EXECUTION
      COPY

     

     

    SECURITIES
      PURCHASE AGREEMENT

    


    BY
      AND AMONG

    


    MRU
      HOLDINGS, INC.

    


    AND

    


    THE
      PERSONS LISTED ON THE SCHEDULE OF BUYERS

    


    ATTACHED
      HERETO

    


    


    Dated
      as of October 19, 2007


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    TABLE
      OF CONTENTS

     

    
      	
              1.

            	
              PURCHASE
                AND SALE OF NOTES.

            	
              5

            
	 	
              a.

            	
              Closing
                Date

            	
              5

            
	 	
              b.

            	
              Form
                of Payment and Delivery of Notes

            	
              5

            
	 	
              c.

            	
              Currency;
                Interest

            	
              5

            
	
              2.

            	
              BUYERS’
                REPRESENTATIONS AND WARRANTIES.

            	
              6

            
	 	
              a.

            	
              Investment
                Purpose

            	
              6

            
	 	
              b.

            	
              Accredited
                Investor Status

            	
              6

            
	 	
              c.

            	
              Reliance
                on Exemptions

            	
              6

            
	 	
              d.

            	
              Information

            	
              6

            
	 	
              e.

            	
              No
                Governmental Review

            	
              6

            
	 	
              f.

            	
              Transfer
                or Resale

            	
              7

            
	 	
              g.

            	
              Legends

            	
              7

            
	 	
              h.

            	
              Authorization;
                Enforcement; Validity

            	
              8

            
	 	
              i.

            	
              Residency

            	
              8

            
	 	
              j.

            	
              No
                Other Agreements

            	
              8

            
	
              3.

            	
              REPRESENTATIONS
                AND WARRANTIES OF THE COMPANY.

            	
              8

            
	 	
              a.

            	
              Organization
                and Qualification; Subsidiaries

            	
              8

            
	 	
              b.

            	
              Authorization;
                Enforcement; Validity

            	
              9

            
	 	
              c.

            	
              Capitalization

            	
              9

            
	 	
              d.

            	
              Issuance
                of Securities

            	
              11

            
	 	
              e.

            	
              No
                Conflicts

            	
              11

            
	 	
              f.

            	
              SEC
                Documents; Financial Statements.

            	
              12

            
	 	
              g.

            	
              Sarbanes-Oxley
                Compliance; Internal Accounting Controls; Disclosure Controls and
                Procedures; Books and Records.

            	
              14

            
	 	
              h.

            	
              Absence
                of Certain Changes

            	
              16

            
	 	
              i.

            	
              Absence
                of Litigation

            	
              16

            
	 	
              j.

            	
              Full
                Disclosure; No Undisclosed Events, Liabilities, Developments or
                Circumstances

            	
              16

            
	 	
              k.

            	
              Acknowledgment
                Regarding Buyers’ Purchase of Notes

            	
              16

            
	 	
              l.

            	
              No
                General Solicitation

            	
              17

            
	 	
              m.

            	
              No
                Integrated Offering

            	
              17

            
	 	
              n.

            	
              [Reserved.]

            	
              17

            
	 	
              o.

            	
              Employee
                Relations

            	
              17

            
	 	
              p.

            	
              Intellectual
                Property Rights

            	
              18

            
	 	
              q.

            	
              Environmental
                Laws

            	
              18

            
	 	
              r.

            	
              Insurance

            	
              19

            
	 	
              s.

            	
              Regulatory
                Permits

            	
              19

            
	 	
              t.

            	
              Principal
                Market

            	
              19

            
	 	
              u.

            	
              Tax
                Status

            	
              19

            
	 	
              v.

            	
              Transactions
                With Related Parties

            	
              20

            
	 	
              w.

            	
              [Reserved.]

            	
              20

            
	 	
              x.

            	
              Foreign
                Corrupt Practices

            	
              20

            


    

     

    
      
        
        

      

      
        i

        
          

        

      

      
        
        

      

    

     

    
      	 	
              y.

            	
              Outstanding
                Indebtedness; Liens

            	
              20

            
	 	
              z.

            	
              Real
                Property

            	
              21

            
	 	
              aa.

            	
              Tangible
                Assets

            	
              21

            
	 	
              bb.

            	
              No
                Materially Adverse Contracts, Etc

            	
              21

            
	 	
              cc.

            	
              Investment
                Company

            	
              21

            
	 	
              dd.

            	
              Stock
                Options

            	
              22

            
	
              4.

            	
              AFFIRMATIVE
                COVENANTS.

            	
              22

            
	 	
              a.

            	
              Best
                Efforts

            	
              22

            
	 	
              b.

            	
              Form D
                and Blue Sky

            	
              22

            
	 	
              c.

            	
              Reporting
                Status

            	
              22

            
	 	
              d.

            	
              Use
                of Proceeds

            	
              22

            
	 	
              e.

            	
              Financial
                Information

            	
              23

            
	 	
              f.

            	
              Internal
                Accounting Controls

            	
              23

            
	 	
              g.

            	
              [Reserved.]

            	
              24

            
	 	
              h.

            	
              [Reserved.]

            	
              24

            
	 	
              i.

            	
              Expenses

            	
              24

            
	 	
              j.

            	
              Disclosure
                of Transactions and Other Material Information.

            	
              24

            
	 	
              k.

            	
              Pledge
                of Securities

            	
              25

            
	 	
              l.

            	
              Notices

            	
              26

            
	 	
              m.

            	
              Compliance
                with Laws and Maintenance of Permits

            	
              26

            
	 	
              n.

            	
              Inspection
                and Audits

            	
              26

            
	 	
              o.

            	
              Collateral

            	
              27

            
	 	
              p.

            	
              Insurance

            	
              27

            
	 	
              q.

            	
              Taxes

            	
              27

            
	 	
              r.

            	
              Intellectual
                Property

            	
              27

            
	 	
              s.

            	
              Patriot
                Act, Investor Secrecy Act and Office of Foreign Assets
                Control

            	
              27

            
	 	
              t.

            	
              Security
                Covenants

            	
              28

            
	 	
              u.

            	
              Dividends
                or Cash Distributions by Excluded Subsidiaries..

            	
              28

            
	 	
              v.

            	
              Public
                Disclosure of Change of Control or Organic Change

            	
              28

            
	 	
              w.

            	
              Right
                to Participate in Future Financing

            	
              29

            
	
              5.

            	
              NEGATIVE
                COVENANTS.

            	
              30

            
	 	
              a.

            	
              [Reserved.]

            	
              30

            
	 	
              b.

            	
              Status

            	
              30

            
	 	
              c.

            	
              Stay,
                Extension and Usury Laws

            	
              30

            
	 	
              d.

            	
              Restriction
                on Purchases or Payments

            	
              30

            
	 	
              e.

            	
              Payment
                and Lien Restrictions

            	
              30

            
	 	
              f.

            	
              Prepayments

            	
              31

            
	 	
              g.

            	
              Indebtedness

            	
              31

            
	 	
              h.

            	
              Liens

            	
              32

            
	 	
              i.

            	
              Sale
                of Collateral

            	
              32

            
	 	
              j.

            	
              Corporate
                Existence

            	
              32

            
	 	
              k.

            	
              Related
                Party Transactions

            	
              32

            
	 	
              l.

            	
              Restriction
                on Loans; Investments; Subsidiary Equity

            	
              32

            
	 	
              m.

            	
              Investment
                Company

            	
              33

            


    

     

    
      
        
        

      

      
        ii

        
          

        

      

      
        
        

      

    

     

    
      	 	
              n.

            	
              [Reserved.]

            	
              33

            
	 	
              o.

            	
              [Reserved.]

            	
              33

            
	 	
              p.

            	
              No
                Avoidance of Obligations

            	
              33

            
	 	
              q.

            	
              Regulation
                M

            	
              33

            
	 	
              r.

            	
              No
                Integrated Offering

            	
              33

            
	
              6.

            	
              [RESERVED.]

            	
              33

            
	
              7.

            	
              CONDITIONS
                TO THE OBLIGATIONS OF THE COMPANY TO SELL

            	
              33

            
	
              8.

            	
              CONDITIONS
                TO BUYERS’ OBLIGATIONS TO PURCHASE

            	
              34

            
	
              9.

            	
              INDEMNIFICATION.

            	
              36

            
	
              10.

            	
              GOVERNING
                LAW; MISCELLANEOUS.

            	
              38

            
	 	
              a.

            	
              Governing
                Law; Jurisdiction; Jury Trial

            	
              38

            
	 	
              b.

            	
              Counterparts

            	
              38

            
	 	
              c.

            	
              Headings

            	
              39

            
	 	
              d.

            	
              Severability

            	
              39

            
	 	
              e.

            	
              Entire
                Agreement; Amendments

            	
              39

            
	 	
              f.

            	
              Notices

            	
              39

            
	 	
              g.

            	
              Successors
                and Assigns

            	
              40

            
	 	
              h.

            	
              No
                Third Party Beneficiaries

            	
              40

            
	 	
              i.

            	
              Survival

            	
              40

            
	 	
              j.

            	
              Further
                Assurances

            	
              41

            
	 	
              k.

            	
              Termination

            	
              41

            
	 	
              l.

            	
              Placement
                Agent

            	
              41

            
	 	
              m.

            	
              No
                Strict Construction

            	
              41

            
	 	
              n.

            	
              Remedies

            	
              41

            
	 	
              o.

            	
              Rescission
                and Withdrawal Right

            	
              41

            
	 	
              p.

            	
              Payment
                Set Aside

            	
              42

            
	 	
              q.

            	
              Independent
                Nature of Buyers

            	
              42

            
	 	
              r.

            	
              Interpretative
                Matters

            	
              42

            


    

     

    
      
        
        

      

      
        iii

        
          

        

      

      
        
        

      

    


    SECURITIES
      PURCHASE AGREEMENT
      (the
“Agreement”),
      dated
      as of October 19, 2007, by and among MRU Holdings, Inc., a Delaware
      corporation, with principal offices
      located
      at 590 Madison Avenue, New York, New York 10022
      (the
“Company”),
      and
      the investors listed on the Schedule
      of Buyers
      attached
      hereto (each, a “Buyer”
and,
      collectively, the “Buyers”).
      Capitalized terms used and not defined elsewhere in this Agreement have the
      respective meanings assigned to such terms in the Appendix
      hereto.

     

    WHEREAS:
      

     

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

     

     

    B. The
      Buyers, severally and not jointly, desire to purchase from the Company, and
      the
      Company wishes to sell to the Buyers, upon the terms and conditions stated
      in
      this Agreement, secured senior notes, in the form attached as Exhibit
      A,
      in an
      original aggregate principal amount of $11,200,000 on
      the
      Closing Date (such notes, together with any promissory notes or other securities
      issued in exchange or substitution therefor or replacement thereof, and as
      any
      of the same may be amended, supplemented, restated or modified and in effect
      from time to time, the “Notes”).
      

     

    C. Contemporaneously
      with the Closing (as defined in Section
      1(a),
      below),
      the Company will execute and deliver a Pledge and Security Agreement, in the
      form attached as Exhibit B
      (as the
      same may be amended, supplemented, restated or modified and in effect from
      time
      to time, the “Pledge
      and Security
      Agreement”),
      in
      favor of the Collateral Agent, as collateral agent for the Buyers, pursuant
      to
      which the Company will pledge in favor of the Collateral Agent, as collateral
      agent for the Buyers, a first priority perfected security interest in the
      Pledged Collateral and a first priority security interest in the Account
      Collateral.

     

    D. Contemporaneously
      with the Closing, MRU ABS LLC, a Delaware limited liability company
      (“MRU
      ABS”),
      will
      execute and deliver an Assignment Agreement, in the form attached as
Exhibit
      C
      (the
“Assignment
      Agreement”)
      in
      favor of the Company, pursuant to which MRU ABS will distribute all of its
      rights to receive all of the residual cash flow from the MRU Student Loan Trust
      2007-A.

     

    E. Contemporaneously
      with the Closing, MRU ABS will execute and deliver a Direction Letter to The
      Bank of New York Trust Company, N.A., in the form attached as Exhibit
      D
      (the
“Direction
      Letter”)
      pursuant to which The Bank of New York Trust Company, N.A. will agree to
      distribute all of the residual cash flow from the MRU Student Loan Trust 2007-A
      to the Blocked Account (as defined in the Pledge and Security
      Agreement).

     

    F. Contemporaneously
      with the Closing, each of the Company’s Subsidiaries other than the Excluded
      Subsidiaries will execute and deliver a Guaranty, in the form attached hereto
      as
Exhibit
      E
      (as the
      same may be amended, supplemented, restated or modified and in effect from
      time
      to time, the “Guaranty”),
      pursuant to which the Subsidiaries will agree to guaranty certain obligations
      of
      the Company (the guarantees under the Guaranty, including any such guarantees
      added after the Closing, being referred to herein as the “Guarantees”).


    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    


    NOW
      THEREFORE,
      the
      Company and each of the Buyers, severally and not jointly, hereby agree as
      follows:

     

    1. PURCHASE
      AND SALE OF NOTES.

     

    Subject
      to the satisfaction (or waiver) of the conditions set forth in Sections
      7
      and
8
      below,
      the Company shall issue and sell to each Buyer, and each Buyer severally agrees
      to purchase from the Company (the “Closing”),
      Notes
      in the respective principal amounts set forth opposite such Buyer’s name on the
Schedule
      of Buyers.
      

     

    The
      aggregate purchase price (the “Purchase
      Price”)
      for
      the Notes purchased by each Buyer shall be the product
      of
      (i)
      $9,983,000, multiplied by
      (ii) the
      quotient of (A) the principal amount of the Notes purchased by such Buyer as
      set
      forth opposite such Buyer’s name in the Schedule
      of Buyers divided by
      (B)
      $11,200,000 (such quotient, such Buyer’s “Allocation
      Percentage”).
      

     

    a. Closing
      Date.
      The
      date and time of the closing of the purchase and sale of the Notes (the
“Closing
      Date”)
      shall
      be 10:00 a.m., New York City time, on the first Business Day following the
      date
      of this Agreement, subject
      to the satisfaction (or waiver) of all of the conditions to the Closing set
      forth in Sections
      7
      and
8
      (or such
      later or earlier date as is mutually agreed to by the Company and the Buyers).
      The Closing shall occur at the offices of Katten Muchin Rosenman LLP, 525 West
      Monroe Street, Suite 1900, Chicago, Illinois 60661, or at such other place
      as
      the Company and Buyers may collectively designate in writing. 

     

    b. Form
      of Payment and Delivery of Notes.
      On the
      Closing Date, (i) each Buyer shall pay such Buyer’s Allocation Percentage of the
      Purchase Price to the Company for the Notes to be issued and sold to such Buyer
      on the Closing Date, by wire transfer of immediately available funds in
      accordance with the Company’s written wire instructions (less any amount
      deducted and paid in accordance with Section
      4(i)),
      and
      (ii) the Company shall deliver to each Buyer a Note (or Notes in the principal
      amounts as such Buyer shall request) representing the original principal amount
      of the Notes that such Buyer is purchasing hereunder, duly executed on behalf
      of
      the Company and registered in the name of such Buyer or its designee.


     

    c. Currency;
      Interest.
      All
      payments to a Buyer under this Agreement or any of the other Transaction
      Documents shall be made in lawful money of the United States of America, by
      wire transfer of immediately available funds to such accounts as such Buyer
      may
      from time to time designate by written notice in accordance with Section
      10(f)
      of this
      Agreement. All references herein and in each of the other Transaction Documents
      to “dollars” or “$” shall mean the lawful money of the United States of America.
      Any amounts payable pursuant to this Agreement that are not paid when due shall
      bear interest at the rate equal to the lesser
      of
      (i) the
      Applicable Interest Rate (as such term is defined in the Notes), and (ii) the
      highest lawful interest rate.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    


    2. BUYERS’
      REPRESENTATIONS AND WARRANTIES.

     

    Each
      Buyer represents and warrants, as of the date of this Agreement and the Closing
      Date, with respect to only itself, that: 

     

    a. Investment
      Purpose.
      Such
      Buyer is acquiring the Notes (together with the related Guarantees) purchased
      by
      such Buyer hereunder (the Notes and the Guarantees being collectively referred
      to herein as the “Securities”)
      for
      such Buyer’s own account and not with a view towards, or for resale in
      connection with, the public sale or distribution thereof, except pursuant to
      sales registered under, or exempted from the registration requirements of,
      the
      1933 Act; provided,
      however,
      that by
      making the representations herein, such Buyer does not agree 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. 

     

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

     

    c. 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 the
      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. 

     

    d. 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 that have been requested by such Buyer.
      Such Buyer and its advisors, if any, have been afforded the opportunity to
      ask
      questions of, and have received answers from, the Company, provided that such
      answers do not affect any of the Buyer’s ability to rely upon the Company’s
      representations and warranties set forth herein. Neither such inquiries nor
      any
      other due diligence investigations conducted by such Buyer or its advisors,
      if
      any, or its representatives shall modify, amend or affect such Buyer’s right to
      rely on the Company’s representations and warranties contained in Sections
      3
      and
10(l)
      below or
      contained in any of the other Transaction Documents. 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.

     

    e. No
      Governmental Review.
      Such
      Buyer understands that no Governmental Entity has passed on or made any
      recommendation or endorsement of the Securities or the fairness or suitability
      of an investment in the Securities nor have such authorities passed upon or
      endorsed the merits of the offering of the Securities. 


