Unassociated Document


    Exhibit
      10.2

     

    SECURITIES
      PURCHASE AGREEMENT

     

    This
      Securities Purchase Agreement (this “Agreement”)
      is
      dated as of July 14, 2008, between Lumera Corporation, a Delaware corporation
      (the “Company”),
      and
      each purchaser identified on the signature pages hereto (each, including its
      successors and assigns, a “Purchaser”
and
      collectively the “Purchasers”).

     

    WHEREAS,
      subject to the terms and conditions set forth in this Agreement and pursuant
      to
      an effective registration statement under the Securities Act of 1933, as amended
      (the “Securities
      Act”),
      the
      Company desires to issue and sell to each Purchaser, and each Purchaser,
      severally and not jointly, desires to purchase from the Company, securities
      of
      the Company as more fully described in this Agreement.

     

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

     

    ARTICLE
      I.

    DEFINITIONS

     

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

     

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

     

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

     

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


     

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

     

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

     

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

     

    “Closing
      Date”
means
      the Trading Day when all of the Transaction Documents have been executed and
      delivered by the applicable parties thereto, and all conditions precedent to
      (i)
      the Purchasers’ obligations to pay the Subscription Amount and (ii) the
      Company’s obligations to deliver the Securities have been satisfied or
      waived.

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

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

     

    “Company
      Counsel”
means
      Ropes & Gray LLP, with offices located at One International Place, Boston,
      MA 02110-2624. 

     

    “Disclosure
      Schedules”
means
      the Disclosure Schedules of the Company delivered concurrently herewith.


     

    “Discussion
      Time”
shall
      have the meaning ascribed to such term in Section 3.2(e).

     

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

     

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

    


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

     

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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

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

     

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

     

    “Participation
      Maximum”
shall
      have the meaning ascribed to such term in Section 4.12(a). 

     

    “Per
      Share Purchase Price”
equals
      $0.76, subject to adjustment for reverse and forward stock splits, stock
      dividends, stock combinations and other similar transactions of the Common
      Stock
      that occur after the date of this Agreement.

     

    “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.

     

    “Pre-Notice”
shall
      have the meaning ascribed to such term in Section 4.12(b). 

     

    “Pro
      Rata Portion”
shall
      have the meaning ascribed to such term in Section 4.12(e).

     

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

     

    “Prospectus”
means
      the final prospectus filed for the Registration Statement.

     

    “Prospectus
      Supplement”
means
      the supplement to the Prospectus complying with Rule 424(b) of the Securities
      Act that is filed with the Commission and delivered by the Company to each
      Purchaser at the Closing.

     

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

     

    “Registration
      Statement”
means
      the effective registration statement with Commission file No. 333-144674 which
      registers the sale of the Shares, the Warrants and the Warrant Shares by the
      Purchasers.

     

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

     

    
      
        
        

      

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

     

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

     

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

     

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

     

    “Short
      Sales”
means
      all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange
      Act (but shall not be deemed to include the location and/or reservation of
      borrowable shares of Common Stock). 

     

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

     

    “Subsequent
      Financing”
shall
      have the meaning ascribed to such term in Section 4.12(a).

     

    “Subsequent
      Financing Notice”
shall
      have the meaning ascribed to such term in Section 4.12(b). 

     

    “Subsidiary”
means
      any subsidiary of the Company as set forth on Schedule
      3.1(a),
      and
      shall, where applicable, also include any direct or indirect subsidiary of
      the
      Company formed or acquired after the date hereof.

     

    “Trading
      Day”
means
      a
      day on which the New York Stock Exchange is open for trading.

     

    “Trading
      Market”
means
      the following markets or exchanges on which the Common Stock is listed or quoted
      for trading on the date in question: the American Stock Exchange, the Nasdaq
      Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market or
      the
      New York Stock Exchange.

     

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

     

    “Transfer
      Agent”
means
      American Stock Transfer & Trust Company, the current transfer agent of the
      Company, with a mailing address of 6201 15th
      Avenue,
      Brooklyn, NY 11219 and a facsimile number of (718) 921-8334, and any successor
      transfer agent of the Company.

     

    
      
        
        

      

      
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    “Variable
      Rate Transaction”
shall
      have the meaning ascribed to such term in Section 4.13(b).

     

    “VWAP”
means,
      for any date, the price determined by the first of the following clauses that
      applies: (a) if the Common Stock is then listed or quoted on a Trading Market,
      the daily volume weighted average price of the Common Stock for such date (or
      the nearest preceding date) on the Trading Market on which the Common Stock
      is
      then listed or quoted for trading as reported by Bloomberg L.P. (based on a
      Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City
      time); (b)  if the OTC Bulletin Board is not a Trading Market, the volume
      weighted average price of the Common Stock for such date (or the nearest
      preceding date) on the OTC Bulletin Board; (c) if the Common Stock is not then
      listed or quoted for trading on the OTC Bulletin Board and if prices for the
      Common Stock are then reported in the “Pink Sheets” published by Pink Sheets,
      LLC (or a similar organization or agency succeeding to its functions of
      reporting prices), the most recent bid price per share of the Common Stock
      so
      reported; or (d) in all other cases, the fair market value of a share of
      Common Stock as determined by an independent appraiser selected in good faith
      by
      the Purchasers of a majority in interest of the Shares then outstanding and
      reasonably acceptable to the Company, the fees and expenses of which shall
      be
      paid by the Company. 

