EX-10.1






Exhibit 10.1




SECURITIES PURCHASE AGREEMENT




This Securities Purchase Agreement (this “Agreement”) is made and entered into as of
March 16, 2007 by and among DATATRAK International, Inc., an Ohio corporation (the
“Company”), and the purchaser(s) identified on the signature pages hereto (each a
“Purchaser” and collectively, the “Purchasers”).



WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to
Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”) and Rule 506
of Regulation D promulgated thereunder, the Company desires to offer, issue and sell to the
Purchasers (the “Offering”), and the Purchasers, severally and not jointly, desire to
purchase from the Company, in the aggregate, up to 1,986,322 shares (the “Shares”) of the
Company’s common shares, no par value per share (the “Common Shares”) (which in no event,
when combined with the Warrant Shares (as defined below) and the Common Shares underlying the
Placement Agent Warrants, shall exceed 19.99% of the Common Shares then outstanding), and five year
warrants to purchase Common Shares (the “Warrants”), with an exercise price per share equal
to $6.00. The Shares and the Warrants are collectively referred to herein as the
“Securities”.



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




	A.	 	Purchase and Sale





Subject to the terms and conditions set forth in this Agreement, at the Closing (as defined
below) the Company shall issue and sell to each Purchaser, and each Purchaser shall, severally and
not jointly, purchase from the Company, the number of Shares and the Warrants set forth on such
Purchaser’s signature page to this Agreement. The Closing shall take place at the offices of
Wilmer Cutler Pickering Hale and Dorr LLP, 399 Park Avenue, New York, New York 10022, on the
Closing Date or at such other location or time as the parties may agree (the “Closing”).
“Closing Date” means the business day on which all of the conditions set forth in Sections
G.1 and G.2 hereof are satisfied or waived, or such other date as the parties may agree.



At the Closing, each Purchaser shall deliver or cause to be delivered to the Company the
aggregate purchase price by wire transfer in same day funds to the account designated by the
Company on Schedule A(2) attached hereto, for the Securities to be purchased by such
Purchaser as set forth on the signature page of such Purchaser hereto (the “Investment
Amount”).



The Securities to be issued to a Purchaser hereunder shall consist of (i) Shares in an amount
equal to the quotient of (x) the Investment Amount, divided by (y) the Offering Price (as defined
below), rounded down to the nearest whole number, and (ii) a Warrant to purchase such number of
Common Shares to be determined based on a ratio of one (1) Warrant for every one (1) Common Share
purchased hereunder rounded down to the nearest whole number. The Company shall allocate the
Investment Amount between the Shares and the Warrants prior to the Closing and provide notice to
the Purchasers of such allocation. For purposes of this Agreement, the “Offering Price”
shall be $4.75, which shall be the price per Share to be paid by the Purchasers. Schedule
A(3), attached hereto, is a complete and accurate list of all Purchasers indicating the
investment amount and the number of Shares and Warrants for each Purchaser respectively.



At the Closing, (x) (i) the Company shall issue to each Purchaser stock certificates
representing the Common Shares purchased at the Closing under this Agreement, registered in the
name of such Purchaser; (ii) the Company shall issue to each Purchaser a Warrant to purchase such
number of Common Shares calculated based on the number of Common Shares issued at Closing and in
accordance with Paragraph (3) above and listed on such Purchaser’s signature page to this
Agreement; and (iii) the Company shall deliver to the Purchasers and to Robert W. Baird & Co.
Incorporated as the lead placement agent for the Offering (the “Lead Agent”), and to Roth
Capital Partners, LLC as the co-placement agent for the Offering (the “Co-Agent”),
collectively known as the placement agents (the “Placement Agents”), the following:



a certificate stating that the representations and warranties made by the Company in Section C
of this Agreement were true and correct in all material respects when made and are true and correct
in all material respects on the date of the Closing (in each case, other than those representations
and warranties qualified by materiality or Material Adverse Effect (as defined below), which shall
be true and correct in all respects) relating to the Securities purchased pursuant to this
Agreement as though made on and as of such Closing Date (provided, however, that representations
and warranties that speak as of a specific date shall continue to be true and correct as of the
Closing with respect to such date)



an opinion of Calfee, Halter & Griswold LLP in the form of Exhibit A hereto.



the Irrevocable Transfer Agent Instructions, in the form of Exhibit B attached hereto,
which instructions shall have been delivered to and acknowledged in writing by the Company’s
transfer agent.



for the Company and each of its operating Subsidiaries that are incorporated or organized
under the laws of a state of the United States of America, a certificate evidencing the
incorporation and good standing from such corporation’s state of incorporation issued by the
Secretary of State of such state of incorporation as of a date within 10 days of the Closing Date.



a certificate, executed by the Secretary of the Company and dated as of the Closing Date, as
to (i) the resolutions consistent with Section C(4) as adopted by the Company’s Board of Directors
in a form reasonably acceptable to such Purchaser, (ii) the Articles of Incorporation and (iii) the
Code of Regulations, each as in effect at the Closing, in the form attached hereto as Exhibit
C.



The obligations of the Company described in the foregoing clauses (i) through (iii) shall be
conditions precedent to each Purchaser’s obligation to complete the purchase of the Securities as
contemplated by this Agreement.



Each Purchaser acknowledges and agrees that the purchase of Securities by such Purchaser
pursuant to the Offering is subject to all the terms and conditions set forth in this Agreement.




	1.	 	Representations and Warranties of the Purchaser





Each Purchaser, severally and not jointly, hereby represents and warrants to the Company as of
the date hereof and as of the Closing Date, and agrees with the Company as follows:



The Purchaser has carefully read this Agreement and the form of Warrant attached hereto as
Exhibit D, and is familiar with and understands the terms of the Offering. The Purchaser
has also carefully read and considered the Company’s (a) Annual Report on Form 10-K for the fiscal
year ended December 31, 2005 (the “2005 Form 10-K”), including, without limitation, the
financial statements included therein and the sections therein entitled “Item 1. Business,” “Item
1A. Risk Factors”, and “Item 7. Management’s Discussion and Analysis of Financial Condition and
Results of Operations,” (b) Quarterly Reports on Form 10-Q for the quarters ended March 31, 2006,
June 30, 2006 and September 30, 2006, including, without limitation, the subsections of such Form
10-Q entitled “Part I — Item 1. Financial Statements,” “Part I — Item 2. Management’s Discussion
and Analysis of Financial Condition and Results of Operations” and “Part II – Item 1A. Risk
Factors,” (c) Current Reports on Form 8-K filed on February 17, 2006, May 1, 2006, May 10, 2006,
August 11, 2006, September 7, 2006, October 10, 2006, November 13, 2006 and February 22, 2007,
respectively and (d) Definitive Proxy Statement on Schedule 14A filed on April 28, 2006
(collectively, the items identified in subclauses (a) through (d) are referred to herein as the
“2006 SEC Filings”). In addition, the Purchaser has read and is familiar with the
Company’s unaudited financial statements for the quarter and year ended December 31, 2006 contained
in the Company’s Current Report on Form 8-K filed February 22, 2007 (the “Q4 Financials”),
along with other information provided by the Company (this Agreement, the form of Warrant, the
Transfer Agent Instructions and each of the other agreements entered into by the parties hereto in
connection with the transactions contemplated by this Agreement are, collectively, referred to
herein as the “Offering Documents”). The Purchaser fully understands all of the risks
related to the purchase of the Securities. The Purchaser has carefully considered and has
discussed with the Purchaser’s professional legal, tax, accounting and financial advisors, to the
extent the Purchaser has deemed necessary, the suitability of an investment in the Securities for
the Purchaser’s particular tax and financial situation and has determined that the Securities being
purchased by the Purchaser are a suitable investment for the Purchaser. The Purchaser recognizes
that an investment in the Securities involves substantial risks, including the possible loss of the
entire amount of such investment. The Purchaser further recognizes that the Company has broad
discretion concerning the use and application of the proceeds from the Offering.



The Purchaser acknowledges that (i) the Purchaser has had the opportunity to request copies of
any documents, records, and books pertaining to this investment and (ii) any such documents,
records and books that the Purchaser requested have been made available for inspection by the
Purchaser, the Purchaser’s attorney, accountant or other advisor(s). The Purchaser has requested,
received, reviewed and considered all information it deems relevant in making an informed decision
to purchase the Securities.



The Purchaser and the Purchaser’s advisor(s) have had a reasonable opportunity to ask
questions of and receive answers from representatives of the Company or persons acting on behalf of
the Company concerning the Company, the Offering and the Securities and all such questions have
been answered to the full satisfaction of the Purchaser.



Authority; Natural Person Purchaser. If the Purchaser is a natural person, the
Purchaser has reached the age of majority in the state in which the Purchaser resides. The
Purchaser has adequate means of providing for the Purchaser’s current financial needs and
contingencies, is able to bear the substantial economic risks of an investment in the Securities
for an indefinite period of time, has no need for liquidity in such investment and can afford a
complete loss of such investment.



Experience of the Purchaser. The Purchaser has sufficient knowledge and experience in
financial, tax and business matters to enable the Purchaser to utilize the information made
available to the Purchaser in connection with the Offering, to evaluate the merits and risks of an
investment in the Securities and to make an informed investment decision with respect to an
investment in the Securities on the terms described in the Offering Documents. The Purchaser has
independently evaluated the merits and risks of its decision to purchase Securities pursuant to the
Offering Documents, and the Purchaser confirms that it has not relied on the advice of the
Company’s or any other Purchaser’s business and/or legal counsel in making such decision. Such
Purchaser has not relied on the business or legal advice of the Placement Agents, or any of their
respective agents, counsel or affiliates in making its investment decision hereunder, and confirms
that none of such persons has made any representations or warranties to such Purchaser in
connection with the transactions contemplated by the Offering Documents.



Investment Intent. The Purchaser will not sell or otherwise transfer the Securities
without registration under the Securities Act and applicable state securities laws or an applicable
exemption therefrom. The Purchaser acknowledges that neither the offer nor sale of the Securities
has been registered under the Securities Act or under the securities laws of any state. The
Purchaser represents and warrants that the Purchaser is acquiring the Securities for the
Purchaser’s own account, for investment purposes and not with a view toward resale or distribution
within the meaning of the Securities Act, except pursuant to sales registered or exempted under the
Securities Act. The Purchaser is acquiring the Securities in the ordinary course of business. The
Purchaser has not offered or sold, the Securities being acquired nor does the Purchaser have any
present intention of selling, distributing or otherwise disposing of such Securities either
currently or after the passage of a fixed or determinable period of time or upon the occurrence or
non-occurrence of any predetermined event or circumstances in violation of the Securities Act. The
Purchaser is aware that (i) the Securities are not currently eligible for sale in reliance upon
Rule 144 promulgated under the Securities Act and (ii) the Company has no obligation to register
the Securities purchased hereunder, except as provided in Section E hereof. By making these
representations herein, the Purchaser is not making any representation or agreement to hold the
Securities for any minimum or other specific term and reserves the right to dispose of the
Securities at any time in accordance with or pursuant to a registration statement or an available
exemption to the registration requirements of the Securities Act.



Transfer Restrictions. The Purchaser understands that except as provided in Section E
hereof: (i) The Securities have not been and are not being registered under the Securities Act or
any state securities laws, and may not be offered for sale, sold, assigned or transferred unless
(A) subsequently registered thereunder, (B) the Purchaser shall have delivered to the Company an
opinion of counsel, in a form reasonably acceptable to the Company, to the effect that such
Securities to be sold, assigned or transferred may be sold, assigned or transferred pursuant to an
exemption from such registration, or (C) the Purchaser provides the Company with reasonable
assurance that such Securities can be sold, assigned or transferred pursuant to Rule 144 or Rule
144A promulgated under the Securities Act, as amended, (or a successor rule thereto) (collectively,
“Rule 144”); (ii) any sale of the Securities made in reliance on Rule 144 may be made only
in accordance with the terms of Rule 144 and further, if Rule 144 is not applicable, any resale of
the Securities under circumstances in which the seller (or the Person through whom the sale is
made) may be deemed to be an underwriter (as that term is defined in the Securities Act) may
require compliance with some other exemption under the Securities Act or the rules and regulations
of the Securities and Exchange Commission (the “SEC”), thereunder; and (iii) neither the
Company nor any other Person is under any obligation to register the Securities under the
Securities Act or any state securities laws or to comply with the terms and conditions of any
exemption thereunder. Notwithstanding the foregoing, the Securities may be pledged in connection
with a bona fide margin account or other loan secured by the Securities to a financial institution
that is an “accredited investor” under Rule 501(a) under the Securities Act. Such pledge of
Securities shall not be deemed to be a transfer, sale or assignment of the Securities hereunder,
and no Purchaser effecting a pledge of Securities shall be required to provide the Company with any
notice thereof or otherwise make any delivery to the Company pursuant to this Agreement or any
other Offering Document, including, without limitation, this Section (B)(8); provided, that in
order to make any sale, transfer or assignment of Securities, the Purchaser and its pledgee makes
such disposition in accordance with or pursuant to a registration statement or an exemption under
the Securities Act.



Legend. The Purchaser acknowledges that the certificates representing the Shares, the
Warrants and, upon the exercise of the Warrants, the Common Shares issuable upon exercise of the
Warrants (the “Warrant Shares”), shall bear any legend required by the securities laws of
any state and be stamped or otherwise imprinted with a legend substantially in the following form:



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



The legend set forth above shall be removed and the Company shall issue a certificate without such
legend to the holder of the Securities upon which it is stamped or issue to such holder by
electronic delivery at the applicable balance account at The Depository Trust Company
(“DTC”), if, unless otherwise required by state securities laws, (i) such Securities are
registered for resale under the Securities Act, (ii) in connection with a sale, assignment or other
transfer, such holder provides the Company with an opinion of counsel reasonably satisfactory to
the Company, in a generally acceptable form, to the effect that such sale, assignment or transfer
of the Securities may be made without registration under the applicable requirements of the
Securities Act and that such legend is no longer required, or (iii) such holder provides the
Company with reasonable assurance that the Securities can be sold, assigned or transferred pursuant
to Rule 144 or Rule 144A, and such holder delivers the legended Securities to the Company or the
Company’s transfer agent. If the Company shall fail for any reason or for no reason to issue to
the holder of the Securities within three (3) Trading Days (as defined below) (after the occurrence
of any of (i) through (iii) above, a certificate without such legend to the holder or to issue such
Securities to such holder by electronic delivery at the applicable balance account at DTC, and if
on or after such Trading Day the holder purchases (in an open market transaction or otherwise)
Common Shares to deliver in satisfaction of a sale by the holder of such Securities that the holder
anticipated receiving without legend from the Company (a “Buy-In”), then the Company shall,
within three (3) Business Days after the holder’s request and in the holder’s discretion, either
(i) pay cash to the holder in an amount equal to the holder’s total purchase price (including
brokerage commissions, if any) for the Common Shares so purchased (the “Buy-In Price”), at
which point the Company’s obligation to deliver such unlegended Securities shall terminate, or (ii)
promptly honor its obligation to deliver to the holder such unlegended Securities as provided above
and pay cash to the holder in an amount equal to the excess (if any) of the Buy-In Price over the
product of (A) such number of Common Shares, times (B) the Closing Bid Price (as defined in the
Warrant) on the date of exercise.



