SECURITIES
PURCHASE AGREEMENT

       

      This
Securities Purchase Agreement (this “Agreement”) is dated as of
January 26, 2011 by and among American Standard Energy Corp., a Delaware
corporation (the “Company”), and each purchaser
identified on the signature pages hereto (each, including its successors and
permitted assigns, a “Purchaser” and collectively,
the “Purchasers”).

       

      RECITALS

       

      A.          The
Company and each Purchaser is executing and delivering this Agreement in
reliance upon the exemption from securities registration afforded by
Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”), and
Rule 506 of Regulation D (“Regulation D”) as
promulgated by the United States Securities and Exchange Commission (the “Commission”) under the
Securities Act.

       

      B.           Each
Purchaser, severally and not jointly, wishes to purchase, and the Company wishes
to sell, upon the terms and conditions stated in this Agreement, (i) that
aggregate number of shares of common stock, par value $0.001 per share (the
“Common Stock”), of the
Company, set forth below such Purchaser’s name on the signature page of this Agreement (which aggregate amount for all Purchasers
together shall be 3,000,000 shares of Common Stock and shall be collectively
referred to herein as the “Shares”),
(ii) warrants, in substantially the form attached hereto as Exhibit A (the “Series A Warrants”), to
acquire up to that number of additional shares of Common Stock equal to
twenty-five percent (25%) of the number of Shares purchased by such Purchaser
(rounded down to the nearest whole share) (the shares of Common Stock issuable
upon exercise of or otherwise pursuant to the Series A Warrants collectively are
referred to herein as the “Series A Warrant
Shares”) and (ii) warrants, in substantially the form attached
hereto as Exhibit B
(the “Series
B Warrants” and,
collectively with the Series A Warrants, the “Warrants”)), to
acquire up to that number of additional shares of Common Stock equal to
twenty-five percent (25%) of the number of Shares purchased by such
Purchaser (rounded down to the nearest whole share) (the shares of Common Stock
issuable upon exercise of or otherwise pursuant to the Series B Warrants
collectively are referred to herein as the “Series B Warrant Shares” and the
Series B Warrant Shares collectively with the Series A Warrant Shares are hereby
referred to herein as the “Warrant
Shares”).

       

      C.           The
Shares, the Warrants and the Warrant Shares collectively are referred to herein
as the “Securities”.

       

      D.          The
Company has engaged Northland Capital Markets as its exclusive placement agent
(the “Placement Agent”)
for the offering of the Shares and Warrants on a “best efforts”
basis.

       

      E.           Contemporaneously
with the execution and delivery of this Agreement, the parties hereto are
executing and delivering a Registration Rights Agreement, substantially in the
form attached hereto as Exhibit C (the
“Registration Rights
Agreement”), pursuant to which, among other things, the Company will
agree to provide certain registration rights with respect to the Shares and the
Warrant Shares under the Securities Act and the rules and regulations
promulgated thereunder and applicable state securities laws.

       

      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 the Purchasers hereby 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 shall have the meanings indicated in this
Section 1.1:

       

      “Acquiring
Person” has the meaning set forth in Section 4.6.

       

      “Affiliate” means, with
respect to any Person, any other Person that, directly or indirectly through one
or more intermediaries, Controls, is controlled by or is under common control
with such Person, as such terms are used in and construed under Rule 405
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.

       

      “Agreement” has the meaning
set forth in the Preamble.

       

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

       

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

       

      “Buy-In” has the
meaning set forth in Section 4.1(f).

       

      “Buy-In Price”
has the meaning set forth in Section 4.1(f).

       

      “Closing” means
the closing of the purchase and sale of the Shares and the Warrants pursuant to
this Agreement.

       

      “Closing Bid
Price” means, for any security as of any date, (a) the last reported
closing bid price per share of Common Stock for such security on the Principal
Trading Market, as reported by Bloomberg Financial Markets, or, (b) if the
Principal Trading Market begins to operate on an extended hours basis and does
not designate the closing bid price then the last bid price of such security
prior to 4:00 P.M., New York City time, as reported by Bloomberg Financial
Markets, or (c) if the foregoing do not apply, the last closing price of
such security in the over-the-counter market on the electronic bulletin board
for such security as reported by Bloomberg Financial Markets, or (d) if no
closing bid price is reported for such security by Bloomberg Financial Markets,
the average of the bid prices of any market makers for such security as reported
in the “pink sheets” by Pink Sheets LLC. If the Closing Bid Price cannot be
calculated for a security on a particular date on any of the foregoing
bases, the Closing Bid Price of such security on such date shall be the fair
market value as mutually determined by the Company and the holder of such
security. If the Company and such holder are unable to agree upon the fair
market value of such security, then such dispute shall be resolved pursuant to
Section 10 of the Warrants. All such determinations shall be appropriately
adjusted for any stock dividend, stock split, stock combination or other similar
transaction during the applicable calculation period.

       

      “Closing Date”
means the Trading Day when all of the Transaction Documents have been executed
and delivered by the applicable parties thereto, and all of the conditions set
forth in Sections 2.1, 2.2, 5.1 and 5.2 hereof are satisfied or waived, as the case may be,
or such other date as the parties may agree.

       

      “Commission” has the meaning
set forth in the Recitals.


      
        
           


        

        
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      “Common Stock” has the meaning
set forth in the Recitals, and also includes any other class of securities into
which the Common Stock may hereafter be reclassified or changed
into.

       

      “Common Stock Equivalents”
means any securities of the Company or any Subsidiary 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 exchangeable for, or
otherwise entitles the holder thereof to receive, Common Stock or other
securities that entitle the holder to receive, directly or indirectly, Common
Stock.

       

      “Company” has the meaning set
forth in the Preamble.

       

      “Company
Counsel” means Anslow & Jaclin, LLP.

       

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

       

      “Company’s
Knowledge” means with respect to any statement made to the Company’s
Knowledge, that the statement is based upon the actual knowledge of Richard
MacQueen, Scott Feldhacker, Scott Mahoney and Andrew Wall.

       

      “Control”
(including the terms “controlling”, “controlled by” or “under common control
with”) means the possession, direct or indirect, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.

       

      “Deadline Date”
has the meaning set forth in Section 4.1(f).

       

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

       

      “Disclosure
Schedules” has the meaning set forth in Section 3.1.

       

      “DTC” has the
meaning set forth in Section 4.1(c).

       

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

       

      “Environmental
Laws” has the meaning set forth in Section 3.1(ff).

       

      “Escrow Agent”
has the meaning set forth in Section 2.1(c).

       

      “Escrow Amount”
has the meaning set forth in Section 2.1(c).

       

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


      
        
           


        

        
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      “Exempt Issuance” means the
issuance of (a) shares of Common Stock or options to employees, consultants
(but, as to consultants, not to exceed 1,800,000 shares, in the aggregate, of
Common Stock or Common Stock Equivalents in any 12 month period (subject to
adjustment for forward and reverse stock splits and the like that occur after
the date hereof), officers or directors of the Company pursuant to any stock or
option plan duly adopted for such purpose, by a majority of the members of the
Board of Directors, (b) securities upon the exercise or exchange of or
conversion of any Securities issued hereunder and/or other securities
exercisable or exchangeable for or convertible into shares of Common Stock
issued and outstanding on the date of this Agreement, provided that such
securities have not been amended since the date of this Agreement to increase
the number of such securities or to decrease the exercise price, exchange price
or conversion price of such securities, (c) securities issued pursuant to
acquisitions or strategic transactions approved by a majority of the directors
of the Company, provided that any such issuance shall only be to a Person (or to
the equityholders of a Person) which is, itself or through its subsidiaries, an
operating company or an owner of an asset in a business synergistic with the
business of the Company and shall provide to the Company additional benefits in
addition to the investment of funds, but shall not include a transaction in
which the Company is issuing securities primarily for the purpose of raising
capital or to an entity whose primary business is investing in securities and
(d) securities issued pursuant to strategic financings approved by a majority of
the directors of the Company, provided that any such issuance shall only be to a
Person which is, itself or through its subsidiaries, an operating company and
shall provide to the Company additional benefits in addition to the investment
of funds, but shall not to an entity whose primary business is investing in
securities, and the effective price per share of Common Stock or Common Stock
Equivalents, if any, shall exceed $3.50 (subject to adjustment for reverse and
forward stock splits and the like) until after the restriction in Section 4.10 has expired and have no
registration rights until after the restriction in Section 4.10 has expired (e)
up to 1,500,000 shares of Common Stock issued pursuant to the same terms and
conditions as set forth in this Agreement.


       

       “GAAP” means
U.S. generally accepted accounting principles, as applied by the
Company.

       

      “Governmental
Licenses” has the meaning set forth in Section 3.1(t).

       

      “Indemnified
Liabilities” has the meaning set forth in Section
6.19(a).

       

      “Indemnitees”
has the meaning set forth in Section
6.19(a).

       

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

       

      “Irrevocable Transfer
Agent Instructions” means, with respect to the Company, the Irrevocable
Transfer Agent Instructions, in the form of Exhibit F,
executed by the Company and delivered to and acknowledged in writing by the
Transfer Agent.

       

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

       

      “Lock-Up
Agreement” has the meaning set forth in Section 2.2(a)(ix).

       

      “Material Adverse
Effect” means a material adverse effect on the results of operations,
assets, business or financial condition of the Company and the Subsidiaries,
taken as a whole, except that any of the following, either alone or in
combination, shall not be deemed a Material Adverse Effect: (i) effects
caused by changes or circumstances affecting general market conditions in the
U.S. economy or which are generally applicable to the industry in which the
Company operates, provided that such effects are not borne disproportionately by
the Company, (ii) effects resulting from or relating to the announcement or
disclosure of the sale of the Securities or other transactions contemplated by
this Agreement, or (iii) effects caused by any event, occurrence or
condition resulting from or relating to the taking of any action in accordance
with the Transaction Documents.


      
        
           


        

        
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      “Material Contract” means any
contract of the Company that has been filed or was required to have been filed
as an exhibit to the SEC Reports pursuant to Item 601(b)(4) or Item 601(b)(10)
of Regulation S-K.

       

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

       

      “OFAC” has the meaning set
forth in Section
3.1(kk).

       

      “Outside Date” means the fifth
Trading Day following the date of this Agreement.

       

      “Person” means an individual,
corporation, partnership, limited liability company, trust, business trust,
association, joint stock company, joint venture, sole proprietorship,
unincorporated organization, governmental authority or any other form of entity
not specifically listed herein.

       

      “Placement Agent” has the
meaning set forth in the Recitals.

       

       “Principal Trading Market”
means the Trading Market on which the Common Stock is primarily listed on and
quoted for trading, which, as of the date of this Agreement and the Closing
Date, shall be the OTC Bulletin Board.

       

      “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.

       

      “Purchase Price”
means $3.50 per unit.

       

      “Purchaser” or
“Purchasers” has
the meaning set forth in the Recitals.

       

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

       

      “Registration Rights
Agreement” has the meaning set forth in the Recitals.

       

      “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 Registrable Securities (as defined in the Registration Rights
Agreement).

       

      “Regulation D”
has the meaning set forth in the Recitals.

       

      “Required
Approvals” has the meaning set forth in Section 3.1(l).

       

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

       

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

       

      “Secretary’s
Certificate” has the meaning set forth in Section 2.2(a)(vii).

       

      “Securities” has
the meaning set forth in the Recitals.

       

      “Securities Act” has the
meaning set forth in the Recitals.


      
        
           


        

        
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      “Series A Warrants” has the
meaning set forth in the Recitals.

       

      “Series A Warrant Shares” has
the meaning set forth in the Recitals.

       

       “Series B Warrants” has the
meaning set forth in the Recitals.

       

       “Series B Warrant Shares” has
the meaning set forth in the Recitals.

       

      “Shares” has the meaning set
forth in the Recitals.

       

      “Short
Sales” include, without limitation, (i) all “short sales” as defined
in Rule 200 promulgated under Regulation SHO under the Exchange Act,
whether or not against the box, and all types of direct and indirect stock
pledges, forward sale contracts, options, puts, calls, short sales, swaps, “put
equivalent positions” (as defined in Rule 16a-1(h) under the Exchange Act)
and similar arrangements (including on a total return basis), and
(ii) sales and other transactions through non-U.S. broker dealers or
foreign regulated brokers (but shall not be deemed to include the location
and/or reservation of borrowable shares of Common Stock).

       

      “Stock
Certificate” has the meaning set forth in Section 2.1(c).

       

      “Subscription
Amount” means, with respect to each Purchaser, the aggregate amount to be
paid for the Shares and the related Warrants purchased hereunder as indicated on
such Purchaser’s signature page to this Agreement next to the heading “Aggregate
Purchase Price (Subscription Amount)” in United States dollars and in
immediately available funds.

       

      “Subsequent
Placement” has the meaning set forth in Section
4.10.

       

      “Subsidiary”
means any subsidiary of the Company.

       

      “Trading
Affiliate” has the meaning set forth in Section 3.2(i).

       

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

       

      “Trading Market” means
whichever of the New York Stock Exchange, the NYSE Amex, the NASDAQ Global
Select Market, the NASDAQ Global Market, the NASDAQ Capital Market or the OTC
Bulletin Board on which the Common Stock is listed or quoted for trading on the
date in question.

       

      “Transaction Documents” means
this Agreement, the schedules and exhibits attached hereto, the Warrants, the
Registration Rights Agreement, and the Irrevocable Transfer Agent
Instructions.

       

      “Transfer Agent” means
Standard Registrar & Transfer Co., the current transfer agent of the
Company, with a mailing address of 12528 South 1840 East, Draper, Utah 84020 and
a facsimile number of (801) 571-2551 or any successor transfer agent for the
Company.


      
        
           


        

        
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      “Treasury” has the meaning set
forth in Section 3.2(q).

       

      “Trigger Date”
has the meaning set forth in Section
4.10.

       

      “Warrants” has
the meaning set forth in the Recitals to this Agreement.

       

      “Warrant Shares”
has the meaning set forth in the Recitals.

       

      ARTICLE II.

      PURCHASE
AND SALE

         

      2.1                      Closing.

       

      (a)                      Amount.  Subject
to the terms and conditions set forth in this Agreement, at the Closing, the
Company shall issue and sell to each Purchaser, and each Purchaser shall,
severally and not jointly, purchase from the Company, such number of shares of
Common Stock equal to the quotient resulting from dividing (i) the
Subscription Amount for such Purchaser by (ii) the Purchase Price, rounded
down to the nearest whole Share.  In addition, each Purchaser shall
receive a Series A Warrant to purchase a number of Series A Warrant Shares equal
to twenty-five percent (25%) of the number of Shares purchased by such
Purchaser, rounded down to the nearest whole Share, as indicated below such
Purchaser’s name on the signature page to this Agreement and a Series B Warrant
to purchase a number of Series B Warrant Shares equal to twenty-five percent
(25%) of the number of Shares purchased by such Purchaser, rounded down to the
nearest whole Share, as indicated below such Purchaser’s name on the signature
page to this Agreement. The Series A Warrants shall have an exercise price equal
to $5.00 per Series A Warrant Share subject to adjustment as provided in the
Warrants and the Series B Warrants shall have an exercise price equal to $6.50
per Series B Warrant Share subject to adjustment as provided in the Warrants
..

       

      (b)                      Closing.  The
Closing of the purchase and sale of the Shares and Warrants shall take place at
the offices of Goodwin Procter LLP, The New York Times Building, 620 Eighth
Avenue, New York, New York on the Closing Date or at such other locations or
remotely by facsimile transmission or other electronic means as the parties may
mutually agree.

       

      (c)                      Form of
Payment.  Except as may otherwise be agreed to among the
Company and one or more of the Purchasers, on or prior to the Closing Date, each
Purchaser shall wire its Subscription Amount, in United States dollars and in
immediately available funds, to a non-interest bearing escrow account
established by the Company and the Placement Agent with Wells Fargo Bank. (the
“Escrow Agent”) as set
forth on Exhibit I hereto
(the aggregate amounts received being held in escrow by the Escrow Agent are
referred to herein as the “Escrow
Amount”).  On the Closing Date, (a) the Company and
Northland Capital Markets shall instruct the Escrow Agent to deliver, in
immediately available funds, the Escrow Amount constituting the aggregate
purchase price as follows: (1) to the Placement Agent, the fees and reimbursable
expenses payable to the Placement Agent (which fees and expenses shall be set
forth in such instructions), (2) the fees to be paid to the Escrow Agent
pursuant to the Escrow Agreement dated as of the date hereof by and among the
Company, the Escrow Agent and Northland Capital Markets and (3) the balance of
the aggregate purchase price to the Company,
(b) the Company shall irrevocably instruct the Transfer Agent to deliver to
each Purchaser a stock certificate, free and clear of all restrictive and other
legends (except as expressly provided in Section 4.1(b) hereof), evidencing the number of Shares such
Purchaser is purchasing as is set forth on such Purchaser’s signature page to
this Agreement next to the heading “Number of Shares to be Acquired” (the “Stock
Certificate”), within three (3) Trading Days after the Closing,
(c) the Company shall deliver to each Purchaser a Series A Warrant, free
and clear of all restrictive and other legends (except as expressly provided in
Section 4.1(b) hereof), evidencing the number of Series A Warrants
such Purchaser is purchasing as is set forth on such Purchaser’s signature page
to this Agreement next to the heading “Underlying Shares Subject to Series A
Warrant”, within three (3) Trading Days after the Closing and (d) the Company
shall deliver to each Purchaser a Series B Warrant, free and clear of all
restrictive and other legends (except as expressly provided in Section 4.1(b) hereof), evidencing the number of Series B Warrants
such Purchaser is purchasing as is set forth on such Purchaser’s signature page
to this Agreement next to the heading “Underlying Shares Subject to Series B
Warrant”, within three (3) Trading Days after the
Closing.


      
        
           


        

        
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      2.2                      Closing
Deliveries.  (a) On or prior to the Closing, the Company
shall issue, deliver or cause to be delivered to each Purchaser the following
(the “Company
Deliverables”):

       

      (i)                this
Agreement, duly executed by the Company;

       

      (ii)              
a facsimile copy of the Stock Certificate, free and clear of all restrictive
legends (except as provided in Section 4.1(b) hereof),
evidencing the Shares subscribed for by such Purchaser hereunder, registered in
the name of such Purchaser as set forth on the Stock Certificate Questionnaire
included as Exhibit D-2 hereto, with the
original Stock Certificate delivered within three (3) Trading Days of Closing;
provided, however that
the receipt of such facsimile shall be conditioned on the Company receiving a
completed Stock Certificate Questionnaire from such Purchaser no later than one
(1) Business Day prior to the Closing Date.

