Form of Purchase Agreement


    PURCHASE
      AGREEMENT

     

    THIS
      PURCHASE AGREEMENT (the “Agreement”) is made as of August 2, 2005, by and
      between Delta Financial Corporation (the “Company”), a corporation organized
      under the laws of the State of Delaware, with its principal offices at 1000
      Woodbury Road, Suite 200, Woodbury, New York 11797, certain stockholders of
      the
      Company identified on Exhibit
      A
      hereto
      (each a “Selling Stockholder” and collectively, the “Selling Stockholders”) and
      the purchaser whose name and address is set forth on the signature page hereof
      (the “Purchaser”). 

     

    IN
      CONSIDERATION of the mutual covenants contained in this Agreement, the Company,
      the Selling Stockholders and the Purchaser agree as follows: 

     

    SECTION
      1.   Sale
      of the Shares.
      Subject
      to the terms and conditions of this Agreement, the Selling Stockholders propose
      to sell an aggregate of up to 2,000,000 shares (the “Shares”) of common stock,
      par value $0.01 per share (the “Common Stock”), of the Company owned by the
      Selling Stockholders. The aggregate number of shares to be sold by each Selling
      Stockholder is set forth on Exhibit A
      hereto.

     

    SECTION
      2.   Agreement
      to Sell and Purchase the Shares.
      At the
      Closing (as defined in Section 3), each Selling Stockholder will sell to the
      Purchaser, and the Purchaser will buy from each Selling Stockholder, upon the
      terms and conditions hereinafter set forth, the number of Shares at the purchase
      price set forth in Exhibit
      B
      hereto.


     

    The
      Company and the Selling Stockholders propose to enter into the same form of
      purchase agreement with certain other investors (the “Other Purchasers”) and the
      Selling Stockholders expect to complete sales of the Shares to them. The
      Purchaser and the Other Purchasers are hereinafter sometimes collectively
      referred to as the “Purchasers,” and this Agreement and the agreements executed
      by the Other Purchasers are hereinafter sometimes collectively referred to
      as
      the “Agreements.” The term “Placement Agent” shall mean JMP Securities LLC,
      which is acting as the placement agent in connection with the transactions
      contemplated by this Agreement.

     

    SECTION
      3.   Delivery
      of the Shares at the Closing.
      The
      completion of the purchase and sale of the Shares (the “Closing”) shall occur at
      the offices of Morrison & Foerster LLP, 1290 Avenue of the Americas, New
      York, New York 10104 as soon as practicable and as agreed to by the parties
      hereto, within three business days following the execution of the Agreements,
      or
      on such later date or at such different location as the Company, Selling
      Stockholders and the Placement Agent shall agree in writing, but in any event
      not prior to the date that the conditions for Closing set forth below have
      been
      satisfied or waived by the appropriate party (the “Closing Date”). The Purchaser
      shall be notified by facsimile transmission or otherwise of the time of the
      Closing.

     

    At
      the
      Closing, the Selling Stockholders shall deliver to the Purchaser one or more
      stock certificates registered in the name of the Purchaser, or, if so indicated
      on the Stock Certificate Questionnaire attached hereto as Appendix I, in such
      nominee name(s) as designated by the Purchaser, representing the number of
      Shares set forth in Section 2 above and bearing an appropriate legend, as
      described in Section 6(f) below, referring to the fact that the Shares
      were
      sold in reliance upon the exemption from registration under the Securities
      

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Act
      of
      1933, as amended (the “Securities Act”), provided by Section 4(2) thereof. The
      name(s) in which the stock certificates are to be registered are set forth
      in
      the Stock Certificate Questionnaire attached hereto as Appendix I. The Selling
      Stockholders’ obligation to complete the purchase and sale of the Shares and
      deliver such stock certificate(s) to the Purchaser at the Closing shall be
      subject to the following conditions, any one or more of which may be waived
      by
      the Selling Stockholders: (a) receipt by the Selling Stockholders of same-day
      funds in the full amount of the purchase price for the Shares being purchased
      hereunder and (b) the accuracy in all material respects of the representations
      and warranties made by the Purchasers (as if such representations and warranties
      were made on the Closing Date) and the fulfillment of those undertakings of
      the
      Purchasers to be fulfilled prior to the Closing. The Purchaser’s obligation to
      accept delivery of such stock certificate(s) and to pay for the Shares evidenced
      thereby shall be subject to the following conditions, any one or more of which
      may be waived by the Purchaser: (a) each of the representations and warranties
      of the Company and the Selling Stockholders made herein shall be accurate as
      of
      the Closing Date; (b) the delivery to the Purchaser by counsel to the
      Company of a favorable legal opinion in substantially the form attached hereto
      as Exhibit
      C
      hereto;
      (c) the fulfillment of those undertakings of the Company and the Selling
      Stockholders to be fulfilled prior to Closing; and (d) the receipt by Purchaser
      of a letter from KPMG LLP, independent public or certified public accountants
      for the Company, dated the date hereof, addressed to the Placement Agent, in
      form and substance satisfactory to the Placement Agent. 

     

    SECTION
      4.   Representations,
      Warranties and Covenants of the Company.
      The
      Company hereby represents and warrants to, and covenants with the Purchaser
      as
      follows: 

     

    4.1  Purchase
      Agreement.
      The
      Company has full legal right, corporate power and authority to enter into this
      Agreement and to perform the transactions contemplated hereby. This Agreement
      has been duly authorized, executed, and delivered by, and is a valid and binding
      agreement of, the Company, enforceable in accordance with its terms, except
      as
      (i) rights to indemnification hereunder may be limited by applicable law, and
      (ii) the enforcement hereof may be limited by applicable bankruptcy, insolvency,
      reorganization, moratorium, or other similar laws relating to or affecting
      the
      rights and remedies of creditors or by general equitable
      principles.

     

    4.2  Authorization
      of the Shares to Be Sold by the Selling Stockholders.
      The
      Shares to be purchased hereunder from the Selling Stockholders were duly
      authorized, validly issued, and are fully paid, and non-assessable and will
      conform in all material respects to the description thereof set forth in the
      Private Placement Memorandum (defined below). No further approval or authority
      of the stockholders or the Board of Directors of the Company will be required
      for the sale of the Shares by the Selling Stockholders as contemplated herein.
      

     

    4.3  Offering
      Materials.
      The
      Company has not distributed and will not distribute prior to the Closing Date
      any offering material in connection with the offering and sale of the Shares
      other than the private placement memorandum dated August 1, 2005 (the “Private
      Placement Memorandum”) or any amendment or supplement thereto. Neither the
      Company nor any person acting on its behalf has in the past or will hereafter
      take any action independent of the Placement Agent to sell, offer for sale
      or
      solicit offers to buy any securities of the Company that would result in the
      offer or sale of the Shares, as contemplated by this Agreement, not being exempt
      from the registration requirements of Section 5 of the Securities Act.


     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    4.4  No
      Other Registration Rights.
      No
      holder of any security of the Company has any right (which has not been waived
      or has not expired by reason of lapse of time following notification of the
      Company’s intent to file the registration statement to be filed by it pursuant
      to Section 8.1 (the “Registration Statement”)) to require the Company to
      register the sale of any security owned by such stockholder under the Securities
      Act in or in preference to the Registration Statement. 

     

    4.5  No
      Material Adverse Change.
      Subsequent to the respective dates as of which information is given in the
      Private Placement Memorandum: (i) there has been no Material Adverse Change
      (as
      defined below), or any development that could reasonably be expected to result
      in a Material Adverse Change; (ii) the Company and its subsidiaries, considered
      as one entity, have not incurred any material liability or obligation, indirect,
      direct, or contingent, nor entered into any material transaction or agreement
      other than in the ordinary course of its business; (iii) there has been no
      dividend or distribution of any kind declared, paid or made by the Company
      or,
      except for dividends paid to the Company or its other subsidiaries, any of
      its
      subsidiaries on any class of capital stock, or repurchase or redemption by
      the
      Company or any of its subsidiaries of any class of capital stock; and (iv)
      the
      Company and its subsidiaries have not sustained any material loss or
      interference with their businesses or properties from fire, flood, windstorm,
      accident or other calamity not covered by insurance. For purposes of this
      Agreement, the term “Material Adverse Change” means any material adverse change
      in the condition, financial or otherwise, or in the earnings, business or
      results of operations, whether or not arising from transactions in the ordinary
      course of business, of the Company and its subsidiaries, considered as one
      entity or on the transactions contemplated hereby or by the agreements and
      instruments to be entered into in connection herewith, or on the authority
      or
      ability of the Company to perform its obligations under this
      Agreement.

     

    4.6  Accountants.
      The
      firm of KMPG LLP, which has expressed its opinion with respect to the
      consolidated financial statements contained in the Company’s Annual Report on
      Form 10-K for the year ended December 31, 2004, which is attached as an exhibit
      to, and made a part of the Private Placement Memorandum, and that will be
      incorporated by reference in the Registration Statement and the prospectus
      that
      forms a part thereof (the “Prospectus”), is an independent accountant as
      required by the Securities Act and the rules and regulations promulgated
      thereunder (the “Rules and Regulations”).

     

    4.7  Preparation
      of the Financial Statements.
      The
      consolidated financial statements of the Company and the related notes contained
      in its filings under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), present fairly the consolidated financial position of the
      Company and its subsidiaries as of and at the dates indicated and the results
      of
      their operations, cash flows and changes in stockholders’ equity for the periods
      therein specified. Such consolidated financial statements (including the related
      notes) have been prepared in conformity with generally accepted accounting
      principles (“GAAP”) applied on a consistent basis throughout the periods
      involved, except as may be expressly stated in the related notes thereto. No
      other financial statements or supporting schedules are required to be included
      in the Company’s Exchange Act Reports (as defined below). 

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    4.8  Incorporation
      and Good Standing of the Company and its Subsidiaries.
      Each of
      the Company and its subsidiaries has been duly incorporated or formed and is
      validly existing as a corporation, limited liability company, or trust, as
      applicable, in good standing under the laws of the jurisdiction of its
      incorporation or formation and has corporate power and authority to own, lease
      and operate its properties and to conduct its business as described in its
      filings with the Securities and Exchange Commission (the “Commission”) and, in
      the case of the Company, to enter into and perform its obligations under this
      Agreement. Each of the Company and its subsidiaries is duly qualified as a
      foreign corporation, limited liability company or trust, as applicable, to
      transact business and is in good standing in each jurisdiction in which such
      qualification is required, whether by reason of the ownership or leasing of
      property or the conduct of business, except for such jurisdictions where the
      failure to so qualify or to be in good standing would not, individually or
      in
      the aggregate, result in a Material Adverse Change. All of the issued and
      outstanding capital stock or limited liability company interests of each
      subsidiary that has been organized as a corporation or a limited liability
      company has been duly authorized and validly issued, is fully paid and
      non-assessable and is owned by the Company, directly or through subsidiaries,
      free and clear of any security interest, mortgage, pledge, lien, encumbrance
      or
      claim.

