EX-10.1



 







Exhibit 10.1




SECURITIES PURCHASE AGREEMENT




     This
Securities Purchase Agreement (this “Agreement”) is
dated as of March 29, 2006, among
Metretek Technologies, Inc., a Delaware corporation (the “Company”), the selling stockholders
identified on the signature page hereto (each, a “Selling Stockholder,” and collectively, the
“Selling Stockholders”) and the investors identified on the signature pages hereto (each, an
“Investor” and collectively, the “Investors”).



     WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to
exemptions from registration under the Securities Act (as defined below), the Company and the
Selling Stockholders desire to issue and sell to each Investor, and each Investor, severally and
not jointly, desires to purchase from the Company and the Selling Stockholders, shares of the
Company’s Common Stock, as more fully described in this Agreement.



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



ARTICLE 1.

DEFINITIONS




     1.1. Definitions. In addition to the terms defined elsewhere in this Agreement, for all
purposes of this Agreement, the following terms shall have the meanings indicated in this Section
1.1:



          “Action” means any action, suit, inquiry, notice of violation, proceeding (including any
partial proceeding such as a deposition) or investigation pending or threatened in writing against
or affecting the Company, any Subsidiary or any of their respective properties before or by any
court, arbitrator, governmental or administrative agency, regulatory authority (federal, state,
county, local or foreign), stock market, stock exchange or trading facility.




          “Affiliate” means any Person that, directly or indirectly through one or more intermediaries,
controls or is controlled by or is under common control with a Person, as such terms are used in
and construed under Rule 144.




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




          “Closing” means the closing of the purchase and sale of the Securities pursuant to Article II.




          “Closing Date” means the Business Day on which all of the conditions set forth in Sections 5.1
and 5.2 hereof are satisfied, or such other date as the parties may agree.




          “Commission” means the Securities and Exchange Commission.




 









 








          “Common Stock” means the common stock of the Company, par value $0.01 per share, and any
securities into which such common stock may hereafter be reclassified.




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




          “Company Counsel” means Kegler, Brown, Hill & Ritter Co., L.P.A.




          “Company Deliverables” has the meaning set forth in Section 2.2(a).




          “Disclosure Materials” has the meaning set forth in Section 3.1(h).




          “Effective Date” means the date that the Registration Statement required by Section 2(a) of
the Registration Rights Agreement is first declared effective by the Commission.




          “Exchange Act” means the Securities Exchange Act of 1934, as amended.




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




          “Intellectual Property Rights” has the meaning set forth in Section 3.1(p).




          “Investment Amount” means, with respect to each Investor, the Investment Amount indicated on
such Investor’s signature page to this Agreement.




          “Investor Deliverables” has the meaning set forth in Section 2.2(b).




          “Investor Party” has the meaning set forth in Section 4.7.




          “Lien” means any lien, charge, encumbrance, security interest, right of first refusal or other
restrictions of any kind.




          “Losses” means any loss, liability, obligation, claim, contingency, damage, cost or expense,
including all judgments, amounts paid in settlements, court costs and reasonable attorneys’ fees
and costs of investigation related thereto.




          “Material Adverse Effect” means any of (i) a material and adverse effect on the legality,
validity or enforceability of any Transaction Document, (ii) a material and adverse effect on the
results of operations, assets, prospects, business or condition (financial or otherwise) of the
Company and the Subsidiaries, taken as a whole, or (iii) an adverse impairment to the Company’s
ability to perform on a timely basis its obligations under any Transaction Document.




          “New York Courts” means the state and federal courts sitting in the City of New York, Borough
of Manhattan.




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          “Outside Date” means April 7, 2006.




          “Per Share Purchase Price” equals $14.00.




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




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




          “Registration Rights Agreement” means the Registration Rights Agreement, dated as of the date
of this Agreement, among the Company and the Investors, in the form of Exhibit A hereto.




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




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




          “SEC Reports” has the meaning set forth in Section 3.1(h).




          “Securities” means the Shares and Selling Stockholder Shares.




          “Securities Act” means the Securities Act of 1933, as amended.




          “Selling Stockholder Shares” means the shares of Common Stock being offered and sold by the
Selling Stockholder to the Investors hereunder in such number as is set forth below the Selling
Stockholder’s signature to this Agreement.




          “Shares” means the shares of Common Stock being offered and sold to the Investors by the
Company hereunder.




          “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 stock
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.




          “Subsidiary” means any “significant subsidiary” as defined in Rule 1-02(w) of the Regulation
S-X promulgated by the Commission under the Exchange Act.




          “Trading Day” means (i) a day on which the Common Stock is traded on a Trading Market (other
than the OTC Bulletin Board), or (ii) if the Common Stock is not listed on

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a Trading Market (other than the OTC Bulletin Board), a day on which the Common Stock is
traded in the over-the-counter market, as reported by the OTC Bulletin Board, or (iii) if the
Common Stock is not quoted on any Trading Market, a day on which the Common Stock is quoted in the
over-the-counter market as reported by the Pink Sheets, LLC (or any similar organization or agency
succeeding to its functions of reporting prices); provided, that in the event that the Common Stock
is not listed or quoted as set forth in (i), (ii) and (iii) hereof, then Trading Day shall mean a
Business Day.




          “Trading Market” means whichever of the New York Stock Exchange, the American Stock Exchange,
the NASDAQ National Market, the NASDAQ SmallCap Market or OTC Bulletin Board on which the Common
Stock is listed or quoted for trading on the date in question.




          “Transaction Documents” means this Agreement, the Registration Rights Agreement, and any other
documents or agreements executed in connection with the transactions contemplated hereunder.




ARTICLE 2.

PURCHASE AND SALE




2.1. Purchase of Securities; Closing.




          (a) Subject to the terms and conditions set forth in this Agreement, at the Closing: (i) the
Company shall sell to each Investor, and each Investor shall, severally and not jointly, purchase
from the Company, Shares in such number as equals the quotient (rounded down to the nearest whole
share) obtained by dividing (1) [ ]% of such Investor’s Investment Amount by (2) the Per Share
Purchase Price; and (ii) the Selling Stockholders shall sell to each Investor, and each Investor
shall, severally and not jointly, purchase from each Selling Stockholder, the Selling Stockholder
Shares held by each Selling Stockholder in such number as equals the quotient (rounded down to the
nearest whole share) obtained by dividing (1) [ ]% of such Investor’s Investment Amount by (2) the
Per Share Purchase Price and (3) multiplying the result by a quotient, the numerator of which is
the aggregate number of Selling Stockholder Shares to be sold by such Selling Stockholder hereunder
and the denominator of which is the total number of Selling Stockholder Shares to be sold by all of
the Selling stockholders hereunder. The Closing shall take place at the offices of Bryan Cave LLP,
1290 Avenue of the Americas, New York, NY 10104 or at such other location as the parties may agree.




          (b) The Company and the Selling Stockholders will cooperate with one another, and will cause
the Selling Stockholder Shares to be issued to the Investors at Closing as part of a single stock
certificate from the Company to each Investor that will include all Shares and Selling Stockholder
Shares being acquired by such Investor under this Agreement. In furtherance thereof, each Selling
Stockholder will (i) deliver to the Company the Selling Stockholder Shares it will be selling at
the Closing, together with such other documents (including legal opinions) as the Company or the
Investors may require to effect the transfer of such shares to the name of the Investors at the
Closing, including executed stock powers and directions for the Company to effect the transfer of
such shares on its books as of the Closing and




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(ii) instruct the Company to hold the Selling Stockholder Shares and deliver the Selling
Stockholder Shares at Closing in accordance with Section 2.2.




