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

EXECUTION VERSION

 

COMMON STOCK PURCHASE AGREEMENT

DATED AS OF JUNE 20, 2012

BY AND BETWEEN

SANTA FE GOLD CORPORATION

AND

GLENGROVE SMALL CAP VALUE, LTD.

 

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

  TABLE OF CONTENTS          ARTICLE I PURCHASE AND SALE OF COMMON STOCK 1    
 Section 1.1 Purchase and Sale of Stock 1      Section 1.2 Effective Date;
Settlement Dates 1      Section 1.3 Reservation of Common Stock 2      Section
1.4 Current Report; Prospectus Supplement 2         ARTICLE II FIXED REQUEST
TERMS; OPTIONAL AMOUNT 3      Section 2.1 Fixed Request Notice 3      Section
2.2 Fixed Requests 3      Section 2.3 Share Calculation 4      Section 2.4
Limitation of Fixed Requests 5      Section 2.5 Reduction of Commitment 5    
 Section 2.6 Below Threshold Price 5      Section 2.7 Settlement 6      Section
2.8 Reduction of Pricing Period 6      Section 2.9 Optional Amount 7    
 Section 2.10 Calculation of Optional Amount Shares 7      Section 2.11 Exercise
of Optional Amount 8      Section 2.12 Aggregate Limit 8      Section 2.13
Blackout Periods 8      Section 2.14 Commitment Shares 9         ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE INVESTOR 10      Section 3.1 Organization
and Standing of the Investor 10      Section 3.2 Authorization and Power 10    
 Section 3.3 No Conflicts 10      Section 3.4 Information 11         ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY 11      Section 4.1 Organization,
Good Standing and Power 11      Section 4.2 Authorization, Enforcement 12    
 Section 4.3 Capitalization 12      Section 4.4 Issuance of Securities 12    
 Section 4.5 No Conflicts 13      Section 4.6 Commission Documents, Financial
Statements 13      Section 4.7 Subsidiaries 15      Section 4.8 No Material
Adverse Effect 15      Section 4.9 No Undisclosed Liabilities 15      Section
4.10 No Undisclosed Events or Circumstances 15      Section 4.11 Indebtedness 15
     Section 4.12 Title To Assets 16      Section 4.13 Actions Pending 16    
 Section 4.14 Compliance With Law 16

i 

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

     Section 4.15 Certain Fees 16      Section 4.16 Operation of Business 17    
 Section 4.17 Environmental Compliance 18      Section 4.18 Material Agreements
18      Section 4.19 Transactions With Affiliates 19      Section 4.20
Securities Act 19      Section 4.21 Employees 21      Section 4.22 Use of
Proceeds 21      Section 4.23 Investment Company Act Status 21      Section 4.24
ERISA 21      Section 4.25 Taxes 22      Section 4.26 Insurance 22      Section
4.27 U.S. Real Property Holding Corporation 22      Section 4.28 Listing and
Maintenance Requirements 22      Section 4.29 Foreign Corrupt Practices Act 22  
   Section 4.30 Money Laundering Laws 23      Section 4.31 OFAC 23      Section
4.32 Manipulation of Price 23      Section 4.33 Natural Resource Properties and
Surface Rights 23      Section 4.34 Royalties and Commissions 24      Section
4.35 Reserve Reports 24      Section 4.36 Acknowledgement Regarding Investor’s
Acquisition of Securities 24         ARTICLE V COVENANTS 24      Section 5.1
Securities Compliance; FINRA Filing 25      Section 5.2 Registration and
Listing; DTC Eligibility 26      Section 5.3 Compliance with Laws. 27    
 Section 5.4 Due Diligence. 27      Section 5.5 Limitations on Holdings and
Issuances 28      Section 5.6 Other Agreements and Other Financings 28    
 Section 5.7 Stop Orders 30      Section 5.8 Amendments to the Registration
Statement; Prospectus Supplements; Free Writing Prospectuses. 31      Section
5.9 Prospectus Delivery 32      Section 5.10 Selling Restrictions. 33    
 Section 5.11 Effective Registration Statement 33      Section 5.12 Non-Public
Information 34      Section 5.13 Broker/Dealer 34      Section 5.14 Earnings
Statement 34      Section 5.15 Disclosure Schedule 35         ARTICLE VI OPINION
OF COUNSEL AND CERTIFICATE; CONDITIONS TO THE SALE AND PURCHASE OF THE SHARES 35
     Section 6.1 Issuance of Commitment Shares and Schedule 2.7 Shares; Opinion
of Counsel; Certificate 35      Section 6.2 Conditions Precedent to the
Obligation of the Company 36      Section 6.3 Conditions Precedent to the
Obligation of the Investor 38       ii 

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

ARTICLE VII TERMINATION 40 Section 7.1 Term, Termination by Mutual Consent 40
Section 7.2 Other Termination 41 Section 7.3 Effect of Termination 42        
ARTICLE VIII INDEMNIFICATION 43 Section 8.1 General Indemnity. 43 Section 8.2
Indemnification Procedures 44         ARTICLE IX MISCELLANEOUS 46 Section 9.1
Fees and Expenses. 46 Section 9.2 Specific Enforcement, Consent to Jurisdiction,
Waiver of Jury Trial. 46 Section 9.3 Entire Agreement; Amendment 47 Section 9.4
Notices 47 Section 9.5 Waivers 48 Section 9.6 Headings; Construction 49 Section
9.7 Successors and Assigns 49 Section 9.8 Governing Law 49 Section 9.9 Survival
49 Section 9.10 Counterparts 50 Section 9.11 Publicity 50 Section 9.12
Severability 50 Section 9.13 No Third Party Beneficiaries 50 Section 9.14
Further Assurances 50         Annex A.          Definitions  

iii

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

COMMON STOCK PURCHASE AGREEMENT

This COMMON STOCK PURCHASE AGREEMENT, made and entered into on this 20th day of
June 2012 (this “Agreement”), by and between Glengrove Small Cap Value, Ltd., a
business company incorporated under the laws of the British Virgin Islands (the
“Investor”), and Santa Fe Gold Corporation, a corporation organized and existing
under the laws of the State of Delaware (the “Company”). Capitalized terms used
but not defined herein shall have the meanings ascribed to such terms in Annex A
hereto.

RECITALS

WHEREAS, the parties desire that, upon the terms and subject to the conditions
and limitations set forth herein, the Company may issue and sell to the
Investor, and the Investor shall thereupon purchase from the Company, up to
$15,000,000 worth of newly issued shares of the Company’s common stock, par
value $0.002 per share (“Common Stock”); and

WHEREAS, in consideration for the Investor’s execution and delivery of this
Agreement, the Company is concurrently causing its transfer agent to issue to
the Investor the Commitment Shares in accordance with the terms and subject to
the conditions of this Agreement; and

WHEREAS, the issuance of the Commitment Shares and the offer and sale of the
Shares hereunder have been registered by the Company in the Registration
Statement, which has been declared effective by order of the Commission under
the Securities Act.

NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby agree
as follows:

ARTICLE I
PURCHASE AND SALE OF COMMON STOCK

Section 1.1 Purchase and Sale of Stock. Upon the terms and subject to the
conditions and limitations of this Agreement, during the Investment Period, the
Company, in its discretion, may issue and sell to the Investor up to $15,000,000
(the “Total Commitment”) worth of duly authorized, validly issued, fully paid
and non-assessable shares of Common Stock (the “Aggregate Limit”), by (i) the
delivery to the Investor of not more than 24 separate Fixed Request Notices
(unless the Investor and the Company mutually agree that a different number of
Fixed Request Notices may be delivered) as provided in Article II hereof and
(ii) the exercise by the Investor of Optional Amounts, which the Company may in
its discretion grant to the Investor and which may be exercised by the Investor,
in whole or in part, as provided in Article II hereof. The aggregate of all
Fixed Request Amounts and Optional Amount Dollar Amounts shall not exceed the
Aggregate Limit.

Section 1.2 Effective Date; Settlement Dates. This Agreement shall become
effective and binding upon the payment of the fees required to be paid on or
prior to the Effective Date pursuant to Section 9.1, the delivery of irrevocable
instructions to issue the Commitment Shares to the Investor or its designees as
provided in Sections 2.14 and 6.1, the delivery of counterpart signature pages
of this Agreement executed by each of the parties hereto, and the delivery of
all other documents, instruments and writings required to be delivered on the
Effective Date, in each case as provided in Section 6.1 hereof, to the offices
of Greenberg Traurig, LLP, 200 Park Avenue, New York, New York 10166, at 5:00
p.m., New York time, on the Effective Date. In consideration of and in express
reliance upon the representations, warranties and covenants, and otherwise upon
the terms and subject to the conditions, of this Agreement, from and after the
Effective Date and during the Investment Period (i) the Company shall issue and
sell to the Investor, and the Investor agrees to purchase from the Company, the
Shares in respect of each Fixed Request and (ii) the Investor may in its
discretion elect to purchase Shares in respect of each Optional Amount. The
issuance and sale of Shares to the Investor pursuant to any Fixed Request or
Optional Amount shall occur on the applicable Settlement Date in accordance with
Sections 2.7 and 2.9 (or on such Trading Day in accordance with Section 2.8, as
applicable), provided in each case that all of the conditions precedent thereto
set forth in Article VI theretofore shall have been fulfilled or (to the extent
permitted by applicable law) waived.

1

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

Section 1.3 Reservation of Common Stock. The Company has or will have duly
authorized and reserved for issuance, and covenants to continue to so reserve
once reserved for issuance, free of all preemptive and other similar rights, at
all times during the Investment Period, the requisite aggregate number of
authorized but unissued shares of its Common Stock to timely effect the
issuance, sale and delivery in full to the Investor of all Shares to be issued
in respect of all Fixed Requests and Optional Amounts under this Agreement, in
any case prior to the issuance to the Investor of such Shares.

Section 1.4 Current Report; Prospectus Supplement. As soon as practicable, but
in any event not later than 5:30 p.m. (New York time) on the first Trading Day
immediately following the Effective Date, the Company shall file with the
Commission (i) a report on Form 8-K relating to the transactions contemplated
by, and describing the material terms and conditions of, this Agreement (the
“Current Report”), and (ii) a Prospectus Supplement pursuant to Rule 424(b)
under the Securities Act specifically relating to the transactions contemplated
by, and describing the material terms and conditions of, this Agreement,
containing information previously omitted at the time of effectiveness of the
Registration Statement in reliance on Rule 430B under the Securities Act, and
disclosing all information relating to the transactions contemplated hereby
required to be disclosed in the Registration Statement and the Prospectus as of
the Effective Date, including, without limitation, information required to be
disclosed in the section captioned “Plan of Distribution” in the Prospectus (the
“Initial Prospectus Supplement”). The Current Report shall include a copy of
this Agreement as an exhibit and shall be incorporated by reference in the
Registration Statement and the Prospectus. The Company shall provide the
Investor a reasonable opportunity to comment on a draft of the Current Report
and the Initial Prospectus Supplement prior to filing the Current Report and
Initial Prospectus Supplement with the Commission, shall give due consideration
to all such comments and shall not file the Current Report or Initial Prospectus
Supplement to the extent the Investor reasonably objects to the form or content
thereof (provided, however, that the failure of the Investor to make such
objection shall not relieve the Company of any obligation or liability under
this Agreement or affect the Investor’s right to rely on the representations and
warranties made by the Company in this Agreement). If the transactions
contemplated by any Fixed Request are material to the Company (individually or
collectively with other prior Fixed Requests, the consummation of which have not
previously been reported in any Prospectus Supplement filed with the Commission
under Rule 424(b) under the Securities Act or in any report, statement or other
document filed by the Company with the Commission under the Exchange Act), or if
otherwise required under the Securities Act (or the interpretations of the
Commission thereof), in each case as reasonably determined by the Company or the
Investor, then, on the first Trading Day immediately following the last Trading
Day of the Pricing Period with respect to such Fixed Request, the Company shall
file with the Commission a Prospectus Supplement pursuant to Rule 424(b) under
the Securities Act with respect to the applicable Fixed Request(s), disclosing
the total number of Shares that are to be (and, if applicable, have been) issued
and sold to the Investor pursuant to such Fixed Request(s), the total purchase
price for the Shares subject to such Fixed Request(s), the applicable Discount
Price(s) for such Shares and the net proceeds that are to be (and, if
applicable, have been) received by the Company from the sale of such Shares. To
the extent not previously disclosed in a Prospectus Supplement, the Company
shall disclose in its Quarterly Reports on Form 10-Q and in its Annual Reports
on Form 10-K the information described in the immediately preceding sentence
relating to all Fixed Request(s) consummated during the relevant fiscal quarter.

2

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

ARTICLE II
FIXED REQUEST TERMS; OPTIONAL AMOUNT

Subject to the satisfaction or (to the extent permitted by applicable law)
waiver of the conditions set forth in this Agreement, the parties agree (unless
otherwise mutually agreed upon by the parties in writing) as follows:

Section 2.1 Fixed Request Notice. The Company may, from time to time in its sole
discretion, no later than 9:30 a.m. (New York time) on the first Trading Day of
the Pricing Period, provide to the Investor a Fixed Request notice,
substantially in the form attached hereto as Exhibit A (the “Fixed Request
Notice”), which Fixed Request Notice shall become effective at 9:30 a.m. (New
York time) on the first Trading Day of the Pricing Period specified in the Fixed
Request Notice; provided, however, that if the Company delivers the Fixed
Request Notice to the Investor later than 9:30 a.m. (New York time) on a Trading
Day, then the first Trading Day of such Pricing Period shall not be the Trading
Day on which the Investor received such Fixed Request Notice, but rather shall
be the next Trading Day (unless a subsequent Trading Day is therein specified).
The Company shall provide the Investor with at least two Trading Days’ prior
notice of its intent to deliver a Fixed Request Notice to the Investor. The
Fixed Request Notice shall specify the Fixed Amount Requested, establish the
Threshold Price for such Fixed Request, designate the first and last Trading Day
of the Pricing Period and specify the Optional Amount, if any, that the Company
elects to grant to the Investor during the Pricing Period and the applicable
Threshold Price for such Optional Amount (the “Optional Amount Threshold
Price”). The Threshold Price and the Optional Amount Threshold Price established
by the Company in a Fixed Request Notice may be the same or different, in the
Company’s sole discretion. Upon the terms and subject to the conditions of this
Agreement, the Investor is obligated to accept each Fixed Request Notice
prepared and delivered in accordance with the provisions of this Agreement.

Section 2.2 Fixed Requests. From time to time during the Investment Period, the
Company may, in its sole discretion, deliver to the Investor a Fixed Request
Notice for a specified Fixed Amount Requested, and the applicable discount price
(the “Discount Price”) shall be determined, in accordance with the price and
share amount parameters as set forth below or such other parameters mutually
agreed upon by the Investor and the Company, and upon the terms and subject to
the conditions of this Agreement, the Investor shall purchase from the Company
the Shares subject to such Fixed Request Notice at the Discount Price; provided,
however, that (i) if an ex-dividend date is established by the Trading Market in
respect of the Common Stock on or between the first Trading Day of the
applicable Pricing Period and the applicable Settlement Date, the Discount Price
shall be reduced by the per share dividend amount and (ii) unless the parties
otherwise mutually agree, the Company may not deliver any single Fixed Request
Notice for a Fixed Amount Requested in excess of the lesser of (a) the amount in
the applicable Fixed Amount Requested column below and (b) 2.5% of the Market
Capitalization:

3

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

Threshold Price Fixed Amount Requested Discount Price Equal to or greater than
$2.00 Not to exceed $1,600,000 95.00% of the VWAP Equal to or greater than $1.50
and less than $2.00 Not to exceed $1,200,000 94.75% of the VWAP Equal to or
greater than $1.00 and less than $1.50 Not to exceed $800,000 94.50% of the VWAP
Equal to or greater than $0.90 and less than $1.00 Not to exceed $720,000 94.50%
of the VWAP Equal to or greater than $0.80 and less than $0.90 Not to exceed
$640,000 94.50% of the VWAP Equal to or greater than $0.70 and less than $0.80
Not to exceed $560,000 94.50% of the VWAP Equal to or greater than $0.60 and
less than $0.70 Not to exceed $480,000 94.50% of the VWAP Equal to or greater
than $0.50 and less than $0.60 Not to exceed $400,000 94.50% of the VWAP Equal
to or greater than $0.40 and less than $0.50 Not to exceed $320,000 94.50% of
the VWAP Equal to or greater than $0.30 and less than $0.40 Not to exceed
$240,000 94.50% of the VWAP Equal to or greater than $0.20 and less than $0.30
Not to exceed $160,000 94.50% of the VWAP Equal to or greater than $0.10 and
less than $0.20 Not to exceed $100,000 94.50% of the VWAP

Anything to the contrary in this Agreement notwithstanding, unless otherwise
mutually agreed upon by the Investor and the Company, at no time shall the
Investor be required to purchase more than $1,600,000 worth of Common Stock in
respect of any Pricing Period (not including Common Stock subject to any
Optional Amount). The date on which the Company delivers any Fixed Request
Notice in accordance with this Section 2.2 hereinafter shall be referred to as a
“Fixed Request Exercise Date”.

Section 2.3 Share Calculation. With respect to each Trading Day during the
applicable Pricing Period for which the VWAP equals or exceeds the Threshold
Price, the number of Shares to be issued by the Company to the Investor pursuant
to a Fixed Request shall equal the quotient (calculated for each Trading Day
during the applicable Pricing Period for which the VWAP equals or exceeds the
Threshold Price) determined pursuant to the following equation (rounded to the
nearest whole Share):

4

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

N = (A x B)/C, where:

N = the number of Shares to be issued by the Company to the Investor in respect
of a Trading Day during the applicable Pricing Period for which the VWAP equals
or exceeds the Threshold Price,

A = 0.10 (the “Multiplier”), provided, however, that if the Company and the
Investor mutually agree prior to the commencement of a Pricing Period that the
number of consecutive Trading Days constituting a Pricing Period shall be less
than 10, then the Multiplier correspondingly shall be increased to equal the
decimal equivalent (in 10-millionths) of a fraction, the numerator of which is
one and the denominator of which equals the number of Trading Days in the
reduced Pricing Period (it being hereby acknowledged and agreed that this
proviso shall not apply to any unilateral determination by the Company to reduce
a Pricing Period, but rather, in the event of such unilateral determination,
Section 2.8 hereof shall apply),

B = the total Fixed Amount Requested, and

C = the applicable Discount Price for such Trading Day.

Section 2.4 Limitation of Fixed Requests. The Company shall not make more than
one Fixed Request in each Pricing Period. Not less than five Trading Days shall
elapse between the end of one Pricing Period and the commencement of any other
Pricing Period during the Investment Period. There shall be permitted a maximum
of 24 Fixed Requests during the Investment Period. Each Fixed Request
automatically shall expire immediately following the last Trading Day of each
Pricing Period.

Section 2.5 Reduction of Commitment. On the Settlement Date with respect to a
Pricing Period, the Investor’s Total Commitment under this Agreement
automatically (and without the need for any amendment to this Agreement) shall
be reduced, on a dollar-for-dollar basis, by the total amount of the Fixed
Request Amount and the Optional Amount Dollar Amount, if any, for such Pricing
Period paid to the Company at such Settlement Date.

Section 2.6 Below Threshold Price. If the VWAP on any Trading Day in a Pricing
Period is lower than the Threshold Price, then for each such Trading Day the
Fixed Amount Requested shall be reduced, on a dollar-for-dollar basis, by an
amount equal to the product of (x) the Multiplier and (y) the total Fixed Amount
Requested, and no Shares shall be purchased or sold with respect to such Trading
Day, except as provided below. If trading in the Common Stock on the OTC
Bulletin Board (or any other Trading Market on which the Common Stock is then
listed or quoted) is suspended for any reason for more than three hours on any
Trading Day, the Investor may at its option deem the price of the Common Stock
to be lower than the Threshold Price for such Trading Day and, for each such
Trading Day, the total amount of the Fixed Amount Requested shall be reduced as
provided in the immediately preceding sentence, and no Shares shall be purchased
or sold with respect to such Trading Day, except as provided below. For each
Trading Day during a Pricing Period on which the VWAP is lower (or is deemed to
be lower as provided in the immediately preceding sentence) than the Threshold
Price, the Investor may in its sole discretion elect to purchase such U.S.
dollar amount of Shares equal to the amount by which the Fixed Amount Requested
has been reduced in accordance with this Section 2.6, at the Threshold Price
multiplied by the applicable percentage set forth in the column entitled
“Discount Price” for the row corresponding to the applicable Threshold Price in
Section 2.2. The Investor shall inform the Company via facsimile transmission
not later than 8:00 p.m. (New York time) on the last Trading Day of such Pricing
Period as to the number of Shares, if any, the Investor elects to purchase as
provided in this Section 2.6.

5

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

Section 2.7 Settlement. The payment for, against simultaneous delivery of,
Shares in respect of each Fixed Request shall be settled on the second Trading
Day next following the last Trading Day of each Pricing Period, or on such
earlier date as the parties may mutually agree (the “Settlement Date”). Except
as specifically set forth in Schedule 2.7, on each Settlement Date, the Company
shall, or shall cause its transfer agent to, electronically transfer the Shares
purchased by the Investor by crediting the Investor’s or its designees’ account
at DTC through its Deposit/Withdrawal at Custodian (DWAC) system, which Shares
shall be freely tradable and transferable and without restriction on resale,
against simultaneous payment therefor to the Company’s designated account by
wire transfer of immediately available funds; provided that if the Shares are
received by the Investor later than 1:00 p.m. (New York time), payment therefor
shall be made with next day funds. As set forth in Section 9.1(ii), a failure by
the Company to deliver such Shares shall result in the payment of partial
damages by the Company to the Investor.

Section 2.8 Reduction of Pricing Period. If during a Pricing Period the Company
elects to reduce the number of Trading Days in such Pricing Period (and thereby
amend its previously delivered Fixed Request Notice), the Company shall so
notify the Investor before 9:00 a.m. (New York time) on any Trading Day during a
Pricing Period (a “Reduction Notice”) and the last Trading Day of such Pricing
Period shall be the Trading Day immediately preceding the Trading Day on which
the Investor received such Reduction Notice; provided, however, that if the
Company delivers the Reduction Notice later than 9:00 a.m. (New York time) on a
Trading Day during a Pricing Period, then the last Trading Day of such Pricing
Period instead shall be the Trading Day on which the Investor received such
Reduction Notice.

Upon receipt of a Reduction Notice, the Investor (i) shall purchase the Shares
in respect of each Trading Day in such reduced Pricing Period for which the VWAP
equals or exceeds the Threshold Price in accordance with Section 2.3 hereof;
(ii) may elect to purchase the Shares in respect of any Trading Day in such
reduced Pricing Period for which the VWAP is (or is deemed to be) lower than the
Threshold Price in accordance with Section 2.6 hereof; and (iii) may elect to
exercise all or any portion of an Optional Amount on any Trading Day during such
reduced Pricing Period in accordance with Sections 2.10 and 2.11 hereof.