       

      (iii)              (A)
a facsimile copy of the Series A Warrant, executed by the Company and registered
in the name of such Purchaser as set forth on the Stock Certificate
Questionnaire included as Exhibit D-2 hereto, pursuant to which such Purchaser shall have
the right to acquire such number of Series A Warrant Shares equal to twenty-five
percent (25%) of the number of Shares issuable to such Purchaser pursuant to
Section 2.2(a)(ii), rounded down to the nearest whole Share, on the terms set
forth therein, with the original Series A Warrant delivered within three (3)
Trading Days of Closing; provided,
however that the receipt of such facsimile shall be conditioned on the
Company receiving a completed Stock Certificate Questionnaire from such
Purchaser no later than one (1) Business Day prior to the Closing Date and (B) a
facsimile copy of the Series B Warrant, executed by the Company and registered
in the name of such Purchaser as set forth on the Stock Certificate
Questionnaire included as Exhibit D-2 hereto, pursuant to which such Purchaser shall have
the right to acquire such number of Series B Warrant Shares equal to twenty-five
percent (25%) of the number of Shares issuable to such Purchaser pursuant to
Section 2.2(a)(ii), rounded down to the nearest whole Share, on the terms set
forth therein, with the original Series B Warrant delivered within three (3)
Trading Days of Closing; provided, however that the receipt of such
facsimile shall be conditioned on the Company receiving a completed Stock
Certificate Questionnaire from such Purchaser no later than one (1) Business Day
prior to the Closing Date  .

       

      (iv)             a
legal opinion of Company Counsel, dated as of the Closing Date and in the form
attached hereto as Exhibit E,
executed by such counsel and addressed to the Purchasers and the Placement
Agent;

       

      (v)              the
Registration Rights Agreement, duly executed by the Company;

       

      (vi)             duly
executed instructions to the Transfer Agent instructing the Transfer Agent to
(a) deliver, on an expedited basis, a certificate evidencing a number of Shares
equal to such Purchaser’s Subscription Amount divided by the Purchase Price,
rounded down to the nearest whole Share, registered in the name of such
Purchaser and (b) establish a reserve of shares of Common Stock to be issued
upon the exercise of the Warrants in accordance with their
terms;


      
        
           


        

        
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      (vii)            a
certificate of the Secretary of the Company (the “Secretary’s Certificate”),
dated as of the Closing Date, (a) certifying the resolutions adopted by the
Board of Directors of the Company or a duly authorized committee thereof
approving the transactions contemplated by this Agreement and the other
Transaction Documents and the issuance of the Securities, (b) certifying
the current versions of the certificate of incorporation, as amended, and
by-laws of the Company and (c) certifying as to the signatures and
authority of persons signing the Transaction Documents and related documents on
behalf of the Company, in the form attached hereto as Exhibit G;

       

      (viii)           the
Compliance Certificate referred to in Section 5.1(i);

       

      (ix)              a
Lock-Up Agreement, substantially in the form of Exhibit J hereto
(the “Lock-Up
Agreement”) executed by each person listed on Exhibit K
hereto, and each such Lock-Up Agreement shall be in full force and effect on the
Closing Date;

       

      (x)               a
certificate evidencing the good standing of the Company issued by the Secretary
of State of the State of Delaware, as of a date within three (3) Business Days
of the Closing Date;

       

      (xi)              a
certificate of existence and authorization issued by the Secretary of State of
the State of Arizona, as of a date within three (3) Business Days of the Closing
Date; and

       

      (xii)             a
certified copy of the certificate of incorporation, as certified by the
Secretary of State (or comparable office) of Delaware, as of a date within three
(3) Business Days of the Closing Date.

       

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

       

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

       

      (ii)              
its Subscription Amount, in United States dollars and in immediately available
funds, in the amount set forth below such Purchaser’s name on the applicable
signature page hereto under the heading “Aggregate Purchase Price (Subscription
Amount)” by wire transfer to the Escrow Account, as set forth on Exhibit I
attached hereto;

       

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

       

      (iv)             a
fully completed and duly executed Selling Stockholder Questionnaire in the form
attached as Annex B to the Registration Rights Agreement; and

       

      (v)              a
fully completed and duly executed Accredited Investor Questionnaire,
satisfactory to the Company, and Stock Certificate Questionnaire in the forms
attached hereto as Exhibits D-1 and D-2,
respectively.

      

        
          
             


          

          
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      ARTICLE III.

      REPRESENTATIONS
AND WARRANTIES


       

      3.1                      Representations and
Warranties of the Company.  Except (i) as set forth in the
schedules delivered herewith (the “Disclosure Schedules”), which
Disclosure Schedules shall be deemed a part hereof and shall qualify any
representation made herein to the extent of the disclosure contained in the
corresponding section of the Disclosure Schedules (provided that any information
disclosed in the Disclosure Schedules under any section number shall be deemed
to be disclosed and incorporated into any other section number under the
Agreement where it is reasonably evident that such item should have been
disclosed under such other section number), or (ii) as disclosed in the SEC
Reports, the Company hereby represents and warrants as of the date hereof and
the Closing Date (except for the representations and warranties that speak as of
a specific date, which shall be made as of such date), to each of the Purchasers
and to the Placement Agent:

       

      (a)                      SEC Reports; Disclosure
Materials.  The Company has filed all reports, schedules,
forms, statements and other documents required to be filed by it under the
Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the
two years preceding the date hereof (or such shorter period as the Company was
required by law or regulation to file such material) (the foregoing materials,
including the exhibits thereto and documents incorporated by reference therein,
being collectively referred to herein as the “SEC Reports”, and the SEC
Reports filed on or after October 1, 2010, together with the Disclosure
Schedules, being collectively referred to as the “Disclosure Materials”) 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, except
where the failure to file on a timely basis would not have or reasonably be
expected to result in a Material Adverse Effect (including, for this purpose
only, any failure to qualify to register the Shares and Warrant Shares for
resale on Form S-1).  As of their respective filing dates, or to
the extent corrected by a subsequent restatement, the SEC Reports included in
the Disclosure Materials complied in all material respects with the requirements
of the Securities Act and the Exchange Act and the rules and regulations of the
Commission promulgated thereunder, and none of the SEC Reports included in the
Disclosure Materials, when filed, contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.  Each of the Material
Contracts to which the Company or any Subsidiary is a party or to which the
property or assets of the Company or any of its Subsidiaries are subject has
been filed as an exhibit, or duly incorporated by reference, to the SEC
Reports.

       

      (b)                      Private Placement.
Assuming the accuracy of the Purchasers’ representations and warranties set
forth in Section 3.2 of this Agreement
and the accuracy of the information disclosed in the Accredited Investor
Questionnaires provided by the Purchasers, no registration under the Securities
Act is required for the offer and sale of the Securities by the Company to the
Purchasers under the Transaction Documents.  Assuming the making and
the obtaining of the Required Approvals, the issuance and sale of the Securities
hereunder does not contravene the rules and regulations of the Trading
Market.

       

      (c)                      Registration
Rights.  No Person has any right to cause the Company to effect
the registration under the Securities Act of any securities of the Company other
than those securities which are currently registered on an effective
registration statement on file with the Commission.

       

      (d)                      Disclosure.  The
Company confirms that it has not provided, and to the Company’s Knowledge, none
of its officers or directors nor any other Person acting on its or their behalf
has provided, and it has not authorized the Placement Agent to provide, any
Purchaser or its respective agents or counsel with any information that
constitutes material, non-public information regarding the Company or its
Subsidiaries except to such Purchaser, prior to such disclosure, that has
executed a written agreement regarding the confidentiality and use of such
information. The Company understands and confirms that the Purchasers will rely
on the foregoing representations in effecting transactions in securities of the
Company.


      
        
           


        

        
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      (e)                      No Integrated
Offering.  Assuming the accuracy of the Purchasers’
representations and warranties set forth in Section 3.2, none of the
Company, its Subsidiaries nor, to the Company’s Knowledge, any of its Affiliates
or any Person acting on its behalf has, directly or indirectly, at any time,
made any offers or sales of any Company security or solicited any offers to buy
any security under circumstances that would (i) eliminate the availability
of the exemption from registration under Regulation D under the Securities
Act in connection with the offer and sale by the Company of the Securities as
contemplated hereby or (ii) cause the offering of the Securities pursuant
to the Transaction Documents to be (x) integrated with prior offerings by the
Company for purposes of any applicable law or regulation or (y) aggregated with
prior offerings by the Company in a manner that would require the prior approval
of the stockholders of the Company prior to the consummation of the transactions
contemplated hereby under the rules and regulations of any Trading Market on
which any of the securities of the Company are listed or
designated.

       

      (f)                   
   No
General Solicitation.  The Company has not offered or sold any
of the Securities by any form of general solicitation or general
advertising.

       

      (g)                      Acknowledgment Regarding
Purchasers’ Purchase of Securities.  The Company acknowledges
and agrees that each of the Purchasers is acting solely in the capacity of an
arm’s length purchaser with respect to the Transaction Documents and the
transactions contemplated hereby and thereby.  The Company further
acknowledges that no Purchaser is acting as a financial advisor or fiduciary of
the Company (or in any similar capacity) with respect to the Transaction
Documents and the transactions contemplated thereby and any advice given by any
Purchaser or any of their respective representatives or agents in connection
with the Transaction Documents and the transactions contemplated thereby is
merely incidental to the Purchasers’ purchase of the Securities.

       

      (h)                      Subsidiaries.  Exhibit 21.1
to the Company’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2009 sets forth each Subsidiary of the Company as of the
Closing Date, showing its jurisdiction of incorporation or organization, and the
Company does not have any other Subsidiaries as of the Closing
Date.

       

      (i)                  
    Organization and
Qualification.  The Company and each of its Subsidiaries have
been duly organized and are validly existing and in good standing under the laws
of their respective jurisdictions of organization, are duly qualified to do
business and are in good standing in each jurisdiction in which their respective
ownership or lease of property or the conduct of their respective businesses
requires such qualification, and have all power and authority necessary to own
or hold their respective properties and to conduct the businesses in which they
are engaged, except where the failure to be so qualified or have such power or
authority would not, individually or in the aggregate, have a Material Adverse
Effect.

       

      (j)                   
   Authorization; Enforcement;
Validity.  The Transaction Documents have been duly authorized,
executed and delivered by the Company, and all action required to be taken by
the Company prior to or as of the Closing Date for the consummation by the
Company of the transactions contemplated hereby has been duly and validly
taken.  Each of the Transaction Documents to which the Company is a
party has been duly executed and delivered by the Company and constitutes a
valid and binding obligation of the Company enforceable against the Company in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation,
conservatorship, receivership or similar laws relating to, or affecting
generally the enforcement of, creditor’s rights and remedies or by other
equitable principles of general application (including any limitation of
equitable remedies) or, in the case of any indemnification agreement, public
policy.


      
        
           


        

        
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      (k)                      No
Conflicts.  The execution, delivery and performance by the
Company of the Transaction Documents, the issuance by the Company of the
Securities and the consummation by the Company of the transactions contemplated
by the Transaction Documents will not (i) conflict with or result in a
breach or violation of any of the terms or provisions of, or constitute a
default under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any of its
Subsidiaries pursuant to, any indenture, mortgage, deed of trust, loan agreement
or other agreement or instrument to which the Company or any of its subsidiaries
is a party or by which the Company or any of its Subsidiaries is bound or to
which any of the property or assets of the Company or any of its Subsidiaries is
subject, (ii) result in any violation of the provisions of the charter or
by-laws or similar organizational documents of the Company or any of its
Subsidiaries or (iii) result in the violation of any law or statute or any
judgment, order, rule or regulation of any court or arbitrator or governmental
or regulatory authority, except in the cases of clauses (i) and (iii) above as
would not be reasonably expected to have a Material Adverse Effect.

       

      (l)                 
     Filings, Consents and
Approvals.  No consent, approval, authorization, order,
registration or qualification of or with any court or arbitrator or governmental
or regulatory authority is required for the execution, delivery and performance
by the Company of the Transaction Documents, the issuance by the Company of any
of the Securities or the consummation of any of the transactions contemplated by
the Transaction Documents, except for (i) the filing with the Commission of
one or more Registration Statements in accordance with the requirements of the
Registration Rights Agreement, (ii) filings required by applicable state
securities laws, (iii) the filing of a Notice of Sale of Securities on
Form D with the Commission under Regulation D of the Securities Act,
(iv) the filing of any requisite notices and/or application(s) to the
Principal Trading Market for the issuance and sale of the Securities and the
listing of the Shares and Warrant Shares for trading or quotation, as the case
may be, thereon in the time and manner required thereby, (v) the filings
required in accordance with Section 4.5 of this Agreement
and (vi) those that have been made or obtained prior to the date of this
Agreement (collectively, the “Required
Approvals”).

       

      (m)                     Issuance of the
Securities.  The Shares have been duly authorized and, when
issued and paid for in accordance with the terms of the Transaction Documents,
will be duly and validly issued, fully paid and nonassessable and free and clear
of all Liens imposed by action or inaction of the Company, other than
restrictions on transfer provided for in the Transaction Documents or imposed by
applicable securities laws, and shall not be subject to preemptive or similar
rights.  The Warrants have been duly authorized and, when issued and
paid for in accordance with the terms of the Transaction Documents, will be duly
and validly issued, free and clear of all Liens, other than restrictions on
transfer provided for in the Transaction Documents or imposed by applicable
securities laws, and shall not be subject to preemptive or similar rights of
stockholders. The Warrant Shares issuable upon exercise of the Warrants have
been duly authorized and, when issued and paid for in accordance with the terms
of the Transaction Documents and the Warrants will be duly and validly issued,
fully paid and nonassessable, free and clear of all Liens, other than
restrictions on transfer provided for in the Transaction Documents or imposed by
applicable securities laws, and shall not be subject to preemptive or similar
rights of stockholders.  Assuming the accuracy of the representations
and warranties of the Purchasers in this Agreement, the Securities will be
issued in compliance with all applicable federal and state securities
laws.  As of the Closing Date, the Company shall have reserved from
its duly authorized capital stock the number of shares of Common Stock issuable
upon exercise of the Warrants (without taking into account any limitations on
the exercise of the Warrants set forth in the Warrants).  The Company
shall, so long as any of the Warrants are outstanding, take all action necessary
to reserve and keep available out of its authorized and unissued capital stock,
solely for the purpose of effecting the exercise of such outstanding Warrants,
the number of shares of Common Stock issuable upon exercise of such outstanding
Warrants (without taking into account any limitations on the exercise of the
Warrants set forth in the Warrants).


      
        
           


        

        
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      (n)                      Capitalization.  The
authorized capital stock of the Company and the shares thereof issued and
outstanding were as set forth in the SEC Reports as of the dates reflected
therein. All of the outstanding shares of Common Stock have been duly authorized
and validly issued, and are fully paid and nonassessable. Except as set forth in
the SEC Reports and the Transaction Documents, there are no agreements or
arrangements under which the Company is obligated to register the sale of any
securities under the Securities Act. Except as set forth in the SEC Reports, no
shares of Common Stock are entitled to preemptive rights and there are no
outstanding options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into or exchangeable for, any shares of capital stock of the
Company, other than as may have been issued or became issuable subsequent to the
last filed SEC Report pursuant to the terms of an equity incentive plan
maintained by the Company. Except as set forth in the SEC Reports, there are no
outstanding debt securities and no contracts, commitments, understandings, or
arrangements by which the Company is or may become bound to issue additional
shares of the capital stock of the Company or options, warrants, scrip, rights
to subscribe to, calls or commitments of any character whatsoever relating to,
or securities or rights convertible into or exchangeable for, any shares of
capital stock of the Company other than those issued or granted in the ordinary
course of business pursuant to the Company’s equity incentive and/or
compensatory plans or arrangements. Except for customary transfer restrictions
contained in agreements entered into by the Company to sell restricted
securities or as set forth in the SEC Reports, the Company is not a party to,
any agreement restricting the voting or transfer of any shares of the capital
stock of the Company and, to the Company’s Knowledge, no such agreements exist.
Except as set forth in the SEC Reports, the offer and sale of all capital stock,
convertible or exchangeable securities, rights, warrants or options of the
Company issued prior to the Closing Date complied with all applicable federal
and state securities laws, and no stockholder has any right of rescission or
damages or any “put” or similar right with respect thereto that would have a
Material Adverse Effect. Except as set forth in the SEC Reports, there are no
securities or instruments containing anti-dilution or similar provisions that
will be triggered by this Agreement or any of the other Transaction Documents or
the consummation of the transactions described herein or therein.

       

      (o)                      Financial
Statements.  Except as disclosed in the Disclosure Materials,
the financial statements and the related notes thereto of the Company and its
consolidated Subsidiaries incorporated by reference or included in the SEC
Reports comply in all material respects with the applicable requirements of the
Securities Act and the Exchange Act, as applicable, and present fairly the
consolidated financial position of the Company and its Subsidiaries as of the
dates indicated and the results of their operations and the changes in their
cash flows for the periods specified; such financial statements have been
prepared in conformity with GAAP applied on a consistent basis throughout the
periods covered thereby, and the other financial information included or
incorporated by reference in the SEC Reports has been derived from the
accounting records of the Company and its subsidiaries and presents fairly the
information shown thereby.

       

      (p)                      Material
Changes.  Since September 30, 2010, except as specifically
disclosed in a subsequent SEC Report filed prior to the date hereof,
(i) there have been no events, occurrences or developments that have had or
would reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect, (ii) the Company has not incurred any material
liabilities (contingent or otherwise) other than (A) trade payables and
accrued expenses incurred in the ordinary course of business consistent with
past practice and (B) liabilities not required to be reflected in the
Company’s financial statements pursuant to GAAP or disclosed in filings made
with the Commission, (iii) the Company has not altered materially its
method of accounting or the manner in which it keeps its accounting books and
records, (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 (other than in connection with repurchases of unvested stock issued to
employees of the Company), and (v) the Company has not issued any equity
securities to any officer, director or Affiliate, except Common Stock issued in
the ordinary course as dividends on outstanding preferred stock or upon the
exercise of warrants or issued pursuant to existing Company stock option or upon
the exercise of warrants or stock purchase plans or executive and director
compensation arrangements disclosed in the SEC Reports. Except for the issuance
of the Securities contemplated by the Transaction Documents, no event, liability
or development has occurred or exists with respect to the Company or its
Subsidiaries or their respective business, properties, operations or financial
condition, that would be required to be disclosed by the Company under
applicable securities laws at the time this representation is made that has not
been publicly disclosed at least one (1) Trading Day prior to the date that this
representation is made.


      
        
           


        

        
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      (q)                      Litigation.  Except
as described in the SEC Reports, there are no legal, governmental or regulatory
investigations, actions, suits or proceedings pending to which the Company or
any of its Subsidiaries is or may be a party or to which any property of the
Company or any of its Subsidiaries is or may be the subject that, individually
or in the aggregate, could reasonably be expected to have a Material Adverse
Effect or materially and adversely affect the ability of the Company to perform
its obligations under the Transaction Documents; no such investigations,
actions, suits or proceedings are, to the Company’s Knowledge, threatened or
contemplated by any governmental or regulatory authority or threatened by
others.