Authority; Entity Purchaser. If this Agreement is executed and delivered on behalf of
a partnership, corporation, trust, estate or other entity: (i) such partnership, corporation,
trust, estate or other entity is duly organized and validly existing and has the full legal right
and power and all authority and approval required (a) to execute and deliver this Agreement and all
other instruments executed and delivered by or on behalf of such partnership, corporation, trust,
estate or other entity in connection with the purchase of its Securities, and (b) to purchase and
hold such Securities; (ii) the signature of the party signing on behalf of such partnership,
corporation, trust, estate or other entity is binding upon such partnership, corporation, trust,
estate or other entity; and (iii) such partnership, corporation, trust or other entity has not been
formed for the specific purpose of acquiring such Securities, unless each beneficial owner of such
entity is qualified as an accredited investor within the meaning of Rule 501(a) of Regulation D
promulgated under the Securities Act and has submitted information to the Company substantiating
such individual qualification.



Authority; Retirement Plan Purchaser. If the Purchaser is a retirement plan or is
investing on behalf of a retirement plan, the Purchaser acknowledges that an investment in the
Securities poses additional risks, including the inability to use losses generated by an investment
in the Securities to offset taxable income.



Purchaser Questionnaire. The information contained in the purchaser questionnaire in
the form of Exhibit E attached hereto (the “Purchaser Questionnaire”) delivered by
the Purchaser in connection with this Agreement is complete and accurate in all material respects
as of the date hereof and as of the Closing. The Purchaser is an “accredited investor” as defined
in Rule 501(a) of Regulation D under the Securities Act on the basis indicated therein and is a
resident of the jurisdiction set forth therein. The Purchaser is not required to be a registered
broker-dealer under Section 15 of the Exchange Act. The information contained in the selling
shareholder questionnaire in the form of Exhibit F attached hereto (the “Selling
Shareholder Questionnaire”) delivered by the Purchaser in connection with this Agreement is
complete and accurate in all material respects. The Purchaser will notify the Company promptly of
any changes in any such information contained in such Purchaser’s Selling Shareholder Questionnaire
until such time as the Purchaser has sold all of its Securities or until the Company is no longer
required to keep the Registration Statement effective, except to the extent that such changed
information is not required under the Securities Act to be disclosed in an amendment or supplement
to the Registration Statement.



The Purchaser acknowledges that the Company will have the authority to issue Common Shares, in
excess of those being issued in connection with the Offering, and that the Company may issue
additional Common Shares from time to time. The issuance of additional Common Shares may cause
dilution of the existing Common Shares and a decrease in the market price of such existing shares.



Placement Agent Acknowledgement. The Purchaser acknowledges that the Company has
engaged the Placement Agents in connection with the Offering and, as consideration for its
services, has agreed to pay the Lead Agent an aggregate cash commission equal to 5.2% of the gross
proceeds resulting from the Offering, and the Co-Agent an aggregate cash commission equal to 1.3%
of the gross proceeds resulting from the Offering, and to reimburse the Placement Agents for
certain of their expenses incurred in connection with the Offering, and to issue warrants (the
“Placement Agent Warrants”) to purchase an aggregate number of Common Shares equal to 1.5%
of the aggregate Shares sold in the Offering. The Placement Agent Warrants will have a term of
five years and will be exercisable at a price equal to $6.00.



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



No Governmental Endorsement or Approval. The Purchaser understands that no United
States federal or state agency or any other government or governmental agency has passed on or made
any recommendation or endorsement of the Securities or the fairness or suitability of the
investment in the Securities nor have such authorities passed upon or endorsed the merits of the
offering of the Securities.



Compliance with Law. This Agreement has been duly and validly authorized, executed
and delivered on behalf of the Purchaser and shall constitute the legal, valid and binding
obligations of such Purchaser enforceable against the Purchaser in accordance its terms.



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



No Control Share Purchase Intent. The purchase by the Purchaser of the Securities
issuable to it at the Closing will not result in such Purchaser (individually or together with any
other Person with whom such Purchaser has identified, or will have identified, itself as part of a
“group” in a public filing made with the SEC involving the Company’s securities) acquiring, or
obtaining the right to acquire, in excess of 9.99% of the outstanding Common Shares or the voting
power of the Company on a post transaction basis that assumes that the Closing shall have occurred.
As of the Closing Date, such Purchaser does not presently intend to, alone or together with
others, make a public filing with the SEC to disclose that it has (or that it together with such
other Persons have) acquired, or obtained the right to acquire, as a result of the Closing (when
added to any other securities of the Company that it or they then own or have the right to
acquire), in excess of 9.99% of the outstanding Common Shares or the voting power of the Company on
a post transaction basis that assumes that the Closing shall have occurred.



Brokers. Other than fees payable to the Placement Agents by the Company, the
Purchaser has not entered into any agreement or arrangement that would entitle any broker or finder
to compensation by the Company in connection with the sale of the Securities to such Purchaser.



Short Sales. Other than the transactions contemplated hereunder, the Purchaser has
not, directly or indirectly, nor has any Person acting on behalf of or pursuant to any
understanding with such Purchaser, executed any disposition, including Short Sales, in the
securities of the Company since the earlier of the time that such Purchaser became aware of or was
first contacted by the Company or the Placement Agents regarding an investment in the Company (such
time, the “Discussion Time”). Such Purchaser covenants that neither it nor any Person
acting on its behalf or pursuant to any understanding with it will engage in any transactions in
the securities of the Company (including Short Sales) prior to the time that the transactions
contemplated by this Agreement are publicly disclosed. “Short Sales” include, without
limitation, all “short sales” as defined in Rule 200 promulgated under Regulation SHO under the
Exchange Act and all types of direct and indirect share pledges, forward sale contracts, options,
puts, calls, swaps and similar arrangements (including on a total return basis), and sales and
other transactions through non-US broker dealers or foreign regulated brokers. Each Purchaser
understands and acknowledges, that the SEC currently takes the position that coverage of Short
Sales “against the box” prior to the Effective Date of the Registration Statement is a violation of
Section 5 of the Securities Act, as set forth in Item 65, Section A, of the Manual of Publicly
Available Telephone Interpretations, dated July 1997, compiled by the Office of Chief Counsel,
Division of Corporation Finance. Notwithstanding the foregoing, in the case of a Purchaser that is
a multimanaged investment vehicle whereby separate portfolio managers manage separate portions of
such Purchaser’s assets, the representation and covenant set forth above shall only apply with
respect to the portion of assets managed by the portfolio manager that made the investment decision
to purchase the Securities covered by this agreement.




	2.	 	Representations and Warranties of the Company





The Company hereby makes the following representations and warranties, as of the date hereof
and as of the Closing Date, to the Purchasers:



Organization, Good Standing and Qualification. Each of the Company and its
"Subsidiaries” (which for purposes of this Agreement means any entity (i) in which the
Company, directly or indirectly, owns capital stock or holds an equity or similar interest and (ii)
which has operations and material assets) are corporations duly organized and validly existing in
good standing under the laws of the jurisdiction in which they are incorporated, and have the
requisite corporate power and 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
corporation to do business and is in good standing in every jurisdiction in which its ownership of
property or the nature of the business conducted by it makes such qualification necessary, except
to the extent that the failure to be so qualified or be in good standing would not have a Material
Adverse Effect. As used in this Agreement, “Material Adverse Effect” means any material
adverse effect on the business, properties, assets, operations, results of operations, condition
(financial or otherwise) or prospects of the Company and its Subsidiaries, taken as a whole, or on
the transactions contemplated hereby and the other Offering Documents or by the agreements and
instruments to be entered into in connection herewith or therewith, or on the authority or ability
of the Company to perform its obligations under the Offering Documents (as defined below). The
Company has no Subsidiaries except as set forth on Schedule C(1) attached hereto.



Capitalization. The authorized capital stock of the Company consists of 25,000,000
Common Shares and 1,000,000 serial preferred shares, no par value per share. As of February 28,
2007, there were 11,576,115 Common Shares and no preferred shares issued and outstanding. As of
February 28, 2007, the Company had reserved (i) 1,997,701 Common Shares for issuance to employees,
directors and consultants pursuant to the Company’s Amended and Restated 1994 Directors’ Share
Option Plan, Amended and Restated 1996 Outside Directors’ Stock Option Plan, as amended, Amended
and Restated Outside Director Stock Option Plan, Amended and Restated 1996 Key Employees’ and
Consultants Stock Option Plan and 2005 Omnibus Equity Plan, of which 1,338,651 Common Shares are
subject to outstanding, unexercised options as of such date, and which include options to purchase
367,099 Common Shares that are not expected to be issued in the future, and (ii) 157,079 Common
Shares for issuance pursuant to other outstanding options and warrants to purchase Common Shares.
Other than the Placement Agent Warrants and as otherwise set forth above or as contemplated in this
Agreement, (a) there are no other options, warrants, calls, rights, commitments or agreements of
any character to which the Company or any of its Subsidiaries is a party or by which either the
Company or any of its Subsidiaries or any of its Subsidiaries is bound or obligating the Company or
any of its Subsidiaries to issue, deliver, sell, repurchase or redeem, or cause to be issued,
delivered, sold, repurchased or redeemed, any shares of the capital stock of the Company or any of
its Subsidiaries or obligating the Company or any of its Subsidiaries to grant, extend or enter
into any such option, warrant, call, right, commitment or agreement and (b) the issuance and sale
of the Securities contemplated hereby will not give rise to any preemptive rights, rights of first
refusal or other similar rights on behalf of any person.



Issuance; Reservation of Shares. The issuance of the Shares has been duly and validly
authorized by all necessary corporate action and no further action is required by the Company or
its shareholders in connection therewith. The Shares, when issued and paid for pursuant to this
Agreement, will be validly issued, fully paid and non-assessable Common Shares of the Company. The
issuance of the Warrants and the Warrant Shares have been duly and validly authorized by all
necessary corporate action and no further action is required by the Company or its shareholders in
connection therewith. The Warrant Shares, when issued and paid for upon the due exercise of the
Warrants, will be validly issued, fully paid and non assessable Common Shares of the Company. The
issuance of the Securities and the Warrant Shares will not result in the right of any holder of
any securities of the Company to adjust the exercise, conversion, exchange or reset price under
such securities. The Company has reserved, and will reserve, at all times that the Warrants remain
outstanding, such number of Common Shares sufficient to enable the full exercise of the Warrants.



Authorization; Enforceability. The Company has all corporate right, power and
authority to enter into this Agreement and to consummate the transactions contemplated hereby. All
corporate action on the part of the Company necessary for the authorization, execution, delivery
and performance of this Agreement by the Company has been taken and no further action is required
by the Company or its shareholders in connection therewith. This Agreement has been (or upon
delivery will have been) duly executed by the Company and, when delivered in accordance with the
terms hereof, will constitute the legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms except as such enforceability may be limited by
general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally, the enforcement of applicable
creditors’ rights and remedies.



No Conflict; Governmental and Other Consents.



The execution and delivery by the Company of this Agreement and the Warrants and the
consummation of the transactions contemplated hereby and thereby will not (i) result in the
violation of any law, statute, rule, regulation, order, writ, injunction, judgment or decree of any
court or governmental authority to or by which the Company or any of its Subsidiaries is bound
(including federal and state securities laws and regulations and the rules and regulations of the
Nasdaq Capital Market (“Nasdaq”)), or (ii) result in the violation of any provision of the
Articles of Incorporation or Code of Regulations of the Company or any of its Subsidiaries, and
will not conflict with, or (iii) result in a breach or violation of, any of the terms or provisions
of, or constitute (with due notice or lapse of time or both) a default under or give to others any
rights of termination, amendment, acceleration or cancellation of, any material lease, loan
agreement, mortgage, security agreement, trust indenture or other agreement or instrument to which
the Company or any of its Subsidiaries is a party or by which it is bound or to which any of its
properties or assets is subject, nor result in the creation or imposition of any lien upon any of
the properties or assets of the Company or any of its Subsidiaries, except in the case of clauses
(i) and (iii) to the extent that any such violation, conflict, default or breach would not be
reasonably likely to have a Material Adverse Effect. No holder of any of the securities of the
Company or any of its Subsidiaries has any rights (“demand,” “piggyback” or otherwise) to have such
securities registered by reason of the intention to file, filing or effectiveness of a Registration
Statement (as defined in Section E hereof), other than (i) those filed by the Company under the
Securities Act on Form S-3 (SEC File No. 333-121993); (ii) that certain Registration Rights
Agreement, dated February 13, 2006, between the Company and the individuals listed on Exhibit
A attached thereto, (iii) the registration rights of the other Purchasers purchasing Securities
in the Offering; and (iv) the registration rights of the Placement Agents provided in the Placement
Agent Warrants. The Company is eligible to register its Shares and Common Shares issuable upon
exercise of the Warrants for resale by the Purchasers on Form S-3 promulgated under the Securities
Act.



Subject to the accuracy of the representations and warranties of each Purchaser party hereto,
no consent, approval, authorization or other order of any governmental authority or other
third-party is required to be obtained by the Company or any of its Subsidiaries in connection with
the authorization, execution and delivery of this Agreement or with the authorization, issue and
sale of the Securities, except such pre-Closing filings which may have to be made with certain
state authorities and such post-Closing filings as may be required to be made with the SEC, and
with any state or foreign blue sky or securities regulatory authority. The Company is not in
violation of the listing requirements of Nasdaq in any material respect and has not received any
notice from Nasdaq asserting any non-compliance which has not been resolved prior to the date of
this Agreement.