In addition, upon receipt of a Reduction Notice, the Investor may elect to
purchase such U.S. dollar amount of additional Shares equal to the product
determined pursuant to the following equation:

D = (A/B) x (B – C), where:

6

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

D = the U.S. dollar amount of additional Shares to be purchased,

A = the Fixed Amount Requested,

B = 10 or, for purposes of this Section 2.8, such lesser number of Trading Days
as the parties may mutually agree to, and

C = the number of Trading Days in the reduced Pricing Period,

at a per Share price equal to the average per share price to be paid for Shares
to be purchased during such reduced Pricing Period pursuant to clauses (i) and
(ii) (as applicable) of the immediately preceding paragraph.

The Investor may also elect to exercise any portion of the applicable Optional
Amount which was unexercised during the reduced Pricing Period by issuing an
Optional Amount Notice to the Company not later than 10:00 a.m. (New York time)
on the first Trading Day next following the last Trading Day of the reduced
Pricing Period. The number of Shares to be issued upon exercise of such Optional
Amount shall be calculated pursuant to the equation set forth in Section 2.10
hereof, except that “C” shall equal the greater of (i) the VWAP for the Common
Stock on the last Trading Day of the reduced Pricing Period or (ii) the Optional
Amount Threshold Price.

The payment for, against simultaneous delivery of, Shares to be purchased and
sold in accordance with this Section 2.8 shall be settled on the second Trading
Day next following the Trading Day on which the Investor receives a Reduction
Notice.

Section 2.9 Optional Amount. With respect to any Pricing Period, the Company may
in its sole discretion grant to the Investor the right to exercise, from time to
time during the Pricing Period (but not more than once on any Trading Day), all
or any portion of an Optional Amount. The maximum Optional Amount Dollar Amount
and the Optional Amount Threshold Price shall be set forth in the Fixed Request
Notice. If an ex-dividend date is established by the Trading Market in respect
of the Common Stock on or between the first Trading Day of the applicable
Pricing Period and the applicable Settlement Date, the applicable exercise price
in respect of the Optional Amount shall be reduced by the per share dividend
amount. Each daily Optional Amount exercise shall be aggregated during the
Pricing Period and settled on the next Settlement Date. The Optional Amount
Threshold Price designated by the Company in its Fixed Request Notice shall
apply to each Optional Amount exercised during the applicable Pricing Period.

Section 2.10 Calculation of Optional Amount Shares. The number of shares of
Common Stock to be issued in connection with the exercise of an Optional Amount
shall be the quotient determined pursuant to the following equation (rounded to
the nearest whole Share):

O = A/(B x C), where:

O = the number of shares of Common Stock to be issued in connection with such
Optional Amount exercise,

7

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

A = the Optional Amount Dollar Amount with respect to which the Investor has
delivered an Optional Amount Notice,

B = the applicable percentage set forth in the column entitled “Discount Price”
for the row corresponding to the applicable Threshold Price in Section 2.2 (with
the Optional Amount Threshold Price serving as the Threshold Price for such
purposes), and

C = the greater of (i) the VWAP for the Common Stock on the day the Investor
delivers the Optional Amount Notice or (ii) the Optional Amount Threshold Price.

Section 2.11 Exercise of Optional Amount. If granted by the Company to the
Investor with respect to a Pricing Period, all or any portion of the Optional
Amount may be exercised by the Investor on any Trading Day during the Pricing
Period, subject to the limitations set forth in Section 2.9. As a condition to
each exercise of an Optional Amount pursuant to this Section 2.11, the Investor
shall issue an Optional Amount Notice to the Company no later than 8:00 p.m.
(New York time) on the day of such Optional Amount exercise. If the Investor
does not exercise an Optional Amount in full by 8:00 p.m. (New York time) on the
last Trading Day of the applicable Pricing Period, such unexercised portion of
the Investor’s Optional Amount with respect to that Pricing Period automatically
shall lapse and terminate.

Section 2.12 Aggregate Limit. If the Company issues a Fixed Request Notice or
Optional Amount that otherwise would permit the Investor to purchase shares of
Common Stock which would cause the aggregate purchases by the Investor under
this Agreement to exceed the Aggregate Limit, such Fixed Request Notice or
Optional Amount shall be void ab initio to the extent of the amount by which the
dollar value of shares or number of shares, as the case may be, of Common Stock
otherwise issuable pursuant to such Fixed Request Notice or Optional Amount
together with the dollar value of shares or number of shares, as the case may
be, of all other Common Stock purchased by the Investor pursuant to this
Agreement, or issued as partial damages pursuant to Section 9.1(ii), would
exceed the Aggregate Limit.

Section 2.13 Blackout Periods. The Company shall advise the Investor in writing
of any changes to its policy on insider trading. Notwithstanding any other
provision of this Agreement, the Company shall not deliver any Fixed Request
Notice or grant any Optional Amount or otherwise offer, sell or deliver Shares
to the Investor, and the Investor shall not be obligated to purchase any Shares
pursuant to this Agreement, (i) during any period in which the Company is, or
may be deemed to be, in possession of material non-public information, (ii)
during any period (other than the period referred to in clause (iii) of this
Section 2.13) in which the Company’s insider trading policy, as it exists from
time to time, would prohibit purchases or sales of Common Stock by its officers
or directors (each such period, a “Blackout Period”), except with respect to
this clause (ii) as expressly provided in the immediately following sentence, or
(iii) except as expressly provided in this Section 2.13, at any time from and
including the date (each, an “Announcement Date”) on which the Company shall
issue a press release containing, or shall otherwise publicly announce, its
earnings, revenues or other results of operations (each, an “Earnings
Announcement”) through and including the time that is 24 hours after the time
that the Company files (a “Filing Time”) a Quarterly Report on Form 10-Q or an
Annual Report on Form 10-K that includes consolidated financial statements as of
and for the same period or periods, as the case may be, covered by such Earnings
Announcement. If the Company wishes to deliver any Fixed Request Notice or grant
any Optional Amount or otherwise offer, sell or deliver Shares to the Investor
during any Blackout Period, the Company shall, as conditions thereto, (A)
provide the Investor with the compliance certificate substantially in the form
attached hereto as Exhibit D, dated the date of such Fixed Request Notice or
Optional Amount grant, as applicable, which certificate shall be deemed to
remain in effect during the applicable Pricing Period through and including the
applicable Settlement Date, and the “bring down” opinions in the form mutually
agreed to by the parties hereto, dated the date of such Fixed Request Notice or
Optional Amount grant, as applicable, and (B) afford the Investor the
opportunity to conduct a due diligence review in accordance with Section 5.4
hereof. If the Company wishes to deliver any Fixed Request Notice or grant any
Optional Amount or otherwise offer, sell or deliver Shares to the Investor at
any time during the period from and including an Announcement Date through and
including the time that is 24 hours after the corresponding Filing Time, the
Company shall, as conditions thereto, (1) prepare and deliver to the Investor
(with a copy to counsel to the Investor) a report on Form 8-K which shall
include substantially the same financial and related information as was set
forth in the relevant Earnings Announcement (other than any earnings or other
projections, similar forward-looking data and officers’ quotations) (each, an
“Earnings 8-K”), in form and substance reasonably satisfactory to the Investor
and its counsel, (2) provide the Investor with the compliance certificate
substantially in the form attached hereto as Exhibit D, dated the date of such
Fixed Request Notice or Optional Amount grant, as applicable, which certificate
shall be deemed to remain in effect during the applicable Pricing Period through
and including the applicable Settlement Date, and the “bring down” opinions in
the form mutually agreed to by the parties hereto, dated the date of such Fixed
Request Notice or Optional Amount grant, as applicable, (3) afford the Investor
the opportunity to conduct a due diligence review in accordance with Section 5.4
hereof and (4) file such Earnings 8-K with the Commission (so that it is deemed
“filed” for purposes of Section 18 of the Exchange Act) on or prior to the date
of such Fixed Request Notice or Optional Amount grant, as applicable. The
provisions of clause (iii) of this Section 2.13 shall not be applicable for the
period from and after the time at which all of the conditions set forth in the
immediately preceding sentence shall have been satisfied (or, if later, the time
that is 24 hours after the time that the relevant Earnings Announcement was
first publicly released) through and including the time that is 24 hours after
the Filing Time of the relevant Quarterly Report on Form 10-Q or Annual Report
on Form 10-K, as the case may be. For purposes of clarity, the parties agree
that the delivery of the compliance certificate and the “bring down” opinions
pursuant to this Section 2.13 shall not relieve the Company from any of its
obligations under this Agreement with respect to the delivery of the compliance
certificate called for by Section 6.3(v) and the “bring down” opinions called
for by Section 6.3(xii) on the applicable Settlement Date, which Sections shall
have independent application.

8

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

Section 2.14 Commitment Shares. In consideration for the Investor’s execution
and delivery of this Agreement, concurrently with the execution and delivery of
this Agreement on the Effective Date, the Company shall deliver irrevocable
instructions to its transfer agent to issue to the Investor (or its designee),
not later than 4:00 p.m. (New York time) on the first Trading Day immediately
following the Effective Date, a certificate representing the Commitment Shares
in the name of the Investor or its designee (in which case such designee name
shall have been provided to the Company prior to the Effective Date), which
Commitment Shares shall be issued pursuant to the Registration Statement and
without any restriction on resale. Such Commitment Share certificate shall not
bear any restrictive legend, shall have no stop transfer or similar order
maintained against transfer thereof and shall be delivered to the Investor (or
its designee) by overnight courier pursuant to the instructions set forth in
Schedule 2.7. For the avoidance of doubt, all of the Commitment Shares shall be
fully earned as of the Effective Date, regardless of whether any Fixed Requests
are issued by the Company or settled hereunder. In addition, concurrently with
the execution and delivery of this Agreement on the Effective Date, the Company
shall deliver irrevocable instructions to its transfer agent to issue to the
Investor (or its designee), not later than 4:00 p.m. (New York time) on the
first Trading Day immediately following the Effective Date, a certificate
representing the number of Shares set forth in Schedule 2.7 in the name of the
Investor or its designee (in which case such designee name shall have been
provided to the Company prior to the Effective Date), which Shares shall be (i)
used to effect settlement of any Fixed Request or Optional Amount prior to the
Company, through its transfer agent, and the Common Stock becoming DTC eligible
and eligible to participate in the DTC Deposit/Withdrawal at Custodian (DWAC)
system, in accordance with the procedures set forth in Schedule 2.7, and (ii)
issued pursuant to the Registration Statement and without any restriction on
resale. Such Share certificate shall not bear any restrictive legend, shall have
no stop transfer or similar order maintained against transfer thereof and shall
be delivered to the Investor (or its designee) by overnight courier pursuant to
the instructions set forth in Schedule 2.7.

9

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

ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE INVESTOR

The Investor hereby makes the following representations and warranties to the
Company:

Section 3.1 Organization and Standing of the Investor. The Investor is a
business company duly organized, validly existing and in good standing under the
laws of the British Virgin Islands.

Section 3.2 Authorization and Power. The Investor has the requisite corporate
power and authority to enter into and perform its obligations under this
Agreement and to purchase or acquire the Securities in accordance with the terms
hereof. The execution, delivery and performance of this Agreement by the
Investor and the consummation by it of the transactions contemplated hereby have
been duly authorized by all necessary corporate action, and no further consent
or authorization of the Investor, its Board of Directors or stockholders is
required. This Agreement has been duly executed and delivered by the Investor.
This Agreement constitutes a valid and binding obligation of the Investor
enforceable against it in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation, conservatorship, receivership, or
similar laws relating to, or affecting generally the enforcement of, creditor’s
rights and remedies or by other equitable principles of general application.

Section 3.3 No Conflicts. The execution, delivery and performance by the
Investor of this Agreement and the consummation by the Investor of the
transactions contemplated herein do not and shall not (i) result in a violation
of such Investor’s charter documents, bylaws or other applicable organizational
instruments, (ii) conflict with, constitute a default (or an event which, with
notice or lapse of time or both, would become a default) under, or give rise to
any rights of termination, amendment, acceleration or cancellation of, any
material agreement, mortgage, deed of trust, indenture, note, bond, license,
lease agreement, instrument or obligation to which the Investor is a party or is
bound, (iii) create or impose any lien, charge or encumbrance on any property of
the Investor under any agreement or any commitment to which the Investor is
party or under which the Investor is bound or under which any of its properties
or assets are bound, or (iv) result in a violation of any federal, state, local
or foreign statute, rule, or regulation, or any order, judgment or decree of any
court or governmental agency applicable to the Investor or by which any of its
properties or assets are bound or affected, except, in the case of clauses (ii),
(iii) and (iv), for such conflicts, defaults, terminations, amendments,
acceleration, cancellations and violations as would not, individually or in the
aggregate, prohibit or otherwise interfere with the ability of the Investor to
enter into and perform its obligations under this Agreement in any material
respect. The Investor is not required under federal, state, local or foreign
law, rule or regulation to obtain any consent, authorization or order of, or
make any filing or registration with, any court or governmental agency in order
for it to execute, deliver or perform any of its obligations under this
Agreement or to purchase or acquire the Securities in accordance with the terms
hereof.

10

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

Section 3.4 Information. All materials relating to the business, financial
condition, management and operations of the Company and materials relating to
the offer and sale of the Securities which have been requested by the Investor
have been furnished or otherwise made available to the Investor or its advisors
(subject to Section 5.12 of this Agreement). The Investor and its advisors have
been afforded the opportunity to ask questions of representatives of the
Company. The Investor has sought such accounting, legal and tax advice as it has
considered necessary to make an informed investment decision with respect to its
acquisition of the Securities. The Investor understands that it (and not the
Company) shall be responsible for its own tax liabilities that may arise as a
result of this investment or the transactions contemplated by this Agreement.
The Investor is aware of all of its obligations under U.S. federal and
applicable state securities laws and all rules and regulations promulgated
thereunder in connection with this Agreement and the transactions contemplated
hereby and the purchase and sale of the Securities.

ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY

Except as set forth in the Commission Documents or the disclosure schedule
delivered by the Company to the Investor (which is hereby incorporated by
reference in, and constitutes an integral part of, this Agreement) (the
“Disclosure Schedule”), the Company hereby makes the following representations
and warranties to the Investor:

Section 4.1 Organization, Good Standing and Power. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has the requisite corporate power and authority to own,
lease and operate its properties and assets and to conduct its business as it is
now being conducted. The Company and each Subsidiary is duly qualified as a
foreign corporation to do business and is in good standing in every jurisdiction
in which the nature of the business conducted or property owned by it makes such
qualification necessary, except to the extent that the failure to be so
qualified would not have a Material Adverse Effect.

11

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

Section 4.2 Authorization, Enforcement. The Company has the requisite corporate
power and authority to enter into and perform this Agreement and to issue and
sell the Securities in accordance with the terms hereof. Except for approvals of
the Company’s Board of Directors or a committee thereof as may be required in
connection with any issuance and sale of Shares to the Investor hereunder (which
approvals shall be obtained prior to the delivery of any Fixed Request Notice),
the execution, delivery and performance by the Company of this Agreement and the
consummation by it of the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action and no further consent or
authorization of the Company or its Board of Directors or stockholders is
required. This Agreement has been duly executed and delivered by the Company and
constitutes a valid and binding obligation of the Company enforceable against
the Company in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation, conservatorship, receivership or similar laws relating to, or
affecting generally the enforcement of, creditor’s rights and remedies or by
other equitable principles of general application.

Section 4.3 Capitalization. The authorized capital stock of the Company and the
shares thereof issued and outstanding were as set forth in the Commission
Documents as of the dates reflected therein. All of the outstanding shares of
Common Stock have been duly authorized and validly issued, and are fully paid
and nonassessable. No shares of Common Stock are entitled to preemptive rights
and there are no outstanding debt securities and no contracts, commitments,
understandings, or arrangements by which the Company is or may become bound to
issue additional shares of the capital stock of the Company or options,
warrants, scrip, rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into or exchangeable
for, any shares of capital stock of the Company other than those issued or
granted in the ordinary course of business pursuant to the Company’s equity
incentive and/or compensatory plans or arrangements. Except for customary
transfer restrictions contained in agreements entered into by the Company to
sell restricted securities, the Company is not a party to, and it has no
Knowledge of, any agreement restricting the voting or transfer of any shares of
the capital stock of the Company. The offer and sale of all capital stock,
convertible or exchangeable securities, rights, warrants or options of the
Company issued prior to the Effective Date complied, in all material respects,
with all applicable federal and state securities laws, and no stockholder has
any right of rescission or damages or any “put” or similar right with respect
thereto that would have a Material Adverse Effect. The Company has made
available via the Commission’s Electronic Data Gathering, Analysis and Retrieval
System (“EDGAR”) true and correct copies of the Company’s Certificate of
Incorporation as in effect on the Effective Date (the “Charter”), and the
Company’s Bylaws as in effect on the Effective Date (the “Bylaws”).

Section 4.4 Issuance of Securities. The Commitment Shares have been, and the
Shares to be issued under this Agreement have been or will be (prior to the
delivery of any Fixed Request Notice to the Investor hereunder), duly authorized
by all necessary corporate action on the part of the Company. The Commitment
Shares, when issued in accordance with the terms of this Agreement, and the
Shares, when paid for in accordance with the terms of this Agreement, shall be
validly issued and outstanding, fully paid and nonassessable and free from all
liens, charges, taxes, security interests, encumbrances, rights of first
refusal, preemptive or similar rights and other encumbrances with respect to the
issue thereof.

12

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

Section 4.5 No Conflicts. The execution, delivery and performance by the Company
of this Agreement and the consummation by the Company of the transactions
contemplated hereby do not and shall not (i) result in a violation of any
provision of the Company’s Charter or Bylaws, (ii) conflict with, constitute a
default (or an event which, with notice or lapse of time or both, would become a
default) under, or give rise to any rights of termination, amendment,
acceleration or cancellation of, any material agreement, mortgage, deed of
trust, indenture, note, bond, license, lease agreement, instrument or obligation
to which the Company or any of its Significant Subsidiaries is a party or is
bound, (iii) create or impose a lien, charge or encumbrance on any property or
assets of the Company or any of its Significant Subsidiaries under any material
agreement or any commitment to which the Company or any of its Significant
Subsidiaries is a party or by which the Company or any of its Significant
Subsidiaries is bound or to which any of their respective properties or assets
is subject, or (iv) result in a violation of any federal, state, local or
foreign statute, rule, regulation, order, judgment or decree applicable to the
Company or any of its Subsidiaries or by which any property or asset of the
Company or any of its Subsidiaries are bound or affected (including federal and
state securities laws and regulations and the rules and regulations of the
Trading Market). The Company is not required under any applicable federal,
state, local or foreign law, rule or regulation to obtain any consent,
authorization or order of, or make any filing or registration with, any court or
governmental agency in order for it to execute, deliver or perform any of its
obligations under this Agreement, or to issue and sell the Securities to the
Investor in accordance with the terms hereof (other than any filings which may
be required to be made by the Company with the Commission, the Financial
Industry Regulatory Authority (“FINRA”) or the Trading Market subsequent to the
Effective Date, including, but not limited to, a Prospectus Supplement under
Section 1.4 of this Agreement).

Section 4.6 Commission Documents, Financial Statements. (a) The Company has
timely filed (giving effect to permissible extensions in accordance with Rule
12b-25 under the Exchange Act) all Commission Documents. The Company has made
available via EDGAR true and complete copies of the Commission Documents filed
with or furnished to the Commission prior to the Effective Date (including,
without limitation, the 2011 Form 10-K) and has made available via EDGAR true
and complete copies of all of the Commission Documents heretofore incorporated
by reference in the Registration Statement and the Prospectus. No Subsidiary of
the Company is required to file or furnish any report, schedule, registration,
form, statement, information or other document with the Commission. The Company
has not provided to the Investor any information which, according to applicable
law, rule or regulation, was required to have been disclosed publicly by the
Company but which has not been so disclosed, other than with respect to the
transactions contemplated by this Agreement. As of its filing date, each
Commission Document filed with or furnished to the Commission and incorporated
by reference in the Registration Statement and the Prospectus (including,
without limitation, the 2011 Form 10-K) complied in all material respects with
the requirements of the Securities Act or the Exchange Act, as applicable, and
other federal, state and local laws, rules and regulations applicable to it,
and, as of its filing date (or, if amended or superseded by a filing prior to
the Effective Date, on the date of such amended or superseded filing), such
Commission Document did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. Each Commission Document to be filed with or
furnished to the Commission after the Effective Date and incorporated by
reference in the Registration Statement, the Prospectus and any Prospectus
Supplement required to be filed pursuant to Section 1.4 hereof during the
Investment Period (including, without limitation, the Current Report), when such
document becomes effective or is filed with or furnished to the Commission and,
if applicable, when such document becomes effective, as the case may be, shall
comply in all material respects with the requirements of the Securities Act or
the Exchange Act, as applicable, and other federal, state and local laws, rules
and regulations applicable to it, and shall not contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. There are no
outstanding or unresolved comments or undertakings in such comment letters
received by the Company from the Commission. The Commission has not issued any
stop order or other order suspending the effectiveness of any registration
statement filed by the Company under the Securities Act or the Exchange Act.

13

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

(b) The financial statements, together with the related notes and schedules, of
the Company included in the Commission Documents comply as to form in all
material respects with all applicable accounting requirements and the published
rules and regulations of the Commission. Such financial statements, together
with the related notes and schedules, have been prepared in accordance with GAAP
applied on a consistent basis during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes thereto or (ii) in
the case of unaudited interim statements, to the extent they may not include
footnotes or may be condensed or summary statements), and fairly present in all
material respects the financial condition of the Company and its consolidated
Subsidiaries as of 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 year-end audit adjustments).

(c) The Company has timely filed with the Commission and made available via
EDGAR all certifications and statements required by (x) Rule 13a-14 or Rule
15d-14 under the Exchange Act or (y) 18 U.S.C. Section 1350 (Section 906 of the
Sarbanes-Oxley Act of 2002 (“SOXA”)) with respect to all relevant Commission
Documents. The Company is in compliance in all material respects with the
provisions of SOXA applicable to it as of the date hereof. The Company maintains
disclosure controls and procedures required by Rule 13a-15 or Rule 15d-15 under
the Exchange Act; such controls and procedures are effective to ensure that all
material information concerning the Company and its Subsidiaries is made known
on a timely basis to the individuals responsible for the timely and accurate
preparation of the Company’s Commission filings and other public disclosure
documents. As used in this Section 4.6(c), the term “file” shall be broadly
construed to include any manner in which a document or information is furnished,
supplied or otherwise made available to the Commission.

(d) Stark Winter Schenkein & Co., LLP, who have expressed their opinions on the
audited financial statements and related schedules included or incorporated by
reference in the Registration Statement and the Base Prospectus are, with
respect to the Company, independent public accountants as required by the
Securities Act and is an independent registered public accounting firm within
the meaning of SOXA as required by the rules of the Public Company Accounting
Oversight Board. Stark Winter Schenkein & Co., LLP has not been engaged by the
Company to perform any “prohibited activities” (as defined in Section 10A of the
Exchange Act).

14

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

Section 4.7 Subsidiaries. Exhibit 21.1 to the 2011 Form 10-K sets forth each

Subsidiary of the Company as of the Effective Date, showing its jurisdiction of
incorporation or organization, and the Company does not have any other
Subsidiaries as of the Effective Date.

Section 4.8 No Material Adverse Effect. Since June 30, 2011, except for
continued losses from operations and resulting liquidity needs and as disclosed
in the Commission Documents, the Company has not experienced or suffered any
Material Adverse Effect, and there exists no current state of facts, condition
or event which would have a Material Adverse Effect.

