EXHIBIT 10.1


 


SECURITIES
PURCHASE AGREEMENT


 


This Securities Purchase Agreement (this “Agreement”)
is dated as of March 27, 2007, among VendingData Corporation, a Nevada
corporation (the “Company”), and each purchaser identified on the
signature pages hereto (each, including its successors and assigns, a “Purchaser”
and collectively the “Purchasers”).


 


R  E  C  I  T  A
L  S


 


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


 


A  G  R  E  E  M
E  N  T


 


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 indicated in this Section 1.1:


 


“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 144 under the Securities
Act.  With respect to a Purchaser, any
investment fund or managed account that is managed on a discretionary basis by
the same investment manager as such Purchaser will be deemed to be an Affiliate
of such Purchaser.


 


“Business Day” means
any day except Saturday, Sunday and any day which shall be a federal legal
holiday in the United States.


 


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


 


“Closing Date” means
the Business 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 applicable Shares have been satisfied or
waived.


 


“Commission” means
the 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.


 


“Disclosure Schedules”
means the Disclosure Schedules of the Company delivered in connection with the
Closing.


 


“Effective Date”
means the date that the initial Registration Statement filed by the Company
pursuant to the Registration Rights Agreement is first declared effective by
the Commission.


 


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


 


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


 


“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).


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


“Shares” means the
One Million, Six Hundred and Twenty Five Thousand (1,625,000) shares of Common
Stock issued or issuable to the Purchasers pursuant to this Agreement.


 


“Short Sales” shall
include 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.


 


“Subsidiary” means
any subsidiary of the Company as set forth on Schedule 3.1(a).


 


“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
New York Stock Exchange, the NASDAQ Global Select Market, the NASDAQ Global
Market, the NASDAQ Capital Market or the OTC Bulletin Board.


 


“Transaction Documents”
means this Agreement, the Warrants and the Registration Rights Agreement
executed in connection with the transactions contemplated hereunder.


 


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


 


“Warrant” and “Warrants”
means a Common Stock purchase warrant, in the form of Exhibit B,
and all Warrants collectively.


 


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ARTICLE II.

PURCHASE AND SALE


 


2.1                                 Closing.  Upon the terms and subject to the conditions
set forth herein, the Company agrees to sell, and each Purchaser agrees to
purchase, severally and not jointly, the number of Shares and Warrants set
forth on each respective Purchaser’s signature page attached hereto, for
the Subscription Amount set forth thereon, which in the aggregate shall equal
up to Four Million, Three Hundred and Six Thousand and Two Hundred and Fifty
Dollars ($4,306,250) of Shares.  On the
Closing Date (the “Closing Date”), each Purchaser shall deliver to the
Company, via wire transfer or a certified check, immediately available funds
equal to their Subscription Amount, and the Company shall deliver to each
Purchaser their respective Shares and Warrants to be issued at the Closing (the
“Closing”) at the Closing.  Upon
satisfaction of the conditions set forth in Sections 2.2 and 2.3, the Closing
shall occur at the offices of Greenberg Traurig, LLP, 650 Town Center Drive, Suite 1700,
Costa Mesa, California 92626, or such other location as the parties shall
mutually agree.


 


2.2                                 Deliveries.


 


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


 


(i)                                     this Agreement duly executed by the
Company;


 


(ii)                                  one or more stock certificates evidencing
that number of Shares purchased by each Purchaser hereunder, registered in
the name of such Purchaser;


 


(iii)                               an originally executed Warrant evidencing
that number of Warrants purchased by each Purchaser hereunder, registered
in the name of such Purchaser;


 


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


 


(v)                                 an opinion of Greenberg Traurig, LLP (“Company
Counsel”), dated as of the Closing Date, in substantially the form of Exhibit C
attached hereto;


 


(vi)                              a certificate evidencing the
incorporation and good standing of the Company and each of its U.S domiciled
operating Subsidiaries in such corporation’s state of incorporation issued by
the Secretary of State of such state of incorporation as of a date within 10
days of the Closing Date; and


 


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


 


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


 


(i)                                     this Agreement duly executed by such
Purchaser;


 


(ii)                                  such Purchaser’s Subscription Amount by
wire transfer or cashier’s check to the account as specified by the Company in
writing; and


 


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


 


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


 


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


 


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


 


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


 


(i)                                     the representations and warranties of the
Company and its Subsidiaries shall be true and correct in all material respects
(except for those representations and warranties that are qualified by
materiality or Material Adverse Effect, which shall be true and correct in all
respects) as of the date when made and as of the Closing Date as though made at
that time (except for representations and warranties that speak as of a
specific date, which shall remain true and correct as of such specific date);


 


(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;


 


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(iv)                              the Common Stock (I) shall be listed on
the Principal Market and (II) shall not have been suspended, as of the Closing
Date, by the SEC or the Principal Market from trading on the Principal Market
nor shall suspension by the SEC or the Principal Market have been threatened,
as of the Closing Date, either (A) in writing by the SEC or the Principal
Market or (B) by falling below the minimum listing maintenance
requirements of the Principal Market; and


 


(v)                                 the Company shall have obtained all
governmental, regulatory or third party consents and approvals, if any,
necessary for the sale of the Shares and the Warrants.


 


ARTICLE III.

REPRESENTATIONS AND WARRANTIES


 


3.1                                 Representations
and Warranties of the Company. 
Except as set forth under the corresponding section of the
disclosure schedules delivered to the Purchasers concurrently herewith (the “Disclosure
Schedules”) which Disclosure Schedules shall be deemed a part hereof, the
Company hereby makes the representations and warranties set forth below 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 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.