    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    


    f. Transfer
      or Resale.
      Such
      Buyer understands that (i) the Securities have not been and are not being
      registered under the 1933 Act or any other 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 an
      opinion of counsel, in a generally acceptable form, to the effect that the
      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 the Securities can
      be
      sold, assigned or transferred pursuant to Rule 144 promulgated under the 1933
      Act, as amended (or a successor rule thereto) (“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 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 any other Securities Laws; and
      (iii) neither the Company nor any other person is under any obligation to
      register the Securities under the 1933 Act or any other Securities
      Laws. Notwithstanding
      the foregoing provisions of this paragraph, the Securities may be pledged in
      connection with a bona fide margin account or other loan or financing
      arrangement secured by the Securities. 

     

    g. Legends.
      Such
      Buyer understands that, except as set fort below, the certificates or other
      instruments representing the Notes shall bear a restrictive legend in the
      following form (the “1933
      Act Legend”):

     

    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 APPLICABLE STATE
      SECURITIES LAWS OR (B) AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE
      FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE
      SECURITIES LAWS OR (II) UNLESS SOLD PURSUANT TO RULE 144 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.

     

    The
      legend set forth above shall be removed and the Company shall issue a
      certificate without such legend to the holder of the Securities, if
      (i) such Securities are registered for resale under the 1933 Act,
      (ii) in connection with a sale transaction, such holder provides the
      Company with an opinion of counsel, in a generally acceptable form, to the
      effect that a public sale, assignment or transfer of the Securities may be
      made
      without registration under the 1933 Act, (iii) such holder provides the
      Company with reasonable assurances that the Securities can be sold pursuant
      to
      Rule 144(k) promulgated under the 1933 Act (or a successor rule thereto),
      or (iv) such holder provides the Company reasonable assurances that the
      Securities have been or are being sold pursuant to Rule 144.



    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    


    h. Authorization;
      Enforcement; Validity.
      Such
      Buyer is a validly existing corporation, partnership, limited liability company
      or other entity and has the requisite corporate, partnership, limited liability
      or other organizational power and authority to purchase the Securities pursuant
      to this Agreement. This Agreement has been duly and validly authorized, executed
      and delivered on behalf of such Buyer and is the valid and binding agreement
      of
      such Buyer enforceable against such Buyer in accordance with its terms. The
      Pledge and Security Agreement and each of the other agreements entered into
      by
      such Buyer in connection with the transactions contemplated hereby as of the
      Closing will have been duly and validly authorized, executed and delivered
      on
      behalf of such Buyer as of the Closing and will be valid and binding agreements
      of such Buyer, enforceable against such Buyer in accordance with their
      respective terms.

     

    i. Residency.
      Such
      Buyer is a resident of that jurisdiction specified below its address on the
      Schedule
      of Buyers.

     

    j. No
      Other Agreements.
      As of
      the Closing Date, such Buyer has not, directly or indirectly, made any
      agreements with the Company relating to the terms or conditions of the
      transactions contemplated by the Transaction Documents except as set forth
      in
      the Transaction Documents. 

     

    3. REPRESENTATIONS
      AND WARRANTIES OF THE COMPANY.

     

    The
      Company represents and warrants, as of the date of this Agreement and on the
      Closing Date, to each Buyer, that: 

     

    a. Organization
      and Qualification; Subsidiaries.
      The
      Company was formed on March 2, 2000. Set forth in Schedule
      3(a)
      is a
      true and correct list of the Company’s Subsidiaries and the jurisdiction in
      which each is organized or incorporated, together with their respective
      jurisdictions of organization. Other than with respect to the entities listed
      on
Schedule
      3(a),
      the
      Company does not directly or indirectly own any security or beneficial ownership
      interest, in any other Person (including through joint venture or partnership
      agreements) or have any interest in any other Person. Each of the Company and
      its Subsidiaries is a corporation, limited liability company, partnership or
      other entity and is duly organized or formed and validly existing in good
      standing under the laws of the jurisdiction in which it is incorporated or
      organized and has the requisite corporate, partnership, limited liability
      company or other organizational power and authority to own its properties and
      to
      carry on its business as now being conducted and as proposed to be conducted
      by
      the Company and its Subsidiaries. Each of the Company and its Subsidiaries
      is
      duly qualified to do business and is in good standing in every jurisdiction
      in
      which its ownership of property or the nature of the business conducted or
      presently proposed to be conducted by the Company and its Subsidiaries will
      make
      such qualification necessary, except to the extent that the failure to be so
      qualified or be in good standing could not have and could not be, individually
      or in the aggregate, reasonably be expected to have a Material Adverse Effect.
      Except as set forth in Schedule
      3(a),
      the
      Company holds all right, title and interest in and to 100% of the capital stock,
      equity or similar interests of each of its Subsidiaries, in each case, free
      and
      clear of any Liens,
      and no
      such Subsidiary owns
      capital stock or holds an equity or similar interest in any other Person. Each
      of the Excluded Subsidiaries as of the date hereof as identified as such in
      Schedule
      3(a),
      and
      each Subsidiary so identified meets all of the requirements of an Excluded
      Subsidiary as set forth in the definition thereof included in Appendix
      A.
      


    
      
        
        

      

      
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    b. Authorization;
      Enforcement; Validity.
      Each of
      the Company and each of its Subsidiaries has the requisite corporate or other
      organizational power and authority to enter into and perform its obligations
      under this Agreement and each of the other Transaction Documents to which such
      Person is a party and to issue the Securities in accordance with the terms
      hereof and thereof. The execution and delivery of the Transaction Documents
      by
      the Company and each of its Subsidiaries that is a party thereto and the
      consummation by the Company and each of its Subsidiaries that is a party thereto
      of the transactions contemplated hereby and thereby, including the issuance
      of
      the Notes and the Guarantees, have been duly authorized by the respective boards
      of directors, members, managers, trustees, stockholders, other equityholders
      or
      holders of beneficial interests, as applicable, of the Company and such
      Subsidiaries and no further consent or authorization is required by the Company,
      any such Subsidiaries or any of their respective boards of directors, members,
      managers, trustees, stockholders, other equityholders or holders of beneficial
      interests, as applicable. This Agreement and the other Transaction Documents
      dated of even date herewith have been duly executed and delivered by the Company
      and each of its Subsidiaries that is a party thereto, and constitute the valid
      and binding obligations of the Company and each of such Subsidiaries,
      enforceable against the Company and each of such Subsidiaries in accordance
      with
      their respective terms, except as may be limited by bankruptcy, insolvency,
      fraudulent conveyance or similar laws affecting creditors’ rights generally and
      general principles of equity. As of the Closing, the Transaction Documents
      dated
      after the date of this Agreement and on or prior to the Closing Date shall
      have
      been duly executed and delivered by the Company and each of its Subsidiaries
      that is a party thereto and shall constitute the valid and binding obligations
      of the Company and each of such Subsidiaries, enforceable against the Company
      and each of such Subsidiaries in accordance with their respective terms, except
      as may be limited by bankruptcy, insolvency, fraudulent conveyance or similar
      laws affecting creditors’ rights generally and general principles of equity.


     

    c. Capitalization.
      The
      authorized Capital Stock of the Company consists of:

     

    (i) 25,000,000
      shares of Preferred Stock, of which:

     

    (A) 4,500,000
      shares have been designated as Series A Convertible Preferred Stock (the
“Series
      A Convertible Preferred”),
      no
      shares of which are issued and outstanding; and

     

    (B) 12,000,000
      shares have been designated as Series B Convertible Preferred Stock (the
“Series
      B Convertible Preferred”),
      8,237,264 shares of which are issued and outstanding; and


    
      
        
        

      

      
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    (ii) 200,000,000
      shares of Common Stock, of which:

     

    (A) 25,999,793
      shares are issued and outstanding;

     

    (B) 9,500,000
      shares are reserved
      for
      issuance pursuant to the Company’s stock option, restricted stock and employee
      stock purchase plans described on Schedule
      3(c)(ii)(B)
      (the
“Equity
      Plans”),
      including 5,687,192 shares
      issuable pursuant to outstanding awards under the Equity Plans; and

     

    (C) 6,555,292
      shares are reserved for issuance pursuant to the Company’s outstanding warrants
      described on Schedule
      3(c)(ii)(C)
      (the
“Warrants”).
      

     

    No
      shares
      of Common Stock or Preferred Stock are reserved for issuance under any plan,
      agreement or arrangement, other than shares of Common Stock reserved for
      issuance with respect to the Series A Convertible Preferred, the Series B
      Convertible Preferred, the Warrants and under the Equity Plans; and except
      as
      described in the foregoing provisions of this Section 3(c),
      there
      are no shares of Capital Stock, Options, Convertible Securities or other equity
      securities of the Company authorized, issued or outstanding. All of the
      outstanding and issuable shares of Capital Stock have been, or upon issuance
      will be, validly issued and are, or upon issuance will be, fully paid and
      nonassessable. 

     

    Except
      as
      set forth on Schedule
      3(c):
      

     

    (1) no
      shares
      of the Capital Stock of the Company or any of its Subsidiaries are subject
      to
      preemptive rights or any other similar rights or any Liens suffered or permitted
      by the Company or any of its Subsidiaries; 

     

    (2) 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 for, any shares of 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 shares of 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 for, any shares of Capital Stock of the Company
      or any of its Subsidiaries; 

     

    (3) except
      as
      otherwise provided in any registration rights agreement described in
Schedule 3(c),
      there
      are no agreements or arrangements under which the Company or any of its
      Subsidiaries is obligated to register the sale of any of its securities under
      the 1933 Act; 


    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    


    (4) other
      than the Notes, there are no outstanding securities or instruments of the
      Company or any of its Subsidiaries that 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 bound to redeem
      a security of the Company or any of its Subsidiaries, and there are no other
      stockholder agreements or similar agreements to which the Company or any of
      its
      Subsidiaries is a party; 

     

    (5) there
      are
      no securities or instruments containing anti-dilution or similar provisions
      that
      will or may be triggered by the issuance of the Securities; and

     

    (6) the
      Company does not have any stock appreciation rights or “phantom stock” plans or
      agreements or any similar plan or agreement. 

     

    The
      Company has furnished
      to each
      Buyer true and correct copies of: 

     

    (A) the
      Company’s Restated Certificate of Incorporation, as amended and in effect (the
“Certificate
      of Incorporation”);
      

     

    (B) the
      Company’s Bylaws, as amended and in effect (the “Bylaws”);
      

     

    (C) the
      organizational documents of each of the Company’s Subsidiaries, as amended and
      in effect; and

     

    (D) except
      for award agreements pursuant to, and not materially different from the forms
      provided under, the Equity Plans, all documents and instruments containing
      the
      terms of all securities, if any, that, directly or indirectly, are convertible
      into, or exercisable or exchangeable for, Common Stock, and the material rights
      of the holders thereof in respect thereto. 

     

    d. Issuance
      of Securities.
      The
      Notes are duly authorized and, upon issuance in accordance with the terms of
      this Agreement, shall be free from all taxes and Liens with respect to the
      issuance thereof (other than Liens created or imposed upon by the Buyers) and
      entitled to the rights set forth therein; provided,
      however,
      that
      the Securities are subject to restrictions on transfer under the Securities
      Laws, assuming the accuracy of each of the representations and warranties set
      forth in Sections 2(a)
      through
      and including 2(g),
      the
      issuance by the Company of the Securities is exempt from registration under
      the
      1933 Act and any other applicable Securities Laws.

     

    e. No
      Conflicts.
      The
      execution and delivery of this Agreement and the other Transaction Documents
      by
      the Company and each of its Subsidiaries that is a party thereto, the
      performance by the Company and each of such Subsidiaries of its obligations
      hereunder and thereunder and the consummation by the Company and each of such
      Subsidiaries of the transactions contemplated hereby and thereby will
      not:

     

    (i) result
      in
      a violation of the certificate or articles of incorporation, certificate or
      articles of organization, bylaws, operating agreement, partnership agreement
      or
      any other governing documents, as applicable, of any such Person;



    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    


    (ii) conflict
      with, or constitute a breach or default (or an event which, with the giving
      of
      notice or passage of time or both, constitutes or would constitute a breach
      or
      default) under, or give to others any right of termination, amendment,
      acceleration or cancellation of, or other remedy with respect to, any agreement,
      indenture or instrument to which any such Person is a party; or 

     

    (iii) result
      in
      a violation of any law, rule, regulation, order, judgment or decree (including
      Securities Laws and the rules and regulations, if any, of the Principal Market)
      applicable to any such Person or by which any property or asset of any such
      Person is bound or affected. 

     

    Neither
      the Company nor any of its Subsidiaries is in violation of any term of its
      certificate or articles of incorporation, certificate or articles of
      organization, bylaws, operating agreement, partnership agreement or any other
      governing document, as applicable. Neither the Company nor any of its
      Subsidiaries is or has been in violation of any term of or in default under
      (or
      with the giving of notice or passage of time or both would be in violation
      of or
      default under) any contract, agreement, mortgage, indebtedness, indenture,
      instrument, judgment, decree or order or any Law applicable to the Company
      or
      its Subsidiaries, except where such violation or default could not, individually
      or in the aggregate, reasonably be expected to have a Material Adverse Effect
      or
      to result in the acceleration of any Indebtedness or other obligation. The
      business of the Company and its Subsidiaries has not been and is not being
      conducted, in violation of any Law of any Governmental Entity except as could
      not, individually or in the aggregate, reasonably be expected to have a Material
      Adverse Effect. Except for the filing of instruments to perfect security
      interests and as set forth in Schedule
      3(e),
      neither
      the Company nor any of its Subsidiaries is, has been, or will be required to
      obtain any consent, authorization or order of, or make any filing or
      registration with, any court or Governmental Entity in order for it to execute,
      deliver or perform any of its obligations under or contemplated by the
      Transaction Documents in accordance with the terms hereof or thereof. Except
      for
      the filing of Form D with the SEC, all consents, authorizations, orders,
      filings and registrations that the Company or any of its Subsidiaries is or
      has
      been required to obtain as described in the preceding sentence have been
      obtained or effected on or prior to the date of this Agreement and prior to
      the
      date of the effectiveness of such requirement. 

     

    f. SEC
      Documents; Financial Statements.

     

    (i) Since
      June 30, 2005, the Company has 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 this representation is made (including all exhibits included therein and
      financial statements and schedules thereto and documents incorporated by
      reference therein) being referred to herein as the “SEC
      Documents”
and
      the
      Company’s consolidated balance sheet as of June 30, 2007, as included in the
      Company’s annual report on Form 10-KSB, for the period then ended, as filed with
      the SEC on September 28, 2007, being referred to herein as the “Most
      Recent Balance Sheet”).
      A
      complete and accurate list of the SEC Documents is set forth on Schedule
      3(f)(i).
      Each of
      the SEC Documents was filed with the SEC via the SEC’s EDGAR system within the
      time frames prescribed by the SEC for the filing of such SEC Documents. As
      of
      their respective dates, the SEC Documents complied in all material respects
      with
      the Securities Laws. 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 light of the circumstances under which they were made,
      not misleading. Except as set forth on Schedule
      3(f)(i),
      since
      the filing of each of the SEC Documents, no event has occurred that would
      require an amendment or supplement to any such SEC Document and as to which
      such
      an amendment or supplement has not been filed and made publicly available on
      the
      SEC’s EDGAR system no less than five Business Days prior to the date this
      representation is made. Except as set forth on Schedule
      3(f)(i),
      the
      Company has not received any written comments from the SEC staff that have
      not
      been resolved to the satisfaction of the SEC staff. 


    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    


    (ii) As
      of
      their respective filing dates, the consolidated financial statements of the
      Company and its Subsidiaries included in the SEC Documents complied as to form
      in all material respects with applicable accounting requirements and the
      Securities Laws with respect thereto. Such consolidated 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) and fairly present in all material respects the financial position
      of
      the Company and its Subsidiaries as of the dates thereof and the results of
      their operations and cash flows for the periods then ended (subject, in the
      case
      of unaudited statements, to normal year-end audit adjustments that are not
      material individually or in the aggregate). 

     

    (iii) Since
      June 30, 2007, none of the Company, its Subsidiaries and their respective
      officers, directors and Affiliates has made any filing with the SEC, issued
      any
      press release or made, distributed, paid for or approved (or engaged any other
      Person to make or distribute) any other public statement, report, advertisement
      or communication on behalf of the Company or any of its Subsidiaries or
      otherwise relating to the Company or any of its Subsidiaries that contains
      any
      untrue statement of a material fact or omits any statement of material fact
      necessary in order to make the statements therein, in the light of the
      circumstances under which they are or were made, not misleading or has provided
      any other information to any Buyer, including information referred to in
Section
      2(d),
      that,
      considered in the aggregate, contains any untrue statement of a material fact
      or
      omits to state any material fact necessary in order to make the statements
      therein, in the light of the circumstances under which they are or were made,
      not misleading. Except as set forth in Schedule
      3(f)(iii),
      none of
      the Company, its Subsidiaries and their respective officers, directors,
      employees or agents has provided any Buyer with any material, nonpublic
      information. 

     

    (iv) Except
      as
      set forth in Schedule
      3(f)(iv),
      the
      Company is not required to file and will not be required to file any agreement,
      note, lease, mortgage, deed or other instrument entered into prior to the date
      this representation is made and in effect on the date this representation is
      made and to which the Company or any Subsidiary is a party or by which the
      Company or any Subsidiary is bound that has not been previously filed as an
      exhibit (including by way of incorporation by reference) to its reports filed
      or
      made with the SEC under the 1934 Act. 


    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    


    (v) The
      accounting firm that has expressed its opinion with respect to the consolidated
      financial statements included in the Company’s most recently filed annual report
      on Form 10-KSB (the “Audit
      Opinion”)
      is
      independent of the Company pursuant to the standards set forth in Rule 2-01
      of
      Regulation S-X promulgated by the SEC and such firm was otherwise qualified
      to
      render the Audit Opinion under applicable Securities Laws. Each accounting
      firm
      that since such filing has conducted or will conduct a review or audit of any
      of
      the Company’s consolidated financial statements is independent of the Company
      pursuant to the standards set forth in Rule 2-01 of Regulation S-X promulgated
      by the SEC and is otherwise qualified to conduct such review or audit and render
      an audit opinion under applicable Securities Laws. 