       

      (r)              
        Employment
Matters.  No labor disturbance by or dispute with employees of
the Company or any of its Subsidiaries exists or, to the Company’s Knowledge, is
contemplated or threatened.  Neither the Company nor any Subsidiary of
the Company has any collective bargaining arrangements or agreements covering
any of its employees, except as set forth in the SEC Reports. Except as
disclosed in the SEC Reports, no officer, consultant or key employee of the
Company or any Subsidiary whose termination, either individually or in the
aggregate, would reasonably be expected to have a Material Adverse Effect, has
terminated or, to the Company’s Knowledge, has any present intention of
terminating his or her employment or engagement with the Company or any
Subsidiary.

       

      (s)                      Compliance.  Neither
the Company nor any of its Subsidiaries is (i) in violation of its charter
or by-laws or similar organizational documents; (ii) in default, and no
event has occurred that, with notice or lapse of time or both, would constitute
such a default, in the due performance or observance of any term, covenant or
condition contained in any indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument to which the Company or any of its Subsidiaries is
a party or by which the Company or any of its Subsidiaries is bound or to which
any of the property or assets of the Company or any of its Subsidiaries is
subject; or (iii) in violation of any law or statute or any judgment,
order, rule or regulation of any court or arbitrator or governmental or
regulatory authority, except, in the case of clauses (ii) and (iii) above, for
any such default or violation that would not, individually or in the aggregate,
be reasonably expected to have a Material Adverse Effect.

       

      (t)                      Regulatory Permits.
The Company and each of its Subsidiaries possess such permits, licenses,
approvals, consents and other authorizations (collectively, “Governmental Licenses”)
issued by the appropriate federal, state, local or foreign regulatory agencies
or bodies necessary to conduct the business of the Company as described in the
SEC Reports, except where the failure so to possess would not, singly or in the
aggregate, result in a Material Adverse Effect; the Company and each of its
Subsidiaries are in compliance with the requirements of all such Governmental
Licenses, except where the failure so to comply would not, singly or in the
aggregate, result in a Material Adverse Effect; all of the Governmental Licenses
are valid and in full force and effect, except when the invalidity of such
Governmental Licenses or the failure of such Governmental Licenses to be in full
force and effect would not, singly or in the aggregate, result in a Material
Adverse Effect; and neither the Company nor any of its Subsidiaries have
received any notice of proceedings relating to the revocation or modification of
any such Governmental Licenses which, singly or in the aggregate, if the subject
of an unfavorable decision, ruling or finding, would result in a Material
Adverse Effect. The Company has no reason to believe that any party granting any
such Governmental Licenses is considering limiting, suspending or revoking the
same in any material respect.

       

      (u)                      Title to
Assets.  The Company and its Subsidiaries have good and valid
title in fee simple to, or have valid rights to lease or otherwise use, all
items of real and personal property reflected in the financial statements
included or incorporated by reference in the SEC Reports that are material to
the businesses of the Company and its Subsidiaries taken as a whole, in each
case free and clear of all liens, encumbrances, claims and defects and
imperfections of title except those that (i) do not materially interfere
with the use made and proposed to be made of such property by the Company and
its Subsidiaries or (ii) could not reasonably be expected, individually or
in the aggregate, to have a Material Adverse Effect.


      
        
           


        

        
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      (v)                      Patents and
Trademarks.  Except as described in the SEC Reports, to the
Company’s Knowledge, (i) the Company owns, possesses or has adequate rights
to use the Company Intellectual Property Rights (as defined below),
(ii) the Company has not received any written notice of any infringement
of, or conflict with, any Intellectual Property Rights of any third party,
(iii) the Company is not aware of any third party Intellectual Property
Rights that would have a Material Adverse Effect on the ability of the Company
to make, use or sell its products, (iv) no third party, including any
academic or governmental organization, possesses or could obtain rights to the
Company Intellectual Property Rights which, if exercised, could enable such
party to develop products competitive with those of the Company, and
(v) neither the Company nor any of its Subsidiaries is obligated to pay a
material royalty, grant a material license, or provide other material
consideration to any third party in connection with the Company Intellectual
Property Rights. Except as described in the SEC Reports or as would not have a
Material Adverse Effect, (x) the Company is not aware of any facts or
circumstances that constitute an infringement by the Company of any valid claim
of a third-party patent, (y) the Company is not aware of any facts or
circumstances that constitute an infringement by the Company of, or conflict
with, any non-patented Intellectual Property Rights of any third party, and (z)
the Company is not aware of any facts or circumstances that would render any
Company Intellectual Property Rights invalid or unenforceable. For purposes of
this Agreement, “Intellectual
Property Rights” means patents, patent rights, patent applications,
licenses, inventions, copyrights, know how (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential information, systems
or procedures), trademarks, service marks and trade names.

       

      (w)                      Insurance.  The
Company and its Subsidiaries have insurance covering their respective
properties, operations, personnel and businesses, including business
interruption insurance, which insurance is in amounts and insures against such
losses and risks as are reasonable and prudent to protect the Company and its
Subsidiaries and their respective businesses; and neither the Company nor any of
its Subsidiaries has (i) received notice from any insurer or agent of such
insurer that capital improvements or other expenditures are required or
necessary to be made in order to continue such insurance or (ii) 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 at reasonable cost
from similar insurers as may be necessary to continue its business.

       

      (x)                      Transactions With Affiliates
and Employees.  Except as set forth in the SEC Reports, there
are no loans, leases, agreements, contracts, royalty agreements, management
contracts, service arrangements or other continuing transactions exceeding
$120,000 between (a) the Company or any Subsidiary, on the one hand, and
(b) any person or entity who would be covered by Item 404(a) of
Regulation S-K promulgated under the Securities Act, on the other hand.
Except as disclosed in the SEC Reports, there are no outstanding amounts payable
to or receivable from, or advances by the Company or any of its Subsidiaries to,
and neither the Company nor any of its Subsidiaries is otherwise a creditor of
or debtor to, any beneficial owner of more than 5% of the outstanding shares of
Common Stock, or any director, employee or affiliate of the Company or any of
its Subsidiaries, other than (i) reimbursement for reasonable expenses
incurred on behalf of the Company or any of its Subsidiaries or (ii) as
part of the normal and customary terms of such persons’ employment or service as
a director with the Company or any of its Subsidiaries.


      
        
           


        

        
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      (y)                      Internal Accounting
Controls.  Except as disclosed in its SEC Reports, the Company
maintains systems of “internal control over financial reporting” (as defined in
Rule 13a-15(f) of the Exchange Act) that comply with the requirements of
the Exchange Act and have been designed by, or under the supervision of the
Company’s principal executive and principal financial officers, or persons
performing similar functions, to provide reasonable assurance that
(i) transactions are executed in accordance with management’s general or
specific authorizations; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with GAAP and to
maintain asset accountability; (iii) access to assets is permitted only in
accordance with management’s general or specific authorization; and
(iv) the recorded accountability for assets is compared with the existing
assets at reasonable intervals and appropriate action is taken with respect to
any differences. Except as disclosed in the SEC Reports, there are no material
weaknesses in the Company’s internal control over financial
reporting.

       

      (z)                      Sarbanes-Oxley; Disclosure
Controls.  Except as disclosed on Schedule 3.1(z), there is and
has been no failure on the part of the Company or any of the Company’s directors
or officers, in their capacities as such, to comply with any provision of the
Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated in
connection therewith, including Section 402 related to loans and
Sections 302 and 906 related to certifications to the extent that the
Company is or has been required to comply with the Sarbanes-Oxley Act and such
rules.  Except as disclosed in the Disclosure Materials, the Company
maintains “disclosure controls and procedures” (as defined in
Rule 13a-15(e) of the Exchange Act) that are reasonably designed to ensure
that information required to be disclosed by the Company in reports that it
files or submits under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in the Exchange Act, and that such
information is accumulated and communicated to the Company’s management as
appropriate to allow timely decisions regarding required disclosure. The Company
has carried out evaluations of the effectiveness of its disclosure controls and
procedures as required by Rule 13a-15 of the Exchange Act.

       

      (aa)                    Certain
Fees.  Neither the Company nor any of its Subsidiaries is a
party to any contract, agreement or understanding with any person (other than
the Transaction Documents and the engagement letter between Northland Capital
Markets and the Company) that would give rise to a valid claim against the
Company or any of its Subsidiaries or the Placement Agent for a brokerage
commission, finder’s fee or like payment in connection with the offering and
sale of the Securities.

       

      (bb)                   Investment
Company.  The Company is not and, after giving effect to the
offering and sale of the Securities, will not be required to register as an
“investment company” within the meaning of the Investment Company Act of 1940,
as amended, and the rules and regulations of the Commission
thereunder.

       

      (cc)                    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 the Company’s Knowledge is likely to
have the effect of, terminating the registration of the Common Stock under the
Exchange Act, nor has the Company received any notification that the Commission
is contemplating terminating such registration. Except as disclosed in the SEC
Reports, the Company has not, in the 10 months preceding the Closing Date,
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. As of the Closing
Date, the Company is in compliance with all such listing and maintenance
requirements.

       

      (dd)                  
Application of
Takeover Protections; Rights Agreements.  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 charter or the laws of its state of
incorporation that is or could reasonably be expected to become applicable to
any of the Purchasers as a result of the Purchasers and the Company fulfilling
their respective obligations or exercising their respective rights under the
Transaction Documents (as applicable), including, without limitation, as a
result of the Company’s issuance of the Securities and the Purchasers’ ownership
of the Securities.


      
        
           


        

        
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      (ee)                    Tax
Matters.  Except as would not have a Material Adverse Effect,
the Company and its Subsidiaries have paid all federal, state, local and foreign
taxes and filed all tax returns required to be paid or filed through the date
hereof to the extent that such taxes have become due and are not being contested
in good faith; and except as otherwise disclosed in the SEC Reports, there is no
tax deficiency that has been, or could reasonably be expected to be, asserted
against the Company or any of its Subsidiaries or any of their respective
properties or assets except as would not have a Material Adverse
Effect.

       

      (ff)                     Environmental
Matters.  (i) The Company and its Subsidiaries (x) are in
compliance with any and all applicable federal, state, local and foreign laws,
rules, regulations, requirements, decisions and orders relating to the
protection of human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants (collectively, “Environmental
Laws”); (y) have received and are in compliance with all permits,
licenses, certificates or other authorizations or approvals required of them
under applicable Environmental Laws to conduct their respective businesses; and
(z) have not received written notice of any actual or potential liability for
the investigation or remediation of any disposal or release of hazardous or
toxic substances or wastes, pollutants or contaminants, and (ii) there are
no costs or liabilities associated with Environmental Laws of or relating to the
Company or its Subsidiaries, except in the case of each of clauses (ff)(i)(x), (ff)(i)(y) and
(ff)(ii)(z)
above, for any such failure to comply, or failure to receive required permits,
licenses or approvals, or cost or liability, as would not, individually or in
the aggregate, have a Material Adverse Effect.

       

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

       

      (hh)                   Off Balance Sheet
Arrangements.  There is no transaction, arrangement, or other
relationship between the Company (or any Subsidiary) and an unconsolidated or
other off balance sheet entity that is required to be disclosed by the Company
in SEC Reports and is not so disclosed and would have or reasonably be expected
to result in a Material Adverse Effect.

       

      (ii)                      Regulation M
Compliance.  The Company has not taken, directly or indirectly,
any action designed to or that could reasonably be expected to cause or result
in any stabilization or manipulation of the price of the
Securities.

       

      (jj)                      PFIC.  The
Company is not operated in such a manner as to qualify as a passive foreign
investment company, as defined in Section 1297 of the U.S. Internal Revenue
Code of 1986, as amended.

       

      (kk)                    OFAC. Neither the
Company nor any Subsidiary nor, to the Company’s Knowledge, any director,
officer, agent, employee or Affiliate is currently subject to any U.S. sanctions
administered by the Office of Foreign Assets Control of the U.S. Treasury
Department (“OFAC”);
and the Company will not directly or indirectly use the proceeds of the sale of
the Securities, or lend, contribute or otherwise make available such proceeds to
any Subsidiary, joint venture partner or other Person or entity, towards any
sales or operations in Cuba, Iran, Syria, Sudan, Myanmar or any other country
sanctioned by OFAC or for the purpose of financing the activities of any Person
currently subject to any U.S. sanctions administered by OFAC.


      
        
           


        

        
          -17-

          
            

          

        

        
           


        

      

       

      (ll)                      No Additional
Agreements.  The Company does not have any agreement or
understanding with any Purchaser with respect to the transactions contemplated
by the Transaction Documents other than as specified in the Transaction
Documents or any written agreement regarding the confidentiality and use of
confidential information.

       

      (mm)                  Acknowledgement Regarding
Purchasers' Trading Activity.  It is understood and
acknowledged by the Company that (i) none of the Purchasers has been asked to
agree, nor has any Purchaser agreed, to desist from purchasing or selling, long
and/or short, securities of the Company, or “derivative” securities based on
securities issued by the Company or to hold the Securities for any specified
term; (ii) any Purchaser, and counter-parties in “derivative” transactions to
which any such Purchaser is a party, directly or indirectly, presently may have
a “short” position in the Common Stock, and (iii) each Purchaser shall not be
deemed to have any affiliation with or control over any arm’s length
counter-party in any “derivative” transaction.  The Company further
understands and acknowledges that one or more Purchasers may engage in hedging
and/or trading activities at various times during the period that the Securities
are outstanding and such hedging and/or trading activities, if any, can reduce
the value of the existing stockholders’ equity interest in the Company both at
and after the time the hedging and/or trading activities are being
conducted.  The Company acknowledges that such aforementioned hedging
and/or trading activities do not constitute a breach of the Transaction
Documents.

       

      3.2                      Representations and
Warranties of the Purchasers.  Each Purchaser hereby, severally
but not jointly, 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 the requisite corporate, limited liability company or
partnership power and authority to enter into and to consummate the transactions
contemplated by the applicable Transaction Documents and otherwise to carry out
its obligations hereunder and thereunder. The execution and delivery of this
Agreement by such Purchaser and performance by such Purchaser of the
transactions contemplated by this Agreement have been duly authorized by all
necessary corporate or, if such Purchaser is not a corporation, such
partnership, limited liability company or other applicable like 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 as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally the enforcement of, creditors’
rights and remedies or by other equitable principles of general
application.

       

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


      
        
           


        

        
          -18-

          
            

          

        

        
           


        

      

       

      (c)                      Investment
Intent.  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 Shares and Warrants
and, upon exercise of the Warrants, will acquire the Warrant Shares issuable
upon exercise thereof 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 laws, provided, however, that by
making the representations herein, such Purchaser does not agree to hold any of
the Securities for any minimum period of time and reserves the right, subject to
the provisions of this Agreement and the Registration Rights Agreement, at all
times to sell or otherwise dispose of all or any part of such Securities
pursuant to an effective registration statement under the Securities Act or
under an exemption from such registration and in compliance with applicable
federal and state securities laws.  Such Purchaser is acquiring the
Securities hereunder in the ordinary course of its business. Such Purchaser does
not have any agreement, plan or understanding, directly or indirectly, with any
Person to distribute or effect any distribution of any of the Securities (or any
securities which are derivatives thereof) to or through any person or entity;
such Purchaser is not a registered broker-dealer under Section 15 of the
Exchange Act or an entity engaged in a business that would require it to be so
registered as a broker-dealer.

       

      (d)                      Purchaser
Status.  At the time such Purchaser was offered the Shares and
Warrants, it was, and at the date hereof it is, and on each date on which it
exercises the Warrants it will be, an “accredited investor” as defined in
Rule 501(a) under the Securities Act.

       

      (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, radio or presented at any seminar or any other
general advertisement.

       

      (f)                      Experience of Such
Purchaser.  Such Purchaser 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.

       

      (g)                      Acknowledgement of
Risks.

       

      (i)                 Such
Purchaser acknowledges and understands that its investment in the Securities
involves a significant degree of risk, including, without limitation:
(i) the Company remains a development stage business with limited operating
history and requires substantial funds in addition to the proceeds from the sale
of the Securities; (ii) an investment in the Company is speculative, and
only Purchasers who can afford the loss of their entire investment should
consider investing in the Company and the Securities; (iii) such Purchaser
may not be able to liquidate its investment; (iv) transferability of the
Securities is extremely limited; (v) in the event of a disposition of the
Securities, such Purchaser could sustain the loss of its entire investment; and
(vi) the Company has not paid any dividends on its Common Stock since inception
and does not anticipate the payment of dividends in the foreseeable
future.  Such risks are more fully set forth in the public filings
made by the Company with the Commission;

       

      (ii)                 Such
Purchaser is able to bear the economic risk of holding the Securities for an
indefinite period, and has knowledge and experience in financial and business
matters such that it is capable of evaluating the risks of the investment in the
Securities; and


      
        
           


        

        
          -19-

          
            

          

        

        
           


        

      

       

      (iii)                 Such
Purchaser has, in connection with such Purchaser’s decision to purchase
Securities, not relied upon any representations or other information (whether
oral or written) other than as set forth in the representations and warranties
of the Company contained herein, and such Purchaser has, with respect to all
matters relating to the Transaction Documents and the offer and sale of the
Securities, relied solely upon the advice of such Purchaser’s own counsel and
has not relied upon or consulted any counsel to the Placement Agent or counsel
to the Company.

       

      (h)                      Access to
Information.  Such Purchaser acknowledges that it has had the
opportunity to review the Disclosure Materials and has been afforded
(i) the opportunity to ask such questions as it has deemed necessary of,
and to receive answers from, representatives of the Company concerning the terms
and conditions of the offering of the Securities and the merits and risks of
investing in the Securities; (ii) access to information about the Company
and the Subsidiaries and their respective financial condition, results of
operations, business, properties, management and prospects sufficient to enable
it to evaluate its investment; and (iii) the opportunity to obtain such
additional information that the Company possesses or can acquire without
unreasonable effort or expense that is necessary to make an informed investment
decision with respect to the investment. Neither such inquiries nor any other
investigation conducted by or on behalf of such Purchaser or its representatives
or counsel shall modify, amend or affect such Purchaser’s right to rely on the
truth, accuracy and completeness of the Disclosure Materials and the Company’s
representations and warranties contained in the Transaction
Documents.  Such Purchaser has sought such accounting, legal and tax
advice as it has considered necessary to make an informed decision with respect
to its acquisition of the Securities.