 


(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 (as applicable), with the
requisite power and authority to own and use its properties and assets and to
carry on its business as currently conducted. 
Neither the Company nor any Subsidiary is in violation or default of any
of the provisions of its respective certificate or articles of incorporation,
bylaws or other organizational or charter documents.  Each of the Company and the Subsidiaries is
duly qualified to conduct business and is in good standing as a foreign
corporation or other entity in each jurisdiction in which the nature of the
business conducted or property owned by it makes such qualification necessary,
except where the failure to be so qualified or in good standing, as the case
may be, 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 business,
properties, assets, operations, prospects, results of operations or financial
condition of the Company and the Subsidiaries, taken as a whole, or (iii) a
material adverse effect on the Company’s ability to perform in any material
respect on a timely basis its obligations under any Transaction Document (any
of (i), (ii) or (iii), a “Material Adverse Effect”) and 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.


 


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(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, its board of directors or its stockholders in
connection therewith other than in connection with the required approvals set
forth on Schedule 3.1(c) attached hereto (the “Required
Approvals”).  Each Transaction
Document has been (or upon delivery will have been) duly executed by the
Company and, when delivered in accordance with the terms hereof 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 of the Transaction Documents by
the Company, the issuance and sale of the Securities and the consummation by
the Company 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.


 


(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) filings required
pursuant to Section 4.4 of this Agreement, (ii) the filing with the
Commission of the Registration Statement, (iii) application(s) to each
applicable Trading Market for the listing of the


 


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Shares and the
Underlying Shares for trading thereon in the time and manner required thereby,
and (iv) the filing of Form D with the Commission and such filings as
are required to be made under applicable state securities laws (collectively,
the “Required Approvals”).


 


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


 


(g)                                 Capitalization. 
The capitalization of the Company is as set forth on Schedule 3.1(g).  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 or as set forth on Schedule 3.1(g), there are no
outstanding options, warrants, script 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 of the
Company or others is required for the issuance and sale of the Securities.  Except as set forth on Schedule 3.1(g),
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 filed all reports, schedules, forms, statements and
other documents required to be filed by it under the Securities Act and the
Exchange Act, including pursuant to Section 13(a) or 15(d) thereof,
for the period commencing on January 1, 2006 through the date hereof (the
foregoing materials, including the exhibits thereto and documents incorporated
by reference therein, being collectively referred to herein as the “SEC
Reports”) on a timely basis or has received a valid extension of such time
of filing and has filed any such SEC Reports prior to the expiration of any
such extension.  As of their respective
dates, the SEC Reports complied in all material respects with the requirements
of the Securities Act and the Exchange Act and the rules and regulations
of the Commission promulgated thereunder, as applicable, and none of the SEC
Reports, when filed, contained any untrue


 


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statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.  The financial statements of the Company
included in the SEC Reports complied 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.


 


(i)                                     Material Changes; Undisclosed Events,
Liabilities or Developments.  Since the
date of the latest audited financial statements included within the SEC
Reports, except as specifically disclosed in a subsequent SEC Report, (i) there
has been no event, occurrence or development that has had or that could
reasonably be expected by the Company to result in a Material Adverse Effect, (ii) the
Company has not incurred any 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.


 


(j)                                     Litigation.  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 materially adversely affects or challenges the legality, validity or
enforceability of any of the Transaction Documents or the Securities.  The Commission has not issued any stop order
or other order suspending the effectiveness of any registration statement filed
by the Company or any Subsidiary under the Exchange Act or the Securities Act.


 


(k)                                  Labor Relations. 
No material labor dispute exists or, to the knowledge of the Company, is
imminent with respect to any of the employees of the Company which could
reasonably be expected to result in a Material Adverse Effect.  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, and neither the Company or any of its Subsidiaries is a party
to a collective bargaining agreement, and the Company and its


 


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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, and the continued employment of each such executive
officer does not subject the Company or any of its Subsidiaries to any
liability with respect to any of the foregoing matters.  The Company and its Subsidiaries are in
compliance with all U.S. federal, state, local and foreign laws and regulations
relating to employment and employment practices, terms and conditions of
employment and wages and hours, except where the failure to be in compliance
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.


 


(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.


 


(o)                                 Patents and Trademarks. 
The Company and the Subsidiaries have, or have rights to use, all
patents, patent applications, trademarks, trademark applications, service


 


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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
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 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.


 


(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 $60,000 other than (i) for payment of salary or
consulting fees for services rendered, (ii) reimbursement for expenses
incurred on behalf of the Company and (iii) for 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
maintains disclosure controls and procedures (as such term is defined in Rule 13a-15(e) under
the Exchange Act) that are effective in ensuring that information required to
be disclosed by the Company in the reports that it files or submits under the
Exchange Act is recorded, processed, summarized and reported, within the time
periods specified in the rules and forms of the SEC, including, without
limitation, controls and procedures designed in to ensure that information
required to be disclosed by the Company in the reports that it files or submits


 


11

















 


under the Exchange
Act is accumulated and communicated to the Company’s management, including its
principal executive officer or officers and its principal financial officer or
officers, as appropriate, to allow timely decisions regarding required
disclosure.


 


(s)                                  Certain Fees. 
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 as a result of any
action taken by the Company or its Affiliates.


 


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


 


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


 


(v)                                 Registration Rights. 
Other than each of the Purchasers, no Person has any right to cause the
Company to effect the registration under the Securities Act of any securities
of the Company.


