Exhibit 10.24**AMENDED AND RESTATED SECURITIES PURCHASE AGREEMENT**     **AMENDED AND RESTATED SECURITIES PURCHASE AGREEMENT**(the “**Agreement**”), dated as of June19, 2007, by and among The Allied Defense Group, Inc., a Delaware corporation with its corporateheadquarters located at 8000 Towers Crescent Drive, Suite 260, Vienna, Virginia 22182 (the“**Company**”), and the investors listed on the Schedule of Buyers attached hereto (individually, a“**Buyer**” and collectively, the “**Buyers**”).     **WHEREAS**:     A. The Company and the Buyers entered into that certain Securities Purchase Agreement, datedas of March 9, 2006 (the “**Original Closing Date**”) (as amended from time to time in accordance withits terms, the “**Original Securities Purchase Agreement**”), whereby the Company, among other things,issued (i) that aggregate principal amount of senior subordinated convertible notes (the “**OriginalNotes**”), set forth opposite such Buyer’s name in column (3) on the Schedule of Buyers and (ii)warrants (the “**Warrants**”), to acquire up to that number of additional shares of the Company’scommon stock, par value $0.10 per share (the “**Common Stock**”) set forth opposite such Buyer’s namein column (9) of the Schedule of Buyers (as exercised, collectively, the “**Warrant Shares**”).     B. The Company has authorized a new series of senior secured convertible notes of the Company,in substantially the form attached hereto as Exhibit A-2, which shall be convertible intoCommon Stock in accordance with the terms of such Notes.     C. Each Buyer and the Company wishes to exchange in the Initial Closing (as defined in Section1(a)(i) below), upon the terms and conditions stated in this Agreement, that aggregate principalamount of Original Notes set forth opposite such Buyer’s name in column (3) on the Schedule ofBuyers (which aggregate amount for all Buyers is $30,000,000) for (i) that aggregate principalamount of Notes, in substantially the form attached hereto as Exhibit A-2 (collectively,the “**Amended Notes**”), as set forth opposite such Buyer’s name in column (4) on the Schedule ofBuyers (which aggregate amount for all Buyers shall be the sum of (x) $27,132,192 and (y) theproduct of (I) the number of calendar days during the period commencing on the date hereof andending on the Initial Closing Date and (II) $10,273.97) (the Common Stock received upon suchconversion, collectively, the “**Amended Conversion Shares**”), (ii) that aggregate number of shares(the “**144 Common Shares**”) of the Common Stock, set forth opposite such Buyer’s name in column (7)on the Schedule of Buyers attached hereto (which aggregate amount for all Buyers shall be 613,142)and (iii) that aggregate number of shares (the “**Other Common Shares**”, and together with the 144Common Shares, the “**Common Shares**”) of the Common Stock, set forth opposite such Buyer’s name incolumn (8) on the Schedule of Buyers attached hereto (which aggregate amount for all Buyers shallbe 674,858).     D. The issuance of the Amended Notes and Common Shares pursuant to this Agreement in exchangefor the surrender (and cancellation) of the Original Notes is being made in reliance upon theexemption from registration provided by Section 3(a)(9) of the Securities Act of 1933, as amended(the “**1933 Act**”).     E. Each Buyer wishes to purchase, and the Company wishes to sell, upon the terms andconditions stated in this Agreement, in the Initial Closing (as defined in Section 1(a)(i) below),that aggregate principal amount of Notes, in substantially the form attached hereto as ExhibitA-2 (collectively, the “**Initial Notes**”), set forth opposite such Buyer’s name in column (5) onthe Schedule of Buyers (which aggregate amount for all Buyers shall be the sum of (x) $5,000,000and (y) the Legal Counsel Fee Amount) (as converted, collectively, the “**Initial ConversionShares**”).
 

 
     F. Subject to the terms and conditions set forth in this Agreement, upon the satisfaction ofcertain conditions, the Buyers shall have the right to purchase or may be required to purchase inan Additional Closing (as defined in Section 1(a)(ii) below), that aggregate principal amount ofNotes, in substantially the form attached hereto as Exhibit A-2 (collectively, the“**Additional Notes**” and, together with the Amended Notes and Initial Notes, the “**Notes**”), set forthopposite such Buyer’s name in column (6) on the Schedule of Buyers (which aggregate amount for allBuyers shall be $10,000,000) (as converted, collectively, the “**Additional Conversion Shares**” and,collectively with the Amended Conversion Shares and Initial Conversion Shares, the “**ConversionShares**”).     G. The Notes bear interest, which at the option of the Company, subject to certain conditions,may be paid in shares of Common Stock (the “**Interest Shares**”).     H. The issuance of the Initial Notes and Additional Notes pursuant to this Agreement is beingmade in reliance upon the exemption from registration afforded by Section 4(2) of the 1933 Act andRule 506 of Regulation D (“**Regulation D**”) as promulgated by the United States Securities andExchange Commission (the “**SEC**”) under the 1933 Act.     I. On or prior to the Initial Closing Date, unless the Company directs otherwise in a writtennotice to the Buyers (an “**Escrow Waiver Event**”), the parties hereto and Wilmington Trust Company, afinancial institution chartered under the laws of the State of Delaware, as escrow agent (the“**Escrow Agent**”) are executing and delivering an escrow agreement, in the form attached hereto asExhibit K (the “**Escrow Agreement**”), pursuant to which the Buyers have agreed to depositwith the Escrow Agent such amount set forth opposite such Buyer’s name in column (12) on theSchedule of Buyers (which aggregate amount for all Buyers shall be $5,000,000) (the “**EscrowAmount**”), which shall be held in escrow by the Escrow Agent in accordance with the terms andconditions of the Escrow Agreement and, subject to the satisfaction of certain conditions, appliedas payment in part of the Additional Purchase Price (as defined below) in the Additional Closing.     J. On the Initial Closing Date, the parties hereto are executing and delivering an Amended andRestated Registration Rights Agreement, substantially in the form attached hereto as ExhibitC (as amended or modified from time to time in accordance with its terms, the “**RegistrationRights Agreement**”), pursuant to which the Company has agreed to provide certain registration rightswith respect to the Conversion Shares, the Warrant Shares under the 1933 Act and the rules andregulations promulgated thereunder, and applicable state securities laws. The Registration RightsAgreement amends and restates the terms and conditions of that certain Registration RightsAgreement, by and among the Company and the Buyers, dated as of the Original Closing Date.     K. The Notes, the Conversion Shares, the Common Shares, the Interest Shares, the Warrants andthe Warrant Shares, collectively, are referred to herein as the “**Securities**”.     L. The Notes will rank senior to all outstanding and future indebtedness of the Company,subject to Permitted Senior Indebtedness (as defined in the Notes), and will be secured by a firstpriority, perfected security interest in all of the assets of the Company and the stock and assetsof each of the Company’s United States subsidiaries and 65% of the stock of ARC Europe, S.A. andAllied Research Corporation Limited, as evidenced by (i) a security agreement, in the form attachedhereto as Exhibit H (as amended or modified from time to time in accordance with its terms,the “**Security Agreement**”), (ii) a pledge agreement, in the form attached hereto as ExhibitI (as amended or modified from time to time in accordance with its terms, the “**PledgeAgreement**”), and (iii) the guarantees of certain subsidiaries of the Company in the form attachedhereto as Exhibit J (as amended or modified from time to time in accordance with its terms,the “**Guarantees**” and together with the Pledge Agreement, the Security Agreement, and any ancillarydocuments related thereto, collectively the “**Security Documents**”).
 

 
     **NOW, THEREFORE**, the Company and each Buyer hereby agree as follows:1. EXCHANGE OF ORIGINAL NOTES FOR AMENDED NOTES AND COMMON SHARES;PURCHASE AND SALE OF ADDITIONAL NOTES.          (a) Issuance of Notes and Common Shares.               (i) Cancellation of Original Notes; Issuance of Amended Notes, Initial Notes and CommonShares. Subject to the satisfaction (or waiver) of the conditions set forth in Sections 6(a)and 7(a) below, on the Initial Closing Date (as defined below), (I) (i) the Company shall issue,sell and deliver to each applicable Buyer, and each such Buyer severally, but not jointly, agreesto accept and purchase, (x) a principal amount of Amended Notes as is set forth opposite suchBuyer’s name in column (4) on the Schedule of Buyers and (y) that aggregate number of Common Sharesas is set forth opposite such Buyer’s name in column (7) on the Schedule of Buyers, and (ii) eachBuyer shall surrender to the Company at the Initial Closing (as defined below) contemplated by thisAgreement, the Original Note issued to such Buyer and (II) the Company shall issue and sell to, andeach such Buyer severally, but not jointly, agrees to purchase from the Company on the InitialClosing Date, such principal amount of Initial Notes as is set forth opposite such Buyer’s name in column (5) on the Schedule of Buyers (collectively, the “**InitialClosing**”).               (ii) Additional Notes. Subject to the satisfaction (or waiver) of the conditions setforth in Sections 1(c), 6(b) and 7(b) below, the Company shall issue and sell to each Buyerrequired to participate in such Additional Closing pursuant to Section 1(c) below, and each suchBuyer severally, but not jointly, agrees to purchase from the Company on such Additional ClosingDate (as defined below), a principal amount of Additional Notes as is set forth opposite suchBuyer’s name in column (6) on the Schedule of Buyers (each, an “**Additional Closing**”).               (iii) Closing. The Initial Closing and the Additional Closings are each referred to inthis Agreement as a “**Closing**”. Each Closing shall occur on the applicable Closing Date at theoffices of Schulte Roth & Zabel LLP, 919 Third Avenue, New York, New York 10022.               (iv) Purchase Price. The Amended Notes and Common Shares shall be issued to each Buyerin exchange for the Original Notes and without the payment of any additional consideration. Thepurchase price for each Buyer of the Initial Notes to be purchased by each such Buyer at theInitial Closing shall be the amount set forth opposite such Buyer’s name in column (10) of theSchedule of Buyers (collectively, the “**Initial Purchase Price**”). The purchase price for each Buyerof the Additional Notes to be purchased by each such Buyer at the Additional Closing shall be theamount set forth opposite such Buyer’s name in column (11) of the Schedule of Buyers (collectively,the “**Additional Purchase Price**”, and together with the Initial Purchase Price, the “**PurchasePrice**”).               (v) Escrow Agreement. Subject to the satisfaction (or waiver) of the conditions setforth in Sections 6(a) and 7(a) below, on the Initial Closing Date (as defined below), unless anEscrow Waiver Event has occurred prior to the Initial Closing Date, each Buyer shall deposit itsEscrow Amount with the Escrow Agent. The parties hereto agree that if the Additional Closing doesnot occur prior to the thirtieth (30th) calendar day after the Initial Closing Date (the “**EscrowTermination Date**”) and an Escrow Waiver Event has not occurred prior to the Initial Closing Date,such parties shall jointly instruct the Escrow Agent to return the Escrow Amount to the Buyers. Onthe Additional Closing Date, if any, unless an Escrow Waiver Event has occurred prior to theInitial Closing Date, such parties shall jointly instruct the Escrow Agent to release the EscrowAmount to the Company.          (b) Initial Closing Date. The date and time of the Initial Closing (the “**InitialClosing Date**”) shall be 10:00 a.m., New York City Time, on the date hereof after notification ofsatisfaction (or waiver) of the conditions to the Initial Closing set forth in Sections 6(a) and7(a) below (or such later date as is mutually agreed to by the Company and each Buyer).          (c) Additional Closing Date.               (i) The date and time of the Additional Closings (the “**Additional Closing Date**,” and togetherwith the Initial Closing Date, each a “**Closing Date**” and collectively, the “**Closing Dates**”) shallbe 10:00 a.m., New York City Time, on the date specified in the applicable Additional ClosingNotice (as defined below), subject to satisfaction (or waiver) of the conditions to each Additional Closing set forth in Sections 6(b) and 7(b) and the conditions contained in this Section 1(c) (orsuch later date as is mutually agreed to by the Company and the applicable Buyer).
 

 
               (ii) Subject to the requirements of Sections 6(b) and 7(b) and the conditions contained inthis Section 1(c), following (x) the delivery of a certificate of the Company in the form attachedhereto as Exhibit L (the “**MECAR Certificate**”), certifying that the MECAR Contract (I) hasbeen duly executed and delivered by the parties thereto (the date of the execution thereof, the“**MECAR Execution Date**”) and (II) is a validly binding and enforceable agreement of the partiesthereto and (y) the public announcement of the execution of the MECAR Contract (as defined in theMECAR Certificate) and the filing of the MECAR Certificate as an exhibit to a filing by the Companywith the SEC, at any time prior to the Escrow Termination Date, the Company shall have the right torequire each Buyer to purchase, at one Closing, the principal amount of Additional Notes as is setforth opposite such Buyer’s name in column (6) on the Schedule of Buyers (as provided by theCompany, a “**Additional Closing Notice**”); provided, that if the Company elects to deliver aAdditional Closing Notice to any Buyer, it must deliver an identical Additional Closing Notice toall Buyers. Any Additional Closing Notice delivered by the Company shall be irrevocable.Notwithstanding anything herein to the contrary, at any time on or after the MECAR Execution Date,upon the Company’s receipt of one or more written notices by the holders of a majority of the Notesthen outstanding, in the aggregate, electing to cause the Additional Closing to occur, the Companyshall within one (1) Business Day thereafter deliver Additional Closing Notices to the Buyers. EachAdditional Closing Notice shall contain a proposed Additional Closing Date that shall be at leastfive (5) Business Days but not more than ten (10) Business Days following the date of delivery ofsuch Additional Closing Notice to the Buyers. Each Additional Closing Notice shall set forth (i)the principal amount of Additional Notes to be purchased by each Buyer at the Additional Closingand (ii) the proposed Additional Closing Date. As used herein, “**Business Day**” means any day otherthan Saturday, Sunday or other day on which commercial banks in The City of New York are authorizedor required by law to remain closed.          (d) Form of Payment. On the Initial Closing Date, (i) each Buyer shall deliver, orcause to be delivered, for cancellation, the Original Note of such Buyer to the Company for theAmended Notes (in such principal amounts as such Buyer has agreed, and in the manner the Buyer mayreasonably request, in accordance with Section 1 of this Agreement) and Common Shares (in suchamounts as such Buyer has agreed, and in the manner the Buyer may reasonably request, in accordancewith Section 1 of this Agreement) to by issued and sold to such Buyer at the Initial Closing and(ii) each Buyer shall pay the Initial Purchase Price (less, in the case of Kings Road InvestmentsLtd. and Castlerigg Master Investments Ltd., the amounts withheld pursuant to Section 4(g) below) to the Company for the Initial Notes to be issued and sold to such Buyer at the InitialClosing by wire transfer of immediately available funds for such Initial Purchase Price inaccordance with the Company’s written wire instructions. The parties acknowledge that the amount tobe paid by the Buyers to the Company, in the aggregate, on the Initial Closing Date from theInitial Purchase Price (net of the amounts deducted to pay the Legal Counsel Fee Amount pursuant toSection 4(g) below) shall equal $5,000,000. On the Additional Closing Date, each Buyer shall paythe Additional Purchase Price (less (x) the Escrow Amount if the Escrow Waiver Event has notoccurred prior to the Initial Closing Date and (y) in the case of Kings Road Investments Ltd. andCastlerigg Master Investments Ltd., the amounts withheld pursuant to Section 4(g)) to the Companyfor the Additional Notes to be issued and sold to such Buyer at the Additional Closing by wiretransfer of immediately available funds for such Additional Purchase Price (less the Escrow Amount)in accordance with the Company’s written wire instructions. At each Closing, the Company shalldeliver to each Buyer the Notes (in the principal amounts as such Buyer is entitled, in such manneras the Buyer may reasonably request) and, as applicable, the Common Shares (in such amounts as suchBuyer is entitled, in such manner as the Buyer may reasonably request) which such Buyer is thenpurchasing duly executed on behalf of the Company and registered in the name of such Buyer or itsdesignee.          (e) Holding Period. For the purposes of Rule 144, the Company acknowledges that theholding period of the Amended Notes and the Common Shares may be tacked onto the holding period ofthe Original Notes, and the Company agrees not to take a position contrary to this Section 1(e),including, without limitation, with respect to the application of the terms and conditions setforth in Section 2(g) below. The Company acknowledges that the 144 Common Shares shall be issued toeach Buyer without any restrictive legend on the Initial Closing Date in reliance upon theexemption from registration provided by Section 3(a)(9) of the 1933 Act and Rule 144.
 