     

    (vi) There
      is
      no transaction, arrangement or other relationship between the Company and an
      unconsolidated or other off-balance-sheet entity that is required to be
      disclosed by the Company in its reports pursuant to the 1934 Act that has not
      been so disclosed in the SEC Documents at least five Business Days prior to
      the
      date of this Agreement. 

     

    (vii) Except
      as
      described in Schedule
      3(f)(vii),
      since
      June 30, 2005, there have been no internal or SEC inquiries or investigations
      (formal or informal) regarding accounting or revenue recognition discussed
      with,
      reviewed by or initiated at the direction of any executive officer, board of
      directors or any committee thereof of the Company or any of its Subsidiaries.
      

     

    (viii) The
      Company is not a “shell company” (as defined in Rule 12b-2 under the 1934
      Act).

     

    (ix) Schedule
      3(f)(ix)
      hereto
      sets forth a pro forma consolidated balance sheet of the Company and its
      Subsidiaries and the pro forma capitalization of the Company, in each case
      as of
      the Most Recent Balance Sheet, and giving effect to the transactions
      contemplated by this Agreement and each of the other Transaction Documents
      as if
      they occurred on the Closing Date (collectively, the “Pro
      Forma Financial Information”).
      The
      Pro Forma Financial Information (i) has been prepared based upon assumptions
      that provide a reasonable basis for presenting the effects of such transactions,
      and the pro forma adjustments shall give appropriate effect to such assumptions,
      (ii) is based upon financial information prepared in accordance with GAAP,
      (iii)
      consistent with the books and records of the Company and its Subsidiaries (which
      are true, accurate and complete), and (iv) fairly present such information
      as of
      the dates presented.

     

    g. Sarbanes-Oxley
      Compliance; Internal Accounting Controls; Disclosure Controls and Procedures;
      Books and Records.

     

    (i) The
      Company and its Subsidiaries are in all material respects in compliance with
      the
      applicable provisions of the Sarbanes-Oxley Act of 2002, as amended, and the
      rules and regulations thereunder (collectively, “Sarbanes-Oxley”).


    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    


    (ii) Since
      June 30, 2005, except as set forth on Schedule
      3(g)(ii),
      neither
      the Company nor any of its Subsidiaries nor any director or officer or, to
      the
      Company’s Knowledge, employee, of the Company or any of its Subsidiaries has
      received or otherwise had or obtained Knowledge of any complaint, allegation,
      assertion or claim, whether written or oral, regarding the accounting or
      auditing practices, procedures, methodologies or methods of the Company or
      any
      of its Subsidiaries or its internal accounting controls, including any
      complaint, allegation, assertion or claim that the Company or any of its
      Subsidiaries has engaged in questionable accounting or auditing practices.
      

     

    (iii) No
      attorney representing the Company or any of its Subsidiaries, whether or not
      employed by the Company or any of its Subsidiaries, has reported evidence of
      a
      material violation of Securities Laws, breach of fiduciary duty or similar
      violation by the Company or any of its Subsidiaries or any of their respective
      officers, directors, employees or agents to their respective boards of directors
      or any committee thereof or pursuant to Section 307 of Sarbanes-Oxley.


     

    (iv) The
      Company has, and has caused each of its Subsidiaries to, at all times keep
      books, records and accounts with respect to all of such Person’s business
      activities, in accordance with sound accounting practices and GAAP consistently
      applied. The Company and each of its Subsidiaries maintains a system of internal
      accounting controls sufficient to provide reasonable assurance that (A)
      transactions are executed in accordance with management’s general or specific
      authorizations, (B) transactions are recorded as necessary to permit preparation
      of financial statements in conformity with generally accepted accounting
      principles and to maintain asset and liability accountability, (C) access to
      assets or incurrence of liability is permitted only in accordance with
      management’s general or specific authorization and (D) 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 differences.

     

    (v) 
      The
      Company has timely filed and made publicly available on the SEC’s EDGAR system
      no less than five Business Days prior to the date of this representation, all
      certifications and statements required by (A) Rule 13a-14 or
      Rule 15d-14 under the 1934 Act and (B) Section 906 of Sarbanes-Oxley
      with respect to any Company SEC Documents. 

     

    (vi) The
      Company maintains disclosure controls and procedures required by
      Rule 13a-15 or Rule 15d-15 under the 1934 Act; such disclosure
      controls and procedures are, and at all times have been, effective to ensure
      that the information required to be disclosed by the Company in the reports
      that
      it files with or submits to the SEC (A) is recorded, processed, summarized
      and reported accurately within the time periods specified in the SEC’s rules and
      forms and (B) is accumulated and communicated to the Company’s management,
      including its principal executive officer and principal financial officer,
      as
      appropriate to allow timely decisions regarding required
      disclosure.

     

    (vii) The
      Company maintains internal control over financial reporting as required under
      the 1934 Act and has not been advised by its registered public accountants
      of
      any material weakness in the Company’s internal controls. 

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    


    h. Absence
      of Certain Changes.
      Since
      June 30, 2007, neither the Company nor any of its Subsidiaries has taken any
      steps, and neither the Company nor any of its Subsidiaries currently expects
      to
      take any steps to seek protection pursuant to any bankruptcy law nor does the
      Company or any of its Subsidiaries have any Knowledge or reason to believe
      that
      the creditors of such Person intend to initiate involuntary bankruptcy
      proceedings or any Knowledge of any fact that would reasonably lead a creditor
      to do so. Neither the Company nor any of its Subsidiaries is as of the date
      this
      representation is made, nor after giving effect to the transactions contemplated
      hereby or by any of the other Transaction Documents will be, Insolvent. Except
      as disclosed in Schedule 3(h),
      since
      June 30, 2007, neither the Company nor any of its Subsidiaries has declared
      or
      paid any dividends or sold any assets outside of the ordinary course of
      business. Except as disclosed in Schedule
      3(h),
      since
      June 30, 2007, neither the Company nor any of its Subsidiaries has had any
      capital expenditures outside the ordinary course of its business.

     

    i. Absence
      of Litigation.
      Except
      as set forth on Schedule
      3(i),
      (i)
      there has at no time been any action, suit, proceeding, inquiry or investigation
      (“Litigation”)
      before
      or by any court, public board, Governmental Entity, self-regulatory organization
      or body pending or, to the Company’s Knowledge, threatened against or affecting
      the Company or any of its Subsidiaries, and (ii) to the Company’s Knowledge, no
      director or officer of the Company or any of its Subsidiaries has been involved
      in securities-related Litigation during the past five years. No Litigation
      disclosed on Schedule
      3(i)
      has, has
      had or could reasonably be expected to have, individually or in the aggregate,
      a
      Material Adverse Effect.

     

    j. Full
      Disclosure; No Undisclosed Events, Liabilities, Developments or
      Circumstances.
      Since
      June 30, 2007, there has been no Material Adverse Effect and no circumstances
      exist that, in the aggregate, could reasonably be expected to be, cause or
      have
      a Material Adverse Effect. Except (A) as and to the extent disclosed or reserved
      against on the Most Recent Balance Sheet, (B) as incurred since the date thereof
      in the ordinary course of business consistent with past practice, (C) as
      incurred at the Closing Date under the Notes and the other Transaction
      Documents, or (D) as set forth on Schedule
      3(j),
      neither
      the Company, nor any of its Subsidiaries has any material liabilities or
      obligations of any nature, whether fixed or unfixed, known or unknown, secured
      or unsecured, absolute, accrued, contingent or otherwise and whether due or
      to
      become due. No representation or warranty or other statement made by the Company
      in this Agreement or any of the other Transaction Documents, the schedules
      hereto or any certificate or instrument delivered pursuant to this Agreement
      contains any untrue statement or omits to state a material fact necessary to
      make any such statement, in light of the circumstances in which it was made,
      not
      misleading. 

     

    k. Acknowledgment
      Regarding Buyers’ Purchase of Notes.
      The
      Company acknowledges and agrees that each Buyer is acting solely in the capacity
      of an arm’s length purchaser with respect to the Company in connection with this
      Agreement and the other Transaction Documents and the transactions contemplated
      hereby and thereby. The Company further acknowledges that no Buyer is acting
      as
      a financial advisor or fiduciary of any party to this Agreement or any of the
      other Transaction Documents (or in any similar capacity) with respect to this
      Agreement and the other Transaction Documents and the transactions contemplated
      hereby and thereby, and any advice given by any 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 decision of the Company and each of its Subsidiaries to enter into
      the
      Transaction Documents has been based solely on the independent evaluation by
      such Person and its representatives.


    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    


    l. No
      General Solicitation.
      Neither
      the Company nor any of its Affiliates, nor any Person acting on the behalf
      of
      any of the foregoing, has engaged or will engage in any form of general
      solicitation or general advertising (within the meaning of Regulation D
      under the 1933 Act), including advertisements, articles, notices, or other
      communications published in any newspaper, magazine or similar media or
      broadcast over radio, television or internet or any seminar or meeting whose
      attendees have been invited by general solicitation or general advertising,
      in
      connection with the offer or sale of the Securities. 

     

    m. No
      Integrated Offering.
      Neither
      the Company nor any of its Affiliates, nor any Person acting on the behalf
      of
      any of the foregoing, has, directly or indirectly, made any offers or sales
      of
      any security or solicited any offers to purchase any security, under
      circumstances that would require registration of any of the Securities under
      the
      1933 Act or cause this offering of the Securities to be integrated with prior
      offerings by the Company for purposes of the 1933 Act, nor will the Company
      or
      any of its Affiliates or any Person acting on behalf of any of the foregoing
      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 the Securities
      to
      be integrated with other offerings for purposes of the 1933 Act. 

     

    n. [Reserved.]

     

    o. Employee
      Relations.
      Neither
      the Company nor any of its Subsidiaries is involved in any labor union dispute
      nor, to the Knowledge of the Company, is any such dispute threatened. None
      of
      the employees of either the Company or any of its Subsidiaries is or has been
      a
      member of a union that relates, or following the Closing will relate, to such
      employee’s relationship with the Company and neither the Company nor any of its
      Subsidiaries is or following the Closing will be, a party to a collective
      bargaining agreement. No executive officer (as defined in Rule 3b-7 under the
      1934 Act), nor any other individual whose termination would be required to
      be
      disclosed on a Current Report on Form 8-K, has notified the Company that such
      individual intends to leave the Company or otherwise terminate such individual’s
      employment with the Company. Except as set forth on Schedule
      3(o),
      no such
      individual is, has been, or is now expected to be, in violation of any material
      term of any employment contract, confidentiality, disclosure or proprietary
      information agreement or non-competition agreement, or any other contract or
      agreement or any restrictive covenant, and the employment of each such
      individual does not, has not and will not subject the Company or any of its
      Subsidiaries to any liability with respect to any of the foregoing matters.
      The
      Company and each of its Subsidiaries is, and has at all times been, in
      compliance in all material respects with all Laws relating to employment and
      employment practices, terms and conditions of employment and wages and hours.
      The Company and each of its Subsidiaries is, and has at all times been, in
      compliance in all material respects with all Laws relating to employee benefits
      and employee benefit plans (as such terms are defined in
      ERISA).


    
      
        
        

      

      
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    p. Intellectual
      Property
      Rights.
      Except
      as set forth on Schedule
      3(p),
      the
      Company and its Subsidiaries own, possess or can obtain on commercially
      reasonable terms adequate rights or licenses to use all trademarks, trademark
      applications and registrations, trade names, service marks, service mark
      registrations, service names, patents, patent rights, patent applications,
      copyrights (whether or not registered), inventions, licenses, approvals,
      governmental authorizations, trade secrets and other intellectual property
      rights (collectively, “Intellectual
      Property”)
      necessary to conduct their respective businesses as conducted as of the date
      this representation is made. Except as set forth in Schedule
      3(p),
      (i)
      none of the rights of the Company or any of its Subsidiaries in its Intellectual
      Property have expired or terminated, or are expected to expire or terminate
      within five years from the date of this Agreement, except to the extent such
      termination could not and could not reasonably be expected, individually or
      in
      the aggregate, to have a Material Adverse Effect, (ii) there has been no
      infringement by the Company or any of its Subsidiaries or any of the Company’s
      or any of its Subsidiaries’ licensors or licensees of any Intellectual Property
      rights of others, (iii) to the Knowledge of the Company, there has been no
      infringement by any third parties of any Intellectual Property owned or licensed
      by the Company or any of its Subsidiaries, or of any development of similar
      or
      identical trade secrets or technical information by others, (iv) there is no
      claim, action or proceeding against or, to the Knowledge of the Company, being
      threatened against, the Company, any of its Subsidiaries or any of their
      respective licensors regarding their Intellectual Property or infringement
      of
      other Intellectual Property rights and there is no claim, action or proceeding
      against or, to the Knowledge of the Company, being threatened against the
      Company, any of its Subsidiaries or any of their respective licensors regarding
      their Intellectual Property or infringement of other Intellectual Property
      rights, (v) there are no facts or circumstances that could reasonably be
      expected to give rise to any of the foregoing, (vi) to the Knowledge of the
      Company, there is no patent or patent application which contains claims that
      interfere with the issued or pending claims of any of the Intellectual Property
      owned or licensed by the Company or any of its Subsidiaries, and (vii) none
      of
      the technology employed by the Company or any of its Subsidiaries has been
      obtained or is being used by the Company or any of its Subsidiaries in violation
      of any material contractual obligation binding on the Company or any of its
      Subsidiaries or is being used by any of the officers or directors of the Company
      or any of its Subsidiaries or, to the Knowledge of the Company, any employees
      of
      the Company or of its Subsidiaries on behalf of the Company or any of its
      Subsidiaries in violation of the rights of any Person or Persons. The Company
      and its Subsidiaries have taken reasonable security measures to protect the
      secrecy, confidentiality and the value of all of their material Intellectual
      Property.

     

    q. Environmental
      Laws.
      Each of
      the Company and its Subsidiaries (i) is, and has at all times been, in
      compliance in all material respects with any and all, and has not violated
      in
      any material respect any, Environmental Laws (as defined below), (ii) has
      no, and has never had any, liability for failure to comply with any
      Environmental Law, (iii) has received all permits, licenses or other approvals
      required of it under applicable Environmental Laws to conduct its business
      as
      presently conducted, and (iv) is in compliance with all terms and
      conditions of any such permit, license or approval, except, in each case, where
      the failure to so comply reasonably would not be expected to result in a
      Material Adverse Effect. 

     

    
      
        
        

      

      
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    r. 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 not be able to renew its existing insurance coverage as and when
      such coverage expires or to obtain similar coverage from similar insurers as
      may
      be necessary to continue its business at a cost that would not reasonably be
      expected to have a Material Adverse Effect.

     

    s. Regulatory
      Permits.
      The
      Company and its Subsidiaries possess all certificates, authorizations,
      approvals, licenses and permits issued by the appropriate federal, state or
      foreign regulatory authorities necessary to conduct their respective businesses
      as conducted at the time this representation is made (“Permits”),
      except where the failure to possess such Permits would not have, individually
      or
      in the aggregate, a Material Adverse Effect, and neither the Company nor any
      of
      its Subsidiaries has received any notice of proceedings relating to the
      revocation or modification of any such Permit. 

     

    t. Principal
      Market.
      The
      Company is not in violation of any of the rules, regulations or requirements
      of
      the NASDAQ Global Market (the “Principal
      Market;”
      provided
      however,
      that, if after the date of this Agreement the Common Stock is listed on another
      national securities exchange, the “Principal
      Market”
shall
      mean such national securities exchange) and has no Knowledge of any facts or
      circumstances which would reasonably lead to delisting or suspension, or
      termination of the trading of, the Common Stock by the Principal Market in
      the
      foreseeable future. Since July 16, 2007, (i) the Company’s Common Stock has been
      quoted 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, or termination of the trading, of the
      Common Stock from the Principal Market. 

     

    u. Tax
      Status.
      The
      Company and each of its Subsidiaries (i) has made or filed all federal, state
      and foreign income and all other tax returns, reports and declarations required
      by any jurisdiction to which it is subject, (ii) has paid all taxes and other
      governmental assessments and charges shown or determined to be due on such
      returns, reports and declarations, except those being contested in good faith
      and for which the Company has made appropriate reserves on its books, and (iii)
      has set aside on its books provisions reasonably adequate for the payment of
      all
      taxes for periods subsequent to the periods to which such returns, reports
      or
      declarations (referred to in clause (i) above) apply, provided
      that
      such taxes have, have had, or are expected in the future to have, a Material
      Adverse Effect. There are no unpaid taxes claimed in writing to be due from
      the
      Company or any of its Subsidiaries by the taxing authority of any jurisdiction,
      and there is no basis for any such claim. Neither the Company nor any of its
      Subsidiaries is a “United States real property holding corporation”
(“USRPHC”)
      as
      that term is defined in Section 897(c)(2) of the Internal Revenue Code of 1986,
      as amended, and the Treasury Regulations promulgated thereunder. 