     2.2. Closing Deliveries. (a) At the Closing, the Company shall deliver or cause to be
delivered to each Investor the following (the “Company Deliverables”):



               (i) a single certificate representing that number of aggregate Shares and Selling Stockholder
Shares to be issued and sold at Closing to such Investor, determined under Section 2.1(a),
registered in the name of such Investor;



               (ii) the legal opinion of Company Counsel, in agreed form, addressed to the Investors; and



               (iii) the Registration Rights Agreement, duly executed by the Company.



          (b) At the Closing, each Investor shall deliver or cause to be delivered to the Company (for
further redistribution to the Selling Stockholder to reflect the Selling Stockholder Shares being
hereby offered and sold consistent with Section 2.1(a)) the following (collectively, the “Investors
Deliverables”):




               (i) its Investment Amount, in United States dollars and in immediately available funds, by
wire transfer to an account designated in writing by the Company for such purpose; and



               (ii) the Registration Rights Agreement, duly executed by such Investor.



     Payment of the Investment Amount to the Company by any Investor shall constitute payment in
full for the Selling Stockholder Shares being acquired by such Investor hereunder and no Investor
shall be responsible for the payment over of any portion of the Investment Amount to the Selling
Stockholders. The Company shall indemnify the Investors for any Loss suffered as a result of the
failure of the Company to pay to the Selling Stockholders the portion of the Investment Amount due
to the Selling Stockholders.



ARTICLE 3.




REPRESENTATIONS AND WARRANTIES




     3.1. Representations and Warranties of the Company. The Company hereby makes the following
representations and warranties to each Investor:



          (a) Subsidiaries. The Company has no direct or indirect Subsidiaries other than as
specified in the SEC Reports. Except as disclosed in Schedule 3.1(a), 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 and are fully paid, non-assessable and free of preemptive and similar rights.




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          (b) Organization and Qualification. The Company and each Subsidiary are duly
incorporated or otherwise organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization (as applicable), with the requisite power and
authority to own and use its properties and assets and to carry on its business as currently
conducted. Neither the Company nor any Subsidiary is in violation of any of the provisions of its
respective certificate or articles of incorporation, bylaws or other organizational or charter
documents. The Company and each Subsidiary are duly qualified to conduct its respective businesses
and are in good standing as a foreign corporation or other entity in each jurisdiction in which the
nature of the business conducted or property owned by it makes such qualification necessary, except
where the failure to be so qualified or in good standing, as the case may be, could not,
individually or in the aggregate, have or reasonably be expected to result in a Material Adverse
Effect.




          (c) Authorization; Enforcement. The Company has the requisite corporate power and
authority to enter into and to consummate the transactions contemplated by each of the Transaction
Documents and otherwise to carry out its obligations thereunder. The execution and delivery of
each of the Transaction Documents by the Company and the consummation by it of the transactions
contemplated thereby have been duly authorized by all necessary action on the part of the Company
and no further action is required by the Company in connection therewith. Each Transaction
Document 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 valid and binding obligation of
the Company enforceable against the Company in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally the enforcement of, creditors’
rights and remedies or by other equitable principles of general application.




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

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          (e) Filings, Consents and Approvals. The Company is not required to obtain any
consent, waiver, authorization or order of, give any notice to, or make any filing or registration
with, any court or other federal, state, local or other governmental authority or other Person in
connection with the execution, delivery and performance by the Company of the Transaction Documents
or by reason of the sale of the Selling Stockholder Shares hereunder, other than (i) the filing
with the Commission of one or more Registration Statements in accordance with the requirements of
the Registration Rights Agreement, (ii) filings required by state securities laws, (iii) the filing
of a Notice of Sale of Securities on Form D with the Commission under Regulation D of the
Securities Act, (iv) the filings required in accordance with Section 4.5 and (v) those that have
been made or obtained prior to the date of this Agreement. To the knowledge of the Company, no
Selling Stockholder is required to obtain any consent, waiver, authorization or order of, give any
notice to, or make any filing or registration with, any court or other federal, state, local or
other governmental authority or any other Person in connection with the execution, delivery and
performance by them of the Transaction Documents or by reason of the sale of the Selling
Stockholder Shares hereunder.




          (f) Issuance of the Shares. The shares of Common Stock to be issued to the Investors
in accordance with Section 2.2(a)(i) have been duly authorized and, when issued and paid for in
accordance with Section 2.2(b)(ii), will be duly and validly issued, fully paid and nonassessable,
free and clear of all Liens. The Company has reserved from its duly authorized capital stock such
shares of Common Stock. The Selling Stockholder Shares are duly authorized, validly issued, fully
paid and nonassessable. The Selling Stockholders are the sole record owner (and to the Company’s
knowledge, the sole beneficial owners) of the Selling Stockholder Shares to be sold hereunder.




          (g) Capitalization. The number of shares and type of all authorized, issued and
outstanding capital stock of the Company, and all shares of Common Stock reserved for issuance
under the Company’s various option and incentive plans, is specified in the SEC Reports. Except as
specified in the SEC Reports, no securities of the Company are entitled to preemptive or similar
rights, and no Person has any right of first refusal, preemptive right, right of participation, or
any similar right to participate in the transactions contemplated by the Transaction Documents.
Except as specified in the SEC Reports, there are no outstanding options, warrants, scrip rights to
subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights
or obligations convertible into or exchangeable for, or giving any Person any right to subscribe
for or acquire, any shares of Common Stock, or contracts, commitments, understandings or
arrangements by which the Company or any Subsidiary is or may become bound to issue additional
shares of Common Stock, or securities or rights convertible or exchangeable into shares of Common
Stock. The issue and sale of the Shares and the Selling Stockholder Shares hereunder will not,
immediately or with the passage of time, obligate the Company to issue shares of Common Stock or
other securities to any Person (other than the Investors) and will not result in a right of any
holder of Company securities to adjust the exercise, conversion, exchange or reset price under such
securities.




          (h) SEC Reports; Financial Statements. The Company has filed all reports required to
be filed by it under the Securities Act and the Exchange Act, including pursuant to Section 13(a)
or 15(d) thereof, for the twelve months preceding the date hereof (or such shorter period as the
Company was required by law to file such reports) (the foregoing materials being





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collectively
referred to herein as the “SEC Reports” and, together with the Schedules to this Agreement (if
any), the “Disclosure Materials”) on a timely basis or has timely filed a valid extension of such
time of filing and has filed any such SEC Reports prior to the expiration of any such extension.
As of their respective dates, the SEC Reports complied in all material respects with the
requirements of the Securities Act and the Exchange Act and the rules and regulations of the
Commission promulgated thereunder, and none of the SEC Reports, when filed, contained any untrue
statement of a material fact or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances under which they
were made, not misleading. The financial statements of the Company included in the SEC Reports
comply in all material respects with applicable accounting requirements and the rules and
regulations of the Commission with respect thereto as in effect at the time of filing. Such
financial statements have been prepared in accordance with GAAP applied on a consistent basis
during the periods involved, except as may be otherwise specified in such financial statements or
the notes thereto, and fairly present in all material respects the financial position of the
Company and its consolidated Subsidiaries as of and for the dates thereof and the results of
operations and cash flows for the periods then ended, subject, in the case of unaudited statements,
to normal, immaterial, year-end audit adjustments.




