SECURITIES PURCHASE AGREEMENT

 

This SECURITIES PURCHASE AGREEMENT (the “Agreement”), dated as of June 11, 2012,
is by and among LightPath Technologies, Inc., a Delaware corporation
(the “Company”), and each of the investors listed on the Schedule of Buyers
attached hereto (individually, a “Buyer” and collectively, the “Buyers”).

 

RECITALS

 

A.          The Company and each Buyer is executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by Section 4(a)(2) of the Securities Act of 1933, as amended (the “1933 Act”),
and Rule 506 of Regulation D (“Regulation D”) as promulgated by the United
States Securities and Exchange Commission (the “SEC”) under the 1933 Act.

 

B.          Each Buyer wishes to purchase, and the Company wishes to sell, upon
the terms and conditions stated in this Agreement, (i) the aggregate number of
shares of Common Stock (as defined below) set forth opposite such Buyer’s name
in column (3) on the Schedule of Buyers (which aggregate amount for all Buyers
shall be 1,943,852 shares of Common Stock and shall collectively be referred to
herein as the “Common Shares”) and (ii) a warrant to initially acquire up to the
aggregate number of shares of Common Stock set forth opposite such Buyer’s name
in column (4) on the Schedule of Buyers, in the form attached hereto as Exhibit
A (the “Warrants”) (as exercised, collectively, the “Warrant Shares”). “Common
Stock” means (i) the Company’s shares of common stock, Class A, $.01 par value
per share, and (ii) any capital stock into which such common stock shall have
been changed or any share capital resulting from a reclassification of such
common stock.

 

C.          At the Closing, the parties hereto shall execute and deliver a
Registration Rights Agreement, in the form attached hereto as Exhibit B (the
“Registration Rights Agreement”), pursuant to which the Company has agreed to
provide certain registration rights with respect to the Registrable Securities
(as defined in the Registration Rights Agreement), under the 1933 Act and the
rules and regulations promulgated thereunder, and applicable state securities
laws.

 

D.          The Common Shares, the Warrants and the Warrant Shares are
collectively referred to herein as the “Securities.”

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and each Buyer hereby
agree as follows:

 

   

 

 

1.PURCHASE AND SALE OF COMMON SHARES AND WARRANTS.

 

(a)          Common Shares and Warrants. Subject to the satisfaction (or waiver)
of the conditions set forth in Sections 6 and 7 below, the Company shall issue
and sell to each Buyer, and each Buyer severally, but not jointly, shall
purchase from the Company on the Closing Date (as defined below), the aggregate
number of Common Shares, as is set forth opposite such Buyer’s name in column
(3) on the Schedule of Buyers, along with Warrants to initially acquire up to
the aggregate number of Warrant Shares as is set forth opposite such Buyer’s
name in column (4) on the Schedule of Buyers.

 

(b)          Closing. The closing (the “Closing”) of the purchase of the Common
Shares and the Warrants by the Buyers shall occur at the offices of Greenberg
Traurig, LLP, 77 W. Wacker Drive, Suite 3100, Chicago, Illinois 60601. The date
and time of the Closing (the “Closing Date”) shall be 10:00 a.m., New York time,
on the first (1st) Business Day on which the conditions to the Closing set forth
in Sections 6 and 7 below are satisfied or waived (or such later date as is
mutually agreed to by the Company and each Buyer). As used herein “Business Day”
means any day other than a Saturday, Sunday or other day on which commercial
banks in New York, New York are authorized or required by law to remain closed.

 

(c)          Purchase Price. The aggregate purchase price for the Common Shares
and the Warrants to be purchased by each Buyer (the “Purchase Price”) shall be
the amount set forth opposite such Buyer’s name in column (5) on the Schedule of
Buyers.

 

(d)          Payment of Purchase Price; Deliveries. On the Closing Date, (i)
each Buyer shall pay its respective Purchase Price to the Company for the Common
Shares and the Warrants to be issued and sold to such Buyer at the Closing, by
wire transfer of immediately available funds in accordance with the Company’s
written wire instructions (less, in the case of Cranshire (as defined below),
the amounts withheld pursuant to Section 4(g)) and (ii) the Company shall
deliver to each Buyer (A) one or more stock certificates, free and clear of all
restrictive and other legends (except as expressly provided in Section 5(c)
hereof), evidencing the number of Common Shares such Buyer is purchasing as is
set forth opposite such Buyer’s name in column (3) on the Schedule of Buyers,
and (B) Warrants pursuant to which such Buyer shall have the right to initially
acquire up to the aggregate number of Warrant Shares as is set forth opposite
such Buyer’s name in column (4) on the Schedule of Buyers, in all cases, duly
executed on behalf of the Company and registered in the name of such Buyer or
its designee.

 

2.BUYER’S REPRESENTATIONS AND WARRANTIES.

 

Each Buyer, severally and not jointly, represents and warrants to the Company
with respect to only itself that:

 

(a)          Organization; Authority. Such Buyer is an entity duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization with the requisite power and authority to enter into and to
consummate the transactions contemplated by the Transaction Documents (as
defined below) to which it is a party and otherwise to carry out its obligations
hereunder and thereunder.

 

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(b)          No Public Sale or Distribution. Such Buyer (i) is acquiring its
Common Shares and Warrants and (ii) upon exercise of its Warrants, will acquire
the Warrant Shares issuable upon exercise thereof, in each case, for its own
account and not with a view towards, or for resale in connection with, the
public sale or distribution thereof in violation of applicable securities laws,
except pursuant to sales registered or exempted under the 1933 Act; provided,
however, by making the representations herein, such Buyer does not agree, or
make any representation or warranty, to hold any of the Securities for any
minimum or other specific term and reserves the right to dispose of the
Securities at any time in accordance with or pursuant to a registration
statement or an exemption under the 1933 Act. Such Buyer does not presently have
any agreement or understanding, directly or indirectly, with any Person to
distribute any of the Securities in violation of applicable securities laws.

 

(c)          Accredited Investor Status. Such Buyer is an “accredited investor”
as that term is defined in Rule 501(a) of Regulation D.

 

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

 

(e)          Information. Such Buyer and its advisors, if any, have been
furnished with all materials relating to the business, finances and operations
of the Company and materials relating to the offer and sale of the Securities
which have been requested by such Buyer. Such Buyer and its advisors, if any,
have been afforded the opportunity to ask questions of the Company. Such Buyer
understands that its investment in the Securities involves a high degree of
risk. Such Buyer 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.

 

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

 

(g)          Transfer or Resale. Such Buyer understands that except as provided
in the Registration Rights Agreement and Section 4(h) hereof: (i) the Securities
have not been and are not being registered under the 1933 Act or any state
securities laws, and may not be offered for sale, sold, assigned or transferred
unless (A) subsequently registered thereunder, (B) such Buyer shall have
delivered to the Company (if requested by the Company) an opinion of counsel to
such Buyer, in a form reasonably acceptable to the Company, to the effect that
such Securities to be sold, assigned or transferred may be sold, assigned or
transferred pursuant to an exemption from such registration, or (C) such Buyer
provides the Company with reasonable assurance that such Securities can be sold,
assigned or transferred pursuant to Rule 144 or Rule 144A promulgated under the
1933 Act (or a successor rule thereto) (collectively, “Rule 144”); (ii) any sale
of the Securities made in reliance on Rule 144 may be made only in accordance
with the terms of Rule 144, and further, if Rule 144 is not applicable, any
resale of the Securities under circumstances in which the seller (or the Person
(as defined below) through whom the sale is made) may be deemed to be an
underwriter (as that term is defined in the 1933 Act) may require compliance
with some other exemption under the 1933 Act or the rules and regulations of the
SEC promulgated thereunder; and (iii) neither the Company nor any other Person
is under any obligation to register the Securities under the 1933 Act or any
state securities laws or to comply with the terms and conditions of any
exemption thereunder.

 

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(h)          Validity; Enforcement. This Agreement has been duly and validly
authorized, executed and delivered on behalf of such Buyer and constitutes the
legal, valid and binding obligations of such Buyer enforceable against such
Buyer in accordance with its terms, except as such enforceability may be limited
by general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation and other similar laws relating to, or
affecting generally, the enforcement of applicable creditors’ rights and
remedies.

 

(i)          No Conflicts. The execution, delivery and performance by such Buyer
of this Agreement and the consummation by such Buyer of the transactions
contemplated hereby will not (i) result in a violation of the organizational
documents of such Buyer, (ii) conflict with, or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which such Buyer is a
party, or (iii) result in a violation of any law, rule, regulation, order,
judgment or decree (including federal and state securities laws) applicable to
such Buyer, except in the case of clauses (ii) and (iii) above, for such
conflicts, defaults, rights or violations which would not, individually or in
the aggregate, reasonably be expected to have a material adverse effect on the
ability of such Buyer to perform its obligations hereunder.

 

(j)          Certain Trading Activities. Such Buyer has not directly or
indirectly, nor has any Person acting on behalf of or pursuant to any
understanding with such Buyer, engaged in any transactions in the securities of
the Company (including, without limitation, any Short Sales (as defined below)
involving the Company’s securities) during the period commencing as of the time
that such Buyer was first contacted by the Placement Agent (as defined below)
regarding the specific investment in the Company contemplated by this Agreement
and ending immediately prior to the execution of this Agreement by such Buyer
(it being understood and agreed that for all purposes of this Agreement, and,
without implication that the contrary would otherwise be true, that neither
transactions nor purchases nor sales shall include the location and/or
reservation of borrowable shares of Common Stock). “Short Sales” means all
“short sales” as defined in Rule 200 promulgated under Regulation SHO under the
Securities Exchange Act of 1934, as amended (the “1934 Act”).

 

(k)          Experience of Such Buyer. Such Buyer, either alone or together with
its representatives, has such knowledge, sophistication and experience in
business and financial matters so as to be capable of evaluating the merits and
risks of the prospective investment in the Securities, and has so evaluated the
merits and risks of such investment. Such Buyer is able to bear the economic
risk of an investment in the Securities and, at the present time, is able to
afford a complete loss of such investment.

 

(l)          General Solicitation. Such Buyer is not purchasing the Securities
as a result of any advertisement, article, notice or other communication
regarding the Securities published in any newspaper, magazine or similar media
or broadcast over television or radio or presented at any seminar or any other
general solicitation or general advertisement.

 

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(m)          Not a 10% Owner. Assuming the accuracy of the Company’s
representations and warranties in Section 3(r), immediately prior to execution
of this Agreement, such Buyer is not a “beneficial owner” of 10% or more of the
Common Stock (as determined under Section 13(d) of the 1934 Act and the rules
and regulations promulgated thereunder). Assuming the accuracy of the Company’s
representations and warranties in Section 3(r), immediately following the
consummation of the transactions contemplated by this Agreement, such Buyer will
not be a “beneficial owner” of 10% or more of the Common Stock (as determined
under Section 13(d) of the 1934 Act and the rules and regulations promulgated
thereunder).

 

3.REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

 

The Company represents and warrants to each of the Buyers that:

 

(a)          Organization and Qualification. Each of the Company and each of its
Subsidiaries are entities duly organized and validly existing and in good
standing under the laws of the jurisdiction in which they are formed, and have
the requisite power and authorization to own their properties and to carry on
their business as now being conducted and as presently proposed to be conducted.
Each of the Company and each of its Subsidiaries is duly qualified as a foreign
entity to do business and is in good standing in every jurisdiction in which its
ownership of property or the nature of the business conducted by it makes such
qualification necessary, except to the extent that the failure to be so
qualified or be in good standing would not have a Material Adverse Effect.
“Material Adverse Effect” means any material adverse effect on (i) the business,
properties, assets, liabilities, results of operations, financial condition or
prospects of the Company and its Subsidiaries, taken as a whole, (ii) the
transactions contemplated hereby or in any of the other Transaction Documents or
(iii) the authority or ability of the Company to perform any of its obligations
under any of the Transaction Documents. Other than the Persons (as defined
below) set forth on Schedule 3(a), the Company has no Subsidiaries.
“Subsidiaries” means any Person in which the Company, directly or indirectly,
(I) owns a majority of the outstanding capital stock or holds a majority of
equity or similar interest of such Person or (II) controls or operates all or
any material part of the business, operations or administration of such Person,
and each of the foregoing, is individually referred to herein as a “Subsidiary.”

 

(b)          Authorization; Enforcement; Validity. The Company has the requisite
power and authority to enter into and perform its obligations under this
Agreement and the other Transaction Documents and to issue the Securities in
accordance with the terms hereof and thereof. The execution and delivery of this
Agreement and the other Transaction Documents by the Company and the
consummation by the Company of the transactions contemplated hereby and thereby
(including, without limitation, the issuance of the Common Shares, the issuance
of the Warrants and the reservation for issuance and issuance of the Warrant
Shares issuable upon exercise of the Warrants) have been duly authorized by the
Company’s board of directors and (other than the filing with the SEC of one or
more Registration Statements in accordance with the requirements of the
Registration Rights Agreement, the 8-K Filing (as defined below), a Form D with
the SEC and any other filings as may be required by any state securities
agencies (collectively, the “Required Approvals”)) no further filing, consent or
authorization is required by the Company, its board of directors or its
stockholders or other governing body of the Company. This Agreement has been,
and the other Transaction Documents will be prior to the Closing, duly executed
and delivered by the Company, and each constitutes the legal, valid and binding
obligations of the Company, enforceable against the Company in accordance with
its respective terms, except as such enforceability may be limited by general
principles of equity or applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation or similar laws relating to, or affecting generally, the
enforcement of applicable creditors’ rights and remedies and except as rights to
indemnification and to contribution may be limited by federal or state
securities law. “Transaction Documents” means, collectively, this Agreement, the
Warrants, the Registration Rights Agreement, the Irrevocable Transfer Agent
Instructions (as defined below) and each of the other agreements and instruments
entered into or delivered by any of the parties hereto in connection with the
transactions contemplated hereby and thereby, as may be amended from time to
time.