       

      (i)                  
    Certain Trading
Activities.  Other than with respect to the transactions
contemplated herein, since the time that such Purchaser was first contacted by
the Company, the Placement Agent or any other Person regarding the transactions
contemplated hereby, neither the Purchaser nor any Affiliate of such Purchaser
which (x) had knowledge of the transactions contemplated hereby, (y) has or
shares discretion relating to such Purchaser’s investments or trading or
information concerning such Purchaser’s investments, including in respect of the
Securities, and (z) is subject to such Purchaser’s review or input concerning
such Affiliate’s investments or trading (collectively, “Trading Affiliates”) has
directly or indirectly, nor has any Person acting on behalf of or pursuant to
any understanding with such Purchaser or Trading Affiliate, effected or agreed
to effect any purchases or sales of the securities of the Company (including,
without limitation, any Short Sales involving the Company’s securities).
Notwithstanding the foregoing, in the case of a Purchaser and/or Trading
Affiliate that is, individually or collectively, a multi-managed investment bank
or vehicle whereby separate portfolio managers manage separate portions of such
Purchaser’s or Trading Affiliate’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 or Trading Affiliate’s assets, the
representation set forth above shall apply only with respect to the portion of
assets managed by the portfolio manager that have knowledge about the financing
transaction contemplated by this Agreement.  Other than to other
Persons party to this Agreement and to accountants, lawyers and other agents and
representatives of each Purchaser that are bound by a duty of confidentiality to
such Purchaser and whom such Purchaser has taken reasonable actions to cause
them to maintain the confidentiality thereof, such Purchaser has maintained the
confidentiality of all disclosures made to it in connection with this
transaction (including the existence and terms of this transaction).
Notwithstanding the foregoing, for avoidance of doubt, nothing contained herein
shall constitute a representation or warranty, or preclude any actions, with
respect to the identification of the availability of, or securing of, available
shares to borrow in order to effect short sales or similar transactions in the
future.

       

      (j)               
       Brokers and
Finders.  No Person will have, as a result of the transactions
contemplated by this Agreement, any valid right, interest or claim against or
upon the Company or any Purchaser for any commission, fee or other compensation
pursuant to any agreement, arrangement or understanding entered into by or on
behalf of the Purchaser.


      
        
           


        

        
          -20-

          
            

          

        

        
           


        

      

       

      (k)                      Independent Investment
Decision.  Such Purchaser has independently evaluated the
merits of its decision to purchase Securities pursuant to the Transaction
Documents, and such Purchaser confirms that it has not relied on the advice of
any other Purchaser’s business and/or legal counsel in making such
decision.  Such Purchaser understands that nothing in this Agreement
or any other materials presented by or on behalf of the Company to the Purchaser
in connection with the purchase of the Securities constitutes legal, tax or
investment advice.  Such Purchaser has consulted such legal, tax and
investment advisors as it, in its sole discretion, has deemed necessary or
appropriate in connection with its purchase of the Securities.  Such
Purchaser understands that the Placement Agent have acted solely as the agents
of the Company in this placement of the Shares and Warrants and such Purchaser
has not relied on the business or legal advice of the Placement Agent or any of
their agents, counsel or Affiliates in making its investment decision hereunder,
and confirms that none of such Persons has made any representations or
warranties to such Purchaser in connection with the transactions contemplated by
the Transaction Documents.

       

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

       

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

       

      (n)                      Reliance on
Representations.  The Purchaser agrees, acknowledges and
understands that the Company and its counsel, are entitled to rely on the
representations, warranties and covenants made by the Purchaser
herein.  Purchaser further represents and warrants that this Agreement
and the Accredited Investor Questionnaire accompanying this Agreement do not
contain any untrue statement or a material fact or omit any material fact
concerning Purchaser.

       

      (o)                      Beneficial
Ownership.  The purchase by such Purchaser of the Shares and
Warrants issuable to it at the Closing will not (either with or without
aggregating such Securities with the Warrant Shares for which such Purchaser’s
Warrants are exercisable) result in such Purchaser (individually or together
with any other Person with whom such Purchaser has identified, or will have
identified, itself as part of a “group” in a public filing made with the
Commission involving the Company’s securities) (when added to any other
securities of the Company that it or they then own or have the right to acquire)
acquiring, or obtaining the right to acquire, in excess of 19.999% of the
outstanding shares of Common Stock or the voting power of the Company on a post
transaction basis that assumes that such Closing shall have
occurred.  Such Purchaser does not presently intend to, alone or
together with others, make a public filing with the Commission to disclose that
it has (or that it together with such other Persons have) acquired, or obtained
the right to acquire, as a result of such Closing (when added to any other
securities of the Company that it or they then own or have the right to
acquire), in excess of 19.999% of the outstanding shares of Common Stock or the
voting power of the Company on a post transaction basis that assumes that each
Closing shall have occurred.

       

      (p)                      Residency.  Such
Purchaser’s residence (if an individual) or offices in which its investment
decision with respect to the Securities was made (if an entity) are located at
the address immediately below such Purchaser’s name on its signature page
hereto.


      
        
           


        

        
          -21-

          
            

          

        

        
           


        

      

       

      (q)                      Anti-Money Laundering
Laws. Such Purchaser represents and warrants to, and covenants with, the
Company that: (i) such Purchaser is in compliance with Executive Order
13224 and the regulations administered by the U.S. Department of the Treasury
(“Treasury”) Office of
Foreign Assets Control; (ii) such Purchaser, its parents, subsidiaries,
affiliated companies, officers, directors and partners, and to such Purchaser’s
knowledge, its shareholders, owners, employees, and agents, are not on the List
of Specially Designated Nationals and Blocked Persons  maintained by
Treasury and have not been designated by Treasury as a financial institution of
primary money laundering concern subject to special measures under Section 311
of the USA PATRIOT Act, Pub. L. 107-56; (iii) to such Purchaser’s
knowledge, the funds to be used to acquire the Securities are not derived from
activities that contravene applicable anti-money laundering laws and
regulations; (iv) such Purchaser is in compliance with all other applicable
anti-money laundering laws and regulations and has implemented anti-money
laundering procedures that comply with applicable anti-money laundering laws and
regulations, including, as applicable, the requirements of the Bank Secrecy Act,
as amended by the USA PATRIOT Act, Pub. L. 107-56; and (v) to the best of
its knowledge (A) none of the funds to be provided by such Purchaser are
being tendered on behalf of a person or entity who has not been identified to
such Purchaser, and (B) upon the reasonable request of the Company, such
Purchaser agrees to re-certify in writing the
representations, warranties and covenants provided in this
paragraph.

       

      The Company and each of the Purchasers acknowledge and
agree that no party to this Agreement has made or makes any representations or
warranties with respect to the transactions contemplated hereby other than those
specifically set forth in this Article III and the Transaction Documents.

       

      3.3           Additional Representations
and Warranties of Non-United States Persons.  If the Purchaser
indicates that such Purchaser is not a U.S. Person on the signature page to this
Agreement, then the Purchaser further makes the  following
representations and warranties to the Company:


       

      (i)           At
the time the Purchaser was offered the Securities, it was not, and at the date
hereof, such Subscriber is not a “U.S. Person”
which is defined below:

       

      
        	
              	
                (A)

              	
                Any
      natural person resident in the United
States;

              


      

       

      
        	
                 
      

              	
                (B)

              	
                Any
      partnership or corporation organized or incorporated under the laws of the
      United States;

              


      

       

      
        	
                 
      

              	
                (C)

              	
                Any
      estate of which any executor or administrator is a U.S.
      person;

              


      

       

      
        	
                 
      

              	
                (D)

              	
                Any
      trust of which any trustee is a U.S.
person;

              


      

       

      
        	
                 
      

              	
                (E)

              	
                Any
      agency or branch of a foreign entity located in the United
      States;

              


      

       

      
        	
                 
      

              	
                (F)

              	
                Any
      non-discretionary account or similar account (other than an estate or
      trust) held by a dealer or other fiduciary for the benefit or account of a
      U.S. person;

              


      

       

      
        	
                 
      

              	
                (G)

              	
                Any
      discretionary account or similar account (other than an estate or trust)
      held by a dealer or other fiduciary organized, incorporated, or (if an
      individual) resident of the United States;
and

              


      


      
        
           


        

        
          -22-

          
            

          

        

        
           


        

      

       

      
        	
                 
      

              	
                (H)

              	
                Any
      partnership or corporation if (i) organized or incorporated under the laws
      of any foreign jurisdiction and (ii) formed by a U.S. person principally
      for the purpose of investing in securities not registered under the
      Securities Act, unless it is organized or incorporated, and owned, by
      accredited investors (as defined in Rule 501(a) of Regulation D
      promulgated under the Securities Act) who are not natural persons, estates
      or trusts.

              


      

       

      “United States” or “U.S.” means the United States
of America, its territories and possessions, any State of the United States, and
the District of Columbia.


       

      (iii)           The
Purchaser understands that no action has been or will be taken in any
jurisdiction by the Company that would permit a public offering of the
Securities in any country or jurisdiction where action for that purpose is
required.

       

      (iv)           The
Purchaser (i) as of the execution date of this Agreement is not located within
the United States, and (ii) is not purchasing the Securities for the account or
benefit of any U.S. person except in accordance with one or more available
exemptions from the registration requirements of the Securities Act or in a
transaction not subject thereto.

       

      (v)           The
Purchaser will not resell the Securities except in accordance with the
provisions of Regulation S (Rule 901 through 905 and Preliminary Notes thereto),
pursuant to a registration under the Securities Act, or pursuant to an available
exemption from registration; and agrees not to engage in hedging transactions
with regard to such securities unless in compliance with the Securities
Act.

       

      (vi)           The
Purchaser will not engage in hedging transactions with regard to shares of the
Company prior to the expiration of the distribution compliance period specified
in Category 2 or 3 (paragraph (b)(2) or (b)(3)) in Rule 903 of Regulation S, as
applicable, unless in compliance with the Securities Act; and as applicable,
shall include statements to the effect that the securities have not been
registered under the Securities Act and may not be offered or sold in the United
States or to U.S. persons (other than distributors) unless the securities are
registered under the Securities Act, or an exemption from the registration
requirements of the Securities Act is available.

       

      (vii)           No
form of “directed selling efforts” (as defined in Rule 902 of Regulation S under
the Securities Act), general solicitation or general advertising in violation of
the Securities Act has been or will be used nor will any offers by means of any
directed selling efforts in the United States be made by the Subscriber or any
of their representatives in connection with the offer and sale of the
Securities.


      
        
           


        

        
          -23-

          
            

          

        

        
           


        

      


      
        ARTICLE IV.

        OTHER
AGREEMENTS OF THE PARTIES

         

        4.1                      Transfer
Restrictions.

         

      

      (a)                      Compliance with
Laws.  Notwithstanding any other
provision of this Article IV, each Purchaser covenants that the Securities may be
disposed of only pursuant to an effective registration statement under, and in
compliance with the requirements of, the Securities Act, or pursuant to an
available exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act, and in compliance with any applicable state
and federal securities laws.  In connection with any transfer of the
Securities other than (i) pursuant to an effective registration statement,
(ii) to the Company or (iii)  in connection with a bona fide pledge
(not including the transfer or foreclosure thereon) as contemplated in Section 4.1(b), the Company may require the transferor thereof to provide
to the Company an opinion of counsel selected by the transferor and reasonably
acceptable 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
or applicable state securities laws.  As a condition of transfer, any
such transferee shall agree in writing to be bound by the terms of this
Agreement and the Registration Rights Agreement and shall have the rights and
obligations of a Purchaser under this Agreement and the Registration Rights
Agreement with respect to such transferred Securities.

       

      (b)                      Legends.  Certificates
evidencing the Securities shall bear any legend as required by the “blue sky”
laws of any state and a restrictive legend in substantially the following form,
until such time as they are not required under Section 4.1(c):

       

      THE OFFER AND SALE OF THESE SECURITIES AND THE SECURITIES
ISSUABLE UPON EXERCISE OF THESE SECURITIES HAVE NOT BEEN REGISTERED] [THE OFFER
AND SALE OF THESE SECURITIES HAVE NOT BEEN REGISTERED] UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE “SECURITIES
ACT”), OR ANY APPLICABLE STATE SECURITIES LAWS.  THE SECURITIES
MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED, ASSIGNED OR OTHERWISE DISPOSED
OF IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES UNDER THE SECURITIES ACT OR (B) AN AVAILABLE EXEMPTION
FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND IN EACH CASE IN ACCORDANCE WITH APPLICABLE STATE SECURITIES
LAWS OR BLUE SKY LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY AND ITS TRANSFER AGENT.  NOTWITHSTANDING
THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE
MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES;
PROVIDED THAT IN CONNECTION WITH ANY FORECLOSURE OR TRANSFER OF THE SECURITIES,
THE TRANSFEROR SHALL COMPLY WITH THE PROVISIONS [HEREIN], IN THE SECURITIES
PURCHASE AGREEMENT AND THE REGISTRATION RIGHTS AGREEMENT, AND UPON FORECLOSURE
OR TRANSFER OF THE SECURITIES, SUCH FORECLOSING PERSON OR TRANSFEREE SHALL
COMPLY WITH ALL PROVISIONS CONTAINED [HEREIN], IN THE SECURITIES PURCHASE
AGREEMENT AND THE REGISTRATION RIGHTS AGREEMENT.

       

      The
Company acknowledges and agrees that a Purchaser may from time to time pledge,
and/or grant a security interest in, some or all of the legended Securities in
connection with applicable securities laws, pursuant to a bona fide margin
agreement in compliance with a bona fide margin loan.  Such a pledge
would not be subject to approval or consent of the Company and no legal opinion
of legal counsel to the pledgee, secured party or pledgor shall be required in
connection with the pledge, but such legal opinion shall be required in
connection with a subsequent transfer or foreclosure following default by the
Purchaser transferee of the pledge.  No notice shall be required of
such pledge, but Purchaser shall promptly notify the Company of any such
subsequent transfer or foreclosure.  Each Purchaser acknowledges that
the Company shall not be responsible for any pledges relating to, or the grant
of any security interest in, any of the Securities or for any agreement,
understanding or arrangement between any Purchaser and its pledgee or secured
party.  At the appropriate Purchaser’s expense, the Company will
execute and deliver such reasonable documentation as
such Purchaser may reasonably request in connection with a pledge or transfer of
the Securities, including the preparation and filing of any required prospectus
supplement under Rule 424(b)(3) of the Securities Act or other applicable
provision of the Securities Act to appropriately amend the list of selling
stockholders thereunder.  Each Purchaser acknowledges and agrees that,
except as otherwise provided in Section 4.1(c), any Securities subject to a pledge or security interest
as contemplated by this Section 4.1(b) shall continue to bear the legend set forth in this
Section 4.1(b) and be subject to the restrictions on transfer set
forth in Section 4.1(a).


      
        
           


        

        
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      (c)                      Removal of
Legends.  The legend set forth in Section 4.1(b) above shall be removed and the Company shall issue a
certificate without such legend or any other legend to the holder of the
applicable Securities upon which it is stamped or issue to such holder by
electronic delivery at the applicable balance account at the Depository Trust
Company (“DTC”), if
(i) such Securities are registered for resale under the Securities Act,
(ii) such Securities are sold or transferred pursuant to Rule 144 (if
the transferor is not an Affiliate of the Company), or (iii) such
Securities are eligible for sale under Rule 144, without the requirement
for the Company to be in compliance with the current public information required
under Rule 144 as to such Securities and without volume or manner-of-sale
restrictions.  Following the earlier of (i) the Effective Date
and (ii) Rule 144 becoming available for the resale of Securities,
without the requirement for the Company to be in compliance with the current
public information required under Rule 144 as to such Securities and
without volume or manner-of-sale restrictions, the Company shall issue to the
Transfer Agent the Irrevocable Transfer Agent Instructions.  Any fees
(with respect to the Transfer Agent, Company Counsel or otherwise) associated
with the issuance of such opinion or the removal of such legend shall be borne
by the Company.  Following the Effective Date, or at such earlier time
as a legend is no longer required for certain Securities, the Company will
promptly, following the delivery by a Purchaser to the Company (with written
notice to the Company) of (i) a legended certificate representing Shares or
Warrant Shares (endorsed or with stock powers attached, signatures guaranteed,
and otherwise in the form necessary to affect the reissuance and/or transfer)
and an opinion of counsel to the extent required by Section 4.1(a) or (ii) an Exercise Notice (as defined in the
Warrants) in the manner stated in the Warrants to effect the exercise of such
Warrant in accordance with its terms, deliver or cause to be delivered to such
Purchaser a certificate representing such Securities that is free from all
restrictive legends.  The Company may not make any notation on its
records or give instructions to the Transfer Agent that enlarge the restrictions
on transfer set forth in this Section 4.1(c).  Certificates for Shares or Warrant Shares
subject to legend removal hereunder may be transmitted by the Transfer Agent to
the Purchasers by crediting the account of the Purchaser’s prime broker with DTC
as directed by such Purchaser.

       

      (d)                      Irrevocable
Transfer Agent Instructions.  The Company shall issue
irrevocable instructions to its transfer agent, and any subsequent transfer
agent, in the form of Exhibit F
attached hereto (the “Irrevocable Transfer
Agent Instructions”) in accordance with Section 4.1(c). The Company represents and warrants that no instruction
other than the Irrevocable Transfer Agent Instructions referred to in this Section 4.1(d) (or instructions that are consistent therewith) will
be given by the Company to the Transfer Agent in connection with this Agreement
(other than those instructions contemplated in Section
2.2(a)(vi)), and that the Securities shall otherwise be freely
transferable on the books and records of the Company as and to the extent
provided in this Agreement and the other Transaction Documents and applicable
law. The Company acknowledges that a breach by it of its obligations under this
Section 4.1(d) will cause irreparable harm to a
Purchaser.  Accordingly, the Company acknowledges that a remedy at law
for a breach of its obligations under this Section 4.1(d) will be inadequate and agrees, in the event of a
breach by the Company of the provisions of this Section 4.1(d), that a Purchaser shall be entitled, in addition to all
other available remedies, to an order and/or injunction restraining any breach
and requiring immediate issuance and transfer, without the necessity of showing
economic loss and without any bond or other security being
required.


      
        
           


        

        
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      (e)                      [Intentionally
Omitted]

       

      (f)              
        Buy-In.  If
by the third (3rd)
Trading Day after receipt of all documents necessary for the removal of the
legends set forth in Section 4.1(b) (pursuant to Section 4.1(c)) (or the fourth (4th)
Trading Day if any part of the necessary documentation is delivered after 5:00
p.m. New York City time) (such date, the “Deadline
Date”), the Company has failed to issue to a Purchaser an unlegended
certificate, then, in addition to all other remedies available to such
Purchaser, if on or after the Trading Day immediately following the Deadline
Date, such Purchaser purchases (in an open market transaction or otherwise)
shares of Common Stock to deliver in satisfaction of a sale by the holder of
shares of Common Stock that such Purchaser anticipated receiving from the
Company without any restrictive legend (a “Buy-In”), then
the Company shall, within three (3) Trading Days after the Company receives such
Purchaser’s written request and in such Purchaser’s sole discretion, either
(i) pay cash to the Purchaser in an amount equal to such Purchaser’s total
purchase price (including brokerage commissions, if any, that are reasonably
documented in Purchaser’s written request) for the shares of Common Stock so
purchased (the “Buy-In Price”),
at which point the Company’s obligation to deliver such certificate (and to
issue such shares of Common Stock) shall terminate, or (ii) promptly honor
its obligation to deliver to such Purchaser a certificate representing such
shares of Common Stock and pay cash to the Purchaser in an amount equal to the
excess (if any) of the Buy-In Price over the product of (a) such number of
shares of Common Stock purchased in the Buy-In, times (b) the Closing Bid
Price of a share of Common Stock on the Deadline Date.