Litigation. Except as disclosed in the SEC Reports, there are no pending or, to the
Company’s knowledge, threatened legal or governmental proceedings against the Company or any of its
Subsidiaries or any of their respective officers or directors, which, if adversely determined,
would individually or in the aggregate be reasonably likely to have a Material Adverse Effect on
the Company. There is no action, suit, proceeding, inquiry or investigation before or by any
court, public board or body (including, without limitation, the SEC or Nasdaq) pending or, to the
knowledge of the Company, threatened against or affecting the Company or any of its Subsidiaries or
any of their respective officers or directors, wherein an unfavorable decision, ruling or finding
could adversely affect the validity or enforceability of, or the authority or ability of the
Company to perform its obligations under this Agreement. Neither the Company nor any Subsidiary,
nor any director or officer thereof (in his or her capacity as such), is or has been the subject of
any action involving a claim or violation of or liability under federal or state securities laws or
a claim of breach of fiduciary duty, except as specifically disclosed in the SEC Reports. The SEC
has not issued any stop order or other order suspending the effectiveness of any registration
statement filed by the Company or any Subsidiary under the Exchange Act or the Securities Act.



Accuracy of Reports. All reports required to be filed or furnished by the Company
during the two years preceding the date hereof (the “SEC Reports”) under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), have been timely filed or furnished
with the SEC, complied at the time of filing or furnishing in all material respects with the
requirements of their respective forms and, except to the extent any such SEC Report has been
updated or superseded prior to the date of this Agreement by any subsequently filed or furnished
report, were complete and correct in all material respects as of the dates at which the information
was furnished, and contained (as of such dates) no untrue statements of a material fact nor omitted
to state any material fact necessary in order to make the statements contained therein, in light of
the circumstances under which they were made, not misleading. The Company has delivered to the
Purchaser or its representatives true, correct and complete copies of any SEC Documents requested
by Purchaser not available on the EDGAR system. None of the statements made in any such SEC Report
is, or has been, required to be amended or updated under applicable law (except for such statements
as have been amended or updated in subsequent filings made prior to the date hereof). As of their
respective dates, the financial statements of the Company included in the SEC Reports complied in
all material respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto in effect as of the time of filing.



Financial Information. The Company’s financial statements that appear in the SEC
Reports were been prepared in accordance with United States generally accepted accounting
principles (“GAAP”), except in the case of unaudited statements, as permitted by Form 10-Q
of the SEC or as may be indicated therein or in the notes thereto, applied on a consistent basis
throughout the periods indicated and such financial statements fairly present in all material
respects the financial condition and results of operations and cash flows of the Company as of the
dates and for the periods indicated therein (subject, in the case of unaudited statements, to
normal year-end audit adjustments).



Accounting and Disclosure Controls. The Company maintains a system of internal
control over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act)
that complies with the requirements of the Exchange Act and has been designed by the Company’s
principal executive officer and principal financial officer, or under their supervision, to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting
principles. Except as disclosed in the SEC Reports, the Company’s internal control over financial
reporting is effective and the Company is not aware of any material weaknesses in its internal
control over financial reporting. The Company and each of its Subsidiaries maintain disclosure
controls and procedures (as such term is defined in Rule 13a-15 under the Exchange Act) that are
effective in ensuring that information required to be disclosed by the Company in the reports that
it files or submits under the Exchange Act is recorded, processed, summarized and reported, within
the time periods specified in the rules and forms of the SEC, including, without limitation,
controls and procedures designed to ensure that information required to be disclosed by the Company
in the reports that it files or submits under the Exchange Act is accumulated and communicated to
the Company’s management, including its principal executive officer or officers and its principal
financial officer or officers, as appropriate, to allow timely decisions regarding required
disclosure.



Sarbanes-Oxley Act of 2002. The Company is in compliance with all applicable material
provisions of the Sarbanes-Oxley Act of 2002 and all rules and regulations promulgated thereunder
or is implementing the provisions thereof that are in effect and is taking reasonable steps to
ensure that it will be in compliance with other applicable provisions of the Sarbanes-Oxley Act of
2002 not currently in effect upon the effectiveness of such provisions.



Absence of Certain Changes. Since the date of the Company’s financial statements in
the latest of the SEC Reports, (i) there has not occurred any undisclosed event that individually
or in the aggregate has caused a Material Adverse Effect or any occurrence, circumstance or
combination thereof that reasonably would be likely to result in a Material Adverse Effect, (ii)
neither the Company nor any of its Subsidiaries have incurred any material liabilities (contingent
or otherwise) other than (A) trade payables and accrued expenses incurred in the ordinary course of
business and (B) liabilities that would not be required to be reflected in the Company’s financial
statements pursuant to GAAP or that would not be required to be disclosed in filings made with the
Commission, (iii) neither the Company nor any of its Subsidiaries have (A) declared or paid any
dividends, (B) amended or changed the Articles of Incorporation or Code of Regulations of the
Company or its Subsidiaries, or (C) altered its method of accounting or the identity of its
auditors and (iv) made a material change in officer compensation except in the ordinary course of
business consistent with past practice.



Investment Company. The Company is not an “investment company” within the meaning of
such term under the Investment Company Act of 1940, as amended, and the rules and regulations of
the SEC thereunder.



Subsidiaries. The Company has no direct or indirect Subsidiaries other than as
specified in the SEC Reports. The Company owns, directly or indirectly, all of the capital stock of
each Subsidiary free and clear of any and all liens, and all the issued and outstanding shares of
capital stock of each Subsidiary are validly issued, fully paid and non-assessable (where such
concepts are legally applicable) and free of preemptive and similar rights.



Certain Fees. Other than fees payable to the Placement Agents (for which the
Company shall be responsible), no brokers’, finders’ or financial advisory fees or commissions
will be payable by the Company with respect to the transactions contemplated by this Agreement.



Material Agreements. All material agreements to which the Company or any of its
Subsidiaries is a party or to which its property or assets are subject that are required to be
filed as exhibits to the SEC Reports under Item 601 of Regulation S-K are included as part of, or
specifically identified in, the SEC Reports. Neither the Company nor any of its Subsidiaries have
received any notice of default by the Company or any of its Subsidiaries, and, to the Company’s
knowledge, neither the Company nor any of its Subsidiaries is in default under, any such material
agreement now in effect, the result of which would individually or in the aggregate be reasonably
likely to have a Material Adverse Effect.



Transactions with Affiliates. Except as set forth in the SEC Reports, none of the
officers, directors or employees of the Company or any of its Subsidiaries is presently a party to
any transaction with the Company or any of its Subsidiaries (other than for ordinary course
services as employees, officers or directors), including any contract, agreement or other
arrangement providing for the furnishing of services to or by, providing for rental of real or
personal property to or from, or otherwise requiring payments to or from any such officer, director
or employee or, to the knowledge of the Company, 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.



Taxes. The Company and each of its Subsidiaries (i) has made or filed all federal and
state income and all other tax returns, reports and declarations required by any jurisdiction to
which it is subject, (ii) has paid all taxes and other governmental assessments and charges that
are material in amount, shown or determined to be due on such returns, reports and declarations,
except those being contested in good faith and (iii) has set aside on its books provision
reasonably adequate for the payment of all taxes for periods subsequent to the periods to which
such returns, reports or declarations apply. There are no unpaid taxes in any material amount
claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company know
of no basis for any such claim.



Insurance. The Company and its Subsidiaries are insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts as the Company believes
are prudent and customary in the businesses in which the Company and its Subsidiaries is engaged.
The Company has no reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage from similar insurers as
may be necessary to continue its business without an increase in cost significantly greater than
general increases in cost experienced for similar companies in similar industries with respect to
similar coverage.



Intellectual Property Rights and Licenses. Except as set forth on Schedule C(19), and
except as disclosed in SEC Reports, the Company and its Subsidiaries owns or possesses adequate
licenses to use, any and all information, know-how, trade secrets, patents, copyrights, trademarks,
service marks, trade names, domain names, software, formulae, methods, processes and other
intangible properties that are of a such nature and significance to the business of the Company and
its Subsidiaries (“Intangible Rights”). Except as disclosed in the SEC Reports, neither the
Company nor any of its Subsidiaries have received any notice that it is in conflict with or
infringing upon the asserted intellectual property rights of others in connection with the
Intangible Rights, and, to the Company’s knowledge, neither the use of the Intangible Rights nor
the operation of the Company’s or any of its Subsidiary’s businesses is infringing or has infringed
upon any intellectual property rights of others. All payments have been duly made that are
necessary to maintain the Intangible Rights in force. No claims have been made, and to the
Company’s knowledge, no claims are threatened, that challenge the validity or scope of any material
Intangible Right of the Company or any of its Subsidiaries. The Company and each of its
Subsidiaries have taken reasonable steps to obtain and maintain in force all licenses and other
permissions under Intangible Rights of third parties necessary to conduct their businesses as
heretofore conducted by them, and now being conducted by them, and the Company and each of its
Subsidiaries are not or have not been in material breach of any such license or other permission.



Compliance with Law; Foreign Corrupt Practices. The Company and each of its
Subsidiaries is in compliance with all applicable laws, except for such noncompliance that
individually or in the aggregate would not reasonably be likely to have a Material Adverse Effect.
Neither the Company nor any of its Subsidiaries have received any notice of, nor does the Company
have any knowledge of, any violation (or of any investigation, inspection, audit or other
proceeding by any governmental entity involving allegations of any violation) of any applicable law
involving or related to the Company or any of its Subsidiaries which has not been dismissed or
otherwise disposed of that individually or in the aggregate would be reasonably likely to have a
Material Adverse Effect. Neither the Company nor any of its Subsidiaries have received notice or
otherwise have any knowledge that the Company is charged with, threatened with or under
investigation with respect to, any violation of any applicable law that individually or in the
aggregate would reasonably be likely to have a Material Adverse Effect. Neither the Company nor
any of its Subsidiaries nor, to the knowledge of the Company, any employee or agent of the Company
or any Subsidiary has, in the course of its actions for, or on behalf of, the Company (i) used any
corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses
relating to political activity; (ii) made any direct or indirect unlawful payment to any foreign or
domestic government official or employee from corporate funds; (iii) violated or is in violation of
any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any
unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any
foreign or domestic government official or employee.



Ownership of Property. Except as set forth in the Company’s financial statements
included in the SEC Reports, the Company and each of its Subsidiaries has (i) good and marketable
fee simple title to its owned real property, if any, free and clear of all liens, except for liens
which do not individually or in the aggregate have a Material Adverse Effect; (ii) a valid
leasehold interest in all leased real property, and each of such leases is valid and enforceable in
accordance with its terms (subject to laws of general application relating to bankruptcy,
insolvency and the relief of debtors and rules of law governing specific performance, injunctive
relief or other equitable remedies, and to limitations of public policy), except as would not be
reasonably likely to have a Material Adverse Effect; and (iii) good title to, or valid leasehold
interests in, all of its other material properties and assets free and clear of all liens, except
for liens disclosed in the SEC Reports or which otherwise do not individually or in the aggregate
have a Material Adverse Effect.



No Integrated Offering. None of the Company, its Subsidiaries, any of their
affiliates, and any Person acting on their behalf has, directly or indirectly, made any offers or
sales of any security or solicited any offers to buy any security, under circumstances that would
require registration of any of the Securities under the Securities Act or cause this offering of
the Securities to be integrated with prior offerings by the Company for purposes of the Securities
Act or any applicable stockholder approval provisions, including, without limitation, under the
rules and regulations of any exchange or automated quotation system on which any of the securities
of the Company are listed or designated. None of the Company, its Subsidiaries, their affiliates
and any Person acting on their behalf will take any action or steps referred to in the preceding
sentence that would require registration of any of the Securities under the Securities Act or cause
the offering of the Securities to be integrated with other offerings.



No General Solicitation. Neither the Company nor its Subsidiaries, nor, to the
Company’s knowledge, any person acting on behalf of the Company or any of its Subsidiaries, has
offered or sold any of the Securities by any form of “general solicitation” within the meaning of
Rule 502 under the Securities Act. To the Company’s knowledge, no person acting on its behalf has
offered the Securities for sale other than to the Purchasers and certain other “accredited
investors” within the meaning of Rule 501 under the Securities Act.



No Registration. Subject to the accuracy of the representations and warranties made
by, and compliance with the covenants of, the Purchasers in Section B hereof, no registration of
the Securities under the Securities Act is required in connection with the offer and sale of the
Securities by the Company to the Purchasers pursuant to this Agreement.



No Brokers. Except with respect to the Placement Agreements, neither the Company nor
any Subsidiary of the Company has taken action that would give rise to any claim by any person for
brokerage commissions, finder’s fees or similar payments in connection with the transactions
contemplated by this Agreement and neither the Company nor any of the Subsidiaries has incurred, or
shall incur, directly or indirectly, any liability for any claim for brokerage commissions,
finder’s fees or similar payments in connection with this Agreement or the Offering Documents or
any transaction contemplated hereby or thereby. The Company shall be responsible for the payment
of any placement agent’s fees, financial advisory fees, or brokers’ commissions (other than for
persons engaged by any Purchaser or its investment advisor) relating to or arising out of the
transactions contemplated hereby. The Company shall pay, and hold each Purchaser harmless against,
any liability, loss or expense (including, without limitation, attorney’s fees and out-of-pocket
expenses) arising in connection with any such claim.



Application of Takeover Protections. The Company and its board of directors have
taken all necessary action, if any, in order to render inapplicable any control share acquisition,
business combination, poison pill (including any distribution under a rights agreement) or other
similar anti-takeover provision under the Articles of Incorporation or the laws of the State of
Ohio which is or could become applicable to any Purchaser as a result of the transactions
contemplated by this Agreement, including, without limitation, the Company’s issuance of the
Securities and any Purchaser’s ownership of the Securities.



Solvency. Based on the financial condition of the Company as of the Closing Date (and
assuming the Closing shall have occurred), (i) the Company’s fair saleable value of its assets
exceeds the amount that will be required to be paid on or in respect of the Company’s existing
debts and other liabilities (including known contingent liabilities) as they mature; (ii) the
Company’s assets do not constitute unreasonably small capital to carry on its business for the
current fiscal year as now conducted and as proposed to be conducted including its capital needs
taking into account the particular capital requirements of the business conducted by the Company,
and projected capital requirements and capital availability thereof; and (iii) the current cash
flow of the Company, together with the proceeds the Company would receive, were it to liquidate all
of its assets, after taking into account all anticipated uses of the cash, would be sufficient to
pay all amounts on or in respect of its debt when such amounts are required to be paid. The
Company does not intend to incur debts beyond its ability to pay such debts as they mature (taking
into account the timing and amounts of cash to be payable on or in respect of its debt).