 

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(c)          Issuance of Securities. The issuance of the Common Shares and the
Warrants is duly authorized and, upon issuance in accordance with the terms of
the Transaction Documents, will be validly issued, fully paid and non-assessable
and free from all preemptive or similar rights, taxes, liens, charges and other
encumbrances with respect to the issue thereof, with the holders of Common
Shares being entitled to all rights accorded to a holder of Common Stock. As of
the Closing, the Company shall have reserved from its duly authorized capital
stock not less than the maximum number of shares of Common Stock issuable upon
exercise of the Warrants (without taking into account any limitations on the
exercise of the Warrants set forth therein). The issuance of the Warrant Shares
is duly authorized, and upon exercise in accordance with the Warrants, the
Warrant Shares, when issued, will be validly issued, fully paid and
non-assessable and free from all preemptive or similar rights, taxes, liens,
charges and other encumbrances with respect to the issue thereof, with the
holders of the Warrant Shares being entitled to all rights accorded to a holder
of Common Stock. Subject to the accuracy of the representations and warranties
of the Buyers in this Agreement, the offer and issuance by the Company of the
Securities is exempt from registration under the 1933 Act.

 

(d)          No Conflicts. The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby (including, without limitation, the
issuance of the Common Shares, the Warrants and Warrant Shares and the
reservation for issuance of the Warrant Shares) will not (i) result in a
violation of the Charter (as defined below) (including, without limitation, any
certificates of designation contained therein) or other organizational documents
of the Company or any of its Subsidiaries, or Bylaws (as defined below), (ii)
conflict with, or constitute a default (or an event which with notice or lapse
of time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which the Company or any of its Subsidiaries is a
party or (iii) subject to the Required Approvals, result in a violation of any
law, rule, regulation, order, judgment or decree (including, without limitation,
foreign, federal and state securities laws and regulations and the rules and
regulations of the Nasdaq Capital Market (the “Principal Market”)) applicable to
the Company or any of its Subsidiaries or by which any property or asset of the
Company or any of its Subsidiaries is bound or affected except, in the case of
clause (ii) or (iii) above, to the extent such violations that could not
reasonably be expected to have a Material Adverse Effect.

 

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(e)          Consents. The Company is not required to obtain any consent from,
authorization or order of, or make any filing or registration with (other than
the Required Approvals), any court, governmental agency or any regulatory or
self-regulatory agency or any other Person in order for it to execute, deliver
or perform any of its obligations under, or contemplated by, the Transaction
Documents, in each case, in accordance with the terms hereof or thereof. All
consents, authorizations, orders, filings and registrations which the Company is
required to obtain at or prior to the Closing have been obtained or effected on
or prior to the Closing Date, and neither the Company nor any of its
Subsidiaries are aware of any facts or circumstances which might prevent the
Company from obtaining or effecting any of the registration, application or
filings contemplated by the Transaction Documents.

 

(f)          Acknowledgment Regarding Buyer’s Purchase of Securities. The
Company acknowledges and agrees that each Buyer is acting solely in the capacity
of an arm’s length purchaser with respect to the Transaction Documents and the
transactions contemplated hereby and thereby and that no Buyer is (i) an officer
or director of the Company or any of its Subsidiaries, (ii) an “affiliate” (as
defined in Rule 144) of the Company or any of its Subsidiaries or (iii) to its
knowledge, a “beneficial owner” of more than 10% of the shares of Common Stock
(as defined for purposes of Rule 13d-3 of the 1934 Act). The Company further
acknowledges that no Buyer is acting as a financial advisor or fiduciary of the
Company or any of its Subsidiaries (or in any similar capacity) with respect to
the Transaction Documents and the transactions contemplated hereby and thereby,
and any advice given by a Buyer or any of its representatives or agents in
connection with the Transaction Documents and the transactions contemplated
hereby and thereby is merely incidental to such Buyer’s purchase of the
Securities. The Company further represents to each Buyer that the Company’s
decision to enter into the Transaction Documents has been based solely on the
independent evaluation by the Company and its representatives.

 

(g)          No General Solicitation; Placement Agent’s Fees. Neither the
Company, nor any of its Subsidiaries or affiliates, nor any Person acting on its
or their behalf, has engaged in any form of general solicitation or general
advertising (within the meaning of Regulation D) in connection with the offer or
sale of the Securities. The Company shall be responsible for the payment of any
placement agent’s fees, financial advisory fees, or brokers’ commissions (other
than for Persons engaged by any Buyer or its investment advisor) relating to or
arising out of the transactions contemplated hereby. Other than Meyers
Associates, LP (the “Placement Agent”), neither the Company nor any of its
Subsidiaries has engaged any placement agent or other agent in connection with
the offer or sale of the Securities.

 

(h)          No Integrated Offering. None of the Company, its Subsidiaries or
any of their affiliates, nor, to the knowledge of the Company, any Person acting
on their behalf has, directly or indirectly, made any offers or sales of any
security or solicited any offers to buy any security, under circumstances that
would require registration of the issuance of any of the Securities under the
1933 Act, whether through integration with prior offerings or otherwise, or
cause this offering of the Securities to require approval of stockholders of the
Company under any applicable stockholder approval provisions, including, without
limitation, under the rules and regulations of any exchange or automated
quotation system on which any of the securities of the Company are listed or
designated for quotation. None of the Company, its Subsidiaries, their
affiliates nor, to the knowledge of the Company, any Person acting on their
behalf will take any action or steps that would require registration of the
issuance of any of the Securities under the 1933 Act or cause the offering of
any of the Securities to be integrated with other offerings of securities of the
Company.

 

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(i)          Dilutive Effect. The Company further acknowledges that its
obligation to issue the Warrant Shares upon exercise of the Warrants in
accordance with this Agreement and the Warrants is absolute and unconditional
(other than the conditions set forth in the Warrants), regardless of the
dilutive effect that such issuance may have on the ownership interests of other
stockholders of the Company.

 

(j)          Application of Takeover Protections; Rights Agreement. The Company
and its board of directors have taken all necessary action, if any, in order to
render inapplicable any control share acquisition, interested stockholder,
business combination, poison pill (including, without limitation, any
distribution under a rights agreement), stockholder rights plan or other similar
anti-takeover provision under the Charter, Bylaws or other organizational
documents or the laws of the jurisdiction of its incorporation or otherwise
which is or could become applicable to any Buyer as a result of the transactions
contemplated by this Agreement, including, without limitation, the Company’s
issuance of the Securities and any Buyer’s ownership of the Securities.

 

(k)          SEC Documents; Financial Statements. During the two (2) years prior
to the date hereof, the Company has timely filed all reports, schedules, forms,
statements and other documents required to be filed by it with the SEC pursuant
to the reporting requirements of the 1934 Act (all of the foregoing filed prior
to the date hereof and all exhibits included therein and financial statements,
notes and schedules thereto and documents incorporated by reference therein
being hereinafter referred to as the “SEC Documents”). The Company has delivered
to the Buyers or their respective representatives true, correct and complete
copies of each of the SEC Documents not available on the EDGAR system. As of
their respective dates, the SEC Documents complied in all material respects with
the requirements of the 1934 Act and the rules and regulations of the SEC
promulgated thereunder applicable to the SEC Documents, and none of the SEC
Documents, at the time they were filed with the SEC, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. As of
their respective dates, the financial statements of the Company included in the
SEC Documents complied in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto as in effect as of the time of filing. Such financial statements have
been prepared in accordance with generally accepted accounting principles,
consistently applied, during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes thereto, or (ii)
in the case of unaudited interim statements, to the extent they may exclude
footnotes or may be condensed or summary statements) and fairly present in all
material respects the financial position of the Company as of the dates thereof
and the results of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments which will not be material, either individually or in the
aggregate). No other information provided by or on behalf of the Company to any
of the Buyers which is not included in the SEC Documents (including, without
limitation, information referred to in Section 2(e) of this Agreement) contains
any untrue statement of a material fact or omits to state any material fact
necessary in order to make the statements therein not misleading, in the light
of the circumstance under which they are or were made.

 

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(l)          Absence of Certain Changes. Since the date of the Company’s most
recent audited financial statements contained in a Form 10-K, except as
disclosed in the SEC Documents filed subsequent to such Form 10-K, there has
been no material adverse change and no material adverse development in the
business, assets, liabilities, properties, results of operations, financial
condition or prospects of the Company and its Subsidiaries, taken as a whole.
Since the date of the Company’s most recent audited financial statements
contained in a Form 10-K, except as disclosed in the SEC Documents filed
subsequent to such Form 10-K, neither the Company nor any of its Subsidiaries
has (i) declared or paid any dividends, (ii) sold any assets outside of the
ordinary course of business or (iii) made any capital expenditures outside of
the ordinary course of business. Neither the Company nor any of its Subsidiaries
has taken any steps to seek protection pursuant to any law or statute relating
to bankruptcy, insolvency, reorganization, receivership, liquidation or winding
up, nor does the Company or any Subsidiary have any knowledge or reason to
believe that any of their respective creditors intend to initiate involuntary
bankruptcy proceedings or any actual knowledge of any fact which would
reasonably lead a creditor to do so. The Company and its Subsidiaries, on a
consolidated basis, are not as of the date hereof, and after giving effect to
the transactions contemplated hereby to occur at the Closing, will not be
Insolvent (as defined below). “Insolvent” means, with respect to the Company and
its Subsidiaries, on a consolidated basis, (i) the present fair saleable value
of the Company’s and its Subsidiaries’ assets is less than the amount required
to pay the Company’s and its Subsidiaries’ total Indebtedness (as defined
below), (ii) the Company and its Subsidiaries are unable to pay their debts and
liabilities, subordinated, contingent or otherwise, as such debts and
liabilities become absolute and matured or (iii) the Company and its
Subsidiaries intend to incur or believe that they will incur debts that would be
beyond their ability to pay as such debts mature. Neither the Company nor any of
its Subsidiaries has engaged in any business or in any transaction, and is not
about to engage in any business or in any transaction, for which the Company’s
or such Subsidiary’s remaining assets constitute unreasonably small capital.

 

(m)          No Undisclosed Events, Liabilities, Developments or Circumstances.
No event, liability, development or circumstance has occurred or exists, or is
reasonably expected to occur or exist, with respect to the Company, any of its
Subsidiaries or any of their respective businesses, properties, liabilities,
results of operations, financial condition or prospects that (i) would be
required to be disclosed by the Company under applicable securities laws on a
registration statement on Form S-1 filed with the SEC relating to an issuance
and sale by the Company of its Common Stock and which has not been publicly
announced, (ii) could have a material adverse effect on any Buyer’s investment
hereunder or (iii) could have a Material Adverse Effect.

 

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(n)          Conduct of Business; Regulatory Permits. Neither the Company nor
any of its Subsidiaries is in violation of any term of or in default under its
Charter, any certificate of designation, preferences or rights of any other
outstanding series of preferred stock of the Company or any of its Subsidiaries
or Bylaws or their organizational charter, certificate of formation or
certificate of incorporation or bylaws, respectively. 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 is not in violation of any of the rules, regulations or requirements of
the Principal Market and has no knowledge of any facts or circumstances that
could reasonably lead to delisting or suspension of the Common Stock by the
Principal Market in the foreseeable future. Since January 1, 2009, (i) the
Common Stock has been listed or designated for quotation on the Principal
Market, (ii) trading in the Common Stock has not been suspended by the SEC or
the Principal Market and (iii) the Company has received no communication,
written or oral, from the SEC or the Principal Market regarding the suspension
or delisting of the Common Stock from the Principal Market. The Company and each
of its Subsidiaries possess all certificates, authorizations and permits issued
by the appropriate regulatory authorities necessary to conduct their respective
businesses, except where the failure to possess such certificates,
authorizations or permits would not have, individually or in the aggregate, a
Material Adverse Effect, and neither the Company nor any such Subsidiary has
received any notice of proceedings relating to the revocation or modification of
any such certificate, authorization or permit.

 

(o)          Foreign Corrupt Practices. Neither the Company nor any of its
Subsidiaries nor, to the knowledge of the Company, any director, officer, agent,
employee or other Person acting on behalf of the Company or any of its
Subsidiaries has, in the course of its actions for, or on behalf of, the Company
or any of its Subsidiaries (i) used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expenses relating to
political activity; (ii) made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate funds; (iii)
violated or is in violation of any provision of the U.S. Foreign Corrupt
Practices Act of 1977, as amended; or (iv) made any unlawful bribe, rebate,
payoff, influence payment, kickback or other unlawful payment to any foreign or
domestic government official or employee.

 

(p)          Sarbanes-Oxley Act. The Company and each Subsidiary is in material
compliance with all applicable requirements of the Sarbanes-Oxley Act of 2002
and all applicable rules and regulations promulgated by the SEC thereunder.

 

(q)          Transactions With Affiliates. Except as disclosed in the SEC
Documents, none of the officers, directors, employees or affiliates of the
Company or any of its Subsidiaries is presently a party to any transaction with
the Company or any of its Subsidiaries (other than for ordinary course services
as employees, officers or directors), including any contract, agreement or other
arrangement providing for the furnishing of services to or by, providing for
rental of real or personal property to or from, or otherwise requiring payments
to or from any such officer, director, employee or affiliate or, to the
knowledge of the Company or any of its Subsidiaries, any corporation,
partnership, trust or other Person in which any such officer, director, employee
or affiliate has a substantial interest or is an employee, officer, director,
trustee or partner.