       

      4.2                      Reservation of Common
Stock.  The Company shall take all action necessary to at all
times have authorized, and reserved for the purpose of issuance from and after
the Closing Date, the number of shares of Common Stock issuable upon exercise of
the Warrants issued at the Closing (without taking into account any limitations
on exercise of the Warrants set forth in the Warrants).

       

      4.3                      [Intentionally
Omitted].

       

      4.4                      Integration.  The
Company shall not, and shall use its commercially reasonable efforts to ensure
that no Affiliate of the Company shall, 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 will 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 stockholder approval prior to the closing of
such other transaction unless stockholder approval is obtained before the
closing of such subsequent transaction.

       

      4.5                      Securities Laws Disclosure;
Publicity.  On or before 9:00 A.M., New York City time, on the
fourth (4th) Trading Day immediately following the date hereof, the Company will
file a Current Report on Form 8-K with the Commission describing the terms
of the Transaction Documents (and including as exhibits to such Current Report
on Form 8-K the material Transaction Documents (including, without
limitation, this Agreement, the form of Warrant and the Registration Rights
Agreement)).  Notwithstanding the foregoing, the Company shall not
publicly disclose the name of any Purchaser or an Affiliate of any Purchaser, or
include the name of any Purchaser or an Affiliate of any Purchaser in any filing
with the Commission (other than the Registration Statement) 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, request of the Staff of the Commission or Trading
Market regulations, in which case the Company shall provide the Purchasers with
prior notice of such disclosure permitted under this subclause
(ii).  No Purchaser shall be in possession of any material, non-public
information regarding the Company or its Subsidiaries received from the Company,
any Subsidiary or any of their respective officers, directors, employees or
agents unless a Purchaser shall have executed a written agreement regarding the
confidentiality and use of such information.  Except as contemplated
by the penultimate sentence of Section 3.2(i), each
Purchaser, severally and not jointly with the other Purchasers, covenants that
until such time as the transactions contemplated by this Agreement are required
to be publicly disclosed by the Company as described in this Section 4.5, 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).


      
        
           


        

        
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      4.6                      Stockholder Rights
Plan.  No claim will be made or enforced by the Company or,
with the consent of the Company, any other Person, that any Purchaser is an
“Acquiring Person” under any control share acquisition, business combination,
poison pill (including any distribution under a rights agreement) or similar
anti-takeover plan or arrangement in effect or hereafter adopted by the Company,
or that any Purchaser could be deemed to trigger the provisions of any such plan
or arrangement, in either case solely by virtue of receiving Securities under
the Transaction Documents or under any other written agreement between the
Company and the Purchasers; provided, however, that no
such Purchaser, directly or indirectly, on its own behalf or as a member of a
“group” (as that term is defined in Section 13(d)(3) under the Exchange Act)
beneficially owns any equity in the Company prior to its purchase of the
Securities hereunder or while it holds or beneficially owns any Securities
purchased hereunder.

       

      4.7                      Non-Public
Information.  Except with respect to the material terms and
conditions of the transactions contemplated by the Transaction Documents,
including this Agreement, or as expressly required by any applicable securities
law, the Company covenants and agrees that neither it, nor any other Person
acting on its behalf, will provide any Purchaser or its agents or counsel with
any information regarding the Company or its Subsidiaries that constitutes
material, non-public information regarding the Company or its Subsidiaries
without the express written consent of such Purchaser, unless prior thereto such
Purchaser shall have executed a written agreement regarding the confidentiality
and use of such information. The Company understands and confirms that each
Purchaser shall be relying on the foregoing covenant in effecting transactions
in securities of the Company.  To the extent that the Company delivers
any material, non-public information to a Purchaser without such Purchaser’s
consent, the Company hereby covenants and agrees that such Purchaser shall not
have any duty of confidentiality with respect to such material, non-public
information.

       

      4.8                      Use of
Proceeds.  The Company shall use the net proceeds from the sale
of the Shares and Warrants hereunder as set forth on Schedule 4.8 and for
working capital and general corporate purposes.

       

      4.9                      Form D; Blue
Sky.  The Company agrees to timely file a Form D with
respect to the Securities as required under Regulation D.  The
Company, on or before the Closing Date, shall take such reasonable action as the
Company shall determine is necessary in order to obtain an exemption for or to
qualify the Securities for sale to the Purchasers under applicable securities or
“Blue Sky” laws of the states of the United States (or to obtain an exemption
from such qualification).


      
        
           


        

        
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      4.10                    Subsequent Equity
Sales.  Except for Exempt Issuances, from the date hereof until
the later of (i) ninety (90) days following the Closing Date and
(ii) thirty (30) days after the Effective Date (such later date, the “Trigger Date”), neither the
Company nor any Subsidiary shall directly or indirectly, offer, sell, grant any
option to purchase, or otherwise dispose of (or announce any offer, sale, grant
or any option to purchase or other disposition of) any of the Company’s or any
Subsidiary’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 Common Stock or
Common Stock Equivalents (any such offer, sale, grant, disposition or
announcement being referred to as a “Subsequent
Placement”); provided,
however, the thirty (30) day period set forth in this Section 4.10 shall be extended for the number of Trading Days
during such period in which (i) trading in the Common Stock is suspended by
any Trading Market, or (ii) following the Effective Date, the Registration
Statement is not effective or the prospectus included in the Registration
Statement may not be used by the Purchasers for the resale of the Shares and
Warrant Shares.  Notwithstanding anything to the contrary contained
herein, the foregoing restriction and the requirements of Section 4.11 shall not
apply to (a) securities required to be issued pursuant to contractual
obligations of the Company in effect as of the date of this Agreement that are
set forth on Schedule
4.10, (b) equity securities issued or issuable pursuant to
employee benefit or purchase plans in effect as of the date of this Agreement or
pursuant to bona fide employee benefit or purchase plans established during the
period described in the first sentence of this Section 4.10 or (c) equity securities issued as an "equity kicker"
in connection with any direct or indirect non-convertible debt financings, by
the Company to a bank or venture fund whose principal business is to lend money
by way of non-convertible debt financing (but not to a hedge fund or private
equity fund) that is approved by the Board of Directors; provided that the value
of the "equity kicker" portion of any such non-convertible debt
financing, including warrants, options or other rights to purchase
capital stock and other interests convertible into capital stock of the Company,
shall not exceed such amounts which are customary in similar transactions and in
no event (i) shall such value exceed ten percent (10%) of the value of the
non-convertible indebtedness being borrowed, or (ii) the number of shares of
Common Stock or securities convertible into or exchangeable for Common Stock
issuable pursuant to this clause (c) exceed, in the aggregate, two percent
(2.0%) of the shares of Common Stock outstanding as of the date of this
Agreement.

       

      4.11                    Additional Issuances of
Securities.

       

      (a)                    
       For purposes of this Section 4.11, the
following definitions shall apply.

       

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

       

      (ii)                      "Options" means any rights,
warrants or options to subscribe for or purchase Common Stock or Convertible
Securities.

       

      (b)                           
Subject to the last sentence of this Section
4.11, from the Trigger Date until the six month anniversary
date of the earlier of (a) the Effective Date whereby all Registrable Securities
(as defined in the Registration Rights Agreement) may be freely resold pursuant
to a resale registration statement, and (b) the date when all Registrable
Securities (as defined in the Registration Rights Agreement) can be sold under
Rule 144, if ever, without any restriction or limitation and without the
requirement to be in compliance with Rule 144(c)(1), the Company will
not, directly or indirectly, effect any Subsequent Placement unless the Company
shall have first complied with this Section 4.11(b).

       

      (i)                 
      The Company shall deliver to each Purchaser
an irrevocable written notice (the "Offer Notice") of any
proposed or intended issuance or sale or exchange (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, sold or exchanged, and the number
or amount of the Offered Securities to be issued, sold or exchanged,
(y) identify the persons or entities (if known) to which or with which the
Offered Securities are to be offered, issued, sold or exchanged and (z) offer to
issue and sell to or exchange with such Purchasers fifty percent (50%) of the
Offered Securities, allocated among such Purchasers (a) based on such
Purchaser's pro rata portion of the aggregate principal amount of Securities
purchased hereunder (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.


      
        
           


        

        
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      (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 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 anything to the contrary contained herein,
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 fifth
(5th)
Business Day after such Purchaser's receipt of such new Offer
Notice.

       

      (iii)                      The
Company shall have five (5) Business Days from the expiration of the Offer
Period above to offer, issue, sell or exchange 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 (the "Subsequent Placement
Agreement") but only to the offerees described in the Offer Notice (if so
described therein) and only upon terms and conditions (including, without
limitation, unit prices and interest rates) that are not more favorable to the
acquiring person or persons or less favorable to the Company than those set
forth in the Offer Notice and (ii) to publicly announce (a) the execution of
such Subsequent Placement Agreement, and (b) either (x) the consummation of the
transactions contemplated by such Subsequent Placement Agreement or (y) the
termination of such Subsequent Placement Agreement, which shall be filed with
the Commission on a Current Report on Form 8-K with such Subsequent Placement
Agreement and any documents contemplated therein filed as exhibits
thereto.

       

      (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
4.11(b)(3) 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 4.11(b)(2) above multiplied by a fraction, (i) the numerator
of which shall be the number or amount of Offered Securities the Company
actually proposes to issue, sell or exchange (including Offered Securities to be
issued or sold to Purchasers pursuant to Section 4.11(b)(3) above prior to such
reduction) and (ii) 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, sell or exchange 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 4.11(b)(3)
above.


      
        
           


        

        
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      (v)                      Upon
the closing of the issuance, sale or exchange 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 4.11(b)(3) 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 4.11(b)(3) above may not be issued, sold or exchanged until they
are again offered to the Purchasers under the procedures specified in this
Agreement.

       

      (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) any registration rights set forth in such Subsequent Placement Documents
shall be similar in all material respects to the registration rights contained
in the Registration Rights Agreement.

       

      (viii)                      Notwithstanding
anything to the contrary in this Section 4.11 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 tenth (10th)
Business Day following delivery of the Offer Notice.  If by the tenth
(10th)
Business Day following delivery of the Offer Notice 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
4.11(b).  The Company shall not be permitted to deliver more than one
such Offer Notice to the Purchasers in any 60 day period.

       

      Notwithstanding anything to the contrary herein, the
provisions of this Section
4.11 shall not apply to any transaction if compliance with
this Section
4.11 would (i) violate any applicable securities law or
regulations or (ii) require the Company, as a condition to completing such
transaction, to obtain the approval of its stockholders pursuant to the rules of
any applicable Trading Market; provided that, in determining whether any such
violation would occur or stockholder consent requirement be triggered, counsel
to one or more of the Purchasers shall be entitled to consult with legal counsel
to the Company and representatives of the Commission and/or Trading Market, as
appropriate.

       

      4.12                      If
the Company is unable to obtain, on or prior to Closing, executed Lock-Up
Agreements which include the bracketed language referred to in footnote 1 to the
Form of Lock-Up Agreement attached as Exhibit J, from the
Persons set forth on Exhibit K, the
Company shall use reasonable best efforts to cause the parties to such Lock-Up
Agreements to re-execute such agreement with the inclusion of such
language.


      
        
           


        

        
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      ARTICLE V.

      CONDITIONS
PRECEDENT TO CLOSING

       

      5.1                      Conditions Precedent to the
Obligations of the Purchasers to Purchase Securities.  The
obligation of each Purchaser to acquire Shares and Warrants at the Closing is
subject to the fulfillment to such Purchaser’s satisfaction, on or prior to the
Closing Date, of each of the following conditions, any of which may be waived by
such Purchaser (as to itself only):

       

      (a)                      Representations and
Warranties.  The representations and warranties of the Company
contained herein shall be true and correct in all material respects (except for
those representations and warranties which are qualified as to materiality or
Material Adverse Effect, in which case such representations and warranties shall
be true and correct in all respects) as of the date when made and as of the
Closing Date, as though made on and as of such date, except for such
representations and warranties that speak as of a specific date.

       

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

       

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

       

      (d)                      Consents.  The
Company shall have obtained in a timely fashion any and all consents, permits,
approvals, registrations and waivers necessary for consummation of the purchase
and sale of the Securities (including all Required Approvals), all of which
shall be and remain so long as necessary in full force and effect.

       

      (e)                      Adverse
Changes.  Since the date hereof, no event or series of events
shall have occurred that has had or would reasonably be expected to have a
Material Adverse Effect.

       

      (f)                      [Intentionally
Omitted].

       

      (g)                      No Suspensions of Trading in
Common Stock.  The Common Stock
shall not  have been suspended, as of the Closing Date, by the
Commission or the Principal Trading Market from trading on the Principal Trading
Market nor shall suspension by the Commission or the Principal Trading Market
have been threatened, as of the Closing Date, either (A) in writing by the
Commission or the Principal Trading Market or (B) by falling below the
minimum listing maintenance requirements of the Principal Trading
Market.

       

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

       

      (i)                   
   Compliance
Certificate.  The Company shall have delivered to each
Purchaser a certificate, dated as of the Closing Date and signed by its Chief
Executive Officer or its Chief Financial Officer, dated as of the Closing Date,
certifying to the fulfillment of the conditions specified in Sections 5.1(a) and (b) in the form attached hereto as Exhibit H.

       

      (j)                   
   Termination.  This
Agreement shall not have been terminated as to such Purchaser in accordance with
Section 6.18.


      
        
           


        

        
          -31-

          
            

          

        

        
           


        

      

       

      5.2                      Conditions Precedent to the
Obligations of the Company to sell Securities.  The Company’s
obligation to sell and issue the Shares and Warrants at the Closing to the
Purchasers is subject to the fulfillment to the satisfaction of the Company on
or prior to the Closing Date of the following conditions, any of which may be
waived by the Company:

       

      (a)                      Representations and
Warranties.  The representations and warranties made by the
Purchasers contained herein shall be true and correct in all material respects
(except for those representations and warranties which are qualified as to
materiality or Material Adverse Effect, in which case such representations and
warranties shall be true and correct in all respects) as of the date when made,
and as of the Closing Date as though made on and as of such date, except for
representations and warranties that speak as of a specific date.

       

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

       

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

       

      (d)                      Purchasers
Deliverables.  Such Purchaser shall have delivered its
Purchaser Deliverables in accordance with Section 2.2(b).

       

      (e)                      Termination.  This
Agreement shall not have been terminated as to such Purchaser in accordance with
Section 6.18 herein.

       

      ARTICLE VI.

      MISCELLANEOUS

       

      6.1                      Fees and
Expenses.  The Company shall be responsible for the payment of
any placement agent’s fees, financial advisory fees, or broker’s commissions
(other than for Persons engaged by any Purchaser) relating to or arising out of
the transactions contemplated hereby, including, without limitation, any fees or
commissions payable to Northland Capital Markets. The Company shall hold each
Purchaser harmless against, any liability, loss or expense (including, without
limitation, reasonable attorney’s fees and out-of-pocket expenses) arising in
connection with any claim relating to any such payment contemplated by the
immediately preceding sentence.  Except as otherwise set forth in the
Transaction Documents, each party to this Agreement shall pay the fees and
expenses of their respective advisers, counsel, accountants and other experts,
if any, and all other expenses incurred by such party in connection with 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 sale and issuance of
the Securities to the Purchasers; provided, that pursuant to
Section 6 of the Warrants, the Company shall not be required to pay any tax that
may be payable in respect of any transfer involved in the registration of
Warrant Shares or the Warrants in a name other than that of the Purchaser or an
Affiliate thereof.

       

      6.2                      Entire
Agreement.  The Transaction Documents, together with the
exhibits and schedules thereto, contain the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior agreements,
understandings, discussions and representations, oral or written, with respect
to such matters, which the parties acknowledge have been merged into such
documents, exhibits and schedules.  At or after the Closing, and
without further consideration, the Company and the Purchasers will execute and
deliver to the other such further documents as may be reasonably requested in
order to give practical effect to the intention of the parties under the
Transaction Documents.


      
        
           


        

        
          -32-

          
            

          

        

        
           


        

      

       

      6.3                      Notices.  Any
and all notices or other communications or deliveries required or permitted to
be provided hereunder shall be in writing and shall be deemed given and
effective on the earliest of (a) the date of transmission, if such notice
or communication is delivered via facsimile (provided the sender receives a
machine-generated confirmation of successful transmission) at the facsimile
number specified in this Section 6.3 prior to 5:00
P.M., New York City time, on a Trading Day, (b) the next Trading Day after
the date of transmission, if such notice or communication is delivered via
facsimile at the facsimile number specified in this Section 6.3 on a day that is
not a Trading Day or later than 5:00 P.M., New York City time, on any Trading
Day, (c) the Trading Day following the date of mailing, if sent by U.S.
nationally recognized overnight courier service with next day delivery
specified, and (d) upon actual receipt by the party to whom such notice is
required to be given.  The address for such notices and communications
shall be as follows:

       

      If to the
Company:            
American Standard Energy Inc.

      4800 N.
Scottsdale Rd Suite 1400

      Scottsdale,
AZ 85251

      Phone:
480-371-1929

      Facsimile
No.: 480-990-2732

      Attention:
Chief Executive Officer

      


      With a
copy
to:                   Anslow
& Jaclin, LLP

      195 Route
9 South Suite 204

      Manapalan,
New Jersey 07726

      Phone:
732-409-1212

      Facsimile
No.: 732-577-1188

      Attention:
Gregg Jaclin, Esq.

       

      
        	
                If
      to a Purchaser:

              	
                To
      the address set forth under such Purchaser’s name on the signature page
      hereof;

              


      

       

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

       

      6.4                      Amendments; Waivers; No
Additional Consideration.  No provision of this Agreement may
be waived, modified, supplemented or amended except in a written instrument
signed, in the case of an amendment, by the Company and the Purchasers of at
least two-thirds of the Shares purchased as of the Closing Date or, in the case
of a waiver, by the party against whom enforcement of any such waiver 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 either party to exercise any right hereunder in any manner impair
the exercise of any such right.  No consideration shall be offered or
paid to any Purchaser to amend or consent to a waiver or modification of any
provision of any Transaction Document unless the same consideration is also
offered to all Purchasers who then hold Securities.