     

    
      
        
        

      

      
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    v. Transactions
      With Related Parties.
      Except
      as set forth on Schedule
      3(v),
      no
      Related Party of the Company or any of its Subsidiaries, nor any Affiliate
      thereof, is presently, has been within the past three years, or will be as
      a
      result of the transactions contemplated by this Agreement and the other
      Transaction Documents, a party to any transaction, contract, agreement,
      instrument, commitment, understanding or other arrangement or relationship
      with
      the Company or any of its Subsidiaries, whether for the furnishing of services
      to or by, providing for rental of real or personal property to or from, or
      otherwise requiring payments or consideration to or from any such Related Party.
      No Related Party of the Company or any of its Subsidiaries, or any of their
      respective affiliates, has any direct or indirect ownership interest in any
      Person (other than ownership of less than 2% of the outstanding common stock
      of
      a publicly traded corporation) in which the Company or any of its Subsidiaries
      has any direct or indirect ownership interest or with which the Company or
      any
      of its Subsidiaries competes or has a business relationship. 

     

    w. [Reserved.]

     

    x. Foreign
      Corrupt Practices.
      Neither
      the Company, nor any of its Subsidiaries, nor any director or officer, or,
      to
      the Knowledge of the Company, any 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, used any corporate funds for any
      unlawful contribution, gift, entertainment or other unlawful expenses relating
      to political activity; made any direct or indirect unlawful payment to any
      foreign or domestic government official or employee from corporate funds;
      violated or is in violation of any provision of the U.S. Foreign Corrupt
      Practices Act of 1977, as amended; or made any unlawful bribe, rebate, payoff,
      influence payment, kickback or other unlawful payment to any foreign or domestic
      government official or employee.

     

    y. Outstanding
      Indebtedness; Liens.
      Payments of principal and other payments due under the Notes will, upon issuance
      at the Closing, rank senior to all other Indebtedness of the Company or any
      of
      its Subsidiaries (in right of payment, whether with respect of payment of
      redemptions, interest or damages or upon liquidation or dissolution or
      otherwise) other than Indebtedness of the Excluded Subsidiaries pursuant to
      Warehouse Documents. Neither the Company nor any of its Subsidiaries has any,
      and upon consummation of the transactions contemplated hereby and by the other
      Transaction Documents will not have any, outstanding Indebtedness other than
      the
      Indebtedness permitted under Section
      5(g).
      There
      are no, and upon consummation of the transactions contemplated hereby and by
      the
      other Transaction Documents there will not be any, Liens on any of the assets
      of
      the Company and its Subsidiaries other than the Liens permitted under
Section
      5(h).
      There
      are no, and upon consummation of the transactions contemplated hereby and by
      the
      other Transaction Documents there will not be any, financing statements securing
      obligations of any amounts filed against the Company or any of its Subsidiaries
      or any of their respective assets, other than under the Pledge and Security
      Agreement and the Warehouse Documents.

     

    
      
        
        

      

      
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    z. Real
      Property.
      Neither
      the Company nor any of its Subsidiaries owns any real property. Schedule
      3(z)
      contains
      a complete and correct list of all the real property, facilities and fixtures
      that (i) are leased or, in the case of fixtures, otherwise owned or possessed
      by
      the Company or any of its Subsidiaries, (ii) in connection with which the
      Company or any of its Subsidiaries has entered into an option agreement,
      participation agreement or acquisition agreement or (iii) the Company or any
      of
      its Subsidiaries has agreed to lease or otherwise acquire or may be obligated
      to
      lease or otherwise acquire in connection with the conduct of its business
      (collectively, including any of the foregoing acquired after the date of this
      Agreement, the “Real
      Property”),
      which
      list identifies all of the Real Property and specifies which of the Company
      and
      its Subsidiaries leases, owns or possesses each item of the Real Property.
      Schedule
      3(z)
      also
      contains a complete and correct list of all leases and other agreements with
      respect to which the Company or any of its Subsidiaries is a party or otherwise
      bound or affected with respect to the Real Property, except easements, rights
      of
      way, access agreements, surface damage agreements, surface use agreements or
      similar agreements that pertain to Real Property that is contained wholly within
      the boundaries of any leased Real Property otherwise described on Schedule
      3(z)
      (the
“Real
      Property Leases”).
      All
      of the Real Property Leases are valid and in full force and effect and are
      enforceable against all parties thereto. Neither the Company nor any of its
      Subsidiaries, except as may be limited by bankruptcy, insolvency, fraudulent
      conveyance or similar laws affecting creditors’ rights generally and general
      principles of equity, is in default in any material respect under any of such
      Real Property Leases and no event has occurred which with the giving of notice
      or the passage of time or both could constitute a default under, or otherwise
      give any party the right to terminate, any of such Real Property Leases, or
      could adversely affect the Company’s or any of its Subsidiaries’ interest in and
      title to the Real Property subject to any of such Real Property Leases. No
      Real
      Property Lease is subject to termination, modification or acceleration as a
      result of the transactions contemplated hereby.

     

    aa. Tangible
      Assets.
      The
      Company and its Subsidiaries have good and marketable title to all of the
      tangible assets that are material to their businesses (the “Assets”),
      in
      each case free and clear of any Lien, other than Permitted Liens. The Assets
      include all tangible assets necessary for the conduct of the Company’s and its
      Subsidiaries businesses as presently proposed to be conducted. The Assets that
      are facilities, fixtures, equipment, and other personal property have been
      maintained in accordance with normal industry practice, and are in good
      operating condition and repair (subject to normal wear and tear), and are
      suitable for the purposes for which they are now used. There are no existing
      agreements, options, commitments or rights with, of or to any Person to acquire
      any such Assets, or any interests therein.

     

    bb. No
      Materially Adverse Contracts, Etc.
      The
      Company is not subject to any charter, contract, agreement, instrument,
      corporate or other legal restriction, or any judgment, decree, order, rule,
      regulation or other Law that has, has had, or is expected in the future to
      have,
      a Material Adverse Effect. 

     

    cc. Investment
      Company.
      The
      Company is not, and upon each Closing will not be, 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.

     

    
      
        
        

      

      
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    dd. Stock
      Options.
      Except
      as set forth in Schedule
      3(dd),
      every
      Option issued by the Company (i) has (or, if no longer outstanding, had), with
      respect to each share of Common Stock into which it is convertible or for which
      it is exercisable or exchangeable, an exercise price equal to or greater than
      the fair market value per share of Common Stock on the date of grant of such
      Option, (ii) was issued in compliance with the terms of the plan under which
      it
      was issued and in compliance with applicable Laws, rules and regulations,
      including the rules and regulations of the Principal Market, and (iii) has
      been
      accounted for in accordance with GAAP and otherwise been disclosed accurately
      and completely and in accordance with the requirements of the Securities Laws,
      including Rule 402 of Regulation S-K promulgated by the SEC, and the Company
      has
      paid, or properly reserved for, all taxes payable with respect to each such
      Option (including with respect to the issuance and exercise thereof), and has
      not deducted any amounts from its taxable income that it is not entitled to
      deduct with respect to any such stock option (including the issuance and
      exercise thereof). 

     

    4. AFFIRMATIVE
      COVENANTS.

     

    a. Best
      Efforts.
      Each
      party shall use its reasonable best efforts to timely satisfy each of the
      conditions to be satisfied by it as provided in Sections
      7
      and
8
      of this
      Agreement.

     

    b. Form D
      and Blue Sky.
      The
      Company agrees to timely 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 to occur on the Closing Date pursuant to this Agreement under
      applicable Securities Laws of the states of the United States, and shall provide
      to each Buyer evidence of any such action so taken on or prior to the Closing
      Date. The Company shall make all filings and reports relating to the offer
      and
      sale of the Securities required under applicable Securities Laws of the states
      of the United States following the Closing Date.

     

    c. Reporting
      Status.
      During
      the period commencing on the date of this Agreement and ending on the date
      on
      which no Notes remain outstanding and the Pledge and Security Agreement has
      been
      terminated (the period ending on such latest date, 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 Securities Laws
      otherwise would permit such termination. 

     

    d. Use
      of
      Proceeds.
      The
      Company will use the proceeds from the sale of the Securities first, to pay
      expenses and commissions related to the sale of the Securities, and second,
      for
      general working capital needs. 

     

    
      
        
        

      

      
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    e. Financial
      Information.
      Unless
      the following are filed with the SEC through EDGAR and are immediately available
      to the public through the EDGAR system, the Company agrees to send the following
      to each Buyer during the Reporting Period: (i) within one Business Day after
      the
      filing thereof with the SEC, a copy of each of its quarterly reports on Form
      10-QSB or 10-Q and annual reports on Form 10-KSB or 10-K, as the case may be
      (each, a “Periodic
      Report”),
      Current Reports on Form 8-K, registration statements (other than on Form S-8)
      and amendments and supplements to each of the foregoing, (ii) unless immediately
      available through Bloomberg, facsimile copies of all press releases issued
      by
      the Company or any of its Subsidiaries, contemporaneously with the issuance
      thereof, and (iii) copies of any notices and other information made available
      or
      given to the stockholders of the Company generally, contemporaneously with
      the
      making available or giving thereof to the stockholders. Within one Business
      Day
      after the date the Company files any Periodic Report during the Reporting
      Period, the Company shall deliver to each Buyer and each holder of Notes a
      compliance certificate, in form and substance satisfactory to such Buyer or
      holder. Such compliance certificate shall not contain any material, non-public
      information regarding the Company or any of its Subsidiaries. 

     

    f. Internal
      Accounting Controls.
      During
      the Reporting Period, the Company shall, and, shall cause each of its
      Subsidiaries to:

     

    (i) at
      all
      times keep books, records and accounts with respect to all of such Person’s
      business activities, in accordance with sound accounting practices and GAAP
      consistently applied;

     

    (ii) maintain
      a system of internal accounting controls sufficient to provide reasonable
      assurance that (A) transactions are executed in accordance with management’s
      general or specific authorizations, (B) transactions are recorded as necessary
      to permit preparation of financial statements in conformity with GAAP and to
      maintain asset and liability accountability, (C) access to assets or incurrence
      of liability is permitted only in accordance with management’s general or
      specific authorization and (D) 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
      differences;

     

    (iii) timely
      file and make publicly available on the SEC’s EDGAR system, all certifications
      and statements required by (A) Rule 13a-14 or Rule 15d-14 under the 1934 Act
      and
      (B) Section 906 of Sarbanes Oxley with respect to any Periodic Reports;


     

    (iv) maintain
      disclosure controls and procedures required by Rule 13a-15 or Rule 15d-15 under
      the 1934 Act, and cause such disclosure controls and procedures to be effective
      at all times to ensure that the information required to be disclosed by the
      Company in the reports that it files with or submits to the SEC (A) is recorded,
      processed, summarized and reported accurately within the time periods specified
      in the SEC’s rules and forms and (B) is accumulated and communicated to the
      Company’s management, including its principal executive officer and principal
      financial officer, as appropriate to allow timely decisions regarding required
      disclosure; and

     

    (v) maintain
      internal control over financial reporting as required under the 1934 Act.


     

    
      
        
        

      

      
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    g. [Reserved.]

     

    h. [Reserved.]

     

    i. Expenses.
      At the
      Closing, the Company shall pay each Buyer (A) a transaction fee in an amount
      equal to the product of (I) such Buyer’s Allocation Percentage, multiplied by
      (II) $112,000, and (B) a reimbursement amount equal to the result of (X) all
      of
      such Buyer’s legal, due diligence and other expenses incurred in connection with
      this Agreement and the transaction contemplated hereby, including fees and
      expenses of attorneys, investigative and other consultants and travel costs
      and
      all other expenses relating to negotiating and preparing the Transaction
      Documents and consummating the transactions contemplated thereby, minus
      (Y) any
      amount previously paid by the Company to such Buyer therefor. The aggregate
      amount payable to each Buyer pursuant to the preceding sentence at the Closing
      shall be withheld as an off-set by such Buyer from its Purchase Price to be
      paid
      by it at such Closing. In addition to reimbursement obligations of the Company
      set forth in above in this Section
      4(i),
      and not
      in limitation thereof, following the Closing, the Company shall promptly
      reimburse each Buyer and each holder of Notes for all of the respective
      out-of-pocket fees, costs and expenses incurred thereby in connection with
      any
      amendment, modification or waiver of any of the Transaction Documents, the
      enforcement of such Person’s rights and remedies under any of the Transaction
      Documents and/or any release, termination, amendment or modification of any
      Lien
      of such Buyer or holder or the Collateral Agent in any of the Pledged Collateral
      or the Account Collateral. 

     

    j. Disclosure
      of Transactions and Other Material Information.

     

    (i) On
      or
      prior to 4:00 p.m. (New York City time) on the second Business Day following
      the
      Closing Date, the Company shall file a Form 8-K (the “Announcing
      Form 8-K”)
      with
      the
      SEC. The Announcing Form 8-K, (x) shall describe the terms of the transactions
      contemplated by the Transaction Documents, including the purchase of the Notes,
      (y) shall include as exhibits to such Form 8-K this Agreement (but not the
      schedules hereto), the
      form
      of Note and the form of Pledge and Security Agreement and the form of the
      Guaranty, and (z) shall include any other information required to be disclosed
      therein pursuant to any Securities Laws or other Laws. The Company represents
      and warrants that none of the information contained in any of the schedules
      hereto (except for information specifically regarding the transaction
      contemplated hereby) constitutes material non-public information regarding
      the
      Company or any of its Subsidiaries. Unless required by Law, the Company shall
      not make any public announcement regarding the transactions contemplated hereby
      prior to the Closing. Subject to the agreements and covenants set forth in
      this
Section
      4(j),
      the
      Company shall not issue any press releases or any other public statements with
      respect to the transactions contemplated hereby or disclosing the name of any
      Buyer; provided,
      however,
      that
      the Company shall be entitled, without the prior approval of any Buyer, to
      make
      any press release or other public disclosure with respect to such transactions
      (A) in substantial conformity with the Announcing Form 8-K and contemporaneously
      therewith and (B) as is required by applicable Law (provided;
      however,
      that
      the Buyers shall be consulted by the Company in connection with any such press
      release or other public disclosure prior to its release and shall be provided
      with a copy thereof). 

     

    
      
        
        

      

      
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    (ii) The
      Company hereby represents, warrants, covenants and agrees that on and after
      the
      December 4, 2007, no Buyer shall be in possession of any material nonpublic
      information received from the Company, any of its Subsidiaries or any of their
      respective Affiliates, officers, directors, employees or agents. Notwithstanding
      any provision herein to the contrary, the Company shall not, and shall cause
      each of its Subsidiaries and its and each of their respective Affiliates,
      officers, directors, employees and agents not to, provide any Buyer with any
      material nonpublic information regarding the Company or any of its Subsidiaries
      from and after the filing of the Announcing Form 8-K with the SEC, without
      the
      express prior written consent of such Buyer. In the event that a Buyer believes
      that the Company, any of its Subsidiaries, or any of their respective
      Affiliates, officers, directors, employees or agents has breached the foregoing
      covenant, the Buyer shall so notify the Company as provided in Section
      10(f)
      hereof.
      If the Company has failed to either (i) cause Buyer to conclude that such
      information does not constitute material nonpublic information or (ii) make
      public disclosure of the claimed material nonpublic information provided to
      such
      Buyer by the end of the second full business day following receipt of the notice
      provided for in the immediately preceding sentence, then, in addition to any
      other remedy provided herein or in the Transaction Documents, such Buyer shall
      have the right to make public disclosure in the form of a press release, public
      advertisement or otherwise, of such material nonpublic information without
      prior
      approval by the Company or any of its Subsidiaries, or any of their respective
      Affiliates, officers, directors, employees or agents. No Buyer shall have any
      liability to the Company, its Subsidiaries, or any of its or their respective
      Affiliates, officers, directors, employees, stockholders or agents for any
      such
      disclosure. Notwithstanding anything to the contrary herein, in the event that
      the Company believes that a notice or communication to any Buyer or Investor
      (as
      defined in Section
      4(k))
      contains material, nonpublic information relating to the Company or any of
      its
      Subsidiaries, the Company so shall indicate to the such Buyer or Investor
      contemporaneously with delivery of such notice or communication, and such
      indication shall provide such Buyer or Investor the means to refuse to receive
      such notice or communication; and in the absence of any such indication, the
      holders of the Securities shall be allowed to presume that all matters relating
      to such notice or communication do not constitute material, nonpublic
      information relating to the Company or any of its Subsidiaries. Upon receipt
      or
      delivery by the Company or any of its Subsidiaries of any notice in accordance
      with the terms of the Transaction Documents, unless the Company has in good
      faith determined that the matters relating to such notice do not constitute
      material, nonpublic information relating to the Company or its Subsidiaries,
      the
      Company shall within one Business Day after any such receipt or delivery
      Publicly Disclose such material, nonpublic information. 

     

    k. Pledge
      of Securities.
      The
      Company acknowledges and agrees that the Securities of a Buyer may be pledged
      by
      such Buyer or its transferees (each, including each Buyer, an “Investor”)
      in
      connection with a bona fide margin agreement or other loan secured by the
      Securities. The pledge of Securities shall not be deemed to be a transfer,
      sale
      or assignment of the Securities hereunder, and no Investor effecting any such
      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, including Section
      2(f)
      of this
      Agreement. 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 an Investor.

     

    
      
        
        

      

      
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    l. Notices.
      During
      the Reporting Period, the Company shall and shall cause each of its Subsidiaries
      to notify the Collateral Agent in writing (A) at least 30 days in advance of
      any
      change in such Person’s legal name and (B) within 10 days of the change of the
      use of any trade name, assumed name, fictitious name or division name not
      previously disclosed to the Collateral Agent in writing. All of the foregoing
      notices also shall be provided by the Company or the applicable Subsidiary
      to
      each Buyer in writing. 