 

10

 

 

(r)          Equity Capitalization. As of the date hereof, the authorized
capital stock of the Company consists of (i) 40,000,000 shares of common stock,
of which 34,500,000 shares are Common Stock, of which 9,768,100 are issued and
outstanding and 706,169 shares are reserved for issuance pursuant to Convertible
Securities (as defined below) (other than the Common Shares and the Warrants),
and 5,500,000 shares were designated as Class E-1 common stock, Class E-2 common
stock or Class E-3 common stock, all previously outstanding shares of which have
been previously redeemed or converted into shares of Common Stock, and (ii)
5,000,000 shares of preferred stock, none of which are issued and outstanding.
No shares of Common Stock are held in treasury. All of such outstanding shares
are duly authorized and have been, or upon issuance will be, validly issued and
are fully paid and non-assessable. 2,040,078 shares of the Company’s issued and
outstanding Common Stock on the date hereof are owned by Persons who are
“affiliates” (as defined in Rule 405 of the 1933 Act and calculated based on the
assumption that only officers, directors and holders of at least 10% of the
Company’s issued and outstanding Common Stock are “affiliates” without conceding
that any such Persons are “affiliates” for purposes of federal securities laws)
of the Company or any of its Subsidiaries. Except as disclosed on Schedule 3(r),
to the Company’s knowledge, no Person owns 10% or more of the Company’s issued
and outstanding shares of Common Stock (calculated based on the assumption that
all Convertible Securities, whether or not presently exercisable or convertible,
have been fully exercised or converted (as the case may be) taking account of
any limitations on exercise or conversion (including “blockers”) contained
therein without conceding that such identified Person is a 10% stockholder for
purposes of federal securities laws). (i) None of the Company’s or any
Subsidiary’s capital stock is subject to preemptive rights or any other similar
rights or any liens or encumbrances suffered or permitted by the Company or any
Subsidiary; (ii) except as disclosed in the SEC Documents, there are no
outstanding options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into, or exercisable or exchangeable for, any capital stock of the
Company or any of its Subsidiaries, or contracts, commitments, understandings or
arrangements by which the Company or any of its Subsidiaries is or may become
bound to issue additional capital stock of the Company or any of its
Subsidiaries or options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into, or exercisable or exchangeable for, any capital stock of the
Company or any of its Subsidiaries; (iii) except as disclosed in the SEC
Documents, there are no outstanding debt securities, notes, credit agreements,
credit facilities or other agreements, documents or instruments evidencing
Indebtedness of the Company or any of its Subsidiaries or by which the Company
or any of its Subsidiaries is or may become bound; (iv) except as disclosed in
the SEC Documents, there are no financing statements securing obligations in any
amounts filed in connection with the Company or any of its Subsidiaries; (v)
except as disclosed in the SEC Documents, there are no agreements or
arrangements under which the Company or any of its Subsidiaries is obligated to
register the sale of any of their securities under the 1933 Act (except pursuant
to the Registration Rights Agreement); (vi) except as disclosed in the SEC
Documents, there are no outstanding securities or instruments of the Company or
any of its Subsidiaries which contain any redemption or similar provisions, and
there are no contracts, commitments, understandings or arrangements by which the
Company or any of its Subsidiaries is or may become bound to redeem a security
of the Company or any of its Subsidiaries; (vii) there are no securities or
instruments containing anti-dilution or similar provisions that will be
triggered by the issuance of the Securities; (viii) neither the Company nor any
Subsidiary has any stock appreciation rights or “phantom stock” plans or
agreements or any similar plan or agreement; and (ix) neither the Company nor
any of its Subsidiaries have any liabilities or obligations required to be
disclosed in the SEC Documents which are not so disclosed in the SEC Documents,
other than those incurred in the ordinary course of the Company’s or its
Subsidiaries’ respective businesses and which, individually or in the aggregate,
do not or could not have a Material Adverse Effect. The Company has furnished to
the Buyers true, correct and complete copies of the Company’s Certificate of
Incorporation, as amended and as in effect on the date hereof (the “Charter”),
and the Company’s bylaws, as amended and as in effect on the date hereof (the
“Bylaws”), and the terms of all securities convertible into, or exercisable or
exchangeable for, shares of Common Stock and the material rights of the holders
thereof in respect thereto.

 

11

 

 

(s)          Indebtedness and Other Contracts. Neither the Company nor any of
its Subsidiaries (i) except as disclosed on Schedule 3(s)(i), has any
outstanding Indebtedness (as defined below), (ii) is a party to any contract,
agreement or instrument, the violation of which, or default under which, by the
other party(ies) to such contract, agreement or instrument could reasonably be
expected to result in a Material Adverse Effect, (iii) is in violation of any
term of or in default under any contract, agreement or instrument relating to
any Indebtedness, except where such violations and defaults would not result,
individually or in the aggregate, in a Material Adverse Effect, or (iv) is a
party to any contract, agreement or instrument relating to any Indebtedness, the
performance of which, in the judgment of the Company’s officers, has or is
expected to have a Material Adverse Effect. (x) “Indebtedness” of any Person
means, without duplication (A) all indebtedness for borrowed money, (B) all
obligations issued, undertaken or assumed as the deferred purchase price of
property or services (including, without limitation, “capital leases” in
accordance with generally accepted accounting principles) (other than trade
payables entered into in the ordinary course of business), (C) all reimbursement
or payment obligations with respect to letters of credit, surety bonds and other
similar instruments, (D) all obligations evidenced by notes, bonds, debentures
or similar instruments, including obligations so evidenced incurred in
connection with the acquisition of property, assets or businesses, (E) all
indebtedness created or arising under any conditional sale or other title
retention agreement, or incurred as financing, in either case with respect to
any property or assets acquired with the proceeds of such indebtedness (even
though the rights and remedies of the seller or bank under such agreement in the
event of default are limited to repossession or sale of such property), (F) all
monetary obligations under any leasing or similar arrangement which, in
connection with generally accepted accounting principles, consistently applied
for the periods covered thereby, is classified as a capital lease, (G) all
indebtedness referred to in clauses (A) through (F) above secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any mortgage, lien, pledge, charge, security
interest or other encumbrance upon or in any property or assets (including
accounts and contract rights) owned by any Person, even though the Person which
owns such assets or property has not assumed or become liable for the payment of
such indebtedness, and (H) all Contingent Obligations in respect of indebtedness
or obligations of others of the kinds referred to in clauses (A) through (G)
above; (y) “Contingent Obligation” means, as to any Person, any direct or
indirect liability, contingent or otherwise, of that Person with respect to any
indebtedness, lease, dividend or other obligation of another Person if the
primary purpose or intent of the Person incurring such liability, or the primary
effect thereof, is to provide assurance to the obligee of such liability that
such liability will be paid or discharged, or that any agreements relating
thereto will be complied with, or that the holders of such liability will be
protected (in whole or in part) against loss with respect thereto; and (z)
“Person” means an individual, a limited liability company, a partnership, a
joint venture, a corporation, a trust, an unincorporated organization, any other
entity and a government or any department or agency thereof.

 

12

 

 

(t)          Absence of Litigation. Except as disclosed in the SEC Documents,
there is no action, suit, proceeding, inquiry or investigation before or by the
Principal Market, any court, public board, government agency, self-regulatory
organization or body pending or, to the knowledge of the Company, threatened
against or affecting the Company or any of its Subsidiaries, the Common Stock or
any of the Company’s or its Subsidiaries’ executive officers or directors which
is outside of the ordinary course of business or individually or in the
aggregate material to the Company or any of its Subsidiaries. There has not
been, and to the knowledge of the Company, there is not pending or contemplated,
any investigation by the SEC involving the Company, any of its Subsidiaries or
any current or former director or executive officer of the Company or any of its
Subsidiaries. Since January 1, 2005, the SEC has not issued any stop order or
other order suspending the effectiveness of any registration statement filed by
the Company under the 1933 Act or the 1934 Act.

 

(u)          Insurance. The Company and each of its Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as management of the Company believes to be prudent and
customary in the businesses in which the Company and its Subsidiaries are
engaged. Neither the Company nor any such Subsidiary has been refused any
insurance coverage sought or applied for, and neither the Company nor any such
Subsidiary has any reason to believe that it will be unable to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not have a Material Adverse Effect.

 

(v)          Employee Relations. Neither the Company nor any of its Subsidiaries
is a party to any collective bargaining agreement or employs any member of a
union. The Company believes that its and its Subsidiaries’ relations with their
respective employees are good. No executive officer (as defined in Rule 501(f)
promulgated under the 1933 Act) or other key employee of the Company or any of
its Subsidiaries has notified the Company or any such Subsidiary that such
officer intends to leave the Company or any such Subsidiary or otherwise
terminate such officer’s employment with the Company or any such Subsidiary. To
the knowledge of the Company, no executive officer or other key employee of the
Company or any of its Subsidiaries is, or is now expected to be, in violation of
any material term of any employment contract, confidentiality, disclosure or
proprietary information agreement, non-competition agreement, or any other
contract or agreement or any restrictive covenant, and the continued employment
of each such executive officer or other key employee (as the case may be) does
not subject the Company or any of its Subsidiaries to any liability with respect
to any of the foregoing matters. The Company and its Subsidiaries are in
compliance with all federal, state, local and foreign laws and regulations
respecting labor, employment and employment practices and benefits, terms and
conditions of employment and wages and hours, except where failure to be in
compliance would not, either individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect.

 

(w)          Title. The Company and its Subsidiaries have good and marketable
title in fee simple to all real property, and have good and marketable title to
all personal property, owned by them which is material to the business of the
Company and its Subsidiaries, in each case, free and clear of all liens,
encumbrances and defects except as disclosed on Schedule 3(w) and such as do not
materially affect the value of such property and do not interfere with the use
made and proposed to be made of such property by the Company and any of its
Subsidiaries. Any real property and facilities held under lease by the Company
or any of its Subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such property and buildings by the
Company or any of its Subsidiaries.

 

13

 

 

(x)          Intellectual Property Rights. The Company and its Subsidiaries own
or possess adequate rights or licenses to use all trademarks, trade names,
service marks, service mark registrations, service names, patents, patent
rights, copyrights, original works, inventions, licenses, approvals,
governmental authorizations, trade secrets and other intellectual property
rights and all applications and registrations therefor (“Intellectual Property
Rights”) necessary to conduct their respective businesses as now conducted and
as presently proposed to be conducted. None of the Company’s or its
Subsidiaries’ material Intellectual Property Rights have expired, terminated or
been abandoned, or are expected to expire, terminate or be abandoned, within two
(2) years from the date of this Agreement. The Company has no knowledge of any
infringement by the Company or any of its Subsidiaries of Intellectual Property
Rights of others. There is no claim, action or proceeding being made or brought,
or to the knowledge of the Company or any of its Subsidiaries, being threatened,
against the Company or any of its Subsidiaries regarding their Intellectual
Property Rights. The Company is not aware of any facts or circumstances which
might give rise to any of the foregoing infringements or claims, actions or
proceedings. The Company and each of its Subsidiaries have taken reasonable
security measures to protect the secrecy, confidentiality and value of all of
their Intellectual Property Rights, except where failure to take such measures
would not, either individually or in the aggregate, reasonably be expected to
result in a Material Adverse Effect.

 

(y)          Environmental Laws. The Company and its Subsidiaries (i) are in
compliance with all Environmental Laws (as defined below), (ii) have received
all permits, licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (iii) are in
compliance with all terms and conditions of any such permit, license or approval
where, in each of the foregoing clauses (i), (ii) and (iii), the failure to so
comply could be reasonably expected to have, individually or in the aggregate, a
Material Adverse Effect. “Environmental Laws” means all federal, state, local or
foreign laws relating to pollution or protection of human health or the
environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata), including, without limitation,
laws relating to emissions, discharges, releases or threatened releases of
chemicals, pollutants, contaminants, or toxic or hazardous substances or wastes
(collectively, “Hazardous Materials”) into the environment, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials, as well as all
authorizations, codes, decrees, demands or demand letters, injunctions,
judgments, licenses, notices or notice letters, orders, permits, plans or
regulations issued, entered, promulgated or approved thereunder.

 

(z)          Subsidiary Rights. Except as disclosed on Schedule 3(z), the
Company or one of its Subsidiaries has the unrestricted right to vote, and
(subject to limitations imposed by applicable law) to receive dividends and
distributions on, all capital securities of its Subsidiaries as owned by the
Company or such Subsidiary.

 

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(aa)          Tax Status. Except for occurrences that would not, either
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect, the Company and each of its Subsidiaries (i) has timely made or
filed all foreign, federal and state income and all other tax returns, reports
and declarations required by any jurisdiction to which it is subject, (ii) has
timely paid all taxes and other governmental assessments and charges that are
material in amount, shown or determined to be due on such returns, reports and
declarations, except those being contested in good faith and (iii) has set aside
on its books provision reasonably adequate for the payment of all taxes for
periods subsequent to the periods to which such returns, reports or declarations
apply. There are no unpaid taxes in any material amount claimed to be due by the
taxing authority of any jurisdiction, and the officers of the Company and its
Subsidiaries know of no basis for any such claim. The Company is not operated in
such a manner as to qualify as a passive foreign investment company, as defined
in Section 1297 of the U.S. Internal Revenue Code of 1986, as amended.

 

(bb)          Internal Accounting and Disclosure Controls. The Company and each
of its Subsidiaries maintains internal control over financial reporting (as such
term is defined in Rule 13a-15(f) under the 1934 Act) that is effective to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles, including that (i) transactions
are executed in accordance with management’s general or specific authorizations,
(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain asset and liability accountability, (iii) access to assets or
incurrence of liabilities is permitted only in accordance with management’s
general or specific authorization and (iv) the recorded accountability for
assets and liabilities is compared with the existing assets and liabilities at
reasonable intervals and appropriate action is taken with respect to any
difference. The Company maintains disclosure controls and procedures (as such
term is defined in Rule 13a-15(e) under the 1934 Act) that are effective in
ensuring that information required to be disclosed by the Company in the reports
that it files or submits under the 1934 Act is recorded, processed, summarized
and reported, within the time periods specified in the rules and forms of the
SEC, including, without limitation, controls and procedures designed to ensure
that information required to be disclosed by the Company in the reports that it
files or submits under the 1934 Act is accumulated and communicated to the
Company’s management, including its principal executive officer or officers and
its principal financial officer or officers, as appropriate, to allow timely
decisions regarding required disclosure. Neither the Company nor any of its
Subsidiaries has received any notice or correspondence from any accountant or
other Person relating to any potential material weakness or significant
deficiency in any part of the internal controls over financial reporting of the
Company or any of its Subsidiaries, that has not been cured or otherwise
resolved prior to the date hereof.

 

(cc)          Off Balance Sheet Arrangements. There is no transaction,
arrangement, or other relationship between the Company or any of its
Subsidiaries and an unconsolidated or other off balance sheet entity that is
required to be disclosed by the Company in its 1934 Act filings and is not so
disclosed or that otherwise could be reasonably likely to have a Material
Adverse Effect.

 

(dd)          Investment Company Status. The Company is not, and upon
consummation of the sale of the Securities will not be, an “investment company,”
an affiliate of an “investment company,” a company controlled by an “investment
company” or an “affiliated person” of, or “promoter” or “principal underwriter”
for, an “investment company” as such terms are defined in the Investment Company
Act of 1940, as amended.