Section 4.9 No Undisclosed Liabilities. Neither the Company nor any of its
Subsidiaries has any liabilities, obligations, claims or losses (whether
liquidated or unliquidated, secured or unsecured, absolute, accrued, contingent
or otherwise) that would be required to be disclosed on a balance sheet of the
Company or any Subsidiary (including the notes thereto) in conformity with GAAP
and are not disclosed in the Commission Documents, other than those incurred in
the ordinary course of the Company’s or its Subsidiaries respective businesses
since June 30, 2011 and which, individually or in the aggregate, do not or would
not have a Material Adverse Effect.

Section 4.10 No Undisclosed Events or Circumstances. No event or circumstance
has occurred or information exists with respect to the Company or any of its
Subsidiaries or its or their business, properties, liabilities, operations
(including results thereof) or conditions (financial or otherwise), which, under
applicable law, rule or regulation, requires public disclosure or announcement
by the Company at or before the Effective Date but which has not been so
publicly announced or disclosed, except for events or circumstances which,
individually or in the aggregate, do not or would not have a Material Adverse
Effect.

Section 4.11 Indebtedness. The Company’s Quarterly Report on Form 10-Q for its
fiscal quarter ended March 31, 2012 sets forth, as of March 31, 2012, all
outstanding secured and unsecured Indebtedness of the Company or any Subsidiary,
or for which the Company or any Subsidiary has commitments through such date.
For the purposes of this Agreement, “Indebtedness” shall mean (a) any
liabilities for borrowed money or amounts owed in excess of $10,000,000 (other
than trade accounts payable incurred in the ordinary course of business), (b)
all guaranties, endorsements, indemnities and other contingent obligations in
respect of Indebtedness of others in excess of $10,000,000, 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 $10,000,000 due under
leases required to be capitalized in accordance with GAAP. There is no existing
or continuing default or event of default in respect of any Indebtedness of the
Company or any of its Subsidiaries. The Company has not taken any steps, and
does not currently expect to take any steps, to seek protection pursuant to
Title 11 of the United States Code or any similar federal or state bankruptcy
law or law for the relief of debtors, nor does the Company have any Knowledge
that its creditors intend to initiate involuntary bankruptcy, insolvency,
reorganization or liquidation proceedings or other proceedings for relief under
Title 11 of the United States Code or any other federal or state bankruptcy law
or any law for the relief of debtors. The Company is financially solvent; and,
upon consummation of the transactions contemplated hereby, shall be generally
able to pay its debts as they become due.

15

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

Section 4.12 Title To Assets. Each of the Company and its Subsidiaries has good
and valid title to, or has valid rights to lease or otherwise use, all of their
respective real and personal property reflected in the Commission Documents,
free of mortgages, pledges, charges, liens, security interests or other
encumbrances, except for those that would not have a Material Adverse Effect and
those disclosed in the Commission Documents. All real property and facilities
held under lease by the Company or any of its Subsidiaries are held by them
under valid, subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and proposed to be made of such
property and buildings by the Company or any of its Subsidiaries.

Section 4.13 Actions Pending. There is no action, suit, claim, investigation or
proceeding pending, or to the Knowledge of the Company threatened, against the
Company or any Subsidiary which questions the validity of this Agreement or the
transactions contemplated hereby or any action taken or to be taken pursuant
hereto or thereto. There is no action, suit, claim, investigation or proceeding
pending, or to the Knowledge of the Company threatened, against or involving the
Company, any Subsidiary or any of their respective properties or assets, or
involving any officers or directors of the Company or any of its Subsidiaries,
including, without limitation, any securities class action lawsuit or
stockholder derivative lawsuit related to the Company, in each case which, if
determined adversely to the Company, its Subsidiary or any officer or director
of the Company or its Subsidiaries, would have a Material Adverse Effect. Except
as set forth in the Commission Documents, no judgment, order, writ, injunction
or decree or award has been issued by or, to the Knowledge of the Company,
requested of any court, arbitrator or governmental agency which would be
reasonably expected to result in a Material Adverse Effect.

Section 4.14 Compliance With Law. The business of the Company and the
Subsidiaries has been and is presently being conducted in compliance with all
applicable federal, state, local and foreign governmental laws, rules,
regulations and ordinances, except for such non-compliance which, individually
or in the aggregate, would not have a Material Adverse Effect. Neither the
Company nor any of its Subsidiaries is in violation of any judgment, decree or
order or any statute, ordinance, rule or regulation applicable to the Company or
any of its Subsidiaries, and neither the Company nor any of its Subsidiaries
will conduct its business in violation of any of the foregoing, except in all
cases for possible violations which could not, individually or in the aggregate,
have a Material Adverse Effect. Without limiting the generality of the
foregoing, the Company has maintained all requirements for the continued listing
or quotation of its Common Stock on the Trading Market, and the Company is not
in material violation of any of the rules, regulations or requirements of the
Trading Market and has no Knowledge of any facts or circumstances that could
reasonably be expected to lead to delisting or suspension of the Common Stock by
the Trading Market in the foreseeable future.

Section 4.15 Certain Fees. Except for the placement fee payable by the Company
to Financial West Group, Member FINRA/SIPC (“FWG”), which shall be set forth in
a separate engagement letter between the Company and FWG (a true and complete
fully executed copy of which has heretofore been provided to the Investor), no
brokers, finders or financial advisory fees or commissions is or shall be
payable by the Company or any Subsidiary (or any of their respective affiliates)
with respect to the transactions contemplated by this Agreement. Except as set
forth in this Section 4.15 or as disclosed in Section 4.15 of the Disclosure
Schedule, there are no contracts, agreements or understandings between the
Company and any person that would give rise to a valid claim against the
Company, the Investor or the Broker-Dealer for a brokerage commission, finder’s
fee or other like payment in connection with the transactions contemplated by
this Agreement or, to the Company’s knowledge, any arrangements, agreements,
understandings, payments or issuance with respect to the Company or any of its
officers, directors, stockholders, partners, employees, Subsidiaries or
Affiliates that may affect the FINRA’s determination of the amount of
compensation to be received by any FINRA member (including, without limitation,
those FINRA members set forth on Schedule 4.15 of the Disclosure Schedule) or
person associated with any FINRA member in connection with the transactions
contemplated by this Agreement. Except as set forth in this Section 4.15 or as
disclosed in Section 4.15 of the Disclosure Schedule, no “items of value”
(within the meaning of FINRA Rule 5110) have been received, and no arrangements
have been entered into for the future receipt of any items of value, from the
Company or any of its officers, directors, stockholders, partners, employees,
Subsidiaries or Affiliates by any FINRA member (including, without limitation,
those FINRA members set forth on Schedule 4.15 of the Disclosure Schedule) or
person associated with any FINRA member, during the period commencing 180 days
immediately preceding the Effective Date and ending on the date this Agreement
is terminated in accordance with Article VII, that may affect the FINRA’s
determination of the amount of compensation to be received by any FINRA member
or person associated with any FINRA member in connection with the transactions
contemplated by this Agreement.

16

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

Section 4.16 Operation of Business. (a) The Company or one or more of its
Subsidiaries possesses such permits, licenses, approvals, consents and other
authorizations (including licenses, accreditation and other similar
documentation or approvals of any local health departments) issued by the
appropriate federal, state, local or foreign regulatory agencies or bodies, as
are necessary to conduct the business now operated by it and as described in the
Commission Documents (collectively, “Governmental Licenses”), except where the
failure to possess such Governmental Licenses, individually or in the aggregate,
would not have a Material Adverse Effect. The Company and its Subsidiaries are
in compliance with the terms and conditions of all such Governmental Licenses,
except where the failure to so comply, individually or in the aggregate, would
not have a Material Adverse Effect. All of the Governmental Licenses are valid
and in full force and effect, except where the invalidity of such Governmental
Licenses or the failure of such Governmental Licenses to be in full force and
effect, individually or in the aggregate, would not have a Material Adverse
Effect. Neither the Company nor any of its Subsidiaries has received any written
notice of proceedings relating to the revocation or modification of any such
Governmental Licenses which, if the subject of any unfavorable decision, ruling
or finding, individually or in the aggregate, would have a Material Adverse
Effect. This Section 4.16 does not relate to environmental matters, such items
being the subject of Section 4.17.

(b) The Company or one or more of its Subsidiaries owns or possesses adequate
patents, patent rights, licenses, inventions, copyrights, know-how (including
trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), trademarks, service marks,
trade names, trade dress, logos, copyrights and other intellectual property,
including, without limitation, all of the intellectual property described in the
Commission Documents as being owned or licensed by the Company (collectively,
“Intellectual Property”), necessary to carry on the business now operated by it.
There are no actions, suits or judicial proceedings pending, or to the Company’s
Knowledge threatened, relating to patents or proprietary information to which
the Company or any of its Subsidiaries is a party or of which any property of
the Company or any of its Subsidiaries is subject, and neither the Company nor
any of its Subsidiaries has received any notice or is otherwise aware of any
infringement of or conflict with asserted rights of others with respect to any
Intellectual Property or of any facts or circumstances which could render any
Intellectual Property invalid or inadequate to protect the interest of the
Company and its Subsidiaries therein, and which infringement or conflict (if the
subject of any unfavorable decision, ruling or finding) or invalidity or
inadequacy, individually or in the aggregate, would have a Material Adverse
Effect.

17

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

Section 4.17 Environmental Compliance. The Company and each of its Subsidiaries
have obtained all material approvals, authorization, certificates, consents,
licenses, orders and permits or other similar authorizations of all governmental
authorities, or from any other Person, that are required under any Environmental
Laws for the Company to operate its business as currently conducted, except for
any approvals, authorization, certificates, consents, licenses, orders and
permits or other similar authorizations the failure of which to obtain does not
or would not have a Material Adverse Effect. “Environmental Laws” shall mean all
applicable laws relating to the protection of the environment, including all
requirements pertaining to reporting, licensing, permitting, controlling,
investigating or remediating emissions, discharges, releases or threatened
releases of hazardous substances, chemical substances, pollutants, contaminants
or toxic substances, materials or wastes, whether solid, liquid or gaseous in
nature, into the air, surface water, groundwater or land, or relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of hazardous substances, chemical substances, pollutants,
contaminants or toxic substances, material or wastes, whether solid, liquid or
gaseous in nature. Except for such instances as would not, individually or in
the aggregate, have a Material Adverse Effect, to the Company’s Knowledge, there
are no past or present events, conditions, circumstances, incidents, actions or
omissions relating to or in any way affecting the Company or its Subsidiaries
that violate or would reasonably be expected to violate any Environmental Law
after the Effective Date or that would reasonably be expected to give rise to
any environmental liability, or otherwise form the basis of any claim, action,
demand, suit, proceeding, hearing, study or investigation (i) under any
Environmental Law, or (ii) based on or related to the manufacture, processing,
distribution, use, treatment, storage (including without limitation underground
storage tanks), disposal, transport or handling, or the emission, discharge,
release or threatened release of any hazardous substance.

Section 4.18 Material Agreements. Neither the Company nor any Subsidiary of the
Company is a party to any written or oral contract, instrument, agreement
commitment, obligation, plan or arrangement, a copy of which would be required
to be filed with the Commission as an exhibit to an annual report on Form 10-K
(collectively, “Material Agreements”). The Company and each of its Subsidiaries
have performed in all material respects all the obligations required to be
performed by them under the Material Agreements, have received no notice of
default or an event of default by the Company or any of its Subsidiaries
thereunder and are not aware of any basis for the assertion thereof, and neither
the Company or any of its Subsidiaries nor, to the Knowledge of the Company, any
other contracting party thereto are in default under any Material Agreement now
in effect, except in each case, the result of which would not have a Material
Adverse Effect. Each of the Material Agreements is in full force and effect, and
constitutes a legal, valid and binding obligation enforceable in accordance with
its terms against the Company and/or any of its Subsidiaries and, to the
Knowledge of the Company, each other contracting party thereto, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation, conservatorship, receivership or
similar laws relating to, or affecting generally the enforcement of, creditor’s
rights and remedies or by other equitable principles of general application.

18

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

Section 4.19 Transactions With Affiliates. Except as disclosed in the Commission
Documents, there are no loans, leases, agreements, contracts, royalty
agreements, management contracts, service arrangements or other continuing
transactions exceeding $120,000 between (a) the Company or any Subsidiary, on
the one hand, and (b) any Person who would be covered by Item 404(a) of
Regulation S-K, on the other hand. There are no outstanding amounts payable to
or receivable from, or advances by the Company or any of its Subsidiaries to,
and neither the Company nor any of its Subsidiaries is otherwise a creditor of
or debtor to, any beneficial owner of more than 5% of the outstanding shares of
Common Stock, or any director, employee or Affiliate of the Company or any of
its Subsidiaries, other than (i) reimbursement for reasonable expenses incurred
on behalf of the Company or any of its Subsidiaries, (ii) as part of the normal
and customary terms of such Persons’ employment or service as a director with
the Company or any of its Subsidiaries or (iii) as disclosed in the Commission
Documents.

Section 4.20 Securities Act. The Company has complied with all applicable
federal and state securities laws in connection with the offer, issuance and
sale of the Securities contemplated by this Agreement.

(i) The Company has prepared and filed with the Commission, in accordance with
the provisions of the Securities Act, the Registration Statement, including a
base prospectus relating to the Securities. The Registration Statement was
declared effective by order of the Commission on December 29, 2009. As of the
date hereof, no stop order suspending the effectiveness of the Registration
Statement has been issued by the Commission or is continuing in effect under the
Securities Act and no proceedings therefor are pending before or, to the
Company’s Knowledge, threatened by the Commission. No order preventing or
suspending the use of the Prospectus or any Permitted Free Writing Prospectus
has been issued by the Commission.

(ii) The Company satisfies all of the requirements for the use of Form S-3 under
the Securities Act for the offering and sale of the Securities contemplated by
this Agreement (without reliance on General Instruction I.B.6. of Form S-3). The
Company is not, and has not previously been at any time, a “shell company” (as
such term is defined in Rule 405 under the Securities Act).

(iii) The Commission has not notified the Company of any objection to the use of
the form of the Registration Statement pursuant to Rule 401(g)(1) under the
Securities Act. The Registration Statement complied in all material respects on
the date on which it was declared effective by the Commission, and will comply
in all material respects at each deemed effective date with respect to the
Investor pursuant to Rule 430B(f)(2) of the Securities Act, with the
requirements of the Securities Act, and the Registration Statement (including
the documents incorporated by reference therein) did not on the date it was
declared effective by the Commission, and shall not at each deemed effective
date with respect to the Investor pursuant to Rule 430B(f)(2) of the Securities
Act, contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading; provided that this representation and warranty does not apply to
statements in or omissions from the Registration Statement made in reliance upon
and in conformity with information relating to the Investor furnished to the
Company in writing by or on behalf of the Investor expressly for use therein.
The Registration Statement, as of the Effective Date, meets the requirements set
forth in Rule 415(a)(1)(x) under the Securities Act. The Base Prospectus
complied in all material respects on its date and on the Effective Date, and
will comply in all material respects on each applicable Fixed Request Exercise
Date and, when taken together with the applicable Prospectus Supplement and any
applicable Permitted Free Writing Prospectus, on each applicable Settlement
Date, with the requirements of the Securities Act and did not on its date and on
the Effective Date and shall not on each applicable Fixed Request Exercise Date
and, when taken together with the applicable Prospectus Supplement and any
applicable Permitted Free Writing Prospectus, on each applicable Settlement Date
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
provided that this representation and warranty does not apply to statements in
or omissions from the Base Prospectus made in reliance upon and in conformity
with information relating to the Investor furnished to the Company in writing by
or on behalf of the Investor expressly for use therein.

19

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

(iv) Each Prospectus Supplement required to be filed pursuant to Section 1.4
hereof, when taken together with the Base Prospectus and any applicable
Permitted Free Writing Prospectus, on its date and on the applicable Settlement
Date, shall comply in all material respects with the provisions of the
Securities Act and shall not on its date and on the applicable Settlement Date
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they are made, not misleading, except
that this representation and warranty does not apply to statements in or
omissions from any Prospectus Supplement made in reliance upon and in conformity
with information relating to the Investor furnished to the Company in writing by
or on behalf of the Investor expressly for use therein.

(v) At the earliest time after the filing of the Registration Statement that the
Company or another offering participant made a bona fide offer (within the
meaning of Rule 164(h)(2) under the Securities Act) relating to the Securities,
the Company was not and is not an “ineligible issuer” (as defined in Rule 405
under the Securities Act). Each Permitted Free Writing Prospectus (a) shall
conform in all material respects to the requirements of the Securities Act on
the date of its first use, (b) when considered together with the Prospectus on
each applicable Fixed Request Exercise Date and on each applicable Settlement
Date, shall not contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they are made,
not misleading, and (c) shall not include any information that conflicts with
the information contained in the Registration Statement, including any document
incorporated by reference therein and any Prospectus Supplement deemed to be a
part thereof that has not been superseded or modified. The immediately preceding
sentence does not apply to statements in or omissions from any Permitted Free
Writing Prospectus made in reliance upon and in conformity with information
relating to the Investor furnished to the Company in writing by or on behalf of
the Investor expressly for use therein.

20

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

(vi) Prior to the Effective Date, the Company has not distributed any offering
material in connection with the offering and sale of the Securities. From and
after the Effective Date and prior to the completion of the distribution of the
Securities, the Company shall not distribute any offering material in connection
with the offering and sale of the Securities, other than the Registration
Statement, the Base Prospectus as supplemented by any Prospectus Supplement or a
Permitted Free Writing Prospectus.

Section 4.21 Employees. Neither the Company nor any Subsidiary of the Company
has any collective bargaining arrangements or agreements covering any of its
employees. No officer, consultant or key employee of the Company or any
Subsidiary whose termination, either individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect, has terminated or, to
the Knowledge of the Company, has any present intention of terminating his or
her employment or engagement with the Company or any Subsidiary.

Section 4.22 Use of Proceeds. The proceeds from the sale of the Shares shall be
used by the Company and its Subsidiaries as set forth in the Base Prospectus and
any Prospectus Supplement filed pursuant to Section 1.4.

Section 4.23 Investment Company Act Status. The Company is not, and as a result
of the consummation of the transactions contemplated by this Agreement and the
application of the proceeds from the sale of the Shares as set forth in the Base
Prospectus and any Prospectus Supplement shall not be, an “investment company”
or a company “controlled” by an “investment company,” within the meaning of the
Investment Company Act of 1940, as amended.

Section 4.24 ERISA. No liability to the Pension Benefit Guaranty Corporation has
been incurred with respect to any Plan by the Company or any of its Subsidiaries
which has had or would have a Material Adverse Effect. No “prohibited
transaction” (as defined in Section 406 of ERISA or Section 4975 of the Code) or
“accumulated funding deficiency” (as defined in Section 302 of ERISA) or any of
the events set forth in Section 4043(b) of ERISA has occurred with respect to
any Plan which has had or would have a Material Adverse Effect, and the
execution and delivery of this Agreement and the issuance and sale of the
Securities hereunder shall not result in any of the foregoing events. Each Plan
is in compliance in all material respects with applicable law, including ERISA
and the Code; the Company has not incurred and does not expect to incur
liability under Title IV of ERISA with respect to the termination of, or
withdrawal from, any Plan; and each Plan for which the Company would have any
liability that is intended to be qualified under Section 401(a) of the Code is
so qualified in all material respects and nothing has occurred, whether by
action or failure to act, which would cause the loss of such qualifications. As
used in this Section 4.22, the term “Plan” shall mean an “employee pension
benefit plan” (as defined in Section 3 of ERISA) which is or has been
established or maintained, or to which contributions are or have been made, by
the Company or any Subsidiary or by any trade or business, whether or not
incorporated, which, together with the Company or any Subsidiary, is under
common control, as described in Section 414(b) or (c) of the Code.

21

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

Section 4.25 Taxes. The Company (i) has filed all federal, state and foreign
income and franchise tax returns or has duly requested extensions thereof,
except for those the failure of which to file would not have a Material Adverse
Effect, (ii) has paid all federal, state, local and foreign taxes due and
payable for which it is liable, except to the extent that any such taxes are
being contested in good faith and by appropriate proceedings, except for such
taxes the failure of which to pay would not have a Material Adverse Effect, and
(iii) does not have any tax deficiency or claims outstanding or assessed or, to
the Company’s Knowledge, proposed against it which would have a Material Adverse
Effect. There are no unpaid taxes in any material amount claimed to be due by
the taxing authority of any jurisdiction, and the Company has no Knowledge of
any basis for any such claim. The Company is not operated in such a manner as to
qualify as a passive foreign investment company, as defined in Section 1297 of
the U.S. Internal Revenue Code of 1986, as amended.

Section 4.26 Insurance. The Company and its Subsidiaries are insured by insurers
of recognized financial responsibility against such losses and risks and in such
amounts as management of the Company believes to be prudent and customary in the
businesses in which the Company and its Subsidiaries are engaged.

Section 4.27 U.S. Real Property Holding Corporation. Neither the Company nor any
of its Subsidiaries is, or has ever been, and so long as any of the Securities
are held by the Investor, shall become a U.S. real property holding corporation
within the meaning of Section 897 of the Code.

Section 4.28 Listing and Maintenance Requirements. The Company’s Common Stock is
registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and the
Company has taken no action designed to, or which to its Knowledge is likely to
have the effect of, terminating the registration of the Common Stock under the
Exchange Act, nor has the Company received any notification that the Commission
is contemplating terminating such registration. The Company has not, in the 12
months preceding the 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 in any material respect with the listing or
maintenance requirements of such Trading Market. As of the Effective Date, the
Company is in compliance with all such listing and maintenance requirements.

Section 4.29 Foreign Corrupt Practices Act. None of the Company, any Subsidiary
or, to the Knowledge of the Company, any director, officer, agent, employee,
affiliate or other Person acting on behalf of the Company or any of its
Subsidiaries, is aware of or has taken any action, directly or indirectly, that
would result in a violation by such Persons of the Foreign Corrupt Practices Act
of 1977, as amended, and the rules and regulations thereunder (collectively, the
“FCPA”), including, without limitation, making use of the mails or any means or
instrumentality of interstate commerce corruptly in furtherance of an offer,
payment, promise to pay or authorization of the payment of any money, or other
property, gift, promise to give, or authorization of the giving of anything of
value to any “foreign official” (as such term is defined in the FCPA) or any
foreign political party or official thereof or any candidate for foreign
political office, in contravention of the FCPA. The Company and the Subsidiaries
have conducted their respective businesses in compliance with the FCPA and have
instituted and maintain policies and procedures designed to ensure, and which
are reasonably expected to continue to ensure, continued compliance therewith.

22

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

Section 4.30 Money Laundering Laws. The operations of the Company and its
Subsidiaries are and have been conducted at all times in compliance with
applicable financial recordkeeping and reporting requirements of the Currency
and Foreign Transactions Reporting Act of 1970, as amended, the money laundering
statutes of all jurisdictions, the rules and regulations thereunder and any
related or similar rules, regulations or guidelines, issued, administered or
enforced by any governmental agency (collectively, the “Money Laundering Laws”)
and no action, suit or proceeding by or before any court or governmental agency,
authority or body or any arbitrator involving the Company or any of its
Subsidiaries with respect to the Money Laundering Laws is pending or, to the
Knowledge of the Company, threatened.