     

    4.9  Subsidiaries
      of the Company.
      The
      Company does not own or control, directly or indirectly, any corporation,
      limited liability company, trust, association or other entity other than the
      subsidiaries listed in Exhibit
      21.1
      to the
      Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2004
      and the subsidiaries listed on Exhibit
      D
      hereto
      (the “List of the Additional Subsidiaries”).

     

    4.10  No
      Prohibition on Subsidiaries from Paying Dividends or Making Other
      Distributions.
      No
      subsidiary of the Company is currently prohibited, directly or indirectly,
      from
      paying any dividends to the Company, from making any other distribution on
      such
      subsidiary’s capital stock, from repaying to the Company any loans or advances
      to such subsidiary from the Company or from transferring any of such
      subsidiary’s property or assets to the Company or any other subsidiary of the
      Company, except as disclosed in or contemplated by the Private Placement
      Memorandum. 

     

    4.11  Capitalization
      and Other Capital Stock Matters.
      The
      authorized, issued, and outstanding capital stock of the Company is as set
      forth
      in the balance sheets set forth in the Exchange Act Reports (other than for
      subsequent issuances, if any, pursuant to employee benefit plans described
      in
      the Exchange Act Reports or upon exercise of outstanding options or warrants
      described in the Exchange Act Reports). The Common Stock (including the shares
      of Common Stock owned by the Selling Stockholders) conforms in all material
      respects to the description thereof contained in the Company’s most recent Form
      8-A filed under the Exchange Act and in the Exchange Act Reports. All of the
      issued and outstanding shares of Common Stock (including the shares of Common
      Stock owned by the Selling Stockholders) have been duly authorized and validly
      issued, are fully paid and non-assessable and have been issued in compliance
      with federal and state securities laws. None of the outstanding shares of Common
      Stock were issued in violation of any preemptive rights, rights of first refusal
      or other similar rights to subscribe for or purchase securities of the Company.
      There are no authorized or outstanding options, warrants, preemptive rights,
      rights of first refusal or other rights to purchase, or equity or debt
      securities convertible into, exchangeable or exercisable for, any capital stock
      of the Company or any of its subsidiaries other than those accurately described
      in the Exchange Act Reports. The description of the Company’s stock option,
      stock bonus and other stock plans or arrangements, and the options or other
      rights granted thereunder, set forth in the Exchange Act Reports, accurately
      and
      fairly presents the information required to be shown with respect to such plans,
      arrangements, options and rights. 

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    4.12  Lock-Up
      Agreements.
      Each
      director and executive officer of the Company and each Selling Stockholder
      has
      agreed to sign an agreement (the “Lock-Up Agreement”) substantially in the form
      attached hereto as Exhibit
      E
      (the
“Form of Lock-up Agreement”). The Company has provided to counsel for the
      Placement Agent true, accurate, and complete copies of all of the Lock-up
      Agreements presently in effect or effected hereby. The Company hereby represents
      and warrants that it will not release any of its executive officers, directors,
      or other stockholders from any Lock-up Agreements currently existing or
      hereafter effected without the prior written consent of the Placement Agent.
      

     

    4.13  Agreement
      Not To Offer Or Sell Additional Securities.
      During
      the period of ninety (90) days following the date of the Private Placement
      Memorandum (the “Lock-Up Period”), the Company will not, without the prior
      written consent of the Placement Agent (which consent may be withheld in its
      sole discretion), (a) consent to the disposition of any shares held by a
      stockholder or option holder which is a director or executive officer of the
      Company or is a Selling Stockholder before the expiration of the Lock-up Period,
      or (b) sell, offer, contract, or grant, directly or indirectly, any option
      to
      sell, pledge, transfer, or establish an open “put equivalent position” within
      the meaning of Rule 16a-1(h) under the Exchange Act, otherwise dispose of,
      transfer, or enter into any transaction which is designed to, or could be
      expected to, result in the disposition (whether by actual disposition or
      effective economic disposition due to cash settlement or otherwise by the
      Company or any affiliate of the Company or any person in privity with the
      Company or any affiliate of the Company), or otherwise dispose of any Securities
      (as defined in Exhibit
      E
      attached
      hereto) or any securities that relates to or derives any significant part of
      its
      value from the Shares; provided,
      however,
      that
      the Company may issue (i) shares of restricted stock or options to purchase
      its
      Common Stock pursuant to any stock option plan, stock bonus, or other stock
      plan
      or arrangement approved by the Board of Directors of the Company and described
      in the Private Placement Memorandum, or (ii) Common Stock upon the exercise
      of
      such options described in clause (i), but only if such shares, options, or
      shares issued upon exercise of such options, cannot be sold, offered, disposed
      of or otherwise transferred during the Lock-up Period without the prior written
      consent of the Placement Agent (which consent may be withheld in its sole
      discretion). 

     

    4.14  Stock
      Exchange Listing.
      The
      Common Stock (including the Shares) is registered pursuant to Section 12(b)
      of
      the Exchange Act, and is listed on the American Stock Exchange (the
“AMEX”),
      and
      the Company has taken no action designed to, or likely to have the effect of,
      terminating the registration of the Common Stock under the Exchange Act or
      delisting the Common Stock from the AMEX nor has the Company received any
      notification that the Commission or the AMEX is contemplating terminating such
      registration or listing. 

     

    4.15  Non-Contravention
      of Existing Instruments; No Further Authorizations or Approvals
      Required.
      Neither
      the Company nor any of its subsidiaries is in violation or default of any
      provision of its charter, by-laws or other organizational documents or is in
      breach of or default (or, with the giving of notice or lapse of time, would
      be
      in 

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    default)
      (“Default”) under any indenture, mortgage, loan or credit agreement, note,
      contract, franchise, lease or other instrument to which the Company or any
      of
      its subsidiaries is a party or by which it or any of them may be bound, or
      to
      which any of the property or assets of the Company or any of its subsidiaries
      is
      subject, including, without limitation, any agreements pertaining to, relating
      to or arising in connection with, any of the securitization transactions of
      the
      Company or any of its subsidiaries (each, an “Existing Instrument”), except for
      such Defaults as would not, individually or in the aggregate, result in a
      Material Adverse Change. The Company and its subsidiaries are in compliance
      with
      all statutes, laws, rules, regulations, judgments, orders and decrees of all
      courts, regulatory bodies, administrative agencies, governmental bodies,
      arbitrators or other authorities having jurisdiction over the Company or such
      subsidiaries or any of their respective properties, as applicable, including,
      without limitation, the provisions of the Sarbanes-Oxley Act of 2002, as amended
      (“Sarbanes-Oxley Act”), and the rules and regulations of the National
      Association of Securities Dealers, Inc. (“NASD”) and the AMEX, including the
      corporate governance requirements thereof, except where such non-compliance
      would not, individually or in the aggregate, result in a Material Adverse
      Change. 

     

    4.17  No
      Material Actions or Proceedings.
      Except
      as disclosed in or contemplated by the Private Placement Memorandum, there
      is no
      legal or governmental action, suit or proceeding pending or, to the knowledge
      of
      the Company, there are no inquiries or investigations, nor are there any legal
      or governmental actions, suits or proceedings threatened (i) against or
      affecting the Company or any of its subsidiaries, (ii) which has as the subject
      thereof any officer or director of, or property owned or leased by, the Company
      or any of its subsidiaries or (iii) relating to environmental or discrimination
      matters, which in the case of clauses (i), (ii) or (iii) could reasonably be
      expected to result in a Material Adverse Change or adversely affect the
      consummation of the transactions contemplated hereby. Neither the Company nor
      any of its subsidiaries is a party to or subject to the provisions of any
      injunction, judgment, decree or order of any court, regulatory body,
      administrative agency or other governmental body that might be expected to
      result in a Material Adverse Change.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    4.18  Labor
      Matters.
      No
      material labor dispute with the employees of the Company or any of its
      subsidiaries exists or, to the knowledge of the Company, is threatened or
      imminent. The Company is not aware of any existing or imminent labor disturbance
      by the employees of any of its third-party contractors, that might be expected
      to result in a Material Adverse Change.

     

    4.19  Intellectual
      Property Rights.
      The
      Company and its subsidiaries own or possess sufficient trademarks, trade names,
      patent rights, patents, know-how, collaborative research agreements, inventions,
      servicemarks, copyrights, licenses, approvals, trade secrets and other similar
      rights (collectively, “Intellectual Property Rights”) necessary to conduct their
      businesses as now conducted, as proposed to be conducted, as described in or
      contemplated by the Private Placement Memorandum, and any respective amendments
      or supplements thereto. The expiration of any of such Intellectual Property
      Rights would not be reasonably expected to result in a Material Adverse Change.
      Neither the Company nor any of its subsidiaries has received any notice of,
      and
      has no knowledge of, any infringement of or conflict with asserted rights of
      the
      Company by others with respect to any Intellectual Property Rights, other than
      with respect to any infringement that would not reasonably be expected to result
      in a Material Adverse Change. There is no claim being made against the Company
      or any of its subsidiaries regarding any kind of Intellectual Property Right.
      The Company and its subsidiaries do not, in the conduct of their business as
      now
      or proposed to be conducted as described in the Private Placement Memorandum,
      infringe or conflict with any right or patent of any third party, or any
      discovery, invention, product, or process which is the subject of a patent
      application filed by any third party, known to the Company or any of its
      subsidiaries, which such infringement or conflict is reasonably likely to result
      in a Material Adverse Change.

     

    4.20  All
      Necessary Permits, etc.
      The
      Company and each subsidiary possess such valid and current certificates,
      authorizations, licenses or permits issued by the appropriate state, federal,
      or
      foreign regulatory agencies or bodies necessary to conduct their respective
      businesses, including, without limitation, all certificates, authorizations,
      licenses or permits required for the making of loans and lending operations,
      and
      (i) any such certificate, authorization, license or permit is not subject to
      any
      qualifications or limitations which would prohibit the Company or any of its
      subsidiaries from conducting their respective businesses, (ii) all applicable
      fees have been paid for any such certificate, authorization, license or permit,
      except for such fees which if not paid would not in any way prevent or prohibit
      the Company or any of its subsidiaries from conducting their respective
      businesses in accordance with all applicable laws, (iii) no fines or penalties
      are outstanding for any failure to timely obtain, or any non-compliance with
      any
      such certificate, authorization, license or permit, except for such fines or
      penalties that would not reasonably be likely to result in a Material Adverse
      Change, and (iv) neither the Company nor any subsidiary has received any notice
      of proceedings relating to the revocation or modification of, or non-compliance
      with, any such certificate, authorization, license or permit, which revocation,
      modification or non-compliance, individually or in the aggregate, would result
      in a Material Adverse Change. 