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



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



Environmental Matters. The Company and its Subsidiaries have obtained, or have applied
for, and areor in compliance with and in good standing under all permits required under
Environmental Laws (except for such failures that individually or in the aggregate would not be
reasonably likely to have a Material Adverse Effect) and the Company has no knowledge of any
proceedings to substantially modify or to revoke any such permit. There are no investigations,
proceedings or litigation pending or, to the Company’s knowledge, threatened against the Company or
any of the Company’s facilities or any Subsidiary of the Company relating to Environmental Laws or
Hazardous Substances. “Environmental Laws” shall mean all federal, national, state, regional and
local laws, statutes, ordinances and regulations, in each case as amended or supplemented from time
to time, and any judicial or administrative interpretation thereof, including orders, consent
decrees or judgments relating to the regulation and protection of human health, safety, the
environment and natural resources.



Disclosure. To the Company’s knowledge, no material event or circumstance has
occurred or information exists with respect to the Company or its business, properties, operations
or financial conditions, which, under applicable law, rule or regulation, requires public
disclosure or announcement by the Company but which has not been so publicly announced or
disclosed. The Company confirms that neither it nor any other Person acting on its behalf has
provided any of the Purchasers or their respective agents or counsel with any information that
constitutes or could reasonably be expected to constitute material, nonpublic information. The
Company understands and confirms that each of the Purchasers will rely on the foregoing
representations in effecting transactions in securities of the Company. All disclosure provided to
the Purchasers regarding the Company, its business and the transactions contemplated hereby,
including the Schedules to this Agreement, furnished by or on behalf of the Company are true and
correct and do not contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading. No event or circumstance has occurred or information
exists with respect to the Company or any Subsidiary or either of its or their respective business,
properties, prospects, operations or financial conditions, which, under applicable law, rule or
regulation, requires public disclosure or announcement by the Company but which has not been so
publicly announced or disclosed (assuming for this purpose that the Company’s reports filed under
the Exchange Act of 1934, as amended, are being incorporated into an effective registration
statement filed by the Company under the Securities Act).



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



Employee Relations. (i) The Company is not a party to any collective bargaining
agreement and, to its knowledge, its employees are not union members. The Company believes that
its relations with its employees are good. No executive officer of the Company (as defined in Rule
501(f) of the Securities Act) has notified the Company that such officer intends to leave the
Company or otherwise terminate such officer’s employment with the Company. No executive officer of
the Company, to the knowledge of the Company, is in violation of any material term of any
employment contract, confidentiality, disclosure or proprietary information agreement,
non-competition agreement, or any other contract or agreement or any restrictive covenant relating
to such executive officer’s employment with the Company, and the continued employment of each such
executive officer does not, to the knowledge of the Company, subject the Company to any liability
with respect to any of the foregoing matters.



(ii) The Company is in compliance with all federal, state, local and foreign laws and
regulations respecting labor, employment and employment practices and benefits, terms and
conditions of employment and wages and hours, except where failure to be in compliance would not,
either individually or in the aggregate, reasonably be expected to result in a Material Adverse
Effect; and



(iii) No material labor dispute exists or, to the knowledge of the Company, is imminent with
respect to any employees of the Company.



Manipulation of Price. The Company has not, and to its knowledge no one acting on its
behalf has, (i) taken, directly or indirectly, any action designed to cause or to result in the
stabilization or manipulation of the price of any security of the Company to facilitate the sale or
resale of any of the Securities, (ii) other than the Placement Agents, sold, bid for, purchased, or
paid any compensation for soliciting purchases of, any of the Securities, or (iii) other than the
Lead Agent and Co-Agent paid or agreed to pay to any person any compensation for soliciting another
to purchase any other securities of the Company.



No Undisclosed Events, Liabilities, Developments or Circumstances. No material event,
liability, development or circumstance has occurred or exists, or is contemplated to occur, with
respect to the Company or its Subsidiaries or their respective business, properties, prospects,
operations or financial condition, that would be required to be disclosed by the Company under
applicable securities laws on a registration statement on Form S-1 filed with the SEC relating to
an issuance and sale by the Company of its Common Shares and which has not been publicly announced.




	3.	 	[Intentionally Omitted]






	4.	 	Registration Rights





Certain Definitions. For purposes of this Section E, the following terms shall have
the meanings ascribed to them below.



"Effective Date” means the date the Registration Statement has been declared effective
by the SEC.



"Investor” means a Purchaser or any transferee or assignee thereof to whom a Purchaser
assigns its rights under this Agreement and who agrees to become bound by the provisions of this
Agreement in accordance with Section H(13) and any transferee or assignee thereof to whom a
transferee or assignee assigns its rights under this Agreement and who agrees to become bound by
the provisions of this Agreement in accordance with Section H(13).



“Prospectus” means the prospectus included in the Registration Statement (including,
without limitation, a prospectus that includes any information previously omitted from a prospectus
filed as part of an effective registration statement in reliance upon Rule 430A promulgated under
the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the
terms of the Offering of any portion of the Registrable Securities covered by the Registration
Statement, and all other amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be incorporated by reference in
such Prospectus.



“Registrable Securities” shall mean any Shares and Warrant Shares issued or issuable
pursuant to the Offering Documents together with any Securities issued or issuable upon any stock
split, dividend or other distribution, adjustment, recapitalization or similar event with respect
to the foregoing.



“Registration Statement” means the registration statement required to be filed under
this Section E, including the Prospectus, amendments and supplements to such registration statement
or Prospectus, including pre- and post-effective amendments, all exhibits thereto, and all material
incorporated by reference or deemed to be incorporated by reference in such registration statement.



"Required Holders” means the holders of at least a majority of the Registrable
Securities.



Registration Statement.



The Company shall use its reasonable best efforts to prepare and file with the SEC a
Registration Statement covering the resale of all Registrable Securities for an offering to be made
on a continuous basis pursuant to Rule 415 under the Securities Act on or prior to the 30th day
following the Closing (such date of actual filing, the “Filing Date”). The Registration
Statement shall be on Form S-3 (or on such other form appropriate for such purpose) and shall
contain (except if otherwise directed by the Investors a “Plan of Distribution” substantially in
the form attached hereto as Exhibit G. Each Investor will furnish to the Company, at the
Closing, a completed Selling Shareholder Questionnaire and agrees to promptly update such
questionnaire in order to make the information previously furnished to the Company such Purchaser
not materially misleading and deliver such updated questionnaire to the Company. By 9:30 am
Eastern time on the business day following the date on which the Registration Statement is declared
effective by the SEC, the Company shall file with the SEC in accordance with Rule 424 under the
Securities Act the final prospectus to be used in connection with sales pursuant to such
Registration Statement.



The Company shall use its reasonable best efforts to cause the Registration Statement to be
declared effective by the SEC on or prior to the 90th day following the Closing or on the 120th day
following the Closing in the event that the SEC has reviewed the Registration Statement (such date,
the “Effectiveness Deadline”), and shall use its reasonable best efforts to keep the
Registration Statement continuously effective under the Securities Act until the earliest of (i)
the second anniversary of the effective date of the Registration Statement, (ii) the date when all
Registrable Securities are eligible for resale under Rule 144(k) of the Securities Act or (iii) the
date when all Registrable Securities covered by such Registration Statement have been sold (the
“Effectiveness Period”).



The Company shall request effectiveness of the Registration Statement (and any post-effective
amendments thereto) within five (5) business days following the Company’s receipt of notice from
the SEC that the Registration Statement will not be reviewed by the SEC or that the SEC has
completed its review of such Registration Statement and has no further comments.



If (i) a Registration Statement covering all of the Registrable Securities required to be
covered thereby and required to be filed by the Company pursuant to this Agreement is (A) not filed
with the SEC on or before the Filing Date (a “Filing Failure”) or (B) not declared
effective by the SEC on or before the Effectiveness Deadline (an “Effectiveness Failure”)
or (ii) on any day after the Effective Date sales of all of the Registrable Securities required to
be included on such Registration Statement cannot be made (other than during an Allowable Grace
Period (as defined below) pursuant to such Registration Statement (including, without limitation,
because of a failure to keep such Registration Statement effective, to disclose such information as
is necessary for sales to be made pursuant to such Registration Statement or to register a
sufficient number of Common Shares) (a “Maintenance Failure”) then, as partial relief for
the damages to any holder by reason of any such delay in or reduction of its ability to sell the
underlying Common Shares (which remedy shall not be exclusive of any other remedies available at
law or in equity), the Company shall pay to each holder of Registrable Securities relating to such
Registration Statement an amount in cash equal to one percent (1.0%) of the aggregate Purchase
Price of such Investor’s Registrable Securities included in such Registration Statement on each of
the following dates: (i) the day of a Filing Failure and on every thirtieth day (pro rated for
periods totaling less than thirty (30) days) thereafter until such Filing Failure is cured; (ii)
the day of an Effectiveness Failure and on every thirtieth day (pro rated for periods totaling less
than thirty (30) days) thereafter until such Effectiveness Failure is cured; and (iii) the initial
day of a Maintenance Failure and on every thirtieth day (pro rated for periods totaling less than
thirty (30) days) thereafter until such Maintenance Failure is cured. The payments to which a
holder shall be entitled pursuant to this Section E(2)(d) are referred to herein as
"Registration Delay Payments.” Registration Delay Payments shall be paid on the earlier of
(I) the last day of the calendar month during which such Registration Delay Payments are incurred
and (II) the third Business Day after the event or failure giving rise to the Registration Delay
Payments is cured. In the event the Company fails to make Registration Delay Payments in a timely
manner, such Registration Delay Payments shall bear interest at the rate of one and one-half
percent (1.5%) per month (prorated for partial months) until paid in full. Notwithstanding
anything herein or in the Securities Purchase Agreement to the contrary, in no event shall the
aggregate amount of Registration Delay Payments (other than Registration Delay Payments payable
pursuant to events that are within the control of the Company) exceed, in the aggregate, 10% of the
aggregate Purchase Price of the Shares.



Registration Procedures. In connection with the Company’s registration obligations
hereunder, the Company shall:



(i) prepare and file with the SEC such amendments, including post-effective amendments, to the
Registration Statement as may be necessary to keep the Registration Statement continuously
effective as to the Registrable Securities for the Effectiveness Period; (ii) cause the related
Prospectus to be amended or supplemented by any required Prospectus supplement, and as so
supplemented or amended to be filed pursuant to Rule 424; and (iii) respond as promptly as
reasonably practicable to any comments received from the SEC with respect to the Registration
Statement or any amendment thereto.



Notify the Placement Agents and the Investors as promptly as reasonably possible, and (if
reasonably requested by the Lead Agent) confirm such notice in writing, of any of the following
events: (i) the SEC notifies the Company whether there will be a “review” of the Registration
Statement; (ii) if the SEC issues any stop order suspending the effectiveness of the Registration
Statement or initiates any action, claim, suit, investigation or proceeding (a
“Proceeding”) for that purpose; (iii) the Company receives notice of any suspension of the
qualification or exemption from qualification of any Registrable Securities for sale in any
jurisdiction, or the initiation or threat of any Proceeding for such purpose; or (iv) the financial
statements included in the Registration Statement become ineligible for inclusion therein or any
statement made in the Registration Statement or Prospectus or any document incorporated or deemed
to be incorporated therein by reference is untrue in any material respect or any revision to the
Registration Statement, Prospectus or other document is required so that it will not contain any
untrue statement of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the circumstances under which they
were made, not misleading. Notwithstanding the foregoing, the Company shall not intentionally
include any material non-public information in any notice provided to any Investor under this
Section E(3)(b).



Use its reasonable best efforts to avoid the issuance of or, if issued, obtain the withdrawal
of (i) any order suspending the effectiveness of the Registration Statement or (ii) any suspension
of the qualification (or exemption from qualification) of any of the Registrable Securities for
sale in any jurisdiction, at the earliest practicable moment; provided, however,
that the Company may suspend sales pursuant to the Registration Statement for a period of up to
thirty (30) days (unless the holders of at least 60 percent of the then-eligible Registrable
Securities consisting of outstanding Common Shares consent in writing to a longer delay of up to an
additional thirty (30) days) no more than once in any twelve-month period (an “Allowable Grace
Period”) if the Company furnishes to the holders of the Registrable Securities a certificate
signed by the Company’s Chief Executive Officer stating that in the good faith judgment of the
Company’s Board of Directors, (i) the offering could reasonably be expected to interfere in any
material respect with any acquisition, corporate reorganization or other material transaction under
consideration by the Company or (ii) there is some other material development relating to the
operations or condition (financial or other) of the Company that has not been disclosed to the
general public and as to which it is in the Company’s best interests not to disclose such
development; provided further, however, that the Company may not so suspend sales more than once in
any calendar year without the written consent of the holders of at least a majority of the
then-eligible Registrable Securities consisting of outstanding Common Shares.



Deliver to each Investor, which delivery may be made electronically, by the business day after
the date first available, without charge, such reasonable number of copies of the Prospectus or
Prospectuses (including each form of prospectus) and each amendment or supplement thereto as such
Investors may reasonably request.



To the extent required by law, prior to any public offering of Registrable Securities, use its
reasonable best efforts to register or qualify or cooperate with the selling Investors in
connection with the registration or qualification (or exemption from such registration or
qualification) of such Registrable Securities for offer and sale under the securities or “blue sky”
laws of such jurisdictions within the United States as any Investor requests in writing, to keep
each such registration or qualification (or exemption therefrom) effective during the Effectiveness
Period and to do any and all other acts or things necessary or advisable to enable the disposition
in such jurisdictions of the Registrable Securities covered by a Registration Statement;
provided, however, that the Company shall not be required for any such purpose to (i)
qualify generally to do business as a foreign corporation in any jurisdiction wherein it would not
be otherwise required to qualify but for the requirements of this Paragraph (3)(e), or (ii) subject
itself to taxation.



Comply in all material respects with all applicable rules and regulations of the SEC and the
principal stock exchange or market on which the Common Shares is then listed or eligible for
trading.



The Company shall use its best efforts to have the Registration Statement declared effective
by the SEC as soon as practicable, but in no event later than the Effectiveness Deadline. By 9:30
am on the Business Day following the Effective Date, the Company shall file with the SEC in
accordance with Rule 424 under the Securities Act the final prospectus to be used in connection
with sales pursuant to such Registration Statement.