     

    m. Compliance
      with Laws and Maintenance of Permits.
      During
      the Reporting Period, the Company shall, and shall cause each of its
      Subsidiaries to, maintain all governmental consents, franchises, certificates,
      licenses, authorizations, approvals and permits, the lack of which would
      reasonably be expected to have a Material Adverse Effect, and the Company and
      each of its Subsidiaries shall remain in compliance with all Laws (including
      Environmental Laws and Laws relating to student loans, taxes, employer and
      employee contributions and similar items, securities, ERISA or employee health
      and safety) the failure with which to comply would have a Material Adverse
      Effect on such Person. 

     

    n. Inspection
      and Audits.
      During
      the Reporting Period and subject to each Buyer’s execution of a confidentiality
      agreement reasonably acceptable to the Company with respect to the information
      provided pursuant to Sections
      4(n)(i)
      and
4(n)(ii)
      hereto,
      which execution shall constitute a waiver, with respect to any material
      non-public information regarding the Company and the Subsidiaries provided
      to
      such Buyer directly in response to such Buyer’s request hereunder, of the
      restriction herein on the Company’s disclosure to such Buyer of material
      nonpublic information: 

     

    (i) The
      Company shall, and shall cause each of its Subsidiaries to, permit each Buyer
      (and each Buyer’s designees), at such Buyer’s own expense, to call at the
      Company’s and each of its Subsidiaries’ places of business at any reasonable
      times, and, upon reasonable advance notice, to inspect, examine and audit the
      Pledged Collateral and the Account Collateral and to inspect, audit, check
      and
      make extracts from such Person’s books, records, journals, orders, receipts and
      any correspondence and other data relating to the Pledged Collateral or the
      Account Collateral or any transactions between the parties hereto, and each
      Buyer (and each Buyer’s designees) shall have the right to make such
      verification concerning the Pledged Collateral or the Account Collateral as
      such
      Buyer may consider reasonable under the circumstances; and 

     

    (ii) Notwithstanding
      anything to the contrary herein, upon written request to the Company by any
      Buyer, the Company shall promptly provide such Buyer with any financial,
      operating or other type of information requested by such Buyer to the extent
      that is reasonably available or can be developed without significant effort
      or
      expense to the Company. 

     

    
      
        
        

      

      
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    o. Collateral.
      During
      the Reporting Period, the Company shall, and shall cause each of its
      Subsidiaries to, maintain and preserve the Pledged Collateral and the Account
      Collateral and the value thereof.

     

    p. Insurance.
      During
      the Reporting Period, the Company shall, and shall cause each of its
      Subsidiaries to maintain, at its expense, such public liability and third party
      property damage insurance with companies that regularly insure Persons engaged
      in businesses similar to that of the Company or the applicable Subsidiary and
      in
      coverage and amount consistent with Persons of established reputation engaged
      in
      similar business. Original (or certified) copies of such policies have been
      delivered to each Buyer, together with evidence of payment of all premiums
      therefor.

     

    q. Taxes.
      During
      the Reporting Period, the Company shall and shall cause each of its Subsidiaries
      to file all required tax returns and pay all of its taxes when due, subject
      to
      any extensions granted by the applicable taxing authority, including taxes
      imposed by federal, state or municipal agencies, and shall cause any Liens
      for
      taxes to be promptly released; provided,
      however,
      that
      the Company and its Subsidiaries shall have the right to contest the payment
      of
      such taxes in good faith by appropriate proceedings so long as (i) the
      amount so contested is shown on such Person’s financial statements;
      (ii) the contesting of any such payment does not give rise to a Lien for
      taxes. 

     

    r. Intellectual
      Property.
      From
      the date of this Agreement until the first date following the Closing Date
      on
      which the Notes are no longer outstanding and the Pledge and Security Agreement
      has terminated, the Company shall and shall cause each of its Subsidiaries
      to
      maintain adequate Intellectual Property to continue its business as presently
      proposed to be conducted by it or as hereafter conducted by it, unless the
      failure to maintain any of the foregoing would not reasonably be expected to
      have a Material Adverse Effect.

     

    s. Patriot
      Act, Investor Secrecy Act and Office of Foreign Assets Control.
      As
      required by federal law and such Buyer’s policies and practices, each Buyer may
      need to obtain, verify and record certain customer identification information
      and documentation in connection with opening or maintaining accounts, or
      establishing or continuing to provide services, and, during the Reporting
      Period, the Company agrees to, and shall cause each of its Subsidiaries to,
      provide such information. 

     

    
      
        
        

      

      
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    t. Security
      Covenants.
       During
      the Reporting Period, the Company shall, and shall cause each of its
      Subsidiaries to, at its own cost and expense, cause to be promptly and duly
      taken, executed, acknowledged and delivered all such further acts, documents
      and
      assurances as may from time to time be necessary or as a Buyer or the Collateral
      Agent may from time to time reasonably request in order to carry out the intent
      and purposes of this Agreement, the Security Documents and the other Transaction
      Documents and the transactions contemplated hereby and thereby, including all
      such actions to establish, create, preserve, protect and perfect a first
      priority Lien in favor of the Collateral Agent for the benefit of such Buyer
      in
      the Pledged Collateral and the Account Collateral. During the Reporting Period,
      the Company shall, and shall cause each of its Subsidiaries to, refrain from
      engaging to any substantial extent in any business other than offering financing
      products to current, prior, or prospective students for the financing or
      refinancing of higher education expenditures and providing online college
      application services, together with other ancillary products and services that
      are related thereto or in furtherance thereof (the
      “Student
      Loan Business”).
      

     

    u. Dividends
      or Cash Distributions by Excluded Subsidiaries.
      During
      the Reporting Period, to the extent permitted by applicable law and the
      Warehouse Documents, the Company shall cause each of the Excluded Subsidiaries
      to promptly distribute any cash and cash equivalents held thereby, as a dividend
      or other cash distribution, to the Company or a Subsidiary that is not an
      Excluded Subsidiary and to which such an Excluded Subsidiary would be permitted
      to pay dividends and make cash distributions pursuant to Section
      5(d). 

     

    v. Public
      Disclosure of Change of Control or Organic Change.
      During
      the Reporting Period, in the event of a Change of Control or Organic Change,
      the
      Company shall no later than the Business Day that is 20 Business Days prior
      to
      the consummation of a Change of Control or an Organic Change, Publicly Disclose
      the principal terms of the agreement or agreements giving rise to such Change
      of
      Control or Organic Change, including the expected date on which the transaction
      shall be consummated (the first public announcement thereof, the “Change
      of Control Announcement”).

     

    
      
        
        

      

      
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    w. Right
      to Participate in Future Financing.
      Subject
      to the exceptions described below, each of the Company and its Subsidiaries
      agrees that during the period beginning on the date hereof and ending on the
      first date following the Closing on which no Note remains outstanding, neither
      the Company nor its Subsidiaries will (x) contract with any party for any debt
      or equity financing (including any debt financing with an equity component),
      or
      (y) issue any debt or equity securities of the Company or any such Subsidiary
      or
      securities convertible, exchangeable or exercisable into or for debt
      or equity
      securities of the Company or any such Subsidiary (including debt securities
      with
      an equity component) (each, a “Future
      Offering”),
      unless, after it has received an offer regarding a Future Offering that it
      has a
      bona fide intention to accept, it shall have first delivered to each Buyer
      (or
      the designee appointed by such Buyer) written notice (the “Future
      Offering Notice”)
      describing the Future Offering in reasonable detail and providing each Buyer
      an
      option (the “Buyer
      Purchase Option”)
      to
      purchase up to 25% of such Buyer’s Allocation Percentage (such 25% of such
      Buyer’s Allocation Percentage being referred to herein as such Buyer’s
“Participation
      Percentage”)
      of the
      total amount of securities to be issued in such Future Offering (the limitations
      referred to in this and the preceding sentence are collectively referred to
      as
      the “Capital
      Raising Limitations”).
      No
      Future Offering Notice shall contain any material non-public information
      regarding the Company or any of its Subsidiaries. Upon the written request
      of
      any Buyer made within five Business Days after its receipt of a Future Offering
      Notice (an “Additional
      Information Request”),
      the
      Company shall provide the Buyers with such additional information regarding
      the
      proposed Future Offering, including terms and conditions and use of proceeds
      thereof, as any Buyer shall reasonably request. A Buyer may exercise its Buyer
      Purchase Option by delivering written notice to the Company within five Business
      Days after the later of (i) such Buyer’s receipt of a Future Offering Notice or
      (ii) such Buyer’s receipt of all of the information reasonably requested by the
      Buyer in an Additional Information Request (the “Buyer
      Purchase Notice Date”),
      which
      notice shall state the quantity or percentage of securities being offered in
      the
      Future Offering that such Buyer will purchase, up to 25% of its Participation
      Percentage, and that quantity or percentage of securities (if any) it is willing
      to purchase in excess of its Allocation Percentage (such Buyer’s “Over-allotment
      Amount”).
      In
      the event that one or more Buyers fail to elect to purchase up to each such
      Buyer’s Aggregate Percentage, then each of the Buyers that have indicated a
      willingness to purchase a Buyer Over-allotment Amount shall be entitled to
      purchase an amount of the securities subject to the Buyer Purchase Option that
      such Buyer or Buyers have failed to elect to purchase (the “Unpurchased
      Securities”)
      equal
      to the lesser of (x) the Buyer Over-allotment Amount of such Buyer, and (y)
      the
      product of (I) such Buyer’s Allocation Percentage, and (II) the aggregate amount
      of such Unpurchased Securities subject to the Buyer Purchase Option. The Company
      shall have 90 days following the Buyer Purchase Notice Date to sell the
      securities of the Future Offering (other than the securities to be purchased
      by
      the Buyers pursuant to this Section
      4(w)),
      upon
      terms and conditions no more favorable to the purchasers thereof than specified
      in the Future Offering Notice. The exercise of the Buyer Purchase Option shall
      be contingent upon, and contemporaneous with, the consummation of such Future
      Offering. In connection with such consummation, each Buyer that exercises the
      Buyer Purchase Option shall deliver to the Company duly and properly executed
      originals of any documents reasonably required by the Company to effectuate
      such
      Future Offering together with payment of the purchase price for the securities
      being purchased by such Buyer in such Future Offering, and the Company shall
      promptly issue to such Buyer the securities purchased thereby. In the event
      the
      Company has not sold such securities of the Future Offering within such 90-day
      period, the Company shall not thereafter issue or sell such securities or any
      other securities subject to this Section
      4(w)
      without
      first offering such securities to the Buyers in the manner provided in this
      Section
      4(w).
      No
      Buyer shall be required to participate or exercise its right of participation
      with respect to a particular Future Offering in order to exercise its right
      of
      participation with respect to later Future Offerings. The Capital Raising
      Limitations shall not apply to (i) any transaction involving the Company’s
      issuances of securities (A) as consideration in a merger or consolidation (the
      primary purpose or material result of which is not to raise or obtain equity
      capital or cash), (B) in connection with any strategic partnership or joint
      venture (the primary purpose or material result of which is not to raise or
      obtain equity capital or cash), or (C) as consideration for the acquisition
      of a
      business, product, license or other assets by the Company (the primary purpose
      or material result of which is not to raise or obtain equity capital or cash),
      (ii) the issuance of securities upon exercise or conversion of the Company’s
      Options or Convertible Securities outstanding as of the date hereof and listed
      on Schedule
      3(c),
      provided
      that
      such securities are not amended or modified on or after the date hereof and
      provided,
      further,
      that
      the conversion price, exchange price, exercise price or other purchase price
      is
      not reduced, adjusted or otherwise modified and the number of shares issued
      or
      issuable is not increased (whether by operation of law or in accordance with
      the
      relevant governing documents or otherwise) on or after the date hereof, (iii)
      the grant of additional options, or the issuance of other securities, under
      any
      of the Company’s stock option, restricted stock or employee stock purchase plan
      existing on the date of this Agreement and described on Schedule
      3(c),
      and
      (iv) the incurrence of indebtedness by any of the Excluded Subsidiaries pursuant
      to Warehouse Documents.  

     

    
      
        
        

      

      
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    5. NEGATIVE
      COVENANTS.

     

    a. [Reserved.]

     

    b. Status.
      From
      the date of this Agreement until the first date following the Closing Date
      on
      which no Notes are outstanding, the Company shall not become a USRPHC; and
      upon
      any Buyer’s request, the Company shall inform such Buyer whether any of the
      Securities then held by Buyer constitute a U.S. real property interest pursuant
      to Treasury Regulation Section 1.897-2(h) without regard to Treasury Regulation
      Section 1.897-2(h)(3).

     

    c. Stay,
      Extension and Usury Laws.
      The
      Company covenants (to the extent that it may lawfully do so) that it shall
      not
      at any time insist upon, plead, or in any manner whatsoever claim or take the
      benefit or advantage of, any stay, extension or usury law or other law that
      would prohibit or forgive it from paying all or any portion of any principal
      of,
      or interest or premium on any of the Notes as contemplated herein or therein,
      wherever enacted, now or at any time hereafter in force, or which may affect
      the
      covenants under, or the performance of, any of the Transaction Documents; and
      the Company (to the extent it may lawfully do so) hereby expressly waives all
      benefit or advantage of any such law, and covenants that it will not, by resort
      to any such law, hinder, delay or impede the execution of any power granted
      to
      any Buyer herein or in any of the other Transaction Documents, but will suffer
      and permit the execution of every such power as though no such law has been
      enacted.

     

    d. Restriction
      on Purchases or Payments.
      During
      the Reporting Period, the Company shall not, and shall not permit any of it
      Subsidiaries to (i) declare, set aside or pay any dividends on or make any
      other
      distributions (whether in cash, stock, equity securities or property) in respect
      of any the Company’s or any Subsidiary’s Capital Stock, or establish or set any
      record date with respect to any of the foregoing; provided,
      however,
      that
      any Subsidiary may declare, set aside or pay dividends on or make any other
      distributions (whether in cash, stock, equity securities or property) in respect
      of any of its Capital Stock that is held solely by the Company or a wholly-owned
      domestic Subsidiary, provided
      that all
      of the equity of such Subsidiary is directly or indirectly owned by the Company,
      such Subsidiary is controlled by the Company, and such Subsidiary is a party
      to
      the Guaranty, or (ii) purchase, redeem or otherwise acquire, directly or
      indirectly, any shares of the Company’s or any of its Subsidiaries’ Capital
      Stock, except repurchases of unvested shares at cost in connection with the
      termination of employment of an employee pursuant to options or agreements
      in
      effect on the date of this Agreement, or cashless (i.e., net issue) exercise
      of
      options by employees under existing options, in each case as set forth in this
      Schedule
      5(d).

     

    e. Payment
      and Lien Restrictions.
      During
      the Reporting Period, (i) the Company shall not, nor will it permit any of
      its
      Subsidiaries to enter into or assume any agreement prohibiting or otherwise
      restricting the creation or assumption of any Lien upon its properties or
      assets, whether now owned or hereafter acquired, or requiring the grant of
      any
      security for an obligation, except to the extent any such agreement provides
      for
      Permitted Liens; and (ii) except as provided herein, the Company shall not
      and
      shall not cause or permit any of its Subsidiaries (other than the Excluded
      Subsidiaries pursuant to Warehouse Document) to directly or indirectly create
      or
      otherwise cause or suffer to exist or become effective any consensual
      encumbrance or consensual restriction of any kind on the ability of any such
      Subsidiary to: (1) pay dividends or make any other distribution on any of such
      Subsidiary’s Capital Stock owned by the Company or any other Subsidiary; (2) pay
      any Indebtedness owed to the Company or any other Subsidiary; (3) make loans
      or
      advances to the Company or any other Subsidiary; or (4) transfer any of its
      property or assets to the Company or any other Subsidiary.

     

    
      
        
        

      

      
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    f. Prepayments.
      During
      the Reporting Period, the Company shall not, nor will it permit any of its
      Subsidiaries (other than the Excluded Subsidiaries pursuant to Warehouse
      Documents) to, prepay any Indebtedness that is in parity with or subordinate
      to
      the Notes by structure or contract; provided,
      however,
      that
      any Subsidiary may prepay any Indebtedness to the Company or a wholly-owned
      domestic Subsidiary (other than the Excluded Subsidiaries) of the
      Company.

     

    g. Indebtedness.
      During
      the Reporting Period, the Company shall not, and shall cause each of its
      Subsidiaries not to, create, incur, assume, extend the term of, become obligated
      on or suffer to exist (directly or indirectly), any Indebtedness other than
      under the Notes issued pursuant to this Agreement, except that the Company
      and
      its Subsidiaries may: 

     

    (i) incur
      non-convertible Indebtedness for borrowed money, but only to the extent a
      subordination agreement in favor of each Buyer substantially in the form of
      Exhibit
      F
      (with
      such changes thereto as are approved by the Buyers that purchased at least
      two-thirds (2/3) of the aggregate original principal amount of the Notes on
      the
      Closing Date) hereto is executed and delivered to such Buyer with respect
      thereto; 

     

    (ii) incur
      non-recourse Indebtedness in respect of any residual interest in future
      securitization trusts;

     

    (iii) incur unsecured
      intercompany Indebtedness amongst the Company and one or more of its
      wholly-owned domestic Subsidiaries that is a party to, and in compliance with,
      the Guaranty; 

     

    (iv) incur
      Indebtedness of the Company and its Subsidiaries for taxes, assessments,
      municipal or governmental charges not yet due; 

     

    (v) incur
      obligations of the Company and its Subsidiaries for collection or deposit in
      the
      ordinary course of business; 

     

    (vi) incur
      Indebtedness of the Excluded Subsidiaries evidenced by Warehouse Documents;
      and

     

    (vii) incur
      or
      assume Capital Lease Obligations, for the purpose of financing all or any part
      of the costs of acquiring technology-related fixed assets, in an aggregate
      principal amount at any time outstanding not greater than $2,000,000.