 


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


 


(x)                                   Application of Takeover Protections. 
The Company and its Board of Directors have taken all necessary action,
if any, in order to render inapplicable any control share acquisition, business
combination, poison pill (including any distribution under a rights agreement)
or other similar anti-takeover provision under the Company’s Certificate of
Incorporation (or similar charter documents) or the laws of its state of


 


12

















 


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.


 


(y)                                 Disclosure.  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, with respect to the representations
and warranties made herein are true and correct with respect to such
representations and warranties and do not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading.


 


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


 


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


 


(cc)                            Insolvency.  The Company
is not as of the date hereof, and after giving effect to the transactions
contemplated hereby to occur at the Closing, will not be Insolvent (as defined
below).  For purposes of this Section 3.1(cc),
“Insolvent” means, with respect to any Person , (i) the present
fair saleable value of such Person’s assets is less than the amount required to
pay such Person’s total indebtedness, (ii) such Person is unable to pay
its debts and liabilities, subordinated, contingent or otherwise, as such debts
and liabilities become absolute and matured, (iii) such Person intends to
incur or believes that it will incur debts that would be beyond its ability to
pay as such debts mature or (iv) such Person has unreasonably small
capital with which to conduct the business in which it is engaged as such
business is now conducted and is proposed to be conducted.


 


13

















 


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


 


(ee)                            No Undisclosed Events, Liabilities,
Developments or Circumstances.  Except for
the transactions contemplated by this Agreement, no event, liability,
development or circumstance has occurred or exists with respect to the Company
or its business, properties, prospects, operations or financial condition, that
would be required to be disclosed by the Company under applicable securities laws
on a Current Report on Form 8-K filed with the SEC.


 


(ff)                                Environmental Laws. 
The Company is in compliance with any and all Environmental Laws (as
hereinafter defined), (ii) have received all permits, licenses or other
approvals required of them under applicable Environmental Laws to conduct their
respective businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval where, in each of the
foregoing clauses (i), (ii) and (iii), the failure to so comply would be
reasonably expected to have, individually or in the aggregate, a Material
Adverse Effect.  The term “Environmental
Laws” means all federal, state, local or foreign laws relating to pollution or
protection of human health or the environment (including, without limitation,
ambient air, surface water, groundwater, land surface or subsurface strata),
including, without limitation, laws relating to emissions, discharges, releases
or threatened releases of chemicals, pollutants, contaminants, or toxic or hazardous
substances or wastes (collectively, “Hazardous Materials”) into the
environment, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials, as well as all authorizations, codes, decrees, demands or
demand letters, injunctions, judgments, licenses, notices or notice letters,
orders, permits, plans or regulations issued, entered, promulgated or approved
thereunder.


 


(gg)                          Manipulation of Price. 
The Company has not, and to its knowledge no one acting on its behalf
has 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.


 


(hh)                          Foreign Corrupt Practices. 
Neither the Company, nor any of its Subsidiaries, nor to the Company’s
knowledge, any director, officer, agent, employee or other Person acting on
behalf of the Company or any of its Subsidiaries has, in the course of its
actions for, or on behalf of, the Company (i) used any corporate funds for
any unlawful contribution, gift, entertainment or other unlawful expenses
relating to political activity; (ii) made any direct or indirect unlawful
payment to any foreign or domestic government official or employee from
corporate funds; (iii) violated or is in violation of any provision of the
U.S. Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any
unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful
payment to any foreign or domestic government official or employee.


 


14

















 


3.2                                 Representations
and Warranties of the Purchasers. 
Each Purchaser hereby, for itself and for no other Purchaser, 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 the Transaction Documents and
otherwise to carry out its obligations hereunder and thereunder. The execution,
delivery 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 understands that the Securities are “restricted
securities” and have not been registered under the Securities Act or any
applicable state securities law and is acquiring the Securities as principal
for its own account and not with a view to or for distributing or reselling
such Securities or any part thereof in violation of the Securities Act or any
applicable state securities law, has no present intention of distributing any
of such Securities in violation of the Securities Act or any applicable state
securities law and has no direct or indirect arrangement or understandings with
any other persons to distribute or regarding the distribution of such
Securities (this representation and warranty not limiting such Purchaser’s
right to sell the Shares and Underlying Shares 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 Shares and Warrants, it was,
and at the date hereof it is, an “accredited investor” as defined in Rule 501(a)(1),
(a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act.  Such Purchaser is not required to be registered
as a broker-dealer under Section 15 of the Exchange Act.


 


(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.


 


15

















 


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


 


(f)                                    Short Sales and Confidentiality Prior To
The Date Hereof.  Other than the transaction contemplated
hereunder, such Purchaser has not directly or indirectly, nor has any Person
acting on behalf of or pursuant to any understanding with such Purchaser,
engaged in any transaction, including Short Sales, in the securities of
the Company since the earlier to occur of (i) the time that such Purchaser
was first contacted by the Company regarding an investment in the Company, or (ii) the
30th day prior to the date of this Agreement (such earlier date, “Discussion
Date”).  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).


 


(g)                                 Access to Information. 
Such Purchaser acknowledges that it has received and had the opportunity
to review (i) copies of the SEC Reports, and (ii) all exhibits
thereto.  Such Purchaser further
acknowledges that it or its representatives have been afforded (iii) the
opportunity to ask such questions as it has deemed necessary of, and to receive
answers from, representatives of the Company concerning the terms and
conditions of the offering of the Securities, the merits and risks of investing
in the Securities, (iv) access to information about the Company and the
Company’s financial condition, results of operations, business, properties,
management and prospects sufficient to enable it to evaluate its investment in
the Securities; and (v) the opportunity to obtain such additional
information which the Company possesses or can acquire without unreasonable
effort or expense that is necessary to verify the accuracy and completeness of
the information contained in the SEC Reports.