     

    “Warrants”
means,
      collectively, the Common Stock purchase warrants delivered to the Purchasers
      at
      the Closing in accordance with Section 2.2(a) hereof, which Warrants shall
      be
      exercisable 181 days from the date hereof and have a term of exercise equal
      to 5
      years, in the form of Exhibit
      A
      attached
      hereto.

     

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

     

    ARTICLE
      II.

    PURCHASE
      AND SALE

     

    2.1 Closing.
      On the Closing Date, upon the terms and subject to the conditions set forth
      herein, substantially concurrent with the execution and delivery of this
      Agreement by the parties hereto, the Company agrees to sell, and the Purchasers,
      severally and not jointly, agree to purchase, up to an aggregate of $3,040,000
      of Shares and Warrants. Each Purchaser shall deliver to the Company, via wire
      transfer, immediately available funds equal to its Subscription Amount and
      the
      Company shall deliver to each Purchaser its respective Shares and a Warrant
      as
      determined pursuant to Section 2.2(a), and the Company and each Purchaser shall
      deliver the other items set forth in Section 2.2 deliverable at the Closing.
      Upon satisfaction of the covenants and conditions set forth in Sections 2.2
      and
      2.3, the Closing shall occur at the offices of FWS or such other location as
      the
      parties shall mutually agree.

     

    
      
        
        

      

      
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    2.2 Deliveries.

     

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

     

    (i) this
      Agreement duly executed by the Company;

     

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

     

    (iii) a
      copy of
      the irrevocable instructions to the Company’s transfer agent instructing the
      transfer agent to deliver via the Depository Trust Company Deposit Withdrawal
      Agent Commission System (“DWAC”)
      Shares
      equal to such Purchaser’s Subscription Amount divided by the Per Share Purchase
      Price, registered in the name of such Purchaser;

     

    (iv) a
      Warrant
      registered in the name of such Purchaser to purchase up to a number of shares
      of
      Common Stock equal to 50% of such Purchaser’s Shares, with an exercise price
      equal to $0.76,
      subject
      to adjustment therein (such Warrant certificate may be delivered within three
      Trading Days of the Closing Date); and

     

    (v) the
      Prospectus and Prospectus Supplement (which may be delivered in accordance
      with
      Rule 172 under the Securities Act).

     

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

     

    (i) this
      Agreement duly executed by such Purchaser; and

     

    (ii) such
      Purchaser’s Subscription Amount by wire transfer to the account as specified in
      writing by the Company.

     

    2.3 Closing
      Conditions. 

     

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

     

    (i) the
      accuracy in all material respects on the Closing Date of the representations
      and
      warranties of the Purchasers contained herein; 

     

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

     

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

    
    

    
      
        
        

      

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

     

    (i) the
      accuracy in all material respects on the Closing Date of the representations
      and
      warranties of the Company contained herein;

     

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

     

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

     

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

     

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

     

    ARTICLE
      III.

    REPRESENTATIONS
      AND WARRANTIES

     

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

     

    (a) Subsidiaries.
      All of
      the direct and indirect subsidiaries of the Company are set forth on
Schedule
      3.1(a).
      The
      Company owns, directly or indirectly, all of the capital stock or other equity
      interests of each Subsidiary free and clear of any Liens, and all of the issued
      and outstanding shares of capital stock of each Subsidiary are validly issued
      and are fully paid, non-assessable and free of preemptive and similar rights
      to
      subscribe for or purchase securities. If the Company has no subsidiaries, then
      all other references to the Subsidiaries or any of them in the Transaction
      Documents shall be disregarded.

     

    
      
        
        

      

      
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    (b) Organization
      and Qualification.
      The
      Company and each of the Subsidiaries is an entity duly incorporated or otherwise
      organized, validly existing and in good standing under the laws of the
      jurisdiction of its incorporation or organization, with the requisite 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
      nor default of any of the provisions of its respective certificate or articles
      of incorporation, bylaws or other organizational or charter documents. Each
      of
      the Company and the Subsidiaries is duly qualified to conduct business and
      is in
      good standing as a foreign corporation or other entity in each jurisdiction
      in
      which the nature of the business conducted or property owned by it makes such
      qualification necessary, except where the failure to be so qualified or in
      good
      standing, as the case may be, could not have or reasonably be expected to result
      in: (i) a material adverse effect on the legality, validity or enforceability
      of
      any Transaction Document, (ii) a material adverse effect on the results of
      operations, assets, business, prospects or condition (financial or otherwise)
      of
      the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse
      effect on the Company’s ability to perform in any material respect on a timely
      basis its obligations under any Transaction Document (any of (i), (ii) or (iii),
      a “Material
      Adverse Effect”)
      and no
      Proceeding has been instituted in any such jurisdiction revoking, limiting
      or
      curtailing or seeking to revoke, limit or curtail such power and authority
      or
      qualification.

     

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

     

    (d) No
      Conflicts.
      The
      execution, delivery and performance by the Company of the Transaction Documents,
      the issuance and sale of the Securities and the consummation by it to which
      it
      is a party of the other transactions contemplated hereby and thereby 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, result in the creation of any Lien upon any of the properties
      or
      assets of the Company or any Subsidiary, 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
      (iii) subject to the Required Approvals, conflict with or result in a violation
      of any law, rule, regulation, order, judgment, injunction, decree or other
      restriction of any 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; except in the case of each of clauses (ii) and (iii),
      such
      as could not 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, other than: (i) the filings required pursuant to Section
      4.4 of this Agreement, (ii) the filing with the Commission of the Prospectus
      Supplement, (iii) application(s) to each applicable Trading Market for the
      listing of the Securities for trading thereon in the time and manner required
      thereby and (iv) such filings as are required to be made under applicable state
      securities laws (collectively, the “Required
      Approvals”).

