or may become bound to
issue additional shares of Common Stock or securities convertible into or
exercisable for shares of Common Stock.  The issuance and sale of the Securities
will not obligate the Company to issue shares of Common Stock or other
securities to any Person (other than Investor) and will not result in a right of
any holder of Company securities to adjust the exercise, conversion, exchange,
or reset price under such securities.  All of the outstanding shares of capital
stock of the Company are validly issued, fully paid and nonassessable, have been
issued in compliance with all federal and state securities laws, and none of
such outstanding shares was issued in violation of any preemptive rights or
similar rights to subscribe for or purchase securities.  No further approval or
authorization of any stockholder, the Board of Directors of the Company or
others is required for the issuance and sale of the Securities.  Except as set
forth in the SEC Reports, there are no stockholders agreements, voting
agreements or other similar agreements with respect to the Company’s capital
stock to which the Company is a party or, to the knowledge of the Company,
between or among any of the Company’s stockholders.

(h)          SEC Reports; Financial Statements.  Except as set forth on Section
4.1(h) to the Disclosure Schedule, the Company has filed all required SEC
Reports for the two years preceding the Effective Date (or such shorter period
as the Company was required by law to file such SEC Reports) on a timely basis
or has received a valid extension of such time of filing and has filed any such
SEC Reports prior to the expiration of any such extension.  As of their
respective dates, the SEC Reports complied in all
 
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material respects with the requirements of the Act and the Exchange Act and the
rules and regulations of the SEC promulgated thereunder, as applicable, and none
of the SEC Reports, when filed, contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.  The financial statements of the
Company included in the SEC Reports comply in all material respects with
applicable accounting requirements and the rules and regulations of the SEC with
respect thereto as in effect at the time of filing.  Such financial statements
have been prepared in accordance with GAAP, except as may be otherwise specified
in such financial statements or the notes thereto and except that unaudited
financial statements may not contain all footnotes required by GAAP, and fairly
present in all material respects the financial position of the Company and its
consolidated subsidiaries as of and for the dates thereof and the results of
operations and cash flows for the periods then ended, subject, in the case of
unaudited statements, to normal, immaterial, year-end audit adjustments.

(i)           Material Changes.  Since the date of the latest audited financial
statements included within the SEC Reports, except as specifically disclosed in
the SEC Reports and on Section 4(i) to the Disclosure Schedule, (i) there has
been no event, occurrence or development that has had, or that could reasonably
be expected to result in, a Material Adverse Effect, (ii) the Company has not
incurred any liabilities (contingent or otherwise) other than (A) trade payables
and accrued expenses incurred in the ordinary course of business consistent with
past practice, and (B) liabilities not required to be reflected in the Company’s
financial statements pursuant to GAAP or required to be disclosed in filings
made with the SEC, (iii) the Company has not altered its method of accounting,
(iv) the Company has not declared or made any dividend or distribution of cash
or other property to its stockholders or purchased, redeemed or made any
agreements to purchase or redeem any shares of its capital stock and (v) the
Company has not issued any equity securities to any officer, director or
Affiliate, except pursuant to existing Company equity incentive plans as
disclosed in the SEC Reports.  The Company does not have pending before the SEC
any request for confidential treatment of information.

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

(k)          Labor Relations.  No material labor dispute exists or, to the
knowledge of the Company, is imminent with respect to any of the employees of
the Company, which could reasonably be expected to result in a Material Adverse
Effect.

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

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

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

(o)          Patents and Trademarks.  The Company and each Subsidiary have, or
have rights to use, all patents, patent applications, trademarks, trademark
applications, service marks, trade names, copyrights, licenses and other similar
rights that are necessary or material for use in connection with their
respective businesses as described in the SEC Reports and which the failure to
so have could have a Material Adverse Effect (collectively, the “Intellectual
Property Rights”).  Neither the Company nor any Subsidiary has received a
written notice that the Intellectual Property Rights used by the Company or any
Subsidiary violates or infringes upon the rights of any Person.  To the
knowledge of the Company, all such Intellectual Property Rights are enforceable
and there is no existing infringement by another Person of any of the
Intellectual Property Rights of the Company or each Subsidiary.

(p)          Insurance.  The Company and each Subsidiary are insured as needed
by insurers of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the businesses in which the
Company and each Subsidiary are engaged.  To the best of Company’s knowledge,
such insurance contracts and policies are accurate and complete.  Neither the
Company nor any Subsidiary has any reason to believe that it will not be able to
renew its existing insurance coverage as and when such coverage expires or to
obtain similar coverage from similar insurers as may be necessary to continue
its business without a significant increase in cost.

(q)          Transactions with Affiliates and Employees.  Except as set forth in
the SEC Reports, none of the officers or directors of the Company and, to the
knowledge of the Company, none of the employees of the Company is presently a
party to any transaction with the Company or any Subsidiary (other than for
services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to the
knowledge of the Company, any entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director, trustee or
partner, in each case in excess of $100,000 other than (i) for payment of salary
or consulting fees for services rendered, (ii) reimbursement for expenses
incurred on behalf of the Company and (iii) for other employee benefits,
including stock option agreements under any equity incentive plan of the
Company.
 
(r)           Sarbanes-Oxley; Internal Accounting Controls.  The Company is in
material compliance with all provisions of the Sarbanes-Oxley Act of 2002 that
are applicable to it as of the date of the Commitment Closing.  The Company and
each Subsidiary maintain a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in accordance
with management’s general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with GAAP and to maintain asset accountability, (iii) access to
assets is permitted only in accordance with management’s general or specific
authorization, and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.  The Company has established disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the
Company and designed such disclosure controls and procedures to ensure that
material information relating to the Company, including its Subsidiaries, is
made known to the certifying
 
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officers by others within those entities, particularly during the period in
which the Company’s most recently filed periodic report under the Exchange Act,
as the case may be, is being prepared.  The Company’s certifying officers have
evaluated the effectiveness of the Company’s disclosure controls and procedures
as of the date prior to the filing date of the most recently filed periodic
report under the Exchange Act (such date, the “Evaluation Date”).  The Company
presented in its most recently filed periodic report under the Exchange Act the
conclusions of the certifying officers about the effectiveness of the Company’s
disclosure controls and procedures based on their evaluations as of the
Evaluation Date.  Since the Evaluation Date, there have been no significant
changes in the Company’s internal accounting controls or its disclosure controls
and procedures or, to the Company’s knowledge, in other factors that could
materially affect the Company’s internal accounting controls or its disclosure
controls and procedures.

(s)          Certain Fees.  Except for the payment of the Commitment Fee, no
brokerage or finder’s fees or commissions are or will be payable by the Company
to any broker, financial advisor or consultant, finder, placement agent,
investment banker, bank or other Person with respect to the transactions
contemplated by this Agreement.  Investor shall have no obligation with respect
to any fees or with respect to any claims made by or on behalf of other Persons
for fees of a type contemplated in this Section 4.1(s) that may be due in
connection with the transactions contemplated by this Agreement or the other
Transaction Documents.
 
(t)           Private Placement.  Assuming the accuracy of Investor
representations and warranties set forth in Section 4.2, no registration under
the Act is required for the offer and sale of the Securities by the Company to
Investor as contemplated hereby.  The issuance and sale of the Securities
hereunder does not contravene the rules and regulations of any Trading Market.
 
(u)          Investment Company.  The Company is not, and is not an Affiliate
of, and immediately after receipt of payment for the Securities, will not be or
be an Affiliate of, an “investment company” within the meaning of the Investment
Company Act of 1940, as amended.  The Company shall conduct its business in a
manner so that it will not become subject to the Investment Company Act.
 
(v)          Registration Rights.  No Person (other than Investor pursuant to
the Transaction Documents) has any right to cause the Company to effect the
registration under the Act of any securities of the Company.
 
(w)         Listing and Maintenance Requirements.  The Common Stock is
registered pursuant to Section 12 of the Exchange Act, and the Company has taken
no action designed to, or which to its knowledge is likely to have the effect
of, terminating the registration of the Common Stock under the Exchange Act nor
has the Company received any notification that the SEC is contemplating
terminating such registration.  The Company has not, in the 12 months preceding
the Effective Date, received notice from any Trading Market on which the Common
Stock is or has been listed or quoted to the effect that the Company is not in
compliance with the listing or maintenance requirements of such Trading
Market.  The Company is, and has no reason to believe that it will not in the
foreseeable future continue to be, in compliance with all such listing and
maintenance requirements.
 
(x)          Application of Takeover Protections.  The Company and its Board of
Directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination, poison pill
(including any distribution under a rights agreement) or other similar anti
takeover provision under the Company’s Certificate of Incorporation (or similar
charter documents) or the laws of its state of incorporation that is or could
become applicable to Investor as a result of Investor and the Company fulfilling
their obligations or exercising their rights under the Transaction Documents,
including without limitation the Company’s issuance of the Securities and
Investor’s ownership of the Securities.
 
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(y)          Disclosure; Non-Public Information.  Except with respect to the
information that will be, and to the extent that it actually is timely publicly
disclosed by the Company pursuant to Section 2.2(c)(i), and notwithstanding any
other provision in this Agreement or the other Transaction Documents, neither
the Company nor any other Person acting on its behalf has provided Investor or
its agents or counsel with any information that constitutes or might constitute
material, non-public information, including without limitation this Agreement
and the Exhibits, Appendices and Schedules hereto, unless prior thereto Investor
shall have executed a written agreement regarding the confidentiality and use of
such information.  The Company understands and confirms that neither Investor
nor any Affiliate of Investor shall have any duty of trust or confidence that is
owed directly, indirectly, or derivatively to the Company or the shareholders of
the Company or to any other Person who is the source of material non-public
information regarding the Company.  No information contained in the Disclosure
Schedules constitutes material non-public information.  There is no adverse
material information regarding the Company that has not been publicly
disclosed.  The Company understands and confirms that Investor will rely on the
foregoing representations and covenants in effecting transactions in securities
of the Company.  All disclosure provided to Investor regarding the Company, its
business and the transactions contemplated hereby, including the Disclosure
Schedules to this Agreement, furnished by or on behalf of the Company with
respect to the representations and warranties made herein are true and correct
in all material respects and do not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading.
 
(z)          No Integrated Offering.  Neither the Company, nor any of its
Affiliates, nor any Person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, under circumstances that would cause this offering of the
Securities to be integrated with prior offerings by the Company for purposes of
the Act or which could violate any applicable stockholder approval provisions,
including, without limitation, under the rules and regulations of the Trading
Market.
 