 
          (f) Mutual Releases.               (i) For purposes of this Agreement, “**Existing Claims**” shall mean any and all claims,liabilities, rights and causes of action, whether known or unknown, relating to the purportedevents of default set forth in any Event of Default Notice (as defined in the Original Notes)delivered to the Company prior to the Initial Closing Date and any other potential claims arisingunder, based on or related to any fact, matter, act or omission, cause, transaction, occurrence orthing arising under or related to any of the Transaction Documents (as defined in the OriginalSecurities Purchase Agreement) or any of the transactions contemplated thereby. In consideration ofthe release set forth in Section 1(f)(ii) and the transactions contemplated by this Agreement,effective as of the Initial Closing, each Buyer, only on behalf of itself and, to the extentpermitted by law, its current and former heirs, executors, administrators, devisees, trustees,partners, directors, officers, shareholders, employees, consultants, representatives, predecessors,principals, agents, parents, associates, affiliates, subsidiaries, attorneys, accountants,successors, successors-in-interest and assignees (collectively, the “**Buyer Releasing Persons**”),hereby waives and releases, to the fullest extent permitted by law, any and all claims, rights and causes of action relating to the Existing Claims that any of the Buyer ReleasingPersons had, currently has or may have, that are directly or indirectly related to, based upon,arise out of, or arise in connection with any fact, matter, act or omission, cause, transaction,occurrence or thing occurring up to the date of this release, including, without limitation, anyExisting Claims arising out of any of the Transaction Documents (as defined pursuant to theOriginal Securities Purchase Agreement), against (w) the Company, (x) any of the Company’s currentor former parents, affiliates, subsidiaries, predecessors, assigns, attorneys or counsel,accountants, auditors, advisors, employees, consultants or representatives, (y) any of theCompany’s or such other persons’ or entities’ current or former officers, directors, employees,agents, principals, and signatories or, (z) in the case of any person or entity described inclauses (x) or (y) above (other than the Company or any of its Subsidiaries), such other persons’or entities’ current or former officers, directors, members, partners, shareholders, employees,agents, principals, Buyers, signatories, advisors, consultants, spouses, heirs, estates, executors,attorneys, auditors and associates and members of their immediate families (collectively, the“**Company Released Persons**”). For the avoidance of doubt, claims that relate to events orcircumstances occurring, or actions taken or failed to be taken, after the date of this release arenot waived or released hereby. Any claims, rights or causes of action other than the ExistingClaims are not waived or released hereby either.               (ii) In further consideration of each Buyer entering into this Agreement, effective as of thedate of this Agreement, the Company on behalf of itself and, to the extent permitted by law, itscurrent and former administrators, devisees, trustees, partners, directors, officers, shareholders,employees, consultants, representatives, predecessors, principals, agents, parents, associates,affiliates, subsidiaries, attorneys, accountants, successors, successors-in-interest and assignees(collectively, the “**Company Releasing Persons**”), hereby waives and releases, to the fullest extentpermitted by law, any and all claims, rights and causes of action relating to the Existing Claimsthat any of the Company Releasing Persons had, currently has or may have, that are directly orindirectly related to, based upon, arise out of, or arise in connection with any fact, matter, actor omission, cause, transaction, occurrence or thing occurring up to the date of this release,including, without limitation, any Existing Claims arising out of any of the Transaction Documents(as defined pursuant to the Original Securities Purchase Agreement), against (x) each Buyer, (y)each Buyer’s current or former parents, affiliates, subsidiaries, predecessors, assigns, attorneysor counsel, accountants, auditors, advisors, employees, consultants or representatives, members,partners, shareholders, affiliates, subsidiaries, predecessors or assigns, (z) any of such Buyer’sor such other persons’ or entities’ current or former officers, directors, members, partners,shareholders, employees, agents, principals, Buyers, signatories, advisors, consultants, spouses,heirs, estates, executors, attorneys, auditors and associates and members of their immediatefamilies (collectively, the “**Buyer Released Persons**”). For the avoidance of doubt, claims thatrelate to events or circumstances occurring, or actions taken or failed to be taken, after the dateof this release are not waived or released hereby. Any claims, rights or causes of action otherthan the Existing Claims are not waived or released hereby either.
 

 
               (iii) Promptly after the consummation of the Initial Closing, and in any event no later thanten (10) Business Days thereafter, Kings Road Investments Ltd. shall dismiss with prejudice thesuit filed against the Company in the United States District Court for the Southern District of NewYork.     2. BUYER’S REPRESENTATIONS AND WARRANTIES.          Each Buyer represents and warrants, with respect to only itself, that:          (a) No Public Sale or Distribution. Such Buyer is acquiring (or has acquired, asapplicable) the Notes, the Common Shares and the Warrants and upon conversion of the Notes andexercise of the Warrants (other than pursuant to a Cashless Exercise (as defined in the Warrants))will acquire the Conversion Shares issuable upon conversion of the Notes, the Interest Sharesissuable pursuant to the terms of the Notes and the Warrant Shares issuable upon exercise of theWarrants for investment purposes, for its own account and not with a view towards, or for resale inconnection with, the public sale or distribution thereof, except pursuant to sales registered orexempted under the 1933 Act; provided, however, that by making the representationsherein, such Buyer does not agree to hold any of the Securities for any minimum or other specificterm and reserves the right to dispose of the Securities at any time in accordance with or pursuantto a registration statement or an exemption under the 1933 Act. Such Buyer is acquiring theSecurities hereunder in the ordinary course of its business. Such Buyer does not presently have anyagreement or understanding, directly or indirectly, with any Person to distribute any of theSecurities.          (b) Buyer Status. Such Buyer is an “accredited investor” as that term is defined inRule 501(a) of Regulation D. Such Buyer is not a registered broker-dealer under Section 15 of theSecurities Exchange Act of 1934, as amended (the “**1934 Act**”).          (c) Reliance on Exemptions. Such Buyer understands that the Securities are beingoffered and sold to it in reliance on specific exemptions from the registration requirements ofUnited States federal and state securities laws and that the Company is relying in part upon thetruth and accuracy of, and such Buyer’s compliance with, the representations, warranties,agreements, acknowledgments and understandings of such Buyer set forth herein in order to determinethe availability of such exemptions and the eligibility of such Buyer to acquire the Securities.          (d) Information. Such Buyer and its advisors, if any, have been furnished with allmaterials relating to the business, finances and operations of the Company and materials relatingto the offer and sale of the Securities that have been requested by such Buyer. Such Buyer and itsadvisors, if any, have been afforded the opportunity to ask questions of the Company and havereceived what the Buyer believes to be satisfactory answers to any such inquiries. Neither suchinquiries nor any other due diligence investigations conducted by such Buyer or its advisors, ifany, or its representatives shall modify, amend or affect such Buyer’s right to rely on theCompany’s representations and warranties contained herein. Such Buyer understands that itsinvestment in the Securities involves a high degree of risk. Such Buyer has sought such accounting, legal and tax advice asit has considered necessary to make an informed investment decision with respect to its acquisitionof the Securities.          (e) No Governmental Review. Such Buyer understands that no United States federal orstate agency or any other government or governmental agency has passed on or made anyrecommendation or endorsement of the Securities or the fairness or suitability of the investment inthe Securities nor have such authorities passed upon or endorsed the merits of the offering of theSecurities.
 

 
          (f) Transfer or Resale. Such Buyer understands that, except as provided in theRegistration Rights Agreement: (i) the Securities have not been and are not being registered underthe 1933 Act or any state securities laws and consequently such Buyer may have to bear the risk ofowning the Securities for an indefinite period (ii) such Buyer agrees that if it decides to offer,sell or otherwise transfer any of the Notes, Conversion Shares, Other Common Shares, Warrants orWarrant Shares, such Notes, Conversion Shares, Other Common Shares, Warrants and Warrant Shares maybe offered, sold or otherwise transferred only: (A) pursuant to an effective registration statementunder the 1933 Act; (B) to the Company; (C) (1) in accordance with the exemption from registrationunder the 1933 Act provided by Rule 144 or Rule 144A thereunder, if available, and in compliancewith any applicable state securities laws or (2) in a transaction that does not requireregistration under the 1933 Act or applicable state securities laws, and the seller has providedthe Company with an opinion of counsel reasonably acceptable to the Company, prior to such offer,sale or transfer, that such Securities may be so offered, sold or transferred in a transaction thatdoes not require registration under the 1933 Act or applicable state securities laws.          (g) Legends. Such Buyer understands that the certificates or other instrumentsrepresenting the Notes, the Other Common Shares and the Warrants and, until such time as the resaleof the Conversion Shares, the Other Common Shares, the Interest Shares and the Warrant Shares havebeen registered under the 1933 Act as contemplated by the Registration Rights Agreement, the stockcertificates representing the Conversion Shares, the Interest Shares and the Warrant Shares, exceptas set forth below, shall bear any legend as required by the “blue sky” laws of any state and arestrictive legend in substantially the following form (and a stop-transfer order may be placedagainst transfer of such stock certificates):**[**NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIESINTO WHICH THESE SECURITIES ARE **[**CONVERTIBLE**] [**EXERCISABLE**]**HAVE BEEN**][**THE SECURITIES REPRESENTEDBY THIS CERTIFICATE HAVE NOT BEEN**]**REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED(THE“1933 ACT”), OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLDOR TRANSFERRED OR ASSIGNED, UNLESS (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE 1933 ACT, OR (B) PURSUANT TO AN AVAILABLEEXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE 1933 ACTAS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICHSHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. NOTHING IN THE PRECEDING WILL PROHIBIT THE PLEDGE OFTHE SECURITIES IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENTSECURED BY THE SECURITIES.The legend set forth above shall be removed and the Company shall issue a certificate without suchlegend to the holder of the Securities upon which it is stamped, if, unless otherwise required bystate securities laws, (i) such Securities are registered for resale under the 1933 Act, or (ii)following a sale or transfer of such Securities pursuant to Rule 144 (assuming the transferor isnot an affiliate of the Company), (iii) while such Securities are eligible for sale under Rule144(k), or (iv) if such legend is not required under applicable requirements of the 1933 Act(including judicial interpretations and pronouncements issued by the Staff of the SEC).If the Company shall fail for any reason or for no reason to issue to the holder of the Securitieswithin three (3) Trading Days (as defined in the Notes) after the occurrence of, and notice of, anyof (i) through (iv) above, a certificate without such legend to the holder or to issue suchSecurities to such holder by electronic delivery at the applicable balance account at DTC, and ifon or after such Trading Day the holder purchases (in an open market transaction or otherwise)shares of Common Stock to deliver in satisfaction of a sale by the holder of such Securities thatthe holder anticipated receiving without legend from the Company (a **“Buy-In”**), then the Companyshall, within three (3) Business Days after such three (3) Trading Day period, and at the holder’srequest and in the holder’s discretion, either (i) pay cash to the holder in an amount equal to theholder’s total purchase price (including brokerage commissions, if any) for the shares of CommonStock so purchased (the **“Buy-In Price”**), at which point the Company’s obligation to deliver suchunlegended Securities shall terminate, or (ii) promptly honor its obligation to deliver to theholder such unlegended Securities as provided above and pay cash to the holder in an amount equalto the excess (if any) of the Buy-In Price over the product of (A) such number of shares of CommonStock, times (B) the Weighted Average Price (as defined in the Notes) of the Common Stock on thedate of exercise.
 

 
          (h) Validity; Enforcement. This Agreement, the Escrow Agreement, the RegistrationRights Agreement and the Security Documents to which it is a party have been duly and validlyauthorized, executed and delivered on behalf of such Buyer and constitute the legal, valid andbinding obligations of such Buyer enforceable against such Buyer in accordance with theirrespective terms, except as such enforceability may be limited by general principles of equity orto applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws relating to, or affectinggenerally, the enforcement of applicable creditors’ rights and remedies.          (i) No Conflicts. The execution, delivery and performance by such Buyer of thisAgreement, the Escrow Agreement, the Registration Rights Agreement and the Security Documents towhich it is a party and the consummation by such Buyer of the transactions contemplated hereby andthereby will not (i) result in a violation of the organizational documents of such Buyer or (ii)conflict with, or constitute a default (or an event which with notice or lapse of time or bothwould become a default) under, or give to others any rights of termination, amendment, accelerationor cancellation of, any agreement, indenture or instrument to which such Buyer is a party, or (iii)result in a violation of any law, rule, regulation, order, judgment or decree applicable to suchBuyer, except in the case of clauses (ii) and (iii) above, for such conflicts, defaults, rights orviolations which would not, individually or in the aggregate, reasonably be expected to have amaterial adverse effect on the ability of such Buyer to perform its obligations hereunder.          (j) Residency. Such Buyer is a resident of that jurisdiction specified below itsaddress on the Schedule of Buyers.          (k) Certain Trading Activities. Neither the Buyer nor any of its affiliates hasdirectly or indirectly, and no Person acting on behalf of the Buyer or its affiliates has directlyor indirectly, engaged in any transactions in the securities of the Company (including, withoutlimitation, any Short Sales involving the Company’s securities) since May 1, 2007, provided,however, that, with respect to LB I Group, the foregoing representation is made solely by, andshall apply solely to, the Global Trading Strategies group of Lehman Brothers Inc. and not made by,or applicable to, any other persons, affiliates or affiliated or associated business units ofLehman Brothers Holdings Inc. “**Short Sales**” include, without limitation, all “short sales” asdefined in Rule 200 promulgated under Regulation SHO under the 1934 Act and all types of direct andindirect stock pledges, forward sale contracts, options, puts, calls, short sales, swaps andsimilar arrangements (including on a total return basis), and sales and other transactions throughnon-US broker dealers or foreign regulated brokers. The Buyer covenants that neither it, itsaffiliates, nor any Person acting on its or its affiliates’ behalf will engage in any transactionsin the securities of the Company (including Short Sales) prior to the time that the transactionscontemplated by this Agreement are publicly disclosed. Notwithstanding the foregoing, for avoidanceof doubt, nothing contained herein shall constitute a representation or warranty, or preclude anyactions, with respect to the identification of the availability of, or securing of, availableshares to borrow in order to effect Short Sales or similar transactions in the future.          (l) General Solicitation. Such Buyer is not purchasing the Securities as a result ofany advertisement, article, notice or other communication regarding the Securities published in anynewspaper, magazine or similar media or broadcast over television or radio or presented at anyseminar.          (m) No Known Event of Default. Buyer has no actual knowledge of any Default or Eventof Default (as defined in the Notes), after giving effect to the terms of this Agreement, that hasoccurred and is continuing as of the time immediately following the Initial Closing Date.
 