          (i) Press Releases. The press releases disseminated by the Company during the twelve
months preceding the date of this Agreement taken as a whole do not contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which they were made and
when made, not misleading.




          (j) Material Changes. Since the date of the latest audited financial statements
included within the SEC Reports, except as specifically disclosed in the SEC Reports, (i) there has
been no event, occurrence or development that has had or that could reasonably be expected to
result in a Material Adverse Effect, (ii) the Company has not incurred any liabilities (contingent
or otherwise) other than (A) trade payables, accrued expenses and other liabilities incurred in the
ordinary course of business consistent with past practice and (B) liabilities not required to be
reflected in the Company’s financial statements pursuant to GAAP or required to be disclosed in
filings made with the Commission, (iii) the Company has not altered its method of accounting or the
identity of its auditors, (iv) the Company has not declared or made any dividend or distribution of
cash or other property to its stockholders or purchased, redeemed or made any agreements to
purchase or redeem any shares of its capital stock, and (v) the Company has not issued any equity
securities to any officer, director or Affiliate, except pursuant to existing Company stock option
plans. The Company does not have pending before the Commission any request for confidential
treatment of information.




          (k) Litigation. There is no Action which (i) adversely affects or challenges the
legality, validity or enforceability of any of the Transaction Documents or the Securities or (ii)
except as specifically disclosed in the SEC Reports, could, if there were an unfavorable decision,
individually or in the aggregate, have or reasonably be expected to result in a Material
Adverse Effect. 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 of
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. There has not been, and to the




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knowledge of the Company, there is not pending any investigation by the Commission involving the
Company or any current or former director or officer of the Company (in his or her capacity as
such). The Commission has not issued any stop order or other order suspending the effectiveness of
any registration statement filed by the Company or any Subsidiary under the Exchange Act or the
Securities Act.




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




          (m) Compliance. Neither the Company nor any Subsidiary (i) is in default under or in
violation of (and no event has occurred that has not been waived that, with notice or lapse of time
or both, would result in a default by the Company or any Subsidiary under), nor has the Company or
any Subsidiary received notice of a claim that it is in default under or that it is in violation
of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a
party or by which it or any of its properties is bound (whether or not such default or violation
has been waived), (ii) is in violation of any order of any court, arbitrator or governmental body,
or (iii) is or has been in violation of any statute, rule or regulation of any governmental
authority, including without limitation all foreign, federal, state and local laws relating to
taxes, environmental protection, occupational health and safety, product quality and safety and
employment and labor matters, except in each case as could not, individually or in the aggregate,
have or reasonably be expected to result in a Material Adverse Effect. The Company is in compliance
with all effective requirements of the Sarbanes-Oxley Act of 2002, as amended, and the rules and
regulations thereunder, that are applicable to it, except where such noncompliance could not have
or reasonably be expected to result in a Material Adverse Effect.




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




          (o) Title to Assets. The Company and the Subsidiaries have good and marketable title
in fee simple to all real property owned by them that is material to their respective businesses
and good and marketable title in all personal property owned by them that is material to their
respective businesses, in each case free and clear of all Liens, except for Liens as do not
materially affect the value of such property and do not materially interfere with the use made and
proposed to be made of such property by the Company and the Subsidiaries. Any real property and
facilities held under lease by the Company and the Subsidiaries are held by them under valid,
subsisting and enforceable leases of which the Company and the Subsidiaries are in compliance,
except as could not, individually or in the aggregate, have or reasonably be expected to result in
a Material Adverse Effect.




          (p) Patents and Trademarks. The Company and the Subsidiaries have, or have rights to
use, all patents, patent applications, trademarks, trademark applications, service marks, trade
names, copyrights, licenses and other similar rights that are necessary or material for use in

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connection with their respective businesses as described in the SEC Reports and which the failure
to so have could, individually or in the aggregate, have or reasonably be expected to result in a
Material Adverse Effect (collectively, the “Intellectual Property Rights”). Neither the Company
nor any Subsidiary has received a written notice that the Intellectual Property Rights used by the
Company or any Subsidiary violates or infringes upon the rights of any Person. Except as set forth
in the SEC Reports, to the knowledge of the Company, all such Intellectual Property Rights are
enforceable and there is no existing infringement by another Person of any of the Intellectual
Property Rights.




          (q) Insurance. The Company and the Subsidiaries are insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts as are prudent and
customary in the businesses in which the Company and the Subsidiaries are engaged. The Company has
no reason to believe that it will not be able to renew its and the Subsidiaries’ 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 on terms consistent with market for the Company’s and
such Subsidiaries’ respective lines of business.




          (r) Transactions With Affiliates and Employees. Except as set forth in the SEC
Reports, none of the officers or directors of the Company and, to the knowledge of the Company,
none of the employees of the Company is presently a party to any transaction with the Company or
any Subsidiary (other than for services as employees, officers and directors), including any
contract, agreement or other arrangement providing for the furnishing of services to or by,
providing for rental of real or personal property to or from, or otherwise requiring payments to or
from any officer, director or such employee or, to the knowledge of the Company, any entity in
which any officer, director, or any such employee has a substantial interest or is an officer,
director, trustee or partner.




          (s) Internal Accounting Controls. The Company and the Subsidiaries maintain a system
of internal accounting controls sufficient to provide reasonable assurance that (i) transactions
are executed in accordance with management’s general or specific authorizations, (ii) transactions
are recorded as necessary to permit preparation of financial statements in conformity with GAAP and
to maintain asset accountability, (iii) access to assets is permitted only in accordance with
management’s general or specific authorization, and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences. The Company has established disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed such disclosure
controls and procedures to ensure that material information relating to the Company, including its
Subsidiaries, is made known to the certifying officers by others within those entities,
particularly during the period in which the Company’s Form 10-K or 10-Q, as the case may be, is
being prepared. The Company’s certifying officers have evaluated the effectiveness of the
Company’s controls and procedures in accordance with Item 307 of Regulation S-K under the Exchange
Act for the Company’s most recently ended fiscal quarter or fiscal year-end (such date, the
“Evaluation Date”). The Company presented in its most recently filed Form 10-K or Form 10-Q the
conclusions of the certifying officers about
the effectiveness of the disclosure controls and procedures based on their evaluations as of
the Evaluation Date. Since the Evaluation Date, there have been no significant changes in the
Company’s internal controls (as such term is defined in Item 308(c) of Regulation S-K under the




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Exchange Act) or, to the Company’s knowledge, in other factors that could significantly affect the
Company’s internal controls.




          (t) Solvency. Based on the financial condition of the Company as of the Closing Date
(and assuming that 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).




          (u) Certain Fees. Except as described in Schedule 3.1(u), no brokerage or
finder’s fees or commissions are or will be payable by the Company to any broker, financial advisor
or consultant, finder, placement agent, investment banker, bank or other Person with respect to the
transactions contemplated by this Agreement. The Investors shall have no obligation with respect
to any fees or with respect to any claims (other than such fees or commissions owed by an Investor
pursuant to written agreements executed by such Investor which fees or commissions shall be the
sole responsibility of such Investor) made by or on behalf of other Persons for fees of a type
contemplated in this Section that may be due in connection with the transactions contemplated by
this Agreement.