     

    4.21  Title
      to Properties.
      The
      Company and each of its subsidiaries has good and marketable title to all the
      properties and assets reflected as owned in the financial statements included
      in
      the Private Placement Memorandum, in each case free and clear of any security
      interests, mortgages, liens, encumbrances, equities, claims and other defects
      of
      any kind, except as described in the Private Placement Memorandum. The real
      property, improvements, equipment and personal property held under lease by
      the
      Company or any subsidiary are held under valid and enforceable leases, with
      such
      exceptions as are not material and do not materially interfere with the use
      made
      or proposed to be made of such real property, improvements, equipment or
      personal property by the Company or such subsidiary.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    4.22  Tax
      Law Compliance.
      The
      Company and its subsidiaries have filed all necessary federal, state and foreign
      income and franchise tax returns or have duly requested extensions thereof
      and
      have paid all taxes required to be paid by any of them and, if due and payable,
      any related or similar assessment, fine, or penalty levied against any of them,
      except for any such tax, assessment, fine or penalty that is being contested
      in
      good faith and by appropriate proceedings and for which adequate reserves have
      been provided. The Company and its subsidiaries have made adequate charges,
      accruals and reserves in the applicable financial statements in respect of
      all
      federal, state and foreign income and franchise taxes for all periods as to
      which the tax liability of the Company and its subsidiaries have not been
      finally determined. The Company has no knowledge of any tax deficiency that
      has
      been or might be asserted or threatened against the Company.

     

    4.23  No
      Transfer Taxes or Other Fees.
      There
      are no transfer taxes or other similar fees or charges under Federal law or
      the
      laws of any state, or any political subdivision thereof, required to be paid
      in
      connection with the execution and delivery of this Agreement or sale by the
      Selling Stockholders of the Shares.

     

    4.24  Company
      Not an “Investment Company”.
      The
      Company is not, and after receipt of payment for the Shares giving effect to
      the
      transactions contemplated hereby will not be, an “investment company,” or an
      entity “controlled” by an “investment company,” within the meaning of the
      Investment Company Act of 1940, as amended, and the rules and regulations
      promulgated thereunder.
      

     

    4.25  Insurance.
      Each of
      the Company and its subsidiaries are insured by recognized, financially sound
      and reputable institutions with policies in such amounts and with such
      deductibles and covering such risks as are generally deemed adequate and
      customary for their businesses and otherwise reasonably prudent including,
      but
      not limited to, policies covering real and personal property owned or leased
      by
      the Company and its subsidiaries against theft, damage, destruction, acts of
      vandalism, earthquakes, general liability and Directors’ and Officers’
      liability, all of which insurance is in full force and effect. The Company
      and
      each of its subsidiaries expect they will be able, and will use their best
      efforts, (i) to renew its existing insurance coverage as and when such policies
      expire, or (ii) to obtain comparable coverage from similar institutions as
      may
      be necessary or appropriate to conduct its business as now conducted and at
      a
      cost that would not result in a Material Adverse Change. Neither of the Company
      nor any subsidiary has been rejected from obtaining any type of insurance
      coverage which it has sought or for which it has applied. 

     

    4.26  No
      Price Stabilization or Manipulation.
      The
      Company has not taken and will not take, directly or indirectly, any action
      which was designed to, or that might be expected to cause or result in,
      stabilization or manipulation of the price of the Common Stock to facilitate
      the
      sale or resale of the Shares. 

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    4.27  Non-Public
      Information.
      The
      Company has not disclosed to the Purchaser, whether in the Private Placement
      Memorandum or otherwise, information that would constitute material non-public
      information as of the Closing Date. 

     

    4.28  Use
      of
      Purchaser Name.
      Except
      as may be required by applicable law or regulation, the Company shall not use
      the Purchaser’s name or the name of any of its affiliates in any advertisement,
      announcement, press release or other similar public communication unless it
      has
      received the prior written consent of the Purchaser for the specific use
      contemplated or as otherwise required by applicable law or
      regulation.

     

    4.29  Related
      Party Transactions.
      There
      are no business relationships or related-party transactions involving the
      Company or any subsidiary or any other person required to be described in the
      Exchange Act Reports which have not been described as required.

     

    4.30  Exchange
      Act and Sarbanes-Oxley Act Compliance.
      Since
      December , 31, 2004, the Company has filed all Exchange Act Reports required
      to
      be filed by it with the Commission pursuant to the reporting requirements of
      the
      Exchange Act. The Exchange Act Reports, at the time they were or hereafter
      are
      filed with the Commission, complied and will comply in all material respects
      with the requirements of the Exchange Act and the Sarbanes-Oxley Act, including
      Section 402 related to loans, and did not contain an untrue statement of a
      material fact or omit to state a material fact required to be stated therein
      or
      necessary to make the fact required to be stated therein or necessary to make
      the statements therein, in light of the circumstances under which they were
      made, not misleading.

     

    4.31  Contracts.
      Except
      as disclosed in the Company’s Exchange Act Reports, the Company and its
      subsidiaries have no material contracts. Any contracts described in the
      Company’s Exchange Act Reports that are material to the Company and its
      subsidiaries, taken as a whole, are in full force and effect on the date
      hereof.

     

    4.32  Company’s
      Accounting System.
      The
      Company and each of its subsidiaries maintain a system of accounting controls
      sufficient to provide reasonable assurances that (i) transactions are executed
      in accordance with management’s general or specific authorization, (ii)
      transactions are recorded as necessary to permit preparation of financial
      statements in conformity with GAAP and to maintain accountability for assets,
      (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 existing assets at reasonable intervals and appropriate action
      is
      taken with respect to any differences.

     

    4.33  No
      Unlawful Contributions or Other Payments.
      Neither
      the Company nor any of its subsidiaries nor, to the knowledge of the Company,
      any employee or agent of the Company or any subsidiary acting on behalf of
      the
      Company or any of its subsidiaries, has made any contribution or other payment
      to any official of, or candidate for, any federal, state or foreign office
      in
      violation of any law or of the character required to be disclosed in the
      Company’s Exchange Act Reports.

     

    4.34  Compliance
      with Environmental Laws.
      Except
      as would not, individually or in the aggregate, result in a Material Adverse
      Change, (i) the Company and its 

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    subsidiaries
      are in compliance with all federal, state, local or foreign law or regulation
      relating to pollution or protection of human health or the environment
      (including, without limitation,
      ambient air, surface water, groundwater, land surface or subsurface strata)
      or
      wildlife, including, without limitation, laws and regulations relating to
      emissions, discharges, releases or threatened releases of chemicals, pollutants,
      contaminants, wastes, toxic substances, hazardous substances, petroleum and
      petroleum products (collectively, the “Materials of Environmental Concern”), or
      otherwise relating to the manufacture, processing, distribution, use, treatment,
      storage, disposal, transport or handling of Materials of Environment Concern
      (collectively, the “Environmental Laws”), which includes, but is not limited to,
      compliance with any permits or other governmental authorizations required for
      the operation of the business of the Company or its subsidiaries under
      applicable Environmental Laws, or compliance with the terms and conditions
      thereof, and neither the Company nor any of its subsidiaries has received any
      written communication, whether from a governmental authority, citizens group,
      employee or otherwise, that alleges that the Company or any of its subsidiaries
      is in violation of any Environmental Law; (ii) there is no claim, action or
      cause of action filed with a court or governmental authority, no investigation
      with respect to which the Company has received written notice, and no written
      notice by any person or entity alleging potential liability for investigatory
      costs, cleanup costs, governmental responses costs, natural resources damages,
      property damages, personal injuries, attorneys’ fees or penalties arising out
      of, based on or resulting from the presence, or release into the environment,
      of
      any Material of Environmental Concern at any location owned, leased or operated
      by the Company or any of its subsidiaries, now or in the past (collectively,
      the
“Environmental Claims”), pending or threatened against the Company or any of its
      subsidiaries or any person or entity whose liability for any Environmental
      Claim
      the Company or any of its subsidiaries has retained or assumed either
      contractually or by operation of law; and (iii) there are no past or present
      actions, activities, circumstances, conditions, events or incidents, including,
      without limitation, the release, emission, discharge, presence or disposal
      of
      any Material of Environmental Concern, that would reasonably be expected to
      result in a violation of any Environmental Law or form the basis of a potential
      Environmental Claim against the Company or any of its subsidiaries or against
      any person or entity whose liability for any Environmental Claim the Company
      or
      any of its subsidiaries has retained or assumed either contractually or by
      operation of law. The Company is not currently aware that it will be required
      to
      make future material capital expenditures to comply with Environmental
      Laws.

     

    4.35  ERISA
      Compliance.
      The
      Company and its subsidiaries and any “employee benefit plan” (as defined under
      the Employee Retirement Income Security Act of 1974, as amended, and the
      regulations and published interpretations thereunder (collectively, “ERISA”))
      established or maintained by the Company, its subsidiaries, or their “ERISA
      Affiliates” (as hereinafter defined) are in compliance in all material respects
      with ERISA. “ERISA Affiliate” means, with respect to the Company or a
      subsidiary, any member of any group of organizations described in Sections
      414(b), (c), (m) or (o) of the Internal Revenue Code of 1986, as amended, and
      the regulations and published interpretations thereunder (collectively, the
      “Code”) of which the Company or such subsidiary is a member. No “reportable
      event” (as defined under ERISA) has occurred or is expected to occur with
      respect to any “employee benefit plan” established or maintained by the Company,
      its subsidiaries or any of their ERISA Affiliates. No “employee benefit plan”
      established or maintained by the Company, its subsidiaries or any of their
      ERISA
      Affiliates, if such “employee benefit plan” were terminated, would have any
“amount of unfunded benefit liabilities” (as defined under 

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    ERISA).
      None of the Company, its subsidiaries or any of their ERISA Affiliates has
      incurred or expects to incur any material liability under (i) Title IV of ERISA
      with respect to termination of, or withdrawal from, any “employee benefit plan”
      or (ii) Sections 412, 4971, 4975 or 4980B of the Code. Each “employee benefit
      plan” established or maintained by the Company, its subsidiaries or any of their
      ERISA Affiliates that is intended to be qualified under Section 401(a) of the
      Code has been determined by the Internal Revenue Service to be so qualified
      and
      nothing has occurred, whether by action or failure to act, which would
      reasonably be expected to cause the loss of such qualification. 

     

    4.36  Form
      S-3 Eligibility.
      The
      Company satisfies the requirements for use of Form S-3 for registration of
      the
      resale of the Shares as contemplated herein. There exist no facts or
      circumstances (including, without limitation, any required approvals or waivers
      or any circumstances that may delay or prevent the obtaining of accountant’s
      consents) that could reasonably be expected to prohibit or delay the preparation
      or initial filing of the Registration Statement that will be available for
      the
      resale of the Shares by each of the Purchasers.

     

    4.37  Commodity
      Exchange Act.
      The
      Company will not, and will not permit any of its subsidiaries to, invest in
      futures contracts, options on futures contracts or options on commodities unless
      such entities are exempt from the registration requirements of the Commodity
      Exchange Act, as amended, and the rules and regulations promulgated thereunder
      (the “Commodity Exchange Act”) or otherwise comply with the Commodity Exchange
      Act.