The Required Holders shall have the right to select one legal counsel to review and oversee
any registration pursuant to this Section E (“Legal Counsel”), which shall be Schulte Roth
& Zabel LLP or such other counsel as thereafter designated by the Required Holders. The Company
and Legal Counsel shall reasonably cooperate with each other in performing the Company’s
obligations under this Agreement.



In the event that Form S-3 is not available for the registration of the resale of Registrable
Securities hereunder, the Company shall (i) register the resale of the Registrable Securities on
another appropriate form reasonably acceptable to the Required Holders and (ii) undertake to
register the Registrable Securities on Form S-3 as soon as such form is available, provided that
the Company shall maintain the effectiveness of the Registration Statement then in effect until
such time as a Registration Statement on Form S-3 covering the Registrable Securities has been
declared effective by the SEC.



If any Investor is required under applicable securities law to be described in the
Registration Statement as an underwriter, at the reasonable request of such Investor, the Company
shall furnish to such Investor, on the date of the effectiveness of the Registration Statement and
thereafter from time to time on such dates as an Investor may reasonably request (i) a letter,
dated such date, from the Company’s independent certified public accountants in form and substance
as is customarily given by independent certified public accountants to underwriters in an
underwritten public offering, addressed to the Investors, and (ii) an opinion, dated as of such
date, of counsel representing the Company for purposes of such Registration Statement, in form,
scope and substance as is customarily given in an underwritten public offering, addressed to the
Investors.



If any Investor is required under applicable securities law to be described in the
Registration Statement as an underwriter, upon the written request of any Investor in connection
with any Investor’s due diligence requirements, if any, the Company shall make available for
inspection by (i) any Investor, (ii) Legal Counsel and (iii) one firm of accountants or other
agents retained by the Investors (collectively, the “Inspectors”), all pertinent financial
and other records, and pertinent corporate documents and properties of the Company (collectively,
the “Records”), as shall be reasonably deemed necessary by each Inspector, and cause the
Company’s officers, directors and employees to supply all information which any Inspector may
reasonably request; provided, however, that each Inspector shall agree to hold in strict confidence
and shall not make any disclosure (except to an Investor) or use of any Record or other information
which the Company determines in good faith to be confidential, and of which determination the
Inspectors are so notified, unless (a) the disclosure of such Records is necessary to avoid or
correct a misstatement or omission in any Registration Statement or is otherwise required under the
1933 Act, (b) the release of such Records is ordered pursuant to a final, non-appealable subpoena
or order from a court or government body of competent jurisdiction, or (c) the information in such
Records has been made generally available to the public other than by disclosure in violation of
this or any other Offering Document. Each Investor agrees that it shall, upon learning that
disclosure of such Records is sought in or by a court or governmental body of competent
jurisdiction or through other means, give prompt notice to the Company and allow the Company, at
its expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective
order for, the Records deemed confidential. Nothing herein (or in any other confidentiality
agreement between the Company and any Investor) shall be deemed to limit the Investors’ ability to
sell Registrable Securities in a manner which is otherwise consistent with applicable laws and
regulations.



If requested by an Investor, the Company shall (i) as soon as practicable incorporate in a
prospectus supplement or post-effective amendment such information as an Investor reasonably
requests to be included therein relating to the sale and distribution of Registrable Securities,
including, without limitation, information with respect to the number of Registrable Securities
being offered or sold, the purchase price being paid therefor and any other terms of the offering
of the Registrable Securities to be sold in such offering; (ii) as soon as practicable make all
required filings of such prospectus supplement or post-effective amendment after being notified of
the matters to be incorporated in such prospectus supplement or post-effective amendment; and (iii)
as soon as practicable, supplement or make amendments to any Registration Statement if reasonably
requested by an Investor holding any Registrable Securities.



The Company shall make generally available to its security holders as soon as practical, but
not later than ninety (90) days after the close of the period covered thereby, an earnings
statement (in form complying with, and in the manner provided by, the provisions of Rule 158 under
the 1933 Act) covering a twelve-month period beginning not later than the first day of the
Company’s fiscal quarter next following the effective date of a Registration Statement.



Within two (2) Business Days after a Registration Statement which covers Registrable
Securities is ordered effective by the SEC, the Company shall deliver, and shall cause legal
counsel for the Company to deliver, to the transfer agent for such Registrable Securities (with
copies to the Investors whose Registrable Securities are included in such Registration Statement)
confirmation that such Registration Statement has been declared effective by the SEC in the form
attached hereto as Exhibit H.



Registration Expenses. The Company shall pay all fees and expenses incident to the
performance of or compliance with this Agreement by the Company, including without limitation (a)
all registration and filing fees and expenses, including without limitation those related to
filings with the SEC, in connection with applicable state securities or “Blue Sky” laws and to
Nasdaq, (b) printing expenses (including, without limitation, expenses of printing certificates for
Registrable Securities and of printing copies of Prospectuses reasonably requested by the
Investors), (c) messenger, telephone and delivery expenses, (d) fees and disbursements of counsel
for the Company and (e) fees and expenses of all other Persons retained by the Company in
connection with the consummation of the transactions contemplated by this Agreement.
Notwithstanding the foregoing, each Investor shall pay any and all costs, fees, discounts or
commissions attributable to the sale of its respective Registrable Securities.



Indemnification.



Indemnification by the Company. The Company agrees to indemnify and hold harmless
each Investor and all of their stockholders, partners, members, officers, directors, employees and
direct or indirect investors and any of the foregoing Persons’ agents or other representatives
(including, without limitation, those retained in connection with the transactions contemplated by
this Agreement) (collectively, the “Indemnitees”), from and against any losses, claims,
damages or liabilities (collectively, “Losses”) to which they may become subject (under the
Securities Act or otherwise) insofar as such Losses (or actions or proceedings in respect thereof)
arise out of, or are based upon, (a) any material misrepresentation or breach of any representation
or warranty (or, with respect to any representation or warranty qualified by “materiality” or
Material Adverse Effect, any misrepresentation or breach of such representation or warranty) made
by the Company in the Offering Documents or any other certificate, instrument or document
contemplated hereby or thereby, (b) any breach of any covenant, agreement or obligation of the
Company contained in the Offering Documents or any other certificate, instrument or document
contemplated hereby or thereby or (c) any cause of action, suit or claim brought or made against
such Indemnitee by a third party (including for these purposes a derivative action brought on
behalf of the Company) and arising out of or resulting from (i) the execution, delivery,
performance or enforcement of the Offering Documents or any other certificate, instrument or
document contemplated hereby or thereby, (ii) any transaction financed or to be financed in whole
or in part, directly or indirectly, with the proceeds of the issuance of the Securities, (iii) the
status of such Investor or holder of the Securities as an investor in the Company, (iv) any untrue
statement or alleged untrue statement of a material fact contained in the Registration Statement or
any omission or alleged omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under which they were made,
not misleading or arise out of any failure by the Company to fulfill any undertaking included in
the Registration Statement and the Company will, as incurred, reimburse the Indemnitees for any
legal or other expenses reasonably incurred in investigating, defending or preparing to defend any
such action, proceeding or claim; provided, however, that the Company shall not be liable in any
such case to the extent that such Loss arises out of, or is based upon, an untrue statement or
omission or alleged untrue statement or omission made in such Registration Statement in reliance
upon and in conformity with written information furnished to the Company by or on behalf of such
Indemnitees specifically for use in preparation of the Registration Statement.



Indemnification by Investors. Each Investor, severally and not jointly, agrees to
indemnify and hold harmless the Company (and each person, if any, who controls the Company within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, each officer of
the Company who signs the Registration Statement and each director of the Company), from and
against any losses, claims, damages or liabilities to which the Company (or any such officer,
director or controlling person) may become subject (under the Securities Act or otherwise), insofar
as such losses, claims, damages or liabilities (or actions or proceedings in respect thereof) arise
out of, or are based upon, any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading in each case, on the effective date
thereof, if, and to the extent, such untrue statement or omission or alleged untrue statement or
omission was made in reliance upon and in conformity with written information furnished by or on
behalf of such Investor specifically for use in preparation of the Registration Statement, and such
Investor will reimburse the Company (and each of its officers, directors or controlling persons)
for any legal or other expenses reasonably incurred in investigating, defending or preparing to
defend any such action, proceeding or claim; provided, however, that in no event shall any
indemnity under this Paragraph 5(b) be greater in amount than the net proceeds to such Investor as
a result of the sale of Registrable Securities pursuant to such Registration Statement and (ii) the
amount of any damages such Investor has otherwise been required to pay by reason of such untrue
statement or omission or alleged untrue statement or omission) received by such Investor upon the
sale of such Registrable Securities.



Conduct of Indemnification Proceedings. If any Proceeding shall be brought or
asserted against any Person entitled to indemnity hereunder (an “Indemnified Party”), such
Indemnified Party shall promptly notify the Person from whom indemnity is sought (the
“Indemnifying Party”) in writing, and the Indemnifying Party shall be entitled to
participate therein, and to the extent that it shall wish, assume the defense thereof, including
the employment of counsel reasonably satisfactory to the Indemnified Party and the payment of all
fees and expenses incurred in connection with defense thereof. After notice from the Indemnifying
Party to such Indemnified Party of its election to assume the defense thereof, such Indemnifying
Party shall not be liable to such Indemnified Party for any legal expenses subsequently incurred by
Indemnified Party in connection with the defense thereof. An Indemnified Party shall have the
right to employ separate counsel in any such Proceeding and to participate in the defense thereof,
but the fees and expenses of such counsel shall be at the expense of such Indemnified Party or
Parties. If there exists or shall exist a conflict of interest that would make it inappropriate
in the reasonable judgment of the Indemnified Party for the same counsel to represent both the
Indemnified Party and such Indemnifying Party or any affiliate or associate thereof, the
Indemnified Party shall be entitled to retain its own counsel at the expense of such Indemnifying
Party; provided, further, that no Indemnifying Party shall be responsible for the fees and expense
of more than one separate counsel for all Indemnified Parties. The Indemnifying Party shall not
settle an action without the consent of the Indemnified Party, which consent shall not be
unreasonably withheld, unless such settlement includes an unconditional release of such Indemnified
Party from all liability on claims that are the subject matter of such Proceeding. All reasonable
fees and expenses of the Indemnified Party (including reasonable fees and expenses to the extent
incurred in connection with investigating or preparing to defend such Proceeding in a manner not
inconsistent with this Section) shall be paid to the Indemnified Party, as incurred, within ten
trading days of written notice thereof to the Indemnifying Party (regardless of whether it is
ultimately determined that an Indemnified Party is not entitled to indemnification hereunder;
provided, that the Indemnifying Party may require such Indemnified Party to undertake to reimburse
all such reasonable fees and expenses to the extent it is finally judicially determined that such
Indemnified Party is not entitled to indemnification hereunder).



Contribution. If a claim for indemnification under Paragraph (5)(a) or (b) is
unavailable to an Indemnified Party (by reason of public policy or otherwise), then each
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount
paid or payable by such Indemnified Party as a result of such Losses, in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party and Indemnified Party in
connection with the actions, statements or omissions that resulted in such Losses as well as any
other relevant equitable considerations. The relative fault of such Indemnifying Party and
Indemnified Party shall be determined by reference to, among other things, whether any action in
question, including any untrue or alleged untrue statement of a material fact or omission or
alleged omission of a material fact, has been taken or made by, or related to information supplied
by, such Indemnifying Party or Indemnified Party, and the parties’ relative intent, knowledge,
access to information and opportunity to correct or prevent such action, statement or omission.
The amount paid or payable by a party as a result of any Losses shall be deemed to include, subject
to the limitations set forth in Paragraph (5)(c), any reasonable attorneys’ or other reasonable
fees or expenses incurred by such party in connection with any Proceeding to the extent such party
would have been indemnified for such fees or expenses if the indemnification provided for in this
Paragraph 5(d) was available to such party in accordance with its terms.



The parties hereto agree that it would not be just and equitable if contribution pursuant to
this Paragraph (5)(d) were determined by pro rata allocation or by any other method of allocation
that does not take into account the equitable considerations referred to in the immediately
preceding paragraph. Notwithstanding the provision of this Paragraph (5)(d), no Investor or holder
of Placement Agent Warrants shall be required to contribute, in the aggregate, any amount in excess
of the amount by which the net proceeds actually received by such Investor or holder from the sale
of the Registrable Securities subject to the Proceeding exceeds the amount of any damages that such
Investor or holder has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No Person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from
any Person who was not guilty of such fraudulent misrepresentation.



Dispositions. Each Purchaser agrees that it will comply with the prospectus delivery
requirements of the Securities Act as applicable to it in connection with sales of Registrable
Securities pursuant to the Registration Statement. Each Purchaser further agrees that, upon
receipt of a notice from the Company of the occurrence of any event of the kind described in
Paragraphs (3)(b), such Purchaser or holder will discontinue disposition of such Registrable
Securities under the Registration Statement until such Purchaser’s receipt of the copies of the
supplemented Prospectus and/or amended Registration Statement, or until it is advised in writing
(the “Advice”) by the Company that the use of the applicable Prospectus may be resumed,
and, in either case, has received copies of any additional or supplemental filings that are
incorporated or deemed to be incorporated by reference in such Prospectus or Registration
Statement. The Company may provide appropriate stop orders to enforce the provisions of this
paragraph.



Piggy-Back Registrations. If at any time during the Effectiveness Period, other than
any suspension period referred to in Paragraph (3)(f), there is not an effective Registration
Statement covering all of the Registrable Securities and the Company shall determine to prepare and
file with the SEC a registration statement relating to an offering for its own account or the
account of others under the Securities Act of any of its equity securities, other than on Form S-4
or Form S-8 (each as promulgated under the Securities Act) or their then equivalents relating to
equity securities to be issued solely in connection with any acquisition of any entity or business
or equity securities issuable in connection with stock option or other employee benefit plans, then
the Company shall send to each Purchaser written notice of such determination and if, within
fifteen (15) days after receipt of such notice, any such Purchaser shall so request in writing, the
Company shall include in such registration statement all or any part of such Registrable Securities
not already covered by an effective Registration Statement such Purchaser requests to be registered
provided, however, that (A) if such registration involves an underwritten public offering, the
Purchasers requesting the registration must sell their Registrable Securities to the underwriters
on the same terms and conditions as apply to the Company and (B) if, at any time after giving
written notice of its intention to register any Registrable Securities pursuant to this Paragraph 7
and prior to the effective date of the registration statement filed in connection with such
registration, the Company shall determine for any reason not to register such Registrable
Securities, the Company shall give written notice to the Purchasers and, thereupon, shall be
relieved of its obligation to register any Registrable Securities in connection with such
registration. The Company’s obligations under this Paragraph 7 shall terminate on the date that
the Registration Statement to be filed in accordance with this Paragraph 7 is declared effective by
the Commission.