 
     3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.          The Company represents and warrants to each of the Buyers as follows:          (a) Organization and Qualification. The Company and its “**Subsidiaries**” (which forpurposes of this Agreement means any “Significant Subsidiary” as such term is defined in Rule 1-02of Regulation S-X of the 1933 Act) are entities duly organized and validly existing and in goodstanding under the laws of the jurisdiction in which they are formed, and have the requisite powerand authorization to own their properties and to carry on their business as now being conducted.Each of the Company and its Subsidiaries is duly qualified as a foreign entity to do business andis in good standing in every jurisdiction in which its ownership of property or the nature of thebusiness conducted by it makes such qualification necessary, except to the extent that the failureto be so qualified or be in good standing would not have a Material Adverse Effect. As used in thisAgreement, “**Material Adverse Effect**” means any of (i) a material and adverse effect on thelegality, validity or enforceability of any Transaction Document (as defined in Section 3(b)below), (ii) a material and adverse effect on the results of operations, assets, prospects,business or condition (financial or otherwise) of the Company and the Subsidiaries, taken as awhole, or (iii) an adverse impairment to the Company’s ability to perform on a timely basis itsobligations under any Transaction Document. The Company has no Subsidiaries except as set forth onSchedule 3(a).          (b) Authorization; Enforcement; Validity. The Company has the requisite power andauthority to enter into and perform its obligations under this Agreement, the Notes, theRegistration Rights Agreement, the Security Documents, the Escrow Agreement, the IrrevocableTransfer Agent Instructions (as defined in Section 5(b)), the Warrants and each of the otheragreements entered into by the parties hereto in connection with the transactions contemplated bythis Agreement (collectively, the “**Transaction Documents**”) and to issue the Securities inaccordance with the terms hereof and thereof. The execution and delivery of the TransactionDocuments by the Company and the consummation by the Company of the transactions contemplatedhereby and thereby, including, without limitation, the issuance of the Notes, the Common Shares andthe Warrants, the reservation for issuance and the issuance of the Conversion Shares issuable uponconversion or redemption of the Notes, the reservation for issuance and the issuance of theInterest Shares issuable pursuant to the terms of the Notes and the reservation for issuance andissuance of Warrant Shares issuable upon exercise of the Warrants have been duly authorized by theCompany’s Board of Directors and, other than (i) the filing with the SEC of one or moreRegistration Statements in accordance with the requirements of the Registration Rights Agreement,(ii) the filing of a Form D with respect to the Notes and the Warrants as required under RegulationD, (iii) such filings as are required by the Principal Market (as defined below), which will bemade prior to each Closing, (iv) such filings required under applicable securities or “Blue Sky” laws of thestates of the United States and (v) the Stockholder Approval as contemplated in Section 4(q) (allof the foregoing, the “**Required Approvals**”), no further filing, consent, or authorization isrequired by the Company or of its Board of Directors or its stockholders to enter into theTransaction Documents and consummate the transactions contemplated by the Transaction Documents,including, without limitation, the issuance of the Notes, the Common Shares and the Warrants, thereservation for issuance and the issuance of the Conversion Shares issuable upon conversion orredemption of the Notes, the reservation for issuance and the issuance of the Interest Sharesissuable pursuant to the terms of the Notes and the reservation for issuance and issuance ofWarrant Shares issuable upon exercise of the Warrants. This Agreement and the other TransactionDocuments of even date herewith have been duly executed and delivered by the Company and constitutethe legal, valid and binding obligations of the Company enforceable against the Company inaccordance with their respective terms, except as such enforceability may be limited by generalprinciples of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidationor similar laws relating to, or affecting generally, the enforcement of applicable creditors’rights and remedies. Any of the Transaction Documents dated after the date hereof, upon executionand delivery, will have been duly executed and, when delivered by the Company, will constitute thelegal, valid and binding obligations of the Company, enforceable, subject to the Required Approvalsagainst the Company in accordance with their respective terms, except as such enforceability may belimited by general principles of equity or applicable bankruptcy, insolvency, reorganization,moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement ofapplicable creditors’ rights and remedies.
 

 
          (c) Issuance of Securities. The issuance of the Notes, the Common Shares and theWarrants are (or were, as applicable) duly authorized and are free from all taxes, liens andcharges with respect to the issue thereof and, upon the Company’s receipt of the applicableconsideration therefor, the Common Shares are fully paid and nonassessable. As of the InitialClosing, the Company shall have reserved from its duly authorized capital stock not less than thesum of 120% of the maximum number of shares of Common Stock (A) issuable upon conversion of theNotes issuable at such Closing and issued at any prior Closing (assuming for purposes hereof, thatthe Notes are convertible at the initial Conversion Price and without taking into account anylimitations on the conversion of the Notes set forth in the Notes and assuming such conversionoccurred at such Closing), (B) issuable as Interest Shares pursuant to the terms of the Notes and(C) issuable upon exercise of the Warrants (without taking into account any limitations on theexercise of the Warrants set forth in the Warrants and assuming such exercise occurred at suchClosing). Upon issuance or conversion and payment of all consideration then due from the holder inrespect thereof in accordance with the terms thereof, in accordance with the Notes or exercise inaccordance with the Warrants, as the case may be, the Conversion Shares, the Interest Shares andthe Warrant Shares, respectively, will be validly issued, fully paid and nonassessable and freefrom all preemptive or similar rights, taxes, liens and charges with respect to the issue thereof,with the holders being entitled to all rights accorded to a holder of Common Stock. Based in partupon the accuracy of the representations and warranties of the Buyers’ set forth in Article 2, theoffer and issuance by the Company of the Notes, Warrants, the Interest Shares, the Common Shares, theConversion Shares and the Warrant Shares (when issued) are exempt from registration under the 1933Act.          (d) No Conflicts. Subject to the Required Approvals, the execution, delivery andperformance of the Transaction Documents by the Company and the consummation by the Company of thetransactions contemplated hereby and thereby (including, without limitation, the issuance of theNotes, the Common Shares and the Warrants and reservation for issuance and issuance of theConversion Shares, the Interest Shares and the Warrant Shares) will not (i) result in a violationof the Articles of Incorporation, any capital stock of the Company or any of its Subsidiaries, thebylaws or any of the organizational documents of the Company or any of its Subsidiaries or (ii)conflict with, or constitute a default (or an event which with notice or lapse of time or bothwould become a default) under, or give to others any rights of termination, amendment, accelerationor cancellation of, any agreement, indenture or instrument to which the Company or any of itsSubsidiaries is a party, or (iii) result in a violation of any law, rule, regulation, order,judgment or decree (including federal and state securities laws and regulations and the rules andregulations of the American Stock Exchange (the “**Principal Market**”)) applicable to the Company orany of its Subsidiaries or by which any property or asset of the Company or any of its Subsidiariesis bound or affected; except in the case of each of clauses (ii) and (iii), such as would not,individually or in the aggregate, have or reasonably be expected to result in a Material AdverseEffect.          (e) Consents. Other than the Required Approvals, neither the Company nor any of itsSubsidiaries is required to obtain any consent, authorization or order of, or make any filing orregistration with, any court, governmental agency or any regulatory or self-regulatory agency orany other Person in order for it to execute, deliver or perform any of its obligations under orcontemplated by the Transaction Documents, in each case in accordance with the terms hereof orthereof. All consents, authorizations, orders, filings and registrations (which the Company isrequired to obtain pursuant to the preceding sentence) have been obtained or effected, or will havebeen obtained or effected, on or prior to the Initial Closing Date, and the Company and itsSubsidiaries are unaware of any facts or circumstances that might prevent the Company fromobtaining or effecting any of the registration, application or filings pursuant to the precedingsentence. Except as described in Schedule 3(e), the Company is not in violation of thelisting requirements of the Principal Market and has no knowledge of any facts that wouldreasonably lead to delisting or suspension of the Common Stock in the foreseeable future.
 

 
          (f) Acknowledgment Regarding Buyer’s Purchase of Securities. The Company acknowledgesand agrees that each Buyer is acting solely in the capacity of arm’s length purchaser with respectto the Transaction Documents and the transactions contemplated hereby and thereby and that no Buyeris (i) an officer or director of the Company, (ii) to the Company’s knowledge, an “affiliate” ofthe Company or any of its Subsidiaries (as defined in Rule 144 under the 1933 Act) or (iii) to theknowledge of the Company, a “beneficial owner” of more than 10% of the shares of Common Stock (asdefined for purposes of Rule 13d-3 of the 1934 Act). The Company further acknowledges that no Buyer is acting as a financial advisor or fiduciary of the Company or any of its Subsidiaries(or in any similar capacity) with respect to the Transaction Documents and the transactionscontemplated hereby and thereby, and any advice given by a Buyer or any of its representatives oragents in connection with the Transaction Documents and the transactions contemplated hereby andthereby is merely incidental to such Buyer’s purchase of the Securities. The Company furtherrepresents to each Buyer that the Company’s decision to enter into the Transaction Documents hasbeen based solely on the independent evaluation by the Company and its representatives.          (g) No General Solicitation; Placement Agent’s Fees. Neither the Company, nor any ofits Subsidiaries or affiliates, nor any Person acting on its or their behalf, has engaged in anyform of general solicitation or general advertising (within the meaning of Regulation D) inconnection with the offer or sale of the Securities. The Company shall be responsible for thepayment of any placement agent’s fees, financial advisory fees, or brokers’ commissions (other thanfor Persons engaged by any Buyer or its investment advisor) relating to or arising out of thetransactions contemplated hereby.          (h) No Integrated Offering. None of the Company, its Subsidiaries, any of theiraffiliates, or any Person acting on their behalf has, directly or indirectly, made any offers orsales of any security or solicited any offers to buy any security, under circumstances that wouldrequire registration of any of the Securities under the 1933 Act or cause this offering of theSecurities to be integrated with prior offerings by the Company for purposes of the 1933 Act or anyapplicable stockholder approval provisions, including, without limitation, under the rules andregulations of the Principal Market such that the representation set forth in the last sentence ofeither Section 3(c) or Section 3(d)(iii) would not be accurate. None of the Company, itsSubsidiaries, their affiliates or any Person acting on their behalf will take any action or stepsreferred to in the preceding sentence that would require registration under the 1933 Act of any ofthe Securities to be issued by the Company at such Closing prior to such issuance or cause theoffering of the Securities to be integrated with other offerings.          (i) Dilutive Effect. The Company understands and acknowledges that the number ofConversion Shares issuable upon conversion or redemption of the Notes and the Warrant Sharesissuable upon exercise of the Warrants will increase in certain circumstances. The Company furtheracknowledges that its obligation to issue Conversion Shares upon conversion or redemption of theNotes in accordance with this Agreement and the Notes and its obligation to issue the WarrantShares upon exercise of the Warrants in accordance with this Agreement and the Warrants is, in eachcase, absolute and unconditional regardless of the dilutive effect that such issuance may have onthe ownership interests of other stockholders of the Company.          (j) Application of Takeover Protections; Rights Agreement. The Company and its boardof directors have taken all necessary action, if any, in order to render inapplicable any controlshare acquisition, business combination, poison pill (including any distribution under a rightsagreement) or other similar anti-takeover provision under the Articles of Incorporation or the lawsof the jurisdiction of its incorporation which is or would become applicable to any Buyer as a result of the transactions contemplated by thisAgreement, including, without limitation, the Company’s issuance of the Securities and any Buyer’sownership of the Securities. Except as set forth on Schedule 3(j), the Company has not adopted astockholder rights plan or similar arrangement relating to accumulations of beneficial ownership ofCommon Stock or a change in control of the Company.
 

 
          (k) SEC Documents; Financial Statements. During the two (2) years prior to the datehereof, the Company has filed all reports, schedules, forms, statements and other documentsrequired to be filed by it with the SEC pursuant to the reporting requirements of the 1934 Act (allof the foregoing filed prior to the date hereof and all exhibits included therein and financialstatements, notes and schedules thereto and documents incorporated by reference therein beinghereinafter referred to as the “**SEC Documents**”). The Company has delivered to the Buyers or theirrespective representatives true, correct and complete copies of the SEC Documents not available onthe EDGAR system. As of their respective dates, the SEC Documents complied in all material respectswith the requirements of the 1934 Act and the rules and regulations of the SEC promulgatedthereunder applicable to the SEC Documents, and none of the SEC Documents, at the time they werefiled with the SEC, contained any untrue statement of a material fact or omitted to state amaterial fact required to be stated therein or necessary in order to make the statements therein,in the light of the circumstances under which they were made, not misleading. As of theirrespective dates, the financial statements of the Company included in the SEC Documents complied asto form in all material respects with applicable accounting requirements and the published rulesand regulations of the SEC with respect thereto. Such financial statements have been prepared inaccordance with generally accepted accounting principles, consistently applied, during the periodsinvolved (except (i) as may be otherwise indicated in such financial statements or the notesthereto, or (ii) in the case of unaudited interim statements, to the extent they may excludefootnotes or may be condensed or summary statements) and fairly present in all material respectsthe financial position of the Company as of the dates thereof and the results of its operations andcash flows for the periods then ended (subject, in the case of unaudited statements, to normalyear-end audit adjustments). No other information provided by or on behalf of the Company to theBuyers which is not included in the SEC Documents, including, without limitation, informationreferred to in Section 2(d) of this Agreement, contains any untrue statement of a material fact oromits to state any material fact necessary in order to make the statements therein, in the light ofthe circumstance under which they are or were made, not misleading. The provisions of this Section3(k) are qualified in their entirety by the disclosure set forth on Schedule 3(k).          (l) Absence of Certain Changes. Since the time the Company’s most recently filedaudited financial statements contained in a Form 10-K were filed, there has been no materialadverse change and no material adverse development in the business, properties, operations,condition (financial or otherwise), results of operations or prospects of the Company and theSubsidiaries (excluding News/Sports Microwave Rental, Inc., Titan Systems, Inc., SeaSpaceCorporation, MECAR USA, Inc., and Global Microwave Systems, Inc.), taken as a whole. Since the timethe Company’s most recently filed audited financial statements contained in a Form 10-K were filed, neither the Company nor anyof its Subsidiaries has (i) declared or paid any dividends, (ii) sold any assets, individually orin the aggregate, in excess of $200,000 outside of the ordinary course of business or (iii) capitalexpenditures, in the aggregate, have not exceeded $3,200,000. The Company has no knowledge orreason to believe that its creditors intend to initiate involuntary bankruptcy proceedings or anyactual knowledge of any fact that would reasonably lead a creditor to do so. The Company and itsSubsidiaries, on a consolidated basis, are not as of the date hereof (following the closing of theTransaction Documents), and after giving effect to the transactions contemplated hereby to occur atthe applicable Closing, will not be Insolvent (as defined below). For purposes of this Section3(l), “**Insolvent**” means, with respect to the Company and its Subsidiaries on a consolidated basis(the “**Corporate Group**”), (i) the present fair saleable value of the Corporate Group’s assets isless than the amount required to pay the Corporate Group’s total Indebtedness (as defined inSection 3(s)), (ii) the Corporate Group is unable to pay its debts and liabilities, subordinated,contingent or otherwise, as such debts and liabilities become absolute and matured, (iii) theCorporate Group intends to incur or believes that it will incur debts that would be beyond itsability to pay as such debts mature or (iv) the Corporate Group has unreasonably small capital withwhich to conduct the business in which it is engaged as such business is now conducted and isproposed to be conducted.          (m) No Undisclosed Events, Liabilities, Developments or Circumstances. No event,liability, development or circumstance has occurred or exists with respect to the Company or itsSubsidiaries or their respective business, properties, operations or financial condition, thatwould be required to be disclosed by the Company under applicable securities laws on a registrationstatement on Form S-1 filed with the SEC relating to an issuance and sale by the Company of itsCommon Stock and which has not been publicly announced.
 

