American Lorain Corporation: Exhibit 10.1 - Prepared by TNT Filings
Inc.




  




Exhibit 10.1


SECURITIES PURCHASE AGREEMENT


          This
Securities Purchase Agreement (this “Agreement”) is dated as of October
28, 2009, between American Lorain Corporation, a Delaware corporation (the “Company”),
and each purchaser identified on the signature pages hereto (each, including
its successors and assigns, a “Purchaser” and collectively, the “Purchasers”).


          WHEREAS,
subject to the terms and conditions set forth in this Agreement and pursuant to
Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”),
and Rule 506 promulgated thereunder, the Company desires to issue and sell to
each Purchaser, and each Purchaser, severally and not jointly, desires to
purchase from the Company, securities of the Company as more fully described in
this Agreement.


          NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Company and each Purchaser agree
as follows:


ARTICLE I.

DEFINITIONS


             1.1           
Definitions. In addition to the terms defined elsewhere in this Agreement, the
following terms have the meanings set forth in this Section 1.1:


	
 

	
 


	
 

	
          “8-K
  Filing” shall have the meaning ascribed to such term in Section 4.4


	
 

	
 


	
 

	
          “Acquiring
  Person” shall have the meaning ascribed to such term in Section 4.5.


	
 

	
 


	
 

	
          “Action”
  shall have the meaning ascribed to such term in Section 3.1(j).


	
 

	
 


	
 

	
          “Affiliate”
  means any Person that, directly or indirectly through one or more
  intermediaries, controls or is controlled by or is under common control with
  a Person, as such terms are used in and construed under Rule 405 under the
  Securities Act. 


	
 

	
 


	
 

	
          “Board
  of Directors” means the board of directors of the Company.


	
 

	
 


	
 

	
          “Business
  Day” means any day except any Saturday, any Sunday, any day which is a
  federal legal holiday in the United States or any day on which banking
  institutions in the State of New York are authorized or required by law or
  other governmental action to close.


	
 

	
 


	
 

	
          “Closing”
  means the closing of the purchase and sale of the Securities pursuant to
  Section 2.1.


	
 

	
 


	
 

	
          “Closing
  Date” means the day on which all of the Transaction Documents have been
  executed and delivered by the applicable parties thereto, and all conditions
  precedent to (i) the Purchasers’ obligations to pay the Subscription Amount
  and (ii) the Company’s obligations to deliver the Securities, in each case,
  have been satisfied or waived, but in no event later than the third Trading
  Day following the date hereof.





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          “Closing
  Price” means on any particular date (a) the last reported closing
  bid price per share of Common Stock on such date on the Trading Market (as
  reported by Bloomberg L.P. at 4:15 p.m. (New York City time)), (b) if there
  is no such price on such date, then the closing bid price on the Trading
  Market on the date nearest preceding such date (as reported by Bloomberg L.P.
  at 4:15 p.m. (New York City time)), (c) if the Common Stock is not then
  listed or quoted on a Trading Market and if prices for the Common Stock are
  then reported in the “pink sheets” published by Pink OTC Markets, Inc. (or a
  similar organization or agency succeeding to its functions of reporting
  prices), then the most recent bid price per share of the Common Stock so
  reported, or (d) if the shares of Common Stock are not then publicly
  traded then the fair market value as of such date of a share of Common Stock
  as determined by an independent appraiser selected in good faith by the
  Purchasers of a majority in interest of the Shares then outstanding and
  reasonably acceptable to the Company, the reasonable fees and expenses of
  which shall be paid by the Company.


	
 

	
 


	
 

	
          “Closing
  Statement” means the Closing Statement in the form on Annex A
  attached hereto.


	
 

	
 


	
 

	
          “Commission”
  means the United States Securities and Exchange Commission.


	
 

	
 


	
 

	
          “Common
  Stock” means the common stock of the Company, par value $0.001 per share,
  and any other class of securities into which such securities may hereafter be
  reclassified or changed. 


	
 

	
 


	
 

	
          “Common
  Stock Equivalents” means any securities of the Company or the
  Subsidiaries which would entitle the holder thereof to acquire at any time
  Common Stock, including, without limitation, any debt, preferred stock,
  rights, options, warrants or other instrument that is at any time convertible
  into or exercisable or exchangeable for, or otherwise entitles the holder
  thereof to receive, Common Stock.


	
 

	
 


	
 

	
          “Company
  Counsel” means Kramer Levin Naftalis & Frankel LLP, with offices
  located at 1177 Avenue of the Americas, New York, New York 10036. 


	
 

	
 


	
 

	
          “DTC”
  means The Depository Trust Company.


	
 

	
 


	
 

	
          “Effective
  Date” means the earlier of the date that (a) all of the Registrable
  Securities (as defined in the Registration Rights Agreement) have been
  registered for resale by the holders thereof pursuant to a registration
  statement(s) declared effective by the Commission and (b) all of the
  Registrable Securities have been sold pursuant to Rule 144 or (except to the
  extent any such Registrable Securities are then held by an Affiliate of the
  Company) may be sold pursuant to Rule 144 without the requirement for the Company
  to be in compliance with the current public information requirement under
  Rule 144 and without volume or manner-of-sale restrictions. 


	
 

	
 


	
 

	
          “Evaluation
  Date” shall have the meaning ascribed to such term in Section 3.1(r). 


	
 

	
 


	
 

	
          “Exchange
  Act” means the Securities Exchange Act of 1934, as amended, and the rules
  and regulations promulgated thereunder.





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          “Exempt
  Issuance” means the issuance of (a) shares of Common Stock or options to
  employees, officers or directors of the Company pursuant to any stock or
  option plan duly adopted for such purpose, by a majority of the non-employee
  members of the Board of Directors or a majority of the members of a committee
  of non-employee directors established for such purpose, (b) securities upon
  the exercise or exchange of or conversion of any Securities issued hereunder
  and/or other securities exercisable or exchangeable for or convertible into
  shares of Common Stock issued and outstanding on the date of this Agreement,
  provided that such securities have not been amended since the date of this
  Agreement to increase the number of such securities or to decrease the
  exercise price, exchange price or conversion price of such securities and (c)
  securities issued pursuant to acquisitions or strategic transactions approved
  by a majority of the disinterested directors of the Company, provided that
  any such issuance shall only be to a Person (or to the equityholders of a
  Person) which is, itself or through its subsidiaries, an operating company or
  an asset in a business synergistic with the business of the Company and shall
  provide to the Company additional benefits in addition to the investment of
  funds, but shall not include a transaction in which the Company is issuing
  securities primarily for the purpose of raising capital or to an entity whose
  primary business is investing in securities.


	
 

	
 


	
 

	
          “GAAP”
  shall have the meaning ascribed to such term in Section 3.1(h).


	
 

	
 


	
 

	
          “Indebtedness”
  shall have the meaning ascribed to such term in Section 3.1(aa).


	
 

	
 


	
 

	
          “Knowledge”
  means (i) the actual knowledge of those officers of the Company required to
  file statements relating to their ownership of the Company’s securities
  pursuant to Section 16 of the Exchange Act and (ii) with respect to each
  Subsidiary, the executive officers of such Subsidiary.


	
 

	
 


	
 

	
          “Intellectual
  Property Rights” shall have the meaning ascribed to such term in Section
  3.1(o).


	
 

	
 


	
 

	
          “Legend
  Removal Date” shall have the meaning ascribed to such term in Section
  4.1(c). 


	
 

	
 


	
 

	
          “Liens”
  means a lien, charge, security interest, encumbrance, right of first refusal,
  preemptive right or other restriction.


	
 

	
 


	
 

	
          “Material
  Adverse Effect” shall have the meaning assigned to such term in Section
  3.1(b).


	
 

	
 


	
 

	
          “Material
  Permits” shall have the meaning ascribed to such term in Section 3.1(m).


	
 

	
 


	
 

	
          “Per
  Share Purchase Price” equals $2.40.





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          “Person”
  means an individual or corporation, partnership, trust, incorporated or
  unincorporated association, joint venture, limited liability company, joint
  stock company, government (or an agency or subdivision thereof) or other
  entity of any kind.


	
 

	
 


	
 

	
          “Proceeding”
  means an action, claim, suit, investigation or proceeding (including, without
  limitation, an informal investigation or partial proceeding, such as a
  deposition). 


	
 

	
 


	
 

	
          “Public
  Information Failure” shall have the meaning ascribed to such term in
  Section 4.2(b).


	
 

	
 


	
 

	
          “Public
  Information Failure Payments” shall have the meaning ascribed to such
  term in Section 4.2(b).


	
 

	
 


	
 

	
          “Purchaser
  Party” shall have the meaning ascribed to such term in Section 4.8.


	
 

	
 


	
 

	
          “Registration
  Rights Agreement” means the Registration Rights Agreement, dated the date
  hereof, among the Company and the Purchasers, in the form of Exhibit A
  attached hereto.


	
 

	
 


	
 

	
          “Registration
  Statement” means a registration statement meeting the requirements set
  forth in the Registration Rights Agreement and covering the resale by the
  Purchasers of the Shares and the Warrant Shares. 


	
 

	
 


	
 

	
          “Required
  Approvals” shall have the meaning ascribed to such term in Section
  3.1(e).


	
 

	
 


	
 

	
          “Rule
  144” means Rule 144 promulgated by the Commission pursuant to the
  Securities Act, as such Rule may be amended from time to time, or any similar
  rule or regulation hereafter adopted by the Commission having substantially
  the same effect as such Rule. 


	
 

	
 


	
 

	
          “Rule
  424” means Rule 424 promulgated by the Commission pursuant to the
  Securities Act, as such Rule may be amended or interpreted from time to time,
  or any similar rule or regulation hereafter adopted by the Commission having
  substantially the same purpose and effect as such Rule.


	
 

	
 


	
 

	
          “SEC
  Reports” shall have the meaning ascribed to such term in Section 3.1(h).


	
 

	
 


	
 

	
          “Securities”
  means, collectively, the Shares, the Warrants and the Warrant Shares.


	
 

	
 


	
 

	
          “Securities
  Act” means the Securities Act of 1933, as amended, and the rules and
  regulations promulgated thereunder.


	
 

	
 


	
 

	
          “Series
  A Warrants” means, collectively, the Series A Common Stock purchase
  warrants deliverable to the Purchasers at the Closing in accordance with
  Section 2.2(a)(iv) hereof, which Series A Warrants shall be exercisable six
  months from the date of issuance of such Series A Warrants and have a term of
  exercise equal to five (5) years from the Initial Exercise Date (as defined
  therein) and an exercise price equal to $3.70 per share,
  subject to adjustment as provided therein, a form of which is attached hereto
  as Exhibit B-1.





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          “Series
  B Warrants” means, collectively, the Series B Common Stock purchase
  warrants deliverable to the Purchasers at the Closing in accordance with
  Section 2.2(a)(v) hereof, which Series B Warrants shall be exercisable six
  months from the date of issuance of such Series B Warrants and have a term of
  exercise equal to thirty (30) months from the Initial Exercise Date (as
  defined therein) and an exercise price equal to $3.70 per share, subject to
  adjustment as provided therein, a form of which is attached hereto as Exhibit
  B-2.


	
 

	
 


	
 

	
          “Shares”
  means the shares of Common Stock issued or issuable to each Purchaser
  pursuant to this Agreement.


	
 

	
 


	
 

	
          “Short
  Sales” means all “short sales” as defined in Rule 200 of Regulation SHO
  under the Exchange Act (but shall not be deemed to include the location
  and/or reservation of borrowable shares of Common Stock nor shall it be
  deemed to include any hedging transaction with respect to any Shares
  purchased or Warrant Shares purchasable upon exercise of the Warrants).


	
 

	
 


	
 

	
          “Stockholder”
  shall have the meaning ascribed to such term in Section 4.11.


	
 

	
 


	
 

	
          “Subscription
  Amount” means, as to each Purchaser, the aggregate amount to be paid for
  Shares and Warrants purchased hereunder as specified below such Purchaser’s
  name on the signature page of this Agreement and next to the heading
  “Subscription Amount,” in United States dollars and in immediately available
  funds.


	
 

	
 


	
 

	
          “Subsidiary”
  means any entity in which the Company, directly or indirectly, owns any of
  the capital stock or holds an equity or similar interest, as set forth on Schedule
  3.1(a), and shall, where applicable, also include any direct or indirect
  subsidiary of the Company formed or acquired after the date hereof. 