If a registration pursuant to this Paragraph 7 involves an underwritten public offering and
the managing underwriter thereof advises the Company that, in its view, the number of Common Shares
proposed to be included in such registration exceeds the largest number of Common Shares that can
be sold without having an adverse effect on such public offering (the “Maximum Offering
Size”), the Company will include in such registration only that number of Common Shares which
does not cause the Maximum Offering Size to be exceeded, in the following order of priorities: (i)
first, all securities the Company proposes to sell for its own account, (ii) second, up to the full
number of securities proposed to be registered for the account of the holders of securities
entitled to inclusion of their securities in the registration statement by reason of demand
registration rights, and (iii) third, the securities requested to be registered by other holders of
securities entitled to participate in the registration (including the Purchasers pursuant hereto),
drawn from them pro-rata based on the number of shares each has requested to be included in such
registration.



If as a result of the proration provisions of this Paragraph 7, the Purchasers are not
entitled to include all such Registrable Securities in such registration, such Purchasers may elect
to withdraw their request to include any Registrable Securities in such registration.



Notwithstanding the foregoing, the Company shall have no obligations under this Paragraph 7
hereof at any time that such Registrable Securities are the subject of an effective registration
statement.



Rule 144. Until such time as the Registrable Securities are eligible for resale
pursuant to Rule 144(k) under the Securities Act, the Company agrees with each holder of
Registrable Securities to:



comply with the requirements of Rule 144(c) under the Securities Act with respect to current
public information about the Company;



to file with the SEC in a timely manner all reports and other documents required of the
Company under the Securities Act and the Exchange Act (at any time it is subject to such reporting
requirements); and



furnish to any holder of Registrable Securities upon request (i) a written statement by the
Company as to its compliance with the requirements of said Rule 144(c) and the reporting
requirements of the Securities Act and the Exchange Act (at any time it is subject to such
reporting requirements), (ii) a copy of the most recent annual or quarterly report of the Company,
and (iii) such other reports and documents of the Company as such holder may reasonably request to
avail itself of any similar rule or regulation of the SEC allowing it to sell any such securities
without registration.




	5.	 	Covenants of the Company





Not later than 8:30 a.m. Eastern time on the business day following the date this Agreement is
entered into, the Company shall make a public announcement of the execution of this Agreement by
filing with the SEC a Current Report on Form 8-K and issuing a press release, with such public
announcement complying with the safe harbor provisions of Rule 135c of the Securities Act.



Not later than 8:30 a.m. Eastern time on the business day following the Closing, the Company
shall make a public announcement of the Closing of the Offering by filing with the SEC a Current
Report on Form 8-K and issuing a press release (the “Closing 8-K). From and after the filing of
the Closing 8-K, no Purchaser shall be in possession of any material, nonpublic information
received from the Company, any of its Subsidiaries or any of its respective officers, directors,
employees or agents, that is not disclosed in the Closing 8-K or in previous filings with the SEC.



The Company shall not publicly disclose the name of any Purchaser, or include the name of any
Purchaser in any filing or press release without the prior written consent of such Purchaser, other
than (i) in the form of this Agreement that is filed with the SEC; or (ii) in the table of selling
shareholders in the Registration Statement or (iii) unless otherwise required by law. The Company
shall not, and shall cause each of its officers, directors, employees and agents not to, knowingly
provide any Purchaser with any material nonpublic information regarding the Company from and after
the issuance of the above referenced filings and press releases without the express written consent
of such Purchaser.



The Company agrees to file one or more Forms D with respect to the Securities on a timely
basis as required under Regulation D under the Securities Act to claim the exemption provided by
Rule 506 of Regulation D and to provide a copy thereof to the Placement Agents and their counsel
promptly after such filing. The Company, on or before the Closing Date, shall take such action as
the Company shall reasonably determine is necessary in order to obtain an exemption for or to
qualify the Securities for sale to the Purchasers at the Closing pursuant to this Agreement under
applicable securities or “Blue Sky” laws of the states of the United States (or to obtain an
exemption from such qualification), and shall provide evidence of any such action so taken to the
Purchasers on or prior to the Closing date. The Company at its sole expense shall make all filings
and reports relating to the offer and sale of the Securities required under applicable securities
or “Blue Sky” laws of the states of the United States following the Closing Date.



The Company shall (i) file with Nasdaq a Listing of Additional Shares Notification with
respect to the Shares and the Warrant Shares as promptly as practicable after execution of this
Agreement; (ii) take all commercially reasonable steps necessary to cause such Securities to be
approved for listing on Nasdaq as soon as possible thereafter; and (iii) use its reasonable best
efforts to maintain the listing of the Company’s Common Shares on Nasdaq.



Other than pursuant to the Registration Statement, prior to the Effective Date, the Company
may not file any registration statement (other than on Form S-8) with the SEC with respect to any
securities of the Company. Until 90 days after the Effective Date, the Company will not, directly
or indirectly, offer, sell, grant any option to purchase, or otherwise dispose of (or announce any
of the foregoing) any of its or its Subsidiaries equity or equity equivalent securities, including,
without limitation, any debt, preferred shares or other instrument or security that is, at any time
during its life and under any circumstances, convertible into or exchangeable or exercisable for
Common Shares or Common Share equivalents, provided, however, that the Company may
grant such options and shares to its directors and employees in the ordinary course of business.



The Company will not sell, offer to sell, solicit offers to buy or otherwise negotiate in
respect of any “security” (as defined in the Securities Act) that is or could be integrated with
the sale of the Securities in a manner that would require the registration of the Securities under
the Securities Act. During the six months following the Closing Date, the Company shall not issue
any “Future Priced Securities” as such term is described by NASD IM-4350-1.



As long as any Purchaser owns the Securities, the Company covenants (i) to timely file (or
obtain extensions in respect thereof and file within the applicable grace period) all reports
required to be filed by the Company after the date hereof pursuant to the Exchange Act and (ii)
maintain compliance with all applicable provisions of the Sarbanes Oxley Act of 2002 and all rules
and regulations promulgated thereunder, except where noncompliance would not have, individually or
in the aggregate, a Material Adverse Effect. During the Effectiveness Period, as long as any
Purchaser owns Securities, if, the Company is not required to file reports pursuant to such laws,
it will prepare and furnish to the Purchasers and make publicly available in accordance with Rule
144(c) such information as is required for the Purchasers to sell the Shares or Warrant Shares
under Rule 144. The Company further covenants that it will take such further action during the
Effectiveness Period as any holder of Securities may reasonably request, all to the extent required
from time to time to enable such Person to sell the Shares and Warrant Shares without registration
under the Securities Act within the limitation of the exemptions provided by Rule 144.



The Company shall issue irrevocable instructions to its transfer agent, and any subsequent
transfer agent, to issue certificates or credit shares to the applicable balance accounts at DTC,
registered in the name of each Purchaser or its respective nominee(s), for the Warrant Shares in
such amounts as specified from time to time by each Purchaser to the Company upon exercise of the
Warrants in the form of Exhibit B attached hereto (the “Irrevocable Transfer Agent
Instructions”). The Company represents and warrants that no instruction other than the Irrevocable
Transfer Agent Instructions referred to in this Section F(9), and stop transfer instructions to
give effect to Section B(7) hereof, will be given by the Company to its transfer agent with respect
to the Securities, and that the Securities shall otherwise be freely transferable on the books and
records of the Company as and to the extent provided in this Agreement and the other Offering
Documents. The Company acknowledges that a breach by it of its obligations hereunder will cause
irreparable harm to a Purchaser. Accordingly, the Company acknowledges that the remedy at law for
a breach of its obligations under this Section F(9) will be inadequate and agrees, in the event of
a breach or threatened breach by the Company of the provisions of this Section F(9), that a
Purchaser shall be entitled, in addition to all other available remedies, to an order and/or
injunction restraining any breach and requiring immediate issuance and transfer, without the
necessity of showing economic loss and without any bond or other security being required.



Short Sales. Each Purchaser severally and not jointly with the other Purchasers
covenants that neither it nor any of its affiliates acting on its behalf or pursuant to any
understanding with it has engaged or will engage, directly or indirectly, in any transactions in
the securities of the Company (including, without limitation, any Short Sales involving the
Company’s securities) during the period commencing at the Discussion Time and until the earlier of
(i) the Effective Date of the Registration Statement or (ii) this Agreement is terminated in full
pursuant to Section G. Notwithstanding the foregoing, in the case of a Purchaser that is a
multi-managed investment vehicle whereby separate portfolio managers manage separate portions of
such Purchaser’s assets and the portfolio managers have no direct knowledge of the investment
decisions made by the portfolio managers managing other portions of such Purchaser’s assets, the
covenant set forth above shall only apply with respect to the portion of assets managed by the
portfolio manager that made the investment decision to purchase the Securities covered by this
Agreement.




	6.	 	Conditions to Closing; Termination





Conditions Precedent to the Obligations of the Purchasers to Purchase Securities. The
obligation of each Purchaser to acquire Securities at the Closing is subject to the satisfaction or
waiver by such Purchaser, at or before the Closing, of each of the following conditions:



The representations and warranties of the Company contained herein shall be true and correct
in all material respects (other than those representations and warranties that are qualified by
“materiality” or Material Adverse Effect qualifiers shall be true and correct in all respects) as
of the date when made and as of the Closing as though made on and as of such date (except to the
extent that such representation or warranty speaks of an earlier date, in which case such
representation and warranty shall be true and correct in all material respects as though made on
and as of the Closing Date);



The Company shall have performed, satisfied and complied in all material respects with all
covenants, agreements and conditions required by the Offering Documents to be performed, satisfied
or complied with by it at or prior to the Closing;



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



Since the date of execution of this Agreement, no event or series of events shall have
occurred that reasonably could have or result in a Material Adverse Effect;



Trading in the Common Shares shall not have been suspended by the SEC or Nasdaq (except for
any suspensions of trading of limited duration agreed to by the Company) at any time since the date
of execution of this Agreement, and the Common Shares shall have been at all times since such date
listed for trading on Nasdaq;



The Company shall have delivered the items required to be delivered by the Company in
accordance with Section A.4;



This Agreement shall not have been terminated as to such Purchaser in accordance with Section
G.3.



Conditions Precedent to the Obligations of the Company to sell Securities. The
obligation of the Company to sell Securities at the Closing is subject to the satisfaction or
waiver by the Company, at or before the Closing, of each of the following conditions:



The representations and warranties of each Purchaser contained herein shall be true and
correct in all material respects (other than those representations and warranties that are
qualified by “materiality” or Material Adverse Effect qualifiers shall be true and correct in all
respects) as of the date when made and as of the Closing Date as though made on and as of such
date;



Each Purchaser shall have performed, satisfied and complied in all material respects with all
covenants, agreements and conditions required by the Offering Documents to be performed, satisfied
or complied with by such Purchaser at or prior to the Closing;



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



Each Purchaser shall have delivered its Investment Amount in accordance with Section A.2;



This Agreement shall not have been terminated as to such Purchaser in accordance with Section
G.3.



This Agreement may be terminated prior to Closing:



by written agreement of the Purchasers and the Company; and



by the Company or a Purchaser (as to itself but no other Purchaser) upon written notice to the
other, if the Closing shall not have taken place by 6:30 p.m. Eastern time on or before March 20,
2007; provided, that the right to terminate this Agreement under this Section G.3 shall not be
available to any Person whose failure to comply with its obligations under this Agreement has been
the cause of or resulted in the failure of the Closing to occur on or before such time.



In the event of a termination pursuant to Section G.3(a), the Company shall promptly notify
all non-terminating Purchasers. Upon a termination in accordance with this Section G.3, the Company
and the terminating Purchaser(s) shall not have any further obligation or liability (including as
arising from such termination) to the other and no Purchaser will have any liability to any other
Purchaser under the Offering Documents as a result thereof.




	7.	 	Miscellaneous





Gender. All pronouns and any variations thereof used herein shall be deemed to refer
to the masculine, feminine, singular or plural, as identity of the person or persons may require.



Notices. Any notice or other communication required or permitted to be given or
delivered under this Agreement shall be in writing and shall be deemed given and effective on the
earliest of (a) the date of transmission, if such notice or communication is delivered by fax prior
to 6:30 p.m. Eastern Time on a business day, (b) the next business day after the date of
transmission, if such notice or communication is delivered by fax on a day that is not a business
day or later than 6:30 p.m. Eastern Time on a business day, (c) upon receipt, if sent by an
internationally recognized overnight delivery service (with charges prepaid), or (d) upon actual
receipt by the party to whom such notice or other communication is required to be given:




if to the Company, to it at:




DATATRAK International, Inc.


6150 Parkland Boulevard


Mayfield Hts., Ohio 44124


Fax No.: (440) 442-3482


Attention: Chief Executive Officer




or such other address as it shall have specified to the Purchaser in
writing, with a copy (which shall not constitute notice) to:




Calfee, Halter & Griswold LLP


1400 McDonald Investment Center


800 Superior Avenue


Cleveland, Ohio 44114-2688


Fax No.: (216) 241-0816


Attention: Thomas F. McKee, Esq.




if to a Purchaser, to it at its address set forth on the signature page to this
Agreement, or such other address as it shall have specified to the Company in writing.



	 	 	 	 	 
	with a copy (for informational purposes only) to:

	Schulte Roth & Zabel LLP
919 Third Avenue
New York, New York 10022
Telephone:
	 	 	(212) 756-2000	 
	Facsimile:
	 	 	(212) 593-5955	 
	Attention:
	 	Eleazer N. Klein, Esq.







Waivers. Failure of the Company to exercise any right or remedy under this Agreement
or any other agreement between the Company and the Purchaser, or otherwise, or delay by the Company
in exercising such right or remedy, will not operate as a waiver thereof. No waiver by the Company
will be effective unless and until it is in writing and signed by the Company.