 


(h)                                 Restrictions on Securities. 
Such Purchaser understands that the Securities have not been registered
under the Securities Act and may not be offered, resold, pledged or otherwise
transferred except (a) pursuant to an exemption from registration under
the Securities Act or pursuant to an effective registration statement in
compliance with Section 5 under the Securities Act and (b) in
accordance with all applicable securities laws of the states of the United
States and other jurisdictions.


 


16

















 


ARTICLE IV.

OTHER AGREEMENTS OF THE PARTIES


 


4.1                                 Transfer
Restrictions.  


 


(a)                                  The Securities may only be disposed of in
compliance with state and federal securities laws.  In connection with any transfer of Securities
other than pursuant to an effective registration statement or Rule 144,
the Company may require the transferor thereof to provide to the Company an
opinion of counsel to the Company, the form and substance of which opinion
shall be reasonably satisfactory to the Company, to the effect that such
transfer does not require registration of such transferred Securities under the
Securities Act.


 


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


 


THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
U.S. SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE
AND ARE “RESTRICTED SECURITIES” AS THAT TERM IS DEFINED IN RULE 144 UNDER THE
SECURITIES ACT.  SUCH SECURITIES MAY NOT
BE OFFERED FOR SALE, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND THE APPLICABLE
STATE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION THEREUNDER,
THE AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO THE REASONABLE SATISFACTION
OF COUNSEL TO THE ISSUER.


 


4.2                                 Furnishing of Information.  As
long as any Purchaser owns Securities, the Company covenants to timely file (or
obtain extensions in respect thereof and file within the applicable grace
period) all reports required to be filed by the Company after the date hereof
pursuant to the Exchange Act.  As long as
any 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 Shares and Underlying
Shares under Rule 144. The Company further covenants that it will take
such further action as any holder of Shares and Underlying Shares may
reasonably request, to the extent required from time to time to enable such
Person to sell such Shares and Underlying Shares without registration under the
Securities Act within the requirements of the exemption provided by Rule 144.


 


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 in a manner that would
require the registration under the Securities Act of the sale of the Securities
to the Purchasers or that would be integrated with the offer or sale of the
Securities for purposes of the rules and regulations of any Trading Market
such that it would require shareholder approval prior to the closing of such


 


17

















 


other
transaction unless shareholder approval is obtained before the closing of such
subsequent transaction.


 


4.4                                 Securities
Laws Disclosure; Publicity.  The
Company shall, within one Business Day of the Closing Date, issue a press
release disclosing the material terms of the transactions contemplated hereby,
and shall file a Current Report on Form 8-K (the “Closing 8-K”)
which shall attach the Transaction Documents thereto by the first Business Day
following the Closing Date.  The press
release and the Closing 8-K shall be acceptable to the Purchasers in their
reasonable discretion.  No Purchaser
shall issue any such press release or otherwise make any such public statement
without the prior consent of the Company. 
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 (i) as required by federal securities law in connection
with (A) any registration statement contemplated by the Registration
Rights Agreement and (B) the filing of final Transaction Documents
(including signature pages thereto) with the Commission and (ii) 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 subclause (ii).


 


4.5                                 Use
of Proceeds.  The Company shall use
the net proceeds from the sale of the Shares hereunder as set forth on Schedule 4.5
of the Disclosure Schedule.


 


4.6                                 Listing of Common Stock.  The
Company hereby agrees to use best efforts to maintain the listing of the Common
Stock on a Trading Market, and as soon as reasonably practicable following the
Closing to list all of the Shares and Underlying 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 include in such application all of
the Shares and Underlying Shares, and will take such other action as is
necessary to cause all of the Shares and Underlying Shares to be listed on such
other Trading Market as promptly as possible. 
The Company will take all action reasonably necessary to continue the
listing and trading of its Common Stock on a Trading Market and will comply in
all respects with the Company’s reporting, filing and other obligations under
the bylaws or rules of the Trading Market.


 


4.7                                 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 engage in any
transactions, including any Short Sales, in the securities of the Company
during the period commencing at the Discussion Time and ending at the time that
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 neither it nor any Affiliate
acting on its behalf or pursuant to any understanding with it will engage in
any Short Sales in the securities of the Company during the period commencing
at the Discussion Time and ending on the date the Closing 8-K is filed with the
SEC (“Black-out Termination Date”).  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 all disclosures made to it in connection with this transaction (including
the existence and terms of this transaction). 
Each Purchaser understands and


 


18

















 


acknowledges, severally and not jointly with any other Purchaser, that
the Commission currently takes the position that coverage of short sales of
shares of the Common Stock “against the box” prior to the Effective Date of the
Registration Statement with respect to the Shares is a violation of Section 5
of the Securities Act, as set forth in Item 65, Section A, of the Manual
of Publicly Available Telephone Interpretations, dated July 1997, compiled
by the Office of Chief Counsel, Division of Corporation Finance.  Notwithstanding
the foregoing, 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 Black-out Termination Date.  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.


 


4.8                                 Form D;
Blue Sky Filings.  The Company agrees
to timely file a Form D with respect to the Securities as required under
Regulation D and to provide a copy thereof, promptly upon request of any
Purchaser. The Company shall take such action as the Company shall reasonably
determine is necessary in order to obtain an exemption for, or to qualify the
Securities for, sale to the Purchasers at the Closing under applicable
securities or “Blue Sky” laws of the states of the United States, and shall
provide evidence of such actions promptly upon request of any Purchaser.