     

    
      
        
        

      

      
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    h. Liens.
      During
      the Reporting Period, the Company shall not, and shall cause each of its
      Subsidiaries not to, grant or suffer to exist (voluntarily or involuntarily)
      any
      Lien, claim, security interest or other encumbrance whatsoever on any of its
      assets, other than Permitted Liens. 

     

    i. Sale
      of Collateral.
      During
      the Reporting Period, neither the Company nor any of the Subsidiaries shall
      sell, transfer, assign or dispose of any Pledged Collateral or any Account
      Collateral, except pursuant to the Pledge and Security Agreement and the Account
      Control Agreement. 

     

    j. Corporate
      Existence.
      During
      the Reporting Period, the Company shall maintain its corporate existence and
      shall not sell all or substantially all of the Company’s assets (including, for
      the avoidance of any doubt, all or substantially all of the assets of the
      Subsidiaries in the aggregate). 

     

    k. Related
      Party
      Transactions.
      During
      the Reporting Period, the Company shall not, and shall cause each of its
      Subsidiaries not to, enter into, amend, modify or supplement any transaction,
      contract, agreement, instrument, commitment, understanding or other arrangement
      with any Related Party, except for customary employment arrangements and benefit
      programs, on reasonable terms, that are not otherwise prohibited by this
      Agreement. 

     

    l. Restriction
      on Loans; Investments; Subsidiary Equity.
      During
      the Reporting Period, the Company shall not, and shall not permit any of its
      Subsidiaries to: 

     

    (i) Make
      any
      loans to, or investments in, any other Person, including through lending money,
      deferring the purchase price of property or services (other than trade accounts
      receivable on terms of 90 days or less), purchasing any note, bond, debenture
      or
      similar instrument, entering into any letter of credit, guaranteeing (or taking
      any action that has the effect of guaranteeing) any obligations of any other
      Person, or acquiring any equity securities of, or other ownership interest
      in,
      or making any capital contribution to any other Person, except that (A) Excluded
      Subsidiaries may purchase, finance, own, and service student loans and revolving
      credit receivables targeted at students, and (B) the Company may invest in
      another entity in an arms-length transaction in which (I) the Company believes
      that it has received reasonably equivalent value, and (II) the Company is
      acquiring an interest in such other entity (x) in exchange solely for
      non-redeemable Capital Stock of the Company, (y) solely with proceeds from
      the
      sale by the Company of non-redeemable Capital Stock of the Company to
      unaffiliated third parties, or (z) solely in connection with the marketing
      of
      the Student Loan Business, provided that the aggregate amount paid by the
      Company pursuant to this clause (z) does not exceed $2,000,000 during the
      Reporting Period. 

     

    (ii) Other
      than the sale of an interest in a Subsidiary for cash in an arms-length
      transaction in which the Company has determined that it has received reasonably
      equivalent value (provided
      that
      after any and all such sales, the Company remains active in the Student Loan
      Business), issue, transfer or pledge any capital stock or equity interest in
      any
      Subsidiary to any Person other than the Company. 

     

    
      
        
        

      

      
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    m. Investment
      Company.
      From
      the date of this Agreement until the first date following the Closing Date
      on
      which no Notes are outstanding, the Company shall not become 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.

     

    n. [Reserved.]

     

    o. [Reserved.] 

     

    p. No
      Avoidance of Obligations.
      During
      the Reporting Period, the Company shall not, and shall cause each of its
      Subsidiaries not to, enter into any agreement which would limit or restrict
      the
      Company’s or any of its Subsidiaries’ ability to perform under, or take any
      other voluntary action to avoid or seek to avoid the observance or performance
      of any of the terms to be observed or performed by it under, this Agreement,
      the
      Notes and the other Transaction Documents.

     

    q. Regulation
      M.
      Neither
      the Company, nor any of its Subsidiaries nor any of their respective Affiliates
      will take any action prohibited by Regulation M under the 1934 Act in connection
      with the offer, sale and delivery of the Securities contemplated
      hereby.

     

    r. No
      Integrated Offering.
      Neither
      the Company, nor any of its Subsidiaries, nor any of their respective
      Affiliates, nor any Person acting on behalf of any of the foregoing shall,
      directly or indirectly, make any offers or sales of any security or solicit
      any
      offer to purchase any security, under any circumstances that would require
      registration of any of the Securities under the 1933 Act or cause the offering
      of the Securities to be integrated with prior offerings by the Company for
      purposes of the 1933 Act, the stockholder approval requirements of the Principal
      Market, or any other regulatory or self-regulatory authority.

     

    6. [RESERVED.] 

     

    7. CONDITIONS
      TO THE OBLIGATIONS OF THE COMPANY TO SELL.
      The
      obligation of the Company to issue and sell the Notes to each Buyer at the
      Closing is subject to the satisfaction, at or before the Closing Date (unless
      otherwise specifically provided in this Section
      7),
      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:

     

    a. Such
      Buyer and the Collateral Agent shall have executed each of the Transaction
      Documents to which it is a party and delivered the same to the
      Company.

     

    b. Such
      Buyer shall have delivered to the Company such Buyer’s Allocation Percentage of
      the Purchase Price (less the amount withheld by such Buyer pursuant to
Section 4(i))
      for the
      Notes being purchased by such Buyer at the Closing by wire transfer of
      immediately available funds pursuant to the wire instructions provided by the
      Company.

     

    
      
        
        

      

      
        33

        
          

        

      

      
        
        

      

       

    

    c. The
      representations and warranties of such Buyer herein shall be true and correct
      as
      of the date when made and as of the Closing Date as though made at that time
      (except for representations and warranties that speak as of a specific date,
      which shall be true and correct as of such date), and such Buyer shall have
      performed, satisfied and complied with the covenants, agreements and conditions
      required by the Transaction Documents to be performed, satisfied or complied
      with by such Buyer at or prior to the Closing Date.

     

    8. CONDITIONS
      TO BUYERS’ OBLIGATIONS TO PURCHASE.
      The
      obligation of each Buyer to purchase the Notes from the Company at the Closing
      is subject to the satisfaction, at or before the Closing Date (unless otherwise
      specifically provided in this Section
      8),
      of
      each of the following conditions, provided that these conditions are for each
      Buyer’s sole benefit and may be waived only by such Buyer at any time in its
      sole discretion by providing the Company with prior written notice
      thereof:

     

    a. The
      Company and each of its Subsidiaries shall have executed and delivered the
      Transaction Documents to which such Person is a party to such Buyer. In
      addition, the Company and its Subsidiaries shall have delivered fully executed
      copies of the Direction Letter, the Assignment Agreement and the Blocked Account
      Agreement to such Buyer.

     

    b. The
      representations and warranties of the Company herein and in all of the other
      Transaction Documents shall be true and correct as of the date when made and
      as
      of the Closing Date as though made at that time (except for representations
      and
      warranties that speak as of a specific date, which shall be true and correct
      as
      of such date) and the Company shall have performed, satisfied and complied
      with
      the covenants, agreements and conditions required by the Transaction Documents
      to be performed, satisfied or complied with by the Company at or prior to the
      Closing Date»

     

    c. 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.

     

    d. Such
      Buyer shall have received the opinion of Withers Bergman LLP dated as of the
      Closing Date, which opinion will address, among other things, laws of the States
      of Delaware and New York applicable to the transactions contemplated hereby,
      in
      form, scope and substance reasonably satisfactory to such Buyer and applicable
      to the security interest provided pursuant to the Pledge and Security Agreement,
      in the form of Exhibit
      G
      hereto,
      and otherwise in form, scope and substance reasonably satisfactory to such
      Buyer.

     

    e. The
      Company shall have executed and delivered to such Buyer the Notes to be issued
      to such Buyer at the Closing.

     

    f. The
      Board
      of the Company shall have adopted, and not rescinded or otherwise amended or
      modified, resolutions consistent with Section 3(b)
      above
      and in a form reasonably acceptable to such Buyer (the “Resolutions”).

     

    
      
        
        

      

      
        34

        
          

        

      

      
        
        

      

       

    

    g. The
      Company shall have delivered to such Buyer a certificate evidencing the
      incorporation (or other organization) and good standing of the Company and
      each
      Subsidiary in such entity’s state or other jurisdiction of incorporation or
      organization, issued by the Secretary of State (or other applicable authority)
      of such state or jurisdiction of incorporation or organization as of a date
      within 10 days of the Closing Date.

     

    h. The
      Company shall have delivered to such Buyer a secretary’s certificate, dated as
      of the Closing Date, certifying as to (A) the Resolutions, (B) the
      Certificate of Incorporation, certified as of a date within 10 days of such
      Closing Date, by the Secretary of State of Delaware, (C) the Bylaws of the
      Company, (D) the certificate or articles of incorporation or other
      organizational documents of each of the Company’s Subsidiaries, each certified
      as of a date within 10 days of such Closing Date, by the Secretary of State
      of
      the state of such entity’s jurisdiction of incorporation or organization, and
      (E) the bylaws or other similar documents of each of the Company’s Subsidiaries,
      each as in effect at the Closing.

     

    i. The
      Company shall have made all filings under all applicable Securities Laws
      necessary to consummate the issuance of the Securities pursuant to this
      Agreement in compliance with such laws.

     

    j. The
      Company shall have delivered to such Buyer all waivers, consents, approvals
      and
      authorizations required from any Persons for the consummation of the
      transactions contemplated hereby (including waivers of any preemptive rights
      held by any Persons), and all such waivers, consents, approvals and
      authorizations shall be in full force and effect.

     

    k. The
      Company shall have given, executed, delivered, filed and/or recorded any
      financing statements, notices, instruments, documents, agreements and other
      papers that may be necessary or desirable (in the reasonable judgment of such
      Buyer) to create, preserve, perfect or validate the first priority, perfected
      security interest in the Pledged Collateral and the Account Collateral granted
      to such Buyer pursuant to the Pledge and Security Agreement and to enable such
      Buyer to exercise and enforce its rights with respect to such security
      interest.

     

    l. The
      Company shall not have made any public announcement regarding the transactions
      contemplated by the Agreement prior to the Closing.

     

    m. The
      Company shall have delivered to such Buyer such other documents relating to
      the
      transactions contemplated by this Agreement as such Buyer or its counsel may
      reasonably request.

     

    
      
        
        

      

      
        35

        
          

        

      

      
        
        

      

       

    

    9. INDEMNIFICATION.

     

    a. In
      consideration of each Buyer’s execution and delivery of this Agreement and the
      other Transaction Documents to be executed by such Buyer and acquiring the
      Securities hereunder and thereunder and in addition to all of the Company’s and
      its Subsidiaries’ other obligations under the Transaction Documents, the Company
      shall defend, protect, indemnify and hold harmless such Buyer and each other
      holder of the Securities and all of their stockholders, partners, officers,
      directors, members, managers, employees and direct or indirect investors and
      any
      of the foregoing Persons’ agents or other representatives (including 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 Indemnitees 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 Indemnitees as a result of, or arising out of, or relating
      to
      (i) any misrepresentation or breach of any representation or warranty made
      by the Company or any of its Subsidiaries in any of the Transaction Documents
      or
      any other certificate, instrument or document contemplated hereby or thereby,
      (ii) any breach of any covenant, agreement or obligation of the Company or
      any of its Subsidiaries contained in the Transaction Documents or any other
      certificate, instrument or document contemplated hereby or thereby,
      (iii) any cause of action, suit or claim brought or made against such
      Indemnitees and arising out of or resulting from the execution, delivery,
      performance or enforcement of the Transaction Documents in accordance with
      the
      terms thereof or any other certificate, instrument or document contemplated
      hereby or thereby in accordance with the terms thereof (other than a cause
      of
      action, suit or claim brought or made against an Indemnitee by such Indemnitee’s
      owners, investors or Affiliates), (iv) any other transaction financed or to
      be financed in whole or in part, directly or indirectly, with the proceeds
      of
      the issuance of the Securities, or (v) the status of such Buyer or holder of
      the
      Securities as an investor in the Company. 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 that is permissible under applicable law.


     

    b. Promptly
      after receipt by the Indemnitee under this Section
      9
      of
      notice of the commencement of any action or proceeding (including by any
      Governmental Entity) involving any Indemnified Liabilities, such Indemnitee
      shall, if a claim in respect thereof is to be made against the Company under
      this Section
      9,
      deliver
      to the Company a written notice of the commencement thereof, and the Company
      shall have the right to participate in, and, to the extent the Company so
      desires, to assume control of the defense thereof with counsel mutually
      satisfactory to the Company and the Indemnitee. In any such proceeding, any
      Indemnitee may retain its own counsel, but, except as provided in the following
      sentence, the fees and expenses of that counsel will be at the expense of that
      Indemnitee, unless (i) the Company and the Indemnitee shall have mutually agreed
      to the retention of that counsel, (ii) the Company does not assume the defense
      of such proceeding in a timely manner, or (iii) in the reasonable opinion of
      counsel retained by the Indemnitee, the representation by such counsel for
      the
      Indemnitee and the Company would be inappropriate due to actual or potential
      differing interests between such Indemnitee and any other party represented
      by
      such counsel in such proceeding. The Company shall pay reasonable fees for
      only
      one separate legal counsel (plus any local counsel) for the Indemnitees, and
      such legal counsel shall be selected by the holders holding at least two-thirds
      (2/3) of interest of the Aggregate Notes Principal Balance (as defined in the
      Notes). The Indemnitee shall cooperate with the Company in connection with
      any
      negotiation or defense of any such Indemnified Liabilities by the Company and
      shall furnish to the Company all information reasonably available to the
      Indemnitee which relates to such Indemnified Liabilities. The Company shall
      keep
      the Indemnitee fully apprised at all times as to the status of the defense
      or
      any settlement negotiations with respect thereto. The Company shall not be
      liable for any settlement of any action, claim or proceeding effected without
      its prior written consent; provided,
      however,
      that
      the Company shall not unreasonably withhold, delay or condition its consent.
      The
      Company shall not, without the prior written consent of the Indemnitee, consent
      to entry of any judgment or enter into any settlement or other compromise with
      respect to any pending or threatened action or claim in respect of which
      indemnification or contribution may be or has been sought hereunder (whether
      or
      not the Indemnitee is an actual or potential party to such action or claim)
      which does not include as an unconditional term thereof the giving by the
      claimant or plaintiff to such Indemnitee of a release from all liability in
      respect to such claim or litigation and such settlement shall not include any
      admission as to fault on the part of the Indemnitee. Following indemnification
      as provided for hereunder, the Company shall be subrogated to all rights of
      the
      Indemnitee with respect to all third parties, firms or corporations relating
      to
      the matter for which indemnification has been made. The failure to deliver
      written notice to the Company within a reasonable time of the commencement
      of
      any such action shall not relieve the Company of any liability to the Indemnitee
      under this Section
      9,
      except
      to the extent that the Company is prejudiced in its ability to defend such
      action.

     

    
      
        
        

      

      
        36

        
          

        

      

      
        
        

      

       

    

    c. The
      indemnification required by this Section
      9
      shall be
      made by periodic payments of the amount thereof during the course of the
      investigation or defense, as and when bills are received or Indemnified
      Liabilities are incurred; provided,
      however,
      that,
      to the extent the Company makes payments pursuant to this Section
      9(c)
      with
      respect to a direct claim by the Indemnitee for breach of this Agreement or
      any
      of the other Transaction Documents (i.e., not related to any third party action
      suit, proceeding or claim against, or otherwise involving, the Indemnitee),
      but
      reasonably believes (and notifies the Indemnitee at the time the Company makes
      such payments of such belief) that the Indemnitee is not to entitled to
      indemnification hereunder with respect to any of the actions, causes of action,
      suits, claims, losses, costs, penalties, fees, liabilities, damages and/or
      expenses to which such payments relate, the Indemnitee shall repay to the
      Company the amount of such periodic payments made by the Company to the
      Indemnitee pursuant to this Section
      9(c)
      in the
      event (and only to the extent) that it is determined by a court of competent
      jurisdiction, as set forth in a final non-appealable order, that the Indemnitee
      both (i) is not entitled to indemnification hereunder with respect to any of
      the
      actions, causes of action, suits, claims, losses, costs, penalties, fees,
      liabilities, damages and/or expenses as to which such payments relate because
      none of the foregoing is in fact an Indemnified Liability, and (ii) does not
      otherwise have any rights or remedies vis-à-vis the Company or any of the
      Subsidiaries with respect to any of such actions, causes of action, suits,
      claims, losses, costs, penalties, fees, liabilities, damages and/or expenses
      (or
      with respect to any breach, violation or other matter giving rise thereto);
      provided, further, that in no event shall the Indemnitee be required to repay
      to
      the Company any amount in excess of the amount of the periodic repayments
      actually received by the Indemnitee from the Company pursuant to this
Section
      9(c)
      with
      respect to such actions, causes of action, suits, claims, losses, costs,
      penalties, fees, liabilities, damages and/or expenses (i.e., without payment
      to
      the Company of any interest thereon, any costs of recovery thereof or any other
      fees or expenses relating thereto).

     

    d. The
      indemnity agreements contained herein shall be in addition to (i) any cause
      of
      action or similar right of the Indemnitee against the Company or others, and
      (ii) any liabilities the Company may be subject to pursuant to the
      law.