(aa)        Financial Condition.  Based on the financial condition of the
Company as of the date of the Commitment Closing:  the Company’s assets do not
constitute unreasonably small capital to carry on its business for the current
fiscal year as now conducted and as proposed to be conducted including its
capital needs taking into account the particular capital requirements of the
business conducted by the Company and projected capital requirements and capital
availability thereof.  Except as set forth on Section 4(aa) to the Disclosure
Schedule, the Company does not intend to incur debts beyond its ability to pay
such debts as they mature (taking into account the timing and amounts of cash to
be payable on or in respect of its debt).  The Company has no knowledge of any
facts or circumstances that lead it to believe that it will file for
reorganization or liquidation under the bankruptcy or reorganization laws of any
jurisdiction within one year from the date of the Commitment Closing.  The SEC
Reports set forth as of the dates thereof all outstanding secured and unsecured
Indebtedness of the Company or any Subsidiary, or for which the Company or any
Subsidiary has commitments.  Neither the Company nor any Subsidiary is in
default with respect to any Indebtedness.  In connection with the transactions
contemplated by the Transaction Documents, the Company (i) did not and does not
have any intent to hinder, delay, or defraud any of its creditors, (ii) had a
valid business reason for such transactions, (iii) received new value therefor
and consideration therefor constituting reasonably equivalent value and fair
market value consideration, and (iv) was not rendered insolvent by such
transactions and, after giving effect to such transactions, is able to pay its
debts as they mature.

(bb)       Tax Status.  The Company and each of its Subsidiaries has made or
filed all federal, state and foreign income and all other tax returns, reports
and declarations required by any jurisdiction to which it is subject (unless and
only to the extent that the Company and each of its Subsidiaries has set aside
on its books provisions reasonably adequate for the payment of all unpaid and
unreported taxes) and 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 has set aside on its books provisions 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
 
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to be due by the taxing authority of any jurisdiction, and the officers of the
Company know of no basis for any such claim.  The Company has not executed a
waiver with respect to the statute of limitations relating to the assessment or
collection of any foreign, federal, state or local tax.  None of the Company’s
tax returns is presently being audited by any taxing authority.
 
(cc)        No General Solicitation or Advertising.  Neither the Company nor, to
the knowledge of the Company, any of its directors or officers (i) has conducted
or will conduct any general solicitation (as that term is used in Rule 502(c) of
Regulation D) or general advertising with respect to the sale of the Securities,
or (ii) made any offers or sales of any security or solicited any offers to buy
any security under any circumstances that would require registration of the
Securities under the Act or made any “directed selling efforts” as defined in
Rule 902 of Regulation S.
 
(dd)       Foreign Corrupt Practices.  Neither the Company, nor to the knowledge
of the Company, any agent or other person acting on behalf of the Company, has
(i) directly or indirectly, used any corrupt funds for unlawful contributions,
gifts, entertainment or other unlawful expenses related to foreign or domestic
political activity, (ii) made any unlawful payment to foreign or domestic
government officials or employees or to any foreign or domestic political
parties or campaigns from corporate funds, (iii) failed to disclose fully any
contribution made by the Company (or made by any person acting on its behalf of
which the Company is aware) which is in violation of law, or (iv) violated in
any material respect any provision of the Foreign Corrupt Practices Act of 1977,
as amended.
 
(ee)        Acknowledgment Regarding Investor’s Purchase of Securities.  The
Company acknowledges and agrees that Investor is acting solely in the capacity
of arm’s length purchaser with respect to this Agreement and the transactions
contemplated hereby.  The Company further acknowledges that Investor is not
acting as a financial advisor or fiduciary of the Company (or in any similar
capacity) with respect to this Agreement and the transactions contemplated
hereby and any statement made by Investor or any of its representatives or
agents in connection with this Agreement and the transactions contemplated
hereby is not advice or a recommendation and is merely incidental to Investor’s
purchase of the Securities.  The Company further represents to Investor that the
Company’s decision to enter into this Agreement has been based solely on the
independent evaluation of the Company and its representatives.

(ff)          Accountants.  The Company’s accountants are set forth in the SEC
Reports and such accountants are an independent registered public accounting
firm as required by the Act.
 
(gg)        No Disagreements with Accountants and Lawyers.  There are no
disagreements of any kind presently existing, or reasonably anticipated by the
Company to arise, between the accountants and lawyers formerly or presently
employed by the Company, and the Company is current with respect to any fees
owed to its accountants and lawyers, except for any past-due amounts that may be
owed in the ordinary course of business.
 
(hh)        Registration Statements and Prospectuses.
 
(i)           The offer and sale of the Common Shares as contemplated hereby
complies with the requirements of Rule 415 under the Act.

(ii)          The Company has not, directly or indirectly, used or referred to
any “free writing prospectus” (as defined in Rule 405 under the Act) except in
compliance with Rules 164 and 433 under the Act.
 
(ii)          Section 5 Compliance.  No representation or warranty or other
statement made by Company in the Transaction Documents contains any untrue
statement or omits to state a material fact necessary to make any of them, in
light of the circumstances in which it was made, not misleading.  The Company is
not aware of any facts or circumstances that would cause the transactions
contemplated by the Transaction Documents, when consummated, to violate Section
5 of the Act or other federal or state securities laws or regulations.
 
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The Investor acknowledges and agrees that the Company does not make or has not
made any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in this Section 4.1.

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

(b)          Investor Status.  At the time Investor was offered the Securities,
it was, and at the Effective Date it is an “accredited investor” as defined in
Rule 501(a) under the Act.
 
(c)          Experience of Investor.  Investor, either alone or together with
its representatives, has such knowledge, sophistication and experience in
business and financial matters so as to be capable of evaluating the merits and
risks of the prospective investment in the Securities, and has so evaluated the
merits and risks of such investment.  Investor is able to bear the economic risk
of an investment in the Securities and, at the present time, is able to afford a
complete loss of such investment.
 
(d)          General Solicitation.  Investor is not purchasing the Securities as
a result of any advertisement, article, notice or other communication regarding
the Securities published in any newspaper, magazine or similar media or
broadcast over television or radio or presented at any seminar or any other
general solicitation or general advertisement.

(e)          Access to Information.  Investor confirms that it has received or
has had full access to all the information it considers necessary or appropriate
to make an informed investment decision with respect to the Securities,
including the SEC Reports.  Investor further confirms that it has had an
opportunity to ask questions and receive answers from the Company regarding the
Company’s and its Subsidiaries’ business, management and financial affairs and
the terms and conditions of this Agreement and the Securities and to obtain
additional information (to the extent the Company possessed such information or
could acquire it without unreasonable effort or expense) necessary to verify any
information furnished to Investor or to which Investor had access.

(f)           Reliance on Exemption from Registration.  Investor understands
that the Securities have not been under the Act or any applicable state
securities laws and that the sale contemplated hereby is being made in reliance
on an exemption from registration therefrom.

(g)          Short Sales.  Neither Investor nor any of its affiliates has, will,
or will cause any person to directly engage in “short sales” of the Company’s
Common Stock during the term of this Agreement or during the 60 days immediately
preceding the Effective Date.

(h)          Patriot Act and Money Laundering.  Investor certifies that, to the
best of Investor’s knowledge, Investor has not been designated, and is not owned
or controlled, by a “suspected terrorist” as defined in Executive Order
13224.  Investor hereby represents, warrants and covenants that:  (i) none of
the cash or property that Investor will invest pursuant to this Agreement has
been or shall be derived from, or related to, any activity that is deemed
criminal under United States law; and (ii) no
 
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disbursement by Investor to the Company to the extent within Investor’s control,
shall cause Investor to be in violation of the United States Bank Secrecy Act,
the United States International Money Laundering Control Act of 1986 or the
United States International Money Laundering Abatement and Anti-Terrorist
Financing Act of 2001.  Investor shall promptly notify the Company if any of
these representations ceases to be true and accurate regarding
Investor.  Investor agrees to provide the Company any additional information
regarding Investor that the Company deems necessary or convenient to ensure
compliance with all applicable laws concerning money laundering and similar
activities.  Investor understands and agrees that if at any time it is
discovered that any of the foregoing representations are incorrect, or if
otherwise required by applicable law or regulation related to money laundering
similar activities, the Company may undertake appropriate actions to ensure
compliance with applicable law or regulation, including but not limited to
segregation and/or redemption of Investor’s investment in the Company.  Investor
further understands that the Company may release information about Investor and,
if applicable, any underlying beneficial owners, to proper authorities if the
Company, in its sole discretion, determines that it is in the best interests of
the Company in light of relevant rules and regulations under the laws set forth
in subsection (ii) above.
 
The Company acknowledges and agrees that Investor does not make or has not made
any representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in this Section 4.2.
 
 
ARTICLE 5
OTHER AGREEMENTS OF THE PARTIES
 
5.1           Transfer Restrictions

(a)          The Securities may only be disposed of in compliance with state and
federal securities laws.  In connection with any transfer of Securities other
than (i) pursuant to an effective Registration Statement or Rule 144, (ii) to
the Company, (iii) to an Affiliate of Investor, or (iv) in connection with a
pledge as contemplated in Section 5.1(b), the Company may require the transferor
thereof to provide to the Company an opinion of Borteck, Sanders & Torzewski,
LLP (“Borteck”), or other counsel selected by the transferor and reasonably
acceptable to the Company, to the effect that such transfer does not require
registration of such transferred Securities under the Act.
 
(b)          Investor agrees to the imprinting, so long as is required by this
Section 5.1, of the following legend, or substantially similar legend, on any
certificate evidencing Securities:

NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR
THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY. THESE SECURITIES AND THE SECURITIES ISSUABLE UPON EXERCISE OF THESE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN SECURED BY SUCH SECURITIES.
 
The Company agrees to cause such legend to be removed immediately upon
effectiveness of a Registration Statement, or when any Common Shares are
eligible for sale under Rule 144.  Company further acknowledges and agrees that
Investor may from time to time pledge pursuant to a bona fide margin agreement
with a registered broker-dealer or grant a security interest in some or all of
the Securities to a financial institution that is an “accredited investor” as
defined in Rule 501(a) under the Act and who agrees to be bound by the
provisions of this Agreement and, if required under the terms of such
arrangement, Investor may transfer pledged or secured Securities to the pledgees
or
 
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secured parties.  Such a pledge or transfer would not be subject to approval of
the Company and no legal opinion of legal counsel of the pledgee, secured party
or pledgor shall be required in connection therewith.  Further, no notice shall
be required of such pledge.  At Investor’s reasonable expense, the Company will
execute and deliver such documentation as a pledgee or secured party of
Securities may reasonably request in connection with a pledge or transfer of the
Securities.
 
5.2           Furnishing of Information.  As long as Investor owns Securities,
the Company covenants to timely file (or obtain extensions in respect thereof
and file within the applicable grace period) all reports required to be filed by
the Company after the Effective Date pursuant to the Exchange Act.  Upon the
request of Investor, the Company shall deliver to Investor a written
certification of a duly authorized officer as to whether it has complied with
the preceding sentence.  As long as Investor owns Securities, if the Company is
not required to file reports pursuant to such laws, it will prepare and furnish
to Investor and make publicly available in accordance with Rule 144(c) such
information as is required for Investor to sell the Securities under Rule
144.  The Company further covenants that it will take such further action as any
holder of Securities may reasonably request, all to the extent required from
time to time to enable such Person to sell such Securities without registration
under the Act within the limitation of the exemptions provided by Rule 144.
 