     

    4.38  Taxable
      Mortgage Pool.
      Neither
      the Company, any of its subsidiaries nor any of their assets will be treated
      as
      a taxable mortgage pool.

     

    4.39  Investment
      and Risk-Adjusted Capital Guidelines.
      The
      Company is, and at all times has been, in compliance with its investment and
      risk-adjusted capital guidelines to the extent applicable.

     

    4.40  Off-Balance
      Sheet Arrangements.
      There
      is no transaction, arrangement or other relationship between the Company and/or
      any of its subsidiaries and an unconsolidated or other off-balance sheet entity
      that is required to be disclosed by the Company in its Exchange Act filings
      and
      is not so disclosed or that would otherwise be reasonably likely to result
      in a
      Material Adverse Change. There are no such transactions, arrangements or other
      relationships with the Company or any of its subsidiaries that may create
      contingencies or liabilities that are not otherwise disclosed by the Company
      in
      its Exchange Act filings.

     

    4.41  Offering.
      Subject
      to the accuracy of the Selling Stockholders’ representations in Section 5 of
      this Agreement and the Purchaser’s representations in Section 6 of this
      Agreement, the sale of the Shares in conformity with the terms of this Agreement
      constitute transactions exempt from the registration requirements of Section
      5
      of the Securities Act and from the qualification or registration requirements
      of
      all applicable state securities laws.

     

    4.42  No
      Integration.
      Neither
      the Company, nor any of its affiliates, nor, to the Company’s knowledge, any
      person acting on its or their behalf has, directly or indirectly, made any
      offers or sales of any security or solicited any offers to buy any security
      that
      would cause this offering of the Shares to be integrated with prior offerings
      by
      the Company for purposes of the Securities Act or any applicable stockholder
      approval provisions nor will the Company or any of its Subsidiaries take any
      action or steps that would cause the offering of the Shares to be integrated
      with other offerings.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    4.43  Committees.
      The
      members of the Audit Committee, Compensation Committee and Governance and
      Nominating Committee of the Board of Directors of the Company are “independent
      directors” within the meaning of the listing standards and rules of the AMEX,
      and with respect to the Audit Committee, the Commission, (ii) all of the members
      of the Audit Committee are financially literate within the meaning of the
      listing standards and rules of the AMEX and (iii) at least one member of the
      Audit Committee is an “audit committee financial expert,” within the meaning of
      Item 401(h) of Regulation S-K.

     

    4.44  Disclosure
      Controls and Procedures.
      The
      principal executive officer and principal financial officer are responsible
      for
      establishing and maintaining disclosure controls and procedures (as defined
      in
      Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and have
      (i) designed such disclosure controls and procedures, or caused such
      disclosure controls and procedures to be designed under their supervision,
      to
      ensure that material information relating to the Company, including its
      consolidated subsidiaries, is made known to them by others within those
      entities, particularly during the periods in which the Annual Report on Form
      10-K for the year ended December 31, 2004 and the Quarterly Report on Form
      10-Q
      for the quarter ended March 31, 2005 that are incorporated by reference in
      the
      Private Placement Memorandum were being prepared, (ii) evaluated the
      effectiveness of the Company’s disclosure controls and procedures and presented
      in the Annual Report on Form 10-K for the year ended December 31, 2004 and
      the
      Quarterly Report on Form 10-Q for the quarter ended March 31, 2005 that are
      incorporated by reference in the Private Placement Memorandum their conclusions
      about the effectiveness of the disclosure controls and procedures as of the
      end
      of the applicable periods based on such evaluation and (iii) disclosed
      in
      the Annual Report on Form 10-K for the year ended December 31, 2004 and the
      Quarterly Report on Form 10-Q for the quarter ended March 31, 2005 that are
      incorporated by reference in the Private Placement Memorandum whether any change
      in the Company’s internal control over financial reporting that occurred during
      the applicable periods that has materially affected, or is reasonably likely
      to
      materially affect, the Company’s internal control over financial
      reporting.

     

    4.45  No
      Fiduciary Duty.
      The
      Placement Agent and the Purchaser are acting as principals and not as an agent
      or fiduciary of the Company or the Selling Stockholders and the Company’s and
      Selling Stockholder’s engagement of the Placement Agent in connection with the
      offering of the Shares is as independent contractors and not in any other
      capacity. Furthermore, each of the Company and the Selling Stockholders agrees
      that it is solely responsible for independently making its own judgments in
      connection with the offering of the Shares (irrespective of whether the
      Placement Agent or the Purchaser has advised or are currently advising the
      Company or the Selling Stockholders on related or other matters).

     

    4.46  Additional
      Information.
      The
      information contained in the following documents (the materials identified
      in
      clauses a, b, c, d, e, f and g below are referred to herein as the “Exchange Act
      Reports”), copies of which the Placement Agent has furnished to the Purchaser,
      or will furnish prior to the Closing, was or will be true and correct in all
      material respects as of their respective final dates: 

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    (a)  the
      Company’s Annual Report on Form 10-K for the year ended December 31, 2004;


     

    (b)  the
      Company’s Quarterly Report on Form 10-Q for the quarter ended March 31,
      2005;

     

    (c)  the
      Company’s Definitive Proxy Statement on Schedule 14A filed on April 22,
      2005;

     

    (d)  the
      Company’s Current Report on Form 8-K furnished to the Commission on July 27,
      2005; 

     

    (e)  all
      other
      documents, if any, filed by the Company with the Commission since December
      31,
      2004 pursuant to the reporting requirements of the Exchange Act;
      and

     

    (f)  the
      Private Placement Memorandum, including all addenda and exhibits thereto (other
      than the Purchase Agreement and the Appendices).

     

    4.47  Finder’s
      Fees.
      The
      Company has not incurred any liability for any finder’s fees or similar payments
      in connection with the transactions contemplated by this Agreement.

     

    4.48  Certificate.
      At the
      Closing, the Company will deliver to Purchaser a certificate executed by the
      chief executive officer and the chief financial or accounting officer of the
      Company (solely in their capacities as such), dated as of the Closing Date,
      in
      substantially the form attached hereto as Exhibit
      F
      hereto,
      to the effect that the representations and warranties of the Company set forth
      in this Section 4 are true and correct as of the date of this Agreement and
      as
      of the Closing Date and that the Company has complied with all the agreements
      and satisfied all the conditions herein on its part to be performed or satisfied
      on or prior to such Closing Date. 

     

    4.49  Legal
      Opinion.
      As a
      condition to the Purchaser’s obligation to purchase the Shares, at the Closing,
      Morrison & Foerster LLP, counsel for the Company, shall have delivered its
      favorable opinion in the form attached as Exhibit
      C
      hereto.


     

    SECTION
      5.   Representations,
      Warranties and Covenants of the Selling Stockholders.
      Each
      Selling Stockholder, severally and not on behalf of or with respect to the
      Company or any other Selling Stockholder, represents, warrants and covenants
      with the Purchaser as follows:

     

    5.1  The
      Purchase Agreement.
      This
      Agreement has been duly authorized, executed and delivered by or on behalf
      of
      such Selling Stockholder and is a valid and binding agreement of such Selling
      Stockholder, enforceable in accordance with its terms, except as rights to
      indemnification hereunder may be limited by applicable law and except as the
      enforcement hereof may be limited by bankruptcy, insolvency, reorganization,
      moratorium or other similar laws relating to or affecting the rights and
      remedies of creditors or by general equitable principles.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    5.2  Title
      to and Delivery of the Shares to Be Sold.
      Such
      Selling Stockholder has, and on the Closing Date will have, good and valid
      title
      to all of the Shares which may be sold by such Selling Stockholder pursuant
      to
      this Agreement on such date. Delivery of the Shares which are sold by such
      Selling Stockholder pursuant to this Agreement will pass good and valid title
      to
      such Shares, free and clear of any security interest, mortgage, pledge, lien,
      encumbrance or other claim.

     

    5.3  Delivery
      of Shares.
      Upon
      the Purchaser’s acquiring possession of the Shares to be sold by such Selling
      Stockholder and paying the purchase price therefore pursuant to this Agreement,
      the Purchaser (assuming that no such Purchaser has notice of any “adverse
      claim”, within the meaning of Section 8-105 of the New York Uniform Commercial
      Code, to such Shares) will acquire their respective interests in such Shares
      (including, without limitation, all rights that such Selling Stockholder had
      or
      has the power to transfer in such Shares) free and clear of any adverse claim
      within the meaning of Section 8-102 of the New York Uniform Commercial
      Code.

     

    5.4  No
      Further Consents, Authorization or Approvals.
      No
      consent, approval or waiver is required under any instrument or agreement to
      which such Selling Stockholder is a party or by which it is bound or under
      which
      it is entitled to any right or benefit, in connection with the offering, sale
      or
      purchase by the Purchaser of any of the Shares which may be sold by such Selling
      Stockholder under this Agreement or the consummation by such Selling Stockholder
      of any of the other transactions contemplated hereby.

     

    5.5  Non-Contravention;
      No Further Authorizations or Approvals Required.
      The
      execution and delivery by such Selling Stockholder of, and the performance
      by
      such Selling Stockholder of its obligations under, this Agreement will not
      contravene or conflict with, result in a breach of, or constitute a Default
      under, or require the consent of any other party to, the trust agreement or
      other organizational documents of such Selling Stockholder or any other
      agreement or instrument to which such Selling Stockholder is a party or by
      which
      it is bound or under which it is entitled to any right or benefit, any provision
      of applicable law or any judgment, order, decree or regulation applicable to
      such Selling Stockholder of any court, regulatory body, administrative agency,
      governmental body or arbitrator having jurisdiction over such Selling
      Stockholder. No consent, approval, authorization or other order of, or
      registration or filing with, any court or other governmental authority or
      agency, is required for the consummation by such Selling Stockholder of the
      transactions contemplated in this Agreement, except such as may be required
      under state securities or Blue Sky laws or the by-laws and rules of the NASD.
      

     

    5.6  No
      Registration or Other Similar Rights.
      Such
      Selling Stockholder does not have any registration or other similar rights
      to
      have any equity or debt securities registered for sale by the Company under
      the
      Registration Statement required to be filed under this Agreement.

     

    5.7  No
      Preemptive, Co-Sale or Other Rights.
      Such
      Selling Stockholder does not have, or has waived prior to the date hereof,
      any
      preemptive right, co-sale right, right of first refusal or other similar right
      to purchase any of the Shares that are to be sold by any of the other Selling
      Stockholders to the Purchaser and the Other Purchasers pursuant to this
      Agreement. Such Selling Stockholder does not own any warrants, options or
      similar rights to acquire, and does not have any right or arrangement to
      acquire, any capital stock, right, warrants, options or other securities from
      the Company, other than those described in the Company’s Exchange Act
      Reports.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    5.8  Stabilization.
      Such
      Selling Stockholder has not taken and will not take, directly or indirectly,
      any
      action designed to cause or result in, or which constitutes or which might
      be
      expected to constitute, the stabilization or manipulation of the price of the
      Common Stock or any security of the Company to facilitate the sale or resale
      of
      the Shares.