     

    
      
        
        

      

      
        37

        
          

        

      

      
        
        

      

       

    

    10. GOVERNING
      LAW; MISCELLANEOUS.

     

    a. Governing
      Law; Jurisdiction; Jury Trial.
      All
      questions concerning the construction, validity, enforcement and interpretation
      of this Agreement shall be governed by the internal laws of the State of New
      York, without giving effect to any choice of law or conflict of law provision
      or
      rule (whether of the State of New York or any other jurisdiction) that would
      cause the application of the laws of any jurisdiction other than the State
      of
      New York. Each party hereby irrevocably submits to the exclusive jurisdiction
      of
      the state and federal courts sitting in the New York City, borough of Manhattan,
      for the adjudication of any dispute hereunder or in connection herewith or
      with
      any transaction contemplated hereby or discussed herein, and hereby irrevocably
      waives, and agrees not to assert in any suit, action or proceeding, any claim
      that it is not personally subject to the jurisdiction of any such court, that
      such suit, action or proceeding is brought in an inconvenient forum or that
      the
      venue of such suit, action or proceeding is improper. Each party hereby
      irrevocably waives personal service of process and consents to process being
      served in any such suit, action or proceeding by mailing a copy thereof to
      such
      party at the address for such notices to it under this Agreement and agrees
      that
      such service shall constitute good and sufficient service of process and notice
      thereof. Nothing contained herein shall be deemed to limit in any way any right
      to serve process in any manner permitted by law. The parties acknowledge that
      each Buyer has an office in the State of New York and will have made the payment
      of the Purchase Price from its bank account located in the State of New York.
      EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT
      TO
      REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
      CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
      CONTEMPLATED HEREBY.

     

    b. Counterparts.
      This
      Agreement and any amendments hereto may be executed and delivered in one or
      more
      counterparts, and by the different parties hereto in separate counterparts,
      each
      of which when executed shall be deemed to be an original, but all of which
      taken
      together shall constitute one and the same agreement, and shall become effective
      when counterparts have been signed by each party hereto and delivered to the
      other parties hereto, it being understood that all parties need not sign the
      same counterpart. In the event that any signature to this Agreement or any
      amendment hereto is delivered by facsimile transmission or by e-mail delivery
      of
      a “.pdf” format data file, such signature shall create a valid and binding
      obligation of the party executing (or on whose behalf such signature is
      executed) with the same force and effect as if such facsimile or “.pdf”
signature page were an original thereof. At the request of any party each other
      party shall promptly re-execute an original form of this Agreement or any
      amendment hereto and deliver the same to the other party. No party hereto shall
      raise the use of a facsimile machine or e-mail delivery of a “.pdf” format data
      file to deliver a signature to this Agreement or any amendment hereto or the
      fact that such signature was transmitted or communicated through the use of
      a
      facsimile machine or e-mail delivery of a “.pdf” format data file as a defense
      to the formation or enforceability of a contract, and each party hereto forever
      waives any such defense.

     

    
      
        
        

      

      
        38

        
          

        

      

      
        
        

      

       

    

    c. Headings.
      The
      headings of this Agreement are for convenience of reference and shall not form
      part of, or affect the interpretation of, this Agreement.

     

    d. Severability.
      If any
      provision of this Agreement shall be invalid or unenforceable in any
      jurisdiction, such invalidity or unenforceability shall not affect the validity
      or enforceability of the remainder of this Agreement in that jurisdiction or
      the
      validity or enforceability of any provision of this Agreement in any other
      jurisdiction.

     

    e. Entire
      Agreement; Amendments.
      This
      Agreement supersedes all other prior oral or written agreements between each
      Buyer, the Company, its Subsidiaries, their Affiliates and Persons acting on
      their behalf with respect to the matters discussed herein, and this Agreement
      and the other Transaction Documents contain the entire understanding of the
      parties with respect to the matters covered herein and therein and, 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. No provision of this Agreement may be amended, modified or supplemented
      other than by an instrument in writing signed by the Company and the Buyers
      that
      purchased at least two-thirds (2/3) of the aggregate original principal amount
      of the Notes on the Closing Date, or if prior to the Closing, by the Buyers
      listed on the Schedule
      of Buyers
      as being
      obligated to purchase at least two-thirds (2/3) of the aggregate original
      principal amount of the Notes. Any such amendment shall bind all holders of
      the
      Notes. No such amendment shall be effective to the extent that it applies to
      less than all of the holders of the Notes then outstanding.

     

    f. Notices.
      Any
      notices, consents, waivers or other communications required or permitted to
      be
      given under the terms of this Agreement must be in writing and will be deemed
      to
      have been delivered: (i) upon receipt, when delivered personally; (ii) upon
      receipt, when sent by facsimile (provided
      confirmation of transmission is mechanically or electronically generated and
      kept on file by the sending party); or (iii) one Business Day after deposit
      with
      a nationally recognized overnight delivery service, in each case properly
      addressed to the party to receive the same. The addresses and facsimile numbers
      for such communications shall be:

     

    If
      to the
      Company:

     

    MRU
      Holdings, Inc.

     

    1114
      Avenue of the Americas

    30th
      Floor

    New
      York,
      NY 10036

    Attention:   
      General
      Counsel

    Facsimile:    
      (212)
      836-4195

     

    
      
        
        

      

      
        39

        
          

        

      

      
        
        

      

    

     

    


    With
      a
      copy to:

    


    Withers
      Bergman LLP

    430
      Park
      Avenue

    10th
      Floor

    New
      York,
      NY 10014

    Attention:    David
      S.
      Guin, Esq.

    Facsimile:    (212)
      848-9888 

    


    If
      to a
      Buyer, to it at the 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,
      or, in
      the case of a Buyer or any party named above, at such other address and/or
      facsimile number and/or to the attention of such other person as the recipient
      party has specified by written notice given to each other party five days prior
      to the effectiveness of such change. Written confirmation of receipt (A) given
      by the recipient of such notice, consent, waiver or other communication, (B)
      mechanically or electronically generated by the sender’s facsimile machine
      containing the time, date, recipient facsimile number and an image of the first
      page of such transmission or (C) provided by a nationally recognized
      overnight delivery service shall be rebuttable evidence of personal service,
      receipt by facsimile or deposit with a nationally recognized overnight delivery
      service in accordance with clause (i), (ii) or (iii) above, respectively.


     

    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 any purchasers of the
      Securities. The Company shall not assign this Agreement or any rights or
      obligations hereunder without the prior written consent of the holders of at
      least two-thirds (2/3) of the Aggregate Notes Principal Balance. A Buyer may
      assign some or all of its rights hereunder without the consent of the Company;
      provided,
      however,
      that
      any such assignment shall not release such Buyer from its obligations hereunder
      unless such obligations are assumed by such assignee (as evidenced in writing)
      and the Company has consented to such assignment and assumption, which consent
      shall not be unreasonably withheld. Notwithstanding anything to the contrary
      contained in the Transaction Documents, a Buyer shall be entitled to pledge
      the
      Securities in connection with a bona fide margin account or other loan or
      financing arrangement secured by the Securities.

     

    h. No
      Third Party Beneficiaries.
      This
      Agreement is intended for the benefit of the parties hereto and their respective
      permitted successors and assigns and, to the extent provided in Section
      9
      hereof,
      each Indemnitee, and is not for the benefit of, nor may any provision hereof
      be
      enforced by, any other Person.

     

    i. Survival.
      Unless
      this Agreement is terminated under Section
      10(k),
      the
      representations and warranties of each Buyer and the Company contained in
Sections 2
      and
      3,
      the
      agreements and covenants set forth in Sections 4,
      5,
      and
10,
      and the
      indemnification and contribution provisions set forth in Section
      9,
      shall
      survive the Closing. Each Buyer shall be responsible only for its own
      representations, warranties, agreements and covenants hereunder. The Company
      acknowledges and agrees that the provisions of Section
      13
      of the
      Notes shall survive the redemption, repayment or surrender of such
      Note.

    


    
      
        
          
          

        

        
          40

          
            

          

        

        
          
          

        

      

    

    


    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 the other party may reasonably
      request in order to carry out the intent and accomplish the purposes of this
      Agreement and the consummation of the transactions contemplated
      hereby.

     

    k. Termination.
      In the
      event that the Closing shall not have occurred with respect to a Buyer on or
      before the third Business Day following the date of this Agreement due to the
      Company’s or such Buyer’s failure to satisfy the conditions set forth in
Sections
      7
      and
8
      above
      (and the nonbreaching party’s failure to waive such unsatisfied condition(s)),
      the nonbreaching party shall have the option to terminate this Agreement with
      respect to such breaching party at the close of business on such date without
      liability of any party to any other party; provided,
      however,
      that if
      this Agreement is terminated pursuant to this Section
      10(k),
      the
      Company shall be obligated to pay such Buyer (so long as such Buyer is not
      a
      breaching party) its reimbursement amount as set forth in Section
      4(i)
      as if
      such Buyer had purchased the Notes.

     

    l. Placement
      Agent.
      The
      Company represents and warrants that it has not engaged any placement agent,
      broker, or financial advisor in connection with the sale of the Notes or any
      other transactions contemplated hereby. The Company shall be responsible for
      the
      payment of any placement agent’s fees or broker’s commissions relating to or
      arising out of the transactions contemplated hereby. The Company shall pay,
      and
      hold each Buyer harmless against, any liability, loss or expense (including
      attorneys’ fees and out-of-pocket expenses) arising in connection with any claim
      for any such payment. 

     

    m. No
      Strict 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.

     

    n. Remedies.
      Each
      Buyer and each holder of the Securities shall have all rights and remedies
      set
      forth in the Transaction Documents and all rights and remedies that such Buyer
      and holders have been granted at any time under any other agreement or contract
      and all of the rights that such Buyer and 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
      or
      proving actual damages), to recover damages by reason of any breach of any
      provision of this Agreement and to exercise all other rights granted by law,
      or
      in equity.

     

    o. Rescission
      and
      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
      or any of its Subsidiaries 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.

     

    
      
        
          
          

        

        
          41

          
            

          

        

        
          
          

        

      

    

    


    p. Payment
      Set Aside.
      To the
      extent that the Company or any of its Subsidiaries makes a payment or payments
      to a Buyer pursuant to this Agreement, the Notes, the Guaranty or any other
      Transaction Document or a Buyer enforces or exercises its 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 or any
      of
      its Subsidiaries, by a trustee, receiver or any other Person under any law
      (including any bankruptcy law, state or federal law, common law or equitable
      cause of action), then to the extent of any such restoration the obligation
      or
      part thereof originally intended to be satisfied shall be revived and continued
      in full force and effect as if such payment had not been made or such
      enforcement or setoff had not occurred. 

     

    q. Independent
      Nature of Buyers.
      The
      obligations of each Buyer hereunder 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 hereunder. Each Buyer
      shall be responsible only for its own representations, warranties, agreements
      and covenants hereunder. The decision of each Buyer to purchase the Securities
      pursuant to this Agreement has been made by such Buyer independently of any
      other Buyer and independently of any information, materials, statements or
      opinions as to the business, affairs, operations, assets, properties,
      liabilities, results of operations, condition (financial or otherwise) or
      prospects of the Company or any of its Subsidiaries which may have been made
      or
      given by any other Buyer or by any agent or employee of any other Buyer, and
      no
      Buyer or any of its agents or employees shall have any liability to any other
      Buyer (or any other Person or entity) relating to or arising from any such
      information, materials, statements or opinions. Nothing contained herein, and
      no
      action taken by any Buyer pursuant hereto or thereto, shall be deemed to
      constitute the Buyers as a partnership, an association, a joint venture or
      any
      other kind of entity, or create a presumption that the Buyers are in any way
      acting in concert or as a group with respect to such obligations or the
      transactions contemplated hereby. Each Buyer shall be entitled to independently
      protect and enforce its rights, including the rights arising out of this
      Agreement, the Notes and the 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.

     

    r. Interpretative
      Matters.
      Unless
      the context otherwise requires, (i) all references to Sections, Schedules,
      Appendices or Exhibits are to Sections, Schedules, Appendices or Exhibits
      contained in or attached to this Agreement, (b) each accounting term not
      otherwise defined in this Agreement has the meaning assigned to it in accordance
      with GAAP, (c) words in the singular or plural include the singular and
      plural and pronouns stated in either the masculine, the feminine or neuter
      gender shall include the masculine, feminine and neuter, (d) the words “hereof,”
“herein” and words of similar effect shall reference this Agreement in its
      entirety, and (e) the use of the word “including” in this Agreement shall
      be by way of example rather than limitation.

     

    *
      * * * * *

     

    
      
        
          
          

        

        
          42

          
            

          

        

        
          
          

        

      

    

    


    SIGNATURE
      PAGES TO SECURITIES PURCHASE AGREEMENT

     

    IN
      WITNESS WHEREOF,
      Buyers
      and the Company have caused this Securities Purchase Agreement to be duly
      executed as of the date first written above.

     

    
      	
              COMPANY:

            
	 
	
              MRU
                HOLDINGS, INC.

            
	 	 
	
              By:

            	
              /s/
                Vishal Garg

            
	
              Name:
                

            	Vishal
              Garg
	
              Title:

            	Chief
              Financial
              Officer


    

    


    
      
        
          
          

        

        
          43

          
            

          

        

        
          
          

        

      

    

     

    
      	
              BUYERS:

            
	 
	
              THE
                LONGVIEW FUND, L.P.,

            
	
              a
                California limited partnership

            
	 
	
              By:
                Viking Asset Management, LLC

            
	
              Its:
                Investment Advisor

            
	 
	
              By:

            	
              /s/
                S. Michael Rudolph

            
	
              Name:
                

            	
              S.
                Michael Rudolph

            
	
              Title:

            	
              Chief
                Financial Officer 

            
	 	 
	
              LONGVIEW
                MARQUIS MASTER FUND, L.P.,

            
	
              a
                British Virgin Islands limited partnership

            
	 
	
              By:
                Viking Asset Management, LLC

            
	
              Its:
                Investment Advisor

            
	 	 
	
              By:

            	
              /s/
                S. Michael Rudolph

            
	
              Name:

            	
              S.
                Michael Rudolph

            
	
              Title:

            	
              Chief
                Financial Officer 

            


    

    


    
      
        
          
          

        

        
          44

          
            

          

        

        
          
          

        

      

    

    


    SCHEDULE
      OF BUYERS

     

    
      
        	
                Buyer’s
                  Name 
and legal status

              	
                 

              	
                Buyer
                  Address

                and
                  Facsimile Number

              	
                 

              	
                Principal
Amount
                  of
Notes

              	
                 

              	
                Investor’s Representative’s

                Address
                  and
                  Facsimile
Number (to receive copies of
 notices)

              	
                 

              	
                Purchase Price

              	
                 

              
	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                The
                  Longview Fund, L.P., a California limited partnership

              	
                 

              	
                 

              	
                c/o
                  Viking Asset Management, LLC

                600
                  Montgomery Street, 44th
                  Floor

                San
                  Francisco, CA 94111

                Attn:
                  Michael Rudolph

                Facsimile:
                  (415) 981-5301

              	
                 

              	
                $

              	
                1,700,000

              	
                 

              	
                 

              	
                Katten
                  Muchin Rosenman LLP

                525
                  W. Monroe Street 

                Chicago,
                  Illinois 60661-3693 

                Attention:
                  Mark D. Wood, Esq.

                Facsimile:
                  (312) 902-1061

              	
                 

              	
                $

              	
                1,515,277

              	
                 

              
	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                 

              	
                 

              	
                 

              	
                And 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                 

              	
                 

              	
                 

              	
                c/o
                  Viking Asset Management, LLC

                10
                  Glenville Street, 3rd
                  Floor

                Greenwich,
                  CT 06831

                Attn:
                  Robert J. Brantman

                Facsimile:
                  (646) 840-4958
 	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                Longview
                  Marquis Master Fund, L.P., a British Virgin Islands limited
                  partnership

              	
                 

              	
                 

              	
                c/o
                  Viking Asset Management, LLC

                600
                  Montgomery Street, 44th
                  Floor

                San
                  Francisco, CA 94111

                Attn:
                  Michael Rudolph

                Facsimile:
                  (415) 981-5301

              	
                 

              	
                $

              	
                9,500,000

              	
                 

              	
                 

              	
                Katten
                  Muchin Rosenman LLP

                525
                  W. Monroe Street 

                Chicago,
                  Illinois 60661-3693 

                Attention:
                  Mark D. Wood, Esq.

                Facsimile:
                  (312) 902-1061

              	
                 

              	
                $

              	
                8,467,723

              	
                 

              
	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                 

              	
                 

              	
                 

              	
                And 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                 

              	
                 

              	
                 

              	
                c/o
                  Viking Asset Management, LLC

                10
                  Glenville Street, 3rd
                  Floor

                Greenwich,
                  CT 06831

                Attn:
                  Robert J. Brantman

                Facsimile:
                  (646) 840-4958
 	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              


      

    

    


    
      
        
          
          

        

        
          45

          
            

          

        

        
          
          

        

      

    

    


    APPENDIX

     

    CERTAIN
      DEFINED TERMS

     

    For
      purposes of this Agreement, the following terms shall have the following
      meanings:

     

    “Account
      Collateral”
has
      the
      meaning assigned to such term in the Pledge and Security Agreement.

     

    “Affiliate”
means,
      with respect to any Person, another Person that, directly or indirectly,
      (i) has a 5% equity interest in that Person, (ii) has a common ownership
      with that Person, (iii) controls that Person, (iv) is controlled by that
      Person or (v) shares common control with that Person; and “control”
or
      “controls”
means
      that a Person has the power, direct or indirect, to conduct or govern the
      policies of another Person.

     

    “Blocked Account
      Agreement”
has
      the
      meaning assigned to such term in the Pledge and Security Agreement.

     

    “Bloomberg”
means
      Bloomberg Financial Markets (or any successor thereto).

     

    “Business
      Day”
means
      any day other than Saturday, Sunday or other day on which commercial banks
      in
      the New York City are authorized or required by law to remain
      closed.