 

15

 

 

(ee)          Acknowledgement Regarding Buyers’ Trading Activity. It is
understood and acknowledged by the Company that (i) following the public
disclosure of the transactions contemplated by the Transaction Documents in
accordance with the terms thereof, none of the Buyers have been asked by the
Company or any of its Subsidiaries to agree, nor has any Buyer agreed with the
Company or any of its Subsidiaries, to desist from effecting any transactions in
or with respect to (including, without limitation, purchasing or selling, long
and/or short) any securities of the Company, or “derivative” securities based on
securities issued by the Company or to hold any of the Securities for any
specified term; (ii) any Buyer, and counterparties in “derivative” transactions
to which any such Buyer is a party, directly or indirectly, presently may have a
“short” position in the Common Stock which was established prior to such Buyer’s
knowledge of the transactions contemplated by the Transaction Documents; and
(iii) each Buyer shall not be deemed to have any affiliation with or control
over any arm’s length counterparty in any “derivative” transaction. The Company
further understands and acknowledges that following the public disclosure of the
transactions contemplated by the Transaction Documents pursuant to the Press
Release (as defined below) one or more Buyers may engage in hedging and/or
trading activities at various times during the period that the Securities are
outstanding, including, without limitation, during the periods that the value
and/or number of the Warrant Shares deliverable with respect to the Securities
are being determined and such hedging and/or trading activities, if any, can
reduce the value of the existing stockholders’ equity interest in the Company
both at and after the time the hedging and/or trading activities are being
conducted. The Company acknowledges that such aforementioned hedging and/or
trading activities do not constitute a breach of this Agreement or any other
Transaction Document or any of the documents executed in connection herewith or
therewith.

 

(ff)          Manipulation of Price. Neither the Company nor any of its
Subsidiaries has, and, to the knowledge of the Company, no Person acting on
their behalf has, directly or indirectly, (i) taken any action designed to cause
or to result in the stabilization or manipulation of the price of any security
of the Company or any of its Subsidiaries to facilitate the sale or resale of
any of the Securities, (ii) sold, bid for, purchased, or paid any compensation
for soliciting purchases of, any of the Securities (other than the Placement
Agent), or (iii) paid or agreed to pay to any Person any compensation for
soliciting another to purchase any other securities of the Company or any of its
Subsidiaries (other than the Placement Agent).

 

(gg)          U.S. Real Property Holding Corporation. Neither the Company nor
any of its Subsidiaries is, or has ever been, and so long as any of the
Securities are held by any of the Buyers, shall become, a U.S. real property
holding corporation within the meaning of Section 897 of the Internal Revenue
Code of 1986, as amended, and the Company and each Subsidiary shall so certify
upon any Buyer’s request.

 

(hh)          Registration Eligibility. The Company is eligible to register the
Registrable Securities for resale by the Buyers using Form S-3 promulgated under
the 1933 Act.

 

16

 

 

(ii)          Transfer Taxes. On the Closing Date, all stock transfer or other
taxes (other than income or similar taxes) which are required to be paid in
connection with the issuance, sale and transfer of the Securities to be sold to
each Buyer hereunder will be, or will have been, fully paid or provided for by
the Company, and all laws imposing such taxes will be or will have been complied
with.

 

(jj)          Bank Holding Company Act. Neither the Company nor any of its
Subsidiaries is subject to the Bank Holding Company Act of 1956, as amended (the
“BHCA”) and to regulation by the Board of Governors of the Federal Reserve
System (the “Federal Reserve”). Neither the Company nor any of its Subsidiaries
or affiliates owns or controls, directly or indirectly, five percent (5%) or
more of the outstanding shares of any class of voting securities or twenty-five
percent (25%) or more of the total equity of a bank or any equity that is
subject to the BHCA and to regulation by the Federal Reserve. Neither the
Company nor any of its Subsidiaries or affiliates exercises a controlling
influence over the management or policies of a bank or any entity that is
subject to the BHCA and to regulation by the Federal Reserve.

 

(kk)         Shell Company Status. The Company is not, and has never been, an
issuer identified in, or subject to, Rule 144(i).

 

(ll)          Public Utility Holding Act. None of the Company nor any of its
Subsidiaries is a “holding company,” or an “affiliate” of a “holding company,”
as such terms are defined in the Public Utility Holding Act of 2005.

 

(mm)       Federal Power Act. None of the Company nor any of its Subsidiaries is
subject to regulation as a “public utility” under the Federal Power Act, as
amended.

 

(nn)          No Additional Agreements. The Company does not have any agreement
or understanding with any Buyer with respect to the transactions contemplated by
the Transaction Documents other than as specified in the Transaction Documents.

 

(oo)          Illegal or Unauthorized Payments; Political Contributions. Neither
the Company nor any of its Subsidiaries nor, to the Company’s knowledge (after
reasonable inquiry of its executive officers and directors), any of the
officers, directors, employees, agents or other representatives of the Company
or any of its Subsidiaries or any other business entity or enterprise with which
the Company or any Subsidiary is or has been affiliated or associated, has,
directly or indirectly, made or authorized any payment, contribution or gift of
money, property, or services, whether or not in contravention of applicable law,
(a) as a kickback or bribe to any Person or (b) to any political organization,
or the holder of or any aspirant to any elective or appointive public office
except for personal political contributions not involving the direct or indirect
use of funds of the Company or any of its Subsidiaries.

 

(pp)          Money Laundering. The Company and its Subsidiaries are in
compliance with, and have not previously violated, the USA Patriot Act of 2001
and all other applicable U.S. and non-U.S. anti-money laundering laws and
regulations, including, without limitation, the laws, regulations and Executive
Orders and sanctions programs administered by the U.S. Office of Foreign Assets
Control, including, without limitation, (i) Executive Order 13224 of September
23, 2001 entitled, “Blocking Property and Prohibiting Transactions With Persons
Who Commit, Threaten to Commit, or Support Terrorism” (66 Fed. Reg. 49079
(2001)); and (ii) any regulations contained in 31 CFR, Subtitle B, Chapter V.

 

17

 

 

(qq)          Disclosure. The Company confirms that neither it nor any other
Person acting on its behalf has provided any of the Buyers or their agents or
counsel with any information that constitutes or could reasonably be expected to
constitute material, non-public information concerning the Company or any of its
Subsidiaries, other than the existence of the transactions contemplated by this
Agreement and the other Transaction Documents. The Company understands and
confirms that each of the Buyers will rely on the foregoing representations in
effecting transactions in securities of the Company. All disclosure provided to
the Buyers regarding the Company and its Subsidiaries, their businesses and the
transactions contemplated hereby, including the schedules to this Agreement,
furnished by or on behalf of the Company or any of its Subsidiaries is true and
correct in all material respects and does not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading. Each press release issued by the Company or any of its
Subsidiaries during the twelve (12) months preceding the date of this Agreement
did not at the time of release contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they are made, not misleading. No event or circumstance has occurred or
information exists with respect to the Company or any of its Subsidiaries or its
or their business, properties, liabilities, results of operations, financial
condition or prospects, which, under applicable law, rule or regulation,
requires public disclosure at or before the date hereof or announcement by the
Company but which has not been so publicly disclosed. The Company acknowledges
and agrees that no Buyer makes or has made any representations or warranties
with respect to the transactions contemplated hereby other than those
specifically set forth in Section 2.

 

4.COVENANTS.

 

(a)          Best Efforts. Each Buyer shall use its best efforts to timely
satisfy each of the conditions to be satisfied by it as provided in Section 6 of
this Agreement. The Company shall use its best efforts to timely satisfy each of
the conditions to be satisfied by it as provided in Section 7 of this Agreement.

 

(b)          Form D and Blue Sky. The Company shall file a Form D with respect
to the Securities as required under Regulation D and to provide a copy thereof
to each Buyer promptly after such filing. The Company shall, on or before the
Closing Date, take such action as the Company shall reasonably determine is
necessary in order to obtain an exemption for, or to, qualify the Securities for
sale to the Buyers at the Closing pursuant to this Agreement under applicable
securities or “Blue Sky” laws of the states of the United States (or to obtain
an exemption from such qualification), and shall provide evidence of any such
action so taken to the Buyers on or prior to the Closing Date. Without limiting
any other obligation of the Company under this Agreement, the Company shall
timely make all filings and reports relating to the offer and sale of the
Securities required under all applicable securities laws (including, without
limitation, all applicable federal securities laws and all applicable “Blue Sky”
laws), and the Company shall comply with all applicable foreign, federal, state
and local laws, statutes, rules, regulations and the like relating to the
offering and sale of the Securities to the Buyers.

 

18

 

 

(c)          Reporting Status. Until the date on which the Buyers shall have
sold all of the Registrable Securities (the “Reporting Period”), the Company
shall timely file all reports required to be filed with the SEC pursuant to the
1934 Act, and the Company shall not terminate its status as an issuer required
to file reports under the 1934 Act even if the 1934 Act or the rules and
regulations thereunder would no longer require or otherwise permit such
termination.

 

(d)          Use of Proceeds. The Company shall use the proceeds from the sale
of the Securities hereunder solely for general working capital purposes. Without
limiting the foregoing, none of such proceeds shall be used, directly or
indirectly, (i) for the satisfaction of any debt of the Company or any of its
Subsidiaries (other than payment of trade payables incurred after the date
hereof in the ordinary course of business of the Company and its Subsidiaries
and consistent with prior practices), (ii) for the redemption of any securities
of the Company or (iii) with respect to any litigation involving the Company or
any of its Subsidiaries (including, without limitation, (x) the settlement
thereof or (y) the payment of any costs or expenses related thereto).

 

(e)          Financial Information. The Company agrees to send the following to
each Investor (as defined in the Registration Rights Agreement) during the
Reporting Period (i) unless the following are filed with the SEC through EDGAR
and are available to the public through the EDGAR system, within one (1)
Business Day after the filing thereof with the SEC, a copy of its Annual Reports
on Form 10-K and Quarterly Reports on Form 10-Q, any interim reports or any
consolidated balance sheets, income statements, stockholders’ equity statements
and/or cash flow statements for any period other than annual, any Current
Reports on Form 8-K and any registration statements (other than on Form S-8) or
amendments filed pursuant to the 1933 Act and (ii) copies of any notices and
other information made available or given to the stockholders of the Company
generally, contemporaneously with the making available or giving thereof to the
stockholders.

 

(f)          Listing. The Company shall promptly secure the listing or
designation for quotation (as the case may be) of all of the Registrable
Securities upon each national securities exchange and automated quotation
system, if any, upon which the Common Stock is then listed or designated for
quotation (as the case may be) (subject to official notice of issuance) (but in
no event later than the Closing Date) and shall maintain such listing or
designation for quotation (as the case may be) of all Registrable Securities
from time to time issuable under the terms of the Transaction Documents on such
national securities exchange or automated quotation system. The Company shall
maintain the Common Stock’s listing or designation for quotation (as the case
may be) on the Principal Market, The New York Stock Exchange, the NYSE MKT, the
Nasdaq Global Select Market or the Nasdaq Global Market (each, an “Eligible
Market”). Neither the Company nor any of its Subsidiaries shall take any action
which could be reasonably expected to result in the delisting or suspension of
the Common Stock on an Eligible Market. The Company shall pay all fees and
expenses in connection with satisfying its obligations under this Section 4(f).

 

19

 

 

(g)          Fees. The Company shall reimburse Cranshire Capital Master Fund,
Ltd. (“Cranshire”) or its designee(s) for all costs and expenses incurred by it
or its affiliates in connection with the transactions contemplated by the
Transaction Documents (including, without limitation, all legal fees and
disbursements in connection therewith, structuring, documentation and
implementation of the transactions contemplated by the Transaction Documents and
due diligence and regulatory filings in connection therewith) in a
non-accountable amount equal to $25,000, which amount shall be withheld by
Cranshire from its Purchase Price at the Closing or paid by the Company on
demand by Cranshire if Cranshire terminates its obligations under this Agreement
in accordance with Section 8 (as the case may be), less $10,000 which was
previously advanced to Cranshire by the Company. The Company shall be
responsible for the payment of any placement agent’s fees, financial advisory
fees, or broker’s commissions (other than for Persons engaged by any Buyer)
relating to or arising out of the transactions contemplated hereby (including,
without limitation, any fees payable to the Placement Agent, who is the
Company’s sole placement agent in connection with the transactions contemplated
by this Agreement). The Company shall pay, and hold each Buyer harmless against,
any liability, loss or expense (including, without limitation, reasonable
attorneys’ fees and out-of-pocket expenses) arising in connection with any claim
relating to any such payment. Except as otherwise set forth in the Transaction
Documents, each party to this Agreement shall bear its own expenses in
connection with the sale of the Securities to the Buyers.

 

(h)          Pledge of Securities. Notwithstanding anything to the contrary
contained in this Agreement, the Company acknowledges and agrees that the
Securities may be pledged by a Buyer in connection with a bona fide margin
agreement with a registered broker-dealer or grant a security interest in some
or all of the Securities to a financial institution that is an “accredited
investor” as defined in Rule 501(a) under the 1933 Act and who agrees to be
bound by the provisions of this Agreement and the Registration Rights Agreement
and, if required under the terms of such arrangement, such Buyer may transfer
pledged or secured Securities to the pledgees or secured parties. The pledge of
Securities shall not be deemed to be a transfer, sale or assignment of the
Securities hereunder, and no Buyer effecting a pledge of Securities shall be
required to provide the Company with any notice thereof or otherwise make any
delivery to the Company pursuant to this Agreement or any other Transaction
Document. At the appropriate Buyer’s expense, the Company hereby agrees to
execute and deliver such documentation as a pledgee of the Securities may
reasonably request in connection with a pledge of the Securities to such pledgee
by a Buyer.