 


4.9                                 Closing
Documents.  On or prior to fourteen
(14) calendar days after the Closing Date, the Company agrees to deliver, or
cause to be delivered, to each Purchaser and Schulte Roth & Zabel LLP
executed copies of the Transaction Documents, Securities and any other document
required to be delivered to any party pursuant to Section 2.2 hereof.


 


4.10                           Additional
Issuances of Securities.


 


(a)                                  For purposes of this Section 4.10,
the following definitions shall apply.


 


(i)                                     “Approved Stock Plan” means any
employee benefit plan which has been approved by the Board of Directors of the
Company, pursuant to which the Company’s securities may be issued to any
employee, officer or director for services provided to the Company.


 


(ii)                                  “Common Stock Equivalents” means,
collectively, Options and Convertible Securities.


 


(iii)                               “Convertible Securities” means any
stock or securities (other than Options) convertible into or exercisable or
exchangeable for shares of Common Stock.


 


(iv)                              “Excluded Securities” means (i) any
Common Stock or Options issued or issuable in connection with any Approved
Stock Plan; (ii) any Common Stock issuable upon the exercise of the
Warrants; (iii) any Common Stock issuable upon conversion, exercise or exchange
of any Options or Convertible Securities which are outstanding on the day
immediately preceding the date hereof, provided that the terms of any such
Options or Convertible Securities


 


19

















 


are not amended, modified
or changed on or after the date hereof; or (iv) any Common Stock or Common
Stock Equivalents issued (whether in exchange for Options or Convertible
Securities or otherwise) in any Change of Control Transaction (as defined
below).


 


(v)                                 “Options” means any rights,
warrants or options to subscribe for or purchase shares of Common Stock or
Convertible Securities.


 


(vi)                              “Ownership Interest”  means, with respect to any Purchaser at any
given time, the quotient of (x) the Purchaser Securities Amount of such
Purchaser and (y) the sum of (I) the Common Stock Deemed Outstanding (as
defined in the Warrants) as of such time and (II) the Warrant Shares issuable
upon exercise of the Warrants held by, or issuable to, such Purchaser pursuant
to the Transaction Documents as of such time, without regard for any
limitations on exercise in the Warrants held by such Purchaser.


 


(vii)                           “Purchaser Securities Amount”
means, with respect to any Purchaser at any given time, the number of Shares
and Common Stock issuable upon exercise of the Warrants held by, or issuable
to, such Purchaser pursuant to the Transaction Documents as of such time,
without regard for any limitations on exercise in the Warrants held by such
Purchaser.


 


(viii)                        “Subsequent Placement” means any
offer or sale by or on behalf of the Company of the Company’s equity or equity
equivalent securities, including without limitation any debt, preferred stock
or other instrument or security that is, at any time during its life and under
any circumstances, convertible into or exchangeable or exercisable for shares
of Common Stock or Common Stock Equivalents, for direct or indirect
consideration of cash or cash equivalents, pursuant to either (a) a
transaction exempt from Section 5 of the Securities Act; (b) a bona
fide underwritten public offering with a nationally recognized underwriter
which generates gross proceeds to the Company of less than $10,000,000; (c) a
bona fide underwritten public offering with a nationally recognized underwriter
which generates gross proceeds to the Company of at least $10,000,000 in an “at-the-market
offering” as defined in Rule 415(a)(4) under the 1933 Act or
containing any “equity lines”; or (d) an offering pursuant to a
registration statement filed under Section 5 of the Securities Act other
than a bona fide underwritten public offering with a nationally recognized
underwriter which generates gross proceeds to the Company of at least
$10,000,000.


 


(b)                                 From the date hereof until the date that
is sixty (60) Trading Days following the Effective Date (the “Trigger Date”),
the Company will not, directly or indirectly, (x) file any registration
statement with the SEC prior to the filing of the Registration Statement (as
defined in the Registration Rights Agreement) or (y) cause any registration
statement filed on or after the date hereof to become effective under the 1933
Act prior to the Effective Date (as defined in the Registration Rights
Agreement); provided, that, the Company shall not be required to comply with
clause (y) above if the Company has acted in good faith with respect to its
agreements and obligations set forth in the Registration Rights Agreement and
used its reasonable best efforts to have the Registration Statement declared
effective under the 1933 Act prior to the Effective Date.


 


(c)                                  From the Trigger Date until the earlier
to occur of (x) the second anniversary of the Closing Date and (y) such date
after which the Company has, directly or


 


20

















 


indirectly, in one or
more related transactions (collectively, the “Change of Control Transaction”):
(I) allowed another Person to make a purchase, tender or exchange offer that is
accepted by the holders of more than 50% of the outstanding shares of Common
Stock (not including any shares of Common Stock held by the Person or Persons
making or party to, or associated or affiliated with the Persons making or
party to, such purchase, tender or exchange offer) or (II) consummated a stock
purchase agreement or other business combination (including, without
limitation, a merger or consolidation, reorganization, recapitalization,
spin-off or scheme of arrangement) with another Person whereby such other
Person, after giving effect to such Change of Control Transaction, is the
beneficial owner of 50% or more of the outstanding shares of Common Stock, the
Company will not, directly or indirectly, effect any Subsequent Placement
unless the Company shall have first complied with this Section 4.10(c).