 
          (n) Conduct of Business; Regulatory Permits. Neither the Company nor its Subsidiariesis in violation of any term of or in default under its Articles of Incorporation or Bylaws or theirorganizational charter or certificate of incorporation or bylaws, respectively. Neither the Companynor any of its Subsidiaries is in violation of any judgment, decree or order or any law, statute,ordinance, rule or regulation applicable to the Company or its Subsidiaries, and neither theCompany nor any of its Subsidiaries will conduct its business in violation of any of the foregoing,except for possible violations that would not, individually or in the aggregate, have a MaterialAdverse Effect. Without limiting the generality of the foregoing, except as set forth inSchedule 3(n), the Company is not in violation of any of the rules, regulations orrequirements of the Principal Market and has no knowledge of any facts or circumstances that wouldreasonably lead to delisting or suspension of the Common Stock by the Principal Market in theforeseeable future. During the two (2) years prior to the date hereof, (i) the Common Stock havebeen designated for quotation on the Principal Market, (ii) trading in the Common Stock has notbeen suspended by the SEC or the Principal Market and (iii) except as set forth in Schedule3(n), the Company has received no communication, written or oral, from the SEC or the PrincipalMarket regarding the suspension or delisting of the Common Stock from the Principal Market. TheCompany and its Subsidiaries possess all certificates, authorizations and permits issued by the appropriateregulatory authorities necessary to conduct their respective businesses, except where the failureto possess such certificates, authorizations or permits would not have, individually or in theaggregate, a Material Adverse Effect, and neither the Company nor any such Subsidiary has receivedany notice of proceedings relating to the revocation or modification of any such certificate,authorization or permit.          (o) Foreign Corrupt Practices. Neither the Company, nor any of its Subsidiaries, norany director, officer, agent, employee or other Person acting on behalf of the Company or any ofits Subsidiaries has, in the course of its actions for, or on behalf of, the Company or any of itsSubsidiaries (i) used any corporate funds for any unlawful contribution, gift, entertainment orother unlawful expenses relating to political activity; (ii) made any direct or indirect unlawfulpayment to any foreign or domestic government official or employee from corporate funds; (iii)violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, asamended; or (iv) made any unlawful bribe, rebate, payoff, influence payment, kickback or otherunlawful payment to any foreign or domestic government official or employee.          (p) Sarbanes-Oxley Act. The Company is in material compliance with any and allapplicable 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 SEC thereunder that areeffective as of the date hereof.          (q) Transactions With Affiliates. Except as set forth in the SEC Documents filed atleast ten days prior to the date hereof and other than the grant of stock options disclosed onSchedule 3(q), none of the officers, directors or employees of the Company or any of itsSubsidiaries is presently a party to any transaction with the Company or any of its Subsidiaries(other than for ordinary course services as employees, officers or directors), including anycontract, 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 orfrom any such officer, director or employee or, to the knowledge of the Company or any of itsSubsidiaries, any corporation, partnership, trust or other entity in which any such officer,director, or employee has a substantial interest or is an officer, director, trustee or partner.
 

 
          (r) Equity Capitalization. As of the date hereof, the authorized capital stock of theCompany consists of (i) 30,000,000 shares of Common Stock, of which as of the date hereof,6,473,635 are issued and outstanding, 980,836 shares are reserved for issuance pursuant to theCompany’s stock option and purchase plans and 70,000 shares are reserved for issuance pursuant tosecurities (other than the Original Notes, the Notes and the Warrants) exercisable or exchangeablefor, or convertible into, shares of Common Stock and (ii) 1,000,000 shares of undesignatedpreferred stock, no par value, of which as of the date hereof none of which is issued andoutstanding or reserved for issuance. All of such outstanding shares have been, or upon issuancewill be, validly issued and are fully paid and nonassessable. Except as disclosed in Schedule3(r): (i) none of the Company’s capital stock is subject to preemptive rights or any othersimilar rights or any liens or encumbrances suffered or permitted by the Company; (ii) there are no outstanding options,warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relatingto, or securities or rights convertible into, or exercisable or exchangeable for, any capital stockof the Company or any of its Subsidiaries, or contracts, commitments, understandings orarrangements by which the Company or any of its Subsidiaries is or may become bound to issueadditional capital stock of the Company or any of its Subsidiaries or options, warrants, scrip,rights to subscribe to, calls or commitments of any character whatsoever relating to, or securitiesor rights convertible into, or exercisable or exchangeable for, any capital stock of the Company orany of its Subsidiaries; (iii) there are no outstanding debt securities, notes, credit agreements,credit facilities or other agreements, documents or instruments evidencing Indebtedness (as definedin Section 3(s)) of the Company or any of its Subsidiaries or by which the Company or any of itsSubsidiaries is or may become bound; (iv) there are no financing statements securing obligations inany material amounts, either singly or in the aggregate, filed in connection with the Company orany of its Subsidiaries; (v) there are no agreements or arrangements under which the Company or anyof its Subsidiaries is obligated to register the sale of any of their securities under the 1933 Act(except pursuant to the Registration Rights Agreement); (vi) there are no outstanding securities orinstruments of the Company or any of its Subsidiaries which contain any redemption or similarprovisions, and there are no contracts, commitments, understandings or arrangements by which theCompany or any of its Subsidiaries is or may become bound to redeem a security of the Company orany of its Subsidiaries; (vii) there are no securities or instruments containing anti-dilution orsimilar provisions that will be triggered by the issuance of the Securities; (viii) the Companydoes not have any stock appreciation rights or “phantom stock” plans or agreements or any similarplan or agreement; and (ix) the Company and its Subsidiaries have no liabilities or obligationsrequired to be disclosed in the SEC Documents but not so disclosed in the SEC Documents, other thanthose incurred in the ordinary course of the Company’s or its Subsidiaries’ respective businessesand which, individually or in the aggregate, do not or would not reasonably be expected to have aMaterial Adverse Effect. The Company has made available to the Buyer true, correct and completecopies of the Company’s Certificate of Incorporation, as amended and as in effect on the datehereof (the “**Articles of Incorporation**”), and the Company’s Bylaws, as amended and as in effect onthe date hereof (the “**Bylaws**”), and the terms of all securities convertible into, or exercisable orexchangeable for, shares of Common Stock and the material rights of the holders thereof in respectthereto.          (s) Indebtedness and Other Contracts. Except as disclosed in Schedule 3(s),neither the Company nor any of its Subsidiaries (i) has any outstanding Indebtedness (as definedbelow), (ii) is a party to any contract, agreement or instrument, the violation of which, ordefault under which, by the other party(ies) to such contract, agreement or instrument wouldreasonably be expected to result in a Material Adverse Effect, (iii) is in violation of any term ofor in default under any contract, agreement or instrument relating to any Indebtedness, exceptwhere such violations and defaults would not result, individually or in the aggregate, in aMaterial Adverse Effect, or (iv) is a party to any contract, agreement or instrument relating toany Indebtedness, the performance of which, in the judgment of the Company’s officers, has or is expected to have a Material AdverseEffect. Schedule 3(s) provides a description of the material terms of any such outstandingIndebtedness. For purposes of this Agreement: (x) “**Indebtedness**” of any Person means, withoutduplication (A) all indebtedness for borrowed money, (B) all obligations issued, undertaken orassumed as the deferred purchase price of property or services, including (without limitation)“capital leases” in accordance with generally accepted accounting principles (other than tradepayables entered into in the ordinary course of business), (C) all reimbursement or paymentobligations with respect to letters of credit, surety bonds and other similar instruments, (D) allobligations evidenced by notes, bonds, debentures or similar instruments, including obligations soevidenced incurred in connection with the acquisition of property, assets or businesses, (E) allindebtedness created or arising under any conditional sale or other title retention agreement, orincurred as financing, in either case with respect to any property or assets acquired with theproceeds of such indebtedness (even though the rights and remedies of the seller or bank under suchagreement in the event of default are limited to repossession or sale of such property), (F) allmonetary obligations under any leasing or similar arrangement which, in connection with generallyaccepted accounting principles, consistently applied for the periods covered thereby, is classifiedas a capital lease, (G) all indebtedness referred to in clauses (A) through (F) above secured by(or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to besecured by) any mortgage, lien, pledge, charge, security interest or other encumbrance upon or inany property or assets (including accounts and contract rights) owned by any Person, even thoughthe Person which owns such assets or property has not assumed or become liable for the payment ofsuch indebtedness, and (H) all Contingent Obligations in respect of indebtedness or obligations ofothers of the kinds referred to in clauses (A) through (G) above; (y) “**Contingent Obligation**”means, as to any Person, any direct or indirect liability, contingent or otherwise, of that Personwith respect to any indebtedness, lease, dividend or other obligation of another Person if theprimary purpose or intent of the Person incurring such liability, or the primary effect thereof, isto provide assurance to the obligee of such liability that such liability will be paid ordischarged, or that any agreements relating thereto will be complied with, or that the holders ofsuch liability will be protected (in whole or in part) against loss with respect thereto; and (z)“**Person**” means an individual, a limited liability company, a partnership, a joint venture, acorporation, a trust, an unincorporated organization and a government or any department or agencythereof.
 

 
          (t) Absence of Litigation. Except as set forth in Schedule 3(t), there is noaction, suit, proceeding, inquiry or investigation before or by the Principal Market, any court,public board, government agency, self-regulatory organization or body pending or, to the knowledgeof the Company, threatened against or affecting the Company or any of its Subsidiaries, the CommonStock or any of the Company’s Subsidiaries or any of the Company’s or its Subsidiaries’ officers ordirectors in their capacities as such, which would, individually or in the aggregate, reasonably beexpected to have a Material Adverse Effect.          (u) Insurance. The Company and each of its Subsidiaries are insured by insurers ofrecognized financial responsibility against such losses and risks and in such amounts as managementof the Company believes to be prudent and customary in the businesses in which the Company and itsSubsidiaries are engaged. Neither the Company nor any such Subsidiary, during the prior two years,has been refused any insurance coverage sought or applied for and neither the Company nor any suchSubsidiary has any reason to believe that it will not be able to renew its existing insurancecoverage as and when such coverage expires or to obtain similar coverage from similar insurers asmay be necessary to continue its business at a cost that would not materially exceed market costsfor similar businesses to the Company.          (v) Employee Relations. (i) Except as set forth in Schedule 3(v), neither theCompany nor any of its Subsidiaries is a party to any collective bargaining agreement or employsany member of a union. Except as set forth in Schedule 3(v), the Company and itsSubsidiaries believe that their relations with their employees are good. Except as set forth inSchedule 3(v), no executive officer of the Company or any of its Subsidiaries (as defined in Rule501(f) of the 1933 Act) has notified the Company or any such Subsidiary that such officer intendsto leave the Company or any such Subsidiary or otherwise terminate such officer’s employment withthe Company or any such Subsidiary. No executive officer of the Company or any of its Subsidiaries,is, or is now expected to be, in violation of any material term of any employment contract,confidentiality, disclosure or proprietary information agreement, non-competition agreement, or anyother contract or agreement or any restrictive covenant, and the continued employment of each suchexecutive officer does not subject the Company or any of its Subsidiaries to any liability withrespect to any of the foregoing matters.               (ii) The Company and its Subsidiaries are in compliance with all federal, state, local andforeign laws and regulations respecting labor, employment and employment practices and benefits,terms and conditions of employment and wages and hours, except where failure to be in compliancewould not, either individually or in the aggregate, reasonably be expected to result in a MaterialAdverse Effect.          (w) Title. The Company and its Subsidiaries have good and marketable title in feesimple to all real property and good and marketable title to all personal property owned by themwhich is material to the business of the Company and its Subsidiaries, in each case free and clearof all liens, encumbrances and defects except such as do not materially affect the value of suchproperty and do not interfere with the use made and proposed to be made of such property by theCompany and any of its Subsidiaries. Any real property and facilities held under lease by theCompany or any of its Subsidiaries are held by them under valid, subsisting and enforceable leaseswith such exceptions as are not material and do not interfere with the use made and proposed to bemade of such property and buildings by the Company and its Subsidiaries.
 

 
          (x) Intellectual Property Rights. The Company and its Subsidiaries own or possessadequate rights or licenses to use all trademarks, service marks and all applications andregistrations therefor, trade names, patents, patent rights, copyrights, original works of authorship, inventions, trade secrets, licenses, approvals, governmentalauthorizations and other intellectual property rights (“**Intellectual Property Rights**”) necessary toconduct their respective businesses as now conducted. None of the Company’s or its Subsidiaries’Intellectual Property Rights have expired, terminated or have been abandoned, or are expected toexpire, terminate or be abandoned, within three years from the date of this Agreement. The Companydoes not have any knowledge of any infringement by the Company or any of its Subsidiaries ofIntellectual Property Rights of others. There is no claim, action or proceeding being made orbrought, or to the knowledge of the Company, being threatened against the Company or any of itsSubsidiaries regarding its Intellectual Property Rights. Neither the Company nor any of itsSubsidiaries is aware of any facts or circumstances which might give rise to any of the foregoinginfringements or claims, actions or proceedings. The Company and its Subsidiaries have takenreasonable security measures to protect the secrecy, confidentiality and value of all of theirIntellectual Property Rights.          (y) Environmental Laws. The Company and its Subsidiaries (i) are in compliance withany and all Environmental Laws (as hereinafter defined), (ii) have received all permits, licensesor other approvals required of them under applicable Environmental Laws to conduct their respectivebusinesses and (iii) are in compliance with all terms and conditions of any such permit, license orapproval where, in each of the foregoing clauses (i), (ii) and (iii), the failure to so complywould be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect.The term “**Environmental Laws**” means all federal, state, local or foreign laws relating to pollutionor protection of human health or the environment (including, without limitation, ambient air,surface water, groundwater, land surface or subsurface strata), including, without limitation, lawsrelating to emissions, discharges, releases or threatened releases of chemicals, pollutants,contaminants, or toxic or hazardous substances or wastes (collectively, “**Hazardous Materials**”) intothe environment, or otherwise relating to the manufacture, processing, distribution, use,treatment, storage, disposal, transport or handling of Hazardous Materials, as well as allauthorizations, codes, decrees, demands or demand letters, injunctions, judgments, licenses,notices or notice letters, orders, permits, plans or regulations issued, entered, promulgated orapproved thereunder.          (z) Subsidiary Rights. Except as set forth in Schedule 3(z), the Company orone of its Subsidiaries has the unrestricted right to vote, and (subject to limitations imposed byapplicable law) to receive dividends and distributions on, all capital securities of itsSubsidiaries as owned by the Company or such Subsidiary.          (aa) Tax Status. Except as set forth in Schedule 3(aa), the Company and eachof its Subsidiaries (i) has made or filed all foreign, federal and state income and all other taxreturns, reports and declarations required by any jurisdiction to which it is subject, (ii) haspaid all taxes and other governmental assessments and charges that are material in amount, shown ordetermined to be due on such returns, reports and declarations, except those being contested ingood faith and (iii) has set aside on its books provision reasonably adequate for the payment ofall taxes for periods subsequent to the periods to which such returns, reports or declarationsapply. There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and theofficers of the Company know of no basis for any such claim.          (bb) Internal Accounting and Disclosure Controls. Except as set forth in Schedule3(bb), the Company and each of its Subsidiaries maintain a system of internal accountingcontrols sufficient to provide reasonable assurance that (i) transactions are executed inaccordance with management’s general or specific authorizations, (ii) transactions are recorded asnecessary to permit preparation of financial statements in conformity with generally acceptedaccounting principles and to maintain asset and liability accountability, (iii) access to assets orincurrence of liabilities is permitted only in accordance with management’s general or specificauthorization and (iv) the recorded accountability for assets and liabilities is compared with theexisting assets and liabilities at reasonable intervals and appropriate action is taken withrespect to any difference. The Company maintains disclosure controls and procedures (as such termis defined in Rule 13a-14 under the 1934 Act) that are effective in ensuring that informationrequired to be disclosed by the Company in the reports that it files or submits under the 1934 Actis recorded, processed, summarized and reported, within the time periods specified in the rules andforms of the SEC, including, without limitation, controls and procedures designed in to ensure thatinformation required to be disclosed by the Company in the reports that it files or submits underthe 1934 Act is accumulated and communicated to the Company’s management, including its principalexecutive officer or officers and its principal financial officer or officers, as appropriate, toallow timely decisions regarding required disclosure.
 