 

20

 

 

(i)          Disclosure of Transactions and Other Material Information. The
Company shall (x) on or before 8:30 a.m., New York time, on the date of this
Agreement, issue a press release (the “Press Release”) reasonably acceptable to
the Buyers disclosing all the material terms of the transactions contemplated by
the Transaction Documents and (y) on or before 8:30 a.m., New York time, on the
first (1st) Business Day after the date of this Agreement, file a Current Report
on Form 8-K describing all the material terms of the transactions contemplated
by the Transaction Documents in the form required by the 1934 Act and attaching
all the material Transaction Documents (including, without limitation, this
Agreement (and all schedules to this Agreement), the form of Warrants and the
form of the Registration Rights Agreement) (including all attachments, the “8-K
Filing”). From and after the issuance of the Press Release, the Company shall
have disclosed all material, non-public information (if any) delivered to any of
the Buyers by the Company or any of its Subsidiaries, or any of their respective
officers, directors, employees or agents in connection with the transactions
contemplated by the Transaction Documents. The Company shall not, and the
Company shall cause each of its Subsidiaries and each of its and their
respective officers, directors, employees and agents, not to, provide any Buyer
with any material, non-public information regarding the Company or any of its
Subsidiaries from and after the issuance of the Press Release without the
express prior written consent of such Buyer (which may be granted or withheld in
such Buyer’s sole discretion). In the event of a breach of any of the foregoing
covenants or any of the covenants contained in Section 4(o) by the Company, any
of its Subsidiaries, or any of its or their respective officers, directors,
employees and agents (as determined in the reasonable good faith judgment of
such Buyer), in addition to any other remedy provided herein or in the
Transaction Documents, such Buyer shall have the right to make a public
disclosure, in the form of a press release, public advertisement or otherwise,
of such material, non-public information without the prior approval by the
Company, any of its Subsidiaries, or any of its or their respective officers,
directors, employees or agents. No Buyer shall have any liability to the
Company, any of its Subsidiaries, or any of its or their respective officers,
directors, employees, stockholders or agents, for any such disclosure. Subject
to the foregoing, neither the Company, its Subsidiaries nor any Buyer shall
issue any press releases or any other public statements with respect to the
transactions contemplated hereby; provided, however, the Company shall be
entitled, without the prior approval of any Buyer, to issue the Press Release
and any other press release or make other public disclosure with respect to such
transactions (i) in substantial conformity with the 8-K Filing and
contemporaneously therewith and (ii) as is required by applicable law and
regulations (provided that in the case of clause (i) each Buyer shall be
consulted by the Company in connection with any such press release or other
public disclosure prior to its release). Without the prior written consent of
the applicable Buyer (which may be granted or withheld in such Buyer’s sole
discretion), the Company shall not (and shall cause each of its Subsidiaries and
affiliates to not) disclose the name of such Buyer in any filing (other than the
8-K Filing, any Registration Statement registering the Securities and any other
filing as is required by applicable law and regulations), announcement, release
or otherwise. Notwithstanding anything contained in this Agreement to the
contrary and without implication that the contrary would otherwise be true, the
Company expressly acknowledges and agrees that no Buyer has had, and no Buyer
shall have (unless expressly agreed to by a particular Buyer after the date
hereof in a written definitive and binding agreement executed by the Company and
such particular Buyer (it being understood and agreed that no Buyer may bind any
other Buyer with respect thereto) or as expressly contemplated by the first
sentence of Section 4(o)(viii)), any duty of confidentiality with respect to, or
a duty not to trade on the basis of, any information regarding the Company or
any of its Subsidiaries.

 

(j)          Additional Registration Statements. Until the Applicable Date (as
defined below) and at any time thereafter while any Registration Statement is
not effective or any prospectus contained therein is not available for use, the
Company shall not file a registration statement under the 1933 Act relating to
securities that are not the Registrable Securities. “Applicable Date” means the
first date on which the resale by the Buyers of all Registrable Securities is
covered by one or more effective Registration Statements (as defined in the
Registration Rights Agreement) (and each prospectus contained therein is
available for use on such date).

 

21

 

 

(k)          Additional Issuance of Securities. Without the prior written
consent of the Required Significant Buyers (as defined below) (which may be
granted or withheld in the sole discretion of the Required Significant Buyers),
the Company agrees that for the period commencing on the date hereof and ending
on the date immediately following the one hundred eighty (180) day anniversary
of the Applicable Date (provided that such period shall be extended by the
number of days during such period and any extension thereof contemplated by this
proviso on which the Registration Statement is not effective or any prospectus
contained therein is not available for use) (the “Restricted Period”), neither
the Company nor any of its Subsidiaries shall directly or indirectly issue,
offer, sell, grant any option or right to purchase, or otherwise dispose of (or
announce any issuance, offer, sale, grant of any option or right to purchase or
other disposition of) any equity security or any equity-linked or related
security (including, without limitation, any “equity security” (as that term is
defined under Rule 405 promulgated under the 1933 Act), any Convertible
Securities, any debt, any preferred stock or any purchase rights (any such
issuance, offer, sale, grant, disposition or announcement (whether occurring
during the Restricted Period or at any time thereafter) is referred to as a
“Subsequent Placement”). Notwithstanding the foregoing, this Section 4(k) shall
not apply in respect of the issuance of:

 

(A)          shares of Common Stock or standard options to purchase Common Stock
to directors, officers or employees of the Company in their capacity as such
pursuant to an Approved Share Plan (as defined below), provided that (1) all
such issuances (taking into account the shares of Common Stock issuable upon
exercise of such options) after the date hereof pursuant to this clause (A) do
not, in the aggregate, exceed more than 488,405 shares of Common Stock (as
adjusted for stock splits, stock combinations and other similar transactions
occurring after the date of this Agreement) and (2) the exercise price of any
such options is not lowered, none of such options are amended to increase the
number of shares issuable thereunder and none of the terms or conditions of any
such options are otherwise materially changed in any manner that adversely
affects any of the Buyers;

 

(B)          shares of Common Stock issued upon the conversion or exercise of,
or otherwise on account of, Convertible Securities (other than standard options
to purchase Common Stock issued pursuant to an Approved Share Plan that are
covered by clause (A) above) issued prior to the date hereof, provided that the
conversion, exercise or other method of issuance (as the case may be) of any
such Convertible Security is made solely pursuant to the conversion, exercise or
other method of issuance (as the case may be) provisions of such Convertible
Security that were in effect on the date immediately prior to the date of this
Agreement, the conversion, exercise or issuance price of any such Convertible
Securities (other than standard options to purchase Common Stock issued pursuant
to an Approved Share Plan that are covered by clause (A) above) is not lowered,
none of such Convertible Securities are (other than standard options to purchase
Common Stock issued pursuant to an Approved Share Plan that are covered by
clause (A) above) (nor is any provision of any such Convertible Securities)
amended or waived in any manner (whether by the Company or the holder thereof)
to increase, or which results in an increase in, the number of shares issuable
thereunder and none of the terms or conditions of any such Convertible
Securities (other than standard options to purchase Common Stock issued pursuant
to an Approved Share Plan that are covered by clause (A) above) are otherwise
materially changed or waived (whether by the Company or the holder thereof) in
any manner that adversely affects any of the Buyers;

 

22

 

 

(C)          warrants to purchase up to 50,000 shares of Common Stock in the
aggregate to Hayden IR, LLC pursuant to, and in accordance with, the terms of
that certain Investor Relations Consulting Agreement, dated as of April 1, 2012,
by and between Hayden IR, LLC and the Company and such 50,000 shares of Common
Stock upon exercise thereof provided that (1) the exercise of such warrants is
made solely pursuant to the exercise provisions of such warrants that were in
effect on the date of original issuance thereof, (2) the exercise price of such
warrants is not lowered, (3) none of such warrants are (nor is any provision of
any such warrants) amended or waived in any manner (whether by the Company or
the holder thereof) to increase, or which results in an increase in, the number
of shares issuable thereunder and (4) none of the terms or conditions of any
such warrants are otherwise materially changed or waived (whether by the Company
or the holder thereof) in any manner that adversely affects any of the Buyers;

 

(D)          the Warrants;

 

(E)          the Warrant Shares; and

 

(F)           shares of Common Stock issued in connection with strategic mergers
and acquisitions, provided that (I) the primary purpose of such issuance is not
to raise capital, (II) the acquirer of such shares of Common Stock in such
issuance solely consists of either (1) the actual owners of such assets or
securities acquired in such merger or acquisition or (2) the stockholders,
partners or members of the foregoing Persons, (III) the number or amount (as the
case may be) of such shares of Common Stock issued to each such Person by the
Company shall not be disproportionate to such Person’s actual ownership of such
assets or securities to be acquired by the Company (as applicable) and (IV) all
such issuances of Common Stock after the date hereof pursuant to this clause (F)
do not, in the aggregate, exceed more than 976,810 shares of Common Stock
(adjusted for stock splits, stock combinations and other similar transactions
occurring after the date of this Agreement) (each of the foregoing in clauses
(A) through (F), collectively the “Excluded Securities”).

 

“Approved Share Plan” means any employee benefit plan which has been approved by
the board of directors of the Company prior to or subsequent to the date hereof
pursuant to which shares of Common Stock and standard options to purchase Common
Stock may be issued to any employee, officer or director for services provided
to the Company in their capacity as such. “Convertible Securities” means any
capital stock, convertible debenture or other security of the Company or any of
its Subsidiaries that is, or may become, at any time and under any circumstances
directly or indirectly convertible into, exercisable or exchangeable for, or
which otherwise entitles the holder thereof to acquire, any capital stock or
other security of the Company (including, without limitation, Common Stock) or
any of its Subsidiaries.

 

(l)          Reservation of Shares. So long as any of the Warrants remain
outstanding, the Company shall take all action necessary to at all times have
authorized, and reserved for the purpose of issuance, no less than the maximum
number of shares of Common Stock issuable upon exercise of all the Warrants
(without regard to any limitations on the exercise of the Warrants set forth
therein).

 

(m)          Conduct of Business. The business of the Company and its
Subsidiaries shall not be conducted in violation of any law, ordinance or
regulation of any governmental entity, except where such violations would not
result, either individually or in the aggregate, in a Material Adverse Effect.

 

23

 

 

(n)          Variable Rate Transaction. Until the earlier to occur of (i) the
date on which all of the Buyers shall have sold all of the Registrable
Securities and (ii) the third (3rd) anniversary of the date hereof, the Company
and each Subsidiary shall be prohibited from effecting or entering into an
agreement to effect any Subsequent Placement involving a Variable Rate
Transaction without the prior written consent of the Required Significant Buyers
(which may be granted or withheld in the sole discretion of the Required
Significant Buyers). “Variable Rate Transaction” means a transaction in which
the Company or any Subsidiary (i) issues or sells any Convertible Securities
either (A) at a conversion, exercise or exchange rate or other price that is
based upon and/or varies with the trading prices of, or quotations for, the
shares of Common Stock at any time after the initial issuance of such
Convertible Securities, or (B) with a conversion, exercise or exchange price
that is subject to being reset at some future date after the initial issuance of
such Convertible Securities or upon the occurrence of specified or contingent
events directly or indirectly related to the business of the Company or the
market for the Common Stock, other than pursuant to a customary “weighted
average” anti-dilution provision or (ii) enters into any agreement (including,
without limitation, an “equity line of credit” or an “at-the-market offering”)
whereby the Company or any Subsidiary may sell securities at a future determined
price (other than standard and customary “preemptive” or “participation”
rights). Each Buyer shall be entitled to obtain injunctive relief against the
Company and its Subsidiaries to preclude any such issuance, which remedy shall
be in addition to any right to collect damages.

 

(o)          Participation Right. From the date hereof through the eighteen (18)
month anniversary of the Closing Date, neither the Company nor any of its
Subsidiaries shall, directly or indirectly, effect any Subsequent Placement
unless the Company shall have first complied with this Section 4(o). The Company
acknowledges and agrees that the right set forth in this Section 4(o) is a right
granted by the Company, separately, to each Significant Buyer.

 

(i)          At least three (3) Business Days prior to any proposed or intended
Subsequent Placement, the Company shall deliver to each Significant Buyer a
written notice of its proposal or intention to effect a Subsequent Placement
(each such notice, a “Pre-Notice”), which Pre-Notice shall not contain any
information (including, without limitation, material, non-public information)
other than: (i) a statement that the Company proposes or intends to effect a
Subsequent Placement, (ii) a statement that the statement in clause (i) above
does not constitute material, non-public information and (iii) a statement
informing such Significant Buyer that it is entitled to receive an Offer Notice
(as defined below) with respect to such Subsequent Placement upon its written
request. Upon the written request of a Significant Buyer within two (2) Business
Days after the Company’s delivery to such Significant Buyer of such Pre-Notice,
and only upon a written request by such Significant Buyer, the Company shall
promptly, but no later than one (1) Business Day after such request, deliver to
such Significant Buyer an irrevocable written notice (the “Offer Notice”) of any
proposed or intended issuance or sale or exchange (the “Offer”) of the
securities being offered (the “Offered Securities”) in a Subsequent Placement,
which Offer Notice shall (w) identify and describe the Offered Securities, (x)
describe the price and other terms upon which they are to be issued, sold or
exchanged, and the number or amount of the Offered Securities to be issued, sold
or exchanged, (y) identify the Persons (if known) to which or with which the
Offered Securities are to be offered, issued, sold or exchanged and (z) offer to
issue and sell to or exchange with such Significant Buyer in accordance with the
terms of the Offer (I) such Significant Buyer’s Basic Amount (as defined below)
and (II) if such Significant Buyer elects to purchase its Basic Amount, any
additional portion of the applicable Offered Securities attributable to the
Basic Amounts of other Significant Buyers as such Significant Buyer shall
indicate it will purchase or acquire should the other Significant Buyers
subscribe for less than their Basic Amounts (the “Undersubscription Amount”).
“Basic Amount” means, with respect to a Significant Buyer, the portion of the
Offered Securities equal to the product of (1) 50% of the applicable Offered
Securities multiplied by (2) the quotient of (X) the number of Common Shares
purchased hereunder by such Significant Buyer divided by (Y) the aggregate
number of Common Shares purchased hereunder by all Significant Buyers.

 

24

 

 

(ii)          To accept an Offer, in whole or in part, such Significant Buyer
must deliver a written notice to the Company prior to the end of the three (3rd)
Business Day after such Significant Buyer’s receipt of the Offer Notice (the
“Offer Period”), setting forth the portion of such Significant Buyer’s Basic
Amount that such Significant Buyer elects to purchase and, if such Significant
Buyer shall elect to purchase all of its Basic Amount, the Undersubscription
Amount, if any, that such Significant Buyer elects to purchase (in either case,
the “Notice of Acceptance”). If the Basic Amounts subscribed for by all
Significant Buyers are less than the total of all of the Basic Amounts, then
such Significant Buyer who has set forth an Undersubscription Amount in its
Notice of Acceptance shall be entitled to purchase, in addition to the Basic
Amounts subscribed for, the Undersubscription Amount it has subscribed for;
provided, however, if the Undersubscription Amounts subscribed for exceed the
difference between the total of all the Basic Amounts and the Basic Amounts
subscribed for (the “Available Undersubscription Amount”), such Significant
Buyer who has subscribed for any Undersubscription Amount shall be entitled to
purchase only that portion of the Available Undersubscription Amount as the
Basic Amount of such Significant Buyer bears to the total Basic Amounts of all
Significant Buyers that have subscribed for Undersubscription Amounts, subject
to rounding by the Company to the extent it deems reasonably necessary.
Notwithstanding the foregoing, if the Company desires to modify or amend the
terms and conditions of the Offer prior to the expiration of the Offer Period,
the Company may deliver to each Significant Buyer a new Offer Notice and the
Offer Period shall expire on the third (3rd) Business Day after such Significant
Buyer’s receipt of such new Offer Notice.