     

    5.9  Material
      Information.
      On the
      date of the Private Placement Memorandum, and on the Closing Date, the
      information with respect to such Selling Stockholder included therein did not
      contain any untrue statement of a material fact or omit to state a material
      fact
      required to be stated therein or necessary in order to make the statements
      therein not misleading.

     

    5.10  Confirmation
      of the Company’s Representations and Warranties.
      Each of
      the Selling Stockholders represents on its own behalf that it has no reason
      to
      believe that the representations and warranties of the Company contained in
      Section 4 hereof are not true and correct, is familiar with the Private
      Placement Memorandum and has no knowledge of any material fact, condition,
      or
      information not disclosed in the Private Placement Memorandum which has had
      or
      may have a Material Adverse Change and is not prompted to sell shares of Common
      Stock by any information concerning the Company or its subsidiaries which is
      not
      set forth in the Private Placement Memorandum.

     

    5.11  Distribution
      of Offering Materials by the Selling Stockholders.
      Such
      Selling Stockholder has not distributed and will not distribute, prior to the
      Closing Date, any offering material in connection with the offering and sale
      of
      the Shares.

     

    5.12  Certificate.
      At the
      Closing, such Selling Stockholder will deliver to the Placement Agent or counsel
      to the Placement Agent a certificate executed by such Selling Stockholder,
      dated
      the Closing Date, in substantially the form attached hereto as Exhibit
      G
      hereto,
      to the effect that the representations and warranties of such Selling
      Stockholder set forth in this Section 5 are true and correct in all
      material respects as of the date of this Agreement and as of the Closing Date,
      and that such Selling Stockholder has complied with all the agreements and
      satisfied all the conditions herein on his or its part to be performed or
      satisfied on or prior to such Closing Date.

     

    5.13  No
      Transfer Taxes or Other Fees.
      There
      are no transfer taxes or other similar fees or charges under federal law or
      the
      laws of any state, or any political subdivision thereof, required to be paid
      in
      connection with such Selling Stockholder’s execution and delivery of this
      Agreement or the sale by such Selling Stockholder of the Shares.

     

    SECTION
      6.   Representations,
      Warranties and Covenants of the Purchaser.
      (a)
      The
      Purchaser represents and warrants to, and covenants with, the Company and the
      Selling Stockholders that: (i) the Purchaser is knowledgeable, sophisticated
      and
      experienced in making, and is qualified to make, decisions with respect to
      investments in shares representing an investment decision like that involved
      in
      the purchase of the Shares, including investments in securities issued by the
      Company and comparable entities, and has 

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    requested,
      received, reviewed and considered all information it deems relevant in making
      an
      informed decision to purchase the Shares; (ii) the Purchaser is acquiring the
      number of Shares set forth in Exhibit
      B
      in the
      ordinary course of its business and for its own account for investment only
      and
      with no present intention of distributing any of such Shares or any arrangement
      or understanding with any other persons regarding the distribution of such
      Shares (this representation and warranty not limiting the Purchaser’s right to
      sell pursuant to the Registration Statement or in compliance with the Securities
      Act and the Rules and Regulations); (iii) the Purchaser will not, directly
      or
      indirectly, offer, sell, pledge, transfer or otherwise dispose of (or solicit
      any offers to buy, purchase or otherwise acquire or take a pledge of) any of
      the
      Shares, nor will the Purchaser engage in any short sale that results in a
      disposition of any of the Shares by the Purchaser, except in compliance with
      the
      Securities Act, the Exchange Act, the Rules and Regulations and any applicable
      state securities laws; (iv) the Purchaser has completed or caused to be
      completed the Registration Statement Questionnaire attached hereto as part
      of
      Appendix I, for use in preparation of the Registration Statement, and the
      answers thereto are true and correct as of the date hereof and will be true
      and
      correct as of the effective date of the Registration Statement, and the
      Purchaser will notify the Company immediately if any material change in any
      such
      information provided in the Registration Statement Questionnaire occurs prior
      to
      the sale by it of all the Shares; (v) the Purchaser has, in connection with
      its
      decision to purchase the number of Shares set forth in Exhibit
      B,
      relied
      solely upon the Private Placement Memorandum and the documents included or
      incorporated by reference therein and the representations and warranties of
      the
      Company and the Selling Stockholders contained herein; (vi) the Purchaser has
      had an opportunity to discuss this investment with representatives of the
      Company and ask questions of them; and (vii) the Purchaser is an “accredited
      investor” within the meaning of Rule 501(a) of Regulation D promulgated under
      the Securities Act.

     

    (b)  The
      Purchaser understands that the Shares are being offered and sold to it in
      reliance upon specific exemptions from the registration requirements of the
      Securities Act, the Rules and Regulations and state securities laws and that
      the
      Company and the Selling Stockholders are relying upon the truth and accuracy
      of,
      and the Purchaser’s compliance with, the representations, warranties,
      agreements, acknowledgments and understandings of the Purchaser set forth herein
      in order to determine the availability of such exemptions and the eligibility
      of
      the Purchaser to acquire the Shares.

     

    (c)  For
      the
      benefit of the Company and the Selling Stockholders, the Purchaser previously
      agreed orally with the Placement Agent to keep confidential all information
      concerning this private placement. The Purchaser understands that the federal
      securities laws may impose restrictions on trading based on information
      regarding this offering. In addition, the Purchaser hereby acknowledges that
      unauthorized disclosure of information regarding this offering may result in
      a
      violation of Regulation FD. This obligation will terminate upon the Company’s
      issuance of one or more press releases describing this offering. In addition
      to
      the above, the Purchaser shall maintain in confidence the receipt and content
      of
      any notice of a Suspension (as defined in Section 6(h) below). The foregoing
      agreements shall not apply to any information that is or becomes publicly
      available through no fault of the Purchaser, or that the Purchaser is legally
      required to disclose; provided,
      however,
      that if
      the Purchaser is requested or ordered to disclose any such information pursuant
      to any court or other government order or any other applicable legal procedure,
      it shall provide the Company with prompt notice of any such request or order
      in
      time sufficient to enable the Company to seek an appropriate protective
      order.

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    (d)  The
      Purchaser understands that its investment in the Shares involves a significant
      degree of risk, including a risk of total loss of the Purchaser’s investment,
      and the Purchaser has full cognizance of and understands all of the risk factors
      related to the Purchaser’s purchase of the Shares, including, but not limited
      to, those set forth under the caption “Risk Factors” in the Private Placement
      Memorandum. The Purchaser understands that the market price of the Common Stock
      has been volatile and that no representation is being made as to the future
      value or trading volume of the Common Stock. The Purchaser has the ability
      to
      bear the economic risks of an investment in the Shares. 

     

    (e)  The
      Purchaser understands that no United States federal or state agency or any
      other
      government or governmental agency has passed upon or made any recommendation
      or
      endorsement of the Shares. 

     

    (f)  The
      Purchaser understands that, until such time as the Registration Statement has
      been declared effective or the Shares may be sold pursuant to Rule 144 under
      the
      Securities Act without any restriction as to the number of securities as of
      a
      particular date that can then be immediately sold, the Shares will bear a
      restrictive legend in substantially the following form:

     

    “THE
      SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES
      LAWS OF ANY STATE OR OTHER JURISDICTION. THE SHARES MAY NOT BE OFFERED, SOLD,
      PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (1) PURSUANT TO AN EXEMPTION FROM
      REGISTRATION UNDER THE SECURITIES ACT OR (2) PURSUANT TO AN EFFECTIVE
      REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE
      WITH
      ALL APPLICABLE SECURITIES LAWS OF THE UNITED STATES AND OTHER JURISDICTIONS,
      AND
      IN THE CASE OF A TRANSACTION EXEMPT FROM REGISTRATION, UNLESS THE COMPANY HAS
      RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT THAT SUCH
      TRANSACTION DOES NOT REQUIRE REGISTRATION UNDER THE SECURITIES ACT AND SUCH
      OTHER APPLICABLE LAWS.”

     

    (g)  The
      Purchaser’s principal executive offices are in the jurisdiction set forth below
      the Purchaser’s name on the signature pages hereto. 

     

    (h)  The
      Purchaser hereby covenants with the Company not to make any sale of the Shares
      under the Registration Statement without complying with the provisions of this
      Agreement and without effectively causing the prospectus delivery requirement
      under the Securities Act to be satisfied, and the Purchaser acknowledges and
      agrees 

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    that
      such
      Shares are not transferable on the books of the Company unless the certificate
      submitted to the transfer agent evidencing the Shares is accompanied by a
      separate Purchaser’s Certificate of Subsequent Sale: (i) in the form of Appendix
      II hereto, (ii) executed by an officer of, or other authorized person designated
      by, the Purchaser, and (iii) to the effect that (A) the Shares have been sold
      in
      accordance with the Registration Statement, the Securities Act and any
      applicable state securities or Blue Sky laws and (B) the requirement of
      delivering a current prospectus has been satisfied. The Purchaser acknowledges
      that there may occasionally be times when the Company must suspend the use
      of
      the Prospectus forming a part of the Registration Statement (a “Suspension”)
      until such time as an amendment to the Registration Statement has been filed
      by
      the Company and declared effective by the Commission, or until such time as
      the
      Company has filed an appropriate report with the Commission pursuant to the
      Exchange Act. The Purchaser hereby covenants that it will not sell any Shares
      pursuant to said Prospectus during the period commencing at the time at which
      the Company gives the Purchaser written notice of the Suspension of the use
      of
      said Prospectus and ending at the time the Company gives the Purchaser written
      notice that the Purchaser may thereafter effect sales pursuant to said
      Prospectus. Notwithstanding the foregoing, the Company agrees that no suspension
      shall be for a period of longer than 60 days during any 365-day period. The
      Purchaser further covenants to notify the Company promptly of the sale of all
      of
      its Shares.