Governing Law. This Agreement shall be enforced, governed and construed in all
respects in accordance with the laws of the State of New York, as such laws are applied by the New
York courts to agreements entered into and to be performed in New York by and between residents of
New York, and shall be binding upon the Purchaser, the Purchaser’s heirs, estate, legal
representatives, successors and assigns and shall inure to the benefit of the Company, its
successors and assigns. The Company and each Purchaser hereby agree to submit to the non-exclusive
jurisdiction of the courts of the State of New York with respect to any proceeding arising out of
or relating to this Agreement, and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the jurisdiction of any such
court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue
of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal
service of process and consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it under this Agreement and
agrees that such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process
in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND
AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION
WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.



Severability. If any provision of this Agreement is held to be invalid or
unenforceable under any applicable statute or rule of law, then such provision shall be deemed
modified to conform with such statute or rule of law. Any provision hereof that may prove invalid
or unenforceable under any law shall not affect the validity or enforceability of any other
provisions hereof.



Remedies. The parties understand and agree that, unless provided otherwise herein,
money damages would not be a sufficient remedy for any breach of the Agreement by the Company or
the Purchaser and that the party against which such breach is committed shall be entitled to
equitable relief, including injunction and specific performance, as a remedy for any such breach.
Such remedies shall not, unless provided otherwise herein, be deemed to be the exclusive remedies
for a breach by either party of the Agreement but shall be in addition to all other remedies
available at law or equity to the party against which such breach is committed.



Several Purchaser Liability. The obligations of each Purchaser under this Agreement
are several and not joint with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other Purchaser hereunder,
except as may result from the actions of any such Purchaser other than through the execution
hereof. Nothing contained herein solely by virtue of being contained herein shall be deemed to
constitute the Purchasers as a partnership, an association, a joint venture or any similar entity,
or create a presumption that the Purchasers are in any way acting in concert or as a group with
respect to such obligations or the transactions contemplated hereby.



Entire Agreement. This Agreement, together with the agreements and documents executed
and delivered in connection with this Agreement, constitutes the entire agreement between the
parties hereto with respect to the subject matter hereof.



Counterparts. This Agreement may be executed in two or more identical counterparts,
all of which shall be considered one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other party; provided that a
facsimile signature shall be considered due execution and shall be binding upon the signatory
thereto with the same force and effect as if the signature were an original, not a facsimile
signature.



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



Complete Understanding. This Agreement and the other Offering Documents (including
any schedules and exhibits hereto and thereto) supersede all other prior oral or written agreements
between the Purchaser, the Company, their affiliates and persons acting on their behalf with
respect to the matters discussed herein, and this Agreement and other Offering Documents (including
any schedules and exhibits hereto and thereto) and the instruments referenced herein contain the
entire understanding of the parties with respect to the matters covered herein and therein and,
except as specifically set forth herein or therein, neither the Company nor any Purchaser makes any
representation, warranty, covenant or undertaking with respect to such matters.



Amendments. No provision of this Agreement may be amended other than by an instrument
in writing signed by the Company and Purchasers holding or being obligated to purchase at least a
majority of the Shares. No consideration shall be offered or paid to any Purchaser to amend or
consent to a waiver or modification of any provision of any Offering Document unless the same
consideration is also offered to all Purchasers who then hold Shares. No provision hereof may be
waived other than by an instrument in writing signed by the party against whom enforcement is
sought.



Assignment. Any Purchaser may assign any or all of its rights under this Agreement to
any person, provided that such transferee agrees in writing to be bound by the terms and provisions
of this Agreement and, to the extent applicable, the other Offering Documents, and such transfer is
in compliance with the terms and provisions of this Agreement and permitted by federal and state
securities laws.



Survival of Representations and Warranties. The representations and warranties of the
parties contained herein or in any other agreements or documents executed in connection herewith
shall survive the Closing.



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



* * * * * * *




1



SIGNATURE PAGE




The Purchaser hereby agrees to purchase the number of Shares and Warrants, in exchange for the
Investment Amount, as set forth below, and agrees to be bound by the terms and conditions of this
Agreement.



	 	 	 	 	 
	PURCHASER	 	 
	1.Investment Amount: $785,365.00	 	 
	2.Number of Shares Purchased: 165,340	 	 
	3.Number of Shares Included in Warrant:	 	24,801
	/s/ Jerome A. Ribs LP, Manager	 	 
	Signature of Purchaser	 	Signature of Joint Purchaser
	(and title, if applicable)	 	(if any)
	 
	 	 	 	 
	Taxpayer Identification or Social
	 	Taxpayer Identification or Social







Security Number Security Number of Joint Purchaser (if any)



The Catfish Fund, LP



Name (please print as name will appear



on stock certificate)



Number and Street



City, State Zip Code



ACCEPTED BY:



DATATRAK INTERNATIONAL, INC.



	 	 	 
	 
	 	 
	
 
	 	By: /s/ Jeffrey A. Green
	
 
	 	 
	
 
	 	Name: Jeffrey A. Green

Title: President, CEO
	 
	 	 






2




SIGNATURE PAGE




The Purchaser hereby agrees to purchase the number of Shares and Warrants, in exchange for the
Investment Amount, as set forth below, and agrees to be bound by the terms and conditions of this
Agreement.



	 	 	 	 	 
	PURCHASER	 	 
	1.Investment Amount: $64,315.00	 	 
	2.Number of Shares Purchased: 13,540	 	 
	3.Number of Shares Included in Warrant:	 	2,031
	/s/ Jerome A. Ribs LP, Manager	 	 
	Signature of Purchaser	 	Signature of Joint Purchaser
	(and title, if applicable)	 	(if any)
	 
	 	 	 	 
	Taxpayer Identification or Social
	 	Taxpayer Identification or Social







Security Number Security Number of Joint Purchaser (if any)



Bodri Capital Fund, LP



Name (please print as name will appear



on stock certificate)



Number and Street



City, State Zip Code



ACCEPTED BY:



DATATRAK INTERNATIONAL, INC.



	 	 	 
	 
	 	 
	
 
	 	By: /s/ Jeffrey A. Green
	
 
	 	 
	
 
	 	Name: Jeffrey A. Green

Title: President, CEO
	 
	 	 






3




SIGNATURE PAGE




The Purchaser hereby agrees to purchase the number of Shares and Warrants, in exchange for the
Investment Amount, as set forth below, and agrees to be bound by the terms and conditions of this
Agreement.



	 	 	 	 	 
	PURCHASER	 	 
	1.Investment Amount: $100,320.00	 	 
	2.Number of Shares Purchased: 21,120	 	 
	3.Number of Shares Included in Warrant:	 	3,168
	/s/ Jerome A. Ribs LP, Manager	 	 
	Signature of Purchaser	 	Signature of Joint Purchaser
	(and title, if applicable)	 	(if any)
	 
	 	 	 	 
	Taxpayer Identification or Social
	 	Taxpayer Identification or Social







Security Number Security Number of Joint Purchaser (if any)



Bodri Capital Offshore Fund, Ltd.



Name (please print as name will appear



on stock certificate)



Number and Street



City, State Zip Code



ACCEPTED BY:



DATATRAK INTERNATIONAL, INC.



	 	 	 
	 
	 	 
	
 
	 	By: /s/ Jeffrey A. Green
	
 
	 	 
	
 
	 	Name: Jeffrey A. Green

Title: President, CEO
	 
	 	 






4




SIGNATURE PAGE




The Purchaser hereby agrees to purchase the number of Shares and Warrants, in exchange for the
Investment Amount, as set forth below, and agrees to be bound by the terms and conditions of this
Agreement.



	 	 	 	 	 	 	 	 	 
	PURCHASER	 	 	 	 
	1.	 	Investment Amount:	$843,585.75	 
	2.	 	Number of Shares Purchased:	177,597	 
	3.
	 	Number of Shares Included in Warrant:
	 	 	26,640	 
	 
	 	 	 	 	 	 	 	 






	 	 	 
	/s/ Kenneth Berkow, CFO of Potomac Capital
	Signature of Purchaser	 	Signature of Joint Purchaser
	(and title, if applicable)	 	(if any)
	 

	 	 
	Taxpayer Identification or Social

	 	Taxpayer Identification or Social






Security Number Security Number of Joint Purchaser (if any)

Potomac Capital Partners LP, c/o Potomac

Capital Management



Name (please print as name will appear



on stock certificate)



Number and Street



City, State Zip Code



ACCEPTED BY:



DATATRAK INTERNATIONAL, INC.



	 	 	 
	 
	 	 
	
 
	 	By: /s/ Jeffrey A. Green
	
 
	 	 
	
 
	 	Name: Jeffrey A. Green

Title: President, CEO
	 
	 	 






5




SIGNATURE PAGE




The Purchaser hereby agrees to purchase the number of Shares and Warrants, in exchange for the
Investment Amount, as set forth below, and agrees to be bound by the terms and conditions of this
Agreement.



	 	 	 	 	 	 	 	 	 
	PURCHASER	 	 	 	 
	1.	 	Investment Amount:	$578,393.25	 
	2.	 	Number of Shares Purchased:	121,767	 
	3.
	 	Number of Shares Included in Warrant:
	 	 	18,265	 
	 
	 	 	 	 	 	 	 	 






	 	 	 
	/s/ Kenneth Berkow, CFO of Potomac Capital
	Signature of Purchaser	 	Signature of Joint Purchaser
	(and title, if applicable)	 	(if any)
	 

	 	 
	Taxpayer Identification or Social

	 	Taxpayer Identification or Social






Security Number Security Number of Joint Purchaser (if any)

Potomac Capital International Ltd.

c/o Potomac Capital Management


Name (please print as name will appear



on stock certificate)



Number and Street



City, State Zip Code



ACCEPTED BY:



DATATRAK INTERNATIONAL, INC.



	 	 	 
	 
	 	 
	
 
	 	By: /s/ Jeffrey A. Green
	
 
	 	 
	
 
	 	Name: Jeffrey A. Green

Title: President, CEO
	 
	 	 






6




SIGNATURE PAGE




The Purchaser hereby agrees to purchase the number of Shares and Warrants, in exchange for the
Investment Amount, as set forth below, and agrees to be bound by the terms and conditions of this
Agreement.



PURCHASER



	 	 	 	 	 	 	 	 	 
	1.	 	Investment Amount:	$596,771.00	 
	2.	 	Number of Shares Purchased:	125,636	 
	3.
	 	Number of Shares Included in Warrant:
	 	 	18,845	 
	 
	 	 	 	 	 	 	 	 






	 	 	 
	/s/ Kenneth Berkow, CFO of Potomac Capital
	Signature of Purchaser	 	Signature of Joint Purchaser
	(and title, if applicable)	 	(if any)
	 

	 	 
	Taxpayer Identification or Social

	 	Taxpayer Identification or Social






Security Number Security Number of Joint Purchaser (if any)



Peliades Investment Partners R LP


c/o Potomac Capital Management


Name (please print as name will appear


on stock certificate)



Number and Street



City, State Zip Code



ACCEPTED BY:



DATATRAK INTERNATIONAL, INC.



	 	 	 
	 
	 	 
	
 
	 	By: /s/ Jeffrey A. Green
	
 
	 	 
	
 
	 	Name: Jeffrey A. Green

Title: President, CEO
	 
	 	 






7




SIGNATURE PAGE




The Purchaser hereby agrees to purchase the number of Shares and Warrants, in exchange for the
Investment Amount, as set forth below, and agrees to be bound by the terms and conditions of this
Agreement.



PURCHASER



	 	 	 	 	 
	1.Investment Amount: $421,325.00	 	 
	2.Number of Shares Purchased: 88,700	 	 
	3.Number of Shares Included in Warrant:	 	13,305
	/s/ Pamela A. Cavanaugh, V.P. & Treasurer	 	 
	Signature of Purchaser	 	Signature of Joint Purchaser
	(and title, if applicable)	 	(if any)
	 
	 	 	 	 
	Taxpayer Identification or Social
	 	Taxpayer Identification or Social







Security Number Security Number of Joint Purchaser (if any)



Harbour Holdings Ltd.


c/o Skylands Capital, LLC


Name (please print as name will appear


on stock certificate)



Number and Street



City, State Zip Code



ACCEPTED BY:



DATATRAK INTERNATIONAL, INC.



By: /s/ Jeffrey A. Green


Name: Jeffrey A. Green

Title: President, CEO



8



SIGNATURE PAGE




The Purchaser hereby agrees to purchase the number of Shares and Warrants, in exchange for the
Investment Amount, as set forth below, and agrees to be bound by the terms and conditions of this
Agreement.



PURCHASER



	 	 	 	 	 
	1.Investment Amount: $199,025.00	 	 
	2.Number of Shares Purchased: 41,900	 	 
	3.Number of Shares Included in Warrant:	 	6,285
	/s/ Pamela A. Cavanaugh, V.P. & Treasurer	 	 
	Signature of Purchaser	 	Signature of Joint Purchaser
	(and title, if applicable)	 	(if any)
	 
	 	 	 	 
	Taxpayer Identification or Social
	 	Taxpayer Identification or Social







Security Number Security Number of Joint Purchaser (if any)



Skylands Special Investment LLC


Name (please print as name will appear


on stock certificate)



Number and Street



City, State Zip Code



ACCEPTED BY:



DATATRAK INTERNATIONAL, INC.



By: /s/ Jeffrey A. Green


Name: Jeffrey A. Green

Title: President, CEO



9



SIGNATURE PAGE




The Purchaser hereby agrees to purchase the number of Shares and Warrants, in exchange for the
Investment Amount, as set forth below, and agrees to be bound by the terms and conditions of this
Agreement.



PURCHASER



	 	 	 	 	 
	1.Investment Amount: $63,650.00	 	 
	2.Number of Shares Purchased: 13,400	 	 
	3.Number of Shares Included in Warrant:	 	2,010
	/s/ Pamela A. Cavanaugh, V.P. & Treasurer	 	 
	Signature of Purchaser	 	Signature of Joint Purchaser
	(and title, if applicable)	 	(if any)
	 
	 	 	 	 
	Taxpayer Identification or Social
	 	Taxpayer Identification or Social







Security Number Security Number of Joint Purchaser (if any)



Skylands Quest LLC


Name (please print as name will appear


on stock certificate)



Number and Street



City, State Zip Code



ACCEPTED BY:



DATATRAK INTERNATIONAL, INC.