 

(iii)          The Company shall have four (4) Business Days from the expiration
of the Offer Period above (i) to offer, issue, sell or exchange all or any part
of such Offered Securities as to which a Notice of Acceptance has not been given
by a Significant Buyer (the “Refused Securities”) pursuant to a definitive
agreement(s) (the “Subsequent Placement Agreement”), but only to the offerees
described in the Offer Notice (if so described therein) and only upon terms and
conditions (including, without limitation, unit prices and interest rates) that
are not more favorable to the acquiring Person or Persons or less favorable to
the Company than those set forth in the Offer Notice and (ii) to publicly
announce (a) the execution of such Subsequent Placement Agreement, and (b)
either (x) the consummation of the transactions contemplated by such Subsequent
Placement Agreement or (y) the termination of such Subsequent Placement
Agreement, which shall be filed with the SEC on a Current Report on Form 8-K
with such Subsequent Placement Agreement and any documents contemplated therein
filed as exhibits thereto.

 

25

 

 

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

 

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

 

(vi)          Any Offered Securities not acquired by a Significant Buyer or
other Persons in accordance with this Section 4(o) may not be issued, sold or
exchanged until they are again offered to such Significant Buyer under the
procedures specified in this Agreement.

 

(vii)          The Company and each Significant Buyer agree that if any
Significant Buyer elects to participate in the Offer, neither the Subsequent
Placement Agreement with respect to such Offer nor any other transaction
documents related thereto (collectively, the “Subsequent Placement Documents”)
shall include any term or provision whereby such Significant Buyer shall be
required to agree to any restrictions on trading as to any securities of the
Company or be required to consent to any amendment to or termination of, or
grant any waiver, release or the like under or in connection with, any agreement
previously entered into with the Company or any instrument received from the
Company.

 

26

 

 

(viii)          Such Significant Buyer acknowledges and agrees that, upon its
receipt of an Offer Notice, such Significant Buyer shall be deemed to be in
receipt of material non-public information regarding the Company with respect to
the Subsequent Placement expressly contemplated by such Offer Notice and such
Significant Buyer agrees to hold such information in confidence and not to
disclose such information to any other Person and not to effect any transactions
in the Common Stock (other than the purchase of the applicable Offered
Securities) during the period commencing at the time such Significant Buyer
receives such Offer Notice and ending at the time such Significant Buyer no
longer is in possession of material, non-public information as set forth below
in this Section 4(o)(viii). Notwithstanding anything to the contrary in this
Section 4(o) and unless otherwise agreed to by such Significant Buyer, the
Company shall either confirm in writing to such Significant Buyer that the
transaction with respect to the Subsequent Placement expressly contemplated by
the applicable Offer Notice has been abandoned or shall publicly disclose its
intention to issue the Offered Securities, in either case, in such a manner such
that such Significant Buyer will not be in possession of any material,
non-public information with respect to the Company or any of its Subsidiaries,
by the fifth (5th) Business Day following the expiration of the applicable Offer
Period. If by such fifth (5th) Business Day, no public disclosure regarding a
transaction with respect to the Offered Securities has been made, and no notice
regarding the abandonment of such transaction has been received by such
Significant Buyer, such transaction shall be deemed to have been abandoned and
such Significant Buyer shall not be in possession of any material, non-public
information with respect to the Company or any of its Subsidiaries. Should the
Company decide to pursue such transaction with respect to the Offered
Securities, the Company shall provide such Significant Buyer with another Offer
Notice in accordance with, and subject to, the terms of this Section 4(o) and
such Significant Buyer will again have the right of participation set forth in
this Section 4(o). The Company shall not be permitted to deliver more than one
Offer Notice to such Significant Buyer in any sixty (60) day period, except as
expressly contemplated by the last sentence of Section 4(o)(ii).

 

(ix)          The restrictions contained in this Section 4(o) shall not apply in
connection with the issuance of any Excluded Securities. The Company shall not
circumvent the provisions of this Section 4(o) by providing terms or conditions
to one Significant Buyer that are not provided to all. Notwithstanding anything
contained in this Section 4(o), (x) no Significant Buyer may purchase Offered
Securities to the extent (but only to the extent) that immediately following the
purchase thereof such Significant Buyer would be a “beneficial owner” of 10% or
more of the Common Stock (as determined under Section 13(d) of the 1934 Act and
the rules and regulations promulgated thereunder), (y) any Offered Securities
not purchased by a Significant Buyer as a result of the immediately preceding
clause (x) shall be, and shall be deemed to be, part of the applicable
Undersubscription Amount and (z) all Offered Securities that are Convertible
Securities must contain a “beneficial ownership” blocker provision in the form
of Section 1(f) of the Warrants. Solely for illustration purposes and without
implication that the contrary would otherwise be true, if, at the time a
Significant Buyer receives an Offer Notice, (I) such Significant Buyer is a
“beneficial owner” of 9.9% of the Common Stock (as determined under Section
13(d) of the 1934 Act and the rules and regulations promulgated thereunder) as a
result of such Significant Buyer holding only one or more Convertible Securities
containing 9.9% “beneficial ownership” blocker provisions (such as the one
contained in Section 1(f) of the Warrants), (II) 10,000,000 shares of Common
Stock are then outstanding, (III) the Offered Securities described in such Offer
Notice are shares of Common Stock and (IV) such Significant Buyer’s Basic Amount
set forth in such Offer Notice is 1,500,000 shares of Common Stock, then such
Significant Buyer would only be entitled to purchase 1,111,111 of such shares of
Common Stock as a result of the application of clause (x) above in this
paragraph.

 

27

 

 

(p)          Passive Foreign Investment Company. The Company shall conduct its
business in such a manner as will ensure that the Company will not be deemed to
constitute a passive foreign investment company within the meaning of Section
1297 of the U.S. Internal Revenue Code of 1986, as amended.

 

(q)          Corporate Existence. So long as any Buyer owns any Warrants, the
Company shall not be party to any Fundamental Transaction (as defined in the
Warrants) unless the Company is in compliance with the applicable provisions
governing Fundamental Transactions set forth in the Warrants.

 

(r)          Issues or Deemed Issuance Below Floor Price. The Company shall not,
directly or indirectly, issue or sell, or, in accordance with Section 2 of the
Warrants, be deemed to have issued or sold, any shares of Common Stock (other
than Excluded Securities) for consideration per share (determined in accordance
with Section 2 of the Warrants) less than the Floor Price (as defined in the
Warrants) at any time while any of the Warrants are outstanding without the
prior written consent of the Required Significant Buyers (which may be granted
or withheld in the sole discretion of the Required Significant Buyers).

 

5.REGISTER; TRANSFER AGENT INSTRUCTIONS; LEGEND.

 

(a)          Register. The Company shall maintain at its principal executive
offices (or such other office or agency of the Company as it may designate by
notice to each holder of Securities), a register for the Common Shares and the
Warrants in which the Company shall record the name and address of the Person in
whose name the Common Shares and the Warrants have been issued (including the
name and address of each transferee), the number of Common Shares held by such
Person and the number of Warrant Shares issuable upon exercise of the Warrants
held by such Person. The Company shall keep the register open and available at
all times during business hours for inspection of any Buyer or its legal
representatives.

 

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(b)          Transfer Agent Instructions. The Company shall issue irrevocable
instructions to its transfer agent and any subsequent transfer agent in a form
acceptable to each of the Buyers (the “Irrevocable Transfer Agent Instructions”)
to issue certificates or credit shares to the applicable balance accounts at The
Depository Trust Company (“DTC”), registered in the name of each Buyer or its
respective nominee(s), for the Common Shares and the Warrant Shares in such
amounts as specified from time to time by each Buyer to the Company upon
delivery of the Common Shares or the exercise of the Warrants (as the case may
be). The Company represents and warrants that no instruction other than the
Irrevocable Transfer Agent Instructions referred to in this Section 5(b), and
stop transfer instructions to give effect to Section 2(g) hereof, will be given
by the Company to its transfer agent with respect to the Common Shares and the
Warrant Shares, and that the Common Shares and the Warrant Shares shall
otherwise be freely transferable on the books and records of the Company, as
applicable, to the extent provided in this Agreement and the other Transaction
Documents. If a Buyer effects a sale, assignment or transfer of the Common
Shares or the Warrant Shares in accordance with Section 2(g), the Company shall
permit the transfer and shall promptly instruct its transfer agent to issue one
or more certificates or credit shares to the applicable balance accounts at DTC
in such name and in such denominations as specified by such Buyer to effect such
sale, transfer or assignment. In the event that such sale, assignment or
transfer involves Common Shares or Warrant Shares sold, assigned or transferred
pursuant to an effective registration statement or in compliance with Rule 144,
the transfer agent shall issue such shares to such Buyer, assignee or transferee
(as the case may be) without any restrictive legend in accordance with Section
5(d) below. The Company acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to each Buyer. Accordingly, the Company
acknowledges that the remedy at law for a breach of its obligations under this
Section 5(b) will be inadequate and agrees, in the event of a breach or
threatened breach by the Company of the provisions of this Section 5(b), that
each Buyer shall be entitled, in addition to all other available remedies, to an
order and/or injunction restraining any breach and requiring immediate issuance
and transfer, without the necessity of showing economic loss and without any
bond or other security being required. The Company shall cause its counsel to
issue the legal opinion referred to in the Irrevocable Transfer Agent
Instructions to the Company’s transfer agent on each Effective Date (as defined
in the Registration Rights Agreement). Any fees (with respect to the transfer
agent, counsel to the Company or otherwise) associated with the issuance of such
opinion or the removal of any legends on any of the Securities shall be borne by
the Company.

 

(c)          Legends. Each Buyer understands that the Securities have been
issued (or will be issued in the case of the Warrant Shares) pursuant to an
exemption from registration or qualification under the 1933 Act and applicable
state securities laws, and except as set forth below, the Securities shall bear
any legend as required by the “blue sky” laws of any state and a restrictive
legend in substantially the following form (and a stop-transfer order may be
placed against transfer of such stock certificates):

 

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

 

29

 

 

(d)          Removal of Legends. Certificates evidencing Securities shall not be
required to contain the legend set forth in Section 5(c) above or any other
legend (i) while a registration statement (including a Registration Statement)
covering the resale of such Securities is effective under the 1933 Act, (ii)
following any sale of such Securities pursuant to Rule 144 (assuming the
transferor is not an affiliate of the Company), (iii) if such Securities are
eligible to be sold, assigned or transferred under Rule 144 (provided that a
Buyer provides the Company with reasonable assurances that such Securities are
eligible for sale, assignment or transfer under Rule 144 which shall not include
an opinion of counsel), (iv) in connection with a sale, assignment or other
transfer (other than under Rule 144), provided that such Buyer provides the
Company with an opinion of counsel to such Buyer, in a generally acceptable
form, to the effect that such sale, assignment or transfer of the Securities may
be made without registration under the applicable requirements of the 1933 Act
or (v) if such legend is not required under applicable requirements of the 1933
Act (including, without limitation, controlling judicial interpretations and
pronouncements issued by the SEC). If a legend is not required pursuant to the
foregoing, the Company shall promptly, but no later than three (3) Business Days
following the delivery by a Buyer to the Company or the transfer agent (with
notice to the Company) of a legended certificate representing such Securities
(endorsed or with stock powers attached, signatures guaranteed, and otherwise in
form necessary to affect the reissuance and/or transfer, if applicable),
together with any other deliveries from such Buyer as may be required above in
this Section 5(d), as directed by such Buyer, either: (A) provided that the
Company’s transfer agent is participating in the DTC Fast Automated Securities
Transfer Program and such Securities are Common Shares or Warrant Shares, credit
the aggregate number of shares of Common Stock to which such Buyer shall be
entitled to such Buyer’s or its designee’s balance account with DTC through its
Deposit/Withdrawal at Custodian system or (B) if the Company’s transfer agent is
not participating in the DTC Fast Automated Securities Transfer Program, issue
and deliver (via reputable overnight courier) to such Buyer, a certificate
representing such Securities that is free from all restrictive and other
legends, registered in the name of such Buyer or its designee (the date by which
such credit is so required to be made to the balance account of such Buyer’s or
such Buyer’s nominee with DTC or such certificate is required to be delivered to
such Buyer pursuant to the foregoing is referred to herein as the “Required
Delivery Date”).

 

30

 

 

(e)          Failure to Timely Deliver; Buy-In. If the Company fails to (i)
issue and deliver (or cause to be delivered) to a Buyer by the Required Delivery
Date a certificate representing the Securities so delivered to the Company by
such Buyer that is free from all restrictive and other legends or (ii) credit
the balance account of such Buyer’s or such Buyer’s nominee with DTC for such
number of Common Shares or Warrant Shares so delivered to the Company, then, in
addition to all other remedies available to such Buyer, the Company shall pay in
cash to such Buyer on each day after the Required Delivery Date that the
issuance or credit of such shares is not timely effected an amount equal to 1%
of the product of (A) the number of shares of Common Stock not so delivered or
credited (as the case may be) to such Buyer or such Buyer’s nominee multiplied
by (B) the Closing Sale Price (as defined in the Warrants) of the Common Stock
on the Trading Day (as defined in the Warrant) immediately preceding the
Required Delivery Date. In addition to the foregoing, if the Company fails to so
properly deliver such unlegended certificates or so properly credit the balance
account of such Buyer’s or such Buyer’s nominee with DTC by the Required
Delivery Date, and if on or after the Required Delivery Date such Buyer (or any
other Person in respect, or on behalf, of such Buyer) purchases (in an open
market transaction or otherwise) shares of Common Stock to deliver in
satisfaction of a sale by such Buyer of all or any portion of the number of
shares of Common Stock, or a sale of a number of shares of Common Stock equal to
all or any portion of the number of shares of Common Stock, that such Buyer so
anticipated receiving from the Company without any restrictive legend, then, in
addition to all other remedies available to such Buyer, the Company shall,
within three (3) Business Days after such Buyer’s request and in such Buyer’s
sole discretion, either (i) pay cash to such Buyer in an amount equal to such
Buyer’s total purchase price (including brokerage commissions and other
out-of-pocket expenses, if any) for the shares of Common Stock so purchased
(including brokerage commissions and other out-of-pocket expenses, if any) (the
“Buy-In Price”), at which point the Company’s obligation to so deliver such
certificate or credit such Buyer’s balance account shall terminate and such
shares shall be cancelled, or (ii) promptly honor its obligation to so deliver
to such Buyer a certificate or certificates or credit such Buyer’s DTC account
representing such number of shares of Common Stock that would have been so
delivered if the Company timely complied with its obligations hereunder and pay
cash to such Buyer in an amount equal to the excess (if any) of the Buy-In Price
over the product of (A) such number of shares of Conversion Shares or Warrant
Shares (as the case may be) that the Company was required to deliver to such
Buyer by the Required Delivery Date multiplied by (B) the lowest Closing Sale
Price of the Common Stock on any Trading Day during the period commencing on the
date of the delivery by such Buyer to the Company of the applicable Conversion
Shares or Warrant Shares (as the case may be) and ending on the date of such
delivery and payment under this clause (ii).