     

    (i)  The
      Purchaser further represents and warrants to, and covenants with, the Company
      and the Selling Stockholders that (i) the Purchaser has full right, power,
      authority and capacity to enter into this Agreement and to consummate the
      transactions contemplated hereby and has taken all necessary action to authorize
      the execution, delivery and performance of this Agreement, (ii) the making
      and
      performance of this Agreement by the Purchaser and the consummation of the
      transactions herein contemplated will not violate any provision of the
      organizational documents of the Purchaser or conflict with, result in the breach
      or violation of, or constitute, either by itself or upon notice or the passage
      of time or both, a default under any material agreement, mortgage, deed of
      trust, lease, franchise, license, indenture, permit or other instrument to
      which
      the Purchaser is a party, or any statute or any authorization, judgment, decree,
      order, rule or regulation of any court or any regulatory body, administrative
      agency or other governmental body applicable to the Purchaser, (iii) no consent,
      approval, authorization or other order of any court, regulatory body,
      administrative agency or other governmental body is required on the part of
      the
      Purchaser for the execution and delivery of this Agreement or the consummation
      of the transactions contemplated by this Agreement, (iv) upon the execution
      and
      delivery of this Agreement, this Agreement shall constitute a legal, valid
      and
      binding obligation of the Purchaser, enforceable in accordance with its terms,
      except as enforceability may be limited by applicable bankruptcy, insolvency,
      reorganization, moratorium or similar laws affecting creditors’ and contracting
      parties’ rights generally and except as enforceability may be subject to general
      principles of equity (regardless of whether such enforceability is considered
      in
      a proceeding in equity or at law) and except to the extent enforcement of the
      indemnification provisions set forth in Section 8.3 of this Agreement may be
      limited by federal or state securities laws or the public policy underlying
      such
      laws, and (v) to the Purchaser’s knowledge there is not in effect any order
      enjoining or restraining the Purchaser from entering into or engaging in any
      of
      the transactions contemplated by this Agreement, except (solely in the case
      of
      clauses (ii), (iii), (iv) and (v) of the paragraph) for such violations and
      defaults as would not reasonably be expected to have a material adverse effect
      on the transactions contemplated by this Agreement.

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

    SECTION
      7.   Survival
      of Representations, Warranties and Agreements.
      Notwithstanding any investigation made by any party to this Agreement or by
      the
      Placement Agent, all covenants and agreements made by the Company, the Selling
      Stockholders and the Purchaser herein and in the certificates for the Shares
      delivered pursuant hereto shall survive the execution of this Agreement, the
      delivery to the Purchaser of the Shares being purchased and the payment
      therefor. All representations and warranties made by the Company, the Selling
      Stockholders and the Purchaser herein and in the certificates for the Shares
      delivered pursuant hereto shall survive for a period of one year following
      the
      later of the execution of this Agreement, the delivery to the Purchaser of
      the
      Shares being purchased and the payment therefor. 

     

    SECTION
      8.   Registration
      of the Shares; Compliance with the Securities Act.
      

     

    8.1     
      Registration
      Procedures and Expenses.
      The
      Company shall: 

                    

                    (a)  as
      soon
      as practicable, but in no event later than ten (10) business days following
      the
      Closing Date, prepare and file with the Commission the Registration Statement
      on
      Form S-3 relating to the sale of the Shares by the Purchaser and the Other
      Purchasers from time to time on AMEX or the facilities of any national
      securities exchange on which the Common Stock is then traded or in
      privately-negotiated transactions;

     

    (b)  provide
      a
      draft copy of the Registration Statement to the Purchaser for its review and
      comment prior to filing the Registration Statement with the
      Commission;

     

    (c)  notify
      the Purchaser promptly upon being informed whether the staff or the Commission
      intends to review or not review the Registration Statement;

     

    (d)  file
      a
      request for acceleration of the Registration Statement with the Commission
      within three (3) business
      days after the date the Company receives notice from the staff of the Commission
      that the Commission does not intend to review the Registration Statement or
      has
      completed such review;

     

    (e)  use
      its
      best efforts, subject to receipt of necessary information from the Purchasers,
      to cause the Commission to declare the Registration Statement effective as
      soon
      as reasonably practicable and in any event within sixty (60) days after the
      Closing Date (the “Effectiveness Target Date”);

     

    (f)  use
      its
      best efforts to promptly prepare and file with the Commission such amendments
      and supplements to the Registration Statement and the prospectus used in
      connection therewith as may be necessary to keep the Registration Statement
      effective
      until
      the earliest of (i) two years after the effective date of the Registration
      Statement, or (ii) such time as the Shares become eligible for resale by
      non-affiliates of the Company pursuant to Rule 144(k) under the Securities
      Act;

     

    (g)  furnish
      to the Purchaser with respect to the Shares registered under the Registration
      Statement (and to each underwriter, if any, of such Shares) such number of
      copies of prospectuses and such other documents as the Purchaser may reasonably
      request, in order to facilitate the public sale or other disposition of all
      or
      any of the Shares by the Purchaser; 

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

    (h)  file
      documents required of the Company for normal Blue Sky clearance in states
      specified in writing by the Purchaser; provided,
      however,
      that
      the Company shall not be required to qualify to do business or consent to
      service of process in any jurisdiction in which it is not now so qualified
      or
      has not so consented; 

     

    (i)  bear
      all
      expenses in connection with the procedures in paragraphs (a) through (h) of
      this
      Section 8.1 and the registration of the Shares pursuant to the Registration
      Statement, other than fees and expenses, if any, of counsel or other advisers
      to
      the Purchaser or the Other Purchasers or underwriting discounts, brokerage
      fees
      and commissions incurred by the Purchaser or the Other Purchasers, if
      any;

     

    (j)  file
      a
      Form D with respect to the Shares as required under Regulation D and to provide
      a copy thereof to the Purchaser promptly after filing;

     

    (k)  issue
      a
      press release describing the transactions contemplated by this Agreement on
      or
      prior to the Closing Date; and

     

    (l)  make
      available, while the Registration Statement is effective and available for
      resale, its Chief Executive Officer, Chief Financial Officer or other
      appropriate representatives for questions regarding information which the
      Purchaser may reasonably request in order to fulfill any due diligence
      obligation on its part. 

     

    If
      the
      Commission does not declare the Registration Statement effective by the
      Effectiveness Target Date, the Company shall become obligated to pay to the
      Purchaser an amount in cash, as liquidated damages and not as a penalty,
      equivalent to 1% of the aggregate purchase price paid by the Purchaser for
      any
      Shares then held by the Purchaser or its affiliates for each full month that
      effectiveness is delayed beyond the Effectiveness Target Date (pro-rated on
      a
      daily basis for partial months). The Company shall pay in full any liquidated
      damages pursuant to this Section 8.1 within 30 days after the date on which
      the
      Company becomes obligated to pay such damages.

     

    The
      Company understands that the Purchaser disclaims being an underwriter of the
      Shares, but the Purchaser being deemed an underwriter shall not relieve the
      Company of any obligations it has hereunder. A draft of the proposed
      Registration Statement is included in the Private Placement Memorandum and
      a
      questionnaire related thereto to be completed by the Purchaser is attached
      hereto as Appendix I.

     

    8.2  Transfer
      of Shares After Registration.
      The
      Purchaser agrees that it will not effect any disposition of the Shares or its
      right to purchase the Shares that would constitute a sale within the meaning
      of
      the Securities Act or pursuant to any applicable state securities laws, except
      as contemplated in the Registration Statement referred to in Section 8.1 or
      as
      otherwise permitted by law, and that it will promptly notify the Company of
      any
      changes in the information set forth in the Registration Statement regarding
      the
      Purchaser or its plan of distribution (other than changes in the number of
      Shares held by the Purchaser). 

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

    8.3  Indemnification.
      (a) For
      the purpose of this Section 8.3: 

     

    (i)  the
      term
“Purchaser/Affiliate” shall mean any affiliate of the Purchaser, including a
      transferee who is an affiliate of the Purchaser, and any person who controls
      the
      Purchaser or any affiliate of the Purchaser within the meaning of Section 15
      of
      the Securities Act or Section 20 of the Exchange Act; and

     

    (ii)  the
      term
“Registration Statement” shall include any preliminary prospectus, final
      prospectus, exhibit, supplement or amendment included in or relating to, and
      any
      document incorporated by reference in, the Registration Statement referred
      to in
      Section 8.1. 

     

    (b)  The
      Company agrees to indemnify and hold harmless the Purchaser and each
      Purchaser/Affiliate against any losses, claims, damages, liabilities or
      expenses, joint or several, to which the Purchaser or Purchaser/Affiliate may
      become subject, under the Securities Act, the Exchange Act, or any other federal
      or state statutory law or regulation, or at common law or otherwise (including
      in settlement of any litigation, if such settlement is effected with the prior
      written consent of the Company, which consent shall not be unreasonably withheld
      or delayed), insofar as such losses, claims, damages, liabilities or expenses
      (or actions in respect thereof as contemplated below) arise out of or are based
      upon any untrue statement or alleged untrue statement of any material fact
      contained in the Registration Statement, including the Prospectus, financial
      statements and schedules, and all other documents filed as a part thereof,
      as
      amended at the time of effectiveness of the Registration Statement, including
      any information deemed to be a part thereof as of the time of effectiveness
      pursuant to paragraph (b) of Rule 430A, or pursuant to Rule 434, of the Rules
      and Regulations of the Securities Act, or the Prospectus, in the form first
      filed with the Commission pursuant to Rule 424(b) of the Rules and Regulations
      of the Securities Act, or filed as part of the Registration Statement at the
      time of effectiveness if no Rule 424(b) filing is required under the Securities
      Act, or any subsequent amendment or supplement thereto, or arise out of or
      are
      based upon the omission or alleged omission to state in any of them a material
      fact required to be stated therein or necessary to make the statements in the
      Registration Statement or any amendment or supplement thereto not misleading
      or
      in the Prospectus or any amendment or supplement thereto not misleading in
      light
      of the circumstances under which they were made, not misleading, or arise out
      of
      or are based in whole or in part on any inaccuracy in the representations or
      warranties of the Company contained in this Agreement or in any writing
      delivered pursuant to this Agreement, or any failure of the Company to perform
      its obligations hereunder or under law, and will promptly reimburse each such
      Purchaser and each such Purchaser/Affiliate for any legal and other expenses
      as
      such expenses are reasonably incurred by such Purchaser or such
      Purchaser/Affiliate in connection with investigating, defending or preparing
      to
      defend, settling, compromising or paying any such loss, claim, damage,
      liability, expense or action; provided,
      however,
      that
      the Company will not be liable in any such case to the extent that any such
      loss, claim, damage, liability or expense arises out of or is based upon (i)
      an
      untrue statement or alleged untrue statement or omission or alleged omission
      made in the Registration Statement, the Prospectus or any amendment or
      supplement thereto in reliance upon and in conformity with written information
      furnished to the Company by or on behalf of the Purchaser expressly for use
      therein, (ii) the failure of such Purchaser to comply with the covenants and
      agreements contained in Sections 6(h) or 8.2 hereof respecting the sale of
      the
      Shares, (iii) the inaccuracy of any representation made by such Purchaser
      herein, or (iv) any statement or omission in any Prospectus that is corrected
      in
      any subsequent Prospectus that was delivered to the Purchaser prior to the
      pertinent sale or sales by the Purchaser.