 
          (cc) Off Balance Sheet Arrangements. There is no transaction, arrangement, or otherrelationship between the Company and an unconsolidated or other off balance sheet entity that isrequired to be disclosed by the Company in its 1934 Act filings and is not so disclosed or thatotherwise would be reasonably likely to have a Material Adverse Effect.          (dd) Ranking of Notes. Except as set forth in Schedule 3(dd) or as otherwisepermitted in the Transaction Documents, no Indebtedness of the Company is senior to or ranks *paripassu*with the Notes in right of payment, whether with respect of payment of redemptions, interest,damages or upon liquidation or dissolution or otherwise.          (ee) Transfer Taxes. On the applicable Closing Date, all stock transfer or other taxes(other than income or similar taxes) which are required to be paid in connection with the sale andtransfer of the Securities to be sold to each Buyer hereunder will be, or will have been, fullypaid or provided for by the Company, and all laws imposing such taxes will be or will have beencomplied with.          (ff) Acknowledgement Regarding Buyers’ Trading Activity. Except as set forth in theTransaction Documents, it is understood and acknowledged by the Company (i) that following thepublic disclosure of the transactions contemplated by the Transaction Documents in accordance withthe terms hereof, none of the Buyers have been asked to agree, nor has any Buyer agreed, to desistfrom 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) that any Buyer, and counterparties in “derivative” transactions to which any such Buyer is a party, directly or indirectly,which were established prior to their learning of the transactions contemplated by the TransactionDocuments, presently may have a “short” position in the Common Stock, and (iii) that each Buyershall not be deemed to have any affiliation with or control over any arm’s length counter-party inany “derivative” transaction. The Company further understands and acknowledges that following thepublic disclosure of the transactions contemplated by the Transaction Documents in accordance withthe terms hereof, one or more Buyers may engage in hedging and/or trading activities at varioustimes during the period that the Securities are outstanding and (b) such hedging and/or tradingactivities, if any, can reduce the value of the existing stockholders’ equity interest in theCompany both at and after the time the hedging and/or trading activities are being conducted. TheCompany acknowledges that such aforementioned hedging and/or trading activities do not constitute abreach of this Agreement, the Notes, the Warrants or any of the documents executed in connectionherewith.          (gg) Form S-1 Eligibility. The Company is currently eligible to register theConversion Shares, the Interest Shares and the Warrant Shares for resale by the Buyers using FormS-1 promulgated under the 1933 Act.          (hh) Manipulation of Price. The Company has not, and to its knowledge no one acting onits behalf has, (i) taken, directly or indirectly, any action designed to cause or to result in thestabilization or manipulation of the price of any security of the Company to facilitate the sale orresale of any of the Securities, (ii) sold, bid for, purchased, or paid any compensation forsoliciting purchases of, any of the Securities, or (iii) paid or agreed to pay to any person anycompensation for soliciting another to purchase any other securities of the Company.          (ii) Investment Company Status. The Company is not, and upon consummation of the saleof the Securities will not be, an “investment company,” a company controlled by an “investmentcompany” or an “affiliated person” of, or “promoter” or “principal underwriter” for, an “investmentcompany” as such terms are defined in the Investment Company Act of 1940, as amended.
 

 
          (jj) U.S. Real Property Holding Corporation. The Company is not, nor has ever been, aU.S. real property holding corporation within the meaning of Section 897 of the Internal RevenueCode of 1986, as amended, and the Company shall so certify upon Buyer’s request.          (kk) Disclosure. The Company confirms that neither it nor any other Person acting onits behalf has provided any of the Buyers or their agents or counsel with any information thatconstitutes or would reasonably be expected to constitute material, nonpublic information, exceptto the extent that the knowledge of the transactions contemplated by the Transaction Documents mayconstitute such information. The Company understands and confirms that each of the Buyers will relyon the foregoing representations in effecting transactions in the Securities. All disclosuresprovided to the Buyers regarding the Company and its Subsidiaries, their business and the transactionscontemplated hereby, including the Schedules to this Agreement, furnished by or on behalf of theCompany are true and correct and do not contain any untrue statement of a material fact or omit tostate any material fact necessary in order to make the statements made therein, in the light of thecircumstances under which they were made, not misleading. Each press release issued by the Companyor its Subsidiaries during the twelve (12) months preceding the date of this Agreement did not atthe time of release contain any untrue statement of a material fact or omit to state a materialfact required to be stated therein or necessary in order to make the statements therein, in thelight of the circumstances under which they were made, not misleading. No event or circumstance hasoccurred or information exists with respect to the Company or any of its Subsidiaries or its ortheir business, properties, prospects, operations or financial conditions, which, under applicablelaw, rule or regulation, requires public disclosure or announcement by the Company but which hasnot been so publicly announced or disclosed.          (ll) No Event of Default. The Company represents and warrants that after giving effectto the terms of this Agreement, no Default or Event of Default (as defined in the Notes) shall haveoccurred and be continuing as of the time immediately following the applicable Closing Date.     4. COVENANTS.          (a) Best Efforts. Each party shall use its best efforts timely to satisfy each of theconditions to be satisfied by it as provided in Sections 6 and 7 of this Agreement.          (b) Form D and Blue Sky. The Company agrees to file a Form D with respect to theSecurities as required under Regulation D and to provide a copy thereof to each Buyer promptlyafter such filing. The Company shall, on or before each Closing Date, take such action as theCompany shall reasonably determine is necessary in order to obtain an exemption for or to qualifythe Securities for sale to the Buyers at each Closing pursuant to this Agreement under applicablesecurities or “Blue Sky” laws of the states of the United States (or to obtain an exemption fromsuch qualification), and shall provide evidence of any such action so taken to the Buyers on orprior to each Closing Date. The Company shall make all filings and reports relating to the offerand sale of the Securities required under applicable securities or “Blue Sky” laws of the states ofthe United States following each Closing Date.          (c) Reporting Status. Except as set forth in Schedule 4(c), until the date onwhich the Buyers shall have sold all the Conversion Shares, the Common Shares, the Interest Sharesand Warrant Shares and none of the Notes or Warrants is outstanding (the “**Reporting Period**”), theCompany shall timely file all reports required to be filed with the SEC pursuant to the 1934 Act,and the Company shall continue to timely file reports under the 1934 Act even if the 1934 Act orthe rules and regulations thereunder would otherwise no longer require such filings.          (d) Use of Proceeds. The Company and its subsidiaries will use the proceeds from thesale of the Securities for (A) professional fees and costs and restructuring fees and costs, and(B) working capital purposes (including payment of accounts payable), and except as set forthherein and in Schedule 4(d), not for the (i) repayment of any other outstandingIndebtedness of the Company or any of its Subsidiaries or (ii) redemption or repurchase of any ofits equity securities.
 

 
          (e) Financial Information. The Company agrees to send the following to each Investor(as defined in the Registration Rights Agreement) during the Reporting Period (i) unless thefollowing are filed with the SEC through EDGAR and are available to the public through the EDGARsystem, within one (1) Business Day after the filing thereof with the SEC, a copy of its AnnualReports and Quarterly Reports on Form 10-K, 10-KSB, 10-Q or 10-QSB, any interim reports or anyconsolidated balance sheets, income statements, stockholders’ equity statements and/or cash flowstatements for any period other than annual, any Current Reports on Form 8-K and any registrationstatements (other than on Form S-8) or amendments filed pursuant to the 1933 Act, (ii) on the sameday as the release thereof, facsimile copies of all press releases issued by the Company or any ofits Subsidiaries, which are attached to a Current Report on Form 8-K, and (iii) copies of anynotices and other information made available or given to the stockholders of the Company generally,contemporaneously with the making available or giving thereof to the stockholders. As used herein“Business Day” means any other day other than a Saturday, Sunday, or other day on which commercialbanks in The City of New York are authorized or required by law to remain closed.          (f) Listing. The Company shall as promptly as permitted by the Principal Market securethe listing of all of the Registrable Securities (as defined in the Registration Rights Agreement)upon each national securities exchange and automated quotation system, if any, upon which theCommon Stock is then listed (subject to official notice of issuance) and shall maintain suchlisting of all Registrable Securities from time to time issuable under the terms of the TransactionDocuments. The Company shall use its best efforts to maintain the authorization of the Common Stockfor quotation on the Principal Market. Neither the Company nor any of its Subsidiaries shall takeany action which would be reasonably expected to result in the delisting or suspension of theCommon Stock on the Principal Market; provided, however, that the Company makes nocovenant regarding the trading price of the Common Stock. The Company shall pay all fees andexpenses in connection with satisfying its obligations under this Section 4(f).          (g) Fees. Subject to Section 8 below, at each Closing, the Company shall pay (i) anexpense allowance to Kings Road Investments Ltd. (a Buyer) or its designee(s) to cover thereasonable fees and expenses reasonably incurred by Kings Road Investments Ltd. or anyprofessionals engaged by Kings Road Investments Ltd. in relation to due diligence, investmentdocumentation and enforcement of the Transaction Documents and the Transaction Documents (asdefined in the Original Securities Purchase Agreement) (less any other expense amounts previouslypaid to Schulte Roth & Zabel LLP) (the “**SRZ Legal Counsel Fee Amount**”), which amount may bewithheld by such Buyer from its Purchase Price at each Closing; provided, however that any fees andexpenses with respect to any litigation including in the SRZ Legal Counsel Fee Amount shall not exceed$150,000 in the aggregate and (ii) an expense allowance to Castlerigg Master Investments Ltd. (aBuyer) or its designee(s) to cover the reasonable fees and expenses reasonably incurred byCastlerigg Master Investments Ltd. or any professionals engaged by Castlerigg Master InvestmentsLtd. in relation to due diligence, investment documentation and enforcement of the TransactionDocuments and the Transaction Documents (as defined in the Original Securities Purchase Agreement)(less any other expense amounts previously paid to McDermott Will & Emery LLP) (the “**MWE LegalCounsel Fee Amount**”, and together with the SRZ Legal Counsel Fee Amount, the “**Legal Counsel FeeAmount**”), which amount may be withheld by such Buyer from its Purchase Price at each Closing;provided, however that any fees and expenses with respect to any litigation including in the MWELegal Counsel Fee Amount shall not exceed $50,000 in the aggregate. The Company shall beresponsible for the payment of any placement agent’s fees, financial advisory fees, or broker’scommissions (other than for Persons engaged by any Buyer) (collectively, “**Possible Placement Fees**”)relating to or arising out of the transactions contemplated hereby. The Company shall pay, and holdeach Buyer harmless against, any liability, loss or expense (including, without limitation,reasonable attorney’s fees and out-of-pocket expenses) arising in connection with any claimrelating to any such Possible Placement Fees. Except as otherwise set forth in the TransactionDocuments, each party to this Agreement shall bear its own expenses in connection with the sale ofthe Securities to the Buyers.
 

 
          (h) Pledge of Securities. The Company acknowledges and agrees that the Securities maybe pledged by an Investor (as defined in the Registration Rights Agreement) in connection with abona fide margin agreement or other loan or financing arrangement that is secured by theSecurities. The pledge of Securities shall not be deemed to be a transfer, sale or assignment ofthe Securities hereunder, and no Investor effecting a pledge of Securities shall be required toprovide the Company with any notice thereof or otherwise make any delivery to the Company pursuantto this Agreement or any other Transaction Document. The Company hereby agrees to execute anddeliver such documentation as a pledgee of the Securities may reasonably request in connection witha pledge of the Securities to such pledgee by an Investor. No legal opinion of legal counsel to thepledgee, secured party or pledgor shall be required in connection with the pledge, but such legalopinion may be required in connection with a subsequent transfer following default by the Investortransferee of the pledge.          (i) Disclosure of Transactions and Other Material Information. On or before 8:30 a.m.,New York time, on the first Business Day following the date on which this Agreement is fullyexecuted and delivered by the Company and all of the Buyers, the Company shall issue a pressrelease reasonably acceptable to the Buyers disclosing all material terms of the transactionscontemplated hereby. On or before 8:30 a.m., New York time, on the second Business Day followingthe date on which this Agreement is fully executed and delivered by the Company and all of theBuyers, the Company shall file a Current Report on Form 8-K describing the terms of thetransactions contemplated by the Transaction Documents in the form required by the 1934 Act andattaching the material Transaction Documents (including, without limitation, this Agreement (andall schedules to this Agreement), the form of each of the Notes, the forms of Security Documents,the form of Escrow Agreement and the Registration Rights Agreement) as exhibits to such filing(including all attachments, the “**Initial 8-K Filing**”). On or before 8:30 a.m., New York City Time,on the second Trading Day following the MECAR Execution Date, the Company shall file a CurrentReport on Form 8-K with the SEC describing the transactions contemplated by the MECAR Contract andattaching the MECAR Certificate (the “**MECAR 8-K Filing**”). On or before 8:30 a.m., New York CityTime, on the first Trading Day following the Additional Closing Date, the Company shall file aCurrent Report on Form 8-K with the SEC describing the transaction consummated on such date (the“**Additional 8-K Filing**,” and together with the Initial 8-K Filing and the MECAR 8-K Filing, the“**8-K Filings**”). From and after the Initial 8-K Filing with the SEC, no Buyer shall be in possessionof any material, nonpublic information received from the Company or any of its Subsidiaries or anyof its respective officers, directors, employees or agents, that is not disclosed in the Initial8-K Filing. The Company shall not, and shall cause each of its Subsidiaries and its and each oftheir respective officers, directors, employees and agents, not to, provide any Buyer with anymaterial, nonpublic information regarding the Company or any of its Subsidiaries from and after theInitial 8-K Filing with the SEC without the express written consent of such Buyer. If a Buyerreasonably believes that the Company or its agents have distributed to it any such material,nonpublic information regarding the Company or any of its Subsidiaries, it shall provide theCompany with written notice thereof. The Company shall, within five (5) Trading Days of receipt ofsuch notice, make public disclosure of such material, nonpublic information. In the event of abreach of the foregoing covenant by the Company, any of its Subsidiaries, or any of its or theirrespective officers, directors, employees and agents, in addition to any other remedy providedherein or in the Transaction Documents, a Buyer shall have the right to make a public disclosure,in the form of a press release, public advertisement or otherwise, of such material, nonpublicinformation without the prior approval by the Company, its Subsidiaries, or any of its or theirrespective officers, directors, employees or agents. No Buyer shall have any liability to theCompany, its Subsidiaries, or any of its or their respective officers, directors, employees,stockholders or agents for any such disclosure. Subject to the foregoing, neither the Company, itsSubsidiaries nor any Buyer shall issue any press releases or any other public statements withrespect to the transactions contemplated hereby; provided, however, that theCompany shall be entitled, without the prior approval of any Buyer, to make any press release orother public disclosure with respect to such transactions (i) in substantial conformity with theInitial 8-K Filing and contemporaneously therewith and (ii) as is required by applicable law andregulations (provided that in the case of clause (i) each Buyer shall be consulted by the Companyin connection with any such press release or other public disclosure prior to its release). Withoutthe prior written consent of any applicable Buyer, neither the Company nor any of its Subsidiariesshall disclose the name of any Buyer in any filing, announcement or press release, unless suchdisclosure is required by law, regulation or the Principal Market (and in such case, the Companyshall have consulted with such Buyer in connection with any such press release or other publicdisclosure prior to its release).
 