 


(i)                                     The Company shall deliver to each
Purchaser an irrevocable written notice (the ”Offer Notice”) of any
proposed or intended issuance or sale (the ”Offer”) of the
securities being offered (the “Offered Securities”) in a Subsequent
Placement, which Offer Notice shall (w) identify and describe the Offered
Securities, (x) describe the price and other terms upon which they are to
be issued or sold, and the number or amount of the Offered Securities to be
issued or sold, (y) identify the persons or entities (if known) to which
or with which the Offered Securities are to be offered, issued or sold and (z)
offer to issue and sell to such Purchasers such percentage of the Offered
Securities that would permit the Purchasers to maintain their aggregate
Ownership Interest in the Company as in effect immediately prior to the
consummation of such Subsequent Placement, allocated among such Purchasers (a) based
on such Purchaser’s pro rata portion of the aggregate Purchaser Securities
Amount of all the Purchasers at such time (the “Basic Amount”), and (b) with
respect to each Purchaser that elects to purchase its Basic Amount, any
additional portion of the Offered Securities attributable to the Basic Amounts
of other Purchasers as such Purchaser shall indicate it will purchase or
acquire should the other Purchasers subscribe for less than their Basic Amounts
(the “Undersubscription Amount”), which process shall be repeated until
the Purchasers shall have an opportunity to subscribe for any remaining
Undersubscription Amount.


 


(ii)                                  To accept an Offer, in whole or in part,
such Purchaser must deliver a written notice to the Company prior to the end of
the fifth (5th) Business Day after such Purchaser’s receipt of the
Offer Notice (the “Offer Period”), setting forth the portion of such
Purchaser’s Basic Amount that such Purchaser elects to purchase and, if such
Purchaser shall elect to purchase all of its Basic Amount, the
Undersubscription Amount, if any, that such Purchaser elects to purchase (in
either case, the “Notice of Acceptance”).  If the Basic Amounts subscribed for by all
Purchasers are less than the total of all of the Basic Amounts, then each
Purchaser who has set forth an Undersubscription Amount in its Notice of
Acceptance shall be entitled to purchase, in addition to the Basic Amounts
subscribed for, the Undersubscription Amount it has subscribed for; provided,
however, that if the Undersubscription Amounts subscribed for exceed the
difference between the total of all the Basic Amounts and the Basic Amounts
subscribed for (the “Available Undersubscription Amount”), each
Purchaser who has subscribed for any Undersubscription Amount shall be entitled
to purchase only that portion of the Available Undersubscription Amount as the
Basic Amount of such


 


21

















 


Purchaser bears to
the total Basic Amounts of all Purchasers that have subscribed for
Undersubscription Amounts, subject to rounding by the Company to the extent its
deems reasonably necessary. 
Notwithstanding the foregoing, if the Company desires to modify or amend
the terms and conditions of the Offer prior to the expiration of the Offer
Period, the Company may deliver to the Purchasers a new Offer Notice and the
Offer Period shall expire on the third (3rd) Business Day after such
Purchaser’s receipt of such new Offer Notice.


 


(iii)                               The Company shall have twenty (20)
Business Days from the expiration of the Offer Period above to offer, issue or
sell all or any part of such Offered Securities as to which a Notice of
Acceptance has not been given by the Purchasers (the “Refused Securities”)
pursuant to a definitive agreement(s) (the “Subsequent Placement Agreement”),
but only upon terms and conditions (including, without limitation, unit prices
and interest rates) that are not more favorable to the acquiring person or persons
or less favorable to the Company than those set forth in the Offer Notice.


 


(iv)                              In the event the Company shall propose to
sell less than all the Refused Securities (any such sale to be in the manner
and on the terms specified in Section 4.10(c)(iii) above), then each
Purchaser may, at its sole option and in its sole discretion, reduce the number
or amount of the Offered Securities specified in its Notice of Acceptance to an
amount that shall be not less than the number or amount of the Offered Securities
that such Purchaser elected to purchase pursuant to Section 4.10(c)(ii) above
multiplied by a fraction, (a) the numerator of which shall be the number
or amount of Offered Securities the Company actually proposes to issue or sell
(including Offered Securities to be issued or sold to Purchasers pursuant to Section 4.10(c)(iii) above
prior to such reduction) and (b) the denominator of which shall be the
original amount of the Offered Securities. 
In the event that any Purchaser so elects to reduce the number or amount
of Offered Securities specified in its Notice of Acceptance, the Company may
not issue or sell more than the reduced number or amount of the Offered
Securities unless and until such securities have again been offered to the
Purchasers in accordance with Section 4.10(c)(i) above.


 


(v)                                 Upon the closing of the issuance or sale
of all or less than all of the Refused Securities, the Purchasers shall acquire
from the Company, and the Company shall issue to the Purchasers, the number or
amount of Offered Securities specified in the Notices of Acceptance, as reduced
pursuant to Section 4.10(c)(iv) above if the Purchasers have so
elected, upon the terms and conditions specified in the Offer. The purchase by
the Purchasers of any Offered Securities is subject in all cases to the
preparation, execution and delivery by the Company and the Purchasers of a
purchase agreement relating to such Offered Securities reasonably satisfactory
in form and substance to the Purchasers and their respective counsel.


 


(vi)                              Any Offered Securities not acquired by
the Purchasers or other persons in accordance with Section 4.10(c)(iii) above
may not be issued or sold until they are again offered to the Purchasers under
the procedures specified in this Agreement.


 


22

















 


(vii)                           The Company and the Purchasers agree that
if any Purchaser elects to participate in the Offer, (x) neither the Subsequent
Placement Agreement with respect to such Offer nor any other transaction
documents related thereto (collectively, the “Subsequent Placement Documents”)
shall include any term or provisions whereby any Purchaser shall be required to
agree to any restrictions in trading as to any securities of the Company owned
by such Purchaser prior to such Subsequent Placement, and (y) such Purchaser
shall be entitled to registration rights, if any, no less favorable than such
registration rights, if any, provided to any other Persons acquiring securities
in such Subsequent Placement.