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

    (c)  Each
      Purchaser will severally, but not jointly, indemnify and hold harmless the
      Company and each Selling Stockholder, each of the Company’s directors, each of
      the Company’s officers who signed the Registration Statement, and each person,
      if any, who controls the Company or any Selling Stockholder within the meaning
      of Section 15 of the Securities Act or Section 20 of the Exchange Act, against
      any losses, claims, damages, liabilities or expenses to which the Company,
      each
      of its directors, each of its officers who signed the Registration Statement,
      any Selling Stockholder or any of their respective controlling person may become
      subject, under the Securities Act, the Exchange Act, or any other federal or
      state statutory law or regulation, or at common law or otherwise (including
      in
      settlement of any litigation, if such settlement is effected with the prior
      written consent of such Purchaser) insofar as such losses, claims, damages,
      liabilities or expenses (or actions in respect thereof as contemplated below)
      arise out of or are based upon (i) any failure to comply with the covenants
      and
      agreements contained in Sections 6(h) or 8.2 hereof respecting the sale of
      the
      Shares, (ii) the inaccuracy of any representation made by such Purchaser herein,
      or (iii) any untrue or alleged untrue statement of any material fact contained
      in the Registration Statement, the Prospectus, or any amendment or supplement
      thereto, or arise out of or are based upon the omission or alleged omission
      to
      state therein a material fact required to be stated therein or necessary to
      make
      the statements in the Registration Statement or any amendment or supplement
      thereto not misleading or in the Prospectus or any amendment or supplement
      thereto not misleading in light of the circumstances under which they were
      made,
      in each case to the extent that such untrue statement or alleged untrue
      statement or omission or alleged omission was made in the Registration
      Statement, the Prospectus, or any amendment or supplement thereto, in reliance
      upon and in conformity with written information furnished to the Company by
      or
      on behalf of any Purchaser expressly for use therein, and will reimburse the
      Company and the Selling Stockholders, each of the Company’s directors, each of
      the Company’s officers who signed the Registration Statement or controlling
      person of the Company or a Selling Stockholder for any legal and other expense
      reasonably incurred by the Company, each of its directors, each of its officers
      who signed the Registration Statement or controlling person in connection with
      investigating, defending, settling, compromising or paying any such loss, claim,
      damage, liability, expense or action. 

     

    (d) Each
      Selling Stockholder will jointly and severally indemnify and hold harmless
      each
      Purchaser, each Purchaser/Affiliate, the Company, each of its directors and
      each
      of its officers who signed the Registration Statement and each person, if any,
      who controls the Company within the meaning of Section 15 of the Securities
      Act or Section 20 of the Exchange Act, against any losses, claims, damages,
      liabilities or expenses to which the Purchaser, each Purchaser/Affiliate, the
      Company, each of its directors, each of its officers who signed the Registration
      Statement or controlling person may become subject, under the Securities Act,
      the Exchange Act, or any other federal or state statutory law or regulation,
      or
      at common law or otherwise (including in settlement of any claim or litigation,
      if such settlement is effected with the written consent of such Selling
      Stockholder) insofar as such losses, claims, damages, liabilities or expenses
      (or action in respect thereof as contemplated below) arise out of, or are based
      upon (i) any material failure to comply with the covenants and agreements of
      such Selling Stockholder contained in the Agreements or (ii) the material
      inaccuracy of any representation made by such Selling Stockholder in the


     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

    Agreements
      or (iii) any untrue or alleged untrue statement of any material fact
      contained in the Registration Statement, the Prospectus, or any amendment or
      supplement thereto, or arise out of or are based upon the omission or alleged
      omission to state therein a material fact required to be stated therein or
      necessary to make the statements in the Registration Statement or any amendment
      or supplement thereto not misleading or in the Prospectus or any amendment
      or
      supplement thereto not misleading in light of the circumstances under which
      they
      were made, in each case to the extent, but only to the extent, that such untrue
      statement or alleged untrue statement or omission or alleged omission was made
      in the Registration Statement, the Prospectus, or any amendment or supplement
      thereto, in reliance upon and in conformity with written information furnished
      to the Company by such Selling Stockholder expressly for use therein;
provided,
      however,
      that
      the Selling Stockholder will not be liable in any such case to the extent that
      any such loss, claim, damage, liability or expense arises out of or is based
      upon (i) in whole or in part the inaccuracy of any representations or warranties
      made by such Purchaser herein, (ii) the failure of such Purchaser to comply
      with
      the covenants and agreements contained in Sections 6(h) or 8.2 hereof respecting
      the sale of the Shares, or (iii) any statement or omission in any Prospectus
      or
      any amendment or supplement thereto that is corrected in any subsequent
      Prospectus or any amendment or supplement thereto that was delivered to the
      Purchaser prior to the pertinent sale or sales by the Purchaser.

     

    (e) If
      and to
      the extent that the Company shall have sustained any indemnification liability
      under Section 8.3(a) hereof or otherwise under law and such liability shall
      have
      resulted from the failure of any of the Selling Stockholders to promptly notify
      the Company in writing, until the earlier of (i) two years from the effective
      date of the Registration Statement or (ii) the sale of all of the Shares, of
      any
      events or circumstances of which any of the Selling Stockholders becomes aware,
      after their conducting reasonable due inquiry (other than matters publicly
      known
      or actually known by the Company), that (x) materially adversely affects or
      limits the legal or other ability of any of the Selling Stockholders to perform
      any of its material obligations under any written agreements between any of
      the
      Selling Stockholders and the Company and (y) the failure of which to be included
      in the Private Placement Memorandum and/or the Registration Statement, as such
      shall have been supplemented or amended, would result in an untrue statement
      of
      material fact or the omission to state a material fact required to be stated
      therein or necessary to make the statements contained therein not misleading
      in
      light of the circumstances under which they were made, the Selling Stockholders
      shall, jointly and severally, indemnify and hold harmless the Company from
      such
      liability and pay or reimburse the Company for any related costs.

     

    (f) Promptly
      after receipt by an indemnified party under this Section 8.3 of notice of the
      threat or commencement of any action, such indemnified party will, if a claim
      in
      respect thereof is to be made against an indemnifying party under this Section
      8.3, promptly notify the indemnifying party in writing thereof; but the omission
      so to notify the indemnifying party will not relieve it from any liability
      which
      it may have to any indemnified party for contribution or otherwise under the
      indemnity agreement contained in this Section 8.3 to the extent it is not
      prejudiced as a result of such failure. In case any such action is brought
      against any indemnified party and such indemnified party seeks or intends to
      seek indemnity from an indemnifying party, the indemnifying party will be
      entitled to participate in, and, to the extent that it may wish, jointly with
      all other indemnifying parties similarly notified, to assume the defense thereof
      with counsel reasonably satisfactory to such indemnified party; provided,
      however,
      if the
      defendants in any such action include both the 

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

    indemnified
      party and the indemnifying party and the indemnified party, based upon the
      advice of such indemnified party’s counsel, shall have reasonably concluded that
      there may be a conflict of interest between the positions of the indemnifying
      party and the indemnified party in conducting the defense of any such action
      or
      that there may be legal defenses available to it and/or other indemnified
      parties which are different from or additional to those available to the
      indemnifying party, the indemnified party or parties shall have the right to
      select separate counsel to assume such legal defenses and to otherwise
      participate in the defense of such action on behalf of such indemnified party
      or
      parties. Upon receipt of notice from the indemnifying party to such indemnified
      party of its election so to assume the defense of such action and approval
      by
      the indemnified party of counsel, the indemnifying party will not be liable
      to
      such indemnified party under this Section 8.3 for any legal or other expenses
      subsequently incurred by such indemnified party in connection with the defense
      thereof unless (i) the indemnified party shall have employed such counsel in
      connection with the assumption of legal defenses in accordance with the proviso
      to the preceding sentence (it being understood, however, that the indemnifying
      party shall not be liable for the expenses of more than one separate counsel,
      reasonably satisfactory to such indemnifying party, representing the indemnified
      parties who are parties to such action (including indemnified parties under
      Agreements with Other Purchasers), plus local counsel, if appropriate) or (ii)
      the indemnifying party shall not have employed counsel reasonably satisfactory
      to the indemnified party to represent the indemnified party within a reasonable
      time after notice of commencement of action, in each of which cases the
      reasonable fees and expenses of counsel shall be at the expense of the
      indemnifying party. The indemnifying party shall not be liable for any
      settlement of any action without its written consent; provided that such consent
      shall not be unreasonably withheld or delayed.

     

    (g) If
      the
      indemnification provided for in this Section 8.3 is required by its terms but
      is
      for any reason held to be unavailable to or otherwise insufficient to hold
      harmless an indemnified party under paragraphs (a), (b), (c) or (d) of this
      Section 8.3 in respect to any losses, claims, damages, liabilities or expenses
      referred to herein, then each applicable indemnifying party shall contribute
      to
      the amount paid or payable by such indemnified party as a result of any losses,
      claims, damages, liabilities or expenses referred to herein (i) in such
      proportion as is appropriate to reflect the relative benefits received by the
      Company, each Selling Stockholder and the Purchaser from the placement of the
      Common Stock contemplated by this Agreement or (ii) if the allocation provided
      by clause (i) above is not permitted by applicable law, in such proportion
      as is
      appropriate to reflect not only the relative benefits referred to in clause
      (i)
      above but the relative fault of the Company, each Selling Stockholder and the
      Purchaser in connection with the statements or omissions or inaccuracies in
      the
      representations and warranties in this Agreement that resulted in such losses,
      claims, damages, liabilities or expenses, as well as any other relevant
      equitable considerations. The respective relative benefits received by the
      Company and each Selling Stockholder, respectively, on the one hand and each
      Purchaser on the other shall be deemed to be in the same proportion as the
      amount paid by such Purchaser to each Selling Stockholder pursuant to this
      Agreement for the Shares purchased by such Purchaser that were sold pursuant
      to
      the Registration Statement bears to the difference (the “Difference”) between
      the amount such Purchaser paid for the Shares that were sold pursuant to the
      Registration Statement and the amount received by such Purchaser from such
      sale.
      The relative fault of the Company and each Selling Stockholder, respectively,
      on
      the one hand, and each Purchaser on the other shall be determined by reference
      to, among other things, whether the untrue or alleged statement of a material
      fact or the omission or alleged omission to 

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

     

    state
      a
      material fact or the inaccurate or the alleged inaccurate representation and/or
      warranty relates to information supplied by the Company, by such Selling
      Stockholder or by such Purchaser and the parties’ relative intent, knowledge,
      access to information and opportunity to correct or prevent such statement
      or
      omission. The amount paid or payable by a party as a result of the losses,
      claims, damages, liabilities and expenses referred to above shall be deemed
      to
      include, subject to the limitations set forth in paragraph (f) of this Section
      8.3, any legal or other fees or expenses reasonably incurred by such party
      in
      connection with investigating or defending any action or claim. The provisions
      set forth in paragraph (f) of this Section 8.3 with respect to the notice of
      the
      threat or commencement of any threat or action shall apply if a claim for
      contribution is to be made under this paragraph (g); provided,
      however,
      that no
      additional notice shall be required with respect to any threat or action for
      which notice has been given under paragraph (f) for purposes of indemnification.
      The Company, the Selling Stockholders and each Purchaser agree that it would
      not
      be just and equitable if contribution pursuant to this Section 8.3 were
      determined solely by pro rata
      allocation (even if the Purchaser were treated as one entity for such purpose)
      or by any other method of allocation which does not take account of the
      equitable considerations referred to in this paragraph. Notwithstanding the
      provisions of this Section 8.3, no Purchaser shall be required to contribute
      any
      amount in excess of the amount by which the Difference exceeds the amount of
      any
      damages that such Purchaser has otherwise been required to pay by reason of
      such
      untrue or alleged untrue statement or omission or alleged omission.
      Notwithstanding the provision of this Section 8.3, no Selling Stockholder
      shall be required to contribute any amount in excess of the gross proceeds
      received by such Selling Stockholder for the sales of Shares under the
      Agreement. No person guilty of fraudulent misrepresentation (within the meaning
      of Section 11(f) of the Securities Act) shall be entitled to contribution from
      any person who was not guilty of such fraudulent misrepresentation. The
      Purchasers’ obligations to contribute pursuant to this Section 8.3 are several
      and not joint. The Selling Stockholders’ obligations to contribute pursuant to
      this Section 8.3 are joint and several.