5.3           Integration.  The Company shall not sell, offer for sale or
solicit offers to buy or otherwise negotiate in respect of any security (as
defined in Section 2 of the Act) that would be integrated with the offer or sale
of the Securities in a manner that would require the registration under the Act
of the sale of the Securities to Investor or that would be integrated with the
offer or sale of the Securities for purposes of the rules and regulations of any
Trading Market such that it would require stockholder approval prior to the
closing of such other transaction unless stockholder approval is obtained before
the closing of such subsequent transaction.

5.4           Securities Laws Disclosure; Publicity.  The Company shall timely
file a Current Report on Form 8-K as required by this Agreement, and in the
Company’s discretion shall file a press release, in each case reasonably
acceptable to Investor, disclosing the material terms of the transactions
contemplated hereby.  The Company and Investor shall consult with each other in
issuing any press releases with respect to the transactions contemplated hereby,
and neither the Company nor Investor shall issue any such press release or
otherwise make any such public statement without the prior consent of the
Company, with respect to any such press release of Investor, or without the
prior consent of Investor, with respect to any such press release of the
Company, which consent shall not unreasonably be withheld or delayed, except if
such disclosure is required by law or Trading Market regulations, in which case
the disclosing party shall promptly provide the other party with prior notice of
such public statement or communication.  Notwithstanding the foregoing, the
Company shall not publicly disclose the name of Investor, or include the name of
Investor in any filing with the SEC or any regulatory agency or Trading Market,
without the prior written consent of Investor, except (i) as contained in the
Current Report on Form 8-K and press release described above, (ii) as required
by federal securities law in connection with any registration statement under
which the Common Shares are registered, (iii) to the extent such disclosure is
required by law or Trading Market regulations, in which case the Company shall
provide Investor with prior notice of such disclosure, or (iv) to the extent
such disclosure is required in any SEC Report filed by the Company.
 
5.5           Shareholders Rights Plan.  No claim will be made or enforced by
the Company or, to the knowledge of the Company, any other Person that Investor
is an “Acquiring Person” under any shareholders rights plan or similar plan or
arrangement in effect or hereafter adopted by the Company, or that Investor
could be deemed to trigger the provisions of any such plan or arrangement, by
virtue of receiving Securities under the Transaction Documents or under any
other agreement between the Company and Investor.  The Company shall conduct its
business in a manner so that it will not become subject to the Investment
Company Act of 1940, as amended.
 
5.6           Non-Public Information.  The Company covenants and agrees that
neither it nor any other Person acting on its behalf will provide Investor or
its agents or counsel with any information that the Company believes or
reasonably should believe constitutes material non-public information, unless
prior thereto Investor shall have executed a written agreement regarding the
confidentiality and use of such information.  On and after the Effective Date,
neither Investor nor any Affiliate Investor shall have any duty of trust or
 
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confidence that is owed directly, indirectly, or derivatively, to the Company or
the shareholders of the Company, or to any other Person who is the source of
material non-public information regarding the Company.  The Company understands
and confirms that Investor shall be relying on the foregoing in effecting
transactions in securities of the Company.

5.7           Reimbursement.  If Investor becomes involved in any capacity in
any proceeding by or against any Person who is a stockholder of the Company
(except as a result of sales, pledges, margin sales and similar transactions by
Investor to or with any current stockholder), solely as a result of Investor’s
acquisition of the Securities under this Agreement, the Company will reimburse
Investor for its reasonable legal and other expenses (including the cost of any
investigation preparation and travel in connection therewith) incurred in
connection therewith, as such expenses are incurred, or will assume the defense
of Investor in such matter.  The reimbursement obligations of the Company under
this Section 5.7 shall be in addition to any liability which the Company may
otherwise have, shall extend upon the same terms and conditions to any
Affiliates of Investor who are actually named in such action, proceeding or
investigation, and partners, directors, agents, employees and controlling
persons (if any), as the case may be, of Investor and any such Affiliate, and
shall be binding upon and inure to the benefit of any successors, assigns, heirs
and personal representatives of the Company, Investor and any such Affiliate and
any such Person.  The Company also agrees that neither Investor nor any such
Affiliates, partners, directors, agents, employees or controlling persons shall
have any liability to the Company or any Person asserting claims on behalf of or
in right of the Company solely as a result of acquiring the Securities under
this Agreement.
 
5.8           Indemnification
 
(a)          Company Indemnification Obligation.  Subject to the provisions of
this Section 5.8, the Company will indemnify and hold Investor and any Warrant
holder, their Affiliates and attorneys, and each of their directors, officers,
shareholders, partners, employees, agents, and any person who controls Investor
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act
(collectively, the “Investor Parties” and each an “Investor Party”), harmless
from any and all losses, liabilities, obligations, claims, contingencies,
damages, costs and expenses, including all judgments, amounts paid in
settlements, court costs and reasonable attorneys’ fees and costs of
investigation (collectively, “Losses”) that any Investor Party may suffer or
incur as a result of or relating to (i) any breach of any of the
representations, warranties, covenants or agreements made by the Company in this
Agreement or in the other Transaction Documents, (ii) any action instituted
against any Investor Party, or any of them or their respective Affiliates, by
any stockholder of the Company who is not an Affiliate of an Investor Party,
with respect to any of the transactions contemplated by the Transaction
Documents (unless such action is based upon a breach of Investor’s
representations, warranties or covenants under the Transaction Documents or any
agreements or understandings Investor may have with any such stockholder or any
violations by Investor of state or federal securities laws or any conduct by
Investor which constitutes fraud, gross negligence, willful misconduct or
malfeasance), (iii)  any untrue statement or alleged untrue statement of a
material fact contained in a Registration Statement (or in a Registration
Statement as amended by any post-effective amendment thereof by the Company) or
arising out of or based upon any omission or alleged omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and/or (iv) any untrue statement or alleged untrue
statement of a material fact included in any Prospectus ( or any amendments or
supplements to any Prospectus ), in any free writing prospectus, in any “issuer
information” (as defined in Rule 433 under the Act) of the Company, or in any
Prospectus together with any combination of one or more of the  free writing
prospectuses, if any, or arising out of or based upon any omission or alleged
omission to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
 
(b)          Investor Indemnification Obligation.  Subject to the provisions of
this Section 5.8, Investor will indemnify and hold the Company, its Affiliates
and attorneys, and each of their directors, officers, shareholders, partners,
employees, agents, and any person who controls Investor within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act (collectively, the
“Company Parties” and each a “Company Party”), harmless from any and all losses,
liabilities, obligations, claims, contingencies, damages, costs and expenses,
including all judgments, amounts paid in settlements, court costs and reasonable
attorneys’ fees and costs of investigation (collectively, “Losses”) that any
Company Party may suffer or incur as a result of or relating to any breach of
any of the representations, warranties, covenants or agreements made by Investor
in this Agreement or in the other Transaction Documents.
 
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(c)          Indemnification Procedures.  If any action shall be brought against
an Investor Party or a Company Party (an “Indemnified Party”) in respect of
which indemnity may be sought pursuant to this Agreement, such Indemnified Party
shall promptly notify the party required to provide indemnification (the
“Indemnitor”) in writing, and the Indemnitor shall have the right to assume the
defense thereof with counsel of its own choosing.  The Indemnified Parties shall
have the right to employ separate counsel in any such action and participate in
the defense thereof, but the fees and expenses of such counsel shall be at the
expense of the Indemnified Parties except to the extent that (i) the employment
thereof has been specifically authorized by the Indemnified Party in writing,
(ii) the Indemnitor has failed after a reasonable period of time to assume such
defense and to employ counsel or (iii) in such action there is, in the
reasonable opinion of such separate counsel, a material conflict with respect to
the dispute in question on any material issue between the position of the
Indemnified Party and the position of the Indemnitor such that it would be
inappropriate for one counsel to represent the Indemnified Party and the
Indemnitor.  The Indemnitor will not be liable to the Indemnified Party under
this Agreement (i) for any settlement by an Indemnified Party effected without
the Indemnitor’s prior written consent, which shall not be unreasonably withheld
or delayed; or (ii) to the extent, but only to the extent that a loss, claim,
damage or liability is attributable to the Indemnified Party’s breach of any of
the representations, warranties, covenants or agreements made by the Indemnified
Party in this Agreement or in the other Transaction Documents.

5.9           Reservation of Securities.  The Company shall maintain a reserve
from its duly authorized shares of Common Stock for issuance pursuant to the
Transaction Documents in such amount as may be required to fulfill its
obligations in full under the Transaction Documents.
 
5.10         Limited Standstill.  The Company will deliver to Investor on or
before each Tranche Closing Date, and will honor and enforce, and will take
reasonable actions to assist Investor in enforcing, the provisions of, the
Lock-Up Agreements with the Company’s officers, directors and beneficial owners
of 10% or more of the Common Stock.
 
5.11         Prospectus Availability and Changes.  The Company will make
available to Investor upon request, and thereafter from time to time will
furnish Investor, as many copies of any Prospectus (or of the Prospectus as
amended or supplemented if the Company shall have made any amendments or
supplements thereto after the effective date of the applicable Registration
Statement) as Investor may request for the purposes contemplated by the Act; and
in case Investor is required to deliver  a prospectus after the nine-month
period referred to in Section 10(a)(3) of the Act in connection with the sale of
the Common Shares, or after the time a post-effective amendment to the
applicable Registration Statement is required pursuant to Item 512(a) of
Regulation S-K under the Act, the Company will prepare, at its expense, promptly
upon request such amendment or amendments to the Registration Statement and the
Prospectus as may be necessary to permit compliance with the requirements of
Section 10(a)(3) of the Act or Item 512(a) of Regulation S-K under the Act, as
the case may be.
 
The Company will advise Investor promptly of the happening of any event within
the time during which a Prospectus is required to be delivered under the Act
which could require the making of any change in the Prospectus then being used
so that the Prospectus would not include an untrue statement of material fact or
omit to state a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they are made, not misleading, and
to advise Investor promptly if, during such period, it shall become necessary to
amend or supplement any Prospectus to cause such Prospectus to comply with the
requirements of the Act, and in each case, during such time, to prepare and
furnish, at the Company’s expense, to Investor promptly such amendments or
supplements to such Prospectus as may be necessary to reflect any such change or
to effect such compliance.

5.12         Required Approval.  No transactions contemplated under this
Agreement or the Transaction Documents shall be consummated for an amount that
would require approval by any Trading Market or Company stockholders under any
approval provisions, rules or regulations of any Trading Market applicable to
the Company, unless and until such approval is obtained.  Company shall use best
efforts to obtain any required approval as soon as possible.
 
5.13         Activity Restrictions.  For so long as Investor or any of its
Affiliates holds any Preferred Shares, Warrant, or Warrant Shares, neither
Investor nor any Affiliate will: (i) vote any shares of Common Stock owned or
controlled 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,
 
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which would result in beneficially owning or controlling more than 9.99% of the
total outstanding Common Stock or other voting securities of the Company, (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
Section 5.13.
 