          (v) Certain Registration Matters. Assuming the accuracy of the Investors’
representations and warranties set forth in Section 3.2(b)-(e), no registration under the
Securities Act is required for the offer and sale of the Securities by the Company and the Selling
Stockholder (as applicable) to the Investors under the Transaction Documents. The Company is
eligible to register the Securities for resale by the Investors under Form S-3 promulgated under
the Securities Act. Except as specified in Schedule 3.1(v), the Company has not granted or
agreed to grant to any Person any rights (including “piggy-back” registration rights) to have any
securities of the Company registered with the Commission or any other governmental authority that
have not been satisfied.




          (w) Listing and Maintenance Requirements. Except as specified in the SEC Reports, the
Company has not, in the two years preceding the date hereof, received notice from any Trading
Market to the effect that the Company is not in compliance with the listing or maintenance
requirements thereof. The Company is, and has no reason to believe that it will not in the
foreseeable future continue to be, in compliance with the listing and maintenance requirements for
continued listing of the Common Stock on the Trading Market on which the
Common Stock is currently listed or quoted. The issuance and sale of the Shares under the
Transaction Documents does not contravene the rules and regulations of the Trading Market on which
the Common Stock is currently listed or quoted, and no approval of the shareholders of




11









 







the Company
thereunder is required for the consummation of the transactions contemplated hereby.




          (x) Investment Company. The Company is not, and is not an Affiliate of, and
immediately following the Closing will not have become, an “investment company” within the meaning
of the Investment Company Act of 1940, as amended.




          (y) Application of Takeover Protections. The Company has taken all necessary action,
if any, in order to render inapplicable any control share acquisition, business combination, poison
pill (including any distribution under a rights agreement) or other similar anti-takeover provision
under the Company’s Certificate of Incorporation (or similar charter documents) or the laws of its
state of incorporation that is or could become applicable to the Investors as a result of the
Investors and the Company fulfilling their obligations or exercising their rights under the
Transaction Documents, including without limitation the Company’s issuance of the Shares, the sale
of the Selling Stockholder Shares to the Investors and the Investors’ ownership and voting of the
Securities.




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




          (aa) Consultation with Auditors. The Company has consulted its independent auditors
concerning the accounting treatment of the transactions contemplated by the Transaction Documents,
and in connection therewith has furnished such auditors complete copies of the Transaction
Documents.




          (bb) Disclosure. The Company confirms that neither it nor any Person acting on its
behalf has provided any Investor or its respective agents or counsel with any information that the
Company believes constitutes material, non-public information, except insofar as the existence and
terms of the proposed transactions contemplated hereunder may constitute such information. The
Company understands and confirms that the Investors will rely on the foregoing representations and
covenants in effecting transactions in securities of the Company. To the knowledge of the Company,
the representations and warranties of the Selling Stockholder are true and correct in all material
respects. All disclosure provided to the Investors regarding the Company, its business and the
transactions contemplated hereby, furnished by or on behalf of the Company (including the Company’s
representations and warranties set forth in this Agreement) 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 light of the circumstances under which they were made, not
misleading.




     3.2. Representations and Warranties of the Investors. Each Investor hereby, for itself and
for no other Investor, represents and warrants to the Company and the Selling Stockholders as
follows:



          (a) Organization; Authority. Such Investor is an entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its organization with the
requisite corporate or partnership power and authority to enter into and to consummate the




12









 







transactions contemplated by the applicable Transaction Documents and otherwise to carry out its
obligations thereunder. The execution, delivery and performance by such Investor of the
transactions contemplated by this Agreement has been duly authorized by all necessary corporate or,
if such Investor is not a corporation, such partnership, limited liability company or other
applicable like action, on the part of such Investor. Each of this Agreement and the Registration
Rights Agreement has been duly executed by such Investor, and when delivered by such Investor in
accordance with the terms hereof, will constitute the valid and legally binding obligation of such
Investor, enforceable against it in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar
laws relating to, or affecting generally the enforcement of, creditors’ rights and remedies or by
other equitable principles of general application.




          (b) Investment Intent. Such Investor is acquiring the Securities as principal for its
own account for investment purposes only and not with a view to or for distributing or reselling
such Securities or any part thereof, without prejudice, however, to such Investor’s right at all
times to sell or otherwise dispose of all or any part of such Securities in compliance with
applicable federal and state securities laws. Subject to the immediately preceding sentence,
nothing contained herein shall be deemed a representation or warranty by such Investor to hold the
Securities for any period of time. Such Investor is acquiring the Securities hereunder in the
ordinary course of its business. Such Investor does not have any agreement or understanding,
directly or indirectly, with any Person to distribute any of the Securities.




          (c) Investor Status. At the time such Investor was offered the Securities, it was,
and at the date hereof it is, an “accredited investor” as defined in Rule 501(a) under the
Securities Act. Such Investor is not a registered broker-dealer under Section 15 of the Exchange
Act. Such Investor either alone or together with its representatives has such knowledge,
sophistication and experience in business and financial matters so as to be capable of evaluating
the merits and risks of the prospective investment in the Securities, and has so evaluated the
merits and risks of such investment. Such Investor is able to bear the economic risk of an
investment in the Securities and at the present time, is able to afford a complete loss of such
investment.




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




          (e) Access to Information. Such Investor acknowledges that it has reviewed the
Disclosure Materials and has been afforded (i) the opportunity to ask such questions as it has
deemed necessary of, and to receive answers from, representatives of the Company concerning the
terms and conditions of the offering of the Shares and the merits and risks of investing in the
Securities; (ii) access to information about the Company and the Subsidiaries and their respective
financial condition, results of operations, business, properties, management and prospects
sufficient to enable it to evaluate its investment; and (iii) the opportunity to obtain such
additional information that the Company possesses or can acquire without unreasonable effort
or expense that is necessary to make an informed investment decision with respect to the
investment. Neither such inquiries nor any other investigation conducted by or on behalf of such




13









 







Investor or its representatives or counsel shall modify, amend or affect such Investor’s right to
rely on the truth, accuracy and completeness of the Disclosure Materials and the Company’s
representations and warranties contained in the Transaction Documents.




          (f) Certain Trading Activities. Such Investor has not directly or indirectly, nor has
any Person acting on behalf of or pursuant to any understanding with such Investor, engaged in any
transactions in the securities of the Company (including, without limitations, any Short Sales
involving the Company’s securities) since the time that such Investor was first contacted by the
Company or Roth Capital Partners, LLC regarding the investment in the Company contemplated by this
Agreement. Such Investor 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.




          (g) Independent Investment Decision. Such Investor has independently evaluated the
merits of its decision to purchase the Securities pursuant to the Transaction Documents, and such
Investor confirms that it has not relied on the advice of any other Investor’s business and/or
legal counsel in making such decision. Such Investor has not relied on the business or legal
advice of Roth Capital Partners, LLC or any of its 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 Investor in connection with the transactions contemplated by the Transaction
Documents.