By: /s/ Jeffrey A. Green


Name: Jeffrey A. Green

Title: President, CEO



10



SIGNATURE PAGE




The Purchaser hereby agrees to purchase the number of Shares and Warrants, in exchange for the
Investment Amount, as set forth below, and agrees to be bound by the terms and conditions of this
Agreement.



PURCHASER



	 	 	 	 	 
	1.Investment Amount: $28,500.00	 	 
	2.Number of Shares Purchased: 6,000	 	 
	3.Number of Shares Included in Warrant:	 	900
	/s/ Pamela A. Cavanaugh, V.P.	 	 
	Signature of Purchaser	 	Signature of Joint Purchaser
	(and title, if applicable)	 	(if any)
	 
	 	 	 	 
	Taxpayer Identification or Social
	 	Taxpayer Identification or Social







Security Number Security Number of Joint Purchaser (if any)



Skylands Special Investment II LLC


Name (please print as name will appear


on stock certificate)



Number and Street



City, State Zip Code



ACCEPTED BY:



DATATRAK INTERNATIONAL, INC.



By: /s/ Jeffrey A. Green


Name: Jeffrey A. Green

Title: President, CEO



11




SIGNATURE PAGE




The Purchaser hereby agrees to purchase the number of Shares and Warrants, in exchange for the
Investment Amount, as set forth below, and agrees to be bound by the terms and conditions of this
Agreement.



	 	 	 	 	 
	PURCHASER	 	 
	1.Investment Amount: $475,000.00	 	 
	2.Number of Shares Purchased: 100,000	 	 
	3.Number of Shares Included in Warrant:	 	15,000
	/s/ Noel Langlas	 	 
	Signature of Purchaser	 	Signature of Joint Purchaser
	(and title, if applicable)	 	(if any)
	 
	 	 	 	 
	Taxpayer Identification or Social
	 	Taxpayer Identification or Social







Security Number Security Number of Joint Purchaser (if any)



Morgan Stanley RCL Equity


Long/Short Fund LP



Name (please print as name will appear



on stock certificate)



Number and Street



 



City, State Zip Code



ACCEPTED BY:



DATATRAK INTERNATIONAL, INC.



By: /s/ Jeffrey A. Green





Name: Jeffrey A. Green

Title: President, CEO



SIGNATURE PAGE




The Purchaser hereby agrees to purchase the number of Shares and Warrants, in exchange for the
Investment Amount, as set forth below, and agrees to be bound by the terms and conditions of this
Agreement.



PURCHASER



	 	 	 	 	 
	1.Investment Amount: $1,241,279.50	 	 
	2.Number of Shares Purchased: 261,322	 	 
	3.Number of Shares Included in Warrant:	 	39,198
	/s/ Brian H. Davidson, Managing Director	 	 
	Signature of Purchaser	 	Signature of Joint Purchaser
	(and title, if applicable)	 	(if any)
	 
	 	 	 	 
	Taxpayer Identification or Social
	 	Taxpayer Identification or Social







Security Number Security Number of Joint Purchaser (if any)



SF Capital Partners Ltd.


c/o Stark Offshore Management LLC


Name (please print as name will appear


on stock certificate)



Number and Street



City, State Zip Code



ACCEPTED BY:



DATATRAK INTERNATIONAL, INC.



By: /s/ Jeffrey A. Green


Name: Jeffrey A. Green

Title: President, CEO



12



SIGNATURE PAGE




The Purchaser hereby agrees to purchase the number of Shares and Warrants, in exchange for the
Investment Amount, as set forth below, and agrees to be bound by the terms and conditions of this
Agreement.



PURCHASER



	 	 	 	 	 
	1.Investment Amount: $473,741.25	 	 
	2.Number of Shares Purchased: 99,735	 	 
	3.Number of Shares Included in Warrant:	 	14,960
	/s/ Mark Diker	 	 
	Signature of Purchaser	 	Signature of Joint Purchaser
	(and title, if applicable)	 	(if any)
	 
	 	 	 	 
	Taxpayer Identification or Social
	 	Taxpayer Identification or Social







Security Number Security Number of Joint Purchaser (if any)



Diker Micro-Value Fund, LP


Name (please print as name will appear


on stock certificate)



Number and Street



City, State Zip Code



ACCEPTED BY:



DATATRAK INTERNATIONAL, INC.



By: /s/ Jeffrey A. Green


Name: Jeffrey A. Green

Title: President, CEO



13



SIGNATURE PAGE




The Purchaser hereby agrees to purchase the number of Shares and Warrants, in exchange for the
Investment Amount, as set forth below, and agrees to be bound by the terms and conditions of this
Agreement.



PURCHASER



	 	 	 	 	 
	1.Investment Amount: $657,423.75	 	 
	2.Number of Shares Purchased: 138,405	 	 
	3.Number of Shares Included in Warrant:	 	20,761
	/s/ Mark Diker	 	 
	Signature of Purchaser	 	Signature of Joint Purchaser
	(and title, if applicable)	 	(if any)
	 
	 	 	 	 
	Taxpayer Identification or Social
	 	Taxpayer Identification or Social







Security Number Security Number of Joint Purchaser (if any)



Diker Micro-Value QP Fund, LP


Name (please print as name will appear


on stock certificate)



Number and Street



City, State Zip Code



ACCEPTED BY:



DATATRAK INTERNATIONAL, INC.



By: /s/ Jeffrey A. Green


Name: Jeffrey A. Green

Title: President, CEO



14



SIGNATURE PAGE




The Purchaser hereby agrees to purchase the number of Shares and Warrants, in exchange for the
Investment Amount, as set forth below, and agrees to be bound by the terms and conditions of this
Agreement.



PURCHASER



	 	 	 	 	 
	1.Investment Amount: $490,722.50	 	 
	2.Number of Shares Purchased: 103,310	 	 
	3.Number of Shares Included in Warrant:	 	15,497
	/s/ Mark Diker	 	 
	Signature of Purchaser	 	Signature of Joint Purchaser
	(and title, if applicable)	 	(if any)
	 
	 	 	 	 
	Taxpayer Identification or Social
	 	Taxpayer Identification or Social







Security Number Security Number of Joint Purchaser (if any)



Diker Micro and Small Cap Fund, LP


Name (please print as name will appear


on stock certificate)



Number and Street



City, State Zip Code



ACCEPTED BY:



DATATRAK INTERNATIONAL, INC.



By: /s/ Jeffrey A. Green


Name: Jeffrey A. Green

Title: President, CEO



15



SIGNATURE PAGE




The Purchaser hereby agrees to purchase the number of Shares and Warrants, in exchange for the
Investment Amount, as set forth below, and agrees to be bound by the terms and conditions of this
Agreement.



PURCHASER



	 	 	 	 	 
	1.Investment Amount: $515,612.50	 	 
	2.Number of Shares Purchased: 108,550	 	 
	3.Number of Shares Included in Warrant:	 	16,283
	/s/ Mark Diker	 	 
	Signature of Purchaser	 	Signature of Joint Purchaser
	(and title, if applicable)	 	(if any)
	 
	 	 	 	 
	Taxpayer Identification or Social
	 	Taxpayer Identification or Social







Security Number Security Number of Joint Purchaser (if any)



Diker M&S Cap Master, Ltd.


Name (please print as name will appear


on stock certificate)



Number and Street



City, State Zip Code



ACCEPTED BY:



DATATRAK INTERNATIONAL, INC.



By: /s/ Jeffrey A. Green


Name: Jeffrey A. Green

Title: President, CEO



16



SIGNATURE PAGE




The Purchaser hereby agrees to purchase the number of Shares and Warrants, in exchange for the
Investment Amount, as set forth below, and agrees to be bound by the terms and conditions of this
Agreement.



	 	 	 	 	 	 	 	 	 
	PURCHASER	 	 	 	 
	1.	 	Investment Amount:	$1,834,146.00	 
	2.	 	Number of Shares Purchased:	386,136	 
	3.
	 	Number of Shares Included in Warrant:
	 	 	57,920	 
	 
	 	 	 	 	 	 	 	 






	 	 	 
	/s/ David W. Berry, Manager of the
	General Partner	 	 
	Signature of Purchaser	 	Signature of Joint Purchaser
	(and title, if applicable)	 	(if any)
	 

	 	 
	Taxpayer Identification or Social

	 	Taxpayer Identification or Social






Security Number Security Number of Joint Purchaser (if any)



Select Contrarian Value Partners


Name (please print as name will appear


on stock certificate)



Number and Street



City, State Zip Code



ACCEPTED BY:



DATATRAK INTERNATIONAL, INC.



By: /s/ Jeffrey A. Green


Name: Jeffrey A. Green

Title: President, CEO



17



SIGNATURE PAGE




The Purchaser hereby agrees to purchase the number of Shares and Warrants, in exchange for the
Investment Amount, as set forth below, and agrees to be bound by the terms and conditions of this
Agreement.



PURCHASER



	 	 	 	 	 	 	 	 	 
	1.	 	Investment Amount:	$65,854.00	 
	2.	 	Number of Shares Purchased:	13,864	 
	3.
	 	Number of Shares Included in Warrant:
	 	 	2,080	 
	 
	 	 	 	 	 	 	 	 






	 	 	 
	/s/ David W. Berry, Manager of the
	General Partner	 	 
	Signature of Purchaser	 	Signature of Joint Purchaser
	(and title, if applicable)	 	(if any)
	 

	 	 
	Taxpayer Identification or Social

	 	Taxpayer Identification or Social






Security Number Security Number of Joint Purchaser (if any)



Spectrum Galaxy Fund Ltd. re Kaizen


Fundamental Value Fund


c/o Kaizen Management, LP


Name (please print as name will appear


on stock certificate)



Number and Street



City, State Zip Code



ACCEPTED BY:



DATATRAK INTERNATIONAL, INC.



By: /s/ Jeffrey A. Green


Name: Jeffrey A. Green

Title: President, CEO



18



Schedule A(3)




Purchasers




Schedule A(3)




Purchasers




	 	 	 	 	 	 	 	 	 	 	 	 	 
	PURCHASER	 	INVESTMENT AMOUNT	 	NO. OF SHARES	 	NO. OF WARRANTS
	The Catfish Fund, L.P.	 	 	 	 	 	 	 	 	 	 	 	 
	290 Lowell Avenue
Palo Alto, CA 94301
Attention: Casey Roberts
	 	$	785,365.00	 	 	 	165,340	 	 	 	24,801	 
	Bodri Capital Fund, LP
290 Lowell Avenue
Palo Alto, CA 94301
Attention: Casey Roberts
	 	$	64,315.00	 	 	 	13,540	 	 	 	2,031	 
	Bodri Capital Offshore Fund,
Ltd.
4 Embarcadero Center Suite 2500
San Francisco, CA 94111
Attention: Casey Roberts
	 	$	100,320.00	 	 	 	21,120	 	 	 	3,168	 
	Potomac Capital Partners, LP
c/o Potomac Capital Management
825 Third Avenue, 33rd Floor
New York, NY 10022
Attention: Javier Montenegro
	 	$	843,585.75	 	 	 	177,597	 	 	 	26,640	 
	Potomac Capital International
Ltd.
c/o Potomac Capital Management
825 Third Avenue, 33rd Floor
New York, NY 10022
Attention: Javier Montenegro
	 	$	578,393.25	 	 	 	121,767	 	 	 	18,265	 
	Peliades Investment Partners R
LP
c/o Potomac Capital Management
825 Third Avenue, 33rd Floor
New York, NY 10022
Attention: Javier Montenegro
	 	$	596,771.00	 	 	 	125,636	 	 	 	18,845	 
	Harbour Holdings Ltd.
c/o Skylands Capital, LLC
9 Church St
Hamilton HM 11
Bermuda
Attention: Pamela Cavanaugh
	 	$	421,325.00	 	 	 	88,700	 	 	 	13,305	 
	Skylands Special Investment LLC
c/o Skylands Capital, LLC
1200 N Mayfair Road, Suite 250
Milwauke, WI 53226
Attention: Pamela Cavanaugh
	 	$	199,025.00	 	 	 	41,900	 	 	 	6,285	 
	Skyland Quest LLC
c/o Skylands Capital, LLC
1200 N Mayfair Road, Suite 250
Milwauke, WI 53226
Attention: Pamela Cavanaugh
	 	$	63,650.00	 	 	 	13,400	 	 	 	2,010	 
	Skylands Special Investment II
LLC
c/o Skylands Capital, LLC
1200 N Mayfair Road, Suite 250
Milwauke, WI 53226
Attention: Pamela Cavanaugh
	 	$	28,500.00	 	 	 	6,000	 	 	 	900	 
	Morgan Stanley RCL Equity
Long/Short Fund, L.P.
Two Greenwich Plaza
Greenwich, CT 06830
Attention: Michael Eng
	 	$	475,000.00	 	 	 	100,000	 	 	 	15,000	 
	SF Capital Partners Ltd.
3600 South Lake Drive
St. Francis, WI 53235
Attention: Michael Dahm
	 	$	1,241,279.50	 	 	 	261,322	 	 	 	39,198	 
	Diker Micro Value Fund, LP
c/o Diker Management, LLC
745 5th Avenue, Suite 1409
New York, NY 10151
Attention: Matthew H. Gilman
	 	$	473,741.25	 	 	 	99,735	 	 	 	14,960	 
	Diker Micro Value QP Fund, LP
c/o Diker Management, LLC
745 5th Avenue, Suite 1409
New York, NY 10151
Attention: Matthew H. Gilman
	 	$	657,423.75	 	 	 	138,405	 	 	 	20,761	 
	Diker Micro and Small Cap
Fund, LP
c/o Diker Management, LLC
745 5th Avenue, Suite 1409
New York, NY 10151
Attention: Matthew H. Gilman
	 	$	490,722.50	 	 	 	103,310	 	 	 	15,497	 
	Diker M&S Cap Master, Ltd.
c/o Diker Management, LLC
745 5th Avenue, Suite 1409
New York, NY 10151
Attention: Matthew H. Gilman
	 	$	515,612.50	 	 	 	108,550	 	 	 	16,283	 
	Select Contrarian Value
Partners
4200 Montrose Blvd., Suite 400
Houston, TX 77006
Attention: David W. Berry
	 	$	1,834,146.00	 	 	 	386,136	 	 	 	57,920	 
	Kaizen Fundamental Value Fund
4200 Montrose Blvd., Suite 400
Houston, TX 77006
Attention: David W. Berry
	 	$	65,854.00	 	 	 	13,864	 	 	 	2,080	 







19