Section 4.31 OFAC. None of the Company, any Subsidiary or, to the Knowledge of
the Company, any director, officer, agent, employee, affiliate or Person acting
on behalf of the Company or any of its Subsidiaries is currently subject to any
U.S. sanctions administered by the Office of Foreign Assets Control of the U.S.
Treasury Department (“OFAC”); and the Company will not directly or indirectly
use the proceeds of the offering, or lend, contribute or otherwise make
available such proceeds to any subsidiary, joint venture partner or other
Person, for the purpose of financing the activities of any Person currently
subject to any U.S. sanctions administered by OFAC.

Section 4.32 Manipulation of Price. Neither the Company nor any of its officers,
directors or Affiliates has, and, to the Knowledge of the Company, no Person
acting on their behalf has, (i) taken, directly or indirectly, any action
designed or intended to cause or to result in the stabilization or manipulation
of the price of any security of the Company, or which caused or resulted in, or
which would in the future reasonably be expected to cause or result in, the
stabilization or manipulation of the price of any security of the Company, in
each case to facilitate the sale or resale of any of the Securities, or (ii)
sold, bid for, purchased, or paid any compensation for soliciting purchases of,
any of the Securities.

Section 4.33 Natural Resource Properties and Surface Rights. All material
interests in natural resource properties and surface rights for exploration and
exploitation, as applicable, overlying those properties of the Company and its
Subsidiaries are described, or incorporated by reference, in all material
respects in the Registration Statement and Prospectus and, except as set forth
in the Registration Statement and Prospectus (or incorporated by reference
therein), are owned or held by the Company or such Subsidiaries as owner thereof
with good title, are in good standing, and are valid and enforceable and free
and clear of any liens, charges or encumbrances and no royalty is payable in
respect of any of them, except as disclosed in the Commission Documents. Except
as set forth in the Registration Statement and Prospectus (and the Commission
Documents incorporated by reference therein), no other material property rights
are necessary for the conduct of the Company’s or its Subsidiaries’ businesses
as they are currently being conducted, and there are no material restrictions on
the ability of the Company or its Subsidiaries to use or otherwise exploit any
such property rights, and the Company does not know of any claim or basis for a
claim that may adversely affect such rights in any material respect.

23

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

Section 4.34 Royalties and Commissions. Except as set forth in the Registration
Statement and Prospectus (and the Commission Documents incorporated therein),
neither the Company nor any of its Subsidiaries has any responsibility or
obligation to pay or have paid on their behalf any material commission, royalty
or similar payment to any person with respect to their property rights.

Section 4.35 Reserve Reports. The information underlying the estimates of the
Company’s mineralized material reserves that was supplied to Chapman, Wood and
Griswold, Inc. (the “Reserve Engineers”) for the purposes of preparing the
reserve reports and estimates of the mineralized material of the Company on its
Summit silver-gold property in New Mexico as of the Company’s most recent fiscal
year-end disclosed in the Registration Statement and Prospectus was true and
correct in all material respects on the dates such estimates were made, and such
information was supplied and was prepared in accordance with customary industry
practices. Other than normal production of the reserves, the impact of changes
in prices and costs, and fluctuations in demand for silver or gold, and except
as disclosed in the Registration Statement and Prospectus, the Company is not
aware of any facts or circumstances that would in the aggregate result in a
material adverse change in the aggregate reserves as described in the
Registration Statement and the Prospectus, and as reflected in the reports the
Reserve Engineers prepared with regard to the mineralized material of the
Company on its Summit silver-gold property in New Mexico as of the Company’s
most recent fiscal year-end. The estimates of such reserves as described in the
Registration Statement and the Prospectus (and the Commission Documents
incorporated therein) and reflected in the reports referenced therein have been
prepared in a manner that complies with the applicable requirements of the
Securities Act with respect to such estimates.

Section 4.36 Acknowledgement Regarding Investor’s Acquisition of Securities. The
Company acknowledges and agrees that the Investor is acting solely in the
capacity of an arm’s length purchaser with respect to this Agreement and the
transactions contemplated hereby. The Company further acknowledges that the
Investor is not acting as a financial advisor or fiduciary of the Company (or in
any similar capacity) with respect to this Agreement or the transactions
contemplated hereby, and any advice given by the Investor or any of its
representatives or agents in connection with this Agreement or the transactions
contemplated hereby is merely incidental to the Investor’s acquisition of the
Securities. The Company further represents to the Investor that the Company’s
decision to enter into this Agreement has been based solely on the independent
evaluation of the transactions contemplated hereby by the Company and its
representatives. The Company acknowledges and agrees that the Investor has not
made and does not make any representations or warranties with respect to the
transactions contemplated by this Agreement other than those specifically set
forth in Article III of this Agreement.

24

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

ARTICLE V
COVENANTS

The Company covenants with the Investor, and the Investor covenants with the
Company, as follows, which covenants of one party are for the benefit of the
other party, during the Investment Period:

Section 5.1 Securities Compliance; FINRA Filing.

(i) The Company shall notify the Trading Market, as required, in accordance with
its rules and regulations, of the transactions contemplated by this Agreement,
and shall take all necessary action, undertake all proceedings and obtain all
registrations, permits, consents and approvals for the legal and valid issuance
of the Securities to the Investor in accordance with the terms of this
Agreement.

(ii) The Company shall (with the Investor’s assistance) assist FWG with the
preparation and filing with FINRA’s Corporate Financing Department via CobraDesk
(not later than 24 hours after the Effective Date) of all documents and
information required to be filed with FINRA pursuant to FINRA Rule 5110 with
regard to the transactions contemplated by this Agreement (the “FINRA Filing”).
In connection therewith, on the Effective Date, the Company shall pay to FINRA
by wire transfer of immediately available funds the applicable filing fee with
respect to the FINRA Filing, and the Company shall be solely responsible for
payment of such fee. The parties hereby agree to provide each other and FWG all
requisite information and otherwise to assist each other and FWG in a timely
fashion in order for FWG to complete the preparation and submission of the FINRA
Filing in accordance with this Section 5.1(ii) and to assist FWG in promptly
responding to any inquiries or requests from FINRA or its staff. Each party
hereto shall (A) promptly notify the other party and FWG of any communication to
that party or its affiliates from FINRA, including, without limitation, any
request from FINRA or its staff for amendments or supplements to or additional
information in respect of the FINRA Filing and permit the other party and FWG to
review in advance any proposed written communication to FINRA and (B) furnish
the other party and FWG with copies of all written correspondence, filings and
communications between them and their affiliates and their respective
representatives and advisors, on the one hand, and FINRA or members of its
staff, on the other hand, with respect to this Agreement or the transactions
contemplated hereby. Each of the parties hereto agrees to use its commercially
reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, and to assist and cooperate with the other party and FWG in
doing, all things necessary, proper or advisable to obtain as promptly as
practicable (but in no event later than 60 days after the Effective Date)
written confirmation from FINRA to the effect that FINRA’s Corporate Financing
Department has determined not to raise any objection with respect to the
fairness and reasonableness of the terms of the transactions contemplated by
this Agreement; provided, however, that the Investor shall have no
responsibility for the compliance or non-compliance of any Broker-Dealer with
FINRA Rule 5110 and shall not be required to (x) disclose to FINRA or to any
other governmental agency, person or entity any business, financial or other
information that the Investor deems, in its sole and absolute discretion, to be
proprietary, confidential or otherwise sensitive information, (y) amend, modify
or change any of the terms or conditions of this Agreement or (z) otherwise take
any other action, including, without limitation, modifying the Discount Price
thresholds referred to in Section 2.2 or the amount of fees and commissions to
be paid to the Broker-Dealer in connection with the transactions contemplated by
this Agreement, in each case, in such a manner that would, in the Investor’s
sole and absolute discretion, render the terms and conditions of this Agreement
or the transactions contemplated hereby to be no longer advisable to the
Investor. Notwithstanding anything to the contrary contained in this Agreement,
the Company shall not pay any fees to FWG in connection with any of the
transactions contemplated by this Agreement, unless and until the parties hereto
and FWG shall have received written confirmation from FINRA to the effect that
FINRA’s Corporate Financing Department has determined not to raise any objection
with respect to the fairness and reasonableness of the terms of the transactions
contemplated by this Agreement.

25

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

Section 5.2 Registration and Listing; DTC Eligibility. The Company shall take
all action necessary to cause the Common Stock to continue to be registered as a
class of securities under Sections 12(b) or 12(g) of the Exchange Act, shall
comply with its reporting and filing obligations under the Exchange Act, and
shall not take any action or file any document (whether or not permitted by the
Securities Act or the Exchange Act) to terminate or suspend such registration or
to terminate or suspend its reporting and filing obligations under the Exchange
Act or Securities Act, except as permitted herein. Without limiting the
generality of the foregoing, the Company shall file all reports, schedules,
registrations, forms, statements, information and other documents required to be
filed by the Company with the Commission pursuant to the Exchange Act, including
all material required to be filed pursuant to Sections 13(a), 13(c), 14 or 15(d)
of the Exchange Act, in each case within the time periods required by the
Exchange Act (giving effect to permissible extensions in accordance with Rule
12b-25 under the Exchange Act). The Company shall use its reasonable best
efforts to continue the listing and trading of its Common Stock and the listing
of the Securities acquired or purchased by the Investor hereunder on the Trading
Market, and shall comply with the Company’s reporting, filing and other
obligations under the bylaws, listed securities maintenance standards and other
rules and regulations of FINRA and the Trading Market. The Company shall not
take any action which could reasonably be expected to result in the delisting or
suspension of the Common Stock on the Trading Market. The Company shall take all
action necessary such that, as soon as practicable after the Effective Date, the
Company, through its transfer agent, and the Common Stock shall be DTC eligible
and shall participate in the DTC Deposit/Withdrawal at Custodian (DWAC) system,
and the Common Stock shall be electronically transferable to third parties via
the DTC Deposit/Withdrawal at Custodian (DWAC) system. For the avoidance of
doubt, except as expressly set forth in Schedule 2.7, all of the Shares to be
issued in respect of any Fixed Request Notice or Optional Amount grant to the
Investor pursuant to this Agreement shall be issued to the Investor in
accordance with Section 2.7 by crediting the Investor’s or its designees’
account at DTC through its Deposit/Withdrawal at Custodian (DWAC) system, and
all such Shares shall be freely tradable and transferable and without
restriction on resale (and no stop-transfer order shall be placed against
transfer thereof), and the Company shall not take any action or give
instructions to any transfer agent of the Company otherwise. Furthermore, for
the avoidance of doubt and notwithstanding anything in this Agreement to the
contrary, the Company shall not deliver any Fixed Request Notice or Optional
Amount to the Investor, and the Investor shall not be obligated to purchase any
Shares pursuant to any Fixed Request Notice or Optional Amount, if (i) the
number of available Shares represented by the certificate referenced in Schedule
2.7 is insufficient to enable the settlement of all Shares issuable to the
Investor in respect of such Fixed Request Notice or Optional Amount through the
use of the Shares represented by such certificate and (ii) the Company, through
its transfer agent, and the Common Stock shall not then be DTC eligible and
eligible to participate in the DTC Deposit/Withdrawal at Custodian (DWAC)
system, and the Common Stock is not then electronically transferable to third
parties via the DTC Deposit/Withdrawal at Custodian (DWAC) system.

26

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

Section 5.3 Compliance with Laws.

(i) The Company shall comply, and cause each Subsidiary to comply, (a) with all
laws, rules, regulations, permits and orders applicable to the business and
operations of the Company and its Subsidiaries, except as would not have a
Material Adverse Effect and (b) with all applicable provisions of the Securities
Act, the Exchange Act, the rules and regulations of the FINRA and the listing
standards of the Trading Market. Without limiting the foregoing: (A) neither the
Company nor any of its officers or directors (1) will take, directly or
indirectly, any action designed or intended to cause or to result in, or which
would in the future reasonably be expected to cause or result in, the
stabilization or manipulation of the price of any security of the Company, in
each case to facilitate the sale or resale of any of the Securities, or (2)
sell, bid for, purchase, or pay any compensation for soliciting purchases of,
any of the Securities that will result in a violation of applicable provisions
of the Securities Act, the Exchange Act, the rules and regulations of the FINRA
and the listing standards of the Trading Market, other than, in the case of
clause (2), compensation paid to FWG in connection with the settlement of each
Fixed Request pursuant to this Agreement; and (B) neither the Company, nor any
of its Subsidiaries, nor to the Knowledge of the Company, any of their
respective directors, officers, agents, employees or any other Persons acting on
their behalf shall, in connection with the operation of the Company’s and its
Subsidiaries’ respective businesses, (a) use any corporate funds for unlawful
contributions, payments, gifts or entertainment or to make any unlawful
expenditures relating to political activity to government officials, candidates
or members of political parties or organizations, (b) pay, accept or receive any
unlawful contributions, payments, expenditures or gifts, or (c) violate or
operate in noncompliance with any export restrictions, anti-boycott regulations,
embargo regulations or other applicable domestic or foreign laws and
regulations, including, without limitation, the FCPA and the Money Laundering
Laws.

(ii) The Investor shall comply with all laws, rules, regulations and orders
applicable to the performance by it of its obligations under this Agreement and
its investment in the Securities, except as would not, individually or in the
aggregate, prohibit or otherwise interfere with the ability of the Investor to
enter into and perform its obligations under this Agreement in any material
respect. Without limiting the foregoing, the Investor shall comply with all
applicable provisions of the Securities Act and the Exchange Act, including
Regulation M thereunder, and any applicable securities laws of any non-U.S.
jurisdictions. Neither the Investor nor any of its officers or directors will
take, directly or indirectly, any action designed or intended to cause or to
result in, or which would in the future reasonably be expected to cause or
result in, the stabilization or manipulation of the price of any security of the
Company, in each case to facilitate the sale or resale of any of the Securities.

Section 5.4 Due Diligence. Subject to the requirements of Section 5.12 of this
Agreement, from time to time from and after the period beginning with the third
Trading Day immediately preceding each Fixed Request Exercise Date through and
including the applicable Settlement Date, the Company shall make available for
inspection and review by the Investor, customary documentation allowing the
Investor and/or its appointed counsel or advisors to conduct due diligence.

27

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

Section 5.5 Limitations on Holdings and Issuances. Notwithstanding any other
provision of this Agreement, the Company shall not issue and the Investor shall
not purchase any shares of Common Stock which, when aggregated with all other
shares of Common Stock then beneficially owned (as calculated pursuant to
Section 13(d) of the Exchange Act and Rule 13d-3 promulgated thereunder) by the
Investor and its Affiliates, would result in the beneficial ownership by the
Investor of more than 9.9% of the then issued and outstanding shares of Common
Stock. Upon the written or oral request of the Investor, the Company shall
promptly (but not later than the next Trading Day) confirm orally or in writing
to the Investor the number of shares of Common Stock then outstanding. The
Investor and the Company shall each cooperate in good faith in the
determinations required hereby and the application hereof. The Investor’s
written certification to the Company of the applicability of this beneficial
ownership limitation, and the resulting effect thereof hereunder at any time,
shall be conclusive with respect to the applicability thereof and such result
absent manifest error.

Section 5.6 Other Agreements and Other Financings.

(i) The Company shall not enter into, announce or recommend to its stockholders
any agreement, plan, arrangement or transaction in or of which the terms thereof
would restrict, materially delay, conflict with or impair the ability or right
of the Company or any Subsidiary to perform its obligations under this
Agreement, including, without limitation, the obligation of the Company to
deliver the Commitment Shares to the Investor not later than 4:00 p.m. (New York
time) on the first Trading Day immediately following the Effective Date, and the
obligation of the Company to deliver the Shares to the Investor in respect of a
previously provided Fixed Request Notice or Optional Amount on the applicable
Settlement Date.

28

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

(ii) If the Company enters into any agreement, plan, arrangement or transaction
with a third party or seeks to utilize any existing agreement, plan or
arrangement with a third party, in each case the principal purpose of which is
to implement, effect or consummate, at any time during the period beginning on
the first Trading Day of any Pricing Period and ending on the second Trading Day
next following the applicable Settlement Date (the “Reference Period”), an Other
Financing that does not constitute an Acceptable Financing, the Company shall
provide prompt notice thereof (an “Other Financing Notice”) to the Investor;
provided, however, that such Other Financing Notice must be received by the
Investor not later than the earlier of (a) 48 hours after the Company’s
execution of any agreement, plan, arrangement or transaction relating to such
Other Financing (or, with respect to any existing agreement, plan or
arrangement, 48 hours after the Company has determined to utilize any such
existing agreement, plan or arrangement to implement, effect or consummate such
Other Financing) and (b) the second Trading Day immediately preceding the
applicable Settlement Date with respect to the applicable Fixed Request Notice;
provided, further, that the Company shall notify the Investor within 24 hours
(an “Integration Notice”) if it enters into any agreement, plan, arrangement or
transaction with a third party, the principal purpose of which is to obtain at
any time during the Investment Period an Other Financing that may be aggregated
with the transactions contemplated by this Agreement for purposes of determining
whether approval of the Company’s stockholders is required under any bylaw,
listed securities maintenance standards or other rules of the Trading Market
and, if required under applicable law, including, without limitation, Regulation
FD promulgated by the Commission, or under the applicable rules and regulations
of the Trading Market, the Company shall publicly disclose such information in
accordance with Regulation FD and the applicable rules and regulations of the
Trading Market. For purposes of this Section 5.6(ii), any press release issued
by, or Commission Document filed by, the Company shall constitute sufficient
notice, provided that it is issued or filed, as the case may be, within the time
requirements set forth in the first sentence of this Section 5.6(ii) for an
Other Financing Notice or an Integration Notice, as applicable. With respect to
any Pricing Period for which the Company is required to provide an Other
Financing Notice pursuant to the first sentence (including the provisos thereto)
of this Section 5.6(ii), the Investor shall have the option to purchase the
Shares subject to the Fixed Request at (i) the price therefor in accordance with
the terms of this Agreement or (ii) the third party’s per share purchase price
in connection with the Other Financing, net of such third party’s discounts,
Warrant Value and fees. An “Other Financing” shall mean (w) the issuance for
cash of Common Stock for a purchase price less than, or the issuance for cash of
securities convertible into or exchangeable for Common Stock at an exercise or
conversion price (as the case may be) less than, the then Current Market Price
of the Common Stock (including, without limitation, pursuant to any “equity
line” or other financing that is substantially similar to the financing provided
for under this Agreement, or pursuant to any other transaction in which the
purchase, conversion or exchange price for such Common Stock is determined using
a floating discount or other post-issuance adjustable discount to the then
Current Market Price (any such transaction, a “Similar Financing”)), in each
case, after all fees, discounts, Warrant Value and commissions associated with
the transaction (a “Below Market Offering”); (x) an “at-the-market” offering for
cash of Common Stock or securities convertible into or exchangeable for Common
Stock pursuant to Rule 415(a)(4) under the Securities Act (an “ATM”); (y) the
implementation by the Company of any mechanism in respect of any securities
convertible into or exchangeable for Common Stock for the reset of the purchase
price of the Common Stock to below the then Current Market Price of the Common
Stock (including, without limitation, any antidilution or similar adjustment
provisions in respect of any Company securities, but specifically excluding
customary adjustments for stock splits, stock dividends, stock combinations and
similar events) (a “Price Reset Provision”); or (z) the issuance of options,
warrants or similar rights of subscription, in the case of each of clause (w)
and (z) not constituting an Acceptable Financing (it being acknowledged and
agreed that notwithstanding anything herein to the contrary, any Similar
Financing, ATM or Price Reset Provision shall not constitute an Acceptable
Financing). “Acceptable Financing” shall mean the issuance by the Company of:
(1) debt securities or any class or series of preferred stock of the Company, in
each case that are not convertible into or exchangeable for Common Stock or
securities convertible into or exchangeable for Common Stock; (2) shares of
Common Stock or securities convertible into or exchangeable for Common Stock
(including, without limitation, convertible debt securities) other than in
connection with a Below Market Offering or an ATM, and the issuance of shares of
Common Stock upon conversion, exercise or exchange thereof; (3) shares of Common
Stock or securities convertible into or exchangeable for Common Stock
(including, without limitation, convertible debt securities) in connection with
an underwritten public offering (or offering under Rule 144A under the
Securities Act) of securities of the Company or a registered direct public
offering of securities of the Company, in each case where the price per share of
such Common Stock (or the conversion or exercise price of such securities, as
applicable) is fixed concurrently with the execution of definitive documentation
relating to such offering, and the issuance of shares of Common Stock upon the
conversion, exercise or exchange thereof; (4) shares of Common Stock or
securities convertible into or exchangeable for Common Stock in connection with
awards under the Company’s benefit and equity plans and arrangements or
shareholder rights plan (as applicable) and the issuance of shares of Common
Stock upon the conversion, exercise or exchange thereof; (5) shares of Common
Stock issuable upon the conversion or exchange of equity awards or convertible,
exercisable or exchangeable securities (including, without limitation,
convertible debt securities) outstanding as of the Effective Date; (6) shares of
Common Stock in connection with stock splits, stock dividends, stock
combinations, recapitalizations, reclassifications and similar events; (7)
shares of Common Stock or securities convertible into or exchangeable for Common
Stock (including, without limitation, convertible debt securities) issued in
connection with the acquisition, license or sale of one or more other companies,
equipment, technologies, other assets or lines of business, and the issuance of
shares of Common Stock upon the conversion, exercise or exchange thereof; (8)
shares of Common Stock or securities convertible into or exchangeable for Common
Stock (including, without limitation, convertible debt securities) or similar
rights to subscribe for the purchase of shares of Common Stock in connection
with technology sharing, collaboration, partnering, licensing, joint venture,
research and joint development agreements (or amendments thereto) with third
parties, and the issuance of shares of Common Stock upon the conversion,
exercise or exchange thereof; (9) shares of Common Stock or securities
convertible into or exchangeable for Common Stock to employees, consultants
and/or advisors as consideration for services rendered or to be rendered, and
the issuance of shares of Common Stock upon conversion, exercise or exchange
thereof; (10) shares of Common Stock or securities convertible into or
exchangeable for Common Stock issued in connection with capital or equipment
financings and/or real property lease arrangements, and the issuance of shares
of Common Stock upon the conversion, exercise or exchange thereof; (11) shares
of Common Stock or securities convertible into or exchangeable for Common Stock
in connection with a placement under Regulation S under the Securities Act,
where the price per share of such Common Stock (or the conversion or exercise
price of such securities, as applicable) is fixed concurrently with the
execution of definitive documentation relating to such offering, and the
issuance of shares of Common Stock upon the conversion, exercise or exchange
thereof; and (12) any issuance of securities to existing stockholders of the
Company in a transaction exempt from registration pursuant to Section 3(a)(9)
under the Securities Act, provided that (A) such transaction does not have the
same economic effect as a Price Reset Provision and (B) any securities
convertible into or exchangeable for Common Stock issued in such transaction do
not include a Price Reset Provision.