          (h) Reliance. Such Investor understands and acknowledges that: (i) the Securities are
being offered and sold to it without registration under the Securities Act in a private placement
that is exempt from the registration provisions of the Securities Act and (ii) the availability of
such exemption depends in part on, and the Company will rely upon, the accuracy and truthfulness of
the foregoing representations, and such Investor hereby consents to such reliance.



The Company acknowledges and agrees that no Investor has made or makes any representations or
warranties with respect to the transactions contemplated hereby other than those specifically set
forth in this Section 3.2.




     3.3. Representations and Warranties of the Selling Stockholders. Each Selling
Stockholder for itself and no other Selling Stockholder hereby makes the following representations
and warranties to each Investor:



          (a) Enforcement. This Agreement has been duly executed and delivered by such Selling
Stockholder and constitutes the valid and binding obligation of such Selling Stockholder,
enforceable against him in accordance with its terms except as such enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally the enforcement of, creditors’ rights and remedies or by other
equitable principles of general application.




          (b) No Consents. No consent, approval, authorization or order of, or any filing or
declaration with, any court or governmental agency or body or other Person is required





14









 







in
connection with the consummation by such Selling Stockholder of the transactions on its part
contemplated by the Transaction Documents, except (i) filings as may be required under Sections
13(d) and 16(a) of the Exchange Act, and (ii) those that have been made or obtained prior to the
date of this Agreement.




          (c) No Conflicts. The execution, delivery and performance by such Selling Stockholder
of the Transaction Documents to which it is a party and the consummation of the transactions
contemplated thereby do not and will not result in a breach or violation of, or constitute a
default under (with or without notice or lapse of time), any stockholders agreement, voting trust
agreement, pledge registration rights agreement or other agreement or instrument to which such
Selling Stockholder or any of its properties are bound or affected, and will not violate or
conflict with any judgment, decree or order of any court or other governmental agency or any law,
rule or regulation applicable to such Selling Stockholder, in each case such as could not have or
result in a Material Adverse Effect.




          (d) Certain Registration Matters. Assuming the accuracy of the Investors’
representations and warranties set forth in Sections 3.2(b)-(d), no registration under the
Securities Act is required for the purchase and sale of the Selling Stockholder Shares to the
Investors hereunder.




          (e) Good and Marketable Title. Such Selling Stockholder is the sole lawful record and
sole beneficial owner of all of the Selling Stockholder Shares to be sold by it hereunder. Such
Selling Stockholder has good and marketable title to the Selling Stockholder Shares to be sold by
it hereunder, free and clear of any Liens, except for restrictions on subsequent transfer imposed
by applicable securities laws. There are no voting trust arrangements, stockholder agreements or
other agreements, arrangements or understandings to which the Seller Stockholder is a party or to
which its Selling Stockholder Shares are subject (i) granting any option, warrant or right of first
refusal with respect to such Selling Stockholder Shares to any Person, (ii) granting to any Person
a proxy or any other right to vote or to cause the voting of the Selling Stockholder Shares in any
particular matter, (iii) restricting the right of the Selling Stockholder to sell its Selling
Stockholder Shares to the Investors, (iv) restricting any other right of such Selling Stockholder
with respect to its Selling Stockholder Shares, or (v) requiring any Investor to become a party to
or to be bound by the terms of any agreement, arrangement or understanding with respect to such
Selling Stockholder Shares. Such Selling Stockholder has the right, power and capacity to sell,
assign and transfer its Selling Stockholder Shares to the Investors free and clear of any Liens.
Upon consummation of the Closing, the Investors will have good and marketable title to the Selling
Stockholder Shares purchased by them, free and clear of all Liens created by or through such
Selling Stockholder.




          (f) Certain Fees. Except as described in Schedule 3.3(f), no brokerage or
finder’s fees or commissions are or will be payable by the Selling Stockholders to any broker,
financial advisor or consultant, finder, placement agent, investment banker, bank or other Person
with respect to the transactions contemplated by this Agreement. The Investors shall have no
obligation with respect to any fees or with respect to any claims (other than such fees or
commissions owed by an Investor pursuant to written agreements executed by such Investor
which fees or commissions shall be the sole responsibility of such Investor) made by or on
behalf




15









 








of other Persons for fees of a type contemplated in this Section that may be due in
connection with the transactions contemplated by this Agreement.




          (g) No Additional Agreements. The Selling Stockholders do not have any agreement or
understanding with any Investor or with the Company with respect to the transactions contemplated
by the Transaction Documents other than as specified in the Transaction Documents.




          (h) Non-Public Information. The Selling Stockholders do not possess any material,
non-public information concerning the Company.




ARTICLE 4.

OTHER AGREEMENTS OF THE PARTIES




     4.1. (a) Securities may only be disposed of in compliance with state and federal securities
laws. In connection with any transfer of the Securities other than pursuant to an effective
registration statement, to the Company, to an Affiliate of an Investor or in connection with a
pledge as contemplated in Section 4.1(b), the Company may require the transferor thereof to provide
to the Company an opinion of counsel selected by the transferor, the form and substance of which
opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not
require registration of such transferred Securities under the Securities Act.



          (b) Certificates evidencing the Securities will contain the following legend, until such time
as they are not required under Section 4.1(c):





THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN
RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY,
MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE
WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL
OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE
OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THESE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT SECURED BY SUCH SECURITIES.



          The Company acknowledges and agrees that an Investor may from time to time pledge, and/or
grant a security interest in some or all of the Securities pursuant to a bona fide





16









 







margin agreement
in connection with a bona fide margin account and, if required under the terms of such agreement or
account, such Investor may transfer pledged or secured Securities to the pledgees or secured
parties. Such a pledge or transfer would not be subject to approval or consent of the Company and
no legal opinion of legal counsel to the pledgee, secured party or pledgor shall be required in
connection with the pledge, but such legal opinion may be required in connection with a subsequent
transfer following default by the Investor transferee of the pledge. No notice shall be required
of such pledge. At the appropriate Investor’s expense, the Company will execute and deliver such
reasonable documentation as a pledgee or secured party of Securities may reasonably request in
connection with a pledge or transfer of the Securities including the preparation and filing of any
required prospectus supplement under Rule 424(b)(3) of the Securities Act or other applicable
provision of the Securities Act to appropriately amend the list of Selling Stockholders thereunder.




          (c) Upon the earlier of (i) registration for resale pursuant to the Registration Rights
Agreement or (ii) Rule 144(k) becoming available the Company shall (A) deliver to the transfer
agent for the Common Stock (the “Transfer Agent”) irrevocable instructions that the Transfer Agent
shall reissue a certificate representing shares of Common Stock without legends upon receipt by
such Transfer Agent of the legended certificates for such shares, together with either (1) a
customary representation by the Investor that Rule 144(k) applies to the shares of Common Stock
represented thereby or (2) a statement by the Investor that such Investor has sold the shares of
Common Stock represented thereby in accordance with the Plan of Distribution contained in the
Registration Statement, and (B) cause its counsel to deliver to the Transfer Agent one or more
blanket opinions to the effect that the removal of such legends in such circumstances may be
effected under the Securities Act. From and after the earlier of such dates, upon an Investor’s
written request, the Company shall promptly cause certificates evidencing the Investor’s Securities
to be replaced with certificates which do not bear such restrictive legends. When the Company is
required to cause unlegended certificates to replace previously issued legended certificates, if
unlegended certificates are not delivered to an Investor within three (3) Trading Days of
submission by that Investor of legended certificate(s) to the Transfer Agent as provided above, the
Company shall be liable to the Investor for liquidated damages in an amount equal to 1.5% of the
aggregate purchase price of the Shares evidenced by such certificate(s) for each thirty (30) day
period (or portion thereof) beyond such three (3) Business Day that the unlegended certificates
have not been so delivered.