 


(viii)                        Notwithstanding anything to the contrary
in this Section 4.10 and unless otherwise agreed to by the Purchasers, the
Company shall either confirm in writing to the Purchasers that the transaction
with respect to the Subsequent Placement has been abandoned or shall publicly disclose
its intention to issue the Offered Securities, in either case in such a manner
such that the Purchasers will not be in possession of material non-public
information, by the twentieth (20th) Business Day following the
expiration of the Offer Period (the “Offer Information Deadline”).  If by the Offer Information Deadline no
public disclosure regarding a transaction with respect to the Offered
Securities has been made, and no notice regarding the abandonment of such
transaction has been received by the Purchasers, such transaction shall be
deemed to have been abandoned and the Purchasers shall not be deemed to be in
possession of any material, non-public information with respect to the
Company.  Should the Company decide to
pursue such transaction with respect to the Offered Securities, the Company
shall provide each Purchaser with another Offer Notice and each Purchaser will
again have the right of participation set forth in this Section 4.10(c).  After any Offer Information Deadline, the
Company shall not be permitted to deliver an additional Offer Notice to the
Purchasers prior to the fifth (5th) Business Day after such Offer Information
Deadline.


 


(ix)                                The restrictions contained in subsections
(b) and (c) of this Section 4.10 shall not apply in connection
with the issuance of any Excluded Securities.


 


4.11                           Fair
Market Value.  The Company hereby
covenants and agrees that the fair market value of the Securities for purposes
of Article IX of the Charter or any repurchase of any of the Securities in
accordance with applicable law by the Company shall be the Subscription Amount
of such Securities.


 


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, or the Company by written notice
to the other parties, if the Closing has not been consummated on or before April 15,
2007, provided, however, that no such termination will affect the
right of any party to sue for any breach by the other party (or parties).


 


23

















 


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, 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.


 


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 3:30 p.m. (Las Vegas time) on a Business Day, (b) the
next Business 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 Business Day or later than 3:30 p.m. (Las
Vegas time) on any Business Day, (c) the 2nd Business 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, and a copy of any notices to any
Purchaser (for informational purposes only) shall also be delivered to:


 


	
  Schulte Roth & Zabel LLP

  
	
  919 Third Avenue

  
	
  New York, New York 
  10022

  
	
   

  
	
  Telephone:

  	
  (212) 756-2000

  
	
  Facsimile:

  	
  (212) 593-5955

  
	
  Attention:

  	
  Eleazer N. Klein, Esq.

  



 


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 not less
than 51% of the Shares 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                                 Indemnification.  


 


(a)                                  In consideration of each Purchaser’s
execution and delivery of the Transaction Documents and acquiring the
Securities thereunder and in addition to all of the


 


24

















 


Company’s other
obligations under the Transaction Documents, the Company shall defend, protect,
indemnify and hold harmless each Purchaser and all of their stockholders,
partners, members, officers, directors, employees and direct or indirect
investors and any of the foregoing Persons’ agents or other representatives
(including, without limitation, those retained in connection with the
transactions contemplated by this Agreement) (collectively, the “Indemnitees”)
from and against any and all actions, causes of action, suits, claims, losses, costs,
penalties, fees, liabilities and damages, and expenses in connection therewith
(irrespective of whether any such Indemnitee is a party to the action for which
indemnification hereunder is sought), and including reasonable attorneys’ fees
and disbursements (the “Indemnified Liabilities”), incurred by any
Indemnitee as a result of, or arising out of, or relating to (i) any
misrepresentation or breach of any representation or warranty made by the
Company in the Transaction Documents or any other certificate, instrument or
document contemplated hereby or thereby, (ii) any breach of any covenant,
agreement or obligation of the Company contained in the Transaction Documents
or any other certificate, instrument or document contemplated hereby or thereby
or (iii) any cause of action, suit or claim brought or made against such
Indemnitee by a third party (including for these purposes a derivative action
brought on behalf of the Company) and arising out of or resulting from (x) the
execution, delivery, performance or enforcement of the Transaction Documents or
any other certificate, instrument or document contemplated hereby or thereby or
(y) any transaction financed or to be financed in whole or in part, directly or
indirectly, with the proceeds of the issuance of the Securities, in each case,
solely to the extent arising with respect to any willful misconduct, gross
negligence or fraud of the Company or any of its Subsidiaries, or any of their
directors, officers, employees, agents, or representatives, respectively.  To the extent that the foregoing undertaking
by the Company may be unenforceable for any reason, the Company shall make the
maximum contribution to the payment and satisfaction of each of the Indemnified
Liabilities which is permissible under applicable law.