       

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


      
        
           


        

        
          -33-

          
            

          

        

        
           


        

      

       

      6.6                      Successors and
Assigns.  The provisions of this Agreement shall inure to the
benefit of and be binding upon the parties and their successors and permitted
assigns.  Except in the case of a Fundamental Transaction as
contemplated in the Warrants, this Agreement, or any rights or obligations
hereunder, may not be assigned by the Company without the prior written consent
of each Purchaser.  Any Purchaser may assign its rights hereunder in
whole or in part to any Person to whom such Purchaser assigns or transfers any
Securities in compliance with the Transaction Documents and applicable law,
provided such transferee shall agree in writing to be bound, with respect to the
transferred Securities, by the terms and conditions of the Transaction Documents
that apply to the “Purchasers.”

       

      6.7                      No Third-Party
Beneficiaries.  This Agreement is intended for the benefit of
the parties hereto and their respective successors and permitted assigns and is
not for the benefit of, nor may any provision hereof be enforced by, any other
Person, except the Placement Agent is an intended third party beneficiary of
Section 3.1
hereof.

       

      6.8                      Governing
Law.  All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of New
York, without regard to the principles of conflicts of law
thereof.  Each party agrees that all Proceedings concerning the
interpretations, enforcement and defense of the transactions contemplated by
this Agreement and any other Transaction Document (whether brought against a
party hereto or its respective Affiliates, employees or agents) shall be
commenced exclusively in the New York Courts.  Each party hereto
hereby irrevocably submits to the exclusive jurisdiction of the New York Courts
for the adjudication of any dispute hereunder or in connection herewith or with
any transaction contemplated hereby or discussed herein (including with respect
to the enforcement of any of the Transaction Documents), and hereby irrevocably
waives, and agrees not to assert in any Proceeding, any claim that it is not
personally subject to the jurisdiction of any such New York Court, or that such
Proceeding has been commenced in an improper or inconvenient
forum.  Each party hereto hereby irrevocably waives personal service
of process and consents to process being served in any such Proceeding by
mailing a copy thereof via registered or certified mail or overnight delivery
(with evidence of delivery) to such party at the address in effect for notices
to it under this Agreement and agrees that such service shall constitute good
and sufficient service of process and notice thereof.  Nothing
contained herein shall be deemed to limit in any way any right to serve process
in any manner permitted by law.  EACH PARTY HERETO HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO
TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

       

      6.9                      Survival.  Subject
to applicable statute of limitations, the representations, warranties,
agreements and covenants contained herein shall survive the Closing and the
delivery of the Securities.

       

      6.10                    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 signature page were an original thereof.


      
        
           


        

        
          -34-

          
            

          

        

        
           


        

      

       

      6.11                    Severability.  If
any provision of this Agreement is held to be invalid or unenforceable in any
respect, the validity and enforceability of the remaining terms and provisions
of this Agreement shall not in any way be affected or impaired thereby and the
parties will attempt to agree upon a valid and enforceable provision that is a
reasonable substitute therefor, and upon so agreeing, shall incorporate such
substitute provision in this Agreement.

       

      6.12                    Rescission and Withdrawal
Right.  Notwithstanding anything to the contrary contained in
(and without limiting any similar provisions of) the 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, unless such rescission or withdrawal
would materially prejudice the Company.

       

      6.13                    Replacement of
Securities.  If any certificate or instrument evidencing any
Securities is mutilated, lost, stolen or destroyed, the Company shall issue or
cause to be issued in exchange and substitution for and upon cancellation
thereof, or in lieu of and substitution therefor, a new certificate or
instrument, but only upon receipt of evidence reasonably satisfactory to the
Company and the Transfer Agent of such loss, theft or destruction and the
execution by the holder thereof of a customary lost certificate affidavit of
that fact and an agreement to indemnify and hold harmless the Company and the
Transfer Agent for any losses in connection therewith or, if required by the
Transfer Agent, a bond in such form and amount as is required by the Transfer
Agent.  The applicants for a new certificate or instrument under such
circumstances shall also pay any reasonable third-party costs associated with
the issuance of such replacement Securities.  If a replacement
certificate or instrument evidencing any Securities is requested due to a
mutilation thereof, the Company may require delivery of such mutilated
certificate or instrument as a condition precedent to any issuance of a
replacement.

       

      6.14                    Remedies.  In
addition to being entitled to exercise all rights provided herein or granted by
law, including recovery of damages, each of the Purchasers and the Company will
be entitled to specific performance under the Transaction
Documents.  The parties agree that monetary damages may not be
adequate compensation for any loss incurred by reason of any breach of
obligations described in the foregoing sentence and hereby agree to waive in any
action for specific performance of any such obligation (other than in connection
with any action for a temporary restraining order) the defense that a remedy at
law would be adequate.

       

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

       

      6.16                    Adjustments in Share Numbers
and Prices.  In the event of any stock split, subdivision,
dividend or distribution to all stockholders of the Company payable in shares of
Common Stock (or other securities or rights convertible into, or entitling the
holder thereof to receive directly or indirectly shares of Common Stock),
combination or other similar recapitalization or event occurring after the date
hereof and prior to the Closing, each reference in any Transaction Document to a
number of shares or a price per share shall be deemed to be amended to
appropriately account for such event.


      
        
           


        

        
          -35-

          
            

          

        

        
           


        

      

       

      6.17                    Independent Nature of
Purchasers’ Obligations and Rights.  The obligations of each
Purchaser under any Transaction Document are several and not joint with the
obligations of any other Purchaser, and no Purchaser shall be responsible in any
way for the performance of the obligations of any other Purchaser under any
Transaction Document.  The decision of each Purchaser to purchase
Securities pursuant to the Transaction Documents has been made by such Purchaser
independently of any other Purchaser and independently of any information,
materials, statements or opinions as to the business, affairs, operations,
assets, properties, liabilities, results of operations, condition (financial or
otherwise) or prospects of the Company or any Subsidiary which may have been
made or given by any other Purchaser or by any agent or employee of any other
Purchaser, and no Purchaser and any of its agents or employees shall have any
liability to any other Purchaser (or any other Person) relating to or arising
from any such information, materials, statement or opinions.  Nothing
contained herein or in any Transaction Document, and no action taken by any
Purchaser pursuant thereto, shall be deemed to constitute the Purchasers as a
partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Purchasers are in any way acting in concert or as
a group with respect to such obligations or the transactions contemplated by the
Transaction Documents.  Each Purchaser acknowledges that no other
Purchaser has acted as agent for such Purchaser in connection with making its
investment hereunder and that no Purchaser will be acting as agent of such
Purchaser in connection with monitoring its investment in the Securities or
enforcing its rights under the Transaction Documents.  Each Purchaser
shall be entitled to independently protect and enforce its rights, including
without limitation the rights arising out of this Agreement or out of the other
Transaction Documents, and it shall not be necessary for any other Purchaser to
be joined as an additional party in any proceeding for such
purpose.  Each Purchaser has been represented by its own separate
legal counsel in its review and negotiation of the Transaction
Documents.  For reasons of administrative convenience only, Purchasers
and their respective counsels have chosen to communicate with the Company
through Goodwin Procter LLP, counsel to Northland Securities
Inc..  Each Purchaser acknowledges that Goodwin Procter LLP has
rendered legal advice to Northland Securities Inc. and not to such Purchaser in
connection with the transactions contemplated hereby, and that each such
Purchaser has relied for such matters on the advice of its own respective
counsel.  Each Purchaser also acknowledges that Anslow & Jaclin
LLP has rendered legal advice to the Company and not such
Purchaser.  The Company has elected to provide all Purchasers with the
same terms and Transaction Documents for the convenience of the Company and not
because it was required or requested to do so by any Purchaser.

       

      6.18                    Termination.  This
Agreement may be terminated and the sale and purchase of the Shares and the
Warrants abandoned at any time prior to the Closing by either the Company or any
Purchaser (with respect to itself only) upon written
notice to the other, if the Closing has not been consummated on or prior to 5:00
P.M., New York City time, on the Outside Date; provided,
however, that the right to terminate this Agreement under this Section 6.18 shall not be available to any Person whose failure to
comply with its obligations under this Agreement has been the cause of or
resulted in the failure of the Closing to occur on or before such
time.  Nothing in this Section 6.18 shall be deemed to release any party from any
liability for any breach by such party of the terms and provisions of this
Agreement or the other Transaction Documents or to impair the right of any party
to compel specific performance by any other party of its obligations under this
Agreement or the other Transaction Documents.  In the event of a
termination pursuant to this Section 6.18, the Company shall promptly notify all non-terminating
Purchasers.  Upon a termination in accordance with this Section 6.18,
the Company and the terminating Purchaser(s) shall not have any further
obligation or liability (including arising from such termination) to the other,
and no Purchaser will have any liability to any other Purchaser under the
Transaction Documents as a result therefrom.

       

      
        
           


        

        
          -36-

          
            

          

        

        
           


        

      

      
         

        6.19                    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
Company's other obligations under the Transaction Documents, the Company shall
indemnify and hold harmless each Purchaser and all of its 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 losses, costs, fees, liabilities, damages and expenses, 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 (a)
any misrepresentation or breach of any representation or warranty made by the
Company in the Transaction Documents or any certificate, instrument or document
contemplated hereby or thereby, (b) any breach of any covenant, agreement or
obligation of the Company contained in the Transaction Documents or any
certificate, instrument or document contemplated hereby or thereby or (c) any
cause of action, suit or claim brought or made against such Indemnitee by a
third party (including for these purposes a derivative action brought on behalf
of the Company, so long as any stockholder bringing such suit is not an
Affiliate of the Purchaser seeking indemnification) and arising out of or
resulting from (i) the execution, delivery, performance or enforcement of the
Transaction Documents or any other certificate, instrument or document
contemplated hereby or thereby, (ii) any transaction financed or to be financed
in whole or in part, directly or indirectly, with the proceeds of the issuance
of the Securities, or (iii) the status of such Purchaser or holder of the
Securities as an investor in the Company (other than to the extent such action
is based upon a breach of such Indemnitee’s representations, warranties or
covenants under this Agreement or any agreements or understandings such
Indemnitee may have with any such stockholder or any violations by the
Indemnitee of state or federal securities laws or any conduct by such Indemnitee
which constitutes fraud, gross negligence, willful misconduct or
malfeasance).  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 of notice of any demand, claim or circumstances
which could reasonably be expected to give rise to a claim or the commencement
of any action, proceeding (including any governmental action or proceeding) or
investigation in respect of which indemnity may be sought such Indemnitee shall
deliver to the Company a written notice of the commencement thereof, and the
Company shall assume the defense thereof, including the employment of counsel
reasonably satisfactory to such Indemnitee, and the Company shall assume the
payment of all fees and expenses; provided, however, that
an Indemnitee shall have the right to retain its own counsel with fees and
expenses of not more than one counsel for all Indemnitees to be paid by the
indemnifying party, if, in the reasonable judgment of counsel to such
Indemnitee, representation of both the Company and the Indemnitee by the same
counsel would be inappropriate due to actual or potential differing interests
between them; provided, however, that
the Company shall not be responsible for the fees and expenses for more than one
counsel for all Indemnitees.  Legal counsel referred to in the
immediately preceding sentence shall be selected by the Purchasers holding at
least a majority of the Securities issued and issuable hereunder.  The
Indemnitee shall cooperate fully with the Company in connection with any
negotiation or defense of any such action or Indemnified Liabilities by the
Company and shall furnish to the Company all information reasonably available to
the Indemnitee that relates to such action or Indemnified
Liabilities.  The Company shall keep the Indemnitee reasonably
apprised as to the status of the defense or any settlement negotiations with
respect thereto.  The Company shall not be liable for any settlement
of any action, claim or proceeding effected without its prior written consent,
provided,
however,
that the Company shall not unreasonably withhold or delay its
consent.  The Company shall not, without the prior written consent of
the Indemnitee, which consent shall not be unreasonably withheld or delayed,
consent to entry of any judgment or enter into any settlement or other
compromise which (i) 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, (ii)
requires any admission of wrongdoing by such Indemnitee, or (iii) obligates or
requires an Indemnitee to take, or refrain from taking, any
action.  Following indemnification as provided for hereunder, the
Company 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 promptly deliver
written notice to the Company of any demand, claim or circumstances which could
reasonably be expected to give rise to a claim or the commencement of any
action, proceeding or investigation in respect of which indemnity may be sought
shall not relieve the Company of its obligations to the Indemnitee under this
Section
6.19, except to the extent that the Company is prejudiced in
its ability to defend such action.


      
        
           


        

        
          -37-

          
            

          

        

        
           


        

      

       

      (c)                      The
indemnification required by this Section 6.19 shall be made by periodic payments
of the amount thereof during the course of the investigation or defense, as and
when bills are received or Indemnified Liabilities are incurred.

       

      (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.

       

      [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]



      
        
           


        

        
          -38-

          
            

          

        

        
           


        

      

       

      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.

       

      
        
          
            
              
                	
                        AMERICAN
      STANDARD ENERGY CORP.

                      
	 
	
                        By:

                      	 
      
	 
      	
                        Name:

                      	
                        Scott
      Feldhacker

                      
	 
      	
                        Title:

                      	
                        Chief
      Executive
Officer

                      


              

            

          

        

      

       

      [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]


      
        
           


        

        
          
          

          
            

          

        

        
           


        

      

       

      
        
          
            
              	
                      NAME
      OF PURCHASER:

                    	
                         

                    


            

          

        

      

       

      
        
          	
                  By:

                	
                     

                
	
                  Name:

                
	
                  Title:

                


        

      

       

      Aggregate
Purchase Price (Subscription Amount): $ ____________

       

      Number of
Shares to be Acquired: _____________________________________

       

      Underlying
Shares Subject to Series A Warrant: __________________________

      (___% of
the number of Shares to be acquired)  

       

      Underlying
Shares Subject to Series B Warrant: ___________________

      (___% of
the number of Shares to be acquired)

       

      Tax ID
No.: ____________________

       

      Address
for Notice:

      __________________________________

       

      __________________________________

       

      __________________________________

       

      Telephone
No.:                                                            

       

      Facsimile
No.:                                                            

       

      E-mail
Address:                                                            

       

      Attention:                                                            

       

      Delivery
Instructions:

      (if
different than above)

       

      
        
          
            
              
                
                  
                    
                      
                        
                          	
                                  c/o

                                	
                                     

                                
	 	 
	
                                  Street:

                                	
                                     

                                
	 	 
	
                                  City/State/Zip:

                                	
                                     

                                
	 	 
	
                                  Attention:

                                	
                                     

                                
	 	 
	
                                  Telephone
      No.:

                                	
                                     

                                


                        

                      

                    

                  

                

              

            

          

        

      

       

      
        
           


        

        
          
          

          
            

          

        

        
           


        

      

    

    
       

      EXHIBITS:

      
        	
                A: 

              	
                Form
      of Series A Warrant

              


      

      
        	
                B 

              	
                Form
      of Series B Warrant

              


      

      
        	
                C: 

              	
                Form
      of Registration Rights Agreement

              


      

      
        	
                D-1: 

              	
                Accredited
      Investor Questionnaire

              


      

      
        	
                D-2: 

              	
                Stock
      Certificate Questionnaire

              


      

      
        	
                E: 

              	
                Form
      of Opinion of Company Counsel

              


      

      
        	
                F: 

              	
                Form
      of Irrevocable Transfer Agent
Instructions

              


      

      
        	
                G: 

              	
                Form
      of Secretary’s Certificate

              


      

      
        	
                H: 

              	
                Form
      of Officer’s Certificate

              


      

      
        	
                I: 

              	
                Wire
      Instructions

              


      

      
        	
                J: 

              	
                Form
      of Lock-Up Agreement

              


      

      
        	
                K: 

              	
                List
      of Directors and Executive Officers Executing Lock-Up
      Agreements

              


      


      
        
           


        

        
           


          
            

          

        

        
           


        

      

       

      EXHIBIT
A

       

      FORM OF
SERIES A WARRANT


      
        
           


        

        
           


          
            

          

        

        
           


        

      

       

      EXHIBIT
B

       

      FORM OF
SERIES B WARRANT


      
        
           


        

        
           


          
            

          

        

        
           


        

      

       

      EXHIBIT
C

       

      FORM OF
REGISTRATION RIGHTS AGREEMENT


      
        
           


        

        
           


          
            

          

        

        
           


        

      

       

      INSTRUCTION
SHEET

       

      (to be
read in conjunction with the entire Securities Purchase Agreement and
Registration Rights Agreement)

       

      
        	
                A.

              	
                Complete
      the following items in the Securities Purchase Agreement and/or
      Registration Rights Agreement:

              


      

       

      
        	
                 
      

              	
                1.

              	
                Provide
      the information regarding the Purchaser requested on the signature page.
      The Securities Purchase Agreement and the Registration Rights Agreement
      must be executed by an individual authorized to bind the
      Purchaser.

              


      

       

      
        	
                 
      

              	
                2.

              	
                Exhibit D-1
      – Accredited Investor
Questionnaire:

              


      

       

      Provide
the information requested by the Accredited Investor Questionnaire

       

      
        	
                 
      

              	
                3.

              	
                Exhibit D-2
      Stock Certificate Questionnaire:

              


      

       

      Provide
the information requested by the Stock Certificate Questionnaire

       

      
        	
                 
      

              	
                4.

              	
                Annex B to the
      Registration Rights Agreement -- Selling Securityholder Notice and
      Questionnaire

              


      

       

      Provide
the information requested by the Selling Securityholder Notice and
Questionnaire

       

      
        	
                 
      

              	
                5.

              	
                Return
      a signed copy via email or fax and send original signed Securities
      Purchase Agreement and Registration Rights Agreement
  to:

              


      

      


      Ted
Warner

      Northland
Capital Markets

      45 South
7th Street

      Suite
2000

      Minneapolis,
MN 55402

      Direct:
612-851-4906

      Cell:
612-308-8293

      Fax:
612-851-4988

      Email:
twarner@northlandcapitalmarkets.com

       

      
        	
                B.

              	
                Instructions
      regarding the transfer of funds for the purchase of Shares and Warrants
      are set forth on Exhibit H to
      the Securities Purchase
Agreement.

              


      


      
        
           


        

        
           


          
            

          

        

        
           


        

      

       

      EXHIBIT
D-1

       

      ACCREDITED
INVESTOR QUESTIONNAIRE

       

      (ALL
INFORMATION WILL BE TREATED CONFIDENTIALLY)

       

      To:        American
Standard Energy Corp.