     4.2. Furnishing of Information. As long as any Investor owns the Securities, the Company
covenants 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. As long as any Investor owns Securities, if the Company is not required to file
reports pursuant to such laws, it will prepare and furnish to the Investors and make publicly
available in accordance with Rule 144(c) such information as is required for the Investors to sell
the Securities under Rule 144. The Company further covenants that it will take such further action
as any holder of Securities may reasonably request, all to the extent required from time to time to
enable such Person to sell the
Securities without registration under the Securities Act within the limitation of the exemptions
provided by Rule 144.



     4.3. Integration. The Company shall not, and shall use its best efforts to ensure that no
Affiliate of the Company shall, sell, offer for sale or solicit offers to buy or otherwise
negotiate



17









 








in respect of any security (as defined in Section 2 of the Securities Act) that would be
integrated with the offer or sale of the Securities in a manner that would require the registration
under the Securities Act of the sale of the Securities to the Investors, or that would be
integrated with the offer or sale of the Securities for purposes of the rules and regulations of
any Trading Market in a manner that would require stockholder approval of the sale of the
Securities to the Investors.



     4.4. Subsequent Registrations. 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 Commission with respect to any securities of the Company.



     4.5. Securities Laws Disclosure; Publicity. By 9:00 a.m. (New York time) on the Trading
Day following the execution of this Agreement, and by 9:00 a.m. (New York time) on the Trading Day
following the Closing Date, the Company shall issue press releases disclosing the transactions
contemplated hereby and the Closing. On the Trading Day following the execution of this Agreement
the Company will file a Current Report on Form 8-K disclosing the material terms of the Transaction
Documents (and attach as exhibits thereto the Transaction Documents), and on the Trading Day
following the Closing Date the Company will file an additional Current Report on Form 8-K to
disclose the Closing. In addition, the Company will make such other filings and notices in the
manner and time required by the Commission and the Trading Market on which the Common Stock is
listed. Notwithstanding the foregoing, the Company shall not publicly disclose the name of any
Investor, or include the name of any Investor in any filing with the Commission (other than the
Registration Statement and any exhibits to filings made in respect of this transaction in
accordance with periodic filing requirements under the Exchange Act) or any regulatory agency or
Trading Market, without the prior written consent of such Investor, except to the extent such
disclosure is required by law or Trading Market regulations.



     4.6. Limitation on Issuance of Future Priced Securities. 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.



     4.7. Indemnification of Investors. In addition to the indemnity provided in the
Registration Rights Agreement, the Company and each Selling Stockholder hereby agree to the
following indemnification of the Investors:



          (a) The Company will indemnify and hold the Investors and their respective directors,
officers, shareholders, partners, employees and agents (each, an
“Investor Party”)
harmless from any and all Losses that any such Investor Party may suffer or incur as a result
of or relating to any misrepresentation, breach or inaccuracy of any representation, warranty,
covenant or agreement made by the Company in any Transaction Document. In addition to the
indemnity contained herein, the Company will reimburse each Investor Party for its reasonable legal
and other expenses (including the cost of any investigation, preparation and travel in connection
therewith) incurred in connection therewith, as such expenses are incurred.




          (b) Each Selling Stockholder will severally and not jointly indemnify and hold each of the
Company and each Investor Party harmless from any and all Losses that the Company or any such
Investor Party may suffer or incur as a result of or relating to any




18









 







misrepresentation, breach or
inaccuracy of any representation, warranty, covenant or agreement made by such Selling Stockholder
in any Transaction Document. In addition, such Selling Stockholder will reimburse each of the
Company and each Investor Party for its reasonable legal and other expenses (including the cost of
any investigation, preparation and travel in connection therewith) incurred in connection
therewith, as such expenses are incurred.




          (c) Except as otherwise set forth herein, the mechanics and procedures with respect to the
rights and obligations under this Section 4.7 shall be the same as those set forth in Section 5 of
the Registration Rights Agreement.




     4.8. Non-Public Information. Each of the Company and the Selling Stockholders covenant and
agree that neither they nor any other Person acting on their behalf will provide any Investor or
its agents or counsel with any information that the Company believes constitutes material
non-public information, unless prior thereto such Investor shall have executed a written agreement
regarding the confidentiality and use of such information. Each of the Company and the Selling
Stockholders understand and confirm that each Investor shall be relying on the foregoing
representations in effecting transactions in securities of the Company.



     4.9. Listing of Securities. The Company agrees, (i) if the Company applies to have the
Common Stock traded on any other Trading Market, it will include in such application the
Securities, and will take such other action as is necessary or desirable to cause the Securities to
be listed on such other Trading Market as promptly as possible, and (ii) it will take all action
reasonably necessary to continue the listing and trading of its Common Stock on a Trading Market
and will comply in all material respects with the Company’s reporting, filing and other obligations
under the bylaws or rules of the Trading Market.



     4.10. Use of Proceeds. The Company will use the net proceeds from the sale of the
Securities hereunder for working capital purposes, for the satisfaction of the Company’s debt
(including the payment of trade payables and accrued expenses in the ordinary course of the
Company’s business and consistent with prior practices and the repayment of long-term
indebtedness), for capital expenditures and for any other purpose or purposes that its Board of
Directors deems in the best interests of the Company and its stockholders.



ARTICLE 5.

CONDITIONS PRECEDENT TO CLOSING




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



          (a) Representations and Warranties. The representations and warranties of the Company
and the Selling Stockholders contained herein shall be true and correct in all material respects as
of the date when made and as of the Closing as though made on and as of such date;




          (b) Performance. Each of the Company and the Selling Stockholders shall have
performed, satisfied and complied in all material respects with all covenants, agreements and
conditions required by the Transaction Documents to be performed, satisfied or complied with by
them at or prior to the Closing;

19









 









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




          (d) Adverse Changes. 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;




          (e) No Suspensions of Trading in Common Stock; Listing. Trading in the Common Stock
shall not have been suspended by the Commission or any Trading Market (except for any suspensions
of trading of not more than one Trading Day solely to permit dissemination of material information
regarding the Company) at any time since the date of execution of this Agreement, and the Common
Stock shall have been at all times since such date listed for trading on a Trading Market;




          (f) Company Deliverables. The Company shall have delivered the Company Deliverables
in accordance with Section 2.2(a); and




          (g) Termination. This Agreement shall not have been terminated as to such Investor in
accordance with Section 6.5.




     5.2. Conditions Precedent to the Obligations of the Company and the Selling Stockholders to
sell Securities. The obligation of the Company and each Selling Stockholder to sell Securities
at the Closing is subject to the satisfaction or waiver by the Company or the appropriate Selling
Stockholder (as the case may be), at or before the Closing, of each of the following conditions:



          (a) Representations and Warranties. The representations and warranties of each
Investor contained herein shall be true and correct in all material respects as of the date when
made and as of the Closing Date as though made on and as of such date;




          (b) Performance. Each Investor shall have performed, satisfied and complied in all
material respects with all covenants, agreements and conditions required by the Transaction
Documents to be performed, satisfied or complied with by such Investor at or prior to the Closing;




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




          (d) Investors Deliverables. Each Investor shall have delivered its Investors
Deliverables in accordance with Section 2.2(b); and




          (e) Termination. This Agreement shall not have been terminated as to such Investor in
accordance with Section 6.5.