5.14         Registration Statements and Prospectuses.
 
(a)          The Company will use its best efforts to file within 45 calendar
days after the Effective Date (or as soon as possible thereafter), to cause to
become effective as soon as possible thereafter, and to remain effective until
all Common Shares have been sold or are Rule 144 Eligible, a Registration
Statement for the resale of all Common Shares issued hereunder (including
without limitation all Warrant Shares underlying the Warrant).  Each
Registration Statement shall comply when it becomes effective, and, as amended
or supplemented, at the time of any Tranche Notice Date, Tranche Closing Date,
or issuance of any Common Shares, and at all times during which a prospectus is
required by the Act to be delivered in connection with any sale of Common
Shares, will comply, in all material respects, with the requirements of the Act.
 
(b)          Each Registration Statement, as of its respective effective time,
will not, as applicable, contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading.

(c)          Each Prospectus will comply, as of its date and the date it will be
filed with the SEC, and, at the time of any Tranche Notice Date, Tranche Closing
Date, or issuance of any Common Shares, and at all times during which a
prospectus is required by the Act to be delivered in connection with any sale of
Common Shares, will comply, in all material respects, with the requirements of
the Act.
 
(d)          At no time during the period that begins on the date a Prospectus
is filed with the SEC and ends at the time a Prospectus is no longer required by
the Act to be delivered in connection with any sale of Common Shares will any
such Prospectus, as then amended or supplemented, include an untrue statement of
a material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
 
(e)          Each Registration Statement will meet, and the offering and sale of
the Common Shares as contemplated hereby will comply with, the requirements of
Rule 415 under the Act.
 
(f)          The Company will not, directly or indirectly, use or refer to any
“free writing prospectus” (as defined in Rule 405 under the Act) except in
compliance with Rules 164 and 433 under the Act.
 
5.15         Investor Due Diligence.  Investor shall have the right and
opportunity to conduct due diligence, at its own expense, with respect to any
Registration Statement or Prospectus in which the name of Investor or any
Affiliate of Investor appears.

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ARTICLE 6
MISCELLANEOUS
 
6.1           Fees and Expenses.  Except for the $15,000.00 non-refundable
document preparation fee previously paid by the Company to counsel for Investor,
the receipt of which is hereby acknowledged, or as may be otherwise provided in
this Agreement, each party shall pay the fees and expenses of its own advisers,
counsel, accountants and other experts, if any, and all other expenses incurred
by such party incident to the negotiation, preparation, execution, delivery and
performance of the Transaction Documents.  The Company acknowledges and agrees
that Borteck Sanders & Torzewski, LLP, solely represents Investor, and does not
represent the Company or its interests in connection with the Transaction
Documents or the transactions contemplated thereby.  The Company shall pay all
stamp and other taxes and duties levied in connection with the sale of the
Securities, if any.

6.2           Notices.  Unless a different time of day or method of delivery is
set forth in the Transaction Documents, any and all notices or other
communications or deliveries required or permitted to be provided hereunder
shall be in writing and shall be deemed given and effective on the earliest
of:  (a) the date of transmission, if such notice or communication is delivered
via facsimile or electronic mail prior to 5:30 p.m. Eastern time on a Trading
Day and an electronic confirmation of delivery is received by the sender, (b)
the next Trading Day after the date of transmission, if such notice or
communication is delivered later than 5:30 p.m. Eastern time or on a day that is
not a Trading Day, (c) three Trading Days following the date of mailing, if sent
by U.S. nationally recognized overnight courier service, or (d) upon actual
receipt by the party to whom such notice is required to be given.  The addresses
for such notices and communications are those set forth following the signature
page hereof, or such other address as may be designated in writing hereafter, in
the same manner, by such Person.
 
6.3           Amendments; Waivers.  No provision of this Agreement may be waived
or amended except in a written instrument signed, in the case of an amendment,
by the Company and Investor or, in the case of a waiver, by the party against
whom enforcement of any such waiver is sought.  No waiver of any default with
respect to any provision, condition or requirement of this Agreement shall be
deemed to be a continuing waiver in the future or a waiver of any subsequent
default or a waiver of any other provision, condition or requirement hereof, nor
shall any delay or omission of either party to exercise any right hereunder in
any manner impair the exercise of any such right.
 
6.4           Headings.  The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof
 
6.5           Successors and Assigns.  This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and permitted
assigns.  The Company may not assign this Agreement or any rights or obligations
hereunder without the prior written consent of Investor, which consent shall not
be unreasonably withheld or delayed.  Investor may assign any or all of its
rights under this Agreement (a) to any Affiliate, or (b) to any Person to whom
Investor assigns or transfers any Securities.
 
6.6           No Third-Party Beneficiaries.  This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person, except as otherwise set forth in Section 5.8.

 6.7          Governing Law; Dispute Resolution.  All questions concerning the
construction, validity, enforcement and interpretation of the Transaction
Documents shall be governed by and construed and enforced in accordance with the
laws of the State of New York, without regard to the principles of conflicts of
law that would require or permit the application of the laws of any other
jurisdiction.  Any controversy, claim or dispute arising out of or relating to
this Agreement, or the making, performance or interpretation thereof, including,
without limitation, the interpretation and scope of this arbitration provision,
whether in contract, in tort or otherwise, shall be settled by final and binding
arbitration under the auspices of the American Arbitration Association ("AAA")
in New York City, New York in accordance with the expedited dispute of
resolution procedures and the commercial arbitration rules of the AAA then in
effect.  Any arbitration conducted pursuant to this Section 18 shall be chosen
by the parties from lists of qualified arbitrators submitted by the AAA.  The
determination the arbitrator in the arbitration shall be conclusive and binding
on the parties hereto and shall not be subject to appeal or judicial
review.  The award of the
 
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arbitrator may be enforced in any court of competent jurisdiction and each of
the parties hereby unconditionally and irrevocably consents to the jurisdiction
of the state and federal courts located in the State of New York solely with
respect to (and for no reason or other purpose) any action instituted to enforce
any such award.  The award of the arbitrators may also be enforced in any other
court of competent jurisdiction.  Each of the parties unconditionally and
irrevocably waives any right to a trial by jury in respect of any such
action.  The arbitrator shall be entitled to award and apportion the costs and
expenses of the parties in connection with any arbitration (including, without
limitation, attorneys fees and expenses) as the arbitrators, in their
discretion, may determine.

6.8           Survival.  The representations and warranties contained herein
shall survive the Closing and the delivery and exercise of the Securities.
 
6.9           Execution.  This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart.  In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile signature page
were an original thereof.
 
6.10         Severability.  If any provision of this Agreement is held to be
invalid or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Agreement shall not in any way be
affected or impaired thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.
 
6.11         Replacement of Securities.  If any certificate or instrument
evidencing any Securities is mutilated, lost, stolen or destroyed, the Company
shall issue or cause to be issued in exchange and substitution for and upon
cancellation thereof, or in lieu of and substitution therefor, a new certificate
or instrument, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction and customary and reasonable
indemnity, if requested.  The applicants for a new certificate or instrument
under such circumstances shall also pay any reasonable third-party costs
associated with the issuance of such replacement Securities.
 
6.12         Remedies.  In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, each of
Investor and the Company will be entitled to specific performance under the
Transaction Documents.  The parties agree that monetary damages may not be
adequate compensation for any loss incurred by reason of any breach of
obligations described in the foregoing sentence and hereby agrees to waive in
any action for specific performance of any such obligation the defense that a
remedy at law would be adequate.

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

6.15         Construction.  The parties agree that each of them and/or their
respective counsel has reviewed and had an opportunity to revise the Transaction
Documents and, therefore, the normal rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall not be employed
in the interpretation of the Transaction Documents or any amendments
hereto.  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 will be applied against any party.
 
6.16         Entire Agreement.  This Agreement, together with the Exhibits,
Appendices and Schedules hereto, contains the entire agreement and understanding
of the parties, and supersedes all prior and contemporaneous agreements, term
sheets, letters, discussions, communications and understandings, both oral and
written, which the parties acknowledge
 
24
 
 

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have been merged into this Agreement.  No party, representative, attorney or
agent has relied upon any collateral contract, agreement, assurance, promise,
understanding or representation not expressly set forth hereinabove.  The
parties hereby expressly waive all rights and remedies, at law and in equity,
directly or indirectly arising out of or relating to, or which may arise as a
result of, any Person’s reliance on any such assurance.

6.17         Addresses for Notice.  Any notice required or permitted hereunder
shall be given in writing (unless otherwise specified herein) and shall be
deemed effectively given, (i) on the date received, (a) by personal delivery, or
(b) if advance copy is given by fax, (ii) seven (7) Business Days after deposit
with the applicable government postal service by certified mail, or (iii) three
(3) Business Days mailing by reputable international express courier, with
postage and fees prepaid, addressed to each of the other parties thereunto
entitled at the following addresses, or at such other addresses as a party may
designate by fifteen (15) days advance written notice to each of the other
parties hereto.

If to the Company:

Revonergy Inc.
Landmark House
17 Hanover Square
London UK  W1S 1HU

If to the Investor:
 
 
Kodiak Capital Group, LLC
One Columbus Place, 25th Floor
New York, NY 10019
Fax No.:  (212) 262-2601

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

REVONERGY INC.
 
 
/s/ Ravi Daswani
Ravi Daswani, President & CEO

KODIAK CAPITAL GROUP, LLC

/s/ Ryan C. Hodson

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EXHIBIT A
FORM OF WARRANT

NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS.  THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION
OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS
SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT.  NOTWITHSTANDING THE
FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.
 
 
Revonergy Inc.
 
 
Warrant To Purchase Common Stock

Warrant No.: 2010-1
Issuance Date:   [__], 2010

Number of Warrant Shares:  [____________]

Initial Exercise Price:  $[____] per share

Revonergy Inc., a Nevada corporation (“Company”), hereby certifies that, for
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Kodiak Capital Group, LLC, a Delaware limited liability company,
the holder hereof or its designees or assigns (“Holder”), is entitled, subject
to the terms set forth herein, to purchase from the Company, at the Exercise
Price then in effect, upon exercise of this Warrant to Purchase Common Stock
(including any Warrant to Purchase Common Stock issued in exchange, transfer or
replacement hereof, the “Warrant”), at any time or times after issuance of the
Warrant and until 11:59 p.m. Eastern time on the fifth anniversary of the
Tranche Notice Date for each applicable Warrant Tranche, subject to acceleration
pursuant to Section 3.3 hereof, that number of duly authorized, validly issued,
fully paid and non-assessable shares of Common Stock set forth above and as
adjusted herein (the “Warrant Shares”); provided, however, that this Warrant may
only be exercised, from time to time, for that number of shares of Common Stock
equal to 135% of the cumulative amount of Tranche Purchase Prices under Tranche
Notices delivered prior to or on the date of exercise.  Except as otherwise
defined herein, capitalized terms in this Warrant shall have the meanings set
forth in ARTICLE 13 hereof.
 