29

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

Section 5.7 Stop Orders. The Company shall advise the Investor promptly (but in
no event later than 24 hours) and shall confirm such advice in writing: (i) of
the Company’s receipt of notice of any request by the Commission for amendment
of or a supplement to the Registration Statement, the Prospectus, any Permitted
Free Writing Prospectus or for any additional information; (ii) of the Company’s
receipt of notice of the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement or prohibiting or suspending the
use of the Prospectus or any Prospectus Supplement, or of the suspension of
qualification of the Securities for offering or sale in any jurisdiction, or the
initiation or contemplated initiation of any proceeding for such purpose; and
(iii) of the Company becoming aware of the happening of any event, which makes
any statement of a material fact made in the Registration Statement, the
Prospectus or any Permitted Free Writing Prospectus untrue or which requires the
making of any additions to or changes to the statements then made in the
Registration Statement, the Prospectus or any Permitted Free Writing Prospectus
in order to state a material fact required by the Securities Act to be stated
therein or necessary in order to make the statements then made therein (in the
case of the Prospectus, in light of the circumstances under which they were
made) not misleading, or of the necessity to amend the Registration Statement or
supplement the Prospectus or any Permitted Free Writing Prospectus to comply
with the Securities Act or any other law. The Company shall not be required to
disclose to the Investor the substance or specific reasons of any of the events
set forth in clauses (i) through (iii) of the immediately preceding sentence,
but rather, shall only be required to disclose that the event has occurred. The
Company shall not issue any Fixed Request during the continuation of any of the
foregoing events. If at any time the Commission shall issue any stop order
suspending the effectiveness of the Registration Statement or prohibiting or
suspending the use of the Prospectus or any Prospectus Supplement, the Company
shall use reasonable best efforts to obtain the withdrawal of such order at the
earliest possible time. The Company shall also advise the Investor promptly (but
in no event later than 24 hours) and shall confirm such advice in writing of the
Company becoming aware of the happening of any event, which makes any statement
made in the FINRA Filing untrue or which requires the making of any additions to
or changes to the statements then made in the FINRA Filing in order to comply
with FINRA Rule 5110.

30

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

Section 5.8 Amendments to the Registration Statement; Prospectus Supplements;
Free Writing Prospectuses.

(i) Except as provided in this Agreement and other than periodic and current
reports required to be filed pursuant to the Exchange Act, the Company shall not
file with the Commission any amendment to the Registration Statement that
relates to the Investor, this Agreement or the transactions contemplated hereby
or file with the Commission any Prospectus Supplement that relates to the
Investor, this Agreement or the transactions contemplated hereby with respect to
which (a) the Investor shall not previously have been advised, (b) the Company
shall not have given the Investor and its counsel a reasonable opportunity to
comment on a draft thereof prior to filing with the Commission, (c) the Company
shall not have given due consideration to any comments thereon received from the
Investor or its counsel prior to filing with the Commission, or (d) the Investor
shall reasonably object after being so advised or after having completed its
review (provided, however, that the failure of the Investor to make such
objection shall not relieve the Company of any obligation or liability under
this Agreement or affect the Investor’s right to rely on the representations and
warranties made by the Company in this Agreement), unless the Company reasonably
has determined that it is necessary to amend the Registration Statement or make
any supplement to the Prospectus to comply with the Securities Act or any other
applicable law or regulation, in which case the Company shall promptly (but in
no event later than 24 hours) so inform the Investor, the Investor shall be
provided with a reasonable opportunity to review and comment upon any disclosure
relating to the Investor and the Company shall expeditiously furnish to the
Investor an electronic copy thereof (it being acknowledged and agreed that the
provisions of Section 1.4, and not this Section 5.8, shall apply with respect to
the Initial Prospectus Supplement). In addition, for so long as, in the
reasonable opinion of counsel for the Investor, the Prospectus (or in lieu
thereof, the notice referred to in Rule 173(a) under the Securities Act) is
required to be delivered in connection with any acquisition or sale of
Securities by the Investor, the Company shall not file any (1) Prospectus
Supplement with respect to the Securities, without delivering or making
available a copy of such Prospectus Supplement (in the form filed with the
Commission), together with the Base Prospectus, to the Investor promptly after
the filing thereof with the Commission, or (2) any amendment to the Registration
Statement, without promptly delivering or making available a copy of such
amendment to the Registration Statement (in the form filed with the Commission)
to the Investor promptly after the filing thereof with the Commission, in each
case via e-mail in pdf” format to an e-mail account designated by the Investor.

31

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

 

(ii) The Company has not made, and agrees that unless it obtains the prior
written consent of the Investor it will not make, an offer relating to the
Securities that would constitute an Issuer Free Writing Prospectus or that would
otherwise constitute a Free Writing Prospectus required to be filed by the
Company or the Investor with the Commission or retained by the Company or the
Investor under Rule 433 under the Securities Act. The Investor has not made, and
agrees that unless it obtains the prior written consent of the Company it will
not make, an offer relating to the Securities that would constitute a Free
Writing Prospectus required to be filed by the Company with the Commission or
retained by the Company under Rule 433 under the Securities Act. Any such Issuer
Free Writing Prospectus or other Free Writing Prospectus consented to by the
Investor or the Company is referred to in this Agreement as a “Permitted Free
Writing Prospectus.” The Company agrees that (x) it has treated and will treat,
as the case may be, each Permitted Free Writing Prospectus as an Issuer Free
Writing Prospectus and (y) it has complied and will comply, as the case may be,
with the requirements of Rules 164 and 433 under the Securities Act applicable
to any Permitted Free Writing Prospectus, including in respect of timely filing
with the Commission, legending and record keeping.

Section 5.9 Prospectus Delivery. For so long as, in the reasonable opinion of
counsel for the Investor, the Prospectus (or in lieu thereof, the notice
referred to in Rule 173(a) under the Securities Act) is required to be delivered
in connection with any acquisition or sale of Securities by the Investor, the
Company will furnish to the Investor and its counsel (at the expense of the
Company) copies of the Base Prospectus and all Prospectus Supplements that are
filed with the Commission, in each case, in the form filed with the Commission,
as soon as reasonably practicable via e-mail in “.pdf” format to an e-mail
account designated by the Investor and, at the Investor’s request, will also
furnish copies of the Base Prospectus and all Prospectus Supplements, in each
case, in the form filed with the Commission, to each exchange or market on which
sales of the Securities may be made and to each Broker-Dealer or other Person
designated by the Investor. The Company consents to the use of the Prospectus
(and of any Prospectus Supplement thereto) in accordance with the provisions of
the Securities Act and with the securities or “Blue Sky” laws of the
jurisdictions in which the Securities may be sold by the Investor, in connection
with the offering and sale of the Securities and for such period of time
thereafter as the Prospectus (or in lieu thereof, the notice referred to in Rule
173(a) under the Securities Act) is required by the Securities Act to be
delivered in connection with sales of the Securities. If during such period of
time any event shall occur that in the judgment of the Company and its counsel
is required to be set forth in the Registration Statement or the Prospectus or
any Permitted Free Writing Prospectus or should be set forth therein in order to
make the statements made therein (in the case of the Prospectus, in light of the
circumstances under which they were made) not misleading, or if it is necessary
to amend the Registration Statement or supplement or amend the Prospectus or any
Permitted Free Writing Prospectus to comply with the Securities Act or any other
applicable law or regulation, the Company shall forthwith prepare and, subject
to Section 5.8 above, file with the Commission an appropriate amendment to the
Registration Statement or Prospectus Supplement to the Prospectus (or supplement
to the Permitted Free Writing Prospectus) and shall expeditiously furnish or
make available to the Investor a copy thereof in accordance with this Section
5.9. The Investor shall comply with any Prospectus delivery requirements under
the Securities Act applicable to it. The Investor acknowledges and agrees that
it is not authorized to give any information or to make any representation not
contained in the Prospectus or the documents incorporated by reference or
specifically referred to therein in connection with the offer and sale of the
Securities.

32

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

Section 5.10 Selling Restrictions.

(i) Except as expressly set forth below, the Investor covenants that from and
after the date hereof through and including the 90th day next following the
termination of this Agreement (the “Restricted Period”), neither the Investor
nor any of its Affiliates nor any entity managed or controlled by the Investor
(collectively, the “Restricted Persons” and each of the foregoing is referred to
herein as a “Restricted Person”) shall, directly or indirectly, (x) engage in
any Short Sales involving the Company’s securities or (y) grant any option to
purchase, or acquire any right to dispose of or otherwise dispose for value of,
any shares of Common Stock or any securities convertible into or exercisable or
exchangeable for any shares of Common Stock, or enter into any swap, hedge or
other similar agreement that transfers, in whole or in part, the economic risk
of ownership of the Common Stock. Notwithstanding the foregoing, it is expressly
understood and agreed that nothing contained herein shall (without implication
that the contrary would otherwise be true) prohibit any Restricted Person during
the Restricted Period from: (1) selling “long” (as defined under Rule 200
promulgated under Regulation SHO) any shares of Common Stock (including the
Commitment Shares and the Shares); or (2) selling a number of shares of Common
Stock equal to (x) the number of Shares that such Restricted Person is or may be
obligated to purchase under a pending Fixed Request Notice and/or (y) the number
of Shares that such Restricted Person may purchase under a pending Optional
Amount, but, in each case, has not yet taken possession of so long as such
Restricted Person (or the Broker-Dealer, as applicable) delivers the Shares
purchased pursuant to such Fixed Request Notice and/or Optional Amount to the
purchaser thereof or the applicable Broker-Dealer; provided, however, such
Restricted Person (or the applicable Broker-Dealer, as applicable) shall not be
required to so deliver any such Shares subject to such Fixed Request Notice or
Optional Amount, as the case may be, if (a) such Fixed Request or Optional
Amount, as the case may be, is terminated by mutual agreement of the Company and
the Investor and, as a result of such termination, no such Shares are delivered
to the Investor under this Agreement or (b) the Company otherwise fails to
deliver such Shares to the Investor on the applicable Settlement Date upon the
terms and subject to the provisions of this Agreement.

(ii) In addition to the foregoing, in connection with any sale of Securities
(including any sale permitted by paragraph (i) above), the Investor shall comply
in all respects with all applicable laws, rules, regulations and orders,
including, without limitation, the requirements of the Securities Act and the
Exchange Act.

Section 5.11 Effective Registration Statement. The Company shall use its
reasonable best efforts to keep the Registration Statement effective pursuant to
Rule 415 promulgated under the Securities Act, and to keep the Registration
Statement and the Prospectus current and available for issuances and sales of
Securities by the Company to the Investor, and for the resale of Securities by
the Investor, at all times during the term of this Agreement and, to the extent
the Investor owns any Securities upon the termination of this Agreement, until
the 180th day next following the termination of this Agreement (the
“Registration Period”). Without limiting the generality of the foregoing, during
the Registration Period, the Company shall prepare and, subject to Section 5.8
above, file with the Commission, at the Company’s expense, such amendments
(including, without limitation, post-effective amendments) to the Registration
Statement and such Prospectus Supplements pursuant to Rule 424(b) under the
Securities Act, in each case, as may be necessary to keep the Registration
Statement effective pursuant to Rule 415 promulgated under the Securities Act,
and to keep the Registration Statement and the Prospectus current and available
for issuances and sales of Securities by the Company to the Investor, and for
the resale of Securities by the Investor, at all times during the Registration
Period. Without limiting the generality of the foregoing, if, immediately prior
to the third (3rd) anniversary of the initial effective date of the Registration
Statement (the “Renewal Date”), any of the Securities that have been or may be
issued pursuant to this Agreement have not been issued by the Company or resold
by the Investor and the Registration Period has not expired, the Company will,
prior to the Renewal Date, file a new Registration Statement on Form S-3
relating to the Securities, in a form satisfactory to the Investor and its
counsel, and will use its reasonable best efforts to cause such Registration
Statement to be declared effective within 180 days after the Renewal Date. The
Company will take all other reasonable actions necessary or appropriate to
permit the public offer and sale of the Securities (and the resale thereof by
the Investor) to continue as contemplated in the expired Registration Statement
relating to the Securities. From and after the effective date thereof,
references herein to the “Registration Statement” shall include such new
Registration Statement.

33

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

Section 5.12 Non-Public Information. Neither the Company or any of its
Subsidiaries, nor any of their respective directors, officers, employees or
agents shall disclose any material non-public information about the Company to
the Investor, unless a simultaneous public announcement thereof is made by the
Company in the manner contemplated by Regulation FD. In the event of a breach of
the foregoing covenant by the Company or any of its Subsidiaries, or any of
their respective directors, officers, employees and agents (as determined in the
reasonable good faith judgment of the Investor), in addition to any other remedy
provided in this Agreement, the Investor shall have the right to make a public
disclosure, in the form of a press release, public advertisement or otherwise,
of such material, non-public information without the prior approval by the
Company, any of its Subsidiaries, or any of their respective directors,
officers, employees or agents. The Investor shall not have any liability to the
Company, any of its Subsidiaries, or any of their respective directors,
officers, employees, stockholders or agents, for any such disclosure.

Section 5.13 Broker/Dealer. The Investor shall use one or more broker-dealers to
effectuate all sales, if any, of the Securities that it may acquire or purchase
from the Company pursuant to this Agreement which (or whom) shall be
unaffiliated with the Investor and FWG and not then currently engaged or used by
the Company (collectively, the “Broker-Dealer”). The Investor shall provide the
Company with all information regarding the Broker-Dealer reasonably requested by
the Company. The Investor shall be solely responsible for all fees and
commissions of the Broker-Dealer, which shall not exceed customary brokerage
fees and commissions.

Section 5.14 Earnings Statement. The Company will make generally available to
its security holders as soon as practicable, but in any event not later than 15
months after the end of the Company’s current fiscal quarter, an earnings
statement covering a 12-month period that satisfies the provisions of Section
11(a) of and Rule 158 under the Securities Act. The terms “earnings statement”
and “make generally available to its security holders” shall have the meanings
set forth in Rule 158 under the Securities Act.

34

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

Section 5.15 Disclosure Schedule.

(i) From time to time during the Investment Period, the Company shall be
permitted to update the Disclosure Schedule as may be required to satisfy the
condition set forth in Section 6.3(i) . For purposes of this Section 5.15, any
disclosure made in a schedule to the Compliance Certificate substantially in the
form attached hereto as Exhibit D shall be deemed to be an update of the
Disclosure Schedule. Notwithstanding anything in this Agreement to the contrary,
no update to the Disclosure Schedule pursuant to this Section 5.15 shall cure
any breach of a representation or warranty of the Company contained in this
Agreement and shall not affect any of the Investor’s rights or remedies with
respect thereto.

(ii) Notwithstanding anything to the contrary contained in the Disclosure
Schedule or in this Agreement, the information and disclosure contained in any
Schedule of the Disclosure Schedule shall be deemed to be disclosed and
incorporated by reference in any other Schedule of the Disclosure Schedule as
though fully set forth in such Schedule for which applicability of such
information and disclosure is readily apparent on its face. The fact that any
item of information is disclosed in the Disclosure Schedule shall not be
construed to mean that such information is required to be disclosed by this
Agreement. Except as expressly set forth in this Agreement, such information and
the thresholds (whether based on quantity, qualitative characterization, dollar
amounts or otherwise) set forth herein shall not be used as a basis for
interpreting the terms “material” or “Material Adverse Effect” or other similar
terms in this Agreement.

ARTICLE VI
OPINION OF COUNSEL AND CERTIFICATE; CONDITIONS TO THE SALE AND PURCHASE OF THE
SHARES

Section 6.1 Issuance of Commitment Shares and Schedule 2.7 Shares; Opinion of
Counsel; Certificate. On the Effective Date, the Company shall deliver
irrevocable instructions to its transfer agent to issue to the Investor (or its
designee), not later than 4:00 p.m. (New York time) on the first Trading Day
immediately following the Effective Date, (i) a certificate representing the
Commitment Shares in the name of the Investor or its designee (in which case
such designee name shall have been provided to the Company prior to the
Effective Date), in consideration for the Investor’s execution and delivery of
this Agreement, which Commitment Shares shall be issued pursuant to the
Registration Statement and without any restriction on resale, and (ii) a
certificate representing the number of Shares set forth in Schedule 2.7 in the
name of the Investor or its designee (in which case such designee name shall
have been provided to the Company prior to the Effective Date), which Shares
shall be issued pursuant to the Registration Statement and without any
restriction on resale. Such Commitment Shares and Shares certificates shall not
bear any restrictive legend, shall have no stop transfer or similar order
maintained against transfer thereof and shall be delivered to the Investor (or
its designee) by overnight courier in accordance with the instructions set forth
on Schedule 2.7. For the avoidance of doubt, all of the Commitment Shares shall
be fully earned as of the Effective Date, regardless of whether any Fixed
Requests are issued by the Company or settled hereunder. Simultaneously with the
execution and delivery of this Agreement on the Effective Date, the Company
shall deliver to the Investor (a) an opinion of outside counsel to the Company,
dated the Effective Date, in the form mutually agreed to by the parties hereto,
(b) a certificate from the Company, dated the Effective Date, in the form of
Exhibit C hereto and (c) a copy of the irrevocable instructions to the transfer
agent regarding the Commitment Shares and the Shares referenced in Schedule 2.7.
On or prior to the Effective Date, the Company shall have paid by wire transfer
of immediately available funds to an account designated by the Investor’s
counsel, the fees and expenses of the Investor’s counsel in accordance with the
proviso to the first sentence of Section 9.1(i) of this Agreement.

35

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

Section 6.2 Conditions Precedent to the Obligation of the Company. The
obligation hereunder of the Company to issue and sell the Shares to the Investor
under any Fixed Request or Optional Amount is subject to the satisfaction or (to
the extent permitted by applicable law) waiver of each of the conditions set
forth below. These conditions are for the Company’s sole benefit and (to the
extent permitted by applicable law) may be waived by the Company at any time in
its sole discretion.

(i) Accuracy of the Investor’s Representations and Warranties. The
representations and warranties of the Investor contained in this Agreement (a)
that are not qualified by “materiality” shall have been true and correct in all
material respects when made and shall be true and correct in all material
respects as of the applicable Fixed Request Exercise Date and the applicable
Settlement Date with the same force and effect as if made on such dates, except
to the extent such representations and warranties are as of another date, in
which case, such representations and warranties shall be true and correct in all
material respects as of such other date and (b) that are qualified by
“materiality” shall have been true and correct when made and shall be true and
correct as of the applicable Fixed Request Exercise Date and the applicable
Settlement Date with the same force and effect as if made on such dates, except
to the extent such representations and warranties are as of another date, in
which case, such representations and warranties shall be true and correct as of
such other date.

(ii) Registration Statement. The Registration Statement is effective and neither
the Company nor the Investor shall have received notice that the Commission has
issued or intends to issue a stop order with respect to the Registration
Statement. The Company satisfies all of the requirements for the use of Form S-3
under the Securities Act for the offering and sale of the Securities
contemplated by this Agreement (without reliance on General Instruction I.B.6.
of Form S-3). The Company shall have a maximum dollar amount certain of Common
Stock registered under the Registration Statement which (A) as of the Effective
Date, is sufficient to issue to the Investor not less than (1) the Total
Commitment worth of Common Stock plus (2) the Commitment Shares and (B) as of
the applicable Fixed Request Exercise Date and the applicable Settlement Date,
is sufficient to issue to the Investor not less than the maximum dollar amount
worth of Shares issuable pursuant to the applicable Fixed Request Notice and
applicable Optional Amount, if any.

(iii) Other Commission Filings. The Current Report shall have been filed with
the Commission as required pursuant to Section 1.4, and all Prospectus
Supplements required to have been filed with the Commission pursuant to Section
1.4 shall have been filed with the Commission in accordance with Section 1.4.
All reports, schedules, registrations, forms, statements, information and other
documents required to have been filed by the Company with the Commission
pursuant to the reporting requirements of the Exchange Act, including all
material required to have been filed pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act, shall have been filed with the Commission and such
filings shall have been made within the applicable time period prescribed for
such filing under the Exchange Act. All other material required to be filed by
the Company or any other offering participant pursuant to Rule 433(d) under the
Securities Act shall have been filed with the Commission within the applicable
time periods prescribed for such filings by Rule 433 under the Securities Act.

36

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

(iv) Performance by the Investor. The Investor shall have performed, satisfied
and complied in all material respects with all covenants, agreements and
conditions required by this Agreement to be performed, satisfied or complied
with by the Investor at or prior to the applicable Fixed Request Exercise Date
and the applicable Settlement Date.

(v) No Injunction. No statute, regulation, order, decree, writ, ruling or
injunction shall have been enacted, entered, promulgated, threatened or endorsed
by any court or governmental authority of competent jurisdiction which prohibits
the consummation of or which would materially modify or delay any of the
transactions contemplated by this Agreement.

(vi) No Suspension, Etc. Trading in the Common Stock shall not have been
suspended by the Commission or the Trading Market (except for any suspension of
trading of limited duration agreed to by the Company, which suspension shall be
terminated prior to the applicable Fixed Request Exercise Date and applicable
Settlement Date), and, at any time prior to the applicable Fixed Request
Exercise Date and applicable Settlement Date, none of the events described in
clauses (i), (ii) and (iii) of Section 5.7 shall have occurred, trading in
securities generally as reported on the Trading Market shall not have been
suspended or limited, nor shall a banking moratorium have been declared either
by the United States or New York State authorities, nor shall there have
occurred any material outbreak or escalation of hostilities or other national or
international calamity or crisis of such magnitude in its effect on, or any
material adverse change in, any financial, credit or securities market which, in
each case, in the reasonable judgment of the Company, makes it impracticable or
inadvisable to issue the Shares.

(vii) No Proceedings or Litigation. No action, suit or proceeding before any
arbitrator or any court or governmental authority shall have been commenced or
threatened, and no inquiry or investigation by any governmental authority shall
have been commenced or threatened, against the Company or any Subsidiary, or any
of the officers, directors or Affiliates of the Company or any Subsidiary,
seeking to restrain, prevent or change the transactions contemplated by this
Agreement, or seeking damages in connection with such transactions.

(viii) Aggregate Limit. The issuance and sale of the Shares issuable pursuant to
such Fixed Request or Optional Amount shall not violate Sections 1.1, 2.2, 2.12,
5.2 and 5.5 hereof.

(ix) No Unresolved FINRA Objection. There shall not exist any unresolved
objection raised by FINRA’s Corporate Financing Department with respect to the
fairness and reasonableness of the terms of the transactions contemplated by
this Agreement, and the parties hereto and FWG shall have obtained written
confirmation thereof from FINRA.

37

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

Section 6.3 Conditions Precedent to the Obligation of the Investor. The
obligation hereunder of the Investor to accept a Fixed Request Notice or
Optional Amount grant and to acquire and pay for the Shares is subject to the
satisfaction or (to the extent permitted by applicable law) waiver, at or before
each Fixed Request Exercise Date and each Settlement Date, of each of the
conditions set forth below. These conditions are for the Investor’s sole benefit
and (to the extent permitted by applicable law) may be waived by the Investor at
any time in its sole discretion.

(i) Accuracy of the Company’s Representations and Warranties. The
representations and warranties of the Company contained in this Agreement, as
modified by the Disclosure Schedule (a) that are not qualified by “materiality”
or “Material Adverse Effect” shall have been true and correct in all material
respects when made and shall be true and correct in all material respects as of
the applicable Fixed Request Exercise Date and the applicable Settlement Date
with the same force and effect as if made on such dates, except to the extent
such representations and warranties are as of another date, in which case, such
representations and warranties shall be true and correct in all material
respects as of such other date and (b) that are qualified by “materiality” or
“Material Adverse Effect” shall have been true and correct when made and shall
be true and correct as of the applicable Fixed Request Exercise Date and the
applicable Settlement Date with the same force and effect as if made on such
dates, except to the extent such representations and warranties are as of
another date, in which case, such representations and warranties shall be true
and correct as of such other date.