20









 








ARTICLE 6.

MISCELLANEOUS




     6.1. Fees and Expenses. Each party shall pay the fees and expenses of its advisers,
counsel, accountants and other experts, if any, and all other expenses incurred by such party
incident to the negotiation, preparation, execution, delivery and performance of the Transaction
Documents. The Company shall pay all stamp and other taxes and duties levied in connection with
the sale of the Shares.



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



     6.3. Notices. Any and all notices or other communications or deliveries required or
permitted to be provided hereunder shall be in writing and shall be deemed given and effective on
the earliest of (a) the date of transmission, if such notice or communication is delivered via
facsimile (provided the sender receives a machine-generated confirmation of successful
transmission) at the facsimile number specified in this Section prior to 6:30 p.m. (New York City
time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number specified in this Section on a day
that is not a Trading Day or later than 6:30 p.m. (New York City time) on any Trading Day, (c) the
Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (d) upon
actual receipt by the party to whom such notice is required to be given. The address for such
notices and communications shall be as follows:



	 	 	 	 	 
	 

	 	If to the Company:
	 	Metretek Technologies, Inc.
	 

	 	 	 	303 East 17th Street, Suite 660
	 

	 	 	 	Denver, Colorado 80203
	 

	 	 	 	Facsimile: (303) 785-8085
	 

	 	 	 	Attn.: W. Phillip Marcum, President
	 
	 	 	 	 
	 

	 	With a copy to:
	 	Kegler, Brown Hill & Ritter Co., L.P.A.
	 

	 	 	 	65 East State Street, Suite 1800
	 

	 	 	 	Columbus, Ohio 43215
	 

	 	 	 	Facsimile: (614) 464-2634
	 

	 	 	 	Attn.: Paul R. Hess, Esq.
	 
	 	 	 	 
	 

	 	If to the Selling Stockholder:
	 	To the address set forth on its signature page hereof;
	 
	 	 	 	 
	 

	 	If to an Investor:
	 	To the address set forth under such Investor’s name on the
signature pages hereof;





or such other address as may be designated in writing hereafter, in the same manner, by such
Person.




21









 








     6.4. Amendments; Waivers; No Additional Consideration. No provision of this Agreement may
be waived or amended except in a written instrument signed by the Company and the Investors holding
a majority of the Securities and, prior to Closing, the Selling Stockholders. In addition,
Sections 3.3, 4.7(b) and Article VI may not be waived or amended except in a written instrument
signed by the Investors holding a majority of the Securities, the Company and the Selling
Stockholder. No waiver of any default with respect to any provision, condition or requirement of
this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any
subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall
any delay or omission of either party to exercise any right hereunder in any manner impair the
exercise of any such right. No consideration shall be offered or paid to any Investor to amend or
consent to a waiver or modification of any provision of any Transaction Document unless the same
consideration is also offered to all Investors who then hold Securities.



     6.5. Termination. This Agreement may be terminated prior to Closing:



          (a) by written agreement of the Investors and the Company; and




          (b) by the Company, the Selling Stockholder (as to itself but no other Selling Stockholder),
or an Investor (as to itself but no other Investor) upon written notice to the other, if the
Closing shall not have taken place by 6:30 p.m. Eastern time on the Outside Date; provided,
that the right to terminate this Agreement under this Section 6.5(b) 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 this Section, the Company shall promptly notify all
non-terminating Investors. Upon a termination in accordance with this Section 6.5, the Company,
terminating Selling Stockholder(s) or terminating Investor(s), as applicable, shall not have any
further obligation or liability (including as arising from such termination) to any other party and
no Investor will have any liability to any other Investor under the Transaction Documents as a
result therefrom.



     6.6. Construction. The headings herein are for convenience only, do not constitute a part
of this Agreement and shall not be deemed to limit or affect any of the provisions hereof. The
language used in this Agreement will be deemed to be the language chosen by the parties to express
their mutual intent, and no rules of strict construction will be applied against any party. This
Agreement shall be construed as if drafted jointly by the parties, and no presumption or burden of
proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions
of this Agreement or any of the Transaction Documents.



     6.7. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit
of the parties and their successors and permitted assigns. Neither the Company nor the Selling
Stockholder may assign this Agreement or any rights or obligations hereunder without the prior
written consent of the Investors. Any Investor may assign any or all of its rights under this
Agreement to any Person to whom such Investor assigns or transfers any Securities, provided such
transferee agrees in writing to be bound, with respect to the transferred Securities, by the
provisions hereof that apply to the “Investors.”



22









 





     6.8. No Third-Party Beneficiaries. This Agreement is intended for the benefit of the
parties hereto and their respective successors and permitted assigns and is not for the benefit of,
nor may any provision hereof be enforced by, any other Person, except as otherwise set forth in
Section 4.7 (as to each Investor Party).



     6.9. Governing Law. All questions concerning the construction, validity, enforcement and
interpretation of this Agreement shall be governed by and construed and enforced in accordance with
the internal laws of the State of New York, without regard to the principles of conflicts of law
thereof. Each of the Company, the Investors and the Selling Stockholders agrees that all
Proceedings concerning the interpretations, enforcement and defense of the transactions
contemplated by this Agreement and any other Transaction Documents (whether brought against a party
hereto or its respective Affiliates, employees or agents) shall be commenced exclusively in the New
York Courts. Each of the Company, the Investors and the Selling Stockholders hereby irrevocably
submits to the exclusive jurisdiction of the New York Courts for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with
respect to the enforcement of the any of the Transaction Documents), and hereby irrevocably waives,
and agrees not to assert in any Proceeding, any claim that it is not personally subject to the
jurisdiction of any such New York Court, or that such Proceeding has been commenced in an improper
or inconvenient forum. Each of the Company, the Investors and the Selling Stockholders hereby
irrevocably waives personal service of process and consents to process being served in any such
Proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with
evidence of delivery) to such party at the address in effect for notices to it under this Agreement
and agrees that such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process
in any manner permitted by law. Each of the Company, the Investors and the Selling Stockholders
hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to
trial by jury in any legal proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby. If any party shall commence a Proceeding to enforce any
provisions of a Transaction Document, then the prevailing party in such Proceeding shall be jointly
and severally reimbursed by the adverse party for its reasonable attorneys’ fees and other costs
and expenses incurred with the investigation, preparation and prosecution of such Proceeding.



     6.10. Survival. The representations, warranties, agreements and covenants contained herein
shall survive the Closing and the delivery of the Securities.



     6.11. Execution. This Agreement may be executed in two or more counterparts, all of which
when taken together shall be considered one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other party, it being understood
that both parties need not sign the same counterpart. In the event that any signature is delivered
by facsimile transmission, such signature shall create a valid and binding obligation of the party
executing (or on whose behalf such signature is executed) with the same force and effect as if such
facsimile signature page were an original thereof.