 
This Warrant is issued pursuant to the Preferred Stock Purchase Agreement dated
September 1, 2010, by and among the Company and the investor referred to therein
(the “Purchase Agreement”).

This Warrant shall consist of and be exercisable in tranches (each, a “Warrant
Tranche”), with a separate tranche being created upon each delivery of a Tranche
Notice under the Purchase Agreement.  Each Warrant Tranche will grant to the
Holder the right, for a five-year period commencing on the applicable Tranche
Notice Date, to exercise the Warrant and purchase up to a number of shares of
Common Stock with an Aggregate Exercise Price equal to 135% of the Tranche
Purchase Price for the applicable Tranche Notice.  Attached to this Warrant is a
schedule (the “Warrant Tranche Schedule”) that sets forth the issuance date, the
number of Warrant Shares, and the Exercise Price for each Warrant Tranche.  The
Warrant Tranche Schedule shall be updated by the Company, with an updated copy
provided to the Holder, promptly following each exercise of this Warrant.  No
portion of this Warrant shall vest or be exercisable except under the Warrant
Tranches.
 
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ARTICLE 1
EXERCISE OF WARRANT
 
 
1.1           Mechanics of Exercise.
 
 
1.1.1       Subject to the terms and conditions hereof, this Warrant may be
exercised by the Holder on any day on or after the Issuance Date, in whole or in
part, by (i) delivery of a written notice to the Company, in the form attached
hereto as Appendix 1 (the “Exercise Notice”), of the Holder’s election to
exercise this Warrant, and (ii) payment to the Company of an amount equal to the
applicable Exercise Price multiplied by the number of Warrant Shares as to which
this Warrant is being exercised (the “Aggregate Exercise Price”), with such
payment made, at Investor’s option, (x) in cash or by wire transfer of
immediately available funds, or (y) by cashless exercise pursuant to Section
1.3.
 
1.1.2       The Holder shall not be required to deliver the original Warrant in
order to effect an exercise hereunder.  Execution and delivery of the Exercise
Notice with respect to less than all of the Warrant Shares shall have the same
effect as cancellation of the original Warrant and issuance of a new Warrant
evidencing the right to purchase the remaining number of Warrant Shares.
 
1.1.3       On the Trading Day on which the Company has received each of the
Exercise Notice and the Aggregate Exercise Price (the “Exercise Delivery
Documents”) from the Holder by 6:30 p.m. Eastern time, or on the next Trading
Day if the Exercise Delivery Documents are received after 6:30 p.m. Eastern time
or on a non-Trading Day (in each case, the “Exercise Delivery Date”), the
Company shall transmit (i) a facsimile acknowledgment of confirmation of receipt
of the Exercise Delivery Documents to the Holder, and (ii) an electronic copy of
its share issuance instructions to the Holder and to the Company’s transfer
agent (the “Transfer Agent”), with such transmissions to comply with the notice
provisions contained in Section 6.2 of the Purchase Agreement, and shall
instruct and authorize the Transfer Agent to issue such aggregate number of
Warrant Shares that the Holder is entitled to receive upon such exercise to the
Holder or its designee.

1.1.4       Upon delivery of the Exercise Delivery Documents, 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 issued.  Any Warrant delivered
in connection with a Tranche Notice and exercised by Holder shall be deemed
exercised (i) on the Tranche Notice Date, if exercised by 6:30 p.m. Eastern time
on the Tranche Notice Date, or (ii) on the next Trading Day, if exercised by
Investor after 6:30 p.m. Eastern Time on the Tranche Notice Date or on any other
date, in each case with Holder deemed to be a holder of record as of such date.
 
1.1.5       If this Warrant is exercised and the number of Warrant Shares
represented by this Warrant is greater than the number of Warrant Shares being
acquired upon such exercise, then the Company shall, as soon as practicable and
in no event later than one Trading Day after such exercise, update the Tranche
Exercise Schedule to reflect the revised number of Warrant Shares for which this
Warrant is then exercisable and deliver a copy of the updated Tranche Exercise
Schedule to the Holder.  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 which may be payable with respect to the issuance
and delivery of Warrant Shares upon exercise of this Warrant.
 
1.2           Adjustments to Exercise Price and Number of Shares.  In addition
to other adjustments specified herein, the Exercise Price of this Warrant and
the number of shares of Common Stock issuable upon exercise shall be adjusted as
follows:
 
1.2.1       Exercise Price.  The “Exercise Price” per share of Common Stock
underlying this Warrant, subject to further adjustment as provided herein, shall
be as follows: (i) with respect to the portion of this Warrant issued on the
Effective Date and until the first Tranche Notice Date, the amount per Warrant
Share set forth on the face of this
 
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Warrant, which is equal to Closing Bid Price for the Common Stock on the Trading
Day prior to the Effective Date, and (ii) with respect to the portion of this
Warrant that becomes exercisable on any Tranche Notice Date (including the first
Tranche Notice Date), an amount per Warrant Share equal to the Closing Bid Price
of a share of Common Stock on such Tranche Notice Date.

1.2.2       Number of Shares.  The number of Warrant Shares underlying this
Warrant and each Warrant Tranche, subject to further adjustment as provided
herein, shall be as follows: (i) with respect to the portion of this Warrant
issued on the Effective Date and until the first Tranche Notice Date, the number
of shares set forth on the face of this Warrant, which is a number of shares of
Common Stock equal to the Maximum Placement multiplied by 135%, with the
resulting sum divided by the Closing Bid Price of a share of Common Stock on the
Trading Day prior to the Effective Date, and (ii) with respect to the portion of
this Warrant issued on any Tranche Notice Date including the first Tranche
Notice Date, a number of shares equal to the Tranche Purchase Price set forth in
the applicable Tranche Notice multiplied by 135%, with the resulting sum divided
by the Closing Bid Price of a share of Common Stock on the Tranche Notice
Date.  For example, if the Tranche Purchase Price is $500,000 and the Closing
Bid Price is $1.00, then the number of Warrant Shares underlying that Warrant
Tranche shall be $500,000 x 135% = $675,000 divided by $1.00 = 675,000 shares of
Common Stock.  On each Tranche Notice Date, the number of Warrant Shares
underlying the related Warrant Tranche shall vest and become exercisable, and
the aggregate number of Warrant Shares underlying this Warrant that are
currently exercisable shall automatically adjust up or down to account for the
change in the number of Warrant Shares covered by the new Warrant Tranche and
for any Warrant Shares issued upon any prior or simultaneous exercise of this
Warrant.  If at any time the Holder reasonably believes that the number of
Warrant Shares included in the Registration Statement is not sufficient to cover
all exercises under this Warrant, then the Company shall amend such Registration
Statement to include the additional number of Warrant Shares that may be
required to provide such coverage.
 
1.3           Cashless Exercise.  Notwithstanding anything contained herein to
the contrary, 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 receive upon such exercise the “Net Number” of
shares of Common Stock determined according to the following formula (a
“Cashless Exercise”):
 
 
Net Number =
(B-C) x A
 
B

For purposes of the foregoing formula:

A = the total number of shares with respect to which this Warrant is then being
exercised.

B = the average of the Closing Sale Prices of the shares of Common Stock (as
reported by Bloomberg) for the five (5) consecutive Trading Days ending on the
date immediately preceding the date of the Exercise Notice.

C = the Exercise Price then in effect for the applicable Warrant Shares at the
time of such exercise.

1.4           Company’s Failure to Timely Deliver Securities.  Intentionally
Omitted.
 
1.5           Exercise Limitation.  In no event shall a Holder be permitted to
exercise this Warrant, or part hereof, if, upon such exercise, the number of
shares of Common Stock beneficially owned by the Holder (other than shares which
would otherwise be deemed beneficially owned except for being subject to a
limitation on conversion or exercise analogous to the limitation contained in
this Article 1.5), would exceed 9.99% of the number of shares of Common Stock
then issued and outstanding.  As used herein, beneficial ownership shall be
determined in accordance with Section 13(d) of the Securities Exchange Act of
1934, as amended, and the rules thereunder.  To the extent that the limitation
contained in this Article 1.5 applies, the submission of an Exercise Notice by
the Holder shall be deemed to be the Holder’s representation that this Warrant
is exercisable pursuant to the terms hereof and the Company shall be entitled to
rely on such representation without making any further inquiry as to whether
this Article 1.5 applies.  Nothing contained herein shall be deemed to restrict
 
A-3
 
 

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the right of a Holder to exercise this Warrant, or part thereof, at such time as
such exercise will not violate the provisions of this Article 1.5.  This Article
1.5 may not be amended unless such amendment is approved by the holders of a
majority of the Common Stock then outstanding; provided, however, that the
limitations contained in this Article 1.5 shall cease to apply upon sixty (60)
days’ prior written notice from the Holder to the Company.

1.6           Activity Restrictions.  For so long as Holder or any of its
affiliates holds this Warrant or any Warrant Shares, neither Holder nor any
affiliate will:  (i) vote any shares of Common Stock owned or controlled 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 beneficially owning or controlling more than 9.99% of the total
outstanding Common Stock or other voting securities of the Company, (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
Section 1.6.
 
1.7           Disputes.  In the case of a dispute as to the determination of the
Exercise Price or the arithmetic calculation of the Warrant Shares, the Company
shall promptly issue to the Holder the number of Warrant Shares that are not
disputed and resolve such dispute in accordance with Section 12.
 
1.8           Insufficient Authorized Shares.  If at any time while any portion
of this Warrant remains 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 of this Warrant at least a
number of shares of Common Stock equal to 110% of the number of shares of Common
Stock as shall from time to time be necessary to effect the exercise of the
portion of the Warrant 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 the portion of the Warrant 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 90
days after the occurrence of such Authorized Share Failure, the Company shall
hold a meeting of its stockholders for the approval of an increase in the number
of authorized shares of Common Stock.  In connection with such meeting, the
Company shall provide each stockholder with a proxy statement and shall use its
best efforts to solicit its stockholders’ approval of such increase in
authorized shares of Common Stock and to cause its board of directors to
recommend to the stockholders that they approve such proposal.

ARTICLE 2
ADJUSTMENT UPON SUBDIVISION OR COMBINATION OF COMMON STOCK
 
 
If the Company at any time on or after the Issuance Date subdivides (by any
stock split, stock dividend, recapitalization or otherwise) one or more classes
of its outstanding shares of Common Stock into a greater number of shares, the
Exercise Price in effect immediately prior to such subdivision will be
proportionately reduced and the number of Warrant Shares will be proportionately
increased.  If the Company at any time on or after the Issuance Date combines
(by combination, reverse stock split or otherwise) one or more classes of its
outstanding shares of Common Stock into a smaller number of shares, the Exercise
Price in effect immediately prior to such combination will be proportionately
increased and the
 
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number of Warrant Shares will be proportionately decreased.  Any adjustment
under this ARTICLE 2 shall become effective at the close of business on the date
the subdivision or combination becomes effective.
 
 
ARTICLE 3
PURCHASE RIGHTS; FUNDAMENTAL TRANSACTIONS
 
 
3.1           Purchase Rights.  In addition to any adjustments pursuant to
ARTICLE 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 the exercise of this Warrant) 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.