(ii) Registration Statement. The Registration Statement is effective and neither
the Company nor the Investor shall have received notice that the Commission has
issued or intends to issue a stop order with respect to the Registration
Statement. The Company satisfies all of the requirements for the use of Form S-3
under the Securities Act for the offering and sale of the Securities
contemplated by this Agreement (without reliance on General Instruction I.B.6.
of Form S-3). The Company shall have a maximum dollar amount certain of Common
Stock registered under the Registration Statement which (A) as of the Effective
Date, is sufficient to issue to the Investor not less than (1) the Total
Commitment worth of Common Stock plus (2) the Commitment Shares and (B) as of
the applicable Fixed Request Exercise Date and the applicable Settlement Date,
is sufficient to issue to the Investor not less than the maximum dollar amount
worth of Shares issuable pursuant to the applicable Fixed Request Notice and
applicable Optional Amount, if any. As of the Effective Date, the applicable
Fixed Request Exercise Date and the applicable Settlement Date, the Investor
shall be permitted to utilize the Prospectus to resell all of the Securities it
then owns or has the right to acquire pursuant to all Fixed Request Notices
issued pursuant to this Agreement.

(iii) Other Commission Filings. The Current Report shall have been filed with
the Commission as required pursuant to Section 1.4, and all Prospectus
Supplements required to have been filed with the Commission pursuant to Section
1.4 shall have been filed with the Commission in accordance with Section 1.4.
All reports, schedules, registrations, forms, statements, information and other
documents required to have been filed by the Company with the Commission
pursuant to the reporting requirements of the Exchange Act, including all
material required to have been filed pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act, shall have been filed with the Commission and such
filings shall have been made within the applicable time period prescribed for
such filing under the Exchange Act. All other material required to be filed by
the Company or any other offering participant pursuant to Rule 433(d) under the
Securities Act shall have been filed with the Commission within the applicable
time periods prescribed for such filings by Rule 433 under the Securities Act.

38

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

(iv) No Suspension. Trading in the Common Stock shall not have been suspended by
the Commission or the Trading Market (except for any suspension of trading of
limited duration agreed to by the Company, which suspension shall be terminated
prior to the applicable Fixed Request Exercise Date and applicable Settlement
Date), and the Company shall not have received any notice that the listing or
quotation of the Common Stock on the Trading Market shall be terminated on a
date certain (which termination shall be final and non-appealable). At any time
prior to the applicable Fixed Request Exercise Date and applicable Settlement
Date, none of the events described in clauses (i), (ii) and (iii) of Section 5.7
shall have occurred, trading in securities generally as reported on the Trading
Market shall not have been suspended or limited, nor shall a banking moratorium
have been declared either by the United States or New York State authorities,
nor shall there have occurred any material outbreak or escalation of hostilities
or other national or international calamity or crisis of such magnitude in its
effect on, or any material adverse change in, any financial, credit or
securities market which, in each case, in the reasonable judgment of the
Investor, makes it impracticable or inadvisable to purchase the Shares.

(v) Performance of the Company. The Company shall have performed, satisfied and
complied in all material respects with all covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by the
Company at or prior to the applicable Fixed Request Exercise Date and the
applicable Settlement Date. The Company shall have delivered to the Investor on
the applicable Settlement Date the Compliance Certificate substantially in the
form attached hereto as Exhibit D.

(vi) No Injunction. No statute, rule, regulation, order, decree, writ, ruling or
injunction shall have been enacted, entered, promulgated, threatened or endorsed
by any court or governmental authority of competent jurisdiction which prohibits
the consummation of or which would materially modify or delay any of the
transactions contemplated by this Agreement.

(vii) No Proceedings or Litigation. No action, suit or proceeding before any
arbitrator or any court or governmental authority shall have been commenced or
threatened, and no inquiry or investigation by any governmental authority shall
have been commenced or threatened, against the Company or any Subsidiary, or any
of the officers, directors or Affiliates of the Company or any Subsidiary,
seeking to restrain, prevent or change the transactions contemplated by this
Agreement, or seeking damages in connection with such transactions.

(viii) Aggregate Limit. The issuance and sale of the Shares issuable pursuant to
such Fixed Request Notice or Optional Amount shall not violate Sections 1.1,
2.2, 2.12, 5.2 and 5.5 hereof.

39

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

(ix) Shares Authorized and Delivered. The Shares issuable pursuant to such Fixed
Request Notice or Optional Amount shall have been duly authorized by all
necessary corporate action of the Company. The Company shall have delivered all
Shares relating to all prior Fixed Request Notices and Optional Amounts, as
applicable.

(x) Listing of Securities; DTC Eligibility. All of the Securities that may be
issued pursuant to this Agreement shall have been approved for listing or
quotation on the Trading Market as of the Effective Date, subject only to notice
of issuance. As of the applicable Fixed Request Exercise Date, either (i) the
number of available Shares represented by the certificate referenced in Schedule
2.7 shall be sufficient to enable the settlement of all Shares issuable to the
Investor in respect of the applicable Fixed Request Notice and/or Optional
Amount through the use of the Shares represented by such certificate or (ii) the
Company, through its transfer agent, and the Common Stock shall then be DTC
eligible and shall then participate in the DTC Deposit/Withdrawal at Custodian
(DWAC) system, and the Common Stock shall then be electronically transferable to
third parties via the DTC Deposit/Withdrawal at Custodian (DWAC) system.

(xi) No Termination Event. There shall not have occurred any event that would
permit the Investor to terminate this Agreement pursuant to Section 7.2.

(xii) Opinions of Counsel; Bring-Down. Subsequent to the filing of the Current
Report pursuant to Section 1.4 and prior to the first Fixed Request Exercise
Date, the Investor shall have received an opinion from outside counsel to the
Company in the form mutually agreed to by the parties hereto. On each Settlement
Date, the Investor shall have received an opinion “bring down” from outside
counsel to the Company in the form mutually agreed to by the parties hereto.

(xiii) No Unresolved FINRA Objection. There shall not exist any unresolved
objection raised by FINRA’s Corporate Financing Department with respect to the
fairness and reasonableness of the terms of the transactions contemplated by
this Agreement.

ARTICLE VII
TERMINATION

Section 7.1 Term, Termination by Mutual Consent. Unless earlier terminated as
provided hereunder, this Agreement shall terminate automatically on the earliest
of (i) the first day of the month next following the 24-month anniversary of the
Effective Date (the “Investment Period”), (ii) the date that the entire dollar
amount of Common Stock registered under the Registration Statement has been
issued and sold and (iii) the date the Investor shall have purchased or acquired
shares of Common Stock pursuant to this Agreement equal to the Aggregate Limit.
Subject to Section 7.3, this Agreement may be terminated at any time (A) by the
mutual written consent of the parties, effective as of the date of such mutual
written consent unless otherwise provided in such written consent, it being
hereby acknowledged and agreed that the Investor may not consent to such
termination during a Pricing Period or prior to a Settlement Date in the event
the Investor has instructed the Broker-Dealer to effect an open-market sale of
Shares which are subject to a pending Fixed Request or Optional Amount but which
have not yet been physically delivered by the Company (and/or credited by
book-entry) to the Investor in accordance with the terms and subject to the
conditions of this Agreement, or (B) by either the Company or the Investor
effective upon written notice to the other party under Section 9.4, if FINRA’s
Corporate Financing Department has raised any objection with respect to the
fairness and reasonableness of the terms of the transactions contemplated by
this Agreement, or has otherwise failed to confirm in writing that it has
determined not to raise any such objection, and such objection shall not have
been resolved, or such confirmation of no objection shall not have been
obtained, prior to (1) the 60th day immediately following the Effective Date, in
the case of an objection raised or confirmation failure occurring prior to the
first Fixed Request Exercise Date, or (2) prior to the 60th day immediately
following the receipt by the Company or the Investor of notice of such
objection, in the case of an objection raised after the first Fixed Request
Exercise Date; provided however, that (x) the party seeking to terminate this
Agreement pursuant to this clause (B) of Section 7.1 shall have used its
commercially reasonable efforts to resolve such objection and/or to obtain such
confirmation of no objection in accordance with and subject to the provisions of
Section 5.1(ii) of this Agreement and (y) the right to terminate this Agreement
pursuant to this clause (B) of Section 7.1 shall not be available to any party
whose action or failure to act has been a principal cause of, or has resulted
in, such objection or confirmation failure and such action or failure to act
constitutes a breach of this Agreement. Subject to Section 7.3, the Company may
terminate this Agreement effective upon three Trading Days’ prior written notice
to the Investor delivered in accordance with Section 9.4; provided, however,
that (i) such termination shall not occur during any Pricing Period with respect
to a pending Fixed Request or Optional Amount or prior to the Settlement Date
related to such pending Fixed Request or Optional Amount, and (ii) prior to
issuing any press release, or making any public statement or announcement, with
respect to such termination, the Company shall consult with the Investor and
shall obtain the Investor’s consent to the form and substance of such press
release or other disclosure, which consent shall not be unreasonably delayed or
withheld.

40

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

Section 7.2 Other Termination. If the Company provides the Investor with an
Other Financing Notice or an Integration Notice, in each case pursuant to
Section 5.6(ii) of this Agreement, or if the Company otherwise enters into any
agreement, plan, arrangement or transaction with a third party or determines to
utilize any existing agreement, plan or arrangement with a third party, in each
case the principal purpose of which is to implement, effect or consummate
outside a Pricing Period, but otherwise during the Investment Period, a Similar
Financing, an ATM or a Price Reset Provision (in which case the Company shall so
notify the Investor within 48 hours thereof), then in all such cases, subject to
Section 7.3, the Investor shall have the right to terminate this Agreement
within the subsequent 30-day period (the “Event Period”), effective upon one
Trading Day’s prior written notice delivered to the Company in accordance with
Section 9.4 at any time during the Event Period. The Company shall promptly (but
in no event later than 24 hours) notify the Investor (and, if required under
applicable law, including, without limitation, Regulation FD promulgated by the
Commission, or under the applicable rules and regulations of the Trading Market,
the Company shall publicly disclose such information in accordance with
Regulation FD and the applicable rules and regulations of the Trading Market),
and, subject to Section 7.3, the Investor shall have the right to terminate this
Agreement at any time after receipt of such notification, upon one Trading Day’s
prior written notice delivered to the Company in accordance with Section 9.4
hereof, if: (i) any condition, occurrence, state of facts or event constituting
a Material Adverse Effect has occurred; (ii) a Fundamental Transaction has
occurred or the Company enters into a definitive agreement providing for a
Fundamental Transaction; (iii) the effectiveness of the Registration Statement
lapses for any reason (including, without limitation, the issuance of a stop
order) or the Registration Statement or the Prospectus is otherwise unavailable
to the Company for the sale of Securities or to the Investor for the resale of
Securities, and such lapse or unavailability continues for a period of 20
consecutive Trading Days or for more than an aggregate of 60 Trading Days in any
365-day period, other than due to acts of the Investor; (iv) trading in the
Common Stock on the Trading Market shall have been suspended or the Common Stock
shall have failed to be listed or quoted on the Trading Market, and such
suspension or failure continues for a period of 20 consecutive Trading Days or
for more than an aggregate of 60 Trading Days in any 365-day period; (v) 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 (vi) the Company is in material breach or default of this
Agreement, and, if such breach or default is capable of being cured, such breach
or default is not cured within 10 Trading Days after notice of such breach or
default is delivered to the Company pursuant to Section 9.4.

41

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

Section 7.3 Effect of Termination. In the event of termination by the Company or
the Investor pursuant to Section 7.1 or 7.2, as applicable, written notice
thereof shall forthwith be given to the other party as provided in Section 9.4
and the transactions contemplated by this Agreement shall be terminated without
further action by either party. If this Agreement is terminated as provided in
Section 7.1 or 7.2 herein, this Agreement shall become void and of no further
force and effect, except that (i) the provisions of Article VIII
(Indemnification), Section 9.1 (Fees and Expenses), Section 9.2 (Specific
Enforcement, Consent to Jurisdiction, Waiver of Jury Trial), Section 9.4
(Notices), Section 9.8 (Governing Law), Section 9.9 (Survival), Section 9.11
(Publicity), Section 9.12 (Severability) and this Article VII (Termination)
shall remain in full force and effect notwithstanding such termination, (ii) if
the Investor owns any Securities at the time of such termination, the covenants
and agreements of the Company and the Investor, as applicable, contained in
Section 5.1(i) (Securities Compliance; FINRA Filing), Section 5.3 (Compliance
with Laws), Section 5.7 (Stop Orders), Section 5.8 (Amendments to the
Registration Statement; Prospectus Supplements; Free Writing Prospectuses),
Section 5.9 (Prospectus Delivery), Section 5.11 (Effective Registration
Statement), Section 5.12 (Non-Public Information) and Section 5.13
(Broker/Dealer) shall remain in full force and effect notwithstanding such
termination for a period of six months following such termination, (iii) the
covenants and agreements of the Investor contained in Section 5.10 (Selling
Restrictions) shall remain in full force and effect notwithstanding such
termination for a period of 90 days following such termination, and (iv) if the
Investor owns any Securities at the time of such termination, the covenants and
agreements of the Company contained in Section 5.2 (Registration and Listing)
shall remain in full force and effect notwithstanding such termination for a
period of 30 days following such termination. Notwithstanding anything in this
Agreement to the contrary, no termination of this Agreement by any party shall
(a) affect any Commitment Shares, or any rights of any holder thereof (it being
hereby acknowledged and agreed that all of the Commitment Shares shall be fully
earned as of the Effective Date, regardless of whether any Fixed Requests are
issued by the Company or settled hereunder), or (b) affect any cash fees paid to
the Investor’s counsel pursuant to Section 9.1, all of which fees shall be
non-refundable, regardless of whether any Fixed Requests are issued by the
Company or settled hereunder. Nothing in this Section 7.3 shall be deemed to
release the Company or the Investor from any liability for any breach under this
Agreement or to impair the rights of the Company and the Investor to compel
specific performance by the other party of its obligations under this Agreement.

42

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

ARTICLE VIII
INDEMNIFICATION

Section 8.1General Indemnity.

(i) Indemnification by the Company. The Company shall indemnify and hold
harmless the Investor, each of its directors, officers, partners, employees and
Affiliates, and each Person, if any, who controls the Investor within the
meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange Act
from and against all losses, claims, damages, liabilities and expenses
(including reasonable costs of defense and investigation and all reasonable
attorneys’ fees) to which the Investor and each such other Person may become
subject, under the Securities Act or otherwise, insofar as such losses, claims,
damages, liabilities and expenses arise out of or are based upon (a) any breach
of any of the representations, warranties, covenants or agreements made by the
Company in this Agreement, (b) any action, suit, claim or proceeding (including
for these purposes a derivative action brought on behalf of the Company)
instituted against the Investor or any such other Person arising out of or
resulting from the execution, delivery, performance or enforcement of this
Agreement, (c) any violation of United States federal or state securities laws
or the rules and regulations of the Trading Market in connection with the
transactions contemplated by this Agreement by the Company or any of its
Subsidiaries, affiliates, officers, directors or employees, (d) any untrue
statement or alleged untrue statement of a material fact contained, or
incorporated by reference, in the Registration Statement or any amendment
thereto or any omission or alleged omission to state therein, or in any document
incorporated by reference therein, a material fact required to be stated therein
or necessary to make the statements therein not misleading, or (e) any untrue
statement or alleged untrue statement of a material fact contained, or
incorporated by reference, in the Prospectus, any Issuer Free Writing
Prospectus, or in any amendment thereof or supplement thereto, or in any “issuer
information” (as defined in Rule 433 under the Securities Act) of the Company,
which “issuer information” is required to be, or is, filed with the Commission
or otherwise contained in any Free Writing Prospectus, or any amendment or
supplement thereto, or any omission or alleged omission to state therein, or in
any document incorporated by reference therein, a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided, however,
that (A) the Company shall not be liable under this Section 8.1(i) to the extent
that a court of competent jurisdiction shall have determined by a final judgment
(from which no further appeals are available) that such loss, claim, damage,
liability or expense resulted directly and solely from any such acts or failures
to act, undertaken or omitted to be taken by the Investor or such Person through
its bad faith or willful misconduct, (B) the foregoing indemnity shall not apply
to any loss, claim, damage, liability or expense to the extent, but only to the
extent, arising out of or based upon any untrue statement or alleged untrue
statement or omission or alleged omission made in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
the Investor expressly for use in the Current Report or any Prospectus
Supplement or Permitted Free Writing Prospectus, or any amendment thereof or
supplement thereto, and (C) with respect to the Prospectus, the foregoing
indemnity shall not inure to the benefit of the Investor or any such Person from
whom the Person asserting any loss, claim, damage, liability or expense
purchased Common Stock, if copies of all Prospectus Supplements required to be
filed pursuant to Section 1.4, together with the Base Prospectus, were timely
delivered or made available to the Investor pursuant hereto and a copy of the
Base Prospectus, together with a Prospectus Supplement (as applicable), was not
sent or given by or on behalf of the Investor or any such Person to such Person,
if required by law to have been delivered, at or prior to the written
confirmation of the sale of the Common Stock to such Person, and if delivery of
the Base Prospectus, together with a Prospectus Supplement (as applicable),
would have cured the defect giving rise to such loss, claim, damage, liability
or expense.

43

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

The Company shall reimburse the Investor and each such controlling Person
promptly upon demand (with accompanying presentation of documentary evidence)
for all legal and other costs and expenses reasonably incurred by the Investor
or such indemnified Persons in investigating, defending against, or preparing to
defend against any such claim, action, suit or proceeding with respect to which
it is entitled to indemnification.

(ii) Indemnification by the Investor. The Investor shall indemnify and hold
harmless the Company, each of its directors, officers, employees and Affiliates,
and each Person, if any, who controls the Company within the meaning of Section
15 of the Securities Act or Section 20(a) of the Exchange Act from and against
all losses, claims, damages, liabilities and expenses (including reasonable
costs of defense and investigation and all reasonable attorneys fees) to which
the Company and each such other Person may become subject, under the Securities
Act or otherwise, insofar as such losses, claims, damages, liabilities and
expenses arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Current Report, the Registration
Statement or any Prospectus Supplement or Permitted Free Writing Prospectus, or
in any amendment thereof or supplement thereto, or any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, in each case, to the extent, but only to
the extent, the untrue statement, alleged untrue statement, omission or alleged
omission was made in reliance upon, and in conformity with, written information
furnished by the Investor to the Company expressly for inclusion in the Current
Report, the Registration Statement or such Prospectus Supplement or Permitted
Free Writing Prospectus, or any amendment thereof or supplement thereto.

The Investor shall reimburse the Company and each such director, officer or
controlling Person promptly upon demand for all legal and other costs and
expenses reasonably incurred by the Company or such indemnified Persons in
investigating, defending against, or preparing to defend against any such claim,
action, suit or proceeding with respect to which it is entitled to
indemnification.

Section 8.2 Indemnification Procedures. Promptly after a Person receives notice
of a claim or the commencement of an action for which the Person intends to seek
indemnification under Section 8.1, the Person will notify the indemnifying party
in writing of the claim or commencement of the action, suit or proceeding;
provided, however, that failure to notify the indemnifying party will not
relieve the indemnifying party from liability under Section 8.1, except to the
extent it has been materially prejudiced by the failure to give notice. The
indemnifying party will be entitled to participate in the defense of any claim,
action, suit or proceeding as to which indemnification is being sought, and if
the indemnifying party acknowledges in writing the obligation to indemnify the
party against whom the claim or action is brought, the indemnifying party may
(but will not be required to) assume the defense against the claim, action, suit
or proceeding with counsel satisfactory to it. After an indemnifying party
notifies an indemnified party that the indemnifying party wishes to assume the
defense of a claim, action, suit or proceeding, the indemnifying party will not
be liable for any legal or other expenses incurred by the indemnified party in
connection with the defense against the claim, action, suit or proceeding except
that if, in the opinion of counsel to the indemnifying party, one or more of the
indemnified parties should be separately represented in connection with a claim,
action, suit or proceeding, the indemnifying party will pay the reasonable fees
and expenses of one separate counsel for the indemnified parties. Each
indemnified party, as a condition to receiving indemnification as provided in
Section 8.1, will cooperate in all reasonable respects with the indemnifying
party in the defense of any action or claim as to which indemnification is
sought. No indemnifying party will be liable for any settlement of any action
effected without its prior written consent. Notwithstanding the foregoing
sentence, if at any time an indemnified party shall have requested (by written
notice provided in accordance with Section 9.4) an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel, such
indemnifying party agrees that it shall be liable for any settlement of the
nature contemplated hereby effected without its written consent if (i) such
settlement is entered into more than 45 days after receipt by such indemnifying
party of the aforesaid request, (ii) such indemnifying party shall have received
written notice of the terms of such settlement at least 30 days prior to such
settlement being entered into and (iii) such indemnifying party shall not have
reimbursed such indemnified party in accordance with such request prior to the
date of such settlement. No indemnifying party will, without the prior written
consent of the indemnified party, effect any settlement of a pending or
threatened action with respect to which an indemnified party is, or is informed
that it may be, made a party and for which it would be entitled to
indemnification, unless the settlement includes an unconditional release of the
indemnified party from all liability and claims which are the subject matter of
the pending or threatened action.

44

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

If for any reason the indemnification provided for in this Agreement is not
available to, or is not sufficient to hold harmless, an indemnified party in
respect of any loss or liability referred to in Section 8.1 as to which such
indemnified party is entitled to indemnification thereunder, each indemnifying
party shall, in lieu of indemnifying the indemnified party, contribute to the
amount paid or payable by the indemnified party as a result of such loss or
liability, (i) in the proportion which is appropriate to reflect the relative
benefits received by the indemnifying party, on the one hand, and by the
indemnified party, on the other hand, from the sale of Shares which is the
subject of the claim, action, suit or proceeding which resulted in the loss or
liability or (ii) if the allocation provided by clause (i) is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above, but also the relative fault
of the indemnifying party, on the one hand, and the indemnified party, on the
other hand, with respect to the statements or omissions which are the subject of
the claim, action, suit or proceeding that resulted in the loss or liability, as
well as any other relevant equitable considerations.

The remedies provided for in Section 8.1 and this Section 8.2 are not exclusive
and shall not limit any rights or remedies which may otherwise be available to
any indemnified Person at law or in equity.

45

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

ARTICLE IX
MISCELLANEOUS

Section 9.1Fees and Expenses.

(i) Each party shall bear its own fees and expenses related to the transactions
contemplated by this Agreement; provided, however, that the Company shall pay,
on or prior to the Effective Date, by wire transfer of immediately available
funds (A) to FINRA, the applicable filing fee with respect to the FINRA Filing
and (B) to an account designated by the Investor’s counsel, promptly following
the receipt of an invoice therefor, all reasonable attorneys’ fees and expenses
(exclusive of disbursements and out-of-pocket expenses) incurred by the
Investor, up to $35,000, in connection with the preparation, negotiation,
execution and delivery of this Agreement, legal due diligence of the Company and
review of the Registration Statement, the Base Prospectus, the Current Report,
any Permitted Free Writing Prospectus and all other related transaction
documentation. The Company shall pay all U.S. federal, state and local stamp and
other similar transfer and other taxes and duties levied in connection with
issuance of the Securities pursuant hereto. For the avoidance of doubt, all of
the fees payable to the Investor or its counsel pursuant to this Section 9.1
shall be non-refundable, regardless of whether any Fixed Requests are issued by
the Company or settled hereunder.