 


(b)                                 Promptly after receipt by an Indemnitee
under this Section 5.6  of notice of
the commencement of any action or proceeding (including any governmental action
or proceeding) involving an Indemnified Liability, such Indemnitee shall, if a
claim for indemnification in respect thereof is to be made against any
indemnifying party under this Section 5.6, deliver to the indemnifying
party a written notice of the commencement thereof, and the indemnifying party
shall have the right to participate in, and, to the extent the indemnifying
party so desires, jointly with any other indemnifying party similarly noticed,
to assume control of the defense thereof with counsel mutually satisfactory to
the indemnifying party and the Indemnitee; provided, however, that an
Indemnitee shall have the right to retain its own counsel with the fees and
expenses of not more than one counsel for such Indemnitee to be paid by the
indemnifying party, if, in the reasonable opinion of the Indemnitee, the
representation by such counsel of the Indemnitee and the indemnifying party
would be inappropriate due to actual or potential conflicts of interests
between such Indemnitee and any other party represented by such counsel in such
proceeding.  Legal counsel referred to in
the immediately preceding sentence shall be selected by the Investors holding
at least a majority of the Shares.  The
Indemnitee shall cooperate fully with the indemnifying party in connection with
any negotiation or defense of any such action or Indemnified Liabilities by the
indemnifying party and shall furnish to the indemnifying party all information
reasonably available to the Indemnitee that relates to such action or
Indemnified Liabilities.  The
indemnifying party shall keep the Indemnitee fully apprised at all times as to
the status of the defense or any settlement negotiations with respect


 


25

















 


thereto.  No indemnifying party shall be liable for any
settlement of any action, claim or proceeding effected without its prior
written consent, provided, however, that the indemnifying party shall not
unreasonably withhold, delay or condition its consent.  No indemnifying party shall, without the
prior written consent of the Indemnitee, consent to entry of any judgment or
enter into any settlement or other compromise which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnitee of a release from all liability in respect to such Indemnified
Liabilities or litigation.  Following
indemnification as provided for hereunder, the indemnifying party shall be
subrogated to all rights of the Indemnitee with respect to all third parties,
firms or corporations relating to the matter for which indemnification has been
made.  The failure to deliver written
notice to the indemnifying party within a reasonable time of the commencement
of any such action shall not relieve such indemnifying party of any liability
to the Indemnitee under this Section 5.6, except to the extent that the
indemnifying party is prejudiced in its ability to defend such action.


 


(c)                                  The indemnification required by this Section 5.6
shall be made by periodic payments of the amount thereof during the course of
the investigation or defense, as and when bills become due or Indemnified
Liabilities become due.


 


(d)                                 The indemnity agreements contained herein
shall be in addition to (x) any cause of action or similar right of the
Indemnitee against the indemnifying party or others, and (y) any liabilities
the indemnifying party may be subject to pursuant to the law.


 


5.7                                 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.


 


5.8                                 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 shall not
assign this Agreement or any rights or obligations hereunder without the prior
written consent of the Required Holders, including by way of a Fundamental
Transaction (unless the Company is in compliance with the applicable provisions
governing Fundamental Transactions set forth in the Warrants).  No Purchaser may assign any of its rights
hereunder without the consent of the Company.


 


5.9                                 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.


 


5.10                           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 State of
New York. Each party hereby irrevocably submits to the exclusive jurisdiction
of the state and federal courts sitting in the State of New York, for the
adjudication of any dispute hereunder or in connection herewith or with any


 


26

















 


transaction contemplated hereby or discussed herein, and hereby
irrevocably waives, and agrees not to assert in any suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of any such
court, that such suit, action or proceeding is brought in an inconvenient forum
or that the venue of such suit, action or proceeding is improper.  Nothing contained herein shall be deemed to
limit in any way any right to serve process in any manner permitted by law.  EACH
PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY.  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.


 


5.11                           Survival.  The representations and warranties contained
herein shall survive the Closing and the delivery of the Shares.


 


5.12                           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.


 


5.13                           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.


 


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


 


5.15                           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


 


27

















 


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.


 


5.16                           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.


 


(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.


 


 


	
  VENDINGDATA CORPORATION

  	
  Address for Notice:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Mark
  R. Newburg

  	
   

  	
  1120 Town Center

  	
   

  
	
   

  	
  Mark R. Newburg,

  	
  Suite 260

  	
   

  
	
   

  	
  President and Chief
  Executive Officer

  	
  Las Vegas, NV 89144

  	
   

  
	
   

  	
  Fax: 702.733.7197

  	
   

  
						



 


 


[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK


SIGNATURE PAGE FOR PURCHASER FOLLOWS]


 

















 


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.


 


 


	
  GLG NORTH AMERICAN OPPORTUNITY FUND

  	
  Address for Notice:

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Tim
  Kuschill

  	
   

  	
  Walker House

  
	
   

  	
  Name: Tim Kuschill

  	
  87 Mary Street

  
	
   

  	
  Title: Legal Counsel, GLG Partners LP

  	
  George Town

  
	
   

  	
  Grand Cayman K41-9002

  
	
   

  	
  Cayman Islands

  
	
  Subscription Amount: $4,306,250

  	
   

  
	
   

  	
  with a copy to:

  
	
  Shares: 1,625,000

  	
   

  
	
   

  	
  c/o GLG Partners, LP

  
	
  Warrants: 1,625,000

  	
  1 Curzon Street

  
	
   

  	
  London WIJ 5HB

  
	
   

  	
  Facsimile: +44 20 7016 7200

  
	
   

  	
  Telephone: +44 20 7016 7302

  
	
   

  	
  Attention: Antonio Dossantos

  
	
   

  	
  E-mail:

  antonio.dossantos@glgpartners.com

  
	
   

  	
   

  
	
   

  	
  Address for Delivery of Shares and

  Warrants for Purchaser:

  
	
   

  	
   

  
	
   

  	
  c/o GLG Partners, LP

  
	
   

  	
  1 Curzon Street

  
	
   

  	
  London WIJ 5HB

  
	
   

  	
  Facsimile: +44 20 7016 7200

  
	
   

  	
  Telephone: +44 20 7016 7302

  
	
   

  	
  Attention: Antonio Dossantos

  
	
   

  	
  E-mail:

  antonio.dossantos@glgpartners.com