       

      This
Investor Questionnaire (“Questionnaire”) must be
completed by each potential investor in connection with the offer and sale of
the shares of the common stock, par value $0.001 per share, and shares of common
stock that may be issued upon exercise of certain warrants (collectively, the
“Securities”), of
American Standard Energy Corporation., a Delaware corporation (the “Corporation”).  The
Securities are being offered and sold by the Corporation without registration
under the Securities Act of 1933, as amended (the “Act”), and the securities
laws of certain states, in reliance on the exemptions contained in
Section 4(2) of the Act and on Regulation D promulgated thereunder and
in reliance on similar exemptions under applicable state laws.  The
Corporation must determine that a potential investor meets certain suitability
requirements before offering or selling Securities to such
investor.  The purpose of this Questionnaire is to assure the
Corporation that each investor will meet the applicable suitability
requirements.  The information supplied by you will be used in
determining whether you meet such criteria, and reliance upon the private
offering exemptions from registration is based in part on the information herein
supplied.

       

      This
Questionnaire does not constitute an offer to sell or a solicitation of an offer
to buy any security.  Your answers will be kept strictly
confidential.  However, by signing this Questionnaire, you will be
authorizing the Corporation to provide a completed copy of this Questionnaire to
such parties as the Corporation deems appropriate in order to ensure that the
offer and sale of the Securities will not result in a violation of the Act or
the securities laws of any state and that you otherwise satisfy the suitability
standards applicable to purchasers of the Securities.  All potential
investors must answer all applicable questions and complete, date and sign this
Questionnaire.  Please print or type your responses and attach
additional sheets of paper if necessary to complete your answers to any
item.

       

      PART
A.           BACKGROUND
INFORMATION

       

      
        
          	
                  Name
      of Beneficial Owner of the Securities: 

                	 
      


        

      

       

      
        
          	
                  Business
      Address: 

                	 
      
	 
      	
                  (Number
      and Street)

                


        

      

      


      
        
          
            
              	 
      	 
      	 
      
	
                      (City)

                    	
                      (State)

                    	
                      (Zip
      Code)

                    


            

          

        

      

       

      
        
          
            	
                    Telephone
      Number: (__) 

                  	 
      	 
      


          

        

      

       

      If
a corporation, partnership, limited liability company, trust or other
entity:

      
        
          
            
              
                
                  
                    	
                            Type
      of entity:

                          	 
      	 
      	 
      
	
                            State of formation:  

                          	
                              

                          	
                             Approximate Date of formation: 

                          	 
      


                  

                

              

            

          

        

      

       

      Were you
formed for the purpose of investing in the securities being
offered?

       

      Yes
____           No
____


      
        
           


        

        
           


          
            

          

        

        
           


        

      

       

      If an
individual:

       

      
        
          	
                  Residence
      Address: 

                	 
      
	 
      	
                  (Number
      and Street)

                


        

      

      


      
        
          
            
              
                
                  	 
      	 
      	 
      	 
      	 
      
	
                          (City)

                        	 
      	
                          (State)

                        	 
      	
                          (Zip
      Code)

                        


                

              

            

          

        

      

       

      
        
          
            	
                    Telephone
      Number: (___) 

                  	 
      	 
      


          

        

      

       

      
        
          
            
              
                	
                        Age: 

                      	
                          

                      	
                         Citizenship: 

                      	
                          

                      	
                         Where
      registered to vote:

                      	 
      


              

            

          

        

      

       

      Set forth
in the space provided below the state(s), if any, in the United States in which
you maintained your residence during the past two years and the dates during
which you resided in each state:

       

      Are you a
director or executive officer of the Corporation?

       

      Yes
____                      No
____

       

      
        
          	
                  Social
      Security or Taxpayer Identification No. 

                	 
      


        

      

       

      
        	
                PART B. 

              	
                ACCREDITED INVESTOR
      QUESTIONNAIRE

              


      

       

      In order
for the Company to offer and sell the Securities in conformance with state and
federal securities laws, the following information must be obtained regarding
your investor status. Please initial each category
applicable to you as a Purchaser of Securities of the Company.

       

      
        	
                 
      

              	
                __
      (1)

              	
                A
      bank as defined in Section 3(a)(2) of the Securities Act, or any
      savings and loan association or other institution as defined in
      Section 3(a)(5)(A) of the Securities Act whether acting in its
      individual or fiduciary capacity;

              


      

       

      
        	
                 
      

              	
                __
      (2)

              	
                A
      broker or dealer registered pursuant to Section 15 of the Securities
      Exchange Act of 1934, as amended;

              


      

       

      
        	
                 
      

              	
                __
      (3)

              	
                An
      insurance company as defined in Section 2(13) of the Securities
      Act;

              


      

       

      
        	
                 
      

              	
                __
      (4)

              	
                An
      investment company registered under the Investment Company Act of 1940, as
      amended (the “Investment
      Company Act”), or a business development company as defined in
      Section 2(a)(48) of the Investment Company
  Act;

              


      

       

      
        	
                 
      

              	
                __
      (5)

              	
                A
      Small Business Investment Company licensed by the U.S. Small Business
      Administration under Section 301(c) or (d) of the Small Business
      Investment Act of 1958, as amended;

              


      

       

      
        	
                 
      

              	
                __
      (6)

              	
                A
      plan established and maintained by a state, its political subdivisions, or
      any agency or instrumentality of a state or its political subdivisions,
      for the benefit of its employees, if such plan has total assets in excess
      of $5,000,000;

              


      

       

      
        	
                 
      

              	
                __
      (7)

              	
                An
      employee benefit plan within the meaning of the Employee Retirement Income
      Security Act of 1974, as amended, if the investment decision is made by a
      plan fiduciary, as defined in Section 3(21) of such act, which is
      either a bank, savings and loan association, insurance company, or
      registered investment adviser, or if the employee benefit plan has total
      assets in excess of $5,000,000 or, if a self-directed plan, with
      investment decisions made solely by persons that are accredited
      investors;

              


      


      
        
           


        

        
           


          
            

          

        

        
           


        

      

       

      
        	
                 
      

              	
                __
      (8)

              	
                A
      private business development company as defined in Section 202(a)(22)
      of the Investment Advisers Act of 1940, as
  amended;

              


      

       

      
        	
                 
      

              	
                __
      (9)

              	
                An
      organization described in Section 501(c)(3) of the Internal Revenue
      Code, as amended, a corporation, Massachusetts or similar business trust,
      or partnership, not formed for the specific purpose of acquiring the
      Securities, with total assets in excess of
  $5,000,000;

              


      

       

      
        	
                 
      

              	
                __
      (10)

              	
                A
      trust, with total assets in excess of $5,000,000, not formed for the
      specific purpose of acquiring the Securities, whose purchase is directed
      by a sophisticated person who has such knowledge and experience in
      financial and business matters that such person is capable of evaluating
      the merits and risks of investing in the
  Company;

              


      

       

      
        	
                 
      

              	
                __
      (11)

              	
                A
      natural person whose individual net worth, or joint net worth with that
      person’s spouse (in each case, excluding the value of such person’s
      primary residence), at the time of his purchase exceeds
      $1,000,000;

              


      

       

      
        	
                 
      

              	
                __
      (12)

              	
                A
      natural person who had an individual income in excess of $200,000 in each
      of the two most recent years, or joint income with that person’s spouse in
      excess of $300,000, in each of those years, and has a reasonable
      expectation of reaching the same income level in the current
      year;

              


      

       

      
        	
                 
      

              	
                __
      (13)

              	
                An
      executive officer or director of the
Company;

              


      

       

      
        	
                 
      

              	
                __
      (14)

              	
                An
      entity in which all of the equity owners qualify under any of the above
      subparagraphs. If the undersigned belongs to this investor category only,
      list the equity owners of the undersigned, and the investor category which
      each such equity owner satisfies.

              


      

       

      A.           FOR
EXECUTION BY AN INDIVIDUAL:

       

      


      
        
          
            
              	 
      	
                      By

                    	 
      


            

          

        

      

      Date

      
        
          
            	 
      	
                    Print
      Name: 

                  	 
      


          

        

      

       

      B.           FOR
EXECUTION BY AN ENTITY:

       

      
        
          
            
              
                
                  
                    
                      
                        	 
      	
                                Entity
      Name: 

                              	 
      
	 
      	
                                By

                              	 
      


                      

                    

                  

                

              

            

          

        

      

      Date

      
        
          
            	 
      	
                    Print
      Name: 

                  	 
      


          

        

      

      
        
          
            	 
      	
                    Title:

                  	 
      


          

        

      

       

      
        
           


        

        
           


          
            

          

        

        
           


        

      

       

      C.           ADDITIONAL
SIGNATURES (if required by partnership, corporation or trust
document):

      
 

      
        
          
            	 
      	
                    Entity
      Name:

                  	 
      


          

        

      

       

      
        
          
            
              
                	 
      	
                        By

                      	 
      


              

            

          

        

      

      Date

      
        
          
            
              	 
      	
                      Print
      Name:

                    	 
      
	 
      	
                      Title:

                    	 
      


            

          

        

      

       

      
        
          
            	 
      	
                    Entity
      Name:

                  	 
      


          

        

      

       

      
        
          
            
              
                
                  
                    	 
      	
                            By

                          	 
      


                  

                

              

            

          

        

      

      Date

      
        
          
            
              	 
      	
                      Print
      Name:

                    	 
      
	 
      	
                      Title:

                    	 
      


            

          

        

      

       

      
        
           


        

        
           


          
            

          

        

        
           


        

      

       

      EXHIBIT
D-2

       

      STOCK
CERTIFICATE QUESTIONNAIRE

       

      Pursuant
to Section 2.2(b)
of the Agreement, please provide us with the following information:

      


      
        
          
            
              
                	
                        1.

                      	
                        The
      exact name that the Securities are to be registered in (this is the name
      that will appear on the stock certificate(s)). You may use a nominee name
      if appropriate:

                      	 
      	 
      
	 
      	 
      	 
      	 
      
	
                        2.

                      	
                        The
      relationship between the Purchaser of the Securities and the Registered
      Holder listed in response to Item 1 above:

                      	 
      	 
      
	 
      	 
      	 
      	 
      
	
                        3.

                      	
                        The
      mailing address, telephone and telecopy number of the Registered Holder
      listed in response to Item 1 above:

                      	 
      	 
      
	 
      	 
      	 
      	 
      
	
                        4.

                      	
                        The
      Tax Identification Number (or, if an individual, the Social Security
      Number) of the Registered Holder listed in response to Item 1
      above:

                      	 
      	 
      


              

            

          

        

      


      
        
           


        

        
           


          
            

          

        

        
           


        

      

       

      EXHIBIT
E

       

      FORM OF
OPINION OF COMPANY COUNSEL

       

      SUBJECT
TO SUCH ASSUMPTIONS AND QUALIFICATIONS AS ARE CUSTOMARY FOR 

      OPINIONS
OF THIS TYPE

       

      
        	
                1.

              	
                The
      Company is a corporation duly incorporated and validly existing as a
      corporation under the laws of the State of Delaware and is in good
      standing under such laws. The Company has requisite corporate power to
      own, lease and operate its properties and assets, and to conduct its
      business as described in the Disclosure Materials and to carry out and
      perform its obligations pursuant to the Transaction Documents. The Company
      is qualified to do business as a foreign corporation in the State of
      Arizona.

              


      

       

      
        	
                2.

              	
                The
      authorized capital stock of the Company consists of ______________ shares
      of common stock, par value $0.001 per share, ___________ shares of
      preferred stock, par value $0.001 per
share.

              


      

       

      
        
          	
                  3.

                	
                  The
      Shares delivered on the date hereof have been duly authorized and are
      validly issued, fully paid and non-assessable. The Warrant Shares issuable
      upon exercise of the Warrants based on the exercise price in effect on the
      date hereof have been duly authorized and reserved for issuance and, when
      issued and delivered upon exercise by a holder in accordance with the
      provisions of the Warrants, will be duly authorized, validly issued, fully
      paid and non-assessable.

                


        

         

        
          	
                  4.

                	
                  Each
      of the Transaction Documents has been duly authorized, executed and
      delivered by the Company and constitutes a legal, valid and binding
      obligation of the Company, enforceable against the Company in accordance
      with its terms.

                


        

         

        
          	
                  5.

                	
                  The
      execution and delivery by the Company of the Transaction Documents, the
      performance by the Company of its obligations pursuant thereto, and the
      issuance and sale of the Securities being delivered on the date hereof
      pursuant to the Transaction Documents do not violate any provision of (i)
      the Certificate of Incorporation or the bylaws of the Company; (ii) any
      U.S. federal or Arizona state law known to us to be customarily applicable
      to transactions of the nature contemplated in the Transaction Documents;
      or (iii) the General Corporation Law of the State of
    Delaware.

                


        

      

       

      
        	
                6.

              	
                The
      execution and delivery by the Company of the Transaction Documents, the
      performance by the Company of its obligations pursuant thereto, and the
      issuance and sale of the Securities being delivered on the date hereof
      pursuant to the Transaction Documents do not breach or constitute a
      default under any Reviewed Agreement or violate any Reviewed Judgment.
      [Exhibits to opinion to
      set forth Reviewed Judgments and Reviewed
    Agreements]

              


      

       

      
        	
                7.

              	
                No
      consent, approval, authorization of, or designation, declaration or filing
      with any governmental authority on the part of the Company is required for
      the valid execution and delivery of the Transaction Documents or the
      issuance and sale of the Securities, except (i) such as may have been
      obtained or made under the Securities Act or the Exchange Act, (ii) those
      that have been made under the rules OTC Bulletin Board, (iii) such
      consents, approvals, authorizations, orders, registrations or
      qualifications as may be required under applicable state securities or
      Blue Sky laws in connection with the purchase and distribution of the
      Securities, and (iv) as may be expressly contemplated by the Transaction
      Documents.

              


      


      
        
           


        

        
           


          
            

          

        

        
           


        

      

       

      
        	
                8.

              	
                No
      registration of the Securities under the Securities Act is required for
      the offer and sale of the Securities to the Purchasers in the manner
      contemplated by the Agreement, it being understood that no opinion is
      expressed as to any subsequent resale of the
  Securities.

              


      

       

      
        	
                9.

              	
                Except
      as disclosed in the SEC Reports or otherwise expressly waived in writing,
      there are no contracts, agreements or understandings known to us between
      the Company and any person granting such person the right to require the
      Company to file a registration statement under the Securities Act with
      respect to any securities of the Company owned or to be owned by such
      person or to require the Company to include such securities in the
      securities registered pursuant to the Registration
    Statement.

              


      

       

      
        
          

        

      

      
      

       

      EXHIBIT
F

       

      FORM OF
IRREVOCABLE TRANSFER AGENT INSTRUCTIONS

       

      As of
January 26,2011

       

      Standard
Registrar & Transfer Co.

      12528
South 1840 East

      Draper,
Utah 84020

       

      Ladies
and Gentlemen:

       

      Reference
is made to that certain Securities Purchase Agreement, dated as of January 26,
2011 (the “Agreement”),
by and among American Standard Energy Corp., a Delaware corporation (the “Company”), and the purchasers
named on the signature pages thereto (collectively, and including permitted
transferees, the “Holders”), pursuant to which
the Company is issuing to the Holders shares (the “Shares”) of Common Stock of
the Company, par value $0.001 per share (the “Common Stock”), and warrants
(the “Warrants”), which
are exercisable into shares of Common Stock.

       

      This
letter shall serve as our irrevocable authorization and direction to you
(provided that you are the transfer agent of the Company at such time and the
conditions set forth in this letter are satisfied), subject to any stop transfer
instructions that we may issue to you from time to time, if any:

       

      (i)       to
issue, from the share reserve established for the Warrants pursuant to the
instruction letter of the Company dated January 26, 2011, certificates
representing shares of Common Stock at any time after a registration statement
covering resales of the Shares and the Warrant Shares has been declared
effective by the Securities and Exchange Commission (the “Commission”) under the
Securities Act of 1933, as amended (the “Securities Act”) or upon
transfer or resale of the Shares; and

       

      (ii)      to
issue shares of Common Stock upon the exercise of the Warrants (the “Warrant Shares”) to or upon
the order of a Holder from time to time upon delivery to you of a properly
completed and duly executed Exercise Notice, in the form attached hereto as
Annex I,
which has been acknowledged by the Company as indicated by the signature of a
duly authorized officer of the Company thereon together with indication of
receipt of the exercise price therefor.

       

      You
acknowledge and agree that so long as you have received (a) written
confirmation from the Company with respect to clause (1) below or the Company’s
legal counsel with respect to clause (2) below that either (1) a registration
statement covering resales of the Shares and the Warrant Shares has been
declared and remains effective by the Commission under the Securities, or (2)
the Shares and the Warrant Shares have been sold in conformity with
Rule 144 under the Securities Act (“Rule 144”) or are
eligible for sale under Rule 144, without the requirement for the Company
to be in compliance with the current public information required under
Rule 144 as to such securities and without volume or manner-of-sale
restrictions and (b) if applicable, a copy of such registration statement,
then, unless otherwise required by law, promptly upon your receipt of
(i) original certificates representing the Shares (endorsed or with stock
powers attached, signatures guaranteed) or (ii) a notice of transfer of
Shares (along with the applicable Shares, endorsed or with stock powers
attached, signatures guaranteed) or the Exercise Notice, you shall issue the
certificates representing or issue to such Holder or transferee by electronic
delivery at the applicable balance account at the Depository Trust Company the
Shares and/or the Warrant Shares, as the case may be, registered in the names of
such Holders or transferees, as the case may be, and such certificates shall not
bear any legend restricting transfer of the Shares or the Warrant Shares thereby
and should not be subject to any stop-transfer restriction; provided, however, that if
such Shares and Warrant Shares are not registered for resale under the
Securities Act or able to be sold under Rule 144 without the requirement
for the Company to be in compliance with the current public information required
under Rule 144 as to such securities and without volume or manner-of-sale
restrictions, then the certificates for such Shares and/or Warrant Shares shall
bear the following legend:


      
        
           


        

        
           


          
            

          

        

        
           


        

      

       

      THE OFFER
AND SALE OF THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY APPLICABLE STATE SECURITIES
LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED, ASSIGNED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT
FOR THE SECURITIES UNDER THE SECURITIES ACT OR (B) AN AVAILABLE EXEMPTION
FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND IN EACH CASE IN ACCORDANCE WITH APPLICABLE STATE SECURITIES
LAWS OR BLUE SKY LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY AND ITS TRANSFER AGENT. NOTWITHSTANDING THE
FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES;
PROVIDED THAT IN CONNECTION WITH ANY FORECLOSURE OR TRANSFER OF THE SECURITIES,
THE TRANSFERORS SHALL COMPLY WITH THE PROVISIONS IN THE SECURITIES PURCHASE
AGREEMENT AND THE REGISTRATION RIGHTS AGREEMENT, AND UPON FORECLOSURE OR
TRANSFER OF THE SECURITIES, SUCH FORECLOSING PERSON OR TRANSFEREE SHALL COMPLY
WITH ALL PROVISIONS CONTAINED IN THE SECURITIES PURCHASE AGREEMENT AND THE
REGISTRATION RIGHTS AGREEMENT.