     

    (f) Issuance
      of the Securities; Registration.
      The
      Securities are duly authorized and, when issued and paid for in accordance
      with
      the applicable Transaction Documents, will be duly and validly issued, fully
      paid and nonassessable, free and clear of all Liens imposed by the Company.
      The
      Warrant Shares, when issued and paid for upon due exercise in accordance with
      the terms of the Warrants, will be validly issued, fully paid and nonassessable,
      free and clear of all Liens imposed by the Company. The Company has reserved
      from its duly authorized capital stock the maximum number of shares of Common
      Stock issuable pursuant to this Agreement and the Warrants. The Company has
      prepared and filed the Registration Statement in conformity with the
      requirements of the Securities Act, which became effective on December 5,
      2007 (the “Effective
      Date”),
      including the Prospectus, and such amendments and supplements thereto as may
      have been required to the date of this Agreement. The Registration Statement
      is
      effective under the Securities Act and no stop order preventing or suspending
      the effectiveness of the Registration Statement or suspending or preventing
      the
      use of the Prospectus has been issued by the Commission and no proceedings
      for
      that purpose have, to the knowledge of the Company, been instituted or are
      threatened by the Commission. The Company, if required by the rules and
      regulations of the Commission, proposes to file the Prospectus, with the SEC
      pursuant to Rule 424(b). At the time the Registration Statement and any
      amendments thereto became effective, at the date of this Agreement and at the
      Closing Date, the Registration Statement and any amendments thereto conformed
      and will conform in all material respects to the requirements of the Securities
      Act and did not and 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 not misleading; and the Prospectus and any
      amendments or supplements thereto, as of their respective dates and at the
      Closing Date, conformed and will conform in all material respects to the
      requirements of the Securities Act and did not and will not contain an untrue
      statement of a material fact or omit to state a material fact necessary in
      order
      to make the statements therein, in light of the circumstances under which they
      were made, not misleading.

     

    
      
        
        

      

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

     

    (h) SEC
      Reports; Financial Statements.
      The
      Company has complied in all material respects with requirements to file all
      reports, schedules, forms, statements and other documents required to be filed
      by the Company under the Securities Act and the Exchange Act, including pursuant
      to Section 13(a) or 15(d) thereof, for the two years preceding the date hereof
      (or such shorter period as the Company was required by law or regulation to
      file
      such material) (the foregoing materials, including the exhibits thereto and
      documents incorporated by reference therein, together with the Prospectus and
      the Prospectus Supplement, being collectively referred to herein as the
“SEC
      Reports”)
      on a
      timely basis or has received a valid extension of such time of filing and has
      filed any such SEC Reports prior to the expiration of any such extension. As
      of
      their respective dates, the SEC Reports complied in all material respects with
      the requirements of the Securities Act and the Exchange Act, as applicable,
      and
      none of the SEC Reports, when filed, contained any untrue statement of a
      material fact or omitted to state a material fact required to be stated therein
      or necessary in order to make the statements therein, in the light of the
      circumstances under which they were made, not misleading. The Company has never
      been an issuer subject to Rule 144(i) under the Securities Act. The financial
      statements of the Company included in the SEC Reports comply in all material
      respects with applicable accounting requirements and the rules and regulations
      of the Commission with respect thereto as in effect at the time of filing.
      Such
      financial statements have been prepared in accordance with United States
      generally accepted accounting principles applied on a consistent basis during
      the periods involved (“GAAP”),
      except as may be otherwise specified in such financial statements or the notes
      thereto and except that unaudited financial statements may not contain all
      footnotes required by GAAP, 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.

     

    
      
        
        

      

      
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    (i) Material
      Changes; Undisclosed Events, Liabilities or Developments.
      Since
      the date of the last quarterly financial statements included within the SEC
      Reports, except as specifically disclosed in a subsequent SEC Report filed
      prior
      to the date hereof, (i) there has been no event, occurrence or development
      that
      has had or that could reasonably be expected to result in a Material Adverse
      Effect, (ii) the Company has not incurred any material liabilities (contingent
      or otherwise) other than (A) trade payables and accrued expenses 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 disclosed in filings made with the Commission, (iii) the Company has
      not
      altered its method of accounting, (iv) the Company has not declared or made
      any
      dividend or distribution of cash or other property to its stockholders or
      purchased, redeemed or made any agreements to purchase or redeem any shares
      of
      its capital stock and (v) the Company has not issued any equity securities
      to
      any officer, director or Affiliate, except pursuant to existing Company stock
      option plans. The Company does not have pending before the Commission any
      request for confidential treatment of information. Except for the issuance
      of
      the Securities contemplated by this Agreement, no event, liability or
      development has occurred or exists with respect to the Company or its
      Subsidiaries or their respective business, properties, operations or financial
      condition, that would be required to be disclosed by the Company under
      applicable securities laws at the time this representation is made or deemed
      made that has not been publicly disclosed at least 1 Trading Day prior to the
      date that this representation is made.