(ii) If the Company issues a Fixed Request Notice and fails to deliver the
Shares (which have been approved for listing or quotation on the Trading Market,
if such an approval is required for the listing or quotation thereof on the
Trading Market) to the Investor on the applicable Settlement Date and such
failure continues for 10 Trading Days, the Company shall pay the Investor, in
cash (or, at the option of the Investor, in shares of Common Stock which have
not been registered under the Securities Act valued at the applicable Discount
Price of the Shares failed to be delivered; provided that the issuance thereof
by the Company would not violate the Securities Act or any applicable U.S.
federal or state securities laws), as partial damages for such failure and not
as a penalty, an amount equal to 2.0% of the payment required to be paid by the
Investor on such Settlement Date (i.e., the sum of the Fixed Amount Requested
and the Optional Amount Dollar Amount) for the initial 30 days following such
Settlement Date until the Shares (which have been approved for listing or
quotation on the Trading Market, if such an approval is required for the listing
or quotation thereof on the Trading Market) have been delivered, and an
additional 2.0% for each additional 30-day period thereafter until the Shares
(which have been approved for listing or quotation on the Trading Market, if
such an approval is required for the listing or quotation thereof on the Trading
Market) have been delivered, which amount shall be prorated for such periods
less than 30 days. Nothing in this Section 9.1(ii) shall be deemed to release
the Company from any liability for any breach under this Agreement, or to impair
the rights of the Investor to compel specific performance by the Company of its
obligations under this Agreement.

Section 9.2 Specific Enforcement, Consent to Jurisdiction, Waiver of Jury Trial.

(i) The Company and the Investor acknowledge and agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that either party shall be entitled to an injunction or
injunctions to prevent or cure breaches of the provisions of this Agreement by
the other party and to enforce specifically the terms and provisions hereof
(without the necessity of showing economic loss and without any bond or other
security being required), this being in addition to any other remedy to which
either party may be entitled by law or equity.

46

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

(ii) Each of the Company and the Investor (a) hereby irrevocably submits to the
jurisdiction of the U.S. District Court and other courts of the United States
sitting in the City and State of New York, Borough of Manhattan, for the
purposes of any suit, action or proceeding arising out of or relating to this
Agreement, and (b) hereby waives, and agrees not to assert in any such suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of such court, that the suit, action or proceeding is brought in an
inconvenient forum or that the venue of the suit, action or proceeding is
improper. Each of the Company and the Investor consents to process being served
in any such suit, action or proceeding by mailing a copy thereof to such party
at the address in effect for notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing in this Section 9.2 shall affect or limit any right to serve
process in any other manner permitted by law.

(iii) EACH OF THE COMPANY AND THE INVESTOR HEREBY WAIVES TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT
TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION
WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR DISPUTES RELATING
HERETO. EACH OF THE COMPANY AND THE INVESTOR (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS,
THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.2.

Section 9.3 Entire Agreement; Amendment. This Agreement, together with the
exhibits referred to herein and the Disclosure Schedule, represents the entire
agreement of the parties with respect to the subject matter hereof, and there
are no promises, undertakings, representations or warranties by either party
relative to subject matter hereof not expressly set forth herein. Except as
expressly provided in Section 2.12, no provision of this Agreement may be
amended other than by a written instrument signed by both parties hereto. The
Disclosure Schedule and all exhibits to this Agreement are hereby incorporated
by reference in, and made a part of, this Agreement as if set forth in full
herein.

Section 9.4 Notices. Any notice, demand, request, waiver or other communication
required or permitted to be given hereunder shall be in writing and shall be
effective (a) upon hand delivery or facsimile (with facsimile machine
confirmation of delivery received) at the address or number designated below (if
delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received) or (b) on the second business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The address for
such communications shall be:

47

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

    If to the Company: Santa Fe Gold Corporation   1128 Pennsylvania NE, Suite
200   Albuquerque, NM 87110   Telephone Number: (505) 255-4852   Fax: (505)
255-4851   Attention: W. Pierce Carson     With a copy (which shall   not
constitute notice) to: The Jordaan Law Firm, PLLC   5950 Sherry Lane, 4th Floor
  Dallas, Texas 75225   Telephone Number: (214) 202-7449   Fax: (214) 987-4121  
Attention: Jakes Jordaan     If to the Investor: Glengrove Small Cap Value, Ltd.
  4th Floor, Rodus Building   P.O. Box 765   Road Town, Tortola   British Virgin
Islands   Telephone Number: (284) 494-8086   Fax: (284) 494-9474   Attention:
Peter W. Poole     With a copy (which shall   not constitute notice) to:
Greenberg Traurig, LLP   The MetLife Building   200 Park Avenue   New York, NY
10166   Telephone Number: (212) 801-9200   Fax: (212) 801-6400   Attention:
Anthony J. Marsico

Either party hereto may from time to time change its address for notices by
giving at least 10 days advance written notice of such changed address to the
other party hereto.

Section 9.5 Waivers. No waiver by either party 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 other provisions, condition
or requirement hereof nor shall any delay or omission of any party to exercise
any right hereunder in any manner impair the exercise of any such right accruing
to it thereafter. No provision of this Agreement may be waived other than in a
written instrument signed by the party against whom enforcement of such waiver
is sought.

48

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

Section 9.6 Headings; Construction. The article, section and subsection headings
in this Agreement are for convenience only and shall not constitute a part of
this Agreement for any other purpose and shall not be deemed to limit or affect
any of the provisions hereof. Unless the context clearly indicates otherwise,
each pronoun herein shall be deemed to include the masculine, feminine, neuter,
singular and plural forms thereof. The terms “including,” “includes,” “include”
and words of like import shall be construed broadly as if followed by the words
“without limitation.” The terms “herein,” “hereunder,” “hereof” and words of
like import refer to this entire Agreement instead of just the provision in
which they are found. The parties agree that each of them and their respective
counsel has reviewed and had an opportunity to revise this Agreement and,
therefore, the normal rule of construction to the effect that any ambiguities
are to be resolved against the drafting party shall not be employed in the
interpretation of this Agreement. In addition, each and every reference to share
prices and shares of Common Stock in this Agreement shall be subject to
adjustment for any stock splits, stock combinations, stock dividends,
recapitalizations and other similar transactions that occur on or after the date
of this Agreement. Any reference in this Agreement to “Dollars” or “$” shall
mean the lawful currency of the United States of America.

Section 9.7 Successors and Assigns. The Investor may not assign this Agreement
to any Person without the prior consent of the Company, in the Company’s sole
discretion. This Agreement shall be binding upon and inure to the benefit of the
parties and their successors and assigns. The assignment by a party to this
Agreement of any rights hereunder shall not affect the obligations of such party
under this Agreement.

Section 9.8 Governing Law. This Agreement shall be governed by and construed in
accordance with the internal procedural and substantive laws of the State of New
York, without giving effect to the choice of law provisions of such state that
would cause the application of the laws of any other jurisdiction.

Section 9.9 Survival. The representations, warranties, covenants and agreements
of the Company and the Investor contained in this Agreement shall survive the
execution and delivery hereof until the termination of this Agreement; provided,
however, that (i) the provisions of Article VII (Termination), Article VIII
(Indemnification), Section 9.1 (Fees and Expenses), Section 9.2 (Specific
Enforcement, Consent to Jurisdiction, Waiver of Jury Trial), Section 9.4
(Notices), Section 9.8 (Governing Law), Section 9.11 (Publicity), Section 9.12
(Severability) and this Section 9.9 (Survival) shall remain in full force and
effect notwithstanding such termination, (ii) if the Investor owns any
Securities at the time of such termination, the covenants and agreements of the
Company and the Investor, as applicable, contained in Section 5.1(i) (Securities
Compliance; FINRA Filing), Section 5.3 (Compliance with Laws), Section 5.7 (Stop
Orders), Section 5.8 (Amendments to the Registration Statement; Prospectus
Supplements; Free Writing Prospectuses), Section 5.9 (Prospectus Delivery),
Section 5.11 (Effective Registration Statement), Section 5.12 (Non-Public
Information) and Section 5.13 (Broker/Dealer) shall remain in full force and
effect notwithstanding such termination for a period of six months following
such termination, (iii) the covenants and agreements of the Investor contained
in Section 5.10 (Selling Restrictions) shall remain in full force and effect
notwithstanding such termination for a period of 90 days following such
termination, and (iv) if the Investor owns any Securities at the time of such
termination, the covenants and agreements of the Company contained in Section
5.2 (Registration and Listing) shall remain in full force and effect
notwithstanding such termination for a period of 30 days following such
termination.

49

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

Section 9.10 Counterparts. This Agreement may be executed in counterparts, all
of which taken together shall constitute one and the same original and binding
instrument and shall become effective when all counterparts have been signed by
each party and delivered to the other parties hereto, it being understood that
all parties hereto need not sign the same counterpart. In the event any
signature is delivered by facsimile, digital or electronic transmission, such
transmission shall constitute delivery of the manually executed original and the
party using such means of delivery shall thereafter cause four additional
executed signature pages to be physically delivered to the other parties within
five days of the execution and delivery hereof. Failure to provide or delay in
the delivery of such additional executed signature pages shall not adversely
affect the efficacy of the original delivery.

Section 9.11 Publicity. The Investor shall have the right to approve, prior to
issuance or filing, any press release, Commission filing or any other public
disclosure made by or on behalf of the Company relating to the Investor, its
purchases hereunder or any aspect of this Agreement or the transactions
contemplated hereby (unless the same disclosure has been previously reviewed and
approved by the Investor); provided, however, that except as otherwise provided
in this Agreement, the Company shall be entitled, without the prior approval of
the Investor, to make any press release or other public disclosure (including
any filings with the Commission) with respect thereto as is required by
applicable law and regulations (including the regulations of the Trading
Market), so long as prior to making any such press release or other public
disclosure, if reasonably practicable, the Company and its counsel shall have
provided the Investor and its counsel with a reasonable opportunity to review
and comment upon, and shall have consulted with the Investor and its counsel on
the form and substance of, such press release or other disclosure.

Section 9.12 Severability. The provisions of this Agreement are severable and,
in the event that any court of competent jurisdiction shall determine that any
one or more of the provisions or part of the provisions contained in this
Agreement shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
any other provision or part of a provision of this Agreement, and this Agreement
shall be reformed and construed as if such invalid or illegal or unenforceable
provision, or part of such provision, had never been contained herein, so that
such provisions would be valid, legal and enforceable to the maximum extent
possible.

Section 9.13 No Third Party Beneficiaries. Except as expressly provided in
Article VIII, this Agreement is intended only for the benefit of the parties
hereto and their respective permitted successors and assigns, and is not for the
benefit of, nor may any provision hereof be enforced by, any other Person.

Section 9.14 Further Assurances. From and after the date of this Agreement, upon
the request of the Investor or the Company, each of the Company and the Investor
shall execute and deliver such instrument, documents and other writings as may
be reasonably necessary or desirable to confirm and carry out and to effectuate
fully the intent and purposes of this Agreement.

50

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

[Signature Page Follows]

 

 

 

 

 

 

 

51

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

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

SANTA FE GOLD CORPORATION:

By: _________________________________

Name: W. Pierce Carson
Title: President & CEO

GLENGROVE SMALL CAP VALUE, LTD.:

By: _________________________________

Name:
Title:

52

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

ANNEX A TO THE
COMMON STOCK PURCHASE AGREEMENT
DEFINITIONS

“Acceptable Financing” shall have the meaning assigned to such term in Section
5.6(ii) hereof.

“Affiliate” shall have the meaning assigned to such term in Rule 12b-2 under the
Exchange Act.

“Aggregate Limit” shall have the meaning assigned to such term in Section 1.1
hereof.

“Agreement” shall have the meaning assigned to such term in the Preamble.

“ATM” shall have the meaning assigned to such term in Section 5.6(ii) hereof.

“Base Prospectus” shall mean the Company’s prospectus, dated December 29, 2009,
a preliminary form of which is included in the Registration Statement, including
the documents incorporated by reference therein.

“Below Market Offering” shall have the meaning assigned to such term in Section
5.6(ii) hereof.

“Blackout Period” shall have the meaning assigned to such term in Section 2.13
hereof.

“Broker-Dealer” shall have the meaning assigned to such term in Section 5.13
hereof.

“Bylaws” shall have the meaning assigned to such term in Section 4.3 hereof.

“Charter” shall have the meaning assigned to such term in Section 4.3 hereof.

“Code” shall mean the Internal Revenue Code of 1986, as amended.

“Commission” shall mean the Securities and Exchange Commission or any successor
entity.

“Commission Documents” shall mean (1) all reports, schedules, registrations,
forms, statements, information and other documents filed with or furnished to
the Commission by the Company pursuant to the reporting requirements of the
Exchange Act, including all material filed or furnished pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act, since June 30, 2011, including,
without limitation, the Annual Report on Form 10-K filed by the Company for its
fiscal year ended June 30, 2011 (the “2011 Form 10-K”), and which hereafter
shall be filed with or furnished to the Commission by the Company during the
Investment Period, including, without limitation, the Current Report, (2) the
Registration Statement, as the same may be amended from time to time, the
Prospectus and each Prospectus Supplement, and each Permitted Free Writing
Prospectus and (3) all information contained in such filings and all documents
and disclosures that have been and heretofore shall be incorporated by reference
therein.

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

“Commitment Shares” means 666,666 shares of duly authorized, validly issued,
fully paid and non-assessable shares of Common Stock which, concurrently with
the execution and delivery of this Agreement on the Effective Date, the Company
has caused its transfer agent to transfer to the Investor not later than 4:00
p.m. (New York time) on the first Trading Day immediately following the
Effective Date.

“Common Stock” shall have the meaning assigned to such term in the Recitals.

“Company” shall have the meaning assigned to such term in the Preamble.

“Current Market Price” means, with respect to any particular measurement date,
the closing price of a share of Common Stock as reported on the Trading Market
for the Trading Day immediately preceding such measurement date.

“Current Report” shall have the meaning assigned to such term in Section 1.4
hereof.

“Disclosure Schedule” shall have the meaning assigned to such term in Article IV
hereof.

“Discount Price” shall have the meaning assigned to such term in Section 2.2
hereof.

“Earnings Announcement” shall have the meaning assigned to such term in Section
2.13 hereof.

“Earnings 8-K” shall have the meaning assigned to such term in Section 2.13
hereof.

“EDGAR” shall have the meaning assigned to such term in Section 4.3 hereof.

“Effective Date” shall mean the date of this Agreement.

“Environmental Laws” shall have the meaning assigned to such term in Section
4.17 hereof.

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended.

“Event Period” shall have the meaning assigned to such term in Section 7.2
hereof.

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the Commission thereunder.

“FCPA” shall have the meaning assigned to such term in Section 4.29 hereof.

“Filing Time” shall have the meaning assigned to such term in Section 2.13
hereof.

“FINRA” shall have the meaning assigned to such term in Section 4.5 hereof.

“FINRA Filing” shall have the meaning assigned to such term in Section 5.1(ii)
hereof.

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

“Fixed Amount Requested” shall mean the amount of a Fixed Request requested by
the Company in a Fixed Request Notice delivered pursuant to Section 2.1 hereof.

“Fixed Request” means the transactions contemplated under Sections 2.1 through
2.8 of this Agreement.

“Fixed Request Amount” means the actual amount of proceeds received by the
Company pursuant to a Fixed Request under this Agreement.

“Fixed Request Exercise Date” shall have the meaning assigned to such term in
Section 2.2 hereof.

“Fixed Request Notice” shall have the meaning assigned to such term in Section
2.1 hereof.

“Free Writing Prospectus” shall mean a “free writing prospectus” as defined in
Rule 405 promulgated under the Securities Act.

“Fundamental Transaction” means any one or more of the following: (i) the
Company shall, directly or indirectly, in one or more related transactions, (1)
consolidate or merge with or into (whether or not the Company is the surviving
corporation) another Person, with the result that the holders of the Company’s
capital stock immediately prior to such consolidation or merger together
beneficially own less than 50% of the outstanding voting power of the surviving
or resulting corporation, or (2) sell, lease, license, assign, transfer, convey
or otherwise dispose of all or substantially all of the properties or assets of
the Company to another Person, or (3) take action to facilitate a purchase,
tender or exchange offer by another Person that is accepted by the holders of
more than 50% of the outstanding shares of Common Stock (not including any
shares of Common Stock held by the Person or Persons making or party to, or
associated or affiliated with the Persons making or party to, such purchase,
tender or exchange offer), or (4) consummate a stock or share purchase agreement
or other business combination (including, without limitation, a reorganization,
recapitalization, spin-off or scheme of arrangement) with another Person whereby
such other Person acquires more than 50% of the outstanding shares of Common
Stock (not including any shares of Common Stock held by the other Person or
other Persons making or party to, or associated or affiliated with the other
Persons making or party to, such stock or share purchase agreement or other
business combination), or (5) reorganize, recapitalize or reclassify its Common
Stock, or (ii) any “person” or “group” (as these terms are used for purposes of
Sections 13(d) and 14(d) of the Exchange Act) is or shall become the “beneficial
owner” (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of 50% of the aggregate ordinary voting power represented by issued
and outstanding Common Stock.

“FWG” shall have the meaning assigned to such term in Section 4.15 hereof.

“GAAP” shall mean generally accepted accounting principles in the United States
of America as applied by the Company.

“Governmental Licenses” shall have the meaning assigned to such term in Section
4.16(a) hereof.

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

“Indebtedness” shall have the meaning assigned to such term in Section 4.11
hereof.

“Initial Prospectus Supplement” shall have the meaning assigned to such term in
Section 1.4 hereof.

“Integration Notice” shall have the meaning assigned to such term in Section
5.6(ii) hereof.

“Intellectual Property” shall have the meaning assigned to such term in Section
4.16(b) hereof.

“Investment Period” shall have the meaning assigned to such term in Section 7.1
hereof.

“Investor” shall have the meaning assigned to such term in the Preamble.

“Issuer Free Writing Prospectus” shall mean an “issuer free writing prospectus,”
as defined in Rule 433 promulgated under the Securities Act, relating to the
Securities that (i) is required to be filed with the Commission by the Company
or (ii) is exempt from filing pursuant to Rule 433(d)(5)(i) under the Securities
Act, in each case, in the form filed or required to be filed with the Commission
or, if not required to be filed, in the form retained in the Company’s records
pursuant to Rule 433(g) under the Securities Act.

“Knowledge” means the actual knowledge of the Company’s Chief Executive Officer
or Chief Financial Officer, after reasonable inquiry of all officers, directors
and employees of the Company who could reasonably be expected to have knowledge
or information with respect to the matter in question.

“Market Capitalization” shall be calculated on the Trading Day immediately
preceding the applicable Pricing Period and shall be the product of (x) the
number of shares of Common Stock outstanding on such Trading Day and (y) the
closing bid price of the Common Stock on such Trading Day, both as determined by
Bloomberg Financial LP using the DES and HP functions.

“Material Adverse Effect” shall mean any condition, occurrence, state of facts
or event having, or insofar as reasonably can be foreseen would reasonably be
expected to have, any effect on the business, operations, properties or
condition (financial or otherwise) of the Company that is material and adverse
to the Company and its Subsidiaries, taken as a whole, and/or any condition,
occurrence, state of facts or event that would prohibit or otherwise materially
interfere with or delay the ability of the Company to perform any of its
obligations under this Agreement; provided, however, that none of the following,
individually or in the aggregate, shall be taken into account in determining
whether a Material Adverse Effect has occurred or insofar as reasonably can be
foreseen would reasonably be expected to occur: (i) changes in conditions in the
U.S. or global capital, commodities, credit or financial markets generally,
including changes in the availability of capital or currency exchange rates,
provided such changes shall not have affected the Company in a materially
disproportionate manner as compared to other similarly situated companies; (ii)
the effect of any changes arising in connection with acts of war (whether or not
declared), terrorism, military actions or the escalation thereof or other force
majeure events occurring after the Effective Date, provided such changes shall
not have affected the Company in a materially disproportionate manner as
compared to other similarly situated companies; (iii) the effect of any changes
in applicable legal requirements or GAAP; (iv) changes generally affecting the
industries in which the Company operates, provided such changes shall not have
affected the Company in a materially disproportionate manner as compared to
other similarly situated companies; and (v) any effect of the announcement of
this Agreement or the consummation of the transactions contemplated by this
Agreement on the Company’s relationships, contractual or otherwise, with
customers, suppliers, vendors, bank or commercial lenders, lessors,
collaboration partners, employees or consultants.

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

“Material Agreements” shall have the meaning assigned to such term in Section
4.18 hereof.

“Money Laundering Laws” shall have the meaning assigned to such term in Section
4.30 hereof.

“Multiplier” shall have the meaning assigned to such term in Section 2.3 hereof.

“OFAC” shall have the meaning assigned to such term in Section 4.31 hereof.

“Optional Amount” means the transactions contemplated under Sections 2.9 through
2.11 of this Agreement.

“Optional Amount Dollar Amount” shall mean the actual amount of proceeds
received by the Company pursuant to the exercise of an Optional Amount under
this Agreement.

“Optional Amount Notice” shall mean a notice sent to the Company with regard to
the Investor’s election to exercise all or any portion of an Optional Amount, as
provided in Section 2.11 hereof and substantially in the form attached hereto as
Exhibit B.

“Optional Amount Threshold Price” shall have the meaning assigned to such term
in Section 2.1 hereof.

“OTC Bulletin Board” shall mean the OTC Bulletin Board and any successor or
comparable market quotation system or exchange to the OTC Bulletin Board, such
as the OTCQB operated by the OTC Markets Group, Inc.

“Other Financing” shall have the meaning assigned to such term in Section
5.6(ii) hereof.

“Other Financing Notice” shall have the meaning assigned to such term in Section
5.6(ii) hereof.

“Permitted Free Writing Prospectus” shall have the meaning assigned to such term
in Section 5.8(ii) hereof.

“Person” means any person or entity, whether a natural person, trustee,
corporation, partnership, limited partnership, limited liability company, trust,
unincorporated organization, business association, firm, joint venture,
governmental agency or authority.

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

“Plan” shall have the meaning assigned to such term in Section 4.24 hereof.

“Price Reset Provision” shall have the meaning assigned to such term in Section
5.6(ii) hereof.

“Pricing Period” shall mean a period of 10 consecutive Trading Days commencing
on the first Trading Day of the Pricing Period set forth in the Fixed Request
Notice, or such other period mutually agreed upon by the Investor and the
Company.

“Prospectus” shall mean the Base Prospectus, as supplemented by any Prospectus
Supplement, including the documents incorporated by reference therein, together
with any Permitted Free Writing Prospectus.

“Prospectus Supplement” shall mean any prospectus supplement to the Base
Prospectus (including the Initial Prospectus Supplement) filed with the
Commission pursuant to Rule 424(b) under the Securities Act, including the
documents incorporated by reference therein.

“Reduction Notice” shall have the meaning assigned to such term in Section 2.8
hereof.