3.2           Subsequent Equity Sales.  In addition to any adjustments made
pursuant to ARTICLE 2 above, if the Company or any Subsidiary thereof, as
applicable, at any time while this Warrant is outstanding, shall sell or grant
any option to purchase, or sell or grant any right to reprice, or otherwise
dispose of or issue (or announce any offer, sale, grant or any option to
purchase or other disposition) any Common Stock or Common Stock Equivalents
entitling any Person to acquire shares of Common Stock, at an effective price
per share less than the then Exercise Price (such lower price, the “Base Share
Price” and such issuances, collectively, a “Dilutive Issuance”), then the
Exercise Price shall be reduced and only reduced to equal the Base Share Price
and the number of Warrant Shares issuable hereunder shall be increased such that
the aggregate Exercise Price payable hereunder, after taking into account the
decrease in the Exercise Price, shall be equal to the aggregate Exercise Price
prior to such adjustment.  Such adjustment shall be made whenever such Common
Stock or Common Stock Equivalents are issued.  If the holder of the Common Stock
or Common Stock Equivalents so issued shall at any time, whether by operation of
purchase price adjustments, reset provisions, floating conversion, exercise or
exchange prices or otherwise, or due to warrants, options or rights per share
which are issued in connection with such issuance, be entitled to receive shares
of Common Stock at an effective price per share which is less than the Exercise
Price, such issuance shall be deemed to have occurred for less than the Exercise
Price on such date of the Dilutive Issuance.  Notwithstanding the foregoing, no
adjustments shall be made, paid or issued under this Section 3.2 in respect of
an Exempt Issuance, subject to adjustment for reverse and forward stock splits,
stock dividends, stock combinations and other similar transactions of the Common
Stock that occur after the date of the Purchase Agreement.  The Company shall
notify the Holder in writing, no later than the Trading Day following the
issuance of any Common Stock or Common Stock Equivalents subject to this Section
3.2, indicating therein the applicable issuance price, or applicable reset
price, exchange price, conversion price and other pricing terms (such notice the
“Dilutive Issuance Notice”).  For purposes of clarification, whether or not the
Company provides a Dilutive Issuance Notice pursuant to this Section 3.2, upon
the occurrence of any Dilutive Issuance, after the date of such Dilutive
Issuance the Holder is entitled to receive a number of Warrant Shares based upon
the Base Share Price regardless of whether the Holder accurately refers to the
Base Share Price in the Notice of Exercise.
 
3.3           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 in accordance
with the provisions of this Section 3.3 pursuant to written agreements in form
and substance satisfactory to the Required Holders and approved by the Required
Holders prior to such Fundamental Transaction, including agreements to deliver
to each Holder of this Warrant in exchange for such Warrant a security of the
Successor Entity evidenced by a written instrument substantially similar in form
and substance to this Warrant, including, without limitation, an adjusted
exercise price equal to the value for the shares of Common Stock reflected by
the terms of such Fundamental Transaction, and 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 satisfactory to the Required Holders.  Upon the occurrence of
any Fundamental Transaction, the Successor Entity shall succeed to, and be
substituted for (so that from and after the date of such Fundamental
Transaction, the provisions of this Warrant referring to the “Company” shall
refer instead to the Successor Entity), and may exercise every right and power
of the Company and shall assume all of the obligations of the Company under this
Warrant with the same effect as if such Successor Entity had been
 
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named as the Company herein.  Upon consummation of the Fundamental Transaction,
the Successor Entity shall deliver to the Holder confirmation that there shall
be issued upon exercise of this Warrant at any time after the consummation of
the Fundamental Transaction, in lieu of the shares of the Common Stock (or other
securities, cash, assets or other property) purchasable upon the exercise of
this Warrant prior to such Fundamental Transaction, such shares of stock,
securities, cash, assets or any other property whatsoever (including warrants or
other purchase or subscription rights) which the Holder would have been entitled
to receive upon the happening of such Fundamental Transaction had this Warrant
been converted immediately prior to such Fundamental Transaction, as adjusted in
accordance with the provisions of this Warrant.  In addition to and not in
substitution for any other rights hereunder, prior to the consummation of any
Fundamental Transaction pursuant to which holders of shares of Common Stock are
entitled to receive securities or other assets with respect to or in exchange
for shares of Common Stock (a “Corporate Event”), the Company shall make
appropriate provision to insure that the Holder will thereafter have the right
to receive upon an exercise of this Warrant at any time after the consummation
of the Fundamental Transaction, in lieu of the shares of the Common Stock (or
other securities, cash, assets or other property) purchasable upon the exercise
of this Warrant prior to such Fundamental Transaction, such shares of stock,
securities, cash, assets or any other property whatsoever (including warrants or
other purchase or subscription rights) which the Holder would have been entitled
to receive upon the happening of such Fundamental Transaction had this Warrant
been exercised immediately prior to such Fundamental Transaction; provided,
however, that in the event the Fundamental Transaction involves the issuance of
cash or freely tradable securities by an issuer listed on the New York Stock
Exchange or the Nasdaq Stock Market, then the ability to exercise this Warrant
shall expire on the consummation of that Fundamental Transaction.  Provision
made pursuant to the preceding sentence shall be in a form and substance
reasonably satisfactory to the Required Holders.  The provisions of this Section
3.3  shall apply similarly and equally to successive Fundamental Transactions
and Corporate Events and shall be applied without regard to any limitations on
the exercise of this Warrant.

3.4           Purchase of Warrant.  Notwithstanding the foregoing Section 3.3,
in the event of a Fundamental Transaction other than one in which the Successor
Entity is a Public Successor Entity that assumes this Warrant such that this
Warrant shall be exercisable for the publicly traded common stock of such Public
Successor Entity, at the request of the Holder delivered before the 90th day
after the effective date of such Fundamental Transaction, the Company (or the
Successor Entity) shall purchase this Warrant from the Holder by paying to the
Holder, within five (5) Trading Days after such request (or, if later, on the
effective date of the Fundamental Transaction), cash in an amount equal to the
value of the remaining unexercised portion of this Warrant on the date of such
consummation, which value shall be determined by use of the Black Schools Option
Pricing Model using a volatility equal to the 100 day average historical price
volatility prior to the date of the public announcement of such Fundamental
Transaction.

ARTICLE 4
NONCIRCUMVENTION
 
 
The Company hereby covenants and agrees that the Company will not, by amendment
of its certificate or articles of incorporation, articles of association,
bylaws, or any other organization documents, 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 nonassessable shares of Common Stock upon the
exercise of this Warrant, and (iii) shall, so long as any portion of this
Warrant remains 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 this Warrant, 110% of the number of
shares of Common Stock as shall from time to time be necessary to effect the
exercise of this Warrant then outstanding (without regard to any limitations on
exercise).
 
A-6
 
 

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ARTICLE 5
WARRANT HOLDER NOT DEEMED A STOCKHOLDER
 
 
Except as otherwise specifically provided herein, the Holder, solely in such
Person’s 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 such Person’s 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 such Person 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 ARTICLE 5, 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.
 
 
ARTICLE 6
REISSUANCE OF WARRANTS
 
 
6.1           Transfer of Warrant.  If this Warrant is to be transferred, the
Holder shall surrender this Warrant to the Company, whereupon the Company will
forthwith issue and deliver upon the order of the Holder a new Warrant (in
accordance with Section 6.4), 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 6.4) to
the Holder representing the right to purchase the number of Warrant Shares not
being transferred.
 
6.2           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, and, in the case of loss, theft or destruction,
of any indemnification undertaking by the Holder to the Company in customary
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 6.4) representing the right to purchase the Warrant
Shares then underlying this Warrant.

6.3           Exchangeable for Multiple Warrant.  This Warrant is exchangeable,
upon the surrender hereof by the Holder at the principal office of the Company,
for a new Warrant or Warrants (in accordance with Section 6.4) 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, that no Warrant for fractional shares of
Common Stock shall be given.
 
6.4           Issuance of New Warrant.  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 6.1 or Section 6.3, the Warrant Shares designated by the Holder
which, when added to the number of shares of Common Stock underlying the other
new Warrant 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.
 
 
ARTICLE 7
NOTICES
 
 
Whenever notice is required to be given under this Warrant, unless otherwise
provided herein, such notice shall be given in accordance with Section 6.2 of
the 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
therefore.  Without limiting the generality of the foregoing, the Company will
give written notice to the Holder (i) immediately upon any adjustment of the
Exercise Price,
 
A-7
 
 

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

 
 
 setting forth in reasonable detail, and certifying, the calculation of such
adjustment and (ii) at least fifteen 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 or other property to holders of shares of Common
Stock as such or (C) for determining rights to vote with respect to any
Fundamental Transaction, dissolution or liquidation, provided in each case that
such information shall be made known to the public prior to or in conjunction
with such notice being provided to the Holder.
 
 
ARTICLE 8
AMENDMENT AND WAIVER
 
 
Except as otherwise provided herein, the provisions of this Warrant 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 Required Holders; provided that except as
set forth in this Warrant no such action may increase the exercise price of any
Warrant or decrease the number of shares or class of stock obtainable upon
exercise of any Warrant without the written consent of the Holder.  No such
amendment shall be effective to the extent that it applies to less than all of
the holders of this Warrant.
 
 
ARTICLE 9
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.
 
 
ARTICLE 10
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.
 
 
ARTICLE 11
DISPUTE RESOLUTION
 
 
In the case of a dispute as to the determination of the Exercise Price or the
arithmetic calculation of the Warrant Shares, the Company shall submit the
disputed determinations or arithmetic calculations via facsimile within 2
Trading Days of receipt of the Exercise Notice giving rise to such dispute, as
the case may be, to the Holder.  If the Holder and the Company are unable to
agree upon such determination or calculation of the Exercise Price or the
Warrant Shares within three Trading Days of such disputed determination or
arithmetic calculation being submitted to the Holder, then the Company shall,
within 2 Trading Days submit via facsimile (a) the disputed determination of the
Exercise Price or arithmetic calculation to an independent, reputable investment
bank or independent registered public accounting firm selected by Holder subject
to Company’s approval, which may not be unreasonably withheld or delayed, or (b)
the disputed arithmetic calculation of the Warrant Shares to the Company’s
independent registered public accounting firm.  The Company shall cause at its
expense the investment bank or the accountant, as the case may be, to perform
the determinations or calculations and notify the Company and the Holder of the
results no later than 3 Trading Days from the time it receives the disputed
determinations or calculations.  Such investment bank’s or accountant’s
determination or calculation, as the case may be, shall be binding upon all
parties absent demonstrable error.
 
A-8
 
 

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ARTICLE 12
REMEDIES, 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, 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 right to pursue actual damages for
any failure by the Company to comply with the terms of this Warrant.  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.
 
 
ARTICLE 13
DEFINITIONS
 
 
For purposes of this Warrant, in addition to the terms defined elsewhere herein,
the following terms shall have the following meanings:
 
 
13.1         “Bloomberg” means Bloomberg Financial Markets.
 