     

    “Capital
      Lease Obligation”
means,
      as to any Person, any obligation that is required to be classified and accounted
      for as a capital lease on a balance sheet of such Person prepared in accordance
      with GAAP, and the amount of such obligation shall be the capitalized amount
      thereof, determined in accordance with GAAP.

     

    “Capital
      Stock”
means
      any and all shares, interests, participations or other equivalents (however
      designated) of capital stock of a corporation, and any and all equivalent
      ownership interests in a Person (other than a corporation).

     

    “Collateral
      Agent”
has
      the
      meaning assigned to such term in the Pledge and Security Agreement.

     

    “Common
      Stock”
means
      the Company’s common stock, par value $0.001 per share.

     

    “Contingent
      Obligation”
means,
      as to any Person, any direct or indirect liability, contingent or otherwise,
      of
      such Person with respect to any indebtedness, lease, dividend or other
      obligation of another Person if a primary purpose or intent of the Person
      incurring such liability, or a 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.

    
       

    

    
      
        
        

      

      
        Appendix
          - 1

        
          

        

      

      
        
        

      

    

     

    “Convertible
      Securities”
means
      any stock or securities (other than Options) directly or indirectly convertible
      into or exchangeable or exercisable for shares of Common Stock.

     

    “Environmental
      Laws”
means
      all Laws relating to any matter arising out of or relating to public health
      and
      safety, or pollution or protection of the environment (including ambient air,
      surface water, groundwater, land surface or subsurface strata) or workplace,
      including any of the foregoing relating to the presence, use, production,
      generation, handling, transport, treatment, storage, disposal, distribution,
      discharge, emission, release, threatened release, control or cleanup of any
      Hazardous Materials. 

     

    “ERISA”
means
      the Employee Retirement Security Act of 1974, as amended.

     

    “Excluded
      Subsidiaries”
means
      MRU Funding SPV, Inc., MRU Lending Holdco, LLC, MRU ABS, MRU Student Loan Trust
      2007-A, Education Empowerment Funding LLC, Student Services SPV, Inc., and
      MRU
      Lending, Inc. so long as each of the foregoing is a Subsidiary, and any other
      Subsidiary of the Company formed after the date hereof, that is a Subsidiary:
      (a) (i) that is a bankruptcy remote, special purpose entity formed solely for
      participating in a rated securitization program pursuant to which such
      bankruptcy remote subsidiary purchases, finances, owns and services student
      loans and other financial products targeted at students and, to the extent
      applicable, sells such student loans to a trust in such a securitization
      transaction, and (ii) the organizational documents of which contain restrictions
      and requirements substantially similar to the restrictions and requirements
      contained in MRU ABS organizational documents as in effect on the date hereof,
      which, among other things, prohibit such Subsidiary from guaranteeing the
      Indebtedness of the Company or any of the Subsidiaries and from incurring any
      Indebtedness not directly related to the securitization for which such
      Subsidiary was formed, or (b) that is a special purpose entity formed for the
      purpose of purchasing, financing, owning and servicing student loans and
      revolving credit receivables targeted at students and that is party to Warehouse
      Documents. 

     

    “GAAP”
means
      U.S. generally accepted accounting principles.

     

    “Governmental
      Entity”
means
      the government of the United States or any other nation, or any political
      subdivision thereof, whether state, provincial or local, or any agency
      (including any self-regulatory agency or organization), authority,
      instrumentality, regulatory body, court, central bank or other entity exercising
      executive, legislative, judicial, taxing, regulatory or administration powers
      or
      functions of or pertaining to government.

     

    “Hazardous
      Materials”
means
      any hazardous, toxic or dangerous substance, materials and wastes, including
      hydrocarbons (including naturally occurring or man-made petroleum and
      hydrocarbons), flammable explosives, asbestos, urea formaldehyde insulation,
      radioactive materials, biological substances, polychlorinated biphenyls,
      pesticides, herbicides and any other kind and/or type of pollutants or
      contaminants (including materials which include hazardous constituents), sewage,
      sludge, industrial slag, solvents and/or any other similar substances,
      materials, or wastes and including any other substances, materials or wastes
      that are or become regulated under any Environmental Law (including any that
      are
      or become classified as hazardous or toxic under any Environmental
      Law).

     

    
      
        
          
          

        

        
          Appendix
            - 2

          
            

          

        

        
          
          

        

      

    

    
       

      “Indebtedness”
        of any Person means, without duplication: 

       

      (i) All
        indebtedness for borrowed money; 

    

    


    (ii) All
      obligations issued, undertaken or assumed as the deferred purchase price of
      property or services (other than unsecured account trade payables that are
      (A)
      entered into or incurred in the ordinary course of the Company’s and its
      Subsidiaries’ business, (B) on terms that require full payment within 90 days
      from the date entered into or incurred, (C) not unpaid in excess of 60 days
      from
      the receipt of invoice, or are being contested in good faith and as to which
      such reserve as is required by GAAP has been made and (D) not exceeding at
      any
      one time an aggregate amount among the Company and its Subsidiaries of (1)
      $3,000,000 at any time during the months of June, July, August, September or
      October of any year, or (2) $2,500,000 at any other time. 

     

    (iii) All
      reimbursement or payment obligations with respect to letters of credit, surety
      bonds and other similar instruments; 

     

    (iv) All
      obligations evidenced by notes, bonds, debentures, redeemable capital stock
      or
      similar instruments, including obligations so evidenced incurred in connection
      with the acquisition of property, assets or businesses;

     

    (v) 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, bank or other financing source
      under such agreement in the event of default are limited to repossession or
      sale
      of such property); 

     

    (vi) All
      Capital Lease Obligations; 

     

    (vii) All
      indebtedness referred to in clauses (i) through (vi) 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 that
      owns such assets or property has not assumed or become liable for the payment
      of
      such indebtedness; and 

     

    (viii) All
      Contingent Obligations in respect of indebtedness or obligations of others
      of
      the kinds referred to in clauses (i) through (vii) above. 

     

    “Insolvent”
means,
      with respect to any Person as of any date, (i) the present fair saleable value
      of such Person’s assets is less than the amount required to pay such Person’s
      total indebtedness, contingent or otherwise, (ii) such Person is unable to
      pay
      its debts and liabilities, subordinated, contingent or otherwise, as such debts
      and liabilities become absolute and matured, (iii) such Person intends to
      incur, prior to the second anniversary of such date, or believes that it will
      incur, prior to the second anniversary of such date, debts that would be beyond
      its ability to pay as such debts mature, or (iv) such Person has
      unreasonably small capital with which to conduct the business in which it is
      engaged as such business is then conducted and is then proposed to be conducted.
      

     

    
      
        
          
          

        

        
          Appendix
            - 3

          
            

          

        

        
          
          

        

      

    

    


    
      “Investment
        Company Act”
means
        the Investment Company Act of 1940, as amended.

    

     

    “Knowledge,”
      “Knowledge
      of the Company,”
      “to
      the Company’s Knowledge”
and
      similar language means the actual knowledge of any “officer” (as such term is
      defined in Rule 16a-1 under the 1934 Act) of the Company or of any Subsidiary
      and the knowledge any such Person would be expected to have after reasonable
      due
      diligence and inquiry.

     

    “Laws”
means
      all present or future federal, state local or foreign laws, statutes, common
      law
      duties, rules, regulations, ordinances and codes, together with all
      administrative or judicial orders, consent agreements, directed duties,
      requests, licenses, authorizations and permits of, and agreements with, any
      Governmental Entity. 

     

    “Lien”
means
      with respect to any asset or property, any mortgage, lien, pledge,
      hypothecation, charge, security interest, encumbrance or adverse claim of
      any kind and any restrictive covenant, condition, restriction or exception
      of
      any kind that has the practical effect of creating a mortgage, lien, pledge,
      hypothecation, charge, security interest, encumbrance or adverse claim of
      any kind (including (i) any of the foregoing created by, arising under or
      evidenced by any conditional sale or other title retention agreement, the
      interest of a lessor with respect to a Capital Lease Obligation, or any
      financing lease having substantially the same economic effect as any of the
      foregoing, and (ii) any restriction on the use, voting, transfer, receipt
      of income or other exercise of any attributes of free and clear ownership by
      a
      current holder). 

     

    “Material
      Adverse Effect”
means
      any material adverse effect on (i) the business, properties, assets, operations,
      results of operations, condition (financial or otherwise), credit worthiness
      or
      prospects of the Company and its Subsidiaries, taken as a whole, (ii) any of
      the
      transactions contemplated by the Transaction Documents, or (iii) the authority
      or ability of the Company or any of its Subsidiaries to enter into the
      Transaction Documents and perform its obligations thereunder. 

     

    “Options”
means
      any rights, warrants or options to subscribe for or purchase shares of Common
      Stock or Convertible Securities. 

     

    “Permitted
      Lien”
      means: 

     

    (i)
      Liens
      created by the Security Documents; 

     

    (ii)
      Liens
      for
      taxes or other governmental charges not at the time due and payable, or which
      are being contested in good faith by appropriate proceedings diligently
      prosecuted, so long as foreclosure, distraint, sale or other similar proceedings
      have not been initiated, and in each case for which the Company and its
      Subsidiaries maintain adequate reserves in accordance with GAAP in respect
      of
      such taxes and charges; 

     

    (iii)
      Liens
      arising in the ordinary course of business in favor of carriers, warehousemen,
      mechanics and materialmen, or other similar Liens imposed by law, which remain
      payable without penalty or which are being contested in good faith by
      appropriate proceedings diligently prosecuted, which proceedings have the effect
      of preventing the forfeiture or sale of the property subject thereto, and in
      each case for which adequate reserves in accordance with GAAP are being
      maintained; 

     

    
      
        
          
          

        

        
          Appendix
            - 4

          
            

          

        

        
          
          

        

      

    

    


    (iv)
      Liens
      arising in the ordinary course of business in connection with worker’s
      compensation, unemployment compensation and other types of social security
      (excluding Liens arising under ERISA); 

     

    (v)
      Attachments,
      appeal bonds (and cash collateral securing such bonds), judgments and other
      similar Liens, for sums not exceeding $100,000 in the aggregate for the Company
      and its Subsidiaries, arising in connection with court proceedings, provided
      that the
      execution or other enforcement of such Liens is effectively stayed;


     

    (vi)
      Easements,
      rights of way, restrictions, minor defects or irregularities in title and other
      similar Liens arising in the ordinary course of business and not materially
      detracting from the value of the property subject thereto and not interfering
      in
      any material respect with the ordinary conduct of the business of the Company
      or
      any of its Subsidiaries; 

     

    (vii)
      Liens
      arising solely by virtue of any statutory or common law provision relating
      to
      banker’s liens, rights of set-off or similar rights and remedies and burdening
      only deposit accounts or other funds maintained with a creditor depository
      institution, provided
      that no
      such deposit account is a dedicated cash collateral account or is subject to
      restrictions against access by the depositor in excess of those set forth by
      regulations promulgated by the Board of Governors of the U.S. Federal Reserve
      System and that no such deposit account is intended by the Company or any of
      its
      Subsidiaries to provide collateral to the depository institution; 

     

    (viii)
      Liens
      of
      Excluded Subsidiaries securing Indebtedness permitted under Section
      5(g)(vi)
      pursuant to Warehouse Documents; and

     

    (ix)
      Any
      Lien
      on any asset securing Indebtedness permitted under Section 5(g)(vii),
      provided
      that
      such Lien attaches only to the assets financed by such Indebtedness, and such
      Lien attaches concurrently with or within 90 days after the acquisition thereof.
      

     

    “Person”
means
      an individual, a limited liability company, a partnership, a joint venture,
      a
      corporation, a trust, an unincorporated organization, a Governmental Entity
      or
      any other legal entity.

     

    “Pledged
      Collateral”
has
      the
      meaning assigned to such term in the Pledge and Security Agreement.

     

    
      
        
          
          

        

        
          Appendix
            - 5

          
            

          

        

        
          
          

        

      

    

    


    
      “Preferred
        Stock”
means
        the Company’s preferred stock, par value $0.001 per share.

       

      “Public
        Disclosure”
or
        “Publicly
        Disclose”
means
        the Company’s public dissemination of information through the filing via the
        Electronic Data Gathering, Analysis, and Retrieval system of the SEC (“EDGAR”)
        of a Periodic Report or Current Report disclosing such information pursuant
        to
        the requirements of the 1934 Act.

       

      “Related
        Party”
means
        a
        Person’s or any of its subsidiary’s officers, directors, persons who were
        officers or directors at any time during the previous two years, stockholders
        (other than any holder of less than 5% of the outstanding shares of such
        Person), or Affiliates of such Person
        or
        any of its subsidiaries, or any individual related by blood, marriage or
        adoption to any such individual or any entity in which any such entity or
        individual owns a beneficial interest.

    

     

    “Securities
      Laws”
means
      the securities laws (including “Blue Sky” laws), legislation and regulations of,
      and the instruments, policies, rules, orders, codes, notices and interpretation
      notes of, the securities regulatory authorities (including the SEC) of the
      United States and any applicable states and other jurisdictions.

     

    “Security
      Documents”
means
      the Pledge and Security Agreement, the Guarantees, the Blocked Account Agreement
      and any other agreements, documents and instruments executed concurrently
      herewith or at any time hereafter pursuant to which the Company, its
      Subsidiaries, or any other Person either (i) guarantees payment or
      performance of all or any portion of the obligations hereunder or under any
      other instruments delivered in connection with the transactions contemplated
      hereby and by the other Transaction Documents, and/or (ii) provides, as security
      for all or any portion of such obligations, a Lien on any of its assets in
      favor
      of a Buyer, as any or all of the same may be amended, supplemented, restated
      or
      otherwise modified from time to time.

     

    “Subsidiary”
means
      any entity in which the Company, directly or indirectly:

     

    (i)
      beneficially
      owns or otherwise holds 25% or more of the equity or similar
      interests;

     

    (ii)
      beneficially
      owns or otherwise holds or controls 25% or more of the outstanding securities
      entitled to vote generally in the election of such entity’s directors (or the
      equivalent thereof);

     

    (iii)
      if
      the
      entity is a limited partnership, is a general partner; 

     

    (iv)
      if
      the
      entity is a limited liability company, is a manager or managing member;
      or

     

    (v)
      otherwise
      has the ability or right to control (whether by ownership, contractual right
      or
      otherwise) the management and policies of such entity;

     

    provided,
      however,
      that
      neither Education Empowerment Fund I, LLC nor any other fund managed by the
      Company or any of the Subsidiaries and substantially similar to Education
      Empowerment Fund I, LLC, shall constitute a Subsidiary solely due to the
      Company’s or any of the Subsidiaries’ service as a manager of such fund, so long
      as neither the Company nor any of the Subsidiaries has any financial obligations
      to such fund except for those obligations that are directly related to serving
      as a manager of such fund. 

     

    
      
        
          
          

        

        
          Appendix
            - 6

          
            

          

        

        
          
          

        

      

    

     

    
      “Transaction
        Documents”
means
        this Agreement, the Notes, the Pledge and Security Agreement, the Blocked
        Account Agreement, the Guaranty and each of the other agreements or instruments
        to which the Company or any of its Subsidiaries is a party or by which it
        is
        bound and which is entered into by the parties hereto or thereto in connection
        with the transactions contemplated hereby and thereby.

       

    

    “Warehouse
      Documents”
means
      (i) that certain Master Loan Agreement, dated as of January 10, 2006, by and
      between MRU Funding SPV, Inc. and Merrill Lynch Bank USA, together with the
      other agreements entered into in connection therewith, (ii) that certain
      Receivables Loan and Security Agreement, dated as of April 11, 2007, by and
      among Education Empowerment SPV, LLC, Autobahn Funding Company and DZ Bank,
      together with the other agreements entered into in connection therewith, and
      (iii) any
      agreement entered into after the Closing Date by an Excluded Subsidiary for
      the
      purpose of financing education loans and credit receivables targeted to students
      on terms and conditions similar to the warehouse documents identified in the
      preceding clauses (i) and (ii) and under which such Excluded Subsidiary is
      advanced funds at a rate of at least 85% of the aggregate original principal
      amount of the performing student loans held by such Excluded
      Subsidiary.

     

    “Warehouse
      Indebtedness”
means
      the Indebtedness evidenced by the Warehouse Documents.

     

    
      
        
          
          

        

        
          Appendix
            - 7

          
            

          

        

        
          
          

        

      

    

    


    EXHIBIT
      A

     

    FORM
      OF NOTES

    


    
      
        
          
          

        

        
          Exhibit
            A
            - 1

          
            

          

        

        
          
          

        

      

    

    


    EXHIBIT
      B

     

    PLEDGE
      AND SECURITY AGREEMENT

    


    
      
        
          
          

        

        
          Exhibit
            B - 1

          
            

          

        

        
          
          

        

      

    

    


    EXHIBIT
      C

     

    ASSIGNMENT
      AGREEMENT

    


    
      
        
          
          

        

        
          Exhibit
            C
            - 1

          
            

          

        

        
          
          

        

      

    

    


    EXHIBIT
      D

     

    DIRECTION
      LETTER

    


    
      
        
          
          

        

        
          Exhibit
            D
            - 1

          
            

          

        

        
          
          

        

      

    

    


    EXHIBIT
      E

     

    GUARANTY

    


    
      
        
          
          

        

        
          Exhibit
            E
            - 1

          
            

          

        

        
          
          

        

      

    

    


    EXHIBIT
      F

     

    FORM
      OF SUBORDINATION AGREEMENT

    


    
      
        
          
          

        

        
          Exhibit
            F
            - 1

          
            

          

        

        
          
          

        

      

    

    


    EXHIBIT
      G

     

    FORM
      OF COMPANY COUNSEL’S OPINION

    


    
      
        
          
          

        

        
          Exhibit
            G
            - 1