     

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

     

    
      
        
        

      

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

     

    (l) Compliance.
      Neither
      the Company nor any Subsidiary: (i) is in default under or in violation of
      (and
      no event has occurred that has not been waived that, with notice or lapse of
      time or both, would result in a default by the Company or any Subsidiary under),
      nor has the Company or any Subsidiary received notice of a claim that it is
      in
      default under or that it is in violation of, any indenture, loan or credit
      agreement or any other agreement or instrument to which it is a party or by
      which it or any of its properties is bound (whether or not such default or
      violation has been waived), (ii) is in violation of any 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 applicable to its business
      and all such laws that affect the environment, except in each case as could
      not
      have or reasonably be expected to result in a Material Adverse
      Effect.

     

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

     

    
      
        
        

      

      
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    (n) 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 the business of the Company
      and
      the Subsidiaries and good and marketable title in all personal property owned
      by
      them that is material to the business of the Company and the Subsidiaries,
      in
      each case free and clear of all Liens, except for Liens as do not materially
      affect the value of such property and do not materially interfere with the
      use
      made and proposed to be made of such property by the Company and the
      Subsidiaries and Liens for the payment of federal, state or other taxes, the
      payment of which is neither delinquent nor subject to penalties. Any real
      property and facilities held under lease by the Company and the Subsidiaries
      are
      held by them under valid, subsisting and enforceable leases with which the
      Company and the Subsidiaries are in compliance except as could not have or
      reasonably be expected to result in a Material Adverse Effect.

     

    (o) Patents
      and Trademarks.
      The
      Company and the Subsidiaries have, or have rights to use, all patents, patent
      applications, trademarks, trademark applications, service marks, trade names,
      trade secrets, inventions, copyrights, licenses and other intellectual property
      rights and similar rights necessary or material for use in connection with
      their
      respective businesses as described in the SEC Reports and which the failure
      to
      so have could have a Material Adverse Effect (collectively, the “Intellectual
      Property Rights”).
      Neither the Company nor any Subsidiary has received a notice (written or
      otherwise) that any of the Intellectual Property Rights used by the Company
      or
      any Subsidiary violates or infringes upon the rights of any Person. To the
      knowledge of the Company, all such Intellectual Property Rights are enforceable
      in all material respects and there is no existing infringement by another Person
      of any of the Intellectual Property Rights. The Company and its Subsidiaries
      have taken reasonable security measures to protect the secrecy, confidentiality
      and value of all of their intellectual properties, except where failure to
      do so
      could not, individually or in the aggregate, reasonably be expected to have
      a
      Material Adverse Effect.

     

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

     

    
      
        
        

      

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

     

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

     

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

     

    
      
        
        

      

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

     

    (u) Registration
      Rights.
      No
      Person has any right to cause the Company to effect the registration under
      the
      Securities Act of any securities of the Company.

     

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

     

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

     

    (x) Disclosure.
      Except
      with respect to the material terms and conditions of the transactions
      contemplated by the Transaction Documents and except as set forth on Schedule
      3.1(x), the Company confirms that neither it nor any other Person acting on
      its
      behalf has provided any of the Purchasers or their agents or counsel with any
      information that it believes constitutes or might constitute material,
      non-public information which is not otherwise disclosed in the Prospectus
      Supplement. The Company understands and confirms that the Purchasers will rely
      on the foregoing representation in effecting transactions in securities of
      the
      Company. All disclosure furnished by or on behalf of the Company to the
      Purchasers regarding the Company, its business and the transactions contemplated
      hereby, including the Disclosure Schedules to this Agreement, is true and
      correct and does not contain any untrue statement of a material fact or omit
      to
      state any material fact necessary in order to make the statements made therein,
      in light of the circumstances under which they were made, not misleading. The
      Company acknowledges and agrees that no Purchaser makes or has made any
      representations or warranties with respect to the transactions contemplated
      hereby other than those specifically set forth in Section 3.2
      hereof.

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

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

     

    (z) Solvency.
      Based
      on the consolidated financial condition of the Company as of the Closing Date,
      after giving effect to the receipt by the Company of the proceeds from the
      sale
      of the Securities hereunder, (i) the fair saleable value of the Company’s assets
      exceeds the amount that will be required to be paid on or in respect of the
      Company’s existing debts and other liabilities (including known contingent
      liabilities) as they mature, (ii) the Company’s assets do not constitute
      unreasonably small capital to carry on its business as now conducted and as
      proposed to be conducted including its capital needs taking into account the
      particular capital requirements of the business conducted by the Company, and
      projected capital requirements and capital availability thereof, and (iii)
      the
      current cash flow of the Company, together with the proceeds the Company would
      receive, were it to liquidate all of its assets, after taking into account
      all
      anticipated uses of the cash, would be sufficient to pay all amounts on or
      in
      respect of its liabilities when such amounts are required to be paid. The
      Company does not intend to incur debts beyond its ability to pay such debts
      as
      they mature (taking into account the timing and amounts of cash to be payable
      on
      or in respect of its debt). The SEC Reports sets forth as of the date thereof
      all material outstanding secured and unsecured Indebtedness of the Company
      or
      any Subsidiary, or for which the Company or any Subsidiary has commitments
      required to be included therein under the applicable rules and regulations
      of
      the Exchange Act (“Indebtedness”).
      Neither the Company nor any Subsidiary is in default with respect to any
      Indebtedness.