 
13.2         “Closing Bid Price” and “Closing Sale Price” means, for any
security as of any date, the last closing bid price and last closing trade
price, respectively, for such security on the Trading Market, as reported by
Bloomberg, or, if the Trading 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 p.m., Eastern time, as reported by Bloomberg, or,
if the Trading 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 any market makers
for such security as reported in the “pink sheets” by Pink Sheets LLC (formerly
the National Quotation Bureau, Inc.).  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 Holder.  If the Company and Holder are
unable to agree upon the fair market value of such security, then such dispute
shall be resolved pursuant to ARTICLE 11.  All such determinations to be
appropriately adjusted for any stock dividend, stock split, stock combination or
other similar transaction during the applicable calculation period.
 
13.3         “Common Stock” means (i) the Company’s shares of Common Stock, par
value $0.001 per share, and (ii) any share capital into which such Common Stock
shall have been changed or any share capital resulting from a reclassification
of such Common Stock.
 
13.4         “Common Stock Deemed Outstanding” means, at any given time, the
number of shares of Common Stock actually outstanding at such time, plus the
number of shares of Common Stock deemed to be outstanding pursuant to Section
3.1 hereof regardless of whether the Options or Convertible Securities are
actually exercisable at such time, but excluding any shares of Common Stock
owned or held by or for the account of the Company or issuable upon exercise of
this Warrant.
 
13.5         “Common Stock Equivalents” means any securities of the Company or
the Subsidiaries which would entitle the holder thereof to acquire at any time
Common Stock, including, without limitation, any debt, preferred stock, rights,
options, warrants or other instrument that is at any time convertible into or
exercisable or exchangeable for, or otherwise entitles the holder thereof to
receive, Common Stock.
 
13.6         “Convertible Securities” means any stock or securities (other than
Options) directly or indirectly convertible into or exercisable or exchangeable
for shares of Common Stock.
 
A-9
 
 

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13.7         “Eligible Market” means the Trading Market, The New York Stock
Exchange, Inc., The NASDAQ Global Select Market, The NASDAQ Global Market, The
NASDAQ Capital Market, the NYSE Amex or the OTC Bulletin Board, but does not
include the Pink Sheets.
 
13.8         “Exempt Issuance” means the issuance of (a) shares of Common Stock
or options to employees, officers, directors or consultants of the Company
pursuant to any stock or option plan duly adopted for such purpose, by a
majority of the non-employee members of the Board of Directors or a majority of
the members of a committee of non-employee directors established for such
purpose, (b) securities upon the exercise or exchange of or conversion of any
Securities issued hereunder and/or other securities exercisable or exchangeable
for or convertible into shares of Common Stock issued and outstanding on the
date of this Agreement, provided that such securities have not been amended
since the date of this Agreement to increase the number of such securities or to
decrease the exercise price, exchange price or conversion price of such
securities (except as a result of anti-dilution provisions therein), and (c)
securities issued pursuant to acquisitions or strategic transactions approved by
a majority of the disinterested directors of the Company, provided that any such
issuance shall only be to a Person (or to the equity holders of a Person) which
is, itself or through its subsidiaries, an operating company or an asset in a
business synergistic with the business of the Company and shall provide to the
Company additional benefits in addition to the investment of funds, but shall
not include a transaction in which the Company is issuing securities primarily
for the purpose of raising capital or to an entity whose primary business is
investing in securities.
 
13.9         “Fundamental Transaction” has the meaning set forth in the Purchase
Agreement.
 
13.10       “Maximum Placement” has the meaning set forth in the Purchase
Agreement.
 
13.11       “Options” means any rights, warrants or options to subscribe for or
purchase shares of Common Stock or Convertible Securities.
 
13.12       “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.
 
13.13       “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.
 
13.14       “Public Successor Entity” means a Successor Entity that is a
publicly traded corporation whose stock is quoted or listed for trading on an
Eligible Market.
 
13.15       “Required Holders” means the Holders of this Warrant representing at
least a majority of shares of Common Stock underlying this Warrant as then
outstanding.
 
13.16       “Successor Entity” means the Person (or, if so elected by the
Required Holders, the Parent Entity) formed by, resulting from or surviving any
Fundamental Transaction or the Person (or, if so elected by the Required
Holders, the Parent Entity) with which such Fundamental Transaction shall have
been entered into.
 
13.17       “Trading Day” means any day on which the Common Stock is traded on
an Eligible Market; provided that it shall not include any day on which the
Common Stock (a) is suspended from trading, or (b) is scheduled to trade on such
exchange or market for less than 5 hours.
 
13.18       “Trading Market” means the OTC Bulletin Board, the NASDAQ Capital
Market, the NASDAQ Global Market, the NASDAQ Global Select Market, the NYSE
Amex, or the New York Stock Exchange, whichever is at the time the principal
trading exchange or market for the Common Stock, but does not include the Pink
Sheets inter-dealer electronic quotation and trading system.
 
13.19       “Tranche Closing Date” has the meaning set forth in the Purchase
Agreement.
 
A-10
 
 

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13.20       “Tranche Notice” has the meaning set forth in the Purchase
Agreement.
 
13.21       “Tranche Notice Date” has the meaning set forth in the Purchase
Agreement.
 
13.22       “Tranche Purchase Price” has the meaning set forth in the Purchase
Agreement.
 
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.
 
 
REVONERGY INC.
 
 
By:                                                                
Name:                                                                
Title:                                                                
 
 
 

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Warrant Exercise Schedule
 
 
Exercise Date
Number of
Warrant Shares
Exercise Price
Per Share
Aggregate Exercise
Price
Dollar Amount
Remaining
         

A-11
 
 

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APPENDIX 1
 
 
EXERCISE NOTICE
 
 
REVONERGY INC.
 
 
The undersigned hereby exercises the right to purchase ________________ shares
of Common Stock (“Warrant Shares”) of Revonergy Inc., a Nevada corporation
(“Company”), evidenced by the attached Warrant to Purchase Common Stock
(“Warrant”).  Capitalized terms used herein and not otherwise defined shall have
the respective meanings set forth in the Warrant.  The Holder intends that
payment of the Exercise Price shall be made as:
 
 
___
Cash Exercise with respect to ____________ Warrant Shares
   
___
Cashless Exercise with respect to ____________ Warrant Shares

Please issue _________________________ a certificate or certificates
representing said shares of Common Stock in the name specified below

___
Said shares in electronic form to the Deposit/Withdrawal at Custodian (DWAC)
account with Depository Trust Company (DTC) specified below.

 
By:
Name:
Title:

 

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ACKNOWLEDGMENT
 
 
The Company hereby acknowledges the foregoing Exercise Notice and hereby directs
Empire Stock Transfer Inc. to issue the above indicated number of shares of
Common Stock according to the instructions to be provided separately.
 
 
REVONERGY INC.
 
 
By:                                                                
Name:                                                                
Title:                                                                
 
 

A-12
 
 

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EXHIBIT B
REVONERGY INC.
DESIGNATION OF RIGHTS, PRIVILEGES, AND PREFERENCES OF
SERIES A REDEEMABLE PREFERRED STOCK

Pursuant to the provisions of Nevada Revised Statutes, §§ 78.195 and 78.1955,
the undersigned corporation, Revonergy Inc. (the “Corporation”), hereby adopts
the following Designation of Rights, Privileges, and Preferences of Series A
Redeemable Preferred Stock (the “Designation”):

FIRST:  The name of the Corporation is Revonergy Inc.

SECOND:  The following resolution establishing a series of preferred stock
designated as the “Series A Redeemable Preferred Stock,” consisting of 50,000
shares, par value $0.001, was duly adopted by the board of directors of the
Corporation effective as of September 7, 2010, in accordance with the articles
of incorporation of the Corporation and the corporation laws of the state of
Nevada:

RESOLVED, there is hereby created a series of preferred stock of the Corporation
to be designated as the “Series A Redeemable Preferred Stock,” consisting of
50,000 shares, par value $0.001 (referred to herein as the “Preferred Stock”),
with the following powers, preferences, rights, qualifications, limitations, and
restrictions:

1.           Liquidation.

1.01        In the event of any voluntary or involuntary liquidation (whether
complete or partial), dissolution, or winding up of the Corporation, the holders
of the Preferred Stock shall be entitled to be paid out of the assets of the
Corporation available for distribution to its stockholders, whether from
capital, surplus, or earnings, an amount per share in cash equal to the original
issuance price per share, plus all accumulated but unpaid dividends, subject to
the priority distribution required respecting any issued and outstanding shares
of any series of preferred stock authorized prior to the date hereof.  No
distribution shall be made on any common stock or other subsequent series of
preferred stock of the Corporation by reason of any voluntary or involuntary
liquidation (whether complete or partial), dissolution, or winding up of the
Corporation unless each holder of any Preferred Stock shall have received all
amounts to which such holder shall be entitled under this subsection 1.01.

1.02        If on any liquidation (whether complete or partial), dissolution, or
winding up of the Corporation, the assets of the Corporation available for
distribution to holders of Preferred Stock and any other stock ranking as to any
such distribution on a parity with the Preferred Stock shall be insufficient to
pay the holders of outstanding Preferred Stock or such other stock the full
amounts to which they otherwise would be entitled under subsection 1.01, the
assets of the Corporation available for distribution to holders of Preferred
Stock or such other stock shall be distributed to them pro rata on the basis of
the full respective preferential amounts to which they are entitled.

2.            Voting Rights.  The Preferred Stock shall not be voted on any
matter submitted to the stockholders for consideration, except to the extent
that the consent of the holders of the Preferred Stock, voting as a class, is
specifically required by the provisions of the corporation laws of the state of
Nevada, as now existing or as hereafter amended.  Notwithstanding the foregoing,
the holders of the Preferred Stock shall vote as a separate class on any
resolution proposed for adoption by the stockholders of the Corporation that
seeks to: (a) authorize, create, or issue, or increase the authorized or issued
amount, of any class or series of stock ranking senior to the Preferred Stock
with respect to the payment of dividends or the distribution of assets upon
dissolution, liquidation, or winding up of the Corporation or that may be
convertible into any class of shares ranking senior to the Preferred Stock as
regards to participation in dividends or the distribution of assets on
dissolution, liquidation, or winding up; or (b) amend, alter,
 
B-1
 
 

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

 
 
or repeal the provisions of the Corporation’s articles of incorporation or this
Designation, so as to adversely affect any right, preference, privilege, or
voting power of the Preferred Stock or the holders thereof.  In addition,
without the approval of holders of at least a majority of the issued and
outstanding shares of Preferred Stock, the Corporation shall not become subject
to any restriction on the Preferred Stock other than restrictions arising under
the general corporation laws of the state of Nevada or existing under the
articles of incorporation of the Corporation as in effect on the date of this
Designation.  When entitled to vote in accordance with the foregoing, each
holder of Preferred Stock shall be entitled to one vote for each share of such
Preferred Stock.