“Reference Period” shall have the meaning assigned to such term in Section
5.6(ii) hereof.

“Registration Period” shall have the meaning assigned to such term in Section
5.11 hereof.

“Registration Statement” shall mean the registration statement on Form S 3,
Commission File Number 333-163112, filed by the Company with the Commission
under the Securities Act for the registration of the Securities, as such
Registration Statement may be amended and supplemented from time to time
(including any related abbreviated registration statement to register additional
shares of Common Stock filed by the Company pursuant to Rule 462(b) under the
Securities Act), including all documents filed as part thereof or incorporated
by reference therein, and including all information deemed to be a part thereof
at the time of effectiveness pursuant to Rule 430B under the Securities Act,
including any comparable successor registration statement filed by the Company
with the Commission under the Securities Act for the registration of shares of
its Common Stock, including the Securities.

“Renewal Date” shall have the meaning assigned to such term in Section 5.11.

“Reserve Engineers” shall have the meaning assigned to such term in Section 4.35
hereof.

“Restricted Period” shall have the meaning assigned to such term in Section
5.10(i) hereof.

“Restricted Person” shall have the meaning assigned to such term in Section
5.10(i) hereof.

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

“Restricted Persons” shall have the meaning assigned to such term in Section
5.10(i) hereof.

“Securities” shall mean, collectively, the Shares and the Commitment Shares.

“Securities Act” shall mean the Securities Act of 1933, as amended, and the
rules and regulations of the Commission thereunder.

“Settlement Date” shall have the meaning assigned to such term in Section 2.7
hereof.

“Shares” shall mean shares of Common Stock issuable to the Investor upon
exercise of a Fixed Request and shares of Common Stock issuable to the Investor
upon exercise of an Optional Amount.

“Short Sales” means “short sales” as defined in Rule 200 promulgated under
Regulation SHO under the Exchange Act.

“Significant Subsidiary” means any Subsidiary of the Company that would
constitute a Significant Subsidiary of the Company within the meaning of Rule
1-02 of Regulation S-X of the Commission.

“Similar Financing” shall have the meaning assigned to such term in Section
5.6(ii) hereof.

“SOXA” shall have the meaning assigned to such term in Section 4.6(c) hereof.

“Subsidiary” shall mean any corporation or other entity of which at least a
majority of the securities or other ownership interest having ordinary voting
power (absolutely or contingently) for the election of directors or other
Persons performing similar functions are at the time owned directly or
indirectly by the Company and/or any of its other Subsidiaries.

“Threshold Price” is the lowest price (except to the extent otherwise provided
in Section 2.6) at which the Company may sell Shares during the applicable
Pricing Period as set forth in a Fixed Request Notice (not taking into account
the applicable percentage discount during such Pricing Period determined in
accordance with Section 2.2); provided, however, that at no time shall the
Threshold Price be lower than $0.10 per share unless the Company and the
Investor shall mutually agree.

“Total Commitment” shall have the meaning assigned to such term in Section 1.1
hereof.

“Trading Day” shall mean a full trading day (beginning at 9:30 a.m., New York
City time, and ending at 4:00 p.m., New York City time) on the OTC Bulletin
Board.

“Trading Market” means the following markets or exchanges on which the Common
Stock is listed or quoted for trading on the date in question: the OTC Bulletin
Board, the New York Stock Exchange, the NYSE MKT, the NASDAQ Capital Market, the
NASDAQ Global Market or the NASDAQ Global Select Market (or any successors to
any of the foregoing), whichever is at the time the principal trading exchange
or market for the Common Stock.

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

“VWAP” shall mean the daily volume weighted average price (based on a Trading
Day from 9:30 a.m. to 4:00 p.m. (New York time)) of the Common Stock on the OTC
Bulletin Board as reported by Bloomberg Financial L.P. using the AQR function.

“Warrant Value” shall mean the fair value of all warrants, options and other
similar rights issued to a third party in connection with an Other Financing,
determined by using a standard Black-Scholes option-pricing model using an
expected volatility percentage as shall be mutually agreed by the Investor and
the Company. In the case of a dispute relating to such expected volatility
assumption, the Investor shall obtain applicable volatility data from three
investment banking firms of nationally recognized reputation, and the parties
hereto shall use the average thereof for purposes of determining the expected
volatility percentage in connection with the Black-Scholes calculation referred
to in the immediately preceding sentence.

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

EXHIBIT A TO THE
COMMON STOCK PURCHASE AGREEMENT
FORM OF FIXED REQUEST NOTICE

To:
Fax#:

Reference is made to the Common Stock Purchase Agreement dated as of June 20,
2012, (the “Purchase Agreement”) between Santa Fe Gold Corporation, a
corporation organized and existing under the laws of the State of Delaware (the
“Company”), and Glengrove Small Cap Value, Ltd., a business company incorporated
under the laws of the British Virgin Islands. Capitalized terms used and not
otherwise defined herein shall have the meanings given such terms in the
Purchase Agreement.

In accordance with and pursuant to Section 2.1 of the Purchase Agreement, the
Company hereby issues this Fixed Request Notice to exercise a Fixed Request for
the Fixed Amount Requested indicated below.

Fixed Amount Requested:  

Optional Amount Dollar Amount:  

Pricing Period start date:   

Pricing Period end date:  

Settlement Date:  

Fixed Request Threshold Price:  

Optional Amount Threshold Price:  

Dollar Amount of Common Stock  

Currently Unissued under the Registration Statement; Dollar Amount of Common
Stock Currently Available under the Aggregate Limit: Dated: 
_________________________________ By:   Name:   Title:   Address:   Facsimile
No.

AGREED AND ACCEPTED

By: _____________________________
Name:
Title

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

EXHIBIT B TO THE
COMMON STOCK PURCHASE AGREEMENT
FORM OF OPTIONAL AMOUNT NOTICE

To:
Fax#:

Reference is made to the Common Stock Purchase Agreement dated as of June 20,
2012 (the “Purchase Agreement”) between Santa Fe Gold Corporation, a corporation
organized and existing under the laws of the State of Delaware (the “Company”),
and Glengrove Small Cap Value, Ltd., a business company incorporated under the
laws of the British Virgin Islands (the “Investor”). Capitalized terms used and
not otherwise defined herein shall have the meanings given such terms in the
Purchase Agreement.

In accordance with and pursuant to Section 2.11 of the Purchase Agreement, the
Investor hereby issues this Optional Amount Notice to exercise an Optional
Amount for the Optional Amount Dollar Amount indicated below.

Optional Amount Dollar Amount Exercised   Number of Shares to be purchased  
VWAP on the date hereof:
  Discount Price:   Settlement Date:
  Threshold Price:       Dated: __________________________________ By:   Name  
Title:   Address:   Facsimile No.

 

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

EXHIBIT C TO THE
COMMON STOCK PURCHASE AGREEMENT
CERTIFICATE OF THE COMPANY
CLOSING CERTIFICATE

_________, 201__

The undersigned, the [___________] of Santa Fe Gold Corporation, a corporation
organized and existing under the laws of the State of Delaware (the “Company”),
delivers this certificate in connection with the Common Stock Purchase
Agreement, dated as of June 20, 2012 (the “Agreement”), by and between the
Company and Glengrove Small Cap Value, Ltd., a business company incorporated
under the laws of the British Virgin Islands (the “Investor”), and hereby
certifies on the date hereof that (capitalized terms used herein without
definition have the meanings assigned to them in the Agreement):

1. Attached hereto as Exhibit A is a true, complete and correct copy of the
Certificate of Incorporation of the Company as filed with the Secretary of State
of the State of Delaware. The Certificate of Incorporation of the Company has
not been further amended or restated, and no document with respect to any
amendment to the Certificate of Incorporation of the Company has been filed in
the office of the Secretary of State of the State of Delaware since the date
shown on the face of the state certification relating to the Company’s
Certificate of Incorporation, which is in full force and effect on the date
hereof, and no action has been taken by the Company in contemplation of any such
amendment or the dissolution, merger or consolidation of the Company.

2. Attached hereto as Exhibit B is a true and complete copy of the Bylaws of the
Company, as amended and restated through, and as in full force and effect on,
the date hereof, and no proposal for any amendment, repeal or other modification
to the Bylaws of the Company has been taken or is currently pending before the
Board of Directors or stockholders of the Company.

3. The Board of Directors of the Company has approved the transactions
contemplated by the Agreement; said approval has not been amended, rescinded or
modified and remains in full force and effect as of the date hereof.

4. Each person who, as an officer of the Company, or as attorney-in-fact of an
officer of the Company, signed (i) the Agreement and (ii) any other document
delivered prior hereto or on the date hereof in connection with the transactions
contemplated by the Agreement, was duly elected, qualified and acting as such
officer or duly appointed and acting as such attorney-in-fact, and the signature
of each such person appearing on any such document is his genuine signature.

IN WITNESS WHEREOF, I have signed my name as of the date first above written.

_________________________________________
Print Name:
_______________________________
Title:
_____________________________________

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

EXHIBIT D TO THE
COMMON STOCK PURCHASE AGREEMENT
COMPLIANCE CERTIFICATE

In connection with the issuance of shares of common stock of Santa Fe Gold
Corporation, a corporation organized and existing under the laws of the State of
Delaware (the “Company”), pursuant to the Fixed Request Notice, dated
[_____________], delivered by the Company to Glengrove Small Cap Value, Ltd.
(the “Investor”) pursuant to Article II of the Common Stock Purchase Agreement,
dated as of June 20, 2012, by and between the Company and the Investor (the
“Agreement”), the undersigned hereby certifies as follows:

1. The undersigned is the duly elected [_____________] of the Company.

2. Except as set forth in the attached Disclosure Schedule, the representations
and

warranties of the Company set forth in Article IV of the Agreement (i) that are
not qualified by “materiality” or “Material Adverse Effect” are true and correct
in all material respects as of [insert Fixed Request Exercise Date] and as of
the date hereof with the same force and effect as if made on such dates, except
to the extent such representations and warranties are as of another date, in
which case, such representations and warranties are true and correct in all
material respects as of such other date and (ii) that are qualified by
“materiality” or “Material Adverse Effect” are true and correct as of [insert
Fixed Request Exercise Date] and as of the date hereof with the same force and
effect as if made on such dates, except to the extent such representations and
warranties are as of another date, in which case, such representations and
warranties are true and correct as of such other date.

3. The Company has performed, satisfied and complied in all material respects
with all covenants, agreements and conditions required by the Agreement to be
performed, satisfied or complied with by the Company at or prior to [insert
Fixed Request Exercise Date] and the date hereof.

4. As of [insert Fixed Request Exercise Date] and the date hereof, (i) the
Registration Statement did not and does not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein not misleading, (ii) the
Prospectus did not and does not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading and (iii) no event has occurred as a result of
which it is necessary to amend or supplement the Registration Statement or the
Prospectus in order to make the statements therein not untrue or misleading for
clauses (i) and (ii) above, respectively, to be true and correct.

5. As of [insert Fixed Request Exercise Date] and the date hereof, the Company
did not and does not possess any material non-public information.

Capitalized terms used but not otherwise defined herein shall have the meanings
assigned to them in the Agreement.

The undersigned has executed this Certificate this [___] day of [___________],
20[__].

________________________________________

Print Name: _______________________________

Title:_____________________________________

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

DISCLOSURE SCHEDULE
 RELATING TO THE COMMON STOCK
PURCHASE AGREEMENT, DATED AS OF JUNE 20, 2012
BETWEEN SANTA FE GOLD CORPORATION AND GLENGROVE SMALL CAP
VALUE, LTD.

This disclosure schedule is made and given pursuant to Article IV of the Common
Stock Purchase Agreement, dated as of June 20, 2012 (the “Agreement”), by and
between Santa Fe Gold Corporation, a Delaware corporation (the “Company”), and
Glengrove Small Cap Value, Ltd., a business company incorporated under the laws
of the British Virgin Islands. Unless the context otherwise requires, all
capitalized terms are used herein as defined in the Agreement. The numbers below
correspond to the section numbers of representations and warranties in the
Agreement most directly modified by the below exceptions.

 

 

 

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

FORM OF OPINION OF OUTSIDE COUNSEL TO BE DELIVERED PURSUANT TO
SECTION 6.1(i) OF THE COMMON STOCK PURCHASE AGREEMENT
DATED AS OF JUNE 20, 2012 BETWEEN SANTA FE GOLD CORPORATION AND
GLENGROVE SMALL CAP VALUE, LTD.

[Company Counsel’s Letterhead]

1. The Company has been duly incorporated and is validly existing and in good
standing under the laws of the State of Delaware, with full corporate power and
authority to own its properties and to conduct its business as described in the
Registration Statement and the Prospectus. Based on certificates from public
officials, we confirm that the Company is duly qualified to do business as a
foreign corporation and is in good standing in the State of New Mexico.

2. The Company has the requisite corporate power and authority to execute,
deliver and perform its obligations under the Purchase Agreement and to issue
the Commitment Shares and the Shares in accordance with the terms thereof. The
execution and delivery of the Purchase Agreement by the Company, and the
consummation by the Company of the transactions contemplated thereby (including,
without limitation, the issuance of the Commitment Shares and the Shares) have
been duly and validly authorized by all necessary corporate action and, except
for any consent or authorization of the Company’s Board of Directors or a
committee thereof in connection with the delivery of a Fixed Request Notice or
grant of an Optional Amount to the Investor, no further consent or authorization
of the Company, its Board of Directors or its stockholders is required.

3. The Purchase Agreement has been duly executed and delivered by the Company,
and (assuming the due authorization, execution and delivery thereof by the
Investor) the Purchase Agreement constitutes a legal, valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors’ rights and
remedies generally, and subject, as to enforceability, to general principles of
equity, including principles of commercial reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding at law or
in equity).

4. When issued in accordance with the Purchase Agreement, the Commitment Shares
will be duly authorized and validly issued, fully paid and nonassessable, free
and clear of all liens, charges, taxes, security interests, encumbrances, rights
of first refusal, preemptive or similar rights and other encumbrances under the
Company’s Certificate of Incorporation and Bylaws, the laws of the State of
Delaware or any material agreement, mortgage, deed of trust, indenture, note,
bond, license, lease agreement, instrument or obligation to which the Company is
a party or is bound.

The Registration Statement has become effective under the Securities Act. With
your consent, based solely on a telephonic confirmation by a member of the Staff
of the Commission on June 20, 2012, no stop order suspending the effectiveness
of the Registration Statement has been issued under the Securities Act and no
proceedings therefor have been initiated by the Commission.

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

FORM OF OPINION OF OUTSIDE COUNSEL TO BE DELIVERED PURSUANT TO
SECTION 6.3(xii) OF THE COMMON STOCK PURCHASE AGREEMENT
DATED AS OF JUNE 20, 2012 BETWEEN SANTA FE GOLD CORPORATION
AND GLENGROVE SMALL CAP VALUE, LTD.

[Company Counsel’s Letterhead]

1. The Company has been duly incorporated and is validly existing and in good
standing under the laws of the State of Delaware, with full corporate power and
authority to own its properties and to conduct its business as described in the
Registration Statement and the Prospectus. Based on certificates from public
officials, we confirm that the Company is duly qualified to do business as a
foreign corporation and is in good standing in the State of New Mexico.

2. The execution, delivery and performance of the Purchase Agreement by the
Company and the consummation by the Company of the transactions contemplated
thereby (including, without limitation, the issuance of the Commitment Shares
and the Shares) do not and will not: (i) violate the Company’s Certificate of
Incorporation and Bylaws; (ii) violate the General Corporation Law of the State
of Delaware, or any federal or New Mexico state statute, rule or regulation
applicable to the Company; (iii) require any consents, approvals, or
authorizations to be obtained by the Company, or any registrations, declarations
or filings to be made by the Company, in each case, under the General
Corporation Law of the State of Delaware or any federal or New Mexico state
statute, rule or regulation applicable to the Company that have not been
obtained or made; (iv) conflict with, or constitute a default (or an event which
with notice or lapse of time or both would become a default) under, or give to
others any rights of termination, amendment, acceleration or cancellation of,
any material agreement, mortgage, deed of trust, indenture, note, bond, license,
lease agreement, instrument or obligation to which the Company or any of its
Significant Subsidiaries is a party, (v) create or impose a lien, charge or
encumbrance on any property of the Company under any agreement or any commitment
to which the Company or any Significant Subsidiary is a party or by which the
Company or any Significant Subsidiary is bound or by which any of its respective
properties or assets are bound, or (vi) result in a violation of any federal or
state order, judgment or decree applicable to the Company or any of its
Subsidiaries or by which any property or asset of the Company or any of its
Subsidiaries are bound or affected.

3. The Registration Statement has become effective under the Securities Act.
With your consent, based solely on a telephonic confirmation by a member of the
Staff of the Commission on [__________], 2012, no stop order suspending the
effectiveness of the Registration Statement has been issued under the Securities
Act and no proceedings therefor have been initiated by the Commission. Any
required filing of the Prospectus and a Prospectus Supplement with the
Commission pursuant to Rule 424(b) under the Securities Act has been made in the
manner and within the time period required by Rule 424(b) (without reference to
Rule 424(b)(8)) under the Securities Act. Any other material required to be
filed by the Company pursuant to Rule 433(d) under the Securities Act has been
filed with the Commission within the applicable time periods prescribed for such
filings by Rule 433 under the Securities Act.

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

4. The Registration Statement, as of the date it became effective (and at each
deemed effective date with respect to the Investor pursuant to Rule 430B(f)(2)),
and the Prospectus and each Prospectus Supplement, as of its date, complied as
to form in all material respects with the requirements for registration
statements on Form S-3 under the Act; it being understood, however, that we
express no opinion with respect to Regulation S-T or the financial statements,
schedules or other financial data included in or incorporated by reference in or
omitted from the Registration Statement, the Prospectus or any Prospectus
Supplement. For purposes of this paragraph, we have assumed that the statements
made in the Registration Statement, the Prospectus and each Prospectus
Supplement are correct and complete.

5. When issued and paid for in accordance with the Purchase Agreement, the
Shares will be duly authorized and validly issued, fully paid and nonassessable,
free and clear of all liens, charges, taxes, security interests, encumbrances,
rights of first refusal, preemptive or similar rights and other encumbrances
under the Company’s Certificate of Incorporation and Bylaws, the laws of the
State of Delaware or any material agreement, mortgage, deed of trust, indenture,
note, bond, license, lease agreement, instrument or obligation to which the
Company is a party or is bound.

6. The Company is not an “investment company” or any entity controlled by an
“investment company,” as such term is defined in the Investment Company Act of
1940, as amended.

7. There is no action, suit, claim, investigation or proceeding pending or, to
my knowledge, threatened against the Company or any Subsidiary which questions
the validity of the Purchase Agreement or the transactions contemplated thereby
or any action taken or to be taken pursuant thereto. Except as set forth in the
Commission Documents, there is no action, suit, claim, investigation or
proceeding pending or, to my knowledge, threatened, against or involving the
Company, any Subsidiary or any of their respective properties or assets and
which, if determined adversely to the Company or any such Subsidiary, would have
a Material Adverse Effect.

In addition, we have participated in conferences with officers and other
representatives of the Company and representatives of the independent registered
public accounting firm for the Company, at which the contents of the
Registration Statement, the Prospectus and each Prospectus Supplement, and the
Commission Documents incorporated by reference therein, and each Issuer Free
Writing Prospectus and related matters were discussed and, although we are not
passing upon, and do not assume any responsibility for, the accuracy,
completeness or fairness of the statements contained or incorporated by
reference in the Registration Statement, the Prospectus, each Prospectus
Supplement, or the Commission Documents incorporated by reference therein, and
each Issuer Free Writing Prospectus and have not made any independent check or
verification thereof, during the course of such participation, no facts came to
our attention that caused us to believe that the Registration Statement, at the
time it became effective (and at each deemed effective date with respect to the
Investor pursuant to Rule 430B(f)(2)), and as of the date hereof, together with
the Commission Documents incorporated by reference therein, at such time and as
of the date hereof, contained an untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading, or that the Prospectus, as of its date and as
of the date hereof, together with the Commission Documents incorporated by
reference therein, at that date and as of the date hereof, and each Issuer Free
Writing Prospectus, on the date of its first use, contained an untrue statement
of a material fact or omitted to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading; it being understood that we express no belief with respect to
the financial statements, the notes and schedules thereto, other financial data,
or exhibits included in, incorporated by reference in, or omitted from, the
Registration Statement, the Prospectus or any Issuer Free Writing Prospectus.

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

FORM OF OPINION “BRING DOWN” OF OUTSIDE COUNSEL TO BE DELIVERED PURSUANT TO
SECTION 6.3(xii) OF THE COMMON STOCK PURCHASE
AGREEMENT DATED AS OF JUNE 20, 2012 BETWEEN SANTA FE GOLD CORPORATION
AND GLENGROVE SMALL CAP VALUE, LTD.

[Company Counsel’s Letterhead]

1. The Registration Statement has become effective under the Securities Act.
With your consent, based solely on a telephonic confirmation by a member of the
Staff of the Commission on [__________], 2012, no stop order suspending the
effectiveness of the Registration Statement has been issued under the Securities
Act and no proceedings therefor have been initiated by the Commission. Any
required filing of the Prospectus and a Prospectus Supplement with the
Commission pursuant to Rule 424(b) under the Securities Act has been made in the
manner and within the time period required by Rule 424(b) (without reference to
Rule 424(b)(8)) under the Securities Act. Any other material required to be
filed by the Company pursuant to Rule 433(d) under the Securities Act has been
filed with the Commission within the applicable time periods prescribed for such
filings by Rule 433 under the Securities Act.

2. Based on our inquiry of the Company’s [______________], no facts have come to
our attention that cause us to believe that (i) any of the opinions expressed in
our opinion letter to you dated June 20, 2012 are not true and correct as of the
date hereof or (ii) any of the opinions expressed in our opinion letter to you
dated [_______], 20[__] are not true and correct as of the date hereof.

In addition, we have participated in conferences with officers and other
representatives of the Company and representatives of the independent registered
public accounting firm for the Company, at which the contents of the
Registration Statement, the Prospectus and each Prospectus Supplement, and the
Commission Documents incorporated by reference therein, and each Issuer Free
Writing Prospectus and related matters were discussed and, although we are not
passing upon, and do not assume any responsibility for, the accuracy,
completeness or fairness of the statements contained or incorporated by
reference in the Registration Statement, the Prospectus, each Prospectus
Supplement, or the Commission Documents incorporated by reference therein, and
each Issuer Free Writing Prospectus and have not made any independent check or
verification thereof, during the course of such participation, no facts came to
our attention that caused us to believe that the Registration Statement, at the
time it became effective (and at each deemed effective date with respect to the
Investor pursuant to Rule 430B(f)(2)), and as of the date hereof, together with
the Commission Documents incorporated by reference therein, at such time and as
of the date hereof, contained an untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading, or that the Prospectus, as of its date and as
of the date hereof, together with the Commission Documents incorporated by
reference therein, at that date and as of the date hereof, and each Issuer Free
Writing Prospectus, on the date of its first use, contained an untrue statement
of a material fact or omitted to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading; it being understood that we express no belief with respect to
the financial statements, the notes and schedules thereto, other financial data,
or exhibits included in, incorporated by reference in, or omitted from, the
Registration Statement, the Prospectus or any Issuer Free Writing Prospectus.

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