     6.12. Severability. If any provision of this Agreement is held to be invalid or
unenforceable in any respect, the validity and enforceability of the remaining terms and



23









 







provisions
of this Agreement shall not in any way be affected or impaired thereby and the parties will attempt
to agree upon a valid and enforceable provision that is a reasonable substitute therefor, and upon
so agreeing, shall incorporate such substitute provision in this Agreement.



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



     6.14. Replacement of Securities. If any certificate or instrument evidencing any
Securities is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued
in exchange and substitution for and upon cancellation thereof, or in lieu of and substitution
therefor, a new certificate or instrument, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction and customary and reasonable
indemnity, if requested. The applicants for a new certificate or instrument under such
circumstances shall also pay any reasonable third-party costs associated with the issuance of such
replacement Securities. If a replacement certificate or instrument evidencing any Securities is
requested due to a mutilation thereof, the Company may require delivery of such mutilated
certificate or instrument as a condition precedent to any issuance of a replacement.



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



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



     6.17. Independent Nature of Investors’ Obligations and Rights. The obligations of each
Investor under any Transaction Document are several and not joint with the obligations of any other
Investor, and no Investor shall be responsible in any way for the performance of the obligations of
any other Investor under any Transaction Document. The decision of each



24









 








Investor to purchase
Securities pursuant to the Transaction Documents has been made by such Investor independently of
any other Investor. Nothing contained herein or in any Transaction Document, and no action taken
by any Investor pursuant thereto, shall be deemed to
constitute the Investors as a partnership, an association, a joint venture or any other kind of
entity, or create a presumption that the Investors are in any way acting in concert or as a group
with respect to such obligations or the transactions contemplated by the Transaction Documents.
Each Investor acknowledges that no other Investor has acted as agent for such Investor in
connection with making its investment hereunder and that no Investor will be acting as agent of
such Investor in connection with monitoring its investment in the Securities or enforcing its
rights under the Transaction Documents. Each Investor shall be entitled to independently protect
and enforce its rights, including, without limitation, the rights arising out of this Agreement or
out of the other Transaction Documents, and it shall not be necessary for any other Investor to be
joined as an additional party in any proceeding for such purpose. Each of the Company and each
Selling Stockholder acknowledges that each of the Investors has been provided with the same
Transaction Documents for the purpose of closing a transaction with multiple Investors and not
because it was required or requested to do so by any Investor.



     6.18. Independent Nature of Selling Stockholders’ Obligations and Rights.  The
obligations of each Selling Stockholder under any Transaction Document are several and not joint
with the obligations of the Company or any other Selling Stockholder, and no Selling Stockholder
shall be responsible in any way for the performance of the obligations of the Company or any other
Selling Stockholder under any Transaction Document. The decision of each Selling Stockholder to
sell Securities pursuant to the Transaction Documents has been made by such Selling Stockholder
independently of the Company or any other Selling Stockholder. Nothing contained herein or in any
Transaction Document, and no action taken by any Selling Stockholder pursuant thereto, shall be
deemed to constitute the Selling Stockholders as a partnership, an association, a joint venture or
any other kind of entity, or create a presumption that the Selling Stockholders are in any way
acting in concert or as a group with respect to such obligations or the transactions contemplated
by the Transaction Documents. Each Selling Stockholder acknowledges that no other Selling
Stockholder has acted or will be acting as agent for such Selling Stockholder in connection with
the transactions hereunder or in connection with enforcing its rights under the Transaction
Documents. Each Selling Stockholder shall be entitled to independently protect and enforce his
rights, including, without limitation, the rights arising out of this Agreement or out of the other
Transaction Documents, and it shall not be necessary for any other Selling Stockholder to be joined
as an additional party in any proceeding for such purpose. Each of the Company and each Investor
acknowledges that each of the Selling Stockholders has been provided with the same Transaction
Documents for the purpose of closing a transaction with multiple Selling Stockholders and not
because it was required or requested to do so by any Selling Stockholder.



     6.19. Limitation of Liability. Notwithstanding anything herein to the contrary, each of
the Company and each Selling Stockholder acknowledges and agrees that the liability of an Investor
arising directly or indirectly, under any Transaction Document of any and every nature whatsoever
shall be satisfied solely out of the assets of such Investor, and that no trustee, officer, other
investment vehicle or any other Affiliate of such Investor or any investor, shareholder or holder
of shares of beneficial interest of such a Investor shall be personally liable for any liabilities
of such Investor.



25









 





[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGES FOLLOW]




26









 









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



	 	 	 	 	 	 	 
	 	 	METRETEK TECHNOLOGIES, INC.
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ W. Phillip Marcum	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: W. Phillip Marcum	 	 
	 

	 	 	 	Title: President & CEO	 	 






[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGE FOR SELLING STOCKHOLDER FOLLOWS]




27









 








     IN WITNESS WHEREOF, the parties have executed this Securities Purchase Agreement as of the
date first written above.



	 	 	 	 	 	 	 
	 	 	NAME OF SELLING STOCKHOLDER
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Tax ID No.:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	NUMBER OF SELLING STOCKHOLDER SHARES
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	ADDRESS FOR NOTICE
	 
	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	c/o:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Street:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	City/State/Zip:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Attention:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Tel:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Fax:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Email:	 	 	 	 
	 

	 	 	 	 	 	 





[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGES FOR INVESTORS FOLLOW]




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



	 	 	 	 	 	 	 
	 	 	NAME OF INVESTOR
	 
	 	 	 	 	 	 
	 	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 	 	 	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	Title:	 	 






	 	 	 
	 

	 	Investment Amount: $                                                            






	 	 	 
	 

	 	Tax ID No.:                                                            






	 	 	 
	 

	 	ADDRESS FOR NOTICE






	 	 	 
	 

	 	c/o:                                                                                 






	 	 	 
	 

	 	Street:                                                                                






	 	 	 
	 

	 	City/State/Zip:                                                            






	 	 	 
	 

	 	Attention:                                                                                 






	 	 	 
	 

	 	Tel:                                                                                 
	 
	 	 
	 

	 	Fax:                                                                                 






	 	 	 
	 

	 	DELIVERY INSTRUCTIONS

     (if different from above)






	 	 	 
	 

	 	c/o:                                                                                 






	 	 	 
	 

	 	Street:                                                                                 






	 	 	 
	 

	 	City/State/Zip:                                                             






	 	 	 
	 

	 	Attention:                                                             






	 	 	 
	 

	 	Tel:                                                                                 






29









 






SCHEDULE 3.1 (a)




Capital Stock of Subsidiaries




No exceptions.




30









 








SCHEDULE 3.1 (u)




Brokerage and Finders Fees and Commission




     Placement agent fee payable to Roth Capital Partners LLC:




·Up to $25,000 in expenses




·Commission fees of 6.5% of gross proceeds received from the sale of Shares by the Company,
and $0.05 per Selling Stockholder Share sold in the transaction.



 









 





SCHEDULE 3.1 (v)




Registration Rights



1. The shares of Common Stock (i) issued to certain investors in a November 2000 and

February 2001 private placement, and (ii) issued to, or issuable upon the exercise of warrants
issued to, certain investors in a April-May 2004 private placement, which shares of Common Stock
are covered by the Company’s Prospectus, dated November 21, 2005, which is part of a Registration
Statement on Form S-3.





2