3.            Dividends.  The holders of the then-outstanding shares of
Preferred Stock shall be entitled to receive, in preference to the holders of
any other shares of capital stock of the Corporation, cumulative dividends on
the original purchase price per share at an annual rate of 15%, when and as if
they may be declared by the board of directors out of funds legally available
therefor (the “Series A Dividends”).  The Series A Dividends shall accrue on the
Preferred Stock commencing on the date of original issuance thereof.  All Series
A Dividends shall be cumulative, whether or not earned or declared and whether
or not there are profits, surplus, or other funds of the Corporation legally
available for the payment of dividends.  Dividends paid on shares of Preferred
Stock in an amount less than the total amount of such dividends at the time
accumulated and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding.  Unless full
cumulative dividends on the Preferred Stock have been paid, or declared and sums
set aside for the payment thereof, dividends, other than in common stock, $.001
par value per share (“Common Stock”), or other securities of a class or series
of stock of the Corporation the terms of which do not expressly provide that it
ranks senior to or on a parity with the Preferred Stock as to dividend
distributions and distributions upon the liquidation, winding-up, and
dissolution of the Corporation, may not be paid, or declared and sums set aside
for payment thereof, and other distributions may not be made upon the Common
Stock or other shares of capital stock of the Corporation.

4.           Redemption.

4.01        Subject to the requirements and limitations of the corporation laws
of the state of Nevada, the Corporation shall have the right to redeem shares of
Preferred Stock on the terms and conditions provided in this section 4.

4.02        Shares of Preferred Stock are subject to redemption by the
Corporation at any time after the date of issuance thereof.

4.03        The Corporation shall provide written notice of redemption to the
holders of the Preferred Stock on not less than five days’ written notice
specifying the date on which the Preferred Stock shall be redeemed (the
“Redemption Date”).  The Corporation may redeem a portion or all of the issued
and outstanding shares of Preferred Stock; provided, that in the event that
fewer than all of the outstanding shares of Preferred Stock are redeemed, such
redemption shall be pro rata determined on the basis of the number of shares of
Preferred Stock held by each holder reflected on the stock records and the total
number of shares of Preferred Stock outstanding.

4.04        The redemption consideration for each share of Preferred Stock shall
be the original purchase price per share, plus any accumulated but unpaid
dividends, plus the premium payable pursuant to subsection 4.05, if any.

4.05        The Corporation shall pay a premium upon redemption for Preferred
Stock redeemed within three years of issuance, as follows:

(a)          Preferred Stock redeemed within one year of issuance shall receive
a 30% premium on the original purchase price upon redemption;

(b)          Preferred Stock redeemed more than one year after issuance, but
within two years shall receive a 20% premium on the original purchase price upon
redemption; and

(c)          Preferred Stock redeemed more than two years after issuance, but
within three years shall receive a 10% premium on the original purchase price
upon redemption.
 
B-2
 
 

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4.06        Redemption of the Preferred Stock shall be made in the following
manner:

(a)          The Corporation shall notify the holders of the Preferred Stock of
the Corporation’s intent to redeem the Preferred Stock.  Such notice shall
include a statement of the number of shares of Preferred Stock to be redeemed
and the manner in which the redemption consideration is to be paid.
 
(b)          On the Redemption Date, all shares of Preferred Stock subject to
redemption shall be automatically redeemed.  The holder of any shares of
Preferred Stock so redeemed shall be required to tender the certificates
representing such shares, duly endorsed, to the Corporation or its agent in
exchange for delivery of the redemption consideration.

5.           Additional Provisions

5.01        No change in the provisions of the Preferred Stock set forth in this
Designation affecting any interests of the holders of any shares of Preferred
Stock shall be binding or effective unless such change shall have been approved
or consented to by the holders of a majority of the Preferred Stock in the
manner provided in the corporation laws of the state of Nevada, as the same may
be amended from time to time.

5.02        A share of Preferred Stock shall be transferable only on the books
of the Corporation maintained at its principal office on delivery thereof, duly
endorsed by the holder or by holder’s duly authorized attorney or representative
or accompanied by proper evidence of succession, assignment, or authority to
transfer.  In all cases of transfer by an attorney, the original letter of
attorney, duly approved, or an official copy thereof duly certified, shall be
deposited and remain with the Corporation.  In case of transfer by executors,
administrators, guardians, or other legal representatives, duly authenticated
evidence of their authority shall be produced and may be required to be
deposited and remain with the Corporation in its discretion.  On any
registration or transfer, the Corporation shall deliver a new certificate
representing the share of Preferred Stock so transferred to the person entitled
thereto.

5.03        Any notice required or permitted to be given to the holders of the
Preferred Stock under this Designation shall be deemed to have been duly given
if mailed by first class mail, postage prepaid, to such holders at their
respective addresses appearing on the stock records maintained by or for the
Corporation and shall be deemed to have been given as of the date deposited in
the United States mail.

IN WITNESS WHEREOF, the foregoing Designation of Rights, Privileges, and
Preferences of Series A Redeemable Preferred Stock of the Corporation has been
executed as of this 7th day of September, 2010.

   
REVONERGY INC.
Attest:
           
By:
 
By:
   
Kenneth G.C. Telford, Secretary
 
Ravi K. Daswani, President
       

B-3
 
 

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EXHIBIT C
LOCK-UP AGREEMENT
 
 
 
 
[Date]
 
 
Kodiak Capital Group, LLC
One Columbus Place, 25th Floor
New York, NY 10019
 
 
Ladies and Gentlemen:
 
 
This Lock-Up Agreement is being delivered to you in connection with the
Preferred Stock Purchase Agreement dated as of August 25, 2010 (“Purchase
Agreement”) and entered into by and among Revonergy Inc., a Nevada corporation
(“Company”) and Kodiak Capital Group, LLC, a Delaware limited liability company
(“Investor”), with respect to the purchase without registration under the
Securities Act of 1933, as amended (the “Act”), in reliance on Section 4(2) of
the Act and Rule 506 of Regulation D promulgated thereunder, of shares of the
Company’s Series A Preferred Stock and related Securities.  Capitalized terms
used herein without definition shall have the respective meanings ascribed to
them in the Purchase Agreement.
 
In order to induce Investor to enter into the Purchase Agreement, the
undersigned agrees that, for a period of ten Trading Days beginning on each date
the Company delivers a Tranche Notice to Investor (the “Tranche Notice Date”)
and ending on the Tranche Closing Date pursuant to the terms of the Purchase
Agreement (the “Lock-up Period”), the undersigned will not, without the prior
written consent of Investor, (a) sell, offer to sell, contract or agree to sell,
hypothecate, pledge, purchase, grant any option to purchase or otherwise dispose
of or agree to dispose of, directly or indirectly, in respect of, or establish
or increase a put equivalent position or liquidate or decrease a call equivalent
position within the meaning of Section 16 of the Securities Exchange Act of
1934, as amended, and the rules and regulations of the SEC promulgated
thereunder (the “Exchange Act”) with respect to, any Common Stock of the Company
or any securities convertible into or exercisable or exchangeable for Common
Stock, or warrants or other rights to purchase Common Stock or any such
securities, or any securities substantially similar to the Common Stock, (b)
enter into any swap or other arrangement that transfers to another, in whole or
in part, any of the economic consequences of ownership of Common Stock or any
securities convertible into or exercisable or exchangeable for Common Stock or
any such securities, or warrants or other rights to purchase Common Stock,
whether any such transaction is to be settled by delivery of Common Stock or
such other securities, in cash or otherwise, or (c) publicly announce an
intention to effect any transaction specified in clause (a) or (b).
 
The foregoing sentence shall not apply to (a) bona fide gifts, provided the
recipient thereof agrees in writing to be bound by the terms of this Lock-Up
Agreement, (b) dispositions to any trust for the direct or indirect benefit of
the undersigned and/or the immediate family of the undersigned, provided that
such trust agrees in writing to be bound by the terms of this Lock-Up Agreement,
(c) sales made pursuant to any written sales plans established prior to the date
of this Lock-Up Agreement in conformity with the requirements of Rule 10b5-1(c)
promulgated under the Exchange Act or (d) exercise of options for Common Stock
and the disposition (whether by sale, gift or otherwise) of Common Stock
underlying such options.  Notwithstanding clause (a) above, the undersigned may
make a bona fide gift of up to 10,000 shares of Common Stock to a charity or
other non-profit entity and such charity or entity shall not be required to be
bound by the terms of this Lock-Up Agreement; provided, however, that in the
event the undersigned exercises options during the Lock-Up Period, the
undersigned may not, during the Lock-Up Period, dispose of the number of shares
of Common Stock underlying such exercised options equal to the number of shares
of Common Stock gifted by the undersigned pursuant to this sentence during the
Lock-Up Period.  For purposes of this paragraph, “immediate family” shall mean
the undersigned and the spouse, any lineal descendent, father, mother, brother
or sister of the undersigned.
 
The Company agrees to provide the undersigned with notice that the Company has
delivered a Tranche Notice to Investor prior to, or simultaneous with, its
delivery of the Tranche Notice to Investor.  Such notice shall provide the
undersigned with the Tranche Notice Date and clearly indicate the beginning of
the Lock-up Period.
 
C-1
 
 

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Upon the termination of the Purchase Agreement, this Lock-Up Agreement shall be
terminated and the undersigned shall be released from its obligations hereunder.
 
 
Sincerely,
 
 
 
 
Stockholder
Print Name:

Acknowledged and Agreed:
 
 
REVONERGY INC.
 
 
By:                                           
Name:                                           
Title:                                           
 
 
 
 

C-2
 
 

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EXHIBIT D
OPINION
 
 

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 Opinion to be reviewed by KLMR – Draft Opinion to be delivered separately]

D-1
 
 

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EXHIBIT E
TRANCHE NOTICE 
 
 

Dated: [________], 20[__]
 
 
Re:  Tranche Notice
 
 
Ladies & Gentlemen:
 
 
Pursuant to the August 25, 2010 Preferred Stock Purchase Agreement (“Agreement”)
between Revonergy Inc., a Nevada corporation (“Company”), and Kodiak Capital
Group, LLC (“Investor”), Company hereby elects to exercise a
Tranche.  Capitalized terms not otherwise defined herein shall have the meanings
defined in the Agreement.
 
 
At the Tranche Closing, Company will sell to Investor [___________] Preferred
Shares at $10.00 per share for a Tranche Amount of $[___________].
 
 
On behalf of Company, the undersigned hereby certifies to Investor as follows:
 
 
1.             The undersigned is a duly authorized officer of Company;
 
 
2.             The above Tranche Amount does not exceed the Maximum Tranche
Amount; and
 
 
3.             All of the conditions precedent to the right of the Company to
deliver a Tranche Notice set forth in Section 2.3(d) of the Agreement have been
satisfied.
 
 
IN WITNESS WHEREOF, the Company has executed and delivered this Tranche Notice
as of the date first written above.
 
 
REVONERGY INC.

By:                                                                
Name:                                                                
Title:                                                                

E-1
 
 

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