	
 

	
 


	
 

	
          “Trading
  Day” means a day on which the Trading Market is open for trading.


	
 

	
 


	
 

	
          “Trading
  Market” means any of the following markets or exchanges on which the
  Common Stock is listed or quoted for trading on the date in question: the
  NYSE AMEX Equities, the Nasdaq Capital Market, the Nasdaq Global Market, the
  Nasdaq Global Select Market, the New York Stock Exchange or the OTC Bulletin
  Board (or any successors to any of the foregoing).


	
 

	
 


	
 

	
          “Transaction
  Documents” means this Agreement, the Warrants, the Registration Rights
  Agreement, the Escrow Agreement by and among the Company, the Purchasers and
  the escrow agent, a form of which is attached hereto as Exhibit C (the
  “Escrow Agreement”) and all exhibits and schedules thereto and hereto.


	
 

	
 


	
 

	
          “Transfer
  Agent” means Interwest Transfer Company, Inc., the current transfer agent
  of the Company, with a mailing address of 1981 Murray Holladay Road, Suite
  100, Salt Lake
  City, Utah 84117 and a facsimile number of (801) 277-3147, and any successor
  transfer agent of the Company.





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          “Warrants”
  means, collectively, the Series A Warrants and the Series B Warrants.


	
 

	
 


	
 

	
          “Warrant
  Shares” means the shares of Common Stock issuable upon exercise of the
  Warrants.


	
 

	
 


	
 

	
          
  “WS” means Weinstein Smith LLP, with offices located at 420 Lexington
  Avenue, Suite 2620, New York, New York 10170-0002.


	
 

	
 





ARTICLE II.

PURCHASE AND SALE


          2.1
Closing. On the Closing Date, upon the terms and subject to the conditions set
forth herein, substantially concurrent with the execution and delivery of this
Agreement by the parties hereto, the Company agrees to sell, and the
Purchasers, severally and not jointly, agree to purchase, up to $12,000,000 in
aggregate purchase price of Shares, Series A Warrants and Series B Warrants.
Each Purchaser shall deliver to the Company, via wire transfer of immediately
available funds, an amount equal to such Purchaser’s Subscription Amount as set
forth on the signature page hereto executed by such Purchaser, and the Company
shall deliver to each Purchaser its respective Shares, a Series A Warrant and a
Series B Warrant, as determined pursuant to Section 2.2(a), and the Company and
each Purchaser shall deliver the other items set forth in Section 2.2
deliverable at the Closing. Upon satisfaction of the covenants and conditions
set forth in Sections 2.2 and 2.3, the Closing shall occur at the offices of WS
or such other location as the parties shall mutually agree.


          2.2
Deliveries.


	
 

	
 


	
 

	
          (a)
  On or prior to the Closing Date, the Company shall deliver or cause to be
  delivered to each Purchaser the following:


	
 

	
 


	
 

	
          (i)
  this Agreement duly executed by the Company;


	
 

	
 


	
 

	
          (ii)
  a legal opinion of Company Counsel, substantially in the form of Exhibit D
  attached hereto; 


	
 

	
 


	
 

	
          (iii)
  a certificate evidencing a number of Shares equal to such Purchaser’s
  Subscription Amount divided by the Per Share Purchase Price, registered in
  the name of such Purchaser;


	
 

	
 


	
 

	
          (iv)
  a Series A Warrant registered in the name of such Purchaser to purchase up to
  a number of shares of Common Stock equal to 35% of such Purchaser’s Shares,
  with an exercise price equal to $3.70 per share, subject to adjustment
  therein;


	
 

	
 


	
 

	
          (v)
  a Series B Warrant registered in the name of such Purchaser to purchase up to
  a number of shares of Common Stock equal to 10% of such Purchaser’s Shares,
  with an exercise price equal to $3.70 per share, subject to adjustment
  therein; 





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          (vi)
  the Registration Rights Agreement duly executed by the Company; 


	
 

	
 


	
 

	
          (vii)
  the Escrow Agreement, duly executed by the Company;


	
 

	
 


	
 

	
          (viii)
  a certificate, executed by the Secretary of the Company and dated as of the
  Closing Date, as to (i) the resolutions consistent with Section 3.1(c) as
  adopted by the Company’s Board of Directors in a form reasonably acceptable to
  such Purchaser, (ii) the Certificate of Incorporation and (iii) the Bylaws,
  each as in effect at the Closing, in the form attached hereto as Exhibit E;


	
 

	
 


	
 

	
          (ix)
  a certificate, executed by the Chief Executive Officer of the Company, dated
  as of the Closing Date in the form attached hereto as Exhibit F
  certifying that the representations and warranties of the Company shall be
  true and correct in all material respects (except for those representations
  and warranties that are qualified by materiality or Material Adverse Effect,
  which shall be true and correct in all respects) 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 specified date) and the Company shall have
  performed, satisfied and complied in all respects 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;


	
 

	
 


	
 

	
          (x)
  a copy of the Irrevocable Transfer Agent Instructions, in the form of Exhibit G
  attached hereto, which instructions shall have been delivered to and
  acknowledged in writing by the Company’s transfer agent; and


	
 

	
 


	
 

	
          (xi)
  a letter from the Company’s transfer agent certifying the number of shares of
  Common Stock outstanding as of a date within five (5) days of the Closing
  Date.


	
 

	
 


	
 

	
(b) On or
  prior to the Closing Date, each Purchaser shall deliver or cause to be
  delivered to the Company the following:


	
 

	
 


	
 

	
          (i)
  this Agreement duly executed by such Purchaser;


	
 

	
 


	
 

	
          (ii)
  such Purchaser’s Subscription Amount by wire transfer to the account as
  specified in the Escrow Agreement; 


	
 

	
 


	
 

	
          (iii)
  the Registration Rights Agreement duly executed by such Purchaser; and


	
 

	
 


	
 

	
          (iv)
  the Escrow Agreement duly executed by such Purchaser.





2.3 Closing
Conditions.


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          (a) The
  obligations of the Company hereunder in connection with the Closing are
  subject to the following conditions being met:


	
 

	
 


	
 

	
          (i)
  the accuracy in all material respects (except
  for those representations and warranties that are qualified by materiality or
  Material Adverse Effect, which shall be true and correct in all respects) when made and on the Closing Date (except
  for representations and warranties that speak as of a specific date, which
  shall be true and correct as of such specified date) of the representations and warranties of the Purchasers contained
  herein; 


	
 

	
 


	
 

	
          (ii)
  all obligations, covenants and agreements of each Purchaser required to be
  performed at or prior to the Closing Date shall have been performed;


	
 

	
 


	
 

	
          (iii)
  the delivery by each Purchaser of the items
  set forth in Section 2.2(b) of this Agreement; and


	
 

	
 


	
 

	
          (iv)
  the delivery by the escrow agent of the
  Escrow Agreement duly executed by the escrow agent.








	
 

	
 


	
          (b)
  The respective obligations of the Purchasers
  hereunder in connection with the Closing are subject to the following
  conditions being met:


	
 

	
 


	
 

	
          (i)
  the accuracy in all material respects (except
  for those representations and warranties that are qualified by materiality or
  Material Adverse Effect, which shall be true and correct in all respects) when made and on the Closing Date (except
  for representations and warranties that speak as of a specific date, which
  shall be true and correct as of such specified date) of the representations and warranties of the Company contained
herein;


	
 

	
 


	
 

	
          (ii)
  all obligations, covenants and agreements of the Company required to be
  performed at or prior to the Closing Date shall have been performed; 


	
 

	
 


	
 

	
          (iii)
  the delivery by the Company of the items set
  forth in Section 2.2(a) of this Agreement; 


	
 

	
 


	
 

	
          (iv)
  the delivery by the escrow agent of the
  Escrow Agreement duly executed by the escrow agent; 


	
 

	
 


	
 

	
          (v)
  there shall have been no Material Adverse
  Effect with respect to the Company since the date hereof; and


	
 

	
 


	
 

	
          (vi)
  from the date hereof to the Closing Date, trading in the Common Stock shall
  not have been suspended by the Commission or the Trading Market, and, at any
  time prior to the Closing Date, trading in securities generally as reported by
  Bloomberg L.P. shall not have been suspended or limited, or minimum prices
  shall not have been established on securities whose trades are reported by
  such service, or on any Trading Market, nor shall a banking moratorium have
  been declared either by the United States or New York State authorities nor
  shall there have occurred any material outbreak or escalation of hostilities
  or other national or international calamity of such magnitude in its effect
  on, or any material adverse change in, any financial market which, in each
  case, in the reasonable judgment of each Purchaser, makes it impracticable or
  inadvisable to purchase the Securities at the Closing.





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ARTICLE III.

REPRESENTATIONS AND WARRANTIES


	
 

	
 


	
               3.1
  Representations and Warranties of the Company. Except as set forth in
  the disclosure schedules, which disclosure schedules shall be deemed a part
  hereof and shall qualify any representation or otherwise made herein to the
  extent of the disclosure contained in the corresponding section of the
  disclosure schedules, the Company hereby makes the following representations
  and warranties to each Purchaser:


	
 

	
 


	
 

	
          (a)
  Subsidiaries. All of the direct and indirect Subsidiaries of the
  Company are set forth on Schedule 3.1(a). Except as set forth on Schedule
  3.1(a), the Company owns, directly or indirectly, all of the capital
  stock or other equity interests of each Subsidiary free and clear of any
  Liens, and all of the issued and outstanding shares of capital stock of each
  Subsidiary are validly issued and are fully paid, nonassessable (or the
  foreign equivalent) and free of preemptive and similar rights to subscribe
  for or purchase securities. 


	
 

	
 


	
 

	
          (b)
  Organization and Qualification. The Company and each of the
  Subsidiaries is an entity duly incorporated or otherwise organized, validly
  existing and in good standing under the laws of the jurisdiction of its
  incorporation or organization, with the requisite corporate power and
  authority to own and use its properties and assets and to carry on its
  business as currently conducted. Neither the Company nor any Subsidiary is in
  violation or default of any of the provisions of its respective certificate
  or articles of incorporation, bylaws or other organizational or charter
  documents. Each of the Company and the Subsidiaries is duly qualified to
  conduct business and is in good standing as a foreign corporation or other
  entity in each jurisdiction in which the nature of the business conducted or
  property owned by it makes such qualification necessary, except where the
  failure to be so qualified or in good standing, as the case may be, would not
  reasonably be expected to result in: (i) a material adverse effect on the
  legality, validity or enforceability of any Transaction Document, (ii) a material
  adverse effect on the results of operations, assets, business or financial
  condition of the Company and the Subsidiaries, taken as a whole, or (iii) a
  material adverse effect on the Company’s ability to perform in any material
  respect on a timely basis its obligations under any Transaction Document (any
  of (i), (ii) or (iii), a “Material Adverse Effect”) and, to the
  Company’s Knowledge, no Proceeding has been instituted in any such
  jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or
  curtail such power and authority or qualification.


	
 	
 
	
 

	
          (c) Authorization;
  Enforcement. The Company has the requisite corporate power and authority
  to enter into and to consummate the transactions contemplated by each of the
  Transaction Documents and otherwise to carry out its obligations hereunder
  and thereunder. The execution and delivery of each of the Transaction
  Documents by the Company and the consummation by it of the transactions
  contemplated hereby and thereby have been duly authorized by all necessary
  corporate action on the part of the Company and no further action is required
  by the Company, the Board of Directors or the Company’s stockholders in
  connection therewith other than in connection with the Required Approvals.
  Each Transaction Document to which it is a party has been (or upon delivery
  will have been) duly executed by the Company and, when delivered in
  accordance with the terms hereof and thereof, will constitute the valid and
  binding obligation of the Company enforceable against the Company in
  accordance with its terms, except: (i) as limited by general equitable
  principles and applicable bankruptcy, insolvency, reorganization, moratorium
  and other laws of general application affecting enforcement of creditors’
  rights generally, (ii) as limited by laws relating to the availability of
  specific performance, injunctive relief or other equitable remedies and (iii)
  insofar as indemnification and contribution provisions may be limited by
  applicable law. 