 

6.CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL.

 

(a)          The obligation of the Company hereunder to issue and sell the
Common Shares and the related Warrants to each Buyer at the Closing is subject
to the satisfaction, at or before the Closing Date, of each of the following
conditions, provided that these conditions are for the Company’s sole benefit
and may be waived by the Company at any time in its sole discretion by providing
each Buyer with prior written notice thereof:

 

(i)          Such Buyer shall have executed each of the other Transaction
Documents to which it is a party and delivered the same to the Company.

 

(ii)         Such Buyer and each other Buyer shall have delivered to the Company
the Purchase Price (less, in the case of Cranshire, the amounts withheld
pursuant to Section 4(g)) for the Common Shares and the related Warrants being
purchased by such Buyer at the Closing by wire transfer of immediately available
funds pursuant to the wire instructions provided by the Company.

 

(iii)        The representations and warranties of such Buyer shall be true and
correct in all material respects as of the date when made and as of the Closing
Date as though originally made at that time (except for representations and
warranties that speak as of a specific date, which shall be true and correct in
all material respects as of such date), and such Buyer shall have performed,
satisfied and complied in all material respects with the covenants, agreements
and conditions required by this Agreement to be performed, satisfied or complied
with by such Buyer at or prior to the Closing Date.

 

31

 

 

7.CONDITIONS TO EACH BUYER’S OBLIGATION TO PURCHASE.

 

(a)          The obligation of each Buyer hereunder to purchase the Common
Shares and the related Warrants at the Closing is subject to the satisfaction,
at or before the Closing Date, of each of the following conditions, provided
that these conditions are for each Buyer’s sole benefit and may be waived by
such Buyer at any time in its sole discretion by providing the Company with
prior written notice thereof:

 

(i)          The Company shall have duly executed and delivered to such Buyer
(A) each of the other Transaction Documents and (B) the Common Shares (in the
number as is set forth across from such Buyer’s name in column (3) of the
Schedule of Buyers) and the related Warrants (for the number of Warrant Shares
as is set forth across from such Buyer’s name in column (4) of the Schedule of
Buyers) being purchased by such Buyer at the Closing pursuant to this Agreement.

 

(ii)         Such Buyer shall have received the opinion of Baker & Hostetler
LLP, the Company’s counsel, dated as of the Closing Date, in the form reasonably
acceptable to such Buyer.

 

(iii)        The Company shall have delivered to such Buyer a copy of the
Irrevocable Transfer Agent Instructions, in the form reasonably acceptable to
such Buyer, which instructions shall have been delivered to and acknowledged in
writing by the Company’s transfer agent.

 

(iv)        The Company shall have delivered to such Buyer a certificate
evidencing the formation and good standing of the Company and each of its U.S.
Subsidiaries in each such entity’s jurisdiction of formation issued by the
Secretary of State (or comparable office) of such jurisdiction of formation as
of a date within ten (10) days of the Closing Date.

 

(v)         The Company shall have delivered to such Buyer a certificate
evidencing the Company’s qualification as a foreign corporation and good
standing issued by the Secretary of State (or comparable office) of each
jurisdiction in which the Company is so qualified, as of a date within ten (10)
days of the Closing Date.

 

(vi)         The Company shall have delivered to such Buyer a certified copy of
the Charter as certified by the Secretary of State of the Company’s jurisdiction
of formation within ten (10) days of the Closing Date.

 

(vii)        The Company shall have delivered to such Buyer a certificate, in
the form reasonably acceptable to such Buyer, executed by the Secretary of the
Company and dated as of the Closing Date, as to (i) the resolutions consistent
with Section 3(b) as adopted by the Company’s board of directors in a form
reasonably acceptable to such Buyer, (ii) the Charter and (iii) the Bylaws, each
as in effect at the Closing.

 

32

 

 

(viii)      Each and every representation and warranty of the Company shall be
true and correct as of the date when made and shall be true and correct in all
material respects as of the Closing Date as though originally made at that time
(except that any representation and warranty qualified by materiality or
Material Adverse Effect shall be true and correct in all respects) and the
Company shall have performed, satisfied and complied in all material respects
with the covenants, agreements and conditions required to be performed,
satisfied or complied with by the Company at or prior to the Closing Date. Such
Buyer shall have received a certificate, executed by the Chief Executive Officer
of the Company, dated as of the Closing Date, to the foregoing effect and as to
such other matters as may be reasonably requested by such Buyer in the form
reasonably acceptable to such Buyer.

 

(ix)         The Company shall have delivered to such Buyer a report from the
Company’s transfer agent identifying the number of shares of Common Stock
outstanding on the Closing Date immediately prior to the Closing.

 

(x)          The Common Stock (I) shall be designated for quotation or listed on
the Principal Market and (II) shall not have been suspended, as of the Closing
Date, by the SEC or the Principal Market from trading on the Principal Market
nor shall suspension by the SEC or the Principal Market have been threatened, as
of the Closing Date, either (A) in writing by the SEC or the Principal Market or
(B) by falling below the minimum maintenance requirements of the Principal
Market.

 

(xi)         The Company shall have obtained all governmental, regulatory or
third party consents and approvals, if any, necessary for the sale of the
Securities, including without limitation, those required by the Principal
Market.

 

(xii)        No statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or endorsed by any
court or governmental authority of competent jurisdiction that prohibits the
consummation of any of the transactions contemplated by the Transaction
Documents.

 

(xiii)        Since the date of execution of this Agreement, no event or series
of events shall have occurred that reasonably would have or result in a Material
Adverse Effect.

 

(xiv)       The Company shall have obtained approval of the Principal Market to
list or designate for quotation (as the case may be) the Common Shares and the
Warrant Shares.

 

(xv)        The Company shall have delivered to such Buyer such other documents,
instruments or certificates relating to the transactions contemplated by this
Agreement as such Buyer or its counsel may reasonably request.

 

33

 

 

8.TERMINATION.

 

In the event that the Closing shall not have occurred with respect to a Buyer
within ten (10) days after the date hereof, then such Buyer shall have the right
to terminate its obligations under this Agreement with respect to itself at any
time on or after the close of business on such date without liability of such
Buyer to any other party; provided, however, (i) the right to terminate its
obligations under this Agreement pursuant to this Section 8 shall not be
available to such Buyer if the failure of the transactions contemplated by this
Agreement to have been consummated by such date is the result of such Buyer’s
breach of this Agreement and (ii) the abandonment of the sale and purchase of
the Common Shares and the Warrants shall be applicable only to such Buyer
providing such written notice, provided further that no such termination shall
affect any obligation of the Company under this Agreement to reimburse such
Buyer for the expenses described in Section 4(g) above. Nothing contained in
this Section 8 shall be deemed to release any party from any liability for any
breach by such party of the terms and provisions of this Agreement or the other
Transaction Documents or to impair the right of any party to compel specific
performance by any other party of its obligations under this Agreement or the
other Transaction Documents.

 

9.MISCELLANEOUS.

 

(a)          Governing Law; Jurisdiction; Jury Trial. The parties hereby agree
that pursuant to 735 Illinois Compiled Statutes 105/5-5 they have chosen that
all questions concerning the construction, validity, enforcement and
interpretation of this Agreement shall be governed by the internal laws of the
State of Illinois, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of Illinois or any other jurisdictions)
that would cause the application of the laws of any jurisdictions other than the
State of Illinois. Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in Chicago, Illinois, for
the adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to such
party at the address for such notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall (i) limit, or be deemed to limit, in any
way any right to serve process in any manner permitted by law, (ii) operate, or
shall be deemed to operate, to preclude any Buyer from bringing suit or taking
other legal action against the Company in any other jurisdiction to collect on
the Company’s obligations to such Buyer or to enforce a judgment or other court
ruling in favor of such Buyer or (iii) limit, or be deemed to limit, any
provision of Section 13 of the Warrants. EACH PARTY HEREBY IRREVOCABLY WAIVES
ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF
THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

(b)          Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party. In the event that any signature is delivered by
facsimile transmission or by an e-mail which contains a portable document format
(.pdf) file of an executed signature page, such signature page shall create a
valid and binding obligation of the party executing (or on whose behalf such
signature is executed) with the same force and effect as if such signature page
were an original thereof.

 

34

 

 

(c)          Headings; Gender. The headings of this Agreement are for
convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement. Unless the context clearly indicates
otherwise, each pronoun herein shall be deemed to include the masculine,
feminine, neuter, singular and plural forms thereof. The terms “including,”
“includes,” “include” and words of like import shall be construed broadly as if
followed by the words “without limitation.” The terms “herein,” “hereunder,”
“hereof” and words of like import refer to this entire Agreement instead of just
the provision in which they are found.

 

(d)          Severability. If any provision of this Agreement is prohibited by
law or otherwise determined to be invalid or unenforceable by a court of
competent jurisdiction, the provision that would otherwise be prohibited,
invalid or unenforceable shall be deemed amended to apply to the broadest extent
that it would be valid and enforceable, and the invalidity or unenforceability
of such provision shall not affect the validity of the remaining provisions of
this Agreement so long as this Agreement as so modified continues to express,
without material change, the original intentions of the parties as to the
subject matter hereof and the prohibited nature, invalidity or unenforceability
of the provision(s) in question does not substantially impair the respective
expectations or reciprocal obligations of the parties or the practical
realization of the benefits that would otherwise be conferred upon the parties.
The parties will endeavor in good faith negotiations to replace the prohibited,
invalid or unenforceable provision(s) with a valid provision(s), the effect of
which comes as close as possible to that of the prohibited, invalid or
unenforceable provision(s).

 

35

 

 

(e)          Entire Agreement; Amendments. This Agreement, the other Transaction
Documents and the schedules and exhibits attached hereto and thereto and the
instruments referenced herein and therein supersede all other prior oral or
written agreements between the Buyers, the Company, their affiliates and Persons
acting on their behalf solely with respect to the matters contained herein and
therein, and this Agreement, the other Transaction Documents, the schedules and
exhibits attached hereto and thereto and the instruments referenced herein and
therein contain the entire understanding of the parties solely with respect to
the matters covered herein and therein; provided, however, nothing contained in
this Agreement or any other Transaction Document shall (or shall be deemed to)
(i) have any effect on any agreements any Buyer has entered into with, or any
instruments any Buyer has received from, the Company or any of its Subsidiaries
prior to the date hereof with respect to any prior investment made by such Buyer
in the Company or (ii) waive, alter, modify or amend in any respect any
obligations of the Company or any of its Subsidiaries, or any rights of or
benefits to any Buyer or any other Person, in any agreement entered into prior
to the date hereof between or among the Company and/or any of its Subsidiaries
and any Buyer, or any instruments any Buyer received from the Company and/or any
of its Subsidiaries prior to the date hereof, and all such agreements and
instruments shall continue in full force and effect. Except as specifically set
forth herein or therein, neither the Company nor any Buyer makes any
representation, warranty, covenant or undertaking with respect to such matters.
For clarification purposes, the Recitals are part of this Agreement. Provisions
of this Agreement may be amended only with the written consent of the Company
and the Required Significant Buyers, and any amendment of any provision of this
Agreement made in conformity with the provisions of this Section 9(e) shall be
binding upon each Buyer and the Company, provided that no such amendment shall
be effective to the extent that it (1) applies to less than all of the Buyers,
(2) imposes any monetary obligation or liability, or material obligation or
liability, on any Buyer without such Buyer’s prior written consent (which may be
granted or withheld in such Buyer’s sole discretion) or (3) applies
retroactively. No waiver shall be effective unless it is in writing and signed
by an authorized representative of the waiving party, provided that the Required
Significant Buyers (in one or more writings signed by all of the Required
Significant Buyers) may waive any provision of this Agreement, and any waiver of
any provision of this Agreement made in conformity with the provisions of this
Section 9(e) shall be binding on each Buyer, provided that no such waiver shall
be effective to the extent that it (1) applies to less than all the Buyers
(unless a party gives a waiver as to itself only) or (2) imposes any monetary
obligation or liability, or material obligation or liability, on any Buyer
without such Buyer’s prior written consent (which may be granted or withheld in
such Buyer’s sole discretion). No consideration shall be offered or paid to any
Person to amend or consent to a waiver or modification of any provision of any
of the Transaction Documents unless the same consideration also is offered to
all of the parties to the Transaction Documents, all holders of Common Shares or
all holders of the Warrants (as the case may be). The Company has not, directly
or indirectly, made any agreements with any Buyers relating to the terms or
conditions of the transactions contemplated by the Transaction Documents except
as set forth in the Transaction Documents. Without limiting the foregoing, the
Company confirms that, except as set forth in this Agreement, no Buyer has made
any commitment or promise or has any other obligation to provide any financing
to the Company, any Subsidiary or otherwise. As a material inducement for each
Buyer to enter into this Agreement, the Company expressly acknowledges and
agrees that (i) no due diligence or other investigation or inquiry conducted by
a Buyer, any of its advisors or any of its representatives shall affect such
Buyer’s right to rely on, or shall modify or qualify in any manner or be an
exception to any of, the Company’s representations and warranties contained in
this Agreement or any other Transaction Document and (ii) unless a provision of
this Agreement or any other Transaction Document is expressly preceded by the
phrase “except as disclosed in the SEC Documents,” nothing contained in any of
the SEC Documents shall affect such Buyer’s right to rely on, or shall modify or
qualify in any manner or be an exception to any of, the Company’s
representations and warranties contained in this Agreement or any other
Transaction Document. “Significant Buyers” means (as applicable) (x) for
purposes of Section 4(o) hereof, collectively, (i) each Buyer whose Purchase
Price is equal to or exceeds $250,000 and (ii) Pyramid Trading, L.P. (“Pyramid”)
for so long as Cranshire Capital Advisors, LLC remains its investment manager
with respect to its Securities and (y) for all purposes of this Agreement (other
than Section 4(o) hereof), collectively, each Buyer whose Purchase Price is
equal to or exceeds $250,000, provided that for purposes of this clause (y)
Cranshire’s Purchase Price shall be deemed to also include the aggregate
Purchase Price paid by Pyramid (each of the foregoing is referred to herein as a
“Significant Buyer”). “Required Significant Buyers” means Significant Buyers
whose aggregate Purchase Prices equal at least 80% of the aggregate Purchase
Prices of all the Significant Buyers.