     

    8.4  Termination
      of Conditions and Obligations.
      The
      conditions precedent imposed by Section 6 or this Section 8 upon the
      transferability of the Shares shall cease and terminate as to any particular
      number of the Shares upon the passage of two years from the effective date
      of
      the Registration Statement covering such Shares or at such time as an opinion
      of
      counsel satisfactory in form and substance to the Company shall have been
      rendered to the effect that such conditions are not necessary in order to comply
      with the Securities Act. 

     

    8.5  Information
      Available.
      So long
      as the Registration Statement is effective covering the resale of Shares owned
      by the Purchaser, the Company will furnish to the Purchaser:

     

    (a) other
      than any such reports or communications filed with the Commission pursuant
      to
      the Commission’s EDGAR system, as soon as practicable after available (but in
      the case of the Annual Report to the Stockholders, within 150 days after the
      end
      of each fiscal year of the Company), one copy of (i) its Annual Report to
      Stockholders (which Annual Report shall contain financial statements audited
      in
      accordance with GAAP by a national independent registered public accounting
      firm), (ii) if not included in substance in the Annual Report to Stockholders,
      upon the request of Purchaser, its Annual Report on Form 10-K, (iii) upon
      request of Purchaser, its quarterly reports on Form 10-Q, and (iv) a full copy
      of the particular Registration Statement covering the Shares (the foregoing,
      in
      each case, excluding exhibits); and

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

    (b) upon
      the
      reasonable request of the Purchaser, a reasonable number of copies of the
      Prospectuses, and any supplements thereto, to supply to any other party
      requiring such Prospectuses.

     

    The
      Company, upon the reasonable request of the Purchaser and with prior notice,
      will be available to the Purchaser or a representative thereof at the Company’s
      headquarters to discuss information relevant for disclosure in the Registration
      Statement covering the Shares and will otherwise cooperate with any Purchaser
      conducting an investigation for the purpose of reducing or eliminating such
      Purchaser’s exposure to liability under the Securities Act, including the
      reasonable production of information at the Company’s headquarters, subject to
      appropriate confidentiality limitations. 

     

    SECTION
      9.   Broker’s
      Fee.
      The
      Purchaser acknowledges that the Selling Stockholders intend to pay to the
      Placement Agent a fee in respect of the sale of the Shares to the Purchaser.
      Each of the parties hereto hereby represents that, on the basis of any actions
      and agreements by it, there are no other brokers or finders entitled to
      compensation in connection with the sale of the Shares to the Purchaser. The
      Purchaser and the Selling Stockholders hereby agree that the Purchaser shall
      not
      be responsible for such fee.

     

    SECTION
      10.   Expenses.
      The
      Selling Stockholders agree to reimburse the Company for 50% of the Company’s
      aggregate expenses incurred to effect the transactions contemplated hereby,
      including the expenses that the Company is obligated to pay pursuant to Section
      8.1(i). 

     

    SECTION
      11.   Notices.
      All
      notices, requests, consents and other communications required or permitted
      hereunder shall be in writing and shall be deemed effectively given: (i) upon
      delivery to the party to be notified; (ii) when received by confirmed facsimile
      or e-mail; or (iii) one business day after deposit with a nationally recognized
      overnight carrier, specifying next business day delivery, with written
      verification of receipt. All communications shall be sent to the Company and
      the
      Purchaser as follows or at such other addresses as the Company or the Purchaser
      may designate upon ten days’ advance written notice to the other party:


     

    
      	 	
              (a)

            	
              if
                to the Company, to:

            


    

     

    Delta
      Financial Corporation

    1000
      Woodbury Road, Suite 2000

    Woodbury,
      New York 11797

    Attention:
      Marc E. Miller, Esq.

    Facsimile:
      (516) 364-9450

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

    with
      a
      copy to:

     

    Morrison
      & Foerster LLP

    1290
      Avenue of the Americas

    New
      York,
      New York 10104

    Attention:
      James R. Tanenbaum, Esq.

    Facsimile:
      (212) 468-7900

    


    
      	 	
              (b)

            	
              if
                to the Placement Agent, to:

            


    

     

    JMP
      Securities LLC

    One
      Embarcadero Center, Suite 2100 

    San
      Francisco, California 94111

    Attention:
      Gerald L. Tuttle, Jr.

    Facsimile:
      (415) 835-8920

    


    with
      a
      copy to:

     

    O’Melveny
      & Myers LLP, Suite 2600

    Embarcadero
      Center West

    San
      Francisco, California 94111

    Attention:
      Peter T. Healy, Esq. 

    Facsimile:
      (415) 984-8701

    


    
      	 	
              (c)

            	
              if
                to the Purchaser, at its address as set forth at the end of this
                Agreement, or at such other address or addresses as may have been
                furnished to the Company in
                writing.

            


    

     

    
      	 	
              (d)

            	
              if
                to a Selling Stockholder, at the address set forth in Exhibit
                A
                hereto.

            


    

     

    SECTION
      12.   Changes.
      This
      Agreement may not be modified or amended except pursuant to an instrument in
      writing signed by the Company, the Selling Stockholders and the Purchaser.
      No
      provision hereunder may be waived other than in a written instrument executed
      by
      a waiving party.

     

    SECTION
      13.   Headings.
      The
      headings of the various sections of this Agreement have been inserted for
      convenience of reference only and shall not be deemed to be part of this
      Agreement. 

     

    SECTION
      14.   Severability.
      In case
      any provision contained in this Agreement should be invalid, illegal or
      unenforceable in any respect, the validity, legality and enforceability of
      the
      remaining provisions contained herein shall not in any way be affected or
      impaired thereby. 

     

    SECTION
      15.   Governing
      Law.
      This
      Agreement shall be governed by and construed in accordance with the laws of
      the
      State of New York and the federal law of the United States of America.


     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

    SECTION
      16.   Counterparts.
      This
      Agreement may be executed (including, without limitation, by facsimile signature
      or by delivery by portable document format (“PDF”)) in two or more counterparts,
      each of which shall constitute an original, but all of which, when taken
      together, shall constitute but one instrument, and shall become effective when
      one or more counterparts have been signed by each party hereto and delivered
      (including by facsimile) to the other parties.

     

    SECTION
      17.   Entire
      Agreement.
      This
      Agreement and the instruments referenced herein contain the entire understanding
      of the parties with respect to the matters covered herein and therein and,
      except as specifically set forth herein or therein, none of the Company, any
      Selling Stockholder or the Purchaser makes any representation, warranty,
      covenant or undertaking with respect to such matters.

     

    SECTION
      18.   Assignment.
      This
      Agreement is made solely for the benefit of and is binding upon the Purchaser,
      the Selling Stockholders and the Company and to the extent provided in Section
      8.3, any person controlling the Company, the Selling Stockholder or the
      Purchaser, the officers and directors of the Company, and their respective
      executors, administrators, successors and assigns, and subject to the provisions
      of Section 8.3, no other person shall acquire or have any right under or by
      virtue of this Agreement. The term “successors and assigns” shall not include
      any subsequent purchaser, as such purchaser, of the Shares sold to the Purchaser
      pursuant to this Agreement.

     

    


     

    [Signature
      Page Follows]

     

    


     


    
      
        
        

      

      
        28

        
          

        

      

      
        
        

        
        

      

    



    IN
      WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
      by
      their duly authorized representatives as of the day and year first above
      written.

     

    
      	 	 	 
	 	DELTA
              FINANCIAL CORPORATION
	 
 	 
 	 
 
	 	By:  	 
	 	Name:
	 	Title:


    

    
      	 	 	 
	 	HUGH
              MILLER
	 
 	 
 	 
 
	 	By:  	 
	 	Name:
	 	Title:


    

    
      	 	 	 
	 	SIDNEY
              A.MILLER 2001 FAMILY TRUST
	 
 	 
 	 
 
	 	By:  	 
	 	Name:
	 	Title:


    

    
      	 	 	 
	 	RONA
              V. MILLER 2001 FAMILY TRUST
	 
 	 
 	 
 
	 	By:  	 
	 	Name:
	 	Title:


    

     

     

     

     

     

     

    Appendix
      II-1

     

    
      
        
        

      

      
        
          

        

      

      
        
        

      

    

     


    
      	
              Print
                or Type:

               

            	
              Name
                of Purchaser (Individual or Institution):

               

               

            
	 	
               

               

              Name
                of Individual representing Purchaser 

              (if
                an Institution):

               

               

            
	 	
               

               

              Title
                of Individual representing Purchaser (if an Institution):

               

               

            
	
               

               

              Signature
                by:

               

               

            	
               

               

              Individual
                Purchaser or Individual representing Purchaser:

               

               

            
	 	
               

               

              Address:

            
	 	
               

              Telephone:

            
	 	
               

              Telecopier:

            
	 	
               

              E-Mail:

            
	 	
               

              Jurisdiction
                of principal executive offices:

               

               

            


    


    
       

      
        
          
          

        

        
          2

        

         

      

      
        
          

        

      

       

    

    EXHIBIT
      A

     

    Selling
      Stockholders

    


    


    
      	
              Name
                and Address

            	
              Aggregate
                Number

              of
                Shares to be sold

            
	 	 
	
              Hugh
                Miller 

              c/o
                Delta Financial Corporation 

              1000
                Woodbury Road, Suite 200

              Woodbury,
                New York 11797

               

            	
              350,000

            
	
              Sidney
                A. Miller - 2001 Family Trust

              c/o
                Delta Financial Corporation 

              1000
                Woodbury Road, Suite 200

              Woodbury,
                New York 11797

               

            	
              650,000

            
	
              Rona
                V. Miller - 2001 Family Trust 

              c/o
                Delta Financial Corporation 

              1000
                Woodbury Road, Suite 200

              Woodbury,
                New York 11797

            	
              1,000,000

            


    

    


     


    
       

       

      
        A-1