     

    (aa) Tax
      Status.
      Except
      for matters that would not, individually or in the aggregate, have or reasonably
      be expected to result in a Material Adverse Effect, the Company and each
      Subsidiary has filed all necessary federal, state and foreign income and
      franchise tax returns and has paid or accrued all taxes shown as due thereon,
      and the Company has no knowledge of a tax deficiency which has been asserted
      or
      threatened against the Company or any Subsidiary.

     

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

     

    
      
        
        

      

      
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    (cc) Accountants.
      The
      Company’s accounting firm is set PriceWaterhouseCoopers LLP. To the knowledge
      and belief of the Company, such accounting firm (i) is a registered public
      accounting firm as required by the Exchange Act and (ii) shall express its
      opinion with respect to the financial statements to be included in the Company’s
      Annual Report for the year ending December 31, 2008. 

     

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

     

    (ee) Acknowledgement
      Regarding Purchaser’s Trading Activity.
      Anything in this Agreement or elsewhere herein to the contrary notwithstanding
      (except for Sections 3.2(e) and 4.14 hereof), it is understood and acknowledged
      by the Company that: (i) none of the Purchasers have been asked by the Company
      to agree, nor, to the Company’s knowledge, has any Purchaser agreed, to desist
      from purchasing or selling, long and/or short, securities of the Company, or
      “derivative” securities based on securities issued by the Company or to hold the
      Securities for any specified term; (ii) past or future open market or other
      transactions by any Purchaser, specifically including, without limitation,
      Short
      Sales or “derivative” transactions, before or after the closing of this or
      future private placement transactions, may negatively impact the market price
      of
      the Company’s publicly-traded securities; (iii) any Purchaser, and
      counter-parties in “derivative” transactions to which any such Purchaser is a
      party, directly or indirectly, presently may have a “short” position in the
      Common Stock, and (iv) to the Company’s knowledge each Purchaser does not and
      will not have any control over any arm’s length counter-party in any
“derivative” transaction. The
      Company further understands and acknowledges that (y) one or more Purchasers
      may
      engage in hedging activities at various times during the period that the
      Securities are outstanding, including, without limitation, during the periods
      that the value of the Warrant Shares deliverable with respect to Securities
      are
      being determined, and (z) such hedging activities (if any) could reduce the
      value of the existing stockholders' equity interests in the Company at and
      after
      the time that the hedging activities are being conducted.  The Company
      acknowledges that such aforementioned hedging activities do not constitute
      a
      breach of any of the Transaction Documents.

     

    
      
        
        

      

      
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    (ff) Regulation
      M Compliance. 
      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) sold, bid for,
      purchased, or, paid any compensation for soliciting purchases of, any of the
      Securities, or (iii) paid or agreed to pay to any Person any compensation for
      soliciting another to purchase any other securities of the Company, other than,
      in the case of clauses (ii) and (iii), compensation paid to the Company’s
      placement agent in connection with the placement of the Securities.

     

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

     

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

     

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

     

    (c) Purchaser
      Status.
      At the
      time such Purchaser was offered the Securities, it was, and as of the date
      hereof it is, and on each date on which it exercises any Warrants, it will
      be
      either: (i) an “accredited investor” as defined in Rule 501(a)(1), (a)(2),
      (a)(3), (a)(7) or (a)(8) under the Securities Act or (ii) a “qualified
      institutional buyer” as defined in Rule 144A(a) under the Securities Act. Such
      Purchaser is not required to be registered as a broker-dealer under Section
      15
      of the Exchange Act. 

     

    
      
        
        

      

      
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    (d) Experience
      of Such Purchaser.
      Such
      Purchaser, either alone or together with its representatives, has such
      knowledge, sophistication and experience in business and financial matters
      so as
      to be capable of evaluating the merits and risks of the prospective investment
      in the Securities, and has so evaluated the merits and risks of such investment.
      Such Purchaser is able to bear the economic risk of an investment in the
      Securities and, at the present time, is able to afford a complete loss of such
      investment. Such Purchaser acknowledges that it has had the opportunity to
      review (including through availability to it of documents electronically filed
      by the Company with the Commission) the Base Prospectus, the Prospectus
      Supplement and all documents incorporated therein by reference and the
      Registration Statement, including the risk factors set forth in the Prospectus
      Supplement, and has read this Agreement and the form of Warrant and is familiar
      with and understands the terms of the offering.

     

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

     

    (f) Such
      Purchaser understands that nothing in this Agreement or any other materials
      presented by or on behalf of the Company to such Purchaser in connection with
      the Securities constitutes legal, tax or investment advice. Such Purchaser
      has
      consulted such legal, tax and investment advisors as it, in its sole discretion,
      has deemed necessary or appropriate in connection with its purchase of the
      Securities.

     

    (g) Such
      Purchaser acknowledges that the Company has agreed to pay the Placement Agent
      a
      fee in respect of the sale of Securities to such Purchaser.

     

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

     

    
      
        
        

      

      
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    (i) The
      purchase by such Purchaser of the Shares 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 shares of Common Stock or the voting power of the Company on a
      post-transaction basis that assumes that the Closing shall have occurred. 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 shares of Common Stock or the voting power of the Company on a
      post
      transaction basis that assumes that the Closing shall have
      occurred.

     

    ARTICLE
      IV.