 

(f)          Notices. Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this Agreement must be in
writing and will be deemed to have been delivered: (i) upon receipt, if
delivered personally; (ii) when sent, if sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party); (iii) when sent, if sent by e-mail (provided
that such sent e-mail is kept on file (whether electronically or otherwise) by
the sending party and the sending party does not receive an automatically
generated message from the recipient’s e-mail server that such e-mail could not
be delivered to such recipient) and (iv) if sent by overnight courier service,
one (1) Business Day after deposit with an overnight courier service with next
day delivery specified, in each case, properly addressed to the party to receive
the same. The addresses, facsimile numbers and e-mail addresses for such
communications shall be:

 

36

 

 

If to the Company:

 

LightPath Technologies, Inc.

2603 Challenger Tech. Court, Suite 100

Orlando, Florida 32826

Facsimile: (407) 382-4007

E-mail address: jgaynor@lightpath.com

Attention: Chief Executive Officer

 

With a copy (for informational purposes only) to:

 

Baker & Hostetler LLP

200 S. Orange Ave., Suite 2300

Orlando, Florida 32801

Facsimile: (407) 841-0168

E-mail address: jdecker@bakerlaw.com

Attention: Jeffrey E. Decker, Esq.

 

If to the Transfer Agent:

 

Registrar and Transfer Company

10 Commerce Drive

Cranford, New Jersey 07016

Facsimile: (908) 497-2310

E-mail address: drillera@rtco.com

Attention: David Rillera

 

If to a Buyer, to its address and facsimile number set forth on the Schedule of
Buyers, with copies to such Buyer’s representatives as set forth on the Schedule
of Buyers,

 

with a copy (for informational purposes only) to:

 

Greenberg Traurig, LLP
77 W. Wacker Drive, Suite 3100
Chicago, Illinois 60601
Facsimile: (312) 456-8435

E-mail addresses: liebermanp@gtlaw.com

                             mazurt@gtlaw.com

Attention: Peter H. Lieberman, Esq.

                Todd A. Mazur, Esq.

 

37

 

 

or to such other address, facsimile number or e-mail address and/or to the
attention of such other Person as the recipient party has specified by written
notice given to each other party five (5) days prior to the effectiveness of
such change, provided that Greenberg Traurig, LLP shall only be provided copies
of notices sent to Cranshire. Written confirmation of receipt (A) given by the
recipient of such notice, consent, waiver or other communication, (B)
mechanically or electronically generated by the sender’s facsimile machine
containing the time, date and recipient facsimile number or (C) provided by an
overnight courier service shall be rebuttable evidence of personal service,
receipt by facsimile or receipt from an overnight courier service in accordance
with clause (i), (ii) or (iv) above, respectively. A copy of the e-mail
transmission containing the time, date and recipient e-mail address shall be
rebuttable evidence of receipt by e-mail in accordance with clause (iii) above.

 

(g)          Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and assigns,
including, as contemplated below, any assignee or transferee of any of the
Securities. The Company shall not assign this Agreement or any rights or
obligations hereunder without the prior written consent of the Required
Significant Buyers (which may be granted or withheld in the sole discretion of
the Required Significant Buyers), including, without limitation, by way of a
Fundamental Transaction (as defined in the Warrants) (unless the Company is in
compliance with the applicable provisions governing Fundamental Transactions set
forth in the Warrants). A Buyer may assign some or all of its rights hereunder
in connection with any permitted assignment or transfer of any of its Securities
without the consent of the Company, in which event such assignee or transferee
(as the case may be) shall be deemed to be a Buyer hereunder with respect to
such assigned rights.

 

(h)          No Third Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person, other than the Indemnitees referred to in Section 9(k).

 

(i)          Survival. The representations, warranties, agreements and covenants
shall survive the Closing. Each Buyer shall be responsible only for its own
representations, warranties, agreements and covenants hereunder.

 

(j)          Further Assurances. Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
any other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.

 

38

 

 

(k)          Indemnification. In consideration of each Buyer’s execution and
delivery of the Transaction Documents and acquiring the Securities thereunder
and in addition to all of the Company’s other obligations under the Transaction
Documents, the Company shall defend, protect, indemnify and hold harmless each
Buyer and each holder of any Securities and all of their stockholders, partners,
members, officers, directors, employees and direct or indirect investors and any
of the foregoing Persons’ agents or other representatives (including, without
limitation, those retained in connection with the transactions contemplated by
this Agreement) (collectively, the “Indemnitees”) from and against any and all
actions, causes of action, suits, claims, losses, costs, penalties, fees,
liabilities and damages, and expenses in connection therewith (irrespective of
whether any such Indemnitee is a party to the action for which indemnification
hereunder is sought), and including reasonable attorneys’ fees and disbursements
(the “Indemnified Liabilities”), incurred by any Indemnitee as a result of, or
arising out of, or relating to (a) any misrepresentation or breach of any
representation or warranty made by the Company in any of the Transaction
Documents, (b) any breach of any covenant, agreement or obligation of the
Company contained in any of the Transaction Documents or (c) any cause of
action, suit, proceeding or claim brought or made against such Indemnitee by a
third party (including for these purposes a derivative action brought on behalf
of the Company or any Subsidiary) or which otherwise involves such Indemnitee
that arises out of or results from (i) the execution, delivery, performance or
enforcement of any of the Transaction Documents, (ii) any transaction financed
or to be financed in whole or in part, directly or indirectly, with the proceeds
of the issuance of the Securities, (iii) any disclosure properly made by such
Buyer pursuant to Section 4(i), or (iv) the status of such Buyer or holder of
the Securities either as an investor in the Company pursuant to the transactions
contemplated by the Transaction Documents or as a party to this Agreement
(including, without limitation, as a party in interest or otherwise in any
action or proceeding for injunctive or other equitable relief). To the extent
that the foregoing undertaking by the Company may be unenforceable for any
reason, the Company shall make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities which is permissible under
applicable law. Except as otherwise set forth herein, the mechanics and
procedures with respect to the rights and obligations under this Section 9(k)
shall be the same as those set forth in Section 6 of the Registration Rights
Agreement.

 

(l)          Construction. The language used in this Agreement will be deemed to
be the language chosen by the parties to express their mutual intent, and no
rules of strict construction will be applied against any party. No specific
representation or warranty shall limit the generality or applicability of a more
general representation or warranty. Each and every reference to share prices,
shares of Common Stock and any other numbers in this Agreement that relate to
the Common Stock shall be automatically adjusted for stock splits, stock
combinations and other similar transactions that occur with respect to the
Common Stock after the date of this Agreement.

 

(m)         Remedies. Each Buyer and each holder of any Securities shall have
all rights and remedies set forth in the Transaction Documents and all rights
and remedies which such holders have been granted at any time under any other
agreement or contract and all of the rights which such holders have under any
law. Any Person having any rights under any provision of this Agreement shall be
entitled to enforce such rights specifically (without posting a bond or other
security, to the extent permitted by law), to recover damages by reason of any
breach of any provision of this Agreement and to exercise all other rights
granted by law. Furthermore, the Company recognizes that in the event that it
fails to perform, observe, or discharge any or all of its obligations under the
Transaction Documents, any remedy at law may prove to be inadequate relief to
the Buyers. The Company therefore agrees that the Buyers shall be entitled to
seek specific performance and/or temporary, preliminary and permanent injunctive
or other equitable relief from any court of competent jurisdiction in any such
case without the necessity of proving actual damages and without posting a bond
or other security.

 

39

 

 

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

 

(o)          Payment Set Aside; Currency. To the extent that the Company makes a
payment or payments to any Buyer hereunder or pursuant to any of the other
Transaction Documents or any of the Buyers enforce or exercise their rights
hereunder or thereunder, and such payment or payments or the proceeds of such
enforcement or exercise or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside, recovered from, disgorged
by or are required to be refunded, repaid or otherwise restored to the Company,
a trustee, receiver or any other Person under any law (including, without
limitation, any bankruptcy law, foreign, state or federal law, common law or
equitable cause of action), then to the extent of any such restoration the
obligation or part thereof originally intended to be satisfied shall be revived
and continued in full force and effect as if such payment had not been made or
such enforcement or setoff had not occurred. Until none of the Warrants are
outstanding, the Company shall not effect any stock combination, reverse stock
split or other similar transaction (or make any public announcement or
disclosure with respect to any of the foregoing) without the prior written
consent of the Required Significant Buyers (which may be granted or withheld in
the sole discretion of the Required Significant Buyers). Unless otherwise
expressly indicated, all dollar amounts referred to in this Agreement and the
other Transaction Documents are in United States Dollars (“U.S. Dollars”), and
all amounts owing under this Agreement and all other Transaction Documents shall
be paid in U.S. Dollars. All amounts denominated in other currencies (if any)
shall be converted into the U.S. Dollar equivalent amount in accordance with the
Exchange Rate on the date of calculation. “Exchange Rate” means, in relation to
any amount of currency to be converted into U.S. Dollars pursuant to this
Agreement, the U.S. Dollar exchange rate as published in the Wall Street Journal
on the relevant date of calculation.

 

(p)          Independent Nature of Buyers’ Obligations and Rights. The
obligations of each Buyer under the Transaction Documents are several and not
joint with the obligations of any other Buyer, and no Buyer shall be responsible
in any way for the performance of the obligations of any other Buyer under any
Transaction Document. Nothing contained herein or in any other Transaction
Document, and no action taken by any Buyer pursuant hereto or thereto, shall be
deemed to constitute the Buyers as, and the Company acknowledges that the Buyers
do not so constitute, a partnership, an association, a joint venture or any
other kind of group or entity, or create a presumption that the Buyers are in
any way acting in concert or as a group or entity with respect to such
obligations or the transactions contemplated by the Transaction Documents or any
matters, and the Company acknowledges that the Buyers are not acting in concert
or as a group, and the Company shall not assert any such claim, with respect to
such obligations or the transactions contemplated by the Transaction Documents.
The decision of each Buyer to purchase Securities pursuant to the Transaction
Documents has been made by such Buyer independently of any other Buyer. Each
Buyer acknowledges that no other Buyer has acted as agent for such Buyer in
connection with such Buyer making its investment hereunder and that no other
Buyer will be acting as agent of such Buyer in connection with monitoring such
Buyer’s investment in the Securities or enforcing its rights under the
Transaction Documents. The Company and each Buyer confirms that each Buyer has
independently participated with the Company in the negotiation of the
transaction contemplated hereby with the advice of its own counsel and advisors.
Each Buyer shall be entitled to independently protect and enforce its rights,
including, without limitation, the rights arising out of this Agreement or out
of any other Transaction Documents, and it shall not be necessary for any other
Buyer to be joined as an additional party in any proceeding for such purpose.
The use of a single agreement to effectuate the purchase and sale of the
Securities contemplated hereby was solely in the control of the Company, not the
action or decision of any Buyer, and was done solely for the convenience of the
Company and not because it was required or requested to do so by any Buyer. It
is expressly understood and agreed that each provision contained in this
Agreement and in each other Transaction Document is between the Company and a
Buyer, solely, and not between the Company and the Buyers collectively and not
between and among the Buyers.

 

[signature pages follow]

 

40

 

 

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

 

  COMPANY:       LIGHTPATH TECHNOLOGIES, INC.       By: /s/ J. James Gaynor    
  J. James Gaynor     Chief Executive Officer

 

 

 

 

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

 

  BUYER:       CRANSHIRE CAPITAL MASTER FUND,
LTD.       By: Cranshire Capital Advisors, LLC   Its: Investment Manager        
/s/ Keith A. Goodman   By: Keith A. Goodman   Its: Authorized Signatory

 

 

 

 

 

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

 

  BUYER:           PYRAMID TRADING, L.P.           /s/ Keith A. Goodman     By:
Keith A. Goodman     Its: Authorized Signatory  

 

 

 

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

 

  BUYER:       /s/ Brett A. Moyer     Brett A. Moyer

 

 

 

 

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

 

  BUYER:       /s/ Ami Silberman     Ami Silberman

 

 

 

 

 

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

 

  BUYER:           /s/ David Diamant     David Diamant           /s/ Ronni
Diamant     Ronni Diamant  

 

 

 

 

 

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

 

  BUYER:           THE BART MARCY TRUST           /s/ Barton C. Marcy     By:
Barton C. Marcy     Its: Trustee  

 

 

 

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

 

  BUYER:           DYETT-RICHARDSON FAMILY TRUST           /s/ Michael Dyett    
By: Michael Dyett     Its: Trustee  

 

 

 

 

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

 

  BUYER:           /s/ Lester B. Boelter     Lester B. Boelter  

 

 

 

 

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

 

  BUYER:           /s/ Richard Straeter     Richard Straeter  

 

 

 

 

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

 

  BUYER:           /s/ Raymond Smullyan     Raymond Smullyan  

 

 

 

 

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

 

  BUYER:           /s/ Mark Grinbaum     Mark Grinbaum  

 

 

 

 

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

 

  BUYER:           /s/ William S. Lapp     William S. Lapp  

 

 

 

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

 

  BUYER:           /s/ Eric Handorf     Eric Handorf  

 

 

 

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

 

  BUYER:           SHADOW CAPITAL LLC           /s/ B. Kent Garlinghouse     By:
B. Kent Garlinghouse     Its: Manager  

 

 

 

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

 

  BUYER:           /s/ Richard J. Lemming     Richard J. Lemming           /s/
Emily M. Lemming     Emily M. Lemming  

 

 

 

 

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

 

  BUYER:           OCTAGON CAPITAL PARTNERS           /s/ Steven Hart     By:
Steven Hart     Its: General Partner  

 

 

 

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

 

  BUYER:           SCHOTTENSTEIN CAPITAL
PARTNERS, LP           /s/ Gary L. Schottenstein     By: Gary L. Schottenstein  
  Its: General Partner  

 

 

 

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

 

  BUYER:           NEXT VIEW CAPITAL LP           /s/ Stewart Flink     By:
Stewart Flink     Its: Manager  

 

 

 

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

 

  BUYER:           /s/ Nicholas Carosi III     Nicholas Carosi III