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          (d)
  No Conflicts. The execution, delivery and performance by the Company
  of the Transaction Documents, the issuance or sale of the Securities and the
  consummation by the Company of the transactions contemplated hereby and
  thereby to which it is a party do not and will not: (i) conflict with or
  violate any provision of the Company’s or any Subsidiary’s certificate or
  articles of incorporation, bylaws or other organizational or charter
  documents, (ii) conflict with, or constitute a default (or an event that with
  notice or lapse of time or both would become a default) under, or give to
  others any rights of termination, amendment, acceleration or cancellation
  (with or without notice, lapse of time or both) of, any agreement, credit
  facility, debt or other instrument (evidencing a Company or Subsidiary debt
  or otherwise) or other understanding to which the Company or any Subsidiary
  is a party or by which any property or asset of the Company or any Subsidiary
  is bound or affected, (iii) result in the creation of any Lien upon any of
  the properties or assets of the Company or any Subsidiary or (iv) subject to
  the Required Approvals, conflict with or result in a violation of any law,
  rule, regulation, order, judgment, injunction, decree or other restriction of
  any Trading Market, court or governmental authority to which the Company or a
  Subsidiary is subject (including federal and state securities laws and
  regulations and the regulations of any Trading Market), or by which any
  property or asset of the Company or a Subsidiary is bound or affected; except
  in the case of each of clauses (ii) and (iii), such as would not reasonably
  be expected to result in a Material Adverse Effect.


	
 

	
 


	
 

	
          (e)
  Filings, Consents and Approvals. The Company is not required to obtain
  any consent, waiver, authorization or order of, give any notice to, or make
  any filing or registration with, any court or other federal, state, local or
  other governmental authority or other Person in connection with the
  execution, delivery and performance by the Company of the Transaction
  Documents, other than: (i) the filings required pursuant to Section 4.4 of
  this Agreement, (ii) the filing with the Commission of one or more
  registration statements pursuant to the Registration Rights Agreement, (iii)
  the notice and/or application(s) to the Trading Market for the issuance and
  sale of the Securities and the listing of the Securities for trading thereon
  in the time and manner required thereby and (iv) the filing of Form D with
  the Commission and such filings as are required to be made under applicable
  securities or “Blue Sky” laws of the states of the United States
  (collectively, the “Required Approvals”).





10










	
 

	
 


	
 

	
          (f)
  Issuance of the Securities. The Securities are duly authorized and,
  when issued and paid for in accordance with the applicable Transaction
  Documents, will be duly and validly issued, fully paid and nonassessable,
  free and clear of all Liens other than restrictions on transfer provided for
  in the Transaction Documents. The Company has reserved from its duly
  authorized capital stock the maximum number of shares of Common Stock
  issuable pursuant to this Agreement and the Warrants.


	
 

	
 


	
 

	
          (g)
  Capitalization. The authorized capital of the Company is as set forth
  on Schedule 3.1(g), which Schedule 3.1(g) shall also include
  the number of shares of Common Stock owned beneficially, and of record, by
  Affiliates of the Company as of the date hereof. The Company has not issued
  any capital stock since its most recently
  filed periodic report under the Exchange Act, other than pursuant to
  the exercise of employee stock options under the Company’s stock option
  plans, the issuance of shares of Common Stock to employees pursuant to the
  Company’s employee stock purchase plans and pursuant to the conversion and/or
  exercise of Common Stock Equivalents outstanding as of the date of the most
  recently filed periodic report under the Exchange Act. No Person has any
  right of first refusal, preemptive right, right of participation, or any
  similar right to participate in the transactions contemplated by the
  Transaction Documents. Except as a result of the purchase and sale of the
  Securities and except as disclosed on Schedule 3.1(g), there are no
  outstanding options, warrants, scrip rights to subscribe to, calls or commitments
  of any character whatsoever relating to, or securities, rights or obligations
  convertible into or exercisable or exchangeable for, or giving any Person any
  right to subscribe for or acquire any shares of Common Stock, or contracts,
  commitments, understandings or arrangements by which the Company or any
  Subsidiary is or may become bound to issue additional shares of Common Stock
  or Common Stock Equivalents. The issuance and sale of the Securities will not
  obligate the Company to issue shares of Common Stock or other securities to
  any Person (other than the Purchasers) and will not result in a right of any
  holder of Company securities to adjust the exercise, conversion, exchange or
  reset price under any of such securities. All of the outstanding shares of
  capital stock of the Company are validly issued, fully paid and
  nonassessable, have been issued in compliance with all federal and state
  securities laws, and none of such outstanding shares was issued in violation
  of any preemptive rights or similar rights to subscribe for or purchase
  securities. No further approval or authorization of any stockholder, the
  Board of Directors or others is required for the issuance and sale of the
  Securities. There are no stockholders agreements, voting agreements or other
  similar agreements with respect to the Company’s capital stock to which the
  Company is a party or, to the Knowledge of the Company, between or among any
  of the Company’s stockholders.





11





	
 

	
 


	
 

	
          (h)
  SEC Reports; Financial Statements. Except as disclosed on Schedule
  3.1(h), the Company has filed all reports, schedules, forms, statements
  and other documents required to be filed by the Company under the Securities
  Act and the Exchange Act, including pursuant to Section 13(a) or 15(d)
  thereof, for the two years preceding the date hereof (or such shorter period
  as the Company was required by law or regulation to file such material) (the
  foregoing materials, including the exhibits thereto and documents
  incorporated by reference therein, being collectively referred to herein as
  the “SEC Reports”) on a timely basis or has received a valid extension
  of such time of filing and has filed any such SEC Reports prior to the
  expiration of any such extension. As of their respective dates, the SEC
  Reports complied in all material respects with the requirements of the
  Securities Act and the Exchange Act, as applicable, and none of the SEC
  Reports, when filed, contained any untrue statement of a material fact or
  omitted to state a material fact required to be stated therein or necessary
  in order to make the statements therein, in the light of the circumstances
  under which they were made, not misleading. The financial statements of the
  Company included in the SEC Reports comply in all material respects with
  applicable accounting requirements and the rules and regulations of the
  Commission with respect thereto as in effect at the time of filing. Such
  financial statements have been prepared in accordance with United States
  generally accepted accounting principles applied on a consistent basis during
  the periods involved (“GAAP”), except as may be otherwise specified in
  such financial statements or the notes thereto and except that unaudited
  financial statements may not contain all footnotes required by GAAP, but
  fairly present in all material respects the financial position of the Company
  and its consolidated Subsidiaries as of and for the dates thereof and the
  results of operations and cash flows for the periods then ended, subject, in
  the case of unaudited statements, to normal, immaterial, year-end audit
  adjustments.


	
 

	
 


	
 

	
          (i)
  Material Changes; Undisclosed Events, Liabilities or Developments.
  Except as disclosed on Schedule 3.1(i), since the date of the latest
  audited financial statements included within the SEC Reports, except as
  specifically disclosed in a subsequent SEC Report filed prior to the date
  hereof: (i) there has been no event, occurrence or development that has had
  or that would reasonably be expected to result in a Material Adverse Effect,
  (ii) the Company has not incurred any liabilities (contingent or otherwise)
  that would be required to be disclosed on the Company’s balance sheet in
  conformity with GAAP and are not disclosed in the SEC Reports, other than
  those incurred in the ordinary course of the Company’s or its Subsidiaries’
  respective businesses which (x) represent ordinary course short-term bank
  borrowings or (y) which otherwise, individually or in the aggregate, would
  not reasonably be expected to have a Material Adverse Effect, (iii) the Company
  has not altered its method of accounting, (iv) the Company has not declared
  or made any dividend or distribution of cash or other property to its
  stockholders or purchased, redeemed or made any agreements to purchase or
  redeem any shares of its capital stock and (v) the Company has not issued any
  equity securities to any officer, director or Affiliate, except pursuant to
  existing Company stock option plans or stock purchase plans. The Company does
  not have pending before the Commission any request for confidential treatment
  of information. Except for the issuance of the Securities contemplated by
  this Agreement or as set forth on Schedule 3.1(i), no event,
  liability, fact, circumstance, occurrence or development has occurred or
  exists, or is reasonably expected to occur or exist, with respect to the
  Company or its Subsidiaries or their respective business, properties,
  operations, assets or financial condition, that would be required to be
  disclosed by the Company on a Current Report on Form 8-K at the time this
  representation is made or deemed made that has not been publicly disclosed at
  least one (1) Trading Day prior to the date that this representation is made
  or deemed made.





12





	
 

	
 


	
 

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


	
 

	
 


	
 

	
          (k)
  Labor Relations. No material labor dispute exists or, to the Knowledge
  of the Company, is imminent with respect to any of the employees of the
  Company, which could reasonably be expected to result in a Material Adverse
  Effect. To the Company’s Knowledge, none of the Company’s or its
  Subsidiaries’ employees is a member of a union that relates to such
  employee’s relationship with the Company or such Subsidiary, and neither the
  Company nor any of its Subsidiaries is a party to a collective bargaining
  agreement, and the Company and its Subsidiaries believe that their
  relationships with their employees are good. No executive officer, to the
  Knowledge of the Company, is, 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 in favor of any third
  party, and the continued employment of each such executive officer does not
  subject the Company or any of its Subsidiaries to any liability with respect
  to any of the foregoing matters. The Company and its Subsidiaries are in
  compliance with all U.S. federal, state, local and foreign laws and
  regulations relating to employment and employment practices, terms and
  conditions of employment and wages and hours, except where the failure to be
  in compliance would not, individually or in the aggregate, reasonably be
  expected to have a Material Adverse Effect.


	
 

	
 


	
 

	
          (l)
  Compliance. Neither the Company nor any Subsidiary: (i) is in default
  under or in violation of (and no event has occurred that has not been waived
  that, with notice or lapse of time or both, would result in a default by the
  Company or any Subsidiary under), nor has the Company or any Subsidiary
  received notice of a claim that it is in default under or that it is in
  violation of, any indenture, loan or credit agreement or any other agreement
  or instrument to which it is a party or by which it or any of its properties
  is bound (whether or not such default or violation has been waived), (ii) is
  in violation of any judgment, decree, or order of any court, arbitrator or
  governmental body or (iii) is in violation of any statute, rule, ordinance or
  regulation of any governmental authority, including without limitation all
  foreign, federal, state and local laws applicable to its business or relating
  to taxes, environmental protection, occupational health and safety, product
  quality and safety and employment and labor matters, except in each case as
  would not reasonably be expected to result in a Material Adverse Effect.





13





	
 

	
 


	
 

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


	
 

	
 


	
 

	
          (n)
  Title to Assets. The Company and the Subsidiaries have good and
  marketable title in fee simple (or the local equivalent) to all real property
  owned by them and good and marketable title in all personal property owned by
  them that is material to the business of the Company and the Subsidiaries, in
  each case free and clear of all Liens, except for Liens as do not materially
  affect the value of such property (other than to the extent security
  interests granted to lenders may require repayment prior to sale) and do not
  materially interfere with the use made and proposed to be made of such
  property by the Company and the Subsidiaries and Liens for the payment of
  federal, state, foreign or other taxes, the payment of which is neither
  delinquent nor subject to penalties. Except as set forth on Schedule
  3.1(n), any real property and facilities held under lease by the Company
  and the Subsidiaries are held by them under valid, subsisting and enforceable
  leases with which the Company and the Subsidiaries are in compliance.


	
 

	
 


	
 

	
          (o)
  Patents and Trademarks. The Company and the Subsidiaries have, or have
  rights to use, all patents, patent applications, trademarks, trademark
  applications, service marks, trade names, trade secrets, inventions,
  copyrights, licenses and other intellectual property rights and similar
  rights as necessary or material for use in connection with their respective
  businesses as described in the SEC Reports and which failure to so have would
  have a Material Adverse Effect (collectively, the “Intellectual Property
  Rights”). None of, and neither the Company nor any Subsidiary has
  received a notice (written or otherwise) that any of, the Intellectual
  Property Rights has expired, terminated or been abandoned, or is expected to
  expire or terminate or be abandoned, within two (2) years from the date of
  this Agreement. Neither the Company nor any Subsidiary has received, since
  the date of the latest audited financial statements included within the SEC
  Reports, a written notice of a claim or otherwise has any Knowledge that the
  Intellectual Property Rights violate or infringe upon the rights of any
  Person, except as would not have a Material Adverse Effect. To the Knowledge
  of the Company, all such Intellectual Property Rights are enforceable and
  there is no existing infringement by another Person of any of the
  Intellectual Property Rights. The Company and its Subsidiaries have taken
  reasonable security measures to protect the secrecy, confidentiality and
  value of all of their intellectual properties, except where failure to do so
  would not, individually or in the aggregate, reasonably be expected to have a
  Material Adverse Effect.