 
          (j) Restriction on Redemption and Dividends; Additional Registration Statements. Solong as any Notes or Warrants are outstanding, the Company shall not, directly or indirectly,redeem, repurchase or otherwise acquire for value or declare or pay any dividend or distributionon, the Common Stock without the prior express written consent of the holders of Notes representingnot less than a majority of the aggregate principal amount of the then outstanding Notes. Until theEffective Date (as defined in the Registration Rights Agreement), the Company shall not file aregistration statement under the 1933 Act relating to securities that are not the Securities (otherthan on Form S-8).          (k) Other Notes; Variable Securities; Dilutive Issuances. (i) So long as any Notesremain outstanding, the Company will not issue any Notes (other than to the Buyers as contemplatedhereby) and the Company shall not issue any other securities that would cause a breach or defaultunder the Notes. For so long as any Notes or Warrants remain outstanding, the Company shall not, inany manner, issue or sell any rights, warrants or options to subscribe for or purchase Common Stockor directly or indirectly convertible into or exchangeable or exercisable for Common Stock at aprice which varies or may vary with the market price of the Common Stock, including by way of oneor more reset(s) to any fixed price unless the conversion, exchange or exercise price of any suchsecurity cannot be less than the then applicable Conversion Price (as defined in the Notes) withrespect to the Common Stock into which any Note is convertible or the then applicable ExercisePrice (as defined in the Warrants) with respect to the Common Stock into which any Warrant isexercisable. For so long as any Notes or Warrants remain outstanding, the Company shall not, in anymanner, enter into or affect any Dilutive Issuance (as defined in the Notes) if the effect of suchDilutive Issuance is to cause the Company to be required to issue upon conversion of any Note orexercise of any Warrant any shares of Common Stock in excess of that number of shares of CommonStock which the Company may issue upon conversion of the Notes and exercise of the Warrants withoutbreaching the Company’s obligations under the rules or regulations of any Eligible Market (asdefined in the Notes). As of any date, unless either (i) the Stockholder Approval has been obtainedprior to such date and the Equity Conditions (as defined in the Notes) are satisfied as of suchdate or (ii) no Notes or Warrants remain outstanding, the Company shall not, in any manner, enterinto or affect any Dilutive Issuance if the effect of such Dilutive Issuance would, but for theapplication of the Conversion Floor Price (as defined in the Notes) or the Exercise Floor Price (asdefined in the Warrant), as applicable, cause either (i) the Conversion Price (as defined in theNotes) to be reduced below the Conversion Floor Price or (ii) the Exercise Price (as defined in theWarrant) to be reduced below the Exercise Floor Price.               (ii) None of the Company, its Subsidiaries, any of their affiliates, or any Person acting ontheir behalf shall, directly or indirectly, make any offers or sales of any security or solicit anyoffers to buy any security, under circumstances that would require registration of any of theSecurities under the 1933 Act or cause this offering of the Securities to be integrated with priorofferings by the Company for purposes of the 1933 Act or any applicable stockholder approvalprovisions, including, without limitation, under the rules and regulations of the Principal Marketsuch that the representation set forth in the last sentence of either Section 3(c) or Section 3(d)(iii) would not be accurateas if such representations were made as of such time.          (l) Corporate Existence. So long as any Notes are outstanding, the Company shall notbe party to any Fundamental Transaction (as defined in the Notes) unless the Company is incompliance with the applicable provisions governing Fundamental Transactions set forth in the Notesand the Warrants.          (m) Reservation of Shares. The Company shall take all action necessary to at all timeshave authorized, and reserved for the purpose of issuance, after the Initial Closing Date, 120% ofthe maximum number of shares of Common Stock (i) issuable upon conversion or redemption of theNotes issuable at such Closing and issued at any prior Closing (assuming for purposes hereof, thatthe Notes are convertible at the initial Conversion Price and without taking into account anylimitations on the conversion of the Notes set forth in the Notes and assuming such conversionoccurred at such Closing), (ii) issuable as Interest Shares pursuant to the terms of the Notes and(iii) issuable upon exercise of the Warrants (without taking into account any limitations on theexercise of the Warrants set forth in the Warrants and assuming such exercise occurred at suchClosing) and (iii) any capital stock of the Company issued or issuable with respect to theConversion Shares, the Interest Shares, the Common Shares, the Notes, the Warrant Shares or theWarrants.
 

 
          (n) Conduct of Business. The business of the Company and its Subsidiaries shall not beconducted in violation of any law, ordinance or regulation of any governmental entity, except wheresuch violations would not result, either individually or in the aggregate, in a Material AdverseEffect.          (o) Additional Issuances of Securities.               (i) For purposes of this Section 4(o), the following definitions shall apply.                    (1) “**Convertible Securities**” means any stock or securities (other than Options) convertibleinto or exercisable or exchangeable for shares of Common Stock.                    (2) “**Options**” means any rights, warrants or options to subscribe for or purchase shares ofCommon Stock or Convertible Securities.                    (3) “**Common Share Equivalents**” means, collectively, Options and Convertible Securities.                    (4) “**Subsequent Placement**” means any offer, sale, grant, disposition or announcement by theCompany, directly or indirectly, to offer, sell or grant or any option to purchase, or otherwisedispose of (or announce any offer, sale, grant or any option to purchase or other disposition of)any of its or its Subsidiaries’ equity or equity equivalent securities, including, withoutlimitation, any debt, preferred stock or other instrument or security that is, at any time during its life and under anycircumstances, convertible into or exchangeable or exercisable for shares of Common Stock or CommonShare Equivalents.               (ii) As long as any applicable Buyer holds no less than 25% of the original principal amountof the Notes issued to such Buyer at the Closings, from the date hereof until the later of (x) thefifteen month anniversary of the date hereof and (y) the Stockholder Approval Date (as definedbelow), the Company will not, directly or indirectly, effect any Subsequent Placement unless theCompany shall have first complied with this Section 4(o)(ii).                    (1) The Company shall deliver to each such Buyer by facsimile a written notice (the “**OfferNotice**”) of any proposed or intended issuance or sale or exchange (the “**Offer**”) of the securitiesbeing offered (the “**Offered Securities**”) in a Subsequent Placement within one Business Day of thedetermination of the terms of such Subsequent Placement, which Offer Notice shall (w) identify anddescribe the Offered Securities, (x) describe the price and other final terms upon which they areto be issued, sold or exchanged, and the number or amount of the Offered Securities to be issued,sold or exchanged, (y) identify the persons or entities (if known) to which or with which theOffered Securities are to be offered, issued, sold or exchanged and (z) offer to issue and sell toor exchange with such Buyers (which offer being non-transferable to any successor to such Buyer) apro rata portion of at least thirty percent (30%) of the Offered Securities allocated among suchBuyers (a) based on such Buyer’s pro rata portion of the aggregate principal amount of Notespurchased hereunder (the “**Basic Amount**”), and (b) with respect to each Buyer that elects topurchase its Basic Amount, any additional portion of the Offered Securities attributable to theBasic Amounts of other Buyers as such Buyer shall indicate it will purchase or acquire should theother Buyers subscribe for less than their Basic Amounts (the “**Undersubscription Amount**”).
 

 
                    (2) To accept an Offer, in whole or in part, such Buyer must deliver a written notice to theCompany prior to the end of the second (2nd) full Business Day after such Buyer’sreceipt of the Offer Notice (for purposes of this Section 4(a)(iii)(2), notwithstanding theprovisions of Section 9(f), receipt of the Offer Notice shall not be deemed to have occurred untilthe Buyer shall have physically received such Offer Notice and until such Offer Notice contains thefinal terms of the Offer) (the “**Offer Period**”), setting forth the portion of such Buyer’s BasicAmount that such Buyer elects to purchase and, if such Buyer shall elect to purchase all of itsBasic Amount, the Undersubscription Amount, if any, that such Buyer elects to purchase (in eithercase, the “**Notice of Acceptance**”). If the Basic Amounts subscribed for by all Buyers are less thanthe total of all of the Basic Amounts, then each Buyer who has set forth an UndersubscriptionAmount in its Notice of Acceptance shall be entitled to purchase, in addition to the Basic Amountssubscribed for, the Undersubscription Amount it has subscribed for; provided,however, that if the Undersubscription Amounts subscribed for exceed the difference betweenthe total of all the Basic Amounts and the Basic Amounts subscribed for (the “**Available Undersubscription Amount**”), each Buyer who has subscribed forany Undersubscription Amount shall be entitled to purchase only that portion of the AvailableUndersubscription Amount as the Basic Amount of such Buyer bears to the total Basic Amounts of allBuyers that have subscribed for Undersubscription Amounts, subject to rounding by the Company tothe extent it deems reasonably necessary.                    (3) The Company shall have ten (10) Business Days from the expiration of the Offer Periodabove to offer, issue, sell or exchange all or any part of such Offered Securities as to which aNotice of Acceptance has not been given by the Buyers (the “**Refused Securities**”), but only to theofferees described in the Offer Notice (if so described therein) and only upon terms and conditions(including, without limitation, unit prices and interest rates) that are not more favorable to theacquiring person or persons or less favorable to the Company than those set forth in the OfferNotice.                    (4) In the event the Company shall propose to sell less than all the Refused Securities (anysuch sale to be in the manner and on the terms specified in Section 4(o)(ii)(3) above), then eachBuyer may, at its sole option and in its sole discretion, reduce the number or amount of theOffered Securities specified in its Notice of Acceptance to an amount that shall be not less thanthe number or amount of the Offered Securities that such Buyer elected to purchase pursuant toSection 4(o)(ii)(2) above multiplied by a fraction, (i) the numerator of which shall be the numberor amount of Offered Securities the Company actually proposes to issue, sell or exchange (includingOffered Securities to be issued or sold to Buyers pursuant to Section 4(o)(ii)(3) above prior tosuch reduction) and (ii) the denominator of which shall be the original amount of the OfferedSecurities. In the event that any Buyer so elects to reduce the number or amount of OfferedSecurities specified in its Notice of Acceptance, the Company may not issue, sell or exchange morethan the reduced number or amount of the Offered Securities unless and until such securities haveagain been offered to the Buyers in accordance with Section 4(o)(ii)(1) above.                    (5) Upon the closing of the issuance, sale or exchange of all or less than all of the RefusedSecurities, the Buyers shall acquire from the Company, and the Company shall issue to the Buyers,the number or amount of Offered Securities specified in the Notices of Acceptance, as reducedpursuant to Section 4(o)(ii)(3) above if the Buyers have so elected, upon the terms and conditionsspecified in the Offer. The purchase by the Buyers of any Offered Securities is subject in allcases to (i) the preparation, execution and delivery by the Company and the Buyers of a purchaseagreement relating to such Offered Securities reasonably satisfactory in form and substance to theBuyers and their respective counsel, (ii) the Buyers’ satisfaction, in their sole discretion, withthe final terms and/or conditions that differ from those contained in the Offer Notice, and (iii)the Buyers’ reasonable satisfaction with the identity of the other persons or entities to which theOffered Securities will be sold.                    (6) Any Offered Securities not acquired by the Buyers or other persons in accordance with thisSection 4(o)(ii) may not be issued, sold or exchanged until they are again offered to the Buyersunder the procedures specified in this Agreement.               (iii) The restrictions contained in subsection (ii) of this Section 4(o) shall not apply inconnection with the issuance of any Excluded Securities (as defined in the Notes).          (p) Holding Period. For the purposes of Rule 144, the Company acknowledges that undercurrent regulations, the holding period of the Conversion Shares may be tacked onto the holdingperiod of the Notes (unless the holder thereof is an affiliate of the Company) and the Companyagrees not to take a position contrary to this Section 4(p).
 

 
          (q) Stockholder Approval. The Company shall provide each stockholder entitled to voteat a special or annual meeting of stockholders of the Company (the “**Stockholder Meeting**”), whichinitially shall be promptly called and held not later than March 3, 2008 (the “**Stockholder MeetingDeadline**”), a proxy statement, substantially in the form which has been previously reviewed by theBuyers and a counsel of their choice at the expense of the Company, soliciting each suchstockholder’s affirmative vote at the Stockholder Meeting for approval of resolutions (the“**Resolutions**”) providing for the Company’s issuance of all of the Securities as described in theTransaction Documents in accordance with applicable law and the rules and regulations of thePrincipal Market (such affirmative approval being referred to herein as the “**Stockholder Approval**”and the date such approval is obtained (the “**Stockholder Approval Date**”)), and the Company shalluse its reasonable best efforts to solicit its stockholders’ approval of the Resolutions and tocause the Board to recommend to the stockholders that they approve the Resolutions. If, despite theCompany’s best efforts the Stockholder Approval is not obtained on or prior to the StockholderMeeting Deadline, the Company shall solicit the Stockholder Approval at each subsequent special orannual meeting of stockholders of the Company until such Stockholder Approval is obtained.          (r) Collateral Agent. Each Buyer hereby (a) appoints Portside Growth & OpportunityFund, as the collateral agent hereunder and under the other Security Documents (in such capacity,the “**Collateral Agent**”), and (b) authorizes the Collateral Agent (and its officers, directors,employees and agents) to take such action on such Buyer’s behalf in accordance with the termshereof and thereof. The Collateral Agent shall not have, by reason hereof or any of the otherSecurity Documents, a fiduciary relationship in respect of any Buyer. Neither the Collateral Agentnor any of its officers, directors, employees and agents shall have any liability to any Buyer forany action taken or omitted to be taken in connection hereof or any other Security Document exceptto the extent caused by its own gross negligence or willful misconduct, and each Buyer agrees todefend, protect, indemnify and hold harmless the Collateral Agent and all of its officers,directors, employees and agents (collectively, the “**Indemnitees**”) from and against any losses,damages, liabilities, obligations, penalties, actions, judgments, suits, fees, costs and expenses(including, without limitation, reasonable attorneys’ fees, costs and expenses) incurred by such Indemnitee, whether direct, indirect or consequential, arisingfrom or in connection with the performance by such Indemnitee of the duties and obligations ofCollateral Agent pursuant hereto or any of the Security Documents. The Collateral Agent shall notbe required to exercise any discretion or take any action, but shall be required to act or torefrain from acting (and shall be fully protected in so acting or refraining from acting) upon theinstructions of the holders of at least two-thirds in principal amount of the Notes thenoutstanding, and such instructions shall be binding upon all holders of Notes; provided,however, that the Collateral Agent shall not be required to take any action which, in thereasonable opinion of the Agent, exposes the Agent to liability or which is contrary to thisAgreement or any other Transaction Document or applicable law. The Collateral Agent shall beentitled to rely upon any written notices, statements, certificates, orders or other documents orany telephone message believed by it in good faith to be genuine and correct and to have beensigned, sent or made by the proper Person, and with respect to all matters pertaining to thisAgreement or any of the other Transaction Documents and its duties hereunder or thereunder, uponadvice of counsel selected by it.
 