    OTHER
      AGREEMENTS OF THE PARTIES

     

    4.1 Warrant
      Shares. If
      all or
      any portion of a Warrant is exercised at a time when there is an effective
      registration statement to cover the issuance or resale of the Warrant Shares
      or
      if the Warrant is exercised via cashless exercise, the Warrant Shares issued
      pursuant to any such exercise shall be issued free of all legends. If at any
      time following the date hereof the Registration Statement (or any subsequent
      registration statement registering the Warrant Shares) is not effective or
      is
      not otherwise available for the sale or resale of the Warrant Shares, the
      Company shall immediately notify the holders of the Warrants in writing that
      such registration statement is not then effective and thereafter shall promptly
      notify such holders when the registration statement is effective again and
      available for the sale or resale of the Warrant Shares. The Company shall use
      reasonable best efforts to keep a registration statement (including the
      Registration Statement) registering the issuance or resale of the Warrant Shares
      effective during the term of the Warrants. Upon a cashless exercise of the
      Warrants, the holding period for purposes of Rule 144 shall tack back to the
      original date of issuance of such Warrant.

     

    4.2 Furnishing
      of Information.
      Until
      the earliest of the time that (i) no Purchaser owns Securities or (ii) the
      Warrants have expired, 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 even if the Company is not then subject to the reporting
      requirements of the Exchange Act. As long as any Purchaser owns Securities,
      if
      the Company is not required to file reports pursuant to the Exchange Act, it
      will prepare and furnish to the Purchasers and make publicly available in
      accordance with Rule 144(c) such information as is required for the Purchasers
      to sell the Securities under Rule 144. The Company further covenants that it
      will take such further action as any holder of Securities may reasonably
      request, to the extent required from time to time to enable such Person to
      sell
      such Securities without registration under the Securities Act within the
      requirements of the exemption provided by Rule 144.

     

    
      
        
        

      

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

     

    4.4 Securities
      Laws Disclosure; Publicity. The Company shall, by 8:30 a.m. (New York City
      time) on the Trading Day immediately following the date hereof, issue a Current
      Report on Form 8-K, disclosing the material terms of the transactions
      contemplated hereby, and including the Transaction Documents as exhibits
      thereto. The Company and each Purchaser shall consult with each other in issuing
      any other press releases with respect to the transactions contemplated hereby,
      and neither the Company nor any Purchaser shall issue any such press release
      nor
      otherwise make any such public statement without the prior consent of the
      Company, with respect to any press release of any Purchaser, or without the
      prior consent of each Purchaser, with respect to any press release of the
      Company, which consent shall not unreasonably be withheld or delayed, except
      if
      such disclosure is required by law, in which case the disclosing party shall
      promptly provide the other party with prior notice of such public statement
      or
      communication. Notwithstanding the foregoing, the Company shall not publicly
      disclose the name of any Purchaser, or include the name of any Purchaser in
      any
      filing with the Commission or any regulatory agency or Trading Market, without
      the prior written consent of such Purchaser, except (a) as required by federal
      securities law in connection with the filing of final Transaction Documents
      (including signature pages thereto) with the Commission and (b) to the extent
      such disclosure is required by law or Trading Market regulations, in which
      case
      the Company shall provide the Purchasers with prior notice of such disclosure
      permitted under this clause (b).

     

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

     

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

     

    
      
        
        

      

      
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    4.7 Use
      of
      Proceeds. The Company shall use the net proceeds from the sale of the
      Securities hereunder for working capital purposes and shall not use such
      proceeds for: (a) the satisfaction of any portion of the Company’s debt (other
      than payment of trade payables in the ordinary course of the Company’s business
      and prior practices), (b) the redemption of any Common Stock or Common Stock
      Equivalents or (c) the settlement of any outstanding litigation.

     

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

     

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

     

    
      
        
        

      

      
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    4.10 Listing
      of Common Stock.
      The
      Company hereby agrees to use reasonable best efforts to maintain the listing
      and
      quotation of the Common Stock on a Trading Market, and as soon as reasonably
      practicable following the Closing (but not later than the Closing Date) to
      list
      or quote all of the Shares and Warrant Shares on such Trading Market. The
      Company further agrees, if the Company applies to have the Common Stock traded
      on any other Trading Market, it will then include in such application all of
      the
      Shares and Warrant Shares, and will take such other action as is necessary
      to
      cause all of the Shares and Warrant Shares to be listed or quoted on such other
      Trading Market as promptly as possible. The Company will then take all action
      reasonably necessary to continue the listing and trading of its Common Stock
      on
      a Trading Market and will comply in all respects with the Company’s reporting,
      filing and other obligations under the bylaws or rules of the Trading
      Market.

     

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

     

    4.12 [INTENTIONALLY
      DELETED].

     

    4.13 Subsequent
      Equity Sales. 

     

    (a) From
      the
      date hereof until 30 days after the Closing Date, neither the Company nor any
      Subsidiary shall issue shares of Common Stock or Common Stock Equivalents;
      provided,
      however,
      the 30
      day period set forth in this Section 4.13 shall be extended for the number
      of
      Trading Days during such period in which (i) trading in the Common Stock is
      suspended by any Trading Market, or (ii) the Registration Statement is not
      effective or the prospectus included in the Registration Statement may not
      be
      used by the Purchasers for the resale of the Shares and Warrant
      Shares.