14





	
 

	
 


	
 

	
          (p)
  Insurance. The Company and the Subsidiaries are insured by insurers of
  recognized financial responsibility against such losses and risks and in such
  amounts as are prudent and customary in the businesses in which the Company
  and the Subsidiaries are engaged, including, but not limited to, directors
  and officers insurance coverage. Neither the Company nor any Subsidiary has
  any reason to believe that it will not be able to renew its existing
  insurance coverage as and when such coverage expires or to obtain similar
  coverage from similar insurers as may be necessary to continue its business
  without a significant increase in cost.


	
 

	
 


	
 

	
          (q)
  Transactions With Affiliates and Employees. Except as set forth in the
  SEC Reports, none of the officers or directors of the Company and, to the
  Knowledge of the Company, none of the employees of the Company is presently a
  party to any transaction with the Company or any Subsidiary (other than for
  services as employees, officers and directors), including any contract,
  agreement or other arrangement providing for the furnishing of services to or
  by, providing for rental of real or personal property to or from, or
  otherwise requiring payments to or from any officer, director or such
  employee or, to the Knowledge of the Company, any entity in which any
  officer, director, or any such employee has a substantial interest, in each
  case in excess of $120,000, or is an officer, director, trustee or partner,
  other than for: (i) payment of salary or consulting fees for services
  rendered, (ii) reimbursement for expenses incurred on behalf of the Company
  and (iii) other employee benefits, including stock option agreements under
  any stock option plan of the Company.


	
 

	
 


	
 

	
          (r)
  Sarbanes-Oxley; Internal Accounting Controls. The Company is in
  compliance with any and all applicable requirements of the Sarbanes-Oxley Act
  of 2002 that are effective as of the date hereof, and any and all applicable
  rules and regulations promulgated by the Commission thereunder that are
  effective as of the date hereof and as of the Closing Date. The Company and the Subsidiaries maintain a system
  of internal accounting controls sufficient to provide reasonable assurance
  that: (i) transactions are executed in accordance with management’s general
  or specific authorizations, (ii) transactions are recorded as necessary to
  permit preparation of financial statements in conformity with GAAP and to
  maintain asset accountability, (iii) access to assets is permitted only in
  accordance with management’s general or specific authorization, and (iv) the
  recorded accountability for assets is compared with the existing assets at
  reasonable intervals and appropriate action is taken with respect to any
  differences. The Company has established disclosure controls and procedures
  (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company
  and designed such disclosure controls and procedures to ensure that information
  required to be disclosed by the Company in the reports it files or submits
  under the Exchange Act is recorded, processed, summarized and reported,
  within the time periods specified in the Commission’s rules and forms. The
  Company’s certifying officers have evaluated the effectiveness of the
  Company’s disclosure controls and procedures as of the end of the period
  covered by the Company’s most recently filed periodic report under the
  Exchange Act (such date, the “Evaluation Date”). The Company presented
  in its most recently filed periodic report under the Exchange Act the
  conclusions of the certifying officers about the effectiveness of the
  disclosure controls and procedures based on their evaluations as of the
  Evaluation Date. Since the Evaluation Date, there have been no changes in the
  Company’s internal control over financial reporting (as such term is defined
  in the Exchange Act) that has materially affected, or is reasonably likely to
  materially affect, the Company’s internal control over financial reporting.





15










	
 

	
 


	
 

	
          (s)
  Certain Fees. Except as set forth on Schedule 3.1(s), no
  brokerage or finder’s fees or commissions are or will be payable by the
  Company to any broker, financial advisor or consultant, finder, placement
  agent, investment banker, bank or other Person with respect to the
  transactions contemplated by the Transaction Documents. The Purchasers shall
  have no obligation with respect to any fees or with respect to any claims
  made by or on behalf of other Persons for fees of a type contemplated in this
  Section that may be due in connection with the transactions contemplated by
  the Transaction Documents. 


	
 

	
 


	
 

	
          
  (t) Private Placement. Assuming the accuracy of the Purchasers’
  representations and warranties set forth in Section 3.2, no registration
  under the Securities Act is required for the offer and sale of the Securities
  by the Company to the Purchasers as contemplated hereby. The issuance and
  sale of the Securities hereunder does not contravene the rules and
  regulations of the Trading Market.


	
 

	
 


	
 

	
          (u)
  Investment Company. The Company is not, and is not an Affiliate of,
  and immediately after receipt of payment for the Securities, will not be or
  be an Affiliate of, an “investment company” within the meaning of the Investment
  Company Act of 1940, as amended. The Company shall conduct its business in a
  manner so that it will not become an “investment company” subject to
  registration under the Investment Company Act of 1940, as amended.


	
 

	
 


	
 

	
          (v)
  Registration Rights. Other than each of the Purchasers or as set forth
  in Schedule 3.1(v), no Person has any right to cause the Company to
  effect the registration under the Securities Act of any securities of the
  Company.


	
 

	
 


	
 

	
          (w)
  Listing and Maintenance Requirements. The Common Stock is registered
  pursuant to Section 12(b) or 12(g) of the Exchange Act, and the Company has
  taken no action designed to, or which to its Knowledge is likely to have the
  effect of, terminating the registration of the Common Stock under the
  Exchange Act nor has the Company received any notification that the
  Commission is contemplating terminating such registration. The Company has
  not, in the 12 months preceding the date hereof, received notice from any
  Trading Market on which the Common Stock is or has been listed or quoted to
  the effect that the Company is not in compliance with the listing or
  maintenance requirements of such Trading Market. The Company is, and has no
  reason to believe that it will not in the foreseeable future continue to be,
  in compliance with all such listing and maintenance requirements.


	
 

	
 


	
 

	
          (x)
  Application of Takeover Protections. Except as set forth on Schedule
  3.1(x), the Company and the Board of Directors have taken all necessary
  action, if any, in order to render inapplicable any control share
  acquisition, business combination, poison pill (including any distribution
  under a rights agreement) or other similar anti-takeover provision under the
  Company’s certificate of incorporation (or similar charter documents) or the
  laws of its state of incorporation that is or could become applicable to the
  Purchasers as a result of the Purchasers and the Company fulfilling their
  obligations or exercising their rights under the Transaction Documents,
  including without limitation as a result of the Company’s issuance of the
  Securities and the Purchasers’ ownership of the Securities.





16





	
 

	
 


	
 

	
          (y)
  Disclosure. Except with respect to the material terms and conditions
  of the transactions contemplated by the Transaction Documents, the Company
  confirms that neither it nor any other Person acting on its behalf has
  provided any of the Purchasers or their agents or counsel with any
  information that it believes constitutes or might constitute material,
  non-public information. The Company understands and confirms that the
  Purchasers will rely on the foregoing representation in effecting
  transactions in securities of the Company. All of the disclosure furnished by
  or on behalf of the Company to the Purchasers regarding the Company, its
  business and the transactions contemplated hereby, including the disclosure
  schedules to this Agreement, is true and correct in all material respects and
  does not contain any untrue statement of a material fact or omit to state any
  material fact necessary in order to make the statements made therein, in
  light of the circumstances under which they were made, not misleading. The
  press releases disseminated by the Company during the twelve months preceding
  the date of this Agreement taken as a whole do not contain any untrue
  statement of a material fact or omit to state a material fact required to be
  stated therein or necessary in order to make the statements therein, in light
  of the circumstances under which they were made and when made, not misleading.
  The Company acknowledges and agrees that no Purchaser makes or has made any
  representations or warranties with respect to the transactions contemplated
  hereby other than those specifically set forth in Section 3.2 hereof.


	
 

	
 


	
 

	
          (z)
  No Integrated Offering. Assuming the accuracy of the Purchasers’
  representations and warranties set forth in Section 3.2, neither the Company,
  nor any of its Affiliates, nor any Person acting on its or their behalf, has,
  directly or indirectly, made any offers or sales of any security or solicited
  any offers to buy any security, under circumstances that would cause this
  offering of the Securities to be integrated with prior offerings by the
  Company for purposes of (i) the Securities Act which would require the registration
  of any such securities under the Securities Act, or (ii) any applicable
  shareholder approval provisions of any Trading Market on which any of the
  securities of the Company are listed or designated.





17





	
 

	
 


	
 

	
          (aa)
  Solvency. Based on the consolidated financial condition of the Company
  as of the Closing Date, after giving effect to the receipt by the Company of
  the proceeds from the sale of the Securities hereunder: (i) the fair saleable
  value of the Company’s assets exceeds the amount that will be required to be
  paid on or in respect of the Company’s existing debts and other liabilities
  (including known contingent liabilities) as they mature, (ii) the Company’s
  assets do not constitute unreasonably small capital to carry on its business
  as now conducted and as proposed to be conducted including its capital needs
  taking into account the particular capital requirements of the business
  conducted by the Company, and projected capital requirements and capital
  availability thereof, and (iii) the current cash flow of the Company,
  together with the proceeds the Company would receive, were it to liquidate
  all of its assets, after taking into account all anticipated uses of the
  cash, would be sufficient to pay all amounts on or in respect of its liabilities
  when such amounts are required to be paid. The Company does not intend to
  incur debts beyond its ability to pay such debts as they mature (taking into
  account the timing and amounts of cash to be payable on or in respect of its
  debt). The Company has no Knowledge of any facts or circumstances which lead
  it to believe that it will file for reorganization or liquidation under the
  bankruptcy or reorganization laws of any jurisdiction within one year from
  the Closing Date. Schedule 3.1(z) sets forth as of the date hereof all
  outstanding secured and unsecured Indebtedness of the Company or any
  Subsidiary, or for which the Company or any Subsidiary has commitments. For
  the purposes of this Agreement, “Indebtedness” means (x) any
  liabilities for borrowed money or amounts owed in excess of $100,000 (other
  than trade accounts payable incurred in the ordinary course of business), (y)
  all guaranties, endorsements and other contingent obligations in respect of
  indebtedness of others in excess of $100,000, whether or not the same are or
  should be reflected in the Company’s balance sheet (or the notes thereto),
  except guaranties by endorsement of negotiable instruments for deposit or
  collection or similar transactions in the ordinary course of business; and (z)
  the present value of any lease payments in excess of $50,000 due under leases
  required to be capitalized in accordance with GAAP. Neither the Company nor
  any Subsidiary is in default with respect to any Indebtedness.


	


	



	
 

	
          (bb)
  Tax Status. Except for matters that would not, individually or in the
  aggregate, would not reasonably be expected to result in a Material Adverse
  Effect, the Company and each Subsidiary (i) has made or filed all United
  States federal and state income and all foreign income and franchise tax
  returns, reports and declarations required by any jurisdiction to which it is
  subject, (ii) has paid all taxes and other governmental assessments and
  charges that are material in amount, shown or determined to be due on such
  returns, reports and declarations and (iii) has set aside on its books
  provision reasonably adequate for the payment of all material taxes for
  periods subsequent to the periods to which such returns, reports or
  declarations apply. There are no unpaid taxes in any material amount claimed
  to be due by the taxing authority of any jurisdiction, and the officers of
  the Company or of any Subsidiary know of no basis for any such claim. 


	
 

	
 


	
 

	
          (cc)
  No General Solicitation. Neither the Company nor any person acting on
  behalf of the Company has offered or sold any of the Securities by any form
  of general solicitation or general advertising. The Company has offered the
  Securities for sale only to the Purchasers and certain other “accredited
  investors” within the meaning of Rule 501 under the Securities Act.


	
 

	
 


	
 

	
          (dd)
  Foreign Corrupt Practices. Neither the Company, nor, any agent or
  other person acting on behalf of the Company, has: (i) directly or
  indirectly, used any funds for unlawful contributions, gifts, entertainment
  or other unlawful expenses related to foreign or domestic political activity,
  (ii) made any unlawful payment to foreign or domestic government officials or
  employees or to any foreign or domestic political parties or campaigns from
  corporate funds, (iii) failed to disclose fully any contribution made by the
  Company (or made by any person acting on its behalf of which the Company is
  aware) which is in violation of law or (iv) violated in any material respect
  any provision of the Foreign Corrupt Practices Act of 1977, as amended.





18





	
 

	
 


	
 

	
          (ee)
  Accountants. The Company’s accounting firm is set forth on Schedule
  3.1(ee). To the Knowledge of the Company, such accounting firm: (i) is a
  registered public accounting firm as required by the Exchange Act and (ii)
  issued its opinion with respect to the financial statements included in the
  Company’s Annual Report for the year ending December 31, 2008.