       

      A form of
written confirmation from the Company that a registration statement covering
resales of the Shares and the Warrant Shares has been declared effective by the
Commission under the Securities Act is attached hereto as Annex II.

       

      Please
execute this letter in the space indicated to acknowledge your agreement to act
in accordance with these instructions.

       

      
        
          
            
              
                
                  
                    
                      
                        	
                                Very
      truly yours,

                                 

                                AMERICAN
      STANDARD ENERGY CORP.

                              
	 	 
	
                                By:

                              	 
      
	
                                Name: 

                              	
                                Scott Feldhacker

                              
	
                                Title:

                              	
                                Chief Executive
  Officer

                              


                      

                    

                  

                

              

            

          

        

      

       

      Acknowledged
and Agreed:

       

      STANDARD
REGISTRAR & TRANSFER CO.

      
        
          
            
              
                	
                        By:

                      	 
      	 
      
	
                        Name: 

                      	 
      	 
      
	
                        Title:

                      	 
      	 
      


              

            

          

        

      

       

      Date:
_________________, ______


      
        
           


        

        
           


          
            

          

        

        
           


        

      

    

    Annex I

     

    FORM OF
EXERCISE NOTICE

     

    [To be
executed by the Holder to purchase shares of Common Stock under the
Warrant]

     

    Ladies
and Gentlemen:

     

    (1)           The
undersigned is the Holder of Warrant No. __________ (the “Warrant”) issued by American
Standard /Energy Corp, a Delaware corporation (the “Company”).  Capitalized
terms used herein and not otherwise defined herein have the respective meanings
set forth in the Warrant.

     

    (2)           The
undersigned hereby exercises its right to purchase __________ Warrant Shares
pursuant to the Warrant.

     

    (3)           The
Holder intends that payment of the Exercise Price shall be made as (check
one):

     

    o           Cash
Exercise

     

    o           “Cashless
Exercise” under Section 10 of
the Warrant

     

    (4)           If
the Holder has elected a Cash Exercise, the Holder shall pay the sum of
$___________ in immediately available funds to the Company in accordance with
the terms of the Warrant.

     

    (5)           Pursuant
to this Exercise Notice, the Company shall deliver to the Holder Warrant Shares
determined in accordance with the terms of the Warrant.

     

    (6)           By
its delivery of this Exercise Notice, the undersigned represents and warrants to
the Company that in giving effect to the exercise evidenced hereby the Holder
will not beneficially own in excess of the number of shares of Common Stock (as
determined in accordance with Section 13(d) of the Securities Exchange Act
of 1934) permitted to be owned under Section 11 of
the Warrant to which this notice relates.

     

    Dated:                                           

     

    
      
        
          	
                  Name
      of Holder:

                	 
      


        

      

    

     

    
      
        
          
            
              	
                      By:

                    	 
      
	
                      Name:

                    	 
      
	
                      Title:

                    	 
      


            

          

        

      

    

    (Signature
must conform in all respects to name of Holder as specified on the face of the
Warrant)

     

    
      
         


      

      
         


        
          

        

      

      
         


      

    

     

    ACKNOWLEDGEMENT

     

    The
Company hereby acknowledges this Exercise Notice and receipt of the appropriate
exercise price and hereby directs [Name of Transfer Agent] to issue the above
indicated number of shares of Common Stock in accordance with the Irrevocable
Transfer Agent Instructions dated __________, ____, from the Company and
acknowledged and agreed to by [Name of Transfer Agent]

     

    
      
        
          
            
              	
                      [NAME
      OF TRANSFER AGENT]

                    
	 
      	 
      
	
                      By:

                    	 
      
	
                      Name:

                    	 
      
	
                      Title:

                    	 
      


            

          

        

      

    

     

    
      
         


      

      
         


        
          

        

      

      
         


      

    

     

    Annex II

     

    FORM OF
NOTICE OF EFFECTIVENESS OF REGISTRATION STATEMENT

     

    Standard
Registrar & Transfer Co.

    12528
South 1840 East

    Draper,
UT 84020

    Attn:  _________________

     

    Re: American Standard Energy
Corp.

     

    Ladies
and Gentlemen:

     

    Reference
is hereby made to that certain Securities Purchase Agreement, dated as of
January 18, 2011, entered into by and among American standard Energy Corp.,
a Delaware corporation (the “Company”), and the purchasers
named therein (collectively, the “Purchasers”) pursuant to
which the Company issued to the Purchasers shares of the Company’s common stock,
$0.001 par value per share (the “Common Stock”), and warrants
exercisable for shares of Common Stock (the “Warrants”).  Pursuant
to that certain Registration Rights Agreement of even date, the Company agreed
to register the resale of the Common Stock, including the shares of Common Stock
issuable upon exercise of the Warrants (collectively, the “Registrable Securities”),
under the Securities Act of 1933, as amended (the “Securities Act”). In
connection with the Company’s obligations under the Registration Rights
Agreement, on __________, ____, the Company filed a Registration Statement on
Form S-1 (File No. 333-________) (the “Registration Statement”) with
the Securities and Exchange Commission (the “Commission”) relating to the
Registrable Securities which names each of the Purchasers as a selling
stockholder thereunder.

     

    In
connection with the foregoing, we advise you that the Commission has entered an
order declaring the Registration Statement effective under the Securities Act at
____ [a.m.][p.m.] on __________, ____, and we have no knowledge, after
telephonic inquiry of a member of the staff, that any stop order suspending its
effectiveness has been issued or that any proceedings for that purpose are
pending before, or threatened by, the Commission and the Registrable Securities
are available for resale under the Securities Act pursuant to the Registration
Statement.

     

    This
letter shall serve as our standing notice to you that the Common Stock may be
freely transferred by the Purchasers pursuant to the Registration Statement. You
need not require further letters from us to effect any future legend-free
issuance or reissuance of shares of Common Stock to the Purchasers or the
transferees of the Purchasers, as the case may be, as contemplated by the
Company’s Irrevocable Transfer Agent Instructions dated __________, ____,
provided at the time of such reissuance, the Company has not otherwise notified
you that the Registration Statement is unavailable for the resale of the
Registrable Securities. This letter shall serve as our standing instructions
with regard to this matter.

     

    
      
        
          
            
              	
                      Very
      truly yours,

                    
	 
	
                      AMERICAN
      STANDARD ENERGY CORP.

                    
	 	 
	
                      By:

                    	 
      


            

          

        

      

    

     

    
      
         


      

      
         


        
          

        

      

      
         


      

    

     

    EXHIBIT
G

     

    FORM OF
SECRETARY’S CERTIFICATE

     

    January 18,
2011

     

    The
undersigned hereby certifies that he is the duly elected, qualified and acting
Secretary of American Standard Energy Corp., a Delaware corporation (the “Company”), and that as such
he is authorized to execute and deliver this certificate in the name and on
behalf of the Company and in connection with the Securities Purchase Agreement,
dated as of January 18, 2011, by and among the Company and the investors
party thereto (the “Securities
Purchase Agreement”), and further certifies in his official capacity, in
the name and on behalf of the Company, the items set forth
below.  Capitalized terms used but not otherwise defined herein shall
have the meaning set forth in the Securities Purchase Agreement.

     

    1.           Attached
hereto as Exhibit A is true, correct and complete copy of the resolution
duly adopted by the Board of Directors of the Company with unanimous consent
without a meeting on December 20, 2010.  Such resolution has not in
any way been amended, modified, revoked or rescinded, has been in full force and
effect since its adoption to and including the date hereof and is now in full
force and effect.

     

    2.           Attached
hereto as Exhibit B is a true, correct and complete copy of the Certificate of
Incorporation of the Company, together with any and all amendments thereto
currently in effect, and no action has been taken to further amend, modify or
repeal such Certificate of Incorporation, the same being in full force and
effect in the attached form as of the date hereof.

     

    3.           Attached
hereto as Exhibit C is a true, correct and complete copy of the Bylaws of
the Company and any and all amendments thereto currently in effect, and no
action has been taken to further amend, modify or repeal such Bylaws, the same
being in full force and effect in the attached form as of the date
hereof.

     

    4.           Each
person listed on Exhibit D has been duly elected or appointed to the position(s)
indicated opposite his name and is duly authorized to sign the Securities
Purchase Agreement and each of the Transaction Documents on behalf of the
Company, and the signature appearing opposite such person’s name on Exhibit D is
such person’s genuine signature.

     

    [Signature
Page Follows]


    
      
         


      

      
         


        
          

        

      

      
         


      

    

     

    IN WITNESS WHEREOF, I have
signed my name as of the date first above written.

     

    
      
        
          	
                  By:

                	 
      
	 
      	
                  Name:
      Andrew S. Wall

                
	 
      	
                  Title:
      Secretary

                


        

      

    

     

    


    I, Scott
Feldhacker, Chief Executive Officer., hereby certify that Andrew S. Wall is the
duly elected, qualified and acting Secretary of the Company and that the
signature set forth above is his true signature.

    


    
      
        
          	
                  By:

                	 
      
	 
      	
                  Name:
      Scott Feldhacker

                
	 
      	
                  Title:
      Chief Executive Officer

                


        

      

    

     

    
      Signature
Page to Secretary’s Certificate

    

     

    
      
         


      

      
         


        
          

        

      

      
         


      

    

     

    EXHIBIT
A

     

    Resolutions

     

    
      
         


      

      
         


        
          

        

      

      
         


      

    

     

    EXHIBIT
B

     

    Certificate
of Incorporation

     

    
      
         


      

      
         


        
          

        

      

      
         


      

    

     

    EXHIBIT
C

     

    Bylaws

     

    
      
         


      

      
         


        
          

        

      

      
         


      

    

     

     EXHIBIT
D

     

    Officer
Signatures

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          	
                                  Name

                                	
                                  Position

                                	
                                  Signature

                                
	 	 	 
	
                                  Scott
      Feldhacker

                                	
                                  Chief
      Executive Officer

                                	
                                    
      

                                
	 	 	 
	
                                  Richard
      MacQueen

                                	
                                  President

                                	
                                   
        

                                
	 
      	 
      	
                                    
      

                                
	
                                  Scott
      Mahoney, CFA

                                	
                                  Chief
      Financial Officer

                                	
                                   
        

                                
	 
      	 
      	 
      
	
                                  Andrew
      Wall

                                	
                                  Secretary/General
      Counsel

                                	 
       



                        

                      

                    

                  

                

              

            

          

        

      

    


    
      
         


      

      
         


        
          

        

      

      
         


      

    

     

    EXHIBIT  H

     

    FORM OF
OFFICER’S CERTIFICATE

     

    January 26,
2011

     

    The
undersigned, the Chief Executive Officer of American Standard Energy Corp., a
Delaware corporation (the “Company”), pursuant to Section 5.1(i)
of the Securities Purchase Agreement, dated as of January 26, 2011 by and
among the Company and the investors signatory thereto (the “Securities Purchase
Agreement”), hereby represents, warrants and certifies as follows
(capitalized terms used but not otherwise defined herein shall have the meaning
set forth in the Securities Purchase Agreement):

     

    
      	
               
      

            	
              1.

            	
              The
      representations and warranties of the Company contained in the Securities
      Purchase Agreement are true and correct in all material respects (except
      for those representations and warranties which are qualified as to
      materiality, in which case, such representations and warranties shall be
      true and correct in all respects) as of the date when made and as of the
      date hereof, as though made on and as of such date, except for such
      representations and warranties that speak as of a specific
      date.

            


    

     

    
      	
               
      

            	
              2.

            	
              The
      Company has performed, satisfied and complied in all material respects
      with all covenants, agreements and conditions required by the Transaction
      Documents to be performed, satisfied or complied with by it at or prior to
      the date hereof.

            


    

     

    [Signature
Page Follows]


    
      
         


      

      
         


        
          

        

      

      
         


      

    

     

    IN WITNESS WHEREOF, I have
signed my name as of the date first above written.

     

    
      
        
          	
                  By:

                	  
      
	 
      	
                  Name:
      Scott Feldhacker

                
	 
      	
                  Title:
      Chief Executive Officer

                


        

      

    

    
        

      Signature
Page to Officer’s Certificate
 

    
      
         


      

      
         


        
          

        

      

      
         


      

    

     

    EXHIBIT
I

     

    WIRE
INSTRUCTIONS

     

    
      
         


      

      
         


        
          

        

      

      
         


      

    

     

    EXHIBIT
J

     

    FORM OF
LOCK-UP AGREEMENT

     

    January
26, 2011

     

    Northland
Capital Markets

    45 South
7th Street

    Suite
2000

    Minneapolis,
MN 55402

     

    Re:          Private
Placement of Securities

     

    Ladies
and Gentlemen:

     

    The
undersigned understands that Northland Capital Markets proposes to act as the
exclusive placement agent (the “Placement Agent”), American
Standard Energy Corp., a Delaware corporation
(the “Company”), in
connection with a proposed private placement (the “Offering”) of shares (the
“Shares”) of common
stock, par value $0.001 per share (the “Common Stock”) and warrants
to purchase Common Stock (the “Warrants” and together with
the Shares, the “Securities”), of the
Company.

     

    In order
to induce the Placement Agent to continue their efforts in connection with the
Offering, the undersigned hereby agrees that for a period (the “Lock-Up Period”) from the
date hereof until the later of (i) ninety (90) days following the closing date
of the Offering and (ii) thirty (30) days following the date of effectiveness of
the registration statement registering the resale of the Shares and shares of
Common Stock issuable upon exercise of the Warrants filed by the Company with
the Securities and Exchange Commission in connection with such Offering, the
undersigned will not, without the prior written consent of Northland Capital
Markets, directly or indirectly, (1) offer for sale, sell, pledge or otherwise
dispose of (or enter into any transaction or device which is designed to, or
could be expected to, result in the disposition by any person at any time in the
future of) any shares of Common Stock or securities convertible into or
exchangeable for Common Stock, or sell or grant options, rights or warrants with
respect to any shares of Common Stock or securities convertible into or
exchangeable for Common Stock (such securities, “Convertible Securities”), (2)
enter into any swap or other derivative transaction that transfers to another,
in whole or in part, any of the economic benefits or risks of ownership of such
shares of Common Stock, whether any such transaction described in clause (1) or
(2) above is to be settled by delivery of common stock or other securities, in
cash or otherwise; provided, however, that the obligations under this letter
agreement (the “Lock-Up
Agreement”) shall not apply to any Securities acquired in connection with
the Offering.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    Notwithstanding
the foregoing, the restrictions set forth in clause (1) and (2) above
shall not apply to (a) transfers (i) as a bona fide gift or gifts,
provided that the donee or donees thereof agree to be bound in writing by the
restrictions set forth herein, (ii) to any trust for the direct or indirect
benefit of the undersigned or the immediate family of the undersigned, provided
that the trustee of the trust agrees to be bound in writing by the restrictions
set forth herein, and provided further that any such transfer shall not involve
a disposition for value, (iii) with the prior written consent of the
Placement Agent, (iv) effected pursuant to any exchange of “underwater”
options with the Company, (v) to any beneficiary of the undersigned pursuant to
a will or other testamentary document or applicable laws of descent or (vi) to a
spouse, former spouse, child or other dependent pursuant to a domestic relations
order or pursuant to a settlement agreement in connection with a domestic
relations matter, provided that, other than with respect to such a transfer done
pursuant to a court order, the assignee or transferee thereof agrees to be bound
in writing by the restrictions set forth herein, (b) the acquisition or
exercise of an option or warrant to purchase shares of Common Stock (or any
Convertible Securities), including the sale of a portion of stock to be issued
in connection with such exercise to finance a “cashless” exercise, provided that
any such shares issued upon exercise of such option or warrant (or any
Convertible Securities) shall continue to be subject to the applicable
provisions of this Lock-Up Agreement, (c) the purchase or sale of the
Company’s securities pursuant to a plan, contract or instruction that satisfies
all of the requirements of Rule 10b5-1(c)(1)(i)(B) (a “10b5-1 Plan”) that was
in effect prior to the date hereof, (d) the entry into a 10b5-1 Plan, provided
that no sales of the Company’s securities may be effected until after the
expiration of the Lock-Up Period, or (e) the disposition of shares of Common
Stock (or Convertible Securities) to satisfy any tax withholding obligations
upon the vesting of shares of restricted Common Stock (or any Convertible
Securities) held by the undersigned.  For purposes of this Lock-Up
Agreement, “immediate family” shall mean any relationship by blood, marriage or
adoption, not more remote than first cousin.  None of the restrictions set
forth in this Lock-Up Agreement shall apply to Common Stock or Convertible
Securities acquired in open market transactions.  In addition, if the
undersigned is a partnership, limited liability company, trust, corporation or
similar entity, it may distribute the Common Stock or Convertible Securities to
its partners, members or stockholders; provided, however, that in each such
case, prior to any such transfer, each transferee shall execute a duplicate form
of this Lock-Up Agreement or execute an agreement, reasonably satisfactory to
Northland Capital Markets, pursuant to which each transferee shall agree to
receive and hold such Common Stock or Convertible Securities subject to the
provisions hereof, and there shall be no further transfer except in accordance
with the provisions hereof.

     

    The
undersigned hereby agrees and consents to the entry of stop transfer
instructions with the Company’s transfer agent against the transfer of
securities of the Company held by the undersigned during the Lock-Up Period (as
may have been extended pursuant hereto), except in compliance with this Lock-Up
Agreement.

     

    This
Lock-Up Agreement shall automatically terminate and the undersigned shall be
released from all obligations under this Lock-Up Agreement upon the earliest of
(i) the date that is thirty (30) days after the date hereof, if the Offering is
not consummated by such date, and (ii) the termination of the Securities
Purchase Agreement (the “Purchase Agreement”) prior to
payment for and delivery of the Securities to be sold thereunder.

     

    The
undersigned hereby represents and warrants that the undersigned has full power
and authority to enter into this Lock-Up Agreement. This Lock-Up Agreement is
irrevocable.  The undersigned agrees that Purchasers of the Securities
in the Offering shall be intended third-party beneficiaries of the undersigned’s
obligations under this Lock-Up Agreement.

     

    This
Lock-Up Agreement shall be governed by and construed in accordance with the laws
of the State of New York, without regard to the conflict of laws principles
thereof.

     

    
      
        
          
            
              
                
                  	
                          Very
      truly yours,

                        
	 
      	 
      
	
                          Print
      Name:

                        	 
      
	 	 
	
                          Print
      Title:

                        	 
      
	 
      	 
      
	
                          Signature:

                        	 
      


                

              

            

          

        

      

    

     

    
      
         


      

      
         


        
          

        

      

      
         


      

    

     

    EXHIBIT
K

     

    LIST OF
DIRECTORS AND EXECUTIVE OFFICERS

    EXECUTING
LOCK-UP AGREEMENTS

     

    Richard
MacQueen

     

    Scott
Feldhacker

     

    Scott
Mahoney

     

    Andrew
Wall