 
          (s) Successor Collateral Agent.               (i) The Collateral Agent may resign from the performance of all its functions and dutieshereunder and under the other Transaction Documents at any time by giving at least thirty (30)Business Days’ prior written notice to the Company and each holder of Notes. Such resignation shalltake effect upon the acceptance by a successor Collateral Agent of appointment pursuant to clauses(ii) and (iii) below or as otherwise provided below.               (ii) Upon any such notice of resignation, the holders of at least two-thirds in principalamount of the Notes then outstanding shall appoint a successor collateral agent. Upon theacceptance of any appointment as collateral agent hereunder by a successor agent, such successorcollateral agent shall thereupon succeed to and become vested with all the rights, powers,privileges and duties of the collateral agent, and the Collateral Agent shall be discharged fromits duties and obligations under this Agreement and the other Transaction Documents. After theCollateral Agent’s resignation hereunder as the collateral agent, the provisions of this Section4(s) shall inure to its benefit as to any actions taken or omitted to be taken by it while it wasthe Collateral Agent under this Agreement and the other Transaction Documents.               (iii) If a successor collateral agent shall not have been so appointed within said thirty (30)Business Day period, the Collateral Agent shall then appoint a successor collateral agent who shallserve as the collateral agent until such time, if any, as the holders of at least two-thirds inprincipal amount of the Notes then outstanding appoint a successor collateral agent as providedabove.     5. REGISTER; TRANSFER AGENT INSTRUCTIONS.          (a) Register. The Company shall maintain at its principal executive offices (or suchother office or agency of the Company as it may designate by notice to each holder of Securities),a register for the Notes and the Warrants in which the Company shall record the name and address ofthe Person in whose name the Notes and the Warrants have been issued (including the name andaddress of each transferee), the principal amount of Notes held by such Person, the number ofConversion Shares issuable upon conversion of the Notes and the number of Warrant Shares issuableupon exercise of the Warrants held by such Person. The Company shall keep the register open andavailable at all times during business hours for inspection of any Buyer or its legalrepresentatives upon reasonable notice.          (b) Transfer Agent Instructions. The Company shall issue irrevocable instructions toits transfer agent, and any subsequent transfer agent, to issue certificates or credit shares tothe applicable balance accounts at The Depository Trust Company (“**DTC**”), registered in the name ofeach Buyer or its respective nominee(s), for the Common Shares, the Conversion Shares, the InterestShares and the Warrant Shares issued upon conversion of the Notes or as Interest Shares under theNotes or exercise of the Warrants in such amounts as specified from time to time by each Buyer tothe Company upon conversion of the Notes or exercise of the Warrants in the form of ExhibitD-1 and Exhibit D-2 attached hereto (collectively, the “**Irrevocable Transfer AgentInstructions**”), bearing the restrictive legend as and when specified in Section 2(g) of thisAgreement. The Company warrants that no instruction other than the Irrevocable Transfer AgentInstructions referred to in this Section 5(b), and stop transfer instructions to give effect toSection 2(g) hereof, will be given by the Company to its transfer agent, and that the Securitiesshall otherwise be freely transferable on the books and records of the Company as and to the extentprovided in this Agreement and the other Transaction Documents. If a Buyer effects a sale,assignment or transfer of the Securities in accordance with Section 2(f), the Company shall permitthe transfer and the Company shall promptly instruct its transfer agent to issue one or morecertificates or credit shares to the applicable balance accounts at DTC in such name and in suchdenominations as specified by such Buyer to effect such sale, transfer or assignment. In the eventthat such sale, assignment or transfer involves Common Shares, Conversion Shares, Interest Sharesor Warrant Shares sold, assigned or transferred pursuant to an effective registration statement orpursuant to Rule 144, the transfer agent shall issue such Securities to the Buyer, assignee ortransferee, as the case may be, without any restrictive legend to the extent otherwise permitted bythis Agreement, including Section 2(g). The Company acknowledges that a breach by it of itsobligations hereunder will cause irreparable harm to a Buyer. Accordingly, the Company acknowledgesthat the remedy at law for a breach of its obligations under this Section 5(b) will be inadequateand agrees, in the event of a breach or threatened breach by the Company of the provisions of thisSection 5(b), that a Buyer shall be entitled, in addition to all other available remedies, to anorder and/or injunction restraining any breach and requiring immediate issuance and transfer,without the necessity of showing economic loss and without any bond or other security beingrequired.
 

 
     6. CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL.          (a) The obligation of the Company hereunder to exchange the Original Notes for the AmendedNotes and Common Shares and to issue and sell the Initial Notes to each Buyer at the InitialClosing is subject to the satisfaction, at or before the Initial Closing Date, of each of thefollowing conditions, provided that these conditions are for the Company’s sole benefit and may bewaived by the Company at any time in its sole discretion by providing each Buyer with prior writtennotice thereof:               (i) Such Buyer and each other Buyers shall have executed each of the Transaction Documents towhich it is a party and delivered the same to the Company.               (ii) Such Buyer and each other Buyer shall have delivered to the Company the Initial PurchasePrice (less, in the case of Kings Road Investments Ltd. and Castlerigg Master Investments Ltd., theamounts withheld pursuant to Section 4(g) above) for the Initial Notes being purchased by suchBuyer at the Initial Closing by wire transfer of immediately available funds pursuant to the wireinstructions provided by the Company, which wire transfers, in the aggregate shall total$5,000,000.               (iii) The representations and warranties of such Buyer shall be true and correct in allmaterial respects as of the date when made and as of the Initial Closing Date as though made atthat time (except for representations and warranties that speak as of a specific date), and suchBuyer shall have performed, satisfied and complied in all material respects with the covenants,agreements and conditions required by this Agreement to be performed, satisfied or complied with bysuch Buyer at or prior to the Initial Closing Date.               (iv) No litigation, status, rule regulation, executive order, decree, ruling or injunctionshall have been enacted, entered, promulgated, or endorsed by or in any court or governmentalauthority of competent jurisdiction or any self-regulatory organization having authority over thematters contemplated hereby that prohibits the consummation of the transactions contemplated by theTransaction Documents.          (b) The obligation of the Company hereunder to issue and sell the Additional Notes to eachBuyer at the Additional Closing is subject to the satisfaction, at or before the Additional ClosingDate, of each of the following conditions, provided that these conditions are for the Company’ssole benefit and may be waived by the Company at any time in its sole discretion by providing eachBuyer with prior written notice thereof:               (i) Such Buyer and each other Buyer shall have executed each of the Transaction Documents towhich it is a party and delivered the same to the Company.               (ii) Such Buyer and each other Buyer shall have delivered to the Company the AdditionalPurchase Price (less (x) the Escrow Amount if the Escrow Waiver Event has not occurred prior to theInitial Closing Date and (y) in the case of Kings Road Investments Ltd., the amounts withheldpursuant to Section 4(g)) for the Additional Notes being purchased by such Buyer at the AdditionalClosing by wire transfer of immediately available funds pursuant to the wire instructions providedby the Company.               (iii) The representations and warranties of such Buyer shall be true and correct in allmaterial respects as of the date when made and as of the Additional Closing Date as though made atthat time (except for representations and warranties that speak as of a specific date), and suchBuyer shall have performed, satisfied and complied in all material respects with the covenants,agreements and conditions required by this Agreement to be performed, satisfied or complied with bysuch Buyer at or prior to the Additional Closing Date.               (iv) No litigation, status, rule regulation, executive order, decree, ruling or injunctionshall have been enacted, entered, promulgated, or endorsed by or in any court or governmentalauthority of competent jurisdiction or any self-regulatory organization having authority over thematters contemplated hereby that prohibits the consummation of the transactions contemplated by theTransaction Documents.
 

 
     7. CONDITIONS TO EACH BUYER’S OBLIGATION TO PURCHASE.          (a) The obligation of each Buyer hereunder to exchange the Original Notes for the AmendedNotes and Common Shares and to purchase the Initial Notes at the Initial Closing is subject to thesatisfaction, at or before the Initial Closing Date, of each of the following conditions, providedthat these conditions are for each Buyer’s sole benefit and may be waived by such Buyer at any timein its sole discretion by providing the Company with prior written notice thereof:               (i) The Company shall have duly executed and delivered to such Buyer: (A) (x) the AmendedNotes (in such principal amounts as such Buyer has agreed, and in the manner the Buyer mayreasonably request, in accordance with Section 1 of this Agreement) to be received by such Buyer atthe Initial Closing pursuant to this Agreement, (y) the Initial Notes (in such principal amounts assuch Buyer has agreed, and in the manner the Buyer may reasonably request, in accordance withSection 1 of this Agreement) and (z) the Other Common Shares (in such amounts as such Buyer shallrequest in accordance with Section 1 of this Agreement) being purchased by such Buyer at theInitial Closing pursuant to this Agreement and (B) each of the other Transaction Documents.               (ii) The Company shall have delivered an irrevocable instruction letter to the Transfer Agentdirecting the Transfer Agent, in conjunction with the broker or agent (of each of the Buyers each a“**Buyer Broker**”), concurrently with the Initial Closing, to effect the deposit of the 144 CommonShares (in such amounts as such Buyer shall request) to be received by each Buyer at the InitialClosing pursuant to this Agreement to the account of each Buyer Broker at DTC through aDeposit/Withdrawal at Custodian with respect to such Common Shares.               (iii) Such Buyer shall have received the opinion of Baxter, Baker, Sidle, Conn & Jones, theCompany’s outside counsel, dated as of the Initial Closing Date, in substantially the form ofExhibit E-1 attached hereto.               (iv) The Company shall have delivered to such Buyer a copy of the Irrevocable Transfer AgentInstructions, in the form of Exhibit D-1 attached hereto, which instructions shall havebeen delivered to and acknowledged in writing by the Company’s transfer agent.               (v) The Company shall have delivered to such Buyer a certificate evidencing the formation andgood standing of the Company and each of its domestic Subsidiaries in each such entity’sjurisdiction of formation issued by the Secretary of State (or comparable office) of suchjurisdiction, as of a date within 10 days of the Initial Closing Date.               (vi) The Company shall have delivered to such Buyer a certificate evidencing the Company’squalification as a foreign corporation and good standing issued by the Secretary of State (orcomparable office) of each jurisdiction in which the Company, as applicable, conducts business, asof a date within 10 days of the Initial Closing Date.               (vii) The Company shall have delivered to such Buyer a certified copy of the Certificate ofIncorporation of the Company as certified by the Secretary of State of Delaware within ten (10)days of the Initial Closing Date.               (viii) The Company shall have delivered to such Buyer a certificate, executed by the Secretaryof the Company dated as of the Initial Closing Date, as to (i) the resolutions consistent withSection 3(b) as adopted by the Company’s Board of Directors in a form reasonably acceptable to suchBuyer, (ii) the Articles of Incorporation, as in effect at the Initial Closing and (iii) theBylaws, as in effect at the Initial Closing, in the form attached hereto as Exhibit F.
 

 
               (ix) The representations and warranties of the Company shall be true and correct in allmaterial respects (except for those representations and warranties that are qualified bymateriality or Material Adverse Effect, which shall be true and correct in all respects) as of thedate when made and as of the Initial Closing Date as though made at that time (except forrepresentations and warranties that speak as of a specific date) and the Company shall haveperformed, satisfied and complied in all material respects with the covenants, agreements andconditions required by the Transaction Documents to be performed, satisfied or complied with by theCompany at or prior to the Initial Closing Date. Such Buyer shall have received a certificate,executed by an executive officer of the Company, dated as of the Initial Closing Date, to theforegoing effect and as to such other matters as may be reasonably requested by such Buyer in theform attached hereto as Exhibit G.               (x) The Company shall have delivered to such Buyer a letter from the Company’s transfer agentcertifying the number of shares of Common Stock outstanding as of a date within five days of theInitial Closing Date.               (xi) The Common Stock (i) shall be designated for quotation or listed on the Principal Marketand (ii) shall not have been suspended, as of the Initial Closing Date, by the SEC or the PrincipalMarket from trading on the Principal Market nor shall suspension by the SEC or the Principal Markethave been threatened, as of the Initial Closing Date, either (A) in writing by the SEC or thePrincipal Market or (B) by falling below the minimum listing maintenance requirements of thePrincipal Market.               (xii) The Company shall have obtained all governmental, regulatory or third party consents andapprovals, if any, necessary for the sale of the Securities.               (xiii) Within five (5) Business Days prior to the Closing, the Company shall have delivered orcaused to be delivered to each Buyer (i) true copies of UCC search results, listing all effectivefinancing statements which name as debtor the Company or any of its domestic Subsidiaries filed inthe prior five years to perfect an interest in any assets thereof, together with copies of suchfinancing statements, none of which, except as otherwise agreed in writing by the Buyers, shallcover any of the Collateral (as defined in the Security Documents) and the results of searches forany tax lien and judgment lien filed against such Person or its property, which results, except asotherwise agreed to in writing by the Buyers shall not show any such Liens (as defined in theSecurity Documents); and (ii) a perfection certificate, duly completed and executed by the Companyand each of its Subsidiaries, in form and substance satisfactory to the Buyers.               (xiv) The Company shall have delivered to such Buyer duly executed voting agreements of PirateCapital LLC and Wynnefield Capital, Inc. (the “**Stockholders**”), in the form attached hereto asExhibit M (the “**Voting Agreements**”), whereby the Stockholders shall agree to vote in favorof the Resolutions.               (xv) No litigation, status, rule regulation, executive order, decree, ruling or injunctionshall have been enacted, entered, promulgated, or endorsed by or in any court or governmentalauthority of competent jurisdiction or any self-regulatory organization having authority over thematters contemplated hereby that prohibits the consummation of the transactions contemplated by theTransaction Documents.               (xvi) The Company shall have delivered to such Buyer such other documents relating to thetransactions contemplated by this Agreement as such Buyer or its counsel may reasonably request.          (b) The obligation of each Buyer hereunder to purchase the Additional Notes at the AdditionalClosing is subject to the satisfaction, at or before the Additional Closing Date, of each of thefollowing conditions, provided that these conditions are for each Buyer’s sole benefit and may bewaived by such Buyer at any time in its sole discretion by providing the Company with prior writtennotice thereof:               (i) The Company shall have duly executed and delivered to such Buyer: (A) the Additional Notes(in such principal amounts as such Buyer has agreed, and in the manner the Buyer may reasonably request, in accordance with Section 1 of this Agreement) beingpurchased by such Buyer at the Additional Closing pursuant to this Agreement and (B) each of theother Transaction Documents.
 