     

    (b) From
      the
      date hereof until such time as no Purchaser holds any of the Warrants, the
      Company shall be prohibited from effecting or entering into an agreement to
      effect any Subsequent Financing involving a Variable Rate Transaction.
“Variable
      Rate Transaction”
means
      a
      transaction in which the Company issues or sells (i) any debt or equity
      securities that are convertible into, exchangeable or exercisable for, or
      include the right to receive additional shares of Common Stock either (A) at
      a
      conversion price, exercise price or exchange rate or other price that is based
      upon and/or varies with the trading prices of or quotations for the shares
      of
      Common Stock at any time after the initial issuance of such debt or equity
      securities, or (B) with a conversion, exercise or exchange price that is subject
      to being reset at some future date after the initial issuance of such debt
      or
      equity security or upon the occurrence of specified or contingent events
      directly or indirectly related to the business of the Company or the market
      for
      the Common Stock or (ii) enters into any agreement, including, but not limited
      to, an equity line of credit, whereby the Company may sell securities at a
      future determined price. Any Purchaser shall be entitled to obtain injunctive
      relief against the Company to preclude any such issuance, which remedy shall
      be
      in addition to any right to collect damages. 

     

    
      
        
        

      

      
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    (c) Notwithstanding
      the foregoing, this Section 4.13 shall not apply in respect of an Exempt
      Issuance, except that no Variable Rate Transaction shall be an Exempt
      Issuance.

     

    4.14 Short
      Sales and Confidentiality After The Date Hereof. Each Purchaser, severally
      and not jointly with the other Purchasers, covenants that neither it nor any
      Affiliate acting on its behalf or pursuant to any understanding with it will
      execute any Short Sales during the period commencing with the Discussion Time
      and ending at such time the transactions contemplated by this Agreement are
      first publicly announced as described in Section 4.4. 
      Each
      Purchaser, severally and not jointly with the other Purchasers, covenants that
      until such time as the transactions contemplated by this Agreement are publicly
      disclosed by the Company as described in Section 4.4, such Purchaser will
      maintain the confidentiality of the existence and terms of this transaction
      and
      the information included in the Disclosure Schedules.  Notwithstanding
      the foregoing, no Purchaser makes any representation, warranty or covenant
      hereby that it will not engage in Short Sales in the securities of the Company
      after the time that the transactions contemplated by this Agreement are first
      publicly announced as described in Section 4.4.  Notwithstanding
      the foregoing, in the case of a Purchaser that is a multi-managed investment
      vehicle whereby separate portfolio managers manage separate portions of such
      Purchaser’s assets and the portfolio managers have no direct knowledge of the
      investment decisions made by the portfolio managers managing other portions
      of
      such Purchaser’s assets, the covenant set forth above shall only apply with
      respect to the portion of assets managed by the portfolio manager that made
      the
      investment decision to purchase the Securities covered by this
      Agreement.

     

    4.15 
      Delivery of Securities After Closing. The Company shall deliver, or cause
      to be delivered, the respective Securities purchased by each Purchaser to such
      Purchaser within 3 Trading Days of the Closing Date.

     

    ARTICLE
      V.

    MISCELLANEOUS

     

    5.1 Termination. 
      This Agreement may be terminated by any Purchaser, as to such Purchaser’s
      obligations hereunder only and without any effect whatsoever on the obligations
      between the Company and the other Purchasers, by written notice to the other
      parties, if the Closing has not been consummated on or before July 16, 2008;
      provided, however, that no such termination will affect the right
      of any party to sue for any breach by the other party (or parties).

     

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

     

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

     

    
      
        
        

      

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

     

    5.5 Amendments;
      Waivers. No provision of this Agreement may be waived or amended except in a
      written instrument signed, in the case of an amendment, by the Company and
      the
      Purchasers holding at least 67% of the Shares then outstanding or, in the case
      of a waiver, by the party against whom enforcement of any such waived provision
      is sought. No waiver of any default with respect to any provision, condition
      or
      requirement of this Agreement shall be deemed to be a continuing waiver in
      the
      future or a waiver of any subsequent default or a waiver of any other provision,
      condition or requirement hereof, nor shall any delay or omission of any party
      to
      exercise any right hereunder in any manner impair the exercise of any such
      right.

     

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

     

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

     

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

     

    
      
        
        

      

      
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    5.9 Governing
      Law. All questions concerning the construction, validity, enforcement and
      interpretation of the Transaction Documents shall be governed by and construed
      and enforced in accordance with the internal laws of the State of New York,
      without regard to the principles of conflicts of law thereof. Each party agrees
      that all legal proceedings concerning the interpretations, enforcement and
      defense of the transactions contemplated by this Agreement and any other
      Transaction Documents (whether brought against a party hereto or its respective
      affiliates, directors, officers, shareholders, employees or agents) shall be
      commenced exclusively in the state and federal courts sitting in the City of
      New
      York. Each party hereby irrevocably submits to the exclusive jurisdiction of
      the
      state and federal courts sitting in the City of New York, borough of Manhattan
      for the adjudication of any dispute hereunder or in connection herewith or
      with
      any transaction contemplated hereby or discussed herein (including with respect
      to the enforcement of any of the Transaction Documents), and hereby irrevocably
      waives, and agrees not to assert in any suit, action or proceeding, any claim
      that it is not personally subject to the jurisdiction of any such court, that
      such suit, action or proceeding is improper or is an inconvenient venue for
      such
      proceeding. Each party hereby irrevocably waives personal service of process
      and
      consents to process being served in any such suit, action or proceeding by
      mailing a copy thereof via registered or certified mail or overnight delivery
      (with evidence of delivery) to such party at the address in effect for notices
      to it under this Agreement and agrees that such service shall constitute good
      and sufficient service of process and notice thereof. Nothing contained herein
      shall be deemed to limit in any way any right to serve process in any other
      manner permitted by law. If either party shall commence an action or proceeding
      to enforce any provisions of the Transaction Documents, then the prevailing
      party in such action or proceeding shall be reimbursed by the other party for
      its reasonable attorneys’ fees and other costs and expenses incurred with the
      investigation, preparation and prosecution of such action or
      proceeding.