	
 

	
 


	
 

	
          (ff)
  No Disagreements with Accountants or Lawyers. There are no
  disagreements of any kind presently existing, or reasonably anticipated by
  the Company to arise, between the Company and the accountants or lawyers
  formerly or presently employed by the Company and the Company is current with
  respect to any fees owed to its accountants and lawyers which could affect
  the Company’s ability to perform any of its obligations under any of the
  Transaction Documents. 


	
 

	
 


	
 

	
          (gg)
  Acknowledgment Regarding Purchasers’ Purchase of Securities. The
  Company acknowledges and agrees that each of the Purchasers is acting solely
  in the capacity of an arm’s length purchaser with respect to the Transaction
  Documents and the transactions contemplated thereby. The Company further
  acknowledges that no Purchaser is acting as a financial advisor or fiduciary
  of the Company (or in any similar capacity) with respect to the Transaction
  Documents and the transactions contemplated thereby and any advice given by
  any Purchaser or any of their respective representatives or agents in
  connection with the Transaction Documents and the transactions contemplated
  thereby is merely incidental to the Purchasers’ purchase of the Securities.
  The Company further represents to each Purchaser that the Company’s decision
  to enter into this Agreement and the other Transaction Documents has been
  based solely on the independent evaluation of the transactions contemplated
  hereby by the Company and its representatives.


	
 

	
 


	
 

	
          (hh)
  Acknowledgment Regarding Purchasers’ Trading Activity. Anything in
  this Agreement or elsewhere herein to the contrary notwithstanding (except
  for Sections 3.2(f) and 4.15 hereof), it is understood and acknowledged by
  the Company that: (i) none of the Purchasers have been asked by the Company
  to agree, nor has any Purchaser agreed, to desist from purchasing or selling,
  long and/or short, securities of the Company, or “derivative” securities
  based on securities issued by the Company or to hold the Securities for any
  specified term, (ii) past or future open market or other transactions by any
  Purchaser, specifically including, without limitation, Short Sales or
  “derivative” transactions, before or after the closing of this or future
  private placement transactions, may negatively impact the market price of the
  Company’s publicly-traded securities, (iii) any Purchaser, and
  counter-parties in “derivative” transactions to which any such Purchaser is a
  party, directly or indirectly, may presently have a “short” position in the
  Common Stock and (iv) each Purchaser shall not be deemed to have any
  affiliation with or control over any arm’s length counter-party in any
  “derivative” transaction. The Company further understands and acknowledges
  that (y) one or more Purchasers may engage in hedging activities at various
  times during the period that the Securities are outstanding, including,
  without limitation, during the periods that the value of the Warrant Shares
  deliverable with respect to Securities are being determined, and (z) such
  hedging activities (if any) could reduce the value of the existing
  stockholders’ equity interests in the Company at and after the time that the
  hedging activities are being conducted. The Company acknowledges that such
  aforementioned hedging activities do not constitute a breach of any of the
  Transaction Documents.





19





	
 

	
 


	
 

	
          (ii)
  Regulation M Compliance. The Company has not, and, to the Knowledge of
  the Company, no one acting on its behalf has, (i) taken, directly or
  indirectly, any action designed to cause or to result in the stabilization or
  manipulation of the price of any security of the Company to facilitate the
  sale or resale of any of the Securities, (ii) sold, bid for, purchased, or
  paid any compensation for soliciting purchases of, any of the Securities, or
  (iii) paid or agreed to pay to any Person any compensation for soliciting
  another to purchase any other securities of the Company, other than, in the
  case of clauses (ii) and (iii), compensation paid to the Company’s placement
  agent in connection with the placement of the Securities.


	
 

	
 


	
 

	
          (jj)
  Stock Option Plans. Each stock option granted by the Company under the
  Company’s stock option plan was granted (i) in accordance with the terms of
  the Company’s stock option plan and (ii) with an exercise price at least
  equal to the fair market value of the Common Stock on the date such stock
  option would be considered granted under GAAP and applicable law. No stock
  option granted under the Company’s stock option plan has been backdated. The
  Company has not knowingly granted, and there is no and has been no Company
  policy or practice to knowingly grant, stock options prior to, or otherwise
  knowingly coordinate the grant of stock options with, the release or other
  public announcement of material information regarding the Company or its
  Subsidiaries or their financial results or prospects.


	
 

	
 


	
 

	
          (kk)
  Office of Foreign Assets Control. Neither the Company nor any
  director, officer or affiliate of the Company is currently subject to any
  U.S. sanctions administered by the Office of Foreign Assets Control of the
  U.S. Treasury Department (“OFAC”).


	
 

	
 


	
 

	
          (ll)
  U.S. Real Property Holding Corporation. The Company is not and has
  never been, and so long as any Securities remain outstanding, shall not
  become, a U.S. real property holding corporation within the meaning of
  Section 897 of the Internal Revenue Code of 1986, as amended, and the Company
  shall so certify upon a Purchaser’s request. 


	
 

	
 


	
 

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


	
 

	
 





20





	
 

	
 


	
 	
 
	
 

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





          3.2
Representations and Warranties of the Purchasers. Each Purchaser, for itself
and for no other Purchaser, hereby represents and warrants as of the date
hereof and as of the Closing Date to the Company as follows (unless as of a specific date therein):


	
 

	
 


	
 

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


	
 

	
 


	
 

	
          (b)
  Own Account. Such Purchaser understands that the Securities are
  “restricted securities” and have not been registered under the Securities Act
  or any applicable state securities law and is acquiring the Securities as
  principal for its own account and not with a view to or for distributing or
  reselling such Securities or any part thereof in violation of the Securities
  Act or any applicable state securities law, has no present intention of distributing
  any of such Securities in violation of the Securities Act or any applicable
  state securities law and has no direct or indirect arrangement or
  understandings with any other persons to distribute or regarding the
  distribution of such Securities in violation of the Securities Act or any
  applicable state securities law (this representation and warranty not
  limiting such Purchaser’s right to sell the Securities pursuant to the
  Registration Statement or otherwise in compliance with applicable federal and
  state securities laws). Such Purchaser is acquiring the Securities hereunder
  in the ordinary course of its business.


	
 

	
 





21





	
 

	
 


	
 	
 
	
 

	
          (c)
  Rule 144. Such Purchaser understands that the Securities must be held
  indefinitely unless such Securities are registered under the Securities Act
  or an exemption from registration is available. Such Purchaser acknowledges
  that such person is familiar with Rule
  144, and that such Purchaser has been advised that Rule 144 permits resales
  only under certain circumstances. Such Purchaser understands that to the
  extent that Rule 144 is not available, such Purchaser will be unable to sell
  any Securities without either registration under the Securities Act or the
  existence of another exemption from such registration requirement.


	
 

	
 


	
 

	
          (d)
  Purchaser Status. At the time such Purchaser was offered the
  Securities, it was, and as of the date hereof it is, and on each date on
  which it exercises any it will be, an “accredited investor” as defined in
  Rule 501 under the Securities Act or a “qualified institutional buyer” as
  defined in Rule 144A under the Securities Act. Such Purchaser is not required
  to be registered as a broker-dealer under Section 15 of the Exchange Act. 


	
 

	
 


	
 

	
          (e)
  Experience of Such Purchaser. Such Purchaser, either alone or together
  with its representatives, has such knowledge, sophistication and experience
  in business and financial matters so as to be capable of evaluating the
  merits and risks of the prospective investment in the Securities, and has so
  evaluated the merits and risks of such investment. Such Purchaser is able to
  bear the economic risk of an investment in the Securities and, at the present
  time, is able to afford a complete loss of such investment. Such Purchaser has sought such accounting, legal and tax advice as
  it has considered necessary to make an informed investment decision with
  respect to its acquisition of the Securities.


	
 

	
 


	
 

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


	
 

	
 


	
 

	
          (g)
  General. Such Purchaser understands that the Securities are being
  offered and sold in reliance on a transactional exemption from the
  registration requirements of federal and state securities laws and the
  Company is relying upon the truth and accuracy of the representations,
  warranties, agreements, acknowledgments and understandings of such Purchaser
  set forth herein in order to determine the applicability of such exemptions
  and the suitability of such Purchaser to acquire the Securities. Such
  Purchaser understands that no United States federal or state agency or any
  government or governmental agency has passed upon or made any recommendation
  or endorsement of the Securities.


	
 

	
 


	
 

	
          (h)
  Certain Fees. Such Purchaser has not employed any broker or finder or
  incurred any liability for any brokerage or investment banking fees,
  commissions, finders’ fees, financial advisory fees or other similar fees in
  connection with the transactions contemplated by Transaction Documents.


	
 

	
 


	
 

	
          (i)
  Not an Affiliate. Such Purchaser is not an officer, director or
  Affiliate of the Company





22





	
 

	
 


	
 	
 
	
 

	
          (j)
  Certain Transactions and Confidentiality. Other than consummating the
  transactions contemplated hereunder, such Purchaser has not directly or
  indirectly, nor has any Person acting on behalf of or pursuant to any
  understanding with such Purchaser, executed any purchases or sales, including
  Short Sales, of the securities of the Company during the period
  commencing as of the time that such Purchaser first received a term sheet
  (written or oral) from the Company or any other Person representing the
  Company setting forth the material terms of the transactions contemplated
  hereunder and ending immediately prior to the execution hereof.
  Notwithstanding the foregoing, in the case of a Purchaser that is a
  multi-managed investment vehicle whereby separate portfolio managers manage
  separate portions of such Purchaser’s assets and the portfolio managers have
  no direct knowledge of the investment decisions made by the portfolio
  managers managing other portions of such Purchaser’s assets, the
  representation set forth above shall only apply with respect to the portion
  of assets managed by the portfolio manager that made the investment decision
  to purchase the Securities covered by this Agreement. Other than to other
  Persons party to this Agreement, such Purchaser has maintained the
  confidentiality of all disclosures made to it in connection with this transaction
  (including the existence and terms of this transaction). Notwithstanding the
  foregoing, for avoidance of doubt, nothing contained herein shall constitute
  a representation or warranty, or preclude any actions, with respect to the
  identification of the availability of, or securing of, available shares to
  borrow in order to effect Short Sales or similar transactions in the future.





ARTICLE IV.

OTHER AGREEMENTS OF THE PARTIES


	
 

	
 


	
 

	
4.1 Transfer
  Restrictions. 


	
 

	
 


	
 

	
          (a)
  The Securities may be disposed of only in compliance with state and federal
  securities laws. In connection with any transfer of Securities other than (i)
  pursuant to an effective registration statement, (ii) to the Company, (iii)
  to an Affiliate of a Purchaser or (iv) in connection with a pledge as
  contemplated in Section 4.1(b), the Company may require the transferor
  thereof to provide to the Company an opinion of counsel selected by the
  transferor and reasonably acceptable to the Company, the form and substance
  of which opinion shall be reasonably satisfactory to the Company, to the
  effect that such transfer does not require registration of such transferred
  Securities under the Securities Act. As a condition of transfer, any
  transferee shall agree in writing to be bound by the terms of this Agreement
  and the Registration Rights Agreement and shall have the rights and
  obligations of a Purchaser under this Agreement and the Registration Rights
  Agreement. 


	
 

	
 


	
 

	
          (b)
  The Purchasers agree to the imprinting, so long as is required by this
  Section 4.1, of a legend on any of the Securities in the following form:


	
 

	
 





23





THIS SECURITY HAS NOT
BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY,
MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM,
OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AND,
UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT, AS EVIDENCED BY A LEGAL
OPINION OF COUNSEL TO THE TRANSFEROR AND REASONABLY ACCEPTABLE TO THE COMPANY
TO SUCH EFFECT, THE FORM AND SUBSTANCE OF WHICH SHALL BE REASONABLY
SATISFACTORY TO THE COMPANY. THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A
BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER BONA FIDE
LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED
IN RULE 501(A) UNDER THE SECURITIES ACT.


          The
Company acknowledges and agrees that a Purchaser may from time to time, with
respect to all or some of the Shares or Warrant Shares, enter into a bona fide
pledge pursuant to a bona fide margin agreement with a registered broker-dealer
or grant a bona fide security interest pursuant to a bona fide loan to a
financial institution that is an “accredited investor” as defined in Rule
501(a) under the Securities Act and who agrees to be bound by the provisions of
this Agreement and the Registration Rights Agreement, and if required under the
terms of such bona fide arrangement, such Purchaser may transfer pledged or
secured Securities to the pledgees or secured parties. Such a bona fide pledge
or transfer would not be subject to approval of the Company and no legal
opinion of legal counsel of the pledgee, secured party or pledgor shall be
required in connection therewith. Further, no notice shall be required of such
pledge. At the appropriate Purchaser’s expense, the Company will execute and
deliver such reasonable documentation as a bona fide pledgee or secured party
of Securities may reasonably request in connection with a bona fide pledge or
transfer of the Securities, including, if the Securities are subject to
registration pursuant to the Registration Rights Agreement, the preparation and
filing of any required prospectus supplement under Rule 424(b)(3) under the
Securities Act or other applicable provision of the Securities Act to
appropriately amend the list of Selling Stockholders (as defined in the
Registration Rights Agreement) thereunder.


24





          (c)
Certificates evidencing the Shares and Warrant Shares shall not contain any
legend (including the legend set forth in Section 4.1(b) hereof), (i) while a
registration statement (including the Registration Statement) covering the
resale of such security is effective under the Securities Act, (ii) following
any sale of such Shares or Warrant Shares pursuant to Rule 144 to a
non-Affiliate of the Company, (iii) if such Shares or Warrant Shares are
eligible for sale under Rule 144, without the requirement for the Company to be
in compliance with the current public information required under Rule 144 as to
such Shares or Warrant Shares and without volume or manner-of-sale restrictions
or (iv) if such legend is not required, as confirmed under applicable judicial
interpretations and pronouncements issued by the staff of the Commission. The
Company shall cause its counsel to issue a customary legal opinion to the
Transfer Agent promptly after the Effective Date if required by the Transfer
Agent in connection therewith to
effect the removal of the legend hereunder, unless the Securities are sold
pursuant to Rule 144. If all or any portion of a Warrant is exercised at a time
when there is an effective registration statement to cover the resale of the
Warrant Shares, or if such Shares or Warrant Shares may be sold under Rule 144
and the Company is then in compliance with the current public information
required under Rule 144, or if the Shares or Warrant Shares may be sold under
Rule 144 without the requirement for the Company to be in compliance with the
current public information required under Rule 144 as to such Shares or Warrant
Shares or if such legend is not otherwise required under applicable
requirements of the Securities Act (including judicial interpretations and
pronouncements issued by the staff of the Commission) then such Warrant Shares
shall be issued free of all legends. The Company agrees that following the
Effective Date or at such time as such legend is no longer required or at such
time as such legend is provided to be removed under this Section 4.1(c), it
will, no later than three Trading Days following the delivery by a Purchaser to
the Company or the Transfer Agent of a certificate representing Shares or
Warrant Shares, as the case may be, issued with a restrictive legend (such
third Trading Day, the “Legend Removal Date”), deliver or cause to be
delivered to such Purchaser a certificate representing such shares that is free
from all restrictive and other legends. The Company may not make any notation
on its records or give instructions to the Transfer Agent that enlarge the
restrictions on transfer set forth in this Section 4. Certificates for
Securities subject to legend removal hereunder shall be transmitted by the
Transfer Agent to the Purchaser by crediting the account of the Purchaser’s
broker with the Depository Trust Company System as directed by such Purchaser.


          (d)
Each Purchaser, severally and not jointly with the other Purchasers, agrees
with the Company that such Purchaser will sell all Securities pursuant to
either the registration requirements of the Securities Act, including any
applicable prospectus delivery requirements, or an exemption therefrom, and
that if Securities are sold pursuant to a Registration Statement, they will be
sold in compliance with the plan of distribution set forth therein, and
acknowledges that the removal of the restrictive legend from certificates
representing Securities as set forth in this Section 4.1 is predicated upon the
Company’s reliance upon this undertaking.


4.2 Furnishing
of Information; Public Information Failure. 


          (a)
Until the earliest of the time that (i) no Purchaser owns Securities or (ii)
the Warrants have expired, the Company covenants to maintain the registration
of the Common Stock under Section 12(b) or 12(g) of the Exchange Act and to
timely file (or obtain extensions in respect thereof and file within the
applicable grace period) all reports required to be filed by the Company after
the date hereof pursuant to the Exchange Act even if the Company is not then
subject to the reporting requirements of the Exchange Act. As long as any
Purchaser owns Securities, if the Company is not required to file reports
pursuant to the Exchange Act, it will prepare and furnish to the Purchasers and
make publicly available in accordance with Rule 144(c) such information as is
required for the Purchasers to sell the Securities, including without
limitation, under Rule 144. The Company further covenants that it will take
such further action as any holder of Securities may reasonably request, to the
extent required from time to time to enable such Person to sell such
  Securities without registration under the Securities Act, including without
  limitation, within the requirements of the exemption provided by Rule 144. 


25







	
 

	
 


	
 

	
 
	
 

	
 


	
 

	
          (b)
  At any time during the period commencing from the six (6) month anniversary
  of the date hereof and ending at such time that all of the Securities may be
  sold without the requirement for the Company to be in compliance with Rule
  144(c)(1) and otherwise without restriction or limitation pursuant to Rule
  144, if the Company shall fail for any reason to satisfy the current public
  information requirement under Rule 144(c) (a “Public Information Failure”)
  then, in addition to such Purchaser’s other available remedies, the Company
  shall pay to a Purchaser, in cash, as partial liquidated damages and not as a
  penalty, by reason of any such delay in or reduction of its ability to sell
  the Securities, an amount in cash equal to two percent (2.0%) of the
  aggregate Subscription Amount of such Purchaser’s Shares and Warrant Shares
  on the day of a Public Information Failure and on every thirtieth (30th)
  day (pro rated for periods totaling less than thirty days) thereafter until
  the earlier of (a) the date such Public Information Failure is cured and (b)
  such time that such public information is no longer required for the
  Purchasers to transfer the Shares and Warrant Shares pursuant to Rule 144.
  The payments to which a Purchaser shall be entitled pursuant to this Section
  4.2(b) are referred to herein as “Public Information Failure Payments.”
  Public Information Failure Payments
  shall be paid on the later of (i) the last day of the calendar month during
  which such Public Information Failure Payments
  are incurred and (ii) the third (3rd) Business Day after the event
  or failure giving rise to the Public Information Failure Payments is cured. In the event the
  Company fails to make Public Information Failure Payments in a timely manner, such Public Information
  Failure Payments shall bear
  interest at the rate of 1.5% per month (prorated for partial months) until
  paid in full. Nothing herein shall limit such Purchaser’s right to pursue
  actual damages for the Public Information Failure, and such Purchaser shall
  have the right to pursue all remedies available to it at law or in equity
  including, without limitation, a decree of specific performance and/or
  injunctive relief. 





          4.3  Integration. The Company shall not
sell, offer for sale or solicit offers to buy or otherwise negotiate in respect
of any security (as defined in Section 2 of the Securities Act) that would be
integrated with the offer or sale of the Securities hereunder in a manner that
would require the registration under the Securities Act of the sale of the
Securities hereunder or that would be integrated with the offer or sale of the Securities
for purposes of the rules and regulations of any Trading Market such that it
would require shareholder approval prior to the closing of such other
transaction unless shareholder approval is obtained before the closing of such
subsequent transaction. 


26





          4.4
Securities Laws Disclosure; Publicity. The Company shall, by 8:30 a.m.
(New York City time) on the Trading Day immediately following the date hereof,
issue a Current Report on Form 8-K and press release disclosing the material
terms of the transactions contemplated hereby, and including the Transaction
Documents (other than schedules and exhibits to the Transaction Documents) as
exhibits thereto (including all attachments thereto, the “8-K Filing”). From
and after the issuance of such press release, the Company shall have publicly
disclosed all material, non-public information delivered to any of the
Purchasers by the Company or any of its subsidiaries, or any of their
respective agents in
connection with the transactions contemplated by the Transaction Documents. The
Company shall not, and shall cause each of its Subsidiaries and each of their
respective officers, directors, employees and agents, not to, provide any
Purchaser with any material, nonpublic information regarding the Company or any
of its Subsidiaries from and after the 8-K Filing without the express prior
written consent of such Purchaser. If a Purchaser has, or believes it has,
received any such material, nonpublic information regarding the Company or any
of its Subsidiaries from the Company, any of its Subsidiaries or any of the
respective officers, directors, affiliates or agents, other than as required in
writing by such Purchaser, it may provide the Company with written notice
thereof. The Company shall, within two (2) Trading Days of receipt of such
notice, make public disclosure of such material, nonpublic information. The
Company and each Purchaser shall consult with each other in issuing any other
press releases with respect to the transactions contemplated hereby, and
neither the Company nor any Purchaser shall issue any such press release nor
otherwise make any such public statement without the prior consent of the
Company, with respect to any press release of any Purchaser, or without the
prior consent of each Purchaser, with respect to any press release of the
Company, which consent shall not unreasonably be withheld or delayed, except if
such disclosure is required by law, in which case the disclosing party shall
promptly provide the other party with prior notice of such public statement or
communication. Notwithstanding the foregoing, the Company shall not publicly
disclose the name of any Purchaser, or include the name of any Purchaser in any
filing with the Commission or any regulatory agency or Trading Market, without
the prior written consent of such Purchaser, except: (a) as required by federal
securities law in connection with (i) any registration statement contemplated
by the Registration Rights Agreement and (ii) the filing of final Transaction
Documents (including signature pages thereto) with the Commission and (b) to
the extent such disclosure is required by any other law or Trading Market
regulations, in which case the Company shall provide the Purchasers with prior
notice of such disclosure permitted under this clause (b). 


          4.5
Shareholder Rights Plan. No claim will be made or enforced by the
Company or, with the consent of the Company, any other Person, that any
Purchaser is an “Acquiring Person” under any control share acquisition,
business combination, poison pill (including any distribution under a rights
agreement) or similar anti-takeover plan or arrangement in effect or hereafter
adopted by the Company, or that any Purchaser could be deemed to trigger the
provisions of any such plan or arrangement, by virtue of receiving Securities
under the Transaction Documents or under any other agreement between the
Company and the Purchasers. 


          4.6
Non-Public Information. Except with respect to the material terms and
conditions of the transactions contemplated by the Transaction Documents, the
Company covenants and agrees that neither it, nor any other Person acting on
its behalf, will provide any Purchaser or its agents or counsel with any
information that the Company believes constitutes material non-public
information, unless prior thereto such Purchaser shall have executed a written
agreement with the Company regarding the confidentiality and use of such
information. The Company understands and confirms that each Purchaser shall be
relying on the foregoing covenant in effecting transactions in securities of
the Company. 


27





          4.7
Use of Proceeds. Except as set forth on Schedule 4.7 attached
hereto, the Company shall use the net proceeds from the sale of the Securities
hereunder for working capital purposes and shall not use such proceeds for: (a)
the satisfaction of any portion of the Company’s debt
(other than payment of trade payables in the ordinary course of the Company’s
business and prior practices), (b) the redemption of any Common Stock or Common
Stock Equivalents, (c) the settlement of any outstanding litigation or (d) in
violation of the FCPA or OFAC regulations.


          4.8
Indemnification of Purchasers. Subject to the provisions of this Section
4.8, the Company will indemnify and hold each Purchaser and its directors,
officers, shareholders, members, partners, employees and agents (and any other
Persons with a functionally equivalent role of a Person holding such titles,
notwithstanding the absence of such title or any other title), each Person who
controls such Purchaser (within the meaning of Section 15 of the Securities Act
and Section 20 of the Exchange Act), and the directors, officers, shareholders,
agents, members, partners or employees (and any other Persons with a
functionally equivalent role of a Person holding such titles, notwithstanding
the absence of such title or any other title) of such controlling Persons
(each, a “Purchaser Party”) harmless from any and all losses,
liabilities, obligations, claims, contingencies, damages, costs and expenses,
including all judgments, amounts paid in settlements, court costs and
reasonable attorneys’ fees and costs of investigation that any such Purchaser
Party may suffer or incur as a result of or relating to (a) any breach of any
of the representations, warranties, covenants or agreements made by the Company
in this Agreement or in the other Transaction Documents or (b) any action
instituted against a Purchaser in any capacity, or any Purchaser Party or any
Affiliate of a Purchaser or Purchaser Party, by any stockholder of the Company
who is not an Affiliate of such Purchaser, with respect to any of the
transactions contemplated by the Transaction Documents (unless such action is
based upon a breach of such Purchaser’s representations, warranties or
covenants under the Transaction Documents or any agreements or understandings
such Purchaser may have with any such stockholder or any violations by such
Purchaser of state or federal securities laws or any conduct by such Purchaser
which constitutes fraud, gross negligence, willful misconduct or malfeasance).
If any action shall be brought against any Purchaser Party in respect of which
indemnity may be sought pursuant to this Agreement, such Purchaser Party shall
promptly notify the Company in writing, and the Company shall have the right to
assume the defense thereof with counsel of its own choosing, reasonably
acceptable to the Purchaser Party. Any Purchaser Party shall have the right to
employ separate counsel in any such action and participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
such Purchaser Party except to the extent that (i) the employment thereof has
been specifically authorized by the Company in writing, (ii) the Company has
failed after a reasonable period of time to assume such defense and to employ
counsel or (iii) in such action there is, in the reasonable opinion of counsel
to the applicable Purchaser Party, a material conflict on any material issue
between the position of the Company and the position of such Purchaser Party,
in which case the Company shall be responsible for the reasonable fees and
expenses of no more than one such separate counsel. The Company will not be
liable to any Purchaser Party under this Agreement (y) for any settlement by a
Purchaser Party effected without the Company’s prior written consent, which
consent shall not be unreasonably withheld or delayed; or (z) to the extent,
but only to the extent that a loss, claim, damage or liability is attributable
to (1) any Purchaser Party’s breach of any of the representations, warranties,
covenants or agreements made by such Purchaser Party in any of the Transaction
Documents, (2) any violations by such Purchaser Party of applicable state or federal
securities laws or (3) any conduct by such Purchaser Party which constitutes
fraud, gross negligence, willful misconduct or malfeasance. The indemnification
required by this Section 4.8 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 are incurred. The indemnity agreements contained
herein shall be in addition to any cause of action or similar right of any
Purchaser Party against the Company or others and any other liabilities to
which the Company may be subject pursuant to law. 


28





          4.9
Reservation of Common Stock. As of the date hereof, the Company has
reserved and the Company shall continue to reserve and keep available at all
times, free of preemptive rights, a sufficient number of shares of Common Stock
for the purpose of enabling the Company to issue Shares pursuant to this
Agreement and all of the Warrant Shares pursuant to any exercise of the
Warrants. 


          4.10
Listing of Common Stock. The Company hereby agrees to use its reasonable
best efforts to maintain the listing or quotation of the Common Stock on a
Trading Market and concurrently with the Closing, the Company shall apply to
list or quote all of the Shares and Warrant Shares on such Trading Market and
promptly secure the listing of all of the Shares and Warrant Shares on such
Trading Market. The Company further agrees, if the Company applies to have the
Common Stock traded on any other Trading Market, it will then include in such
application all of the Shares and Warrant Shares, and will take such other
action as is necessary to cause all of the Shares and Warrant Shares to be
listed or quoted on such other Trading Market as promptly as practicable. The
Company will then take all action reasonably necessary to continue the listing
or quotation and trading of its Common Stock on the Trading Market and will
comply in all respects with the Company’s reporting, filing and other
obligations under the bylaws or rules of the Trading Market. 


          4.11
Subsequent Equity Sales. 


	
 

	
 


	
 

	
          (a)
  From the date hereof until thirty (30) days after the Effective Date, neither
  the Company nor any Subsidiary shall issue, enter into any agreement to issue
  or announce the issuance or proposed issuance of any shares of Common Stock
  or Common Stock Equivalents; provided, however, that the thirty (30)
  day period set forth in this Section 4.11 shall be extended for the number of
  Trading Days during such period in which (i) trading in the Common Stock is
  suspended by any Trading Market, or (ii) following the Effective Date, the
  Registration Statement is not effective or the prospectus included in the
  Registration Statement may not be used by the Purchasers for the resale of
  any of the Registrable Securities (as defined in the Registration Rights
  Agreement). 


	
 

	
 


	
 

	
          (b)
  For a period of one year from the Effective Date, the Company shall be
  prohibited from effecting or entering into an agreement to effect any
  issuance by the Company or any of its Subsidiaries of Common Stock or Common
  Stock Equivalents for cash consideration (or a combination of units thereof)
  involving a Variable Rate Transaction. “Variable Rate Transaction”
  means a transaction in which the Company (i) issues or sells any debt or
  equity securities that are convertible into, exchangeable or exercisable for,
  or include the right to receive, additional shares of Common Stock either (A)
  at a conversion price, exercise price or exchange rate or other price that is
  based upon, and/or varies with, the trading prices of or quotations for the
  shares of Common Stock at any time after the initial issuance of such debt or
  equity securities or (B) with a conversion, exercise or exchange price that
  is subject to being reset at some future date after the
initial issuance of such debt or equity security or upon the occurrence of
specified or contingent events directly or indirectly related to the business
of the Company or the market for the Common Stock (but not including
adjustments pursuant to conventional anti-dilution adjustments for future
issuances at a price below the conversion or exercise price of such security)
or (ii) enters into any agreement, including, but not limited to, an equity
line of credit, whereby the Company may sell securities at a future determined
price. Any Purchaser shall be entitled to obtain injunctive relief against the
Company to preclude any such issuance, which remedy shall be in addition to any
right to collect damages.





29





                              (c)
Notwithstanding the foregoing, Section 4.11(a) shall not apply in respect of an
Exempt Issuance, except that no Variable Rate Transaction shall be an Exempt
Issuance. 


          4.12 Participation
in Future Financing. 


	
 

	
 


	
 

	
          (a)
  From the date hereof until the date that is the 18 month anniversary of the
  Closing Date, upon any issuance by the Company or any of its Subsidiaries of
  Common Stock or Common Stock Equivalents for cash consideration or
  Indebtedness (or a combination of units hereof) (a “Subsequent Financing”),
  each Purchaser shall have the right to participate in up to an amount of the
  Subsequent Financing equal to 25% of the Subsequent Financing (the “Participation
  Maximum”) on the same terms, conditions and price provided for in the
  Subsequent Financing; provided, however, that if such Subsequent Financing is
  a registered public offering, the Company shall offer each Purchaser the
  right to participate in such public offering if it is lawful for the Company
  to do so, but no Purchaser shall be entitled to purchase any particular
  amount of such public offering. 


	
 

	
 


	
 

	
          (b)
  At least three (3) Trading Days prior to the closing of the Subsequent
  Financing, the Company shall deliver to each Purchaser a written notice of
  its intention to effect a Subsequent Financing (“Pre-Notice”), which
  Pre-Notice shall ask such Purchaser if it wants to review the details of such
  financing (such additional notice, a “Subsequent Financing Notice”).
  Upon the request of a Purchaser, and only upon a request by such Purchaser,
  for a Subsequent Financing Notice, the Company shall promptly, but no later
  than one (1) Trading Day after such request, deliver a Subsequent Financing
  Notice to such Purchaser. The Subsequent Financing Notice shall describe in
  reasonable detail the proposed terms of such Subsequent Financing, the amount
  of proceeds intended to be raised thereunder and the Person or Persons
  through or with whom such Subsequent Financing is proposed to be effected and
  shall include a term sheet or similar document relating thereto as an attachment.
  


	
 

	
 


	
 

	
          (c)
  Any Purchaser desiring to participate in such Subsequent Financing must
  provide written notice to the Company by not later than 5:30 p.m. (New York
  City time) on the third (3rd) Trading Day after all of the
  Purchasers have received the Pre-Notice that the Purchaser is willing to
  participate in the Subsequent Financing, the amount of the Purchaser’s
  participation, and representing and warranting that the Purchaser has such
  funds ready, willing, and available for investment on the terms set forth in
  the Subsequent Financing
  Notice. If the Company receives no such notice from a Purchaser as of such
  third (3rd) Trading Day, such Purchaser shall be deemed to have
  notified the Company that it does not elect to participate. 





30





	
 

	
 


	
 

	
 


	
 

	
          (d)
  If by 5:30 p.m. (New York City time) on the third (3rd) Trading
  Day after all of the Purchasers have received the Pre-Notice, notifications
  by the Purchasers of their willingness to participate in the Subsequent
  Financing (or to cause their designees to participate) is, in the aggregate,
  less than the total amount of the Subsequent Financing, then the Company may
  effect the remaining portion of such Subsequent Financing on the terms and
  with the Persons set forth in the Subsequent Financing Notice. 


	
 

	
 


	
 

	
          (e)
  If by 5:30 p.m. (New York City time) on the third (3rd) Trading
  Day after all of the Purchasers have received the Pre-Notice, the Company
  receives responses to a Subsequent Financing Notice from Purchasers seeking
  to purchase more than the aggregate amount of the Participation Maximum, each
  such Purchaser shall have the right to purchase its Pro Rata Portion (as
  defined below) of the Participation Maximum. “Pro Rata Portion” means the
  ratio of (x) the Subscription Amount of Securities purchased on the Closing
  Date by a Purchaser participating under this Section 4.11 and (y) the sum of
  the aggregate Subscription Amounts of Securities purchased on the Closing
  Date by all Purchasers participating under this Section 4.12. 


	
 

	
 


	
 

	
          (f)
  The Company must provide the Purchasers with a second Subsequent Financing
  Notice, and the Purchasers will again have the right of participation set
  forth above in this Section 4.12, if the Subsequent Financing subject to the
  initial Subsequent Financing Notice is not consummated for any reason on the
  terms set forth in such Subsequent Financing Notice within thirty (30)
  Trading Days after the date of the initial Subsequent Financing Notice. 


	
 

	
 


	
 

	
          (g)
  Notwithstanding the foregoing, this Section 4.12 shall not apply in respect
  of (i) an Exempt Issuance, or (ii) an underwritten public offering of Common
  Stock. 





          4.13
Equal Treatment of Purchasers. No consideration (including any
modification of any Transaction Document) shall be offered or paid to any
Person to amend or consent to a waiver or modification of any provision of any
of the Transaction Documents unless the same consideration (other than the
reimbursement of legal fees) is also offered to all of the parties to the Transaction
Documents. For clarification purposes, this provision constitutes a separate
right granted to each Purchaser by the Company and negotiated separately by
each Purchaser, and is intended for the Company to treat the Purchasers as a
class and shall not in any way be construed as the Purchasers acting in concert
or as a group with respect to the purchase, disposition or voting of Securities
or otherwise. 


31





          4.14
Certain Transactions and Confidentiality. Each Purchaser, severally and
not jointly with the other Purchasers, covenants that neither it, nor any
Affiliate acting on its behalf or pursuant to any understanding with it will
execute any purchases or sales, including Short Sales, of any of the Company’s
securities from the date hereof until the time that the transactions
contemplated by this Agreement are first publicly announced pursuant to the
initial press release as described in Section 4.4.Each Purchaser, severally and not
jointly with the other Purchasers, covenants that
until such time as the transactions contemplated by this Agreement are publicly
disclosed by the Company pursuant to the initial press release as described in
Section 4.4, such Purchaser will maintain the confidentiality of the existence
and terms of this transaction and the information included in the Transaction
Documents and the disclosure schedules hereto and thereto. Except as set forth
above, the Company expressly acknowledges and agrees that (i) no Purchaser
makes any representation, warranty or covenant hereby that it will not engage
in effecting transactions in any securities of the Company after the time that
the transactions contemplated by this Agreement are first publicly announced
pursuant to the initial press release as described in Section 4.4, (ii) no
Purchaser shall be restricted or prohibited from effecting any transactions in
any securities of the Company in accordance with applicable securities laws
from and after the time that the transactions contemplated by this Agreement
are first publicly announced pursuant to the initial press release as described
in Section 4.4 and (iii) no Purchaser shall have any duty of confidentiality to
the Company or its Subsidiaries after the issuance of the initial press release
as described in Section 4.4. Notwithstanding the foregoing, in the case of a
Purchaser that is a multi-managed investment vehicle whereby separate portfolio
managers manage separate portions of such Purchaser’s assets and the portfolio
managers have no direct knowledge of the investment decisions made by the
portfolio managers managing other portions of such Purchaser’s assets, the
covenant set forth above shall only apply with respect to the portion of assets
managed by the portfolio manager that made the investment decision to purchase
the Securities covered by this Agreement. 


          4.15
Form D; Blue Sky Filings. 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, promptly upon request of any Purchaser. The Company shall 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
Purchasers at the Closing under applicable securities or “Blue Sky” laws of the
states of the United States, and shall provide evidence of such actions
promptly upon request of any Purchaser. 


          4.16
Capital Changes. Until the one year anniversary of the Effective Date,
the Company shall not undertake a reverse or forward stock split or
reclassification of the Common Stock without the prior written consent of the
Purchasers holding a majority in interest of the Shares. 


          4.17
Acknowledgment of Dilution. The Company acknowledges that the issuance
of the Securities may result in dilution of the outstanding shares of Common
Stock, which dilution may be substantial under certain market conditions. The
Company further acknowledges that its obligations under the Transaction
Documents, including, without limitation, its obligation to issue the Shares
and Warrant Shares pursuant to the Transaction Documents, are unconditional and
absolute and not subject to any right of set off, counterclaim, delay or
reduction, regardless of the effect of any such dilution or any claim the
Company may have against any Purchaser and regardless of the dilutive effect
that such issuance may have on the ownership of the other stockholders of the
Company. 


          4.18
Conduct of Business. The business of the Company and its Subsidiaries
shall not be conducted in violation of any law, ordinance or regulation of any
governmental entity, except where such
violations would not result, either individually or in the aggregate, in a
Material Adverse Effect. 


32





ARTICLE V. 

MISCELLANEOUS


          5.1  Termination. This Agreement may be
terminated by any Purchaser, as to such Purchaser’s obligations hereunder only
and without any effect whatsoever on the obligations between the Company and
the other Purchasers, by written notice to the other parties, if the Closing
has not been consummated on or before November 2, 2009; provided, however, that
such termination will not affect the right of any party to sue for any breach
by the other party (or parties). 


          5.2
Fees and Expenses. The Company shall deliver to each Purchaser, prior to
the Closing, a completed and executed copy of the Closing Statement, attached
hereto as Annex A. Except as expressly set forth in the Transaction Documents
to the contrary, each party shall pay the fees and expenses of its advisers,
counsel, accountants and other experts, if any, and all other expenses incurred
by such party incident to the negotiation, preparation, execution, delivery and
performance of this Agreement. The Company shall pay all Transfer Agent fees,
stamp taxes and other taxes and duties levied in connection with the delivery
of any Securities to the Purchasers. 


          5.3
Entire Agreement. The Transaction Documents, together with the exhibits
and schedules hereto and thereto, contain the entire understanding of the
parties with respect to the subject matter hereof and thereof and supersede all
prior agreements and understandings, oral or written, with respect to such
matters, which the parties acknowledge have been merged into such documents,
exhibits and schedules. 


          5.4
Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of: (a) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile number
set forth on the signature pages attached hereto prior to 5:30 p.m. (New York
City time) on a Trading Day, (b) the next Trading Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number set forth on the signature pages attached hereto on a day that
is not a Trading Day or later than 5:30 p.m. (New York City time) on any
Trading Day, (c) the second (2nd) Trading Day following the date of
mailing, if sent by U.S. nationally recognized overnight courier service or (d)
upon actual receipt by the party to whom such notice is required to be given.
The address for such notices and communications shall be as set forth on the
signature pages attached hereto. 


33





          5.5
Amendments; Waivers. No provision of this Agreement may be waived,
modified, supplemented or amended except in a written instrument signed, in the
case of an amendment, by the Company and the Purchasers holding at least a
majority in interest of the Securities then outstanding or, in the case of a
waiver, by the party against whom enforcement of any such waived provision is
sought. No waiver of any default with respect to any provision, condition or
requirement of this Agreement shall be deemed to be a continuing waiver in the
future or a waiver of any subsequent default or a waiver of any other
provision, condition or requirement
hereof, nor shall any delay or omission of any party to exercise any right
hereunder in any manner impair the exercise of any such right. 


          5.6
Headings. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof. 


          5.7
Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties and their successors and permitted assigns. The
Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of each Purchaser (other than by merger). Any
Purchaser may assign any or all of its rights under this Agreement to any
Person to whom such Purchaser assigns or transfers all of such Purchaser’s
Securities, provided that such transferee agrees in writing to be bound, with
respect to the transferred Securities, by the provisions of the Transaction
Documents that apply to the “Purchasers.” 


          5.8
No Third-Party Beneficiaries. This Agreement is intended for the benefit
of the parties hereto and their respective successors and permitted assigns and
is not for the benefit of, nor may any provision hereof be enforced by, any
other Person, except as otherwise set forth in Section 4.8. 


          5.9
Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of the Transaction Documents shall be governed
by and construed and enforced in accordance with the internal laws of the State
of New York, without regard to the principles of conflicts of law thereof. Each
party agrees that all legal proceedings concerning the interpretations,
enforcement and defense of the transactions contemplated by this Agreement and
any other Transaction Documents (whether brought against a party hereto or its
respective affiliates, directors, officers, shareholders, employees or agents)
shall be commenced exclusively in the United States District Court for the
Southern District of New York or in any state court located in New York County,
New York. Each party hereby irrevocably submits to the exclusive jurisdiction
of the United States District Court for the Southern District of New York and
any state court located in New York County, New York for the adjudication of
any dispute hereunder or in connection herewith or with any transaction contemplated
hereby or discussed herein (including with respect to the enforcement of any of
the Transaction Documents), 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, or that such suit, action or
proceeding is improper or is an inconvenient venue for such proceeding. 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 via registered or certified mail or overnight delivery (with evidence
of delivery) to such party at the address in effect for notices to it under
this Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any other
manner permitted by law. If either party shall commence an action or proceeding
to enforce any provisions of the Transaction Documents, then the prevailing
party in such action or proceeding shall be reimbursed by the other party for
its reasonable attorneys’ fees and other costs and expenses incurred with the
investigation, preparation and prosecution of such action or proceeding. 


34





          5.10
Survival. The representations and warranties contained herein shall
survive the Closing and the delivery of the Securities. 


          5.11
Execution. This Agreement may be executed in two or more counterparts,
all of which, when taken together shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each
party and delivered to the other parties hereto, it being understood that all
parties need not sign the same counterpart. In the event that any signature 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. 


          5.12
Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall
in no way be affected, impaired or invalidated, and the parties hereto shall
use their commercially reasonable efforts to find and employ an alternative
means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby stipulated and
declared to be the intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions without including any
of such that may be hereafter declared invalid, illegal, void or unenforceable.



          5.13
Rescission and Withdrawal Right. Notwithstanding anything to the
contrary contained in (and without limiting any similar provisions of) any of
the other Transaction Documents, whenever any Purchaser exercises a right,
election, demand or option under a Transaction Document and the Company does
not timely perform its related obligations within the periods therein provided,
then such Purchaser 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; provided, however, that in the case of a rescission of an
exercise of a Warrant, the applicable Purchaser shall be required to return any
shares of Common Stock subject to any such rescinded exercise notice
concurrently with the return to such Purchaser of the aggregate exercise price
paid to the Company for such shares and the restoration of such Purchaser’s
right to acquire such shares pursuant to such Purchaser’s Warrant (including,
issuance of a replacement warrant certificate evidencing such restored right). 


          5.14
Replacement of Securities. If any certificate or instrument evidencing
any Securities is mutilated, lost, stolen or destroyed, the Company shall issue
or cause to be issued in exchange and substitution for and upon cancellation
thereof (in the case of mutilation), or in lieu of and substitution therefor, a
new certificate or instrument, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction. The applicant
for a new certificate or instrument under such circumstances shall also pay any
reasonable third-party costs (including customary indemnity) associated with
the issuance of such replacement Securities. 


35





          5.15
Remedies. In addition to being entitled to exercise all rights provided
herein or granted by law, including recovery of damages, each of the Purchasers
and the Company will be entitled to
specific performance under the Transaction Documents. The parties agree that
monetary damages may not be adequate compensation for any loss incurred by
reason of any breach of obligations contained in the Transaction Documents and
hereby agree to waive and not to assert in any action for specific performance
of any such obligation the defense that a remedy at law would be adequate. 


          5.16
Payment Set Aside. To the extent that the Company makes a payment or payments
to any Purchaser pursuant to any Transaction Document or a Purchaser enforces
or exercises its rights thereunder, and such payment or payments or the
proceeds of such enforcement or exercise or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside, recovered
from, disgorged by or are required to be refunded, repaid or otherwise restored
to the Company, a trustee, receiver or any other person under any law
(including, without limitation, any bankruptcy law, state or federal law,
common law or equitable cause of action), then, to the extent of any such
restoration, the obligation or part thereof originally intended to be satisfied
shall be revived and continued in full force and effect as if such payment had
not been made or such enforcement or setoff had not occurred. 


          5.17
Independent Nature of Purchasers’ Obligations and Rights. The
obligations of each Purchaser under any Transaction Document are several and
not joint with the obligations of any other Purchaser, and no Purchaser shall
be responsible in any way for the performance or non-performance of the
obligations of any other Purchaser under any Transaction Document. Nothing
contained herein or in any other Transaction Document, and no action taken by
any Purchaser pursuant thereto, shall be deemed to constitute the Purchasers as
a partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Purchasers are in any way acting in concert or as
a group with respect to such obligations or the transactions contemplated by
the Transaction Documents. Each Purchaser shall be entitled to independently
protect and enforce its rights, including, without limitation, the rights
arising out of this Agreement or out of the other Transaction Documents, and it
shall not be necessary for any other Purchaser to be joined as an additional
party in any proceeding for such purpose. Each Purchaser has been represented
by its own separate legal counsel in their review and negotiation of the
Transaction Documents. For reasons of administrative convenience only, each
Purchaser and its respective counsel have chosen to communicate with the
Company through WS. WS does not represent any of the Purchasers and only
represents Rodman & Renshaw, LLC. The Company has elected to provide all
Purchasers with the same terms and Transaction Documents for the convenience of
the Company and not because it was required or requested to do so by any of the
Purchasers. 


          5.18
Liquidated Damages. The Company’s obligations to pay any partial
liquidated damages or other amounts owing under the Transaction Documents is a
continuing obligation of the Company and shall not terminate until all unpaid
partial liquidated damages and other amounts have been paid, notwithstanding
the fact that the instrument or security pursuant to which such partial
liquidated damages or other amounts are due and payable shall have been
canceled. 


36





          5.19
Saturdays, Sundays, Holidays, etc. If the last or appointed day for the
taking of any action or the expiration of any right required or granted herein
shall not be a Business Day, then such
action may be taken or such right may be exercised on the next succeeding
Business Day. 


          5.20
Construction. The parties agree that each of them and/or their
respective counsel has reviewed and had an opportunity to revise the
Transaction Documents and, therefore, the normal rule of construction to the
effect that any ambiguities are to be resolved against the drafting party shall
not be employed in the interpretation of the Transaction Documents or any
amendments hereto. In addition, each and every reference to share prices and
shares of Common Stock in any Transaction Document shall be subject to
adjustment for reverse and forward stock splits, stock dividends, stock
combinations and other similar transactions of the Common Stock that occur
after the date of this Agreement. 


          5.21
WAIVER OF JURY TRIAL. IN ANY ACTION, SUIT,
OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY,
THE PARTIES EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED
BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND
EXPRESSLY WAIVES FOREVER TRIAL BY JURY. 


(Signature Pages Follow)


37





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


	
 

	
 


	
AMERICAN LORAIN CORPORATION

	
Address for
  Notice: 


	
By:/s/ Si
  Chen 

	
 


	
 

	
Fax: 


	
Name: Si
Chen 

	
 


	
Title: Chief Executive Officer, Chairman
  and President 

	
 


	
With a copy to (which shall not constitute notice):

	
 





[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
 SIGNATURE PAGE FOR PURCHASER FOLLOWS]


38





[PURCHASER SIGNATURE PAGES TO ALN SECURITIES
PURCHASE AGREEMENT]


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


Name of
Purchaser: ________________________________________________________ 


Signature of Authorized Signatory of
Purchaser: __________________________________ 


Name of
Authorized Signatory: ____________________________________________________ 


Title of
Authorized Signatory: _____________________________________________________ 


Email Address
of Authorized Signatory: ______________________________________________ 


Facsimile
Number of Authorized Signatory: _____________________________________________ 


Address for
Notice of Purchaser: 


Address for
Delivery of Securities for Purchaser (if not same as address for notice): 


Subscription
Amount: $_________________ 


Shares:
_________________ 


Warrant
Shares: __________________ 


EIN Number: [PROVIDE THIS UNDER SEPARATE COVER]


39