 
               (ii) Such Buyer shall have received the opinion of Baxter, Baker, Sidle, Conn & Jones, theCompany’s outside counsel, dated as of the Additional Closing Date, in substantially the form ofExhibit E-2 attached hereto.               (iii) The Company shall have delivered to such Buyer a copy of the Irrevocable Transfer AgentInstructions, in the form of Exhibit D-2 attached hereto, which instructions shall havebeen delivered to and acknowledged in writing by the Company’s transfer agent.               (iv) The Company shall have delivered to such Buyer a certificate evidencing the formation andgood standing of the Company and each of its domestic Subsidiaries in each such entity’sjurisdiction of formation issued by the Secretary of State (or comparable office) of suchjurisdiction, as of a date within 10 days of the Additional Closing Date.               (v) The Company shall have delivered to such Buyer a certificate evidencing the Company’squalification as a foreign corporation and good standing issued by the Secretary of State (orcomparable office) of each jurisdiction in which the Company, as applicable, conducts business, asof a date within 10 days of the Additional Closing Date.               (vi) The Company shall have delivered to such Buyer a certified copy of the Certificate ofIncorporation of the Company as certified by the Secretary of State of Delaware within ten (10)days of the Additional Closing Date.               (vii) The Company shall have delivered to such Buyer a certificate, executed by the Secretaryof the Company dated as of the Additional Closing Date, as to (i) the resolutions consistent withSection 3(b) as adopted by the Company’s Board of Directors in a form reasonably acceptable to suchBuyer, (ii) the Articles of Incorporation, as in effect at the Additional Closing and (iii) theBylaws, as in effect at the Additional Closing, in the form attached hereto as Exhibit F.               (viii) The representations and warranties of the Company shall be true and correct in allmaterial respects (except for those representations and warranties that are qualified bymateriality or Material Adverse Effect, which shall be true and correct in all respects) as of thedate when made and as of the Additional Closing Date as though made at that time (except forrepresentations and warranties that speak as of a specific date) and the Company shall haveperformed, satisfied and complied in all material respects with the covenants, agreements andconditions required by the Transaction Documents to be performed, satisfied or complied with by theCompany at or prior to the Additional Closing Date. Such Buyer shall have received a certificate,executed by the Chief Executive Officer of the Company, dated as of the Additional Closing Date, tothe foregoing effect and as to such other matters as may be reasonably requested by such Buyer inthe form attached hereto as Exhibit G.               (ix) The Company shall have delivered to such Buyer a letter from the Company’s transfer agentcertifying the number of shares of Common Stock outstanding as of a date within five days of theAdditional Closing Date.               (x) The Common Stock (i) shall be designated for quotation or listed on the Principal Marketand (ii) shall not have been suspended, as of the Additional Closing Date, by the SEC or thePrincipal Market from trading on the Principal Market nor shall suspension by the SEC or thePrincipal Market have been threatened, as of the Additional Closing Date, either (A) in writing bythe SEC or the Principal Market or (B) by falling below the minimum listing maintenancerequirements of the Principal Market.               (xi) The Company shall have obtained all governmental, regulatory or third party consents andapprovals, if any, necessary for the sale of the Securities.
 

 
               (xii) No litigation, status, rule regulation, executive order, decree, ruling or injunctionshall have been enacted, entered, promulgated, or endorsed by or in any court or governmentalauthority of competent jurisdiction or any self-regulatory organization having authority over thematters contemplated hereby that prohibits the consummation of the transactions contemplated by theTransaction Documents.               (xiii) The Company shall have delivered to such Buyer such other documents relating to thetransactions contemplated by this Agreement as such Buyer or its counsel may reasonably request.     8. TERMINATION.     In the event that the Initial Closing shall not have occurred with respect to a Buyer on orbefore five (5) Business Days from the date hereof due to the Company’s or such Buyer’s failure tosatisfy the conditions set forth in Sections 6(a) and 7(a) above (and the nonbreaching party’sfailure to waive such unsatisfied condition(s)), the nonbreaching party shall have the option toterminate this Agreement with respect to such breaching party at the close of business on such datewithout liability of any party to any other party; provided, however, that if thisAgreement is terminated pursuant to this Section 8 due to the failure of the Company to satisfy anyof the conditions to Initial Closing set forth in Section 7(a), the Company shall remain obligatedto reimburse the non-breaching Buyers for the expenses described in Section 4(g) above. In theevent of termination of this Agreement pursuant to this Section 8, this Agreement shall be null andvoid and all parties shall retain all rights, remedies, claims, and obligations as if thisAgreement had never been executed, except as provided otherwise in this Paragraph 8.     9. MISCELLANEOUS.          (a) Governing Law; Jurisdiction; Jury Trial. All questions concerning theconstruction, validity, enforcement and interpretation of this Agreement shall be governed by theinternal laws of the State of New York, without giving effect to any choice of law or conflict oflaw provision or rule (whether of the State of New York or any other jurisdictions) that wouldcause the application of the laws of any jurisdictions other than the State of New York. Each partyhereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting inThe City of New York, Borough of Manhattan, for the adjudication of any dispute hereunder or inconnection herewith or with any transaction contemplated hereby or discussed herein, and herebyirrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that itis not personally subject to the jurisdiction of any such court, that such suit, action orproceeding is brought in an inconvenient forum or that the venue of such suit, action or proceedingis improper. Each party hereby irrevocably waives personal service of process and consents toprocess being served in any such suit, action or proceeding by mailing a copy thereof to such partyat the address for such notices to it under this Agreement and agrees that such service shallconstitute good and sufficient service of process and notice thereof. Nothing contained hereinshall be deemed to limit in any way any right to serve process in any manner permitted by law. **EACHPARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FORTHE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT ORANY TRANSACTION CONTEMPLATED HEREBY.**          (b) Counterparts. This Agreement may be executed in two or more identicalcounterparts, all of which shall be considered one and the same agreement and shall becomeeffective when counterparts have been signed by each party and delivered to the other party;provided that a facsimile signature shall be considered due execution and shall be binding upon thesignatory thereto with the same force and effect as if the signature were an original, not afacsimile signature.          (c) Headings. The headings of this Agreement are for convenience of reference andshall not form part of, or affect the interpretation of, this Agreement.          (d) Severability. If any provision of this Agreement shall be invalid or unenforceablein any jurisdiction, such invalidity or unenforceability shall not affect the validity orenforceability of the remainder of this Agreement in that jurisdiction or the validity orenforceability of any provision of this Agreement in any other jurisdiction.
 

 
          (e) Entire Agreement; Amendments. This Agreement and the other Transaction Documentssupersede all other prior oral or written agreements between the Buyers, the Company, theiraffiliates and Persons acting on their behalf with respect to the matters discussed herein andtherein, and this Agreement, the other Transaction Documents and the instruments referenced hereincontain the entire understanding of the parties with respect to the matters covered herein andtherein and, except as specifically set forth herein or therein, neither the Company nor any Buyermakes any representation, warranty, covenant or undertaking with respect to such matters. Noprovision of this Agreement may be amended other than by an instrument in writing signed by the Company and the holders ofat least a majority of the aggregate principal amount of Notes issued and issuable hereunder, andany amendment to this Agreement made in conformity with the provisions of this Section 9(e) shallbe binding on all Buyers and holders of Securities, as applicable. No provision hereof may bewaived other than by an instrument in writing signed by the party against whom enforcement issought. No such amendment shall be effective to the extent that it applies to less than all of theholders of the applicable Securities then outstanding. No consideration shall be offered or paid toany Person to amend or consent to a waiver or modification of any provision of any of theTransaction Documents unless the same consideration also is offered to all of the parties to theTransaction Documents, holders of Notes or holders of the Warrants, as the case may be. The Companyhas not, directly or indirectly, made any agreements with any Buyers relating to the terms orconditions of the transactions contemplated by the Transaction Documents except as set forth in theTransaction Documents. Without limiting the foregoing, the Company confirms that, except as setforth in this Agreement, no Buyer has made any commitment or promise or has any other obligation toprovide any financing to the Company or otherwise.
 

 
          (f) Notices. Any notices, consents, waivers or other communications required orpermitted to be given under the terms of this Agreement must be in writing and will be deemed tohave been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent byfacsimile (provided confirmation of transmission is mechanically or electronically generated andkept on file by the sending party); or (iii) one Business Day after deposit with an overnightcourier service, in each case properly addressed to the party to receive the same. The addressesand facsimile numbers for such communications shall be:     Ifto the Company:  TheAllied Defense Group, Inc.  8000Towers Crescent Drive  Suite 260  Vienna,Virginia 22182  Telephone:  Facsimile: (703) 847-5268Attention:              With a copy (for informational purposes only) to:              Baxter, Baker, Sidle, Conn & Jones              Sun Trust Building              Suite 2100              120 E. Baltimore Street              Baltimore, Maryland 21202              Tel: (410) 230-8122              Fax: (410) 230-3801              Attention: James E. Baker, Jr., Esq.         If to the Transfer Agent:              Mellon Investor Services, LLC         85 Challenger Road         Ridgefield, New Jersey 07660  If to a Buyer, to its address and facsimile number set forth on the Schedule of Buyers, with copiesto such Buyer’s representatives as setforth on the Schedule of Buyers,     with a copy (for informational purposes only) to:    Schulte Roth & Zabel LLP 919 Third Avenue    New York, New York 10022 Telephone:   (212) 756-2000Facsimile:   (212) 593-5955Attention: Eleazer N. Klein, Esq.  or to such other address and/or facsimile number and/or to the attention of such other Person asthe recipient party has specified by written notice given to each other party five (5) days priorto the effectiveness of such change. Written confirmation of receipt (A) given by the recipient ofsuch notice, consent, waiver or other communication, (B) mechanically or electronically generatedby the sender’s facsimile machine containing the time, date, recipient facsimile number and animage of the first page of such transmission or (C) provided by an overnight courier service shallbe rebuttable evidence of personal service, receipt by facsimile or receipt from an overnightcourier service in accordance with clause (i), (ii) or (iii) above, respectively.          (g) Successors and Assigns. This Agreement shall be binding upon and inure to thebenefit of the parties and their respective successors and assigns, including any purchasers of theNotes or the Warrants. The Company shall not assign this Agreement or any rights or obligationshereunder without the prior written consent of the holders of at least a majority of the aggregateprincipal amount of Notes issued and issuable hereunder, including by way of a FundamentalTransaction (unless the Company is in compliance with the applicable provisions governingFundamental Transactions set forth in the Notes and the Warrants). A Buyer may assign some or allof its rights hereunder without the consent of the Company in which event such assignee shall bedeemed to be a Buyer hereunder with respect to such assigned rights.          (h) No Third Party Beneficiaries. This Agreement is intended for the benefit of theparties hereto and their respective permitted successors and assigns, and is not for the benefitof, nor may any provision hereof be enforced by, any other Person.          (i) Survival. Unless this Agreement is terminated under Section 8, the representationsand warranties of the Company and the Buyers contained in Sections 2 and 3 and the agreements andcovenants set forth in Sections 4, 5 and 9 shall survive the Closings. Each Buyer shall beresponsible only for its own representations, warranties, agreements and covenants hereunder.          (j) Further Assurances. Each party shall do and perform, or cause to be done andperformed, all such further acts and things, and shall execute and deliver all such otheragreements, certificates, instruments and documents, as any other party may reasonably request inorder to carry out the intent and accomplish the purposes of this Agreement and the consummation ofthe transactions contemplated hereby.
 

 
          (k) Indemnification. In consideration of each Buyer’s execution and delivery of theTransaction Documents and acquiring the Securities thereunder and in addition to all of theCompany’s other obligations under the Transaction Documents, the Company shall defend, protect,indemnify and hold harmless each Buyer and each other holder of the Securities and all of theirshareholders, partners, members, officers, directors, employees and direct or indirect investorsand any of the foregoing Persons’ agents or other representatives (including, without limitation,those retained in connection with the transactions contemplated by this Agreement) (collectively,the “**Indemnitees**”) from and against any and all actions, causes of action, suits, claims, losses,costs, penalties, fees, liabilities and damages, and expenses in connection therewith (irrespectiveof whether any such Indemnitee is a party to the action for which indemnification hereunder issought), and including reasonable attorneys’ fees and disbursements (the “**IndemnifiedLiabilities**”), incurred by any Indemnitee as a result of, or arising out of, or relating to (a) anyinaccuracy in any representation or warranty made by the Company in the Transaction Documents orany other certificate, instrument or document contemplated hereby or thereby, (b) any breach of anycovenant, agreement or obligation of the Company contained in the Transaction Documents or anyother certificate, instrument or document contemplated hereby or thereby or (c) any cause ofaction, suit or claim brought or made against such Indemnitee by a third party (including for thesepurposes a derivative action brought on behalf of the Company) and arising out of or resulting from(i) the execution, delivery, performance or enforcement of the Transaction Documents or any othercertificate, instrument or document contemplated hereby or thereby, (ii) any transaction financedor to be financed in whole or in part, directly or indirectly, with the proceeds of the issuance ofthe Securities, (iii) any disclosure made by such Buyer pursuant to Section 4(i), or (iv) thestatus of such Buyer or holder of the Securities as an investor in the Company pursuant to thetransactions contemplated by the Transaction Documents. To the extent that the foregoingundertaking by the Company may be unenforceable for any reason, the Company shall make the maximumcontribution to the payment and satisfaction of each of the Indemnified Liabilities that ispermissible under applicable law. Except as otherwise set forth herein, the mechanics andprocedures with respect to the rights and obligations under this Section 9(k) shall be the same as those setforth in Section 6 of the Registration Rights Agreement.          (l) No Strict Construction. The language used in this Agreement will be deemed to bethe language chosen by the parties to express their mutual intent, and no rules of strictconstruction will be applied against any party.          (m) Remedies. Each Buyer and each holder of the Securities shall have all rights andremedies set forth in the Transaction Documents and all rights and remedies which such holders havebeen granted at any time under any other agreement or contract and all of the rights which suchholders have under any law. Any Person having any rights under any provision of this Agreementshall be entitled to enforce such rights specifically (without posting a bond or other security),to recover damages by reason of any breach of any provision of this Agreement and to exercise allother rights granted by law. Furthermore, the Company recognizes that in the event that it fails toperform, observe, or discharge any or all of its obligations under the Transaction Documents, anyremedy at law may prove to be inadequate relief to the Buyers. The Company therefore agrees thatthe Buyers shall be entitled to seek temporary and permanent injunctive relief in any such casewithout the necessity of proving actual damages and without posting a bond or other security.          (n) Rescission and Withdrawal Right. Notwithstanding anything to the contrarycontained in (and without limiting any similar provisions of) the Transaction Documents, wheneverany Buyer exercises a right, election, demand or option under a Transaction Document and theCompany does not timely perform its related obligations within the periods therein provided, thensuch Buyer may rescind or withdraw, in its sole discretion from time to time upon written notice tothe Company, any relevant notice, demand or election in whole or in part without prejudice to itsfuture actions and rights.          (o) Payment Set Aside. To the extent that the Company makes a payment or payments tothe Buyers hereunder or pursuant to any of the other Transaction Documents or the Buyers enforce orexercise their rights hereunder or thereunder, and such payment or payments or the proceeds of suchenforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulentor preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid orotherwise restored to the Company, a trustee, receiver or any other Person under any law(including, without limitation, any bankruptcy law, federal or state, foreign law, common law orequitable cause of action), then to the extent of any such restoration the obligation or partthereof originally intended to be satisfied shall be revived and continued in full force and effectas if such payment had not been made or such enforcement or setoff had not occurred.          (p) Independent Nature of Buyers’ Obligations and Rights. The obligations of eachBuyer under any Transaction Document are several and not joint with the obligations of any otherBuyer, and no Buyer shall be responsible in any way for the performance of the obligations of anyother Buyer under any Transaction Document. Nothing contained herein or in any other TransactionDocument, and no action taken by any Buyer pursuant hereto or thereto, shall be deemed to constitute the Buyers as apartnership, an association, a joint venture or any other kind of entity, or create a presumptionthat the Buyers are in any way acting in concert or as a group with respect to such obligations orthe transactions contemplated by the Transaction Documents and the Company acknowledges that theBuyers are not acting in concert or as a group with respect to such obligations or the transactionscontemplated by the Transaction Documents. Each Buyer confirms that it has independentlyparticipated in the negotiation of the transaction contemplated hereby with the advice of its owncounsel and advisors. Each Buyer shall be entitled to independently protect and enforce its rights,including, without limitation, the rights arising out of this Agreement or out of any otherTransaction Documents, and it shall not be necessary for any other Buyer to be joined as anadditional party in any proceeding for such purpose.**[Signature Page Follows]**
 

 
     **IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signaturepage to this Amended and Restated Securities Purchase Agreement to be duly executed as of the datefirst written above.****COMPANY:**