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
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    5.14 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.

     

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

     

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

     

    5.17 Construction.
      The parties agree that each of them and/or their respective counsel has reviewed
      and had an opportunity to revise the Transaction Documents and, therefore,
      the
      normal rule of construction to the effect that any ambiguities are to be
      resolved against the drafting party shall not be employed in the interpretation
      of the Transaction Documents or any amendments hereto.

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

     

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

     

    (Signature
      Pages Follow)

     

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    


    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.

     

    
      	
              LUMERA
                CORPORATION

            	 	
              Address
                for Notice:

               

              19910
                North Creek Parkway

              Bothell,
                Washington 98011

            
	 	 	 
	
              By:

            	 /s/
              Peter Biere	 	
              Fax:
                425-398-6599

            
	
               Name:
                Peter Biere

            	 	 
	
               Title:
                CFO

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


    

    


    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK

    SIGNATURE
      PAGE FOR PURCHASER FOLLOWS]


    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

    
       

    

    DISCLOSURE
      SCHEDULES

    
      


      to

       

      STOCK
        PURCHASE AGREEMENT


       

      dated
        July 14, 2008

       

      among

       

      LUMERA
        CORPORATION

       

      and
        the various Purchasers party thereto

       

        
          

        

      

      


      The
        Disclosure Schedules are delivered in connection with the execution of the
        above-referenced Stock Purchase Agreement (the “Stock Purchase Agreement” or
“Agreement”). Unless otherwise defined in the Disclosure Schedule, all
        capitalized terms used in the Disclosure Schedule shall have the respective
        meanings ascribed to them in the Stock Purchase Agreement.

      


      Disclosure
        in the Disclosure Schedule with respect to any specific section of the Agreement
        should be read in conjunction with all disclosures contained in the Disclosure
        Schedules and shall be construed as disclosure for all other relevant sections
        of the Agreement where it is reasonably apparent on the face of such disclosure
        that such listing or description would be appropriate. Cross references between
        the various sections of the Disclosure Schedules are also inserted for
        convenience only.

      


      The
        Disclosure Schedules, including all sections and subsections contained therein,
        are qualified in their entirety by reference to specific provisions of the
        Agreement, and are not intended to constitute, and shall not be construed
        as
        constituting, representations and warranties except as to the extent provided
        in
        the Agreement.

      


      The
        inclusion of any information in the Disclosure Schedules shall not be deemed
        to
        be an admission or evidence of the materiality of such item, nor shall it
        establish a standard of materiality for any purpose whatsoever.

      


      The
        headings contained in the Disclosure Schedules are included for convenience
        only
        and are not intended to limit the effect of the disclosures contained in
        the
        Disclosure Schedules or to expand the scope of the information required to
        be
        disclosed in the Disclosure Schedules.


      
        
          
          

        

        
           

          
            

          

        

        
          
          

        

      


      Schedule
        3.1(a); Subsidiaries

      


      Plexera
        BioScience LLC 


      
        
          
          

        

        
           

          
            

          

        

        
          
          

        

      


      Schedule
        3.1(g); Capitalization

      


      
        The
          authorized capital stock of the Company consists of 120,000,000 shares
          of Common
          Stock and 30,000,000 shares of preferred stock, par value $0.001 per share.
          As
          of July 11, 2008 there were 20,088,352 shares of Common Stock and no shares
          of
          preferred stock issued and outstanding. As of June 30, 2008, the Company
          had
          reserved (i) 2,644,980 shares of Common Stock for issuance under compensation
          plans approved by shareholders and (ii) 1,630,546 shares of Common Stock
          for
          issuance pursuant to outstanding warrants to purchase Common
          Stock.

      


      
        
          
          

        

        
           

          
            

          

        

        
          
          

        

      

    

     

    
      Schedule
        3.1(x)

      


      The
        following information will be included in press release(s) to be issued by
        the
        Company prior to the markets opening on the day following the date of the
        Agreement:

      


      Order
        from Lockheed Martin:

      


      Lumera
        Corporation (NASDAQ: LMRA), a leader in the field of photonics communication,
        announced today that it has completed the shipment of electro-optic devices
        on
        the third purchase order from Lockheed Martin under the terms of the existing
        material transfer agreement. 

      


      “We
        are
        pleased that our relationship with Lockheed Martin is progressing and expanding
        with these additional orders,” said Dr. Raluca Dinu, Vice President of Lumera’s
        Electro-Optic Business Unit. “We look forward to continuing to provide our
        materials and devices over the term of the Lockheed Martin agreement as their
        needs increase and their confidence in Lumera builds.”


      


      Preliminary
        Q2 Results

      


      The
        Company also announced that revenues for second quarter are expected to be
        approximately $1.5 million, reflecting a 60% increase as compared to second
        quarter 2007, and a reduction in costs of approximately 30% as compared second
        quarter 2007, primarily due to the closing of Plexera, for an expected net
        loss per share of between